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| Mojo Odyssey: Ghanaian Poverty amidst Wealth. |
11/20/2005 |
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Mojo Odyssey: Ghanaian Poverty amidst Wealth.
The crippling poverty that afflicts the ordinary Ghanaian begs to be treated with more than lip service and casual indifference. The new budget hailed by the majorityin parliament as "Good news budget" but scoffed at by the minority inparliament as "Azaa budget" is so vague in specific policy initiativesto address poverty reduction.
An editorial of the NPP''s leading newspaper, Statesman, says of thebudget that: "It has been termed the Budget of Good News. It certainlyhas good news for companies and tax payers, as taxes have been reducedacross board. Yet, the promise of jobs is vague, however implicit inthe incentives for employers. What is clear is that the 2006 budgetdoes not live up to expectations, considering the background of anadditional $4 billion debt relief expected next year".
The leading NDC newspaper, The Crystal Clear ! Lens, also say of thebudget thus: "So vague was it that for the first time in the presentation of a budget, the Minister of Finance failedto even hint at the specific growth rate expected at the close of theyear. …………..essentially no policies that would achieve the kind ofrapid growth which alone will help alleviate the worsening economicconditions of the majority of Ghanaians who are not in the formalsector of the economy."In essence, the 2006 budget reflects a lack of MOJO in which vision issacrificed for the status quo. Where is the vision that will transformGhana from the highly indebted poor country into the Malaysia of WestAfrica, if our whole game plan is to wait for debt forgiveness? Didthe 2006 budget come early because the government wants to conceal ordistract attention from its likely inability to meet the 2005 budget?The World Bank periodically commissions a study on poverty.
In 2000,it asked variou! s people around the world what they thought about beingpoor. See World Bank (2000a): Voices of the Poor: Can Anyone hear Us? Oxford University Press, where one woman from Moldova, in EasternEurope, replied, "Poverty is pain; it feels like a disease. It attacksa person not only materially but morally. It eats away one''s dignityand drives one into total despair". This is a statement whose simplicity in truth cannot be denied.Poverty is avoidable. Ghana''s state of poverty is even more avoidablethan most other nations that lack Ghana''s huge endowments of naturalresources. Therefore, every Ghanaian child that goes hungry, thatfalls ill, that does not go to school, that dies, because of povertyis a moral stain on a nation''s conscience. So is every half-heartedattempt to resolve it. It is time to take a serious look at Ghana''spoor, and discuss ways in which we can do better about poverty.The history of poverty in every nation, not excluding Ghana, presentsvery interesting lessons on how some nations have dealt with it.
Looking at many such countries, the difference is clear, and for mostGhanaians, bitterly disappointing. Once upon a time, Malaysia,Indonesia, South Korea, etc were very poor nations, with a largelyilliterate population. Today, they are all, without a singleexception, doing better than us. Why?It has almost become a cliché to say that Ghana is a highly-indebtedpoor country (HIPC). Ghana has become a poor country, but not allGhanaians are poor. There are some very wealthy Ghanaians, just asthere are poor ones. This is not to wage class warfare, or imply thatGhana''s rich do not deserve their wealth. No, the point is to be madethat not all Ghanaians are poor, and it is important to figure out howthey became so, in order to emulate, or at the very least, tounderstand the process of wealth generation. Wealth is good.
So how do we make it so that every Ghanaian has the opportunity to join the ranks of the wealthy? After achieving independence on March 6, 1957, Ghana has made only fitful starts in reducing poverty and improving the lives of its people. A large number of Ghana''s population of some 21 million still lives below the poverty line - as measured by income, consumption, and ability to meet basic human needs—making Ghana one of the poorest countries in the world. Without casting stones, is this not a shocking state of affairs, byany manner of criteria? Ghana can, and should, do better.It is unquestionable that poverty reduction in those countriesmentioned above was due in large part to strong, sustained economicgrowth. But that is not all that happened to transform, for instance,Malaysia, from one of the poorest countries in the world, to one ofthe wealthiest developing nations. Another significant factor was thatthe governments of most of these countries heavily invested in theareas of health, education, social safety nets (i.e. social protectionor welfare), and support for microfinance credit programs, whichprovide poor people with loans for the creation of small businessenterprises.Our current government constantly crows about its prowess in battlinginflation, increasing foreign exchange reserves, and other aspects ofthe macro economy. But what about the issues that concern the commonman? What about those questions that assail the average Ghanaian fromthe moment he wakes up in the morning to when he goes to bed at night? Do Ghanaians find it easy or hard to find jobs? How difficult is it toput food on the table? How expensive is it to rent a room, pay schoolfees, visit a doctor, buy clothes for the family, and many other basicnecessities? There are so many hardworking Ghanaians who workfull-time, sometimes having to neglect their families, and still do not earn enough to secure even the basic necessities of life.The failure of our government to address popular needs - especially inclosing the gap between the rich and the poor is a matter of greatconcern. It is true that, in developing countries like Ghana,stabilization programs are designed to reduce inflation, fromgenerally high levels, to levels similar to those observed in thedeveloped countries or, at least, to what is considered acceptablegiven a country''s inflationary history. Indeed, high inflation isharmful to growth and development, and so stabilization should betreated as a major issue in development macroeconomics. But, whatabout the poor? Our government is fond of denouncing those who endorse socialprotections as practicing populist economics. It treats economicgrowth as a zero-sum game, where every single cedi allocated toshielding the less fortunate from the harsh reality of purecapitalism, is one cedi made unavailable for generating an increase inGDP. That every cedi that protects the poor is a wasted cedi. This isa fallacy.
