Ghana – part 1, thoughts on the IMF approach

Greetings – and thanks for all the constructive feedback.

We are double-checking a few facts on Ghana before posting (tomorrow). Meanwhile, we would like to share a few of our observations and questions as we prepared the analysis and worked on the scenarios:

Biggest reasons for optimism: – Ghana has a lot going for it, its relatively well-educated population, natural resources and an important geopolitical position.

Biggest concern – a number of informants point to the political paralysis and denial of the waste and crisis in the public sector. Worst, arguably, many middle class professionals said “we have given up on politics”. 

Our own view: Ghana is changing. People do expect progress and better government. Old traditions – some perfectly compatible with a modern progressive society and some not – are adapting. The question is whether Ghana and in particular government will be able to address the immediate crisis in constructive ways.

The crisis is imminent, but luckily the answers are also quite clear – control and reduce the wagebill (presently 72% of tax revenue) and sort out the energy situation. This is possible, especially given the indications on many ghost workers on the payroll – and results will show before the 2016 elections. Our assessment is that Ghanaians would appreciate an honest, critical statement and subsequent reform actions, if backed up by clear immediate actions and crucially clear, consistent communication. As such, a strong, credible reform programme is possible.

The risk is that reluctance will continue, agreements with the IMF will only be implemented half-heartedly – banking on over-optimistic hopes for future oil prospects –  and the economy will slow further. Business opportunities for Ghanaians as well as foreign investors would suffer and Ghana’s future prospects would suffer.


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