By Professor Lord Mensah, an Economist and Senior Lecturer at the University of Ghana Business School (UGBS), asserts that the 24-hour economy proposed by National Democratic Congress (NDC) flag bearer John Dramani Mahama is presently the most suitable economic policy proposal given the condition of the Ghanaian economy.
John Mahama has pledged that the upcoming NDC administration will implement a 24-hour economy, offering incentives and tax breaks to manufacturers who operate additional shifts to expand employment opportunities and enhance production and services nationwide.
Professor Mensah highlighted the hurdles of a dollar-denominated economy and proposed that augmenting production via the 24-hour economy initiative could attract more inflows and stabilize the currency.
He emphasized the necessity of pinpointing specific key sectors to focus on with the 24-hour economy strategy.
“Our economy is fully dollar-denominated. How do we reduce it? We need production. We need an economy that can produce and bring in more dollars and the 24-hour economy should be targeted very well in certain key areas. It should be able to bring us more inflows and that will stabilize the currency. The 24-hour economy is the best sellable policy as we speak now if you look at the current state of the Ghanaian economy”
The Economist Lecturer made these remarks during a public lecture hosted by the National Youth Commission of NDC Professionals Forum (PROFORUM) at SDA College of Education in Koforidua, Eastern Region.
Regarding fiscal policies, Professor Mensah highlighted that extensive government borrowing has hampered individual lending and proposed reducing budget deficits to incentivize banks to extend more loans to individuals.
“Money only flows when the government is not borrowing that much. If the government reads a budget and the budget positions itself in such a way that the government’s intention to borrow is minimal, the banks will start lending to individuals, that, is why every time we go to the IMF they tell us to reduce the budget deficit. Because it is the budget deficit the causes the financing”.
He criticized Ghana’s dependence on the Euro Bond market, contending that it has fostered complacency among politicians and impeded export-oriented policies.
Prof. Lord Mensah cautioned that the convenient access to international markets has adversely impacted the economy, resulting in the prioritization of quick Euro Bond funds over export-oriented policies.
“We have sacrificed our export driving policy for the Euro Bond market since 2007 when the market was opened for Ghana. It has made our politicians so lazy they refuse to think beyond the bond, they refuse to think beyond the box, they refuse to apply the possible policies that will generate exports so the Euro Bond is easier”.
“Since we had access to the international market it has caused harm to Africa it has made us sacrifice all our export-driving policies just to get the money. There is an incentive to get Euro Bond money. Because when you are defaulting it is difficult for the lenders to come together,” he stated.
Professor Lord Mensah advised prudent borrowing, emphasizing the significance of maintaining a balance between growth prospects and debt levels.
“You have to borrow when you have growth potential but our debt level has siphoned our growth potential. There is always a threshold when borrowing. When you are borrowing and the rate at which you are growing your debt is more than the interest that you are paying you have to stop borrowing”
Finally, Professor Mensah raised concerns regarding the actual condition of the Ghanaian economy. He contended that the nation’s cessation of external debt repayments since 2022 has artificially influenced the exchange rate and dampened the demand for foreign currency.
He asserted that this situation presents a skewed and possibly deceptive portrayal of inflation and the broader economic landscape.
“The true state of the Ghana economy is an economy that is in debt, is an economy that all the inflation numbers that we are recording are partial not the true state of the Ghanaian economy. The reason why I am saying this is that we have suspended our external debt payment. Since 2022. It means we are fixing the exchange rate. the reason is that the government will demand the dollar to go and pay for the debts but you are not paying so you have suppressed demand for the exchange rate”.
Professor Lord Mensah urged the government to wholeheartedly embrace Ghana’s energy transition plan. He emphasized the need to invest in infrastructure and technologies that would eventually decrease the reliance on fuel imports, a factor that continues to adversely affect the exchange rate.
“The most sensitive part of the economy is that we import fuel and so far we have not rolled out any alternative transportation infrastructure that will reduce our fuel import. The railway they are doing is one of them. If we don’t find ways to balance our transportation infrastructure there is no way we can control the exchange rate”.