Our government does not attempt to recognize that there isa better way to combine both economic growth and poverty reduction.Other countries have done it. Developing countries such as Botswana,Chile, China and Thailand have been able to double per capita incomeswithin a decade. Why can''t Ghana? Spending money on the poor does notdetract from economic growth; in fact, it rather enhances it.The economic stabilization programs touted by the government are notbeing translated into a real improvement in the lives of everyday,hardworking Ghanaians. There''s no denying this reality.
Indeed,rather, the rich are getting richer, while the poor are gettingpoorer. According to Nationmaster, which is a compilation of data fromsuch sources as the CIA World Factbook, United Nations, World HealthOrganization, World Bank, World Resources Institute, UNESCO, UNICEFand OECD, Ghana''s income distribution is such that the richest 10%enjoy 30.1 percent and the richest 20% enjoy some 46.7 percent ofnational income. Meanwhile, the poorest 10% enjoy only 2.2 percent ofnational income; and the poorest 20% enjoy 5.6%. This means that thewealthiest 20 percent of Ghanaian society possess just under half ofall of Ghana''s income. Is this not appalling? The average Ghanaiancitizen is becoming poorer, even while Ghana''s GDP grows. This shouldnot, and need not, be the case.Pointing this out is not class warfare because, just as in anyecosystem, Ghanaian society is interdependent. We are all connected,and depend on each other. When the World Bank 2000 survey focused onGhana, a woman interviewed joked, "The rich are getting poorer becausewe the poor borrow from them and never pay back". Even in her poverty,this Ghanaian understands what the government refuses to take seriously: Ghana''s prosperity depends on all its citizens, both richand poor. By focusing almost solely on the investor class, the alreadywealthy, the government is ignoring a large section of Ghana''s mostimportant resource – her people. Economic growth which benefits only afew individuals who are already rich should not be the priority.
Economic growth is necessary, but not sufficient, for poverty reduction. Poverty reduction is not only dependent on the rate ofeconomic growth, but also on the type of growth. Our government''scurrent policies ensure that economic growth will be concentratedamong the already wealthy sectors of society.
The "Golden Age of Business" is reliant on attracting investors from outside of Ghana,without necessarily generating investors from within. Since most ofthese investors are already presumed wealthy, this means that most ofthe returns to capital will go to those who are already rich. A recentcomment suggested, rightfully in my view, that the government''spolicies should also focus on internal investors, that is, creating budding entrepreneurs, Ghana''s own home-grown business leaders, scientists, etc, in addition to reliance on foreign investors.The real question is what type of growth is best for povertyreduction, and which policies will help to bring about more equitablepatterns of growth. There is no necessary trade-off between equity andefficiency. Indeed, extreme inequality is detrimental to political andeconomic security. It serves as a barrier to growth by restricting theproductive potential, undermines investment, and limits the capacityof a large section of the population from being able to respond tomarket incentives. Some Solutions Basically, here are some simple steps to get Ghana''s MOJO into focus:
1. Better quality of public spending: Public spending is often biased against the poor and against rural dwellers. Even more sadly, Ghana''s literacy and enrolment rates are lower in the poorer areas, with poorschool conditions, low quality, irrelevant curriculums, and a lack ofteachers. How many of these schools have graduated students who stillcould not even read and write? The excuse that "we have no money" is apoor one. The government needs to focus on strengthening the qualityof its existing services, mostly in the rural areas where Ghana''swealth can be found.
2. A stronger focus on inequality: This is basically what this articlehas been discussing. The government needs to combine policies that arepro-growth and also pro-poor.
3. Land Reform: The earlier MOJO''s have already talked about thisissue, especially about H. de Soto''s 2001 government-sponsoredseminars that stressed on land reform as the cornerstone ofdevelopment.
4. More Time Implementing Policy: Perhaps, it would be wise forgovernment officials to spend less time campaigning, and travelingaround the world, and more time in their offices, or with the people,actually implementing helpful policies. A modest proposal: for everyhour spent talking in some foreign country, how about investing twohours, on return to Ghana, in the field in the remotest part of thecountry, to see what can be done for the ordinary Ghanaian. Such trade-off would help translate talk into action.
The MOJO Odyssey Continues
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