On Tuesday, 31st May 2011, I organized and hosted a program I called The BiG Debate. We looked at the issue of high bank interest rates and its impact on Ghanaian businesses.
At that time, with bank interest rates as high as 30% in some cases and spreads ranging between 12% and 15%, banks continued to make high profits despite the claim that non-performing loans were a restriction on their performance and a key reason for less lending.
But there were other related arguments suggesting that Regulators, Government, Borrowers of Funds, Lenders to the banking sector as well as Bank’s own weak accounting all contribute in large measure to the persistently high lending rates in Ghana. Clearly, our stuttering economy would benefit from lower borrowing rates in the market place.
How to intervene and trigger a downward spiral in favor of the borrower has eluded analysts, Government and Donors. The BiG Debate attempted to identify the intervention points and offer answers to Government.
Treasury Bill rates were at 10%, and the competing business of risk lending took a back-step while Banks diverted deposits into 91-day bills and quicker profit yielding trade.
Two years on, the T Bill rate is at 25% and the situation is worse now than it was then.
And in the midst of all this, the Ministry of Trade decided to hold a time-wasting event with all the worn out captains of industry, who still label themselves stakeholders, to come and proffer the same old ideas to solve a problem identified as intractable.
Had we done something about it then, we could have saved the taxpayer a lot of money today.
So exactly on another Tuesday, nearly a year to the date, I said the unthinkable and asked the participants at the Ministry-of-Trade-organized event on the high cost of credit, to go home, take off the western jackets and ties and come jaw-jaw with us in batakari and other Ghanaian clothes. My sarcasm was lost on the crowd. Unfortunately.
On May 16th, a bunch of “prostitutes” (an NDC political term now used to describe ladies over 30 and not married) will march to protest their disgust, to say #dumsormuststop. I will go and march with them, and I am asking anyone who believes in what we are doing at OccupyGhana to join the vigil. We have to, we should, we need to and we must, MARCH!
But all week I have been reading Singapore. After a CitiFm interview during the week with Dr. Stephen Koh, I regretted not paying attention to the way that country unraveled its story and managed a “citizen-focused” solution to their problems, achieving tremendous success after about fifty years.
At the nexus of their abyss, Singapore took stock of where they were and made some considered decisions to get out of the mess. The argument has been made consistently that we do not have a Lee Kwan Yew in Ghana; but we have had many. They are called Kofi, Kwame, Araba and Maame in place of the Chinese sounding name.
Look at what Singapore was faced with when they set out. Severe housing shortage, many slums, poor sanitation and filthy waterways. Unemployment exceeded 10%, labor strikes were rampant, criminal gangs ruled parts of the city, petty corruption at customs and law enforcement, ethnic and racial-religious riots between Chinese and Malay, hostile neighboring countries and no natural resources. Singapore was a basket case at independence in 1965.
On the plus side, they had access to the sea, a natural deep-water port, a major trading route, some rule of law, some infrastructure and no threats of typhoon and earthquakes.
And there is a lot behind the story. They took what they had, and with good leadership and long-term foresight, they turned their country around, systematically, one step at a time. The solution was holistic and covered a myriad of sectors.
I am still back-filling my reading, but I will dare say even at this point, that we have a lot more going for us today, than Singapore had then.
Many criticize their democracy and the strictness of society. But we do not have to copycat what they did. We can learn from the good and discard what we do not want, and this by the way was one of their solutions.
US President Woodrow Wilson once said this to his advisors. “We can add rice to our diet, but do not have to choose to eat it with chopsticks”.
Shouldn’t that sum up our whole reason for looking at what we are doing and turn back to see? Isn’t “sankofa” a term we tout in Ghana as culturally significant wisdom?
We have a near perfect launch pad to use to move this country forward. If we start from here, we are way ahead of where Singapore was at their independence.
We have acceptable infrastructure. We have peace, good neighbors, two ports, airports, agricultural land, world acclaimed cash crops, lots of arable land, more water than we care to talk about and a lot of people who can help to build this land.
And despite what we say, we have good leadership; present company excepted.
So lets stop complaining and look just beyond our noses. The answers are staring us in the face and we are capable if we spend time to think through the solutions. Whichever way we look at it, no one should have the responsibility to fix this country and our economy for us. No one should spend time creating aid programs to support our budget overruns and deficits and no one should be prescribing how we should control the cost of our credit.
No one should solve Ghana except Ghanaians.
We were going to sell ADB bank. Now we are no longer going to sell the bank. A worker’s aluta? Not so, say insider pundits. There appear to be some politics at play.
All the same, look at what we are doing? We set up an agricultural development bank to enhance agri-lending in the country. A long time ago. Together with National Investment Bank, these two banks were offered as long-term funding solutions to the challenges of medium and long period gestation projects.
Had we not used them as crony-political “hospices” they might have survived and paid dividends to the State. Now we are reshaping them to compete with the other banks, in order to provide more wealth to select shareholders.
So I ask the question. If we sell ADB Bank, where are the long-term funds for agriculture going to come from? Who will support the economy we have classified as an agricultural economy before oil was found and “lost” from the oil price crash? Where will the small farmers who need the start-up capital turn and not have to borrow short to fund long-term capital projects?
Do you know who is supporting agriculture in this economy? Donors! There is more affordable support from USAID, DANIDA, GIZ, CIDA and others than we care to admit.
So because we have read in a textbook that it is good to have a vibrant Stock Exchange in a market economy, we close our eyes to the important aspects of development and, bam! We are off to sell a significant development asset.
Now there is confusion. And that means someone, someplace in the government is readying themselves to buy another bank; another one for the arsenal of some evil “machinator”.
So don’t come to these forums and seminars with your western style jackets and ties, prepped with only your western style minds, degrees from Cambridge, Harvard and Yale to give us solutions tailor-made for the West.
We have created our own peculiar economic hiatus. Why shorn the batakari solutions and turn to the West’s textbook? Until we look closer indoors and reflect on where we are, I can’t see a way to resolve this interest price gridlock, let alone the whole mess of political survival.
Unless, of course, our Social Democracy with its in-built corruption pillar, is readying to push the mantle of another foot soldier opportunity in 2016.
Ghana, Aha a yε din papa. Alius atrox week advenio. Another terrible week to come!
Source: Sydney Casely-Hayford, email@example.com