The President Nana Akufo-Addo administration is now deeply engaged in detailed strategizing towards its vision of “Ghana beyond aid”, through a comprehensive sensitization programme and series of engagements, beginning with public sector institutions and subsequently both the private sector and civil society, all of which have crucial roles and responsibilities in ensuring its success.
The Ghana beyond aid vision espoused by President Akufo-Addo himself aims at a fundamental restructuring of the economy. While the ultimate objective is to wean the country off foreign aid from development partners, which is to be replaced with the mobilization and use of local and foreign resources on commercial terms, the process for achieving this requires deep restructuring of the economy itself. This is to increase local value addition as a means of generating the requisite development resources internally and through foreign trade and investment, rather than obtaining it from international development partners as largesse, but usually with controversial terms and conditions attached.
The first step towards actualizing the vision, which is now underway, involves in-depth engagements with ministries, departments and agencies as well as metropolitan, municipal and district assemblies as to each one’s specific roles and responsibilities towards achieving the new dispensation being sought. Expectedly this will require these government organs changing some of their long term targets and objectives and consequently, the nature of their interface with private sector businesses and wider civil society.
The second stage will involve similar engagements with both the private sector and civil society to solicit and secure their support and co-operation in achieving the vision, which will require some behavioural changes on their part too.
Importantly, the new seven year development plan drawn up by the incumbent administration incorporates some of the changes in Ghana’s economic growth and development trajectory that are required.
The need for economic restructuring away from the production of primary goods and sale of unprocessed commodities, towards processing and value addition has long been identified by successive political administrations but action has been stalled by two key constraints. One is the lack of political will to risk sacrificing the immediate needs of the electorate – particularly the delivery of public goods and services at the lowest costs possible – ahead of the next general election, in exchange for economic restructuring that has short term costs but only long term benefits. The other is the lack of requisite long term resources needed to restructure the economy.
While the incumbent government is still considering the political risk of the first constraint, it sees a unique opportunity with regards to the second one. The advent of private pension funds and collective investment schemes, along with increasing penetration of life insurance is mobilizing longer term finance than at any time in Ghana’s past. At the same time, Ghana’s entry into international capital markets is proving increasingly successful and the ongoing economic recovery is winning unprecedented confidence of international investors, both direct and portfolio. Last year, Foreign direct investment commitments registered by the Ghana Investment Promotion Centre reached an all time high of US$3.95 billion and added to foreign direct investment channeled through the Ghana Free Zones Board, Minerals Commission and the Petroleum Commission, the total reached an unprecedented US$4.98 billion.
Similarly, following the highest successful – albeit controversial – issuance of cedi denominated long term bonds, in April last year, equivalent to US$2.25 billion, government a fortnight ago successfully closed the biggest Eurobond issuance done by Ghana so far, of US$2.0 billion. Instructively, half of this was done with a 30 year tenor, twice the previous longest tenor attempted. Furthermore the yields accepted by investors, of 7.627% and 8.627% for the 15 year and 30 year bonds respectively are the lowest Ghana has enjoyed since first entering the international capital markets in 2007, a sign of rising confidence in Ghana’s economic future.
Consequent to all this the incumbent government is convinced that it has a unique opportunity to begin a fundamental restructuring of the economy to enable Ghana go “beyond aid” which informs the detailed strategizing initiative it has now begun.