Since elections were successfully held in 2008, although amidst tension, Ghana's continued progress toward a sustainable democratic culture has been hailed by many around the world, and rightly so. Now the real work of developing policies that will alleviate poverty, honor campaign promises and maintain the confidence of investors both local and international has only now began.
The good people of Ghana are waiting patiently for indications that promises that were made before the polls will be met, foreign investors who were wooed by the NPP administration are listening carefully to the vibes from government functionaries to determine if their investments will be safe under a new government and Ghanaians living abroad who may have left the country some 20 - 25 years ago and may be planning to retire or set up small businesses at home are also glued to their computers for any clues that will engender comfort or otherwise.
The new NDC's budget estimates which were read by the minister of finance have received mixed and varied reactions. While some opine that there are no specific policies to improve the lot of Ghanaians, others point to blurbs which signal change for a better Ghana. The cedi has lost value against all the major trading currencies, the stock market has stalled and there is news of massive outflows of investor funds through both official and unofficial means. What ever the case, the Atta Mills administration has an urgent task and a tight rope to walk, especially at a time when the world is going through what some have referred to recently as a "great recession.”
In order for any economy to grow and develop, there is the need to create and nurture a strong middle class. This segment of society which was non-existent in Ghana for many years following the take over of power by the PNDC in 1981 seems to have emerged during the NPP administration and is growing. Many Ghanaians are attending evening and weekend schools to acquire Bachelor degrees and others are striving to pursue Masters Degrees by correspondence and otherwise, in order to fill new job openings that become available. The country is also witnessing an influx of Chinese,
Indian, South African, and Nigeria businesses establishing small-sized turn-key projects and service sector businesses. Even more important is the fact that many Ghanaians who left the country during the brutal PNDC regime are planning to return home after almost 17 years of democratic rule and the semblance of economic stability in Ghana. This group is responsible for many of the new houses being built in the country, shops and small businesses being established as well as massive inflow of remittances and transfers into the country. It is important to note that these funds will almost certainly stay in Ghana and are not likely to be repatriated.
While there is now a significant and growing local middle class, a necessary condition for economic growth of any country, these locals do not have the necessary capital to establish businesses or make the investments required for the levels of jobs to be created to achieve economic growth. The role of a strong domestic middle class is crucial because the businesses they establish will provide jobs open up opportunities for export earnings and best of all the money they generate will stay in Ghana.
If the new NDC administration is successful in encouraging existing foreign investors to remain in the country and attract new ones, these foreign investors will have a limited impact on Ghana's economic growth because they often establish short rather than long-term businesses such as trading, insurance, banking, information technology and human resources. While these sectors are and should be part of the mix in our development efforts, floaters of these initiatives reap profits within a few months and they are often in a rush to repatriate profits overseas.
These investments are therefore not beneficial to the long term goals of our economy since the money they make does not remain in Ghana. At a time when the economies of all industrialized countries are experiencing serious shortfall in demand, business people in those countries will be looking for poor countries in which they can dump their products. The bottom line is that foreign investors will receive stimulus packages to manufacture products which will be dumped in developing countries such as Ghana with the hope to repatriate their profits back to their home countries.
The only group of investors who will make the investments needed to help Ghana develop are Ghanaians living abroad who may be planning to return home to retire. These are the ones sending money home to start small businesses or build a house. They are the ones who are likely to set up long term business projects, create lasting jobs and keep their money in Ghana. This group also includes professionals in medicine, law, information technology, tourism, law enforcement, research, academia and many other skills that the country needs to help accelerate economic growth and development.
Unfortunately, when this important investor group, read headlines such as “NDC operatives seize cars of former government officials”, “Government apologizes to former ministers for car seizures” “Former ministers to be arrested for not returning cars,” “NDC government reviewing ex-gratia awards,” “Conflicts between NDC and NPP operatives in Tamale,” “1,300 former security details and soldiers dismissed,” in the media, they are reminded of the sordid and brutal dictatorial excesses committed after the coup which brought the PNDC to a self imposed rule in Ghana.
Consequently, many Ghanaians living abroad who bought government sovereign bonds, invested significant amounts of money in government treasure bills or are planning on returning home have put their plans on hold because they are apprehensive. They have either stopped sending money home or reduced the amounts they send, put their building projects on hold and waiting to see what happens during this new administration.
Whether these headlines are warranted or not they create a terrible reminder of the past which immediately converts into the truth. These fears are crystallized by some of the names which appeared on the government's transition team. As if that was not enough, some of the members of the new ministerial team have dampened confidence in the administration and provided another justifiable reason for a wait and see attitude on the part of many.
After monitoring internet chatting sites and blogs for sometime now, it is now clear that many Ghanaians who were planning to return home have now either cancelled or postponed their plans and adopted a wait-and-see attitude to developments in Ghana. Confidence in the Ghanaian economy will bring local needed investments and skilles for nation building and the lack of it will kill the country's ability to attract them.
The Atta Mills administration must take immediate and deliberate steps to organize roads trips to most of the capitals around the world where concentrations of Ghanaians live. The object should be to meet Ghanaians, talk to them, touch them and give them some assurance that this administration will change things for the better.
While the former NPP administration may have its own faults, this is something they did with a high degree of success and yet it took the best part of 8 years to earn the confidence of our kindred to look homewards. The results of those efforts – stabilization of the cedi which is a consequence of readily available foreign currency in the banking system, construction jobs, stable food prices and an increase in the number small businesses, for instance, are not difficult to substantiate.
If this new government fails in this task, especially at this opportune time, when the world is going through a major recession, it will take Ghana a long time to find its feet, the economic situation will become even worse and growth will elude the nation. Indeed, the perception about the danger in making long-term investments in Ghana will last a long time because nobody wants to invest their retirement savings into an uncertain economy whether the country begins exporting oil or not.
This is a hard line to walk, but the president must put both feet down and call his men to order because the messages coming out of officialdom have the tendency to poison the investor environment and eventually this government which promised “change for a better Ghana” will negate its own mantra. This is President Atta Mill's biggest Challenge the next four years.
