A finance and investment consultant, Dr Stephen Amoah, has said policies must be instituted to promote local production to reduce the country’s reliance on imports.
We must change the import-driven economy chorus we have been singing for multiple decades. The change must be made by all stakeholders, “he said during the maiden Financial Economic Seminar-Ghana 2022 programme in Accra on Monday.
The programme chaired by the former Rector of GIMPA, Professor Emeritus Stephen Adei, was on the theme “Identifying and Redefining the Economic Fundamental of developing countries: Anomalies and challenges-The case of Ghana.”
Dr Amoah advocated competitive loan regime to enable manufacturing firms increase their production.
He said banks should prioritise investment in the private sector to help address unemployment in the country.
Dr Amoah who is also the Member of Parliament for Nhyiaeso, said government securities in any well-developed economy and efficient market do not offer higher rates than comparable ones by the private sector on the same market.
He said returns from risky investments were made up of risk free return on the market plus premium to compensate for investing in risky portfolio, but in Ghana, often governments’ securities offered higher rates than the private sector returns.
That, he said, contradicted the general principle of the higher the risk, the higher the expected returns in investment, noting that at present, Treasury bill rates on the Ghanaian market were between 22 and 24 per cent while the banking industry rates were on average 11 per cent.
Mr Amoah said banks in Ghana accordingly invest in government securities far more than the private sector ones between 56 per cent and 70 per cent.
“The resultant effects are that private sector which creates value chains and create employment opportunities do not have access to adequate funds. The limited funds they can access through debt financing are always very high,” he said.
According to him although Ghana was a double-digit interest rate economy, the private sector could expand to produce to meet aggregate demand compelling us to import almost everything, because of ritually weak currency.
“The Ghanaian companies, however, cannot expand to deal with the unemployed situation in Ghana because governments compete with them at higher rates.” It is crystal clear that governments cannot create jobs to meet the fast growing demand. “Industries in Ghana will continue to underperform their benchmarks so long as the situation is not regularised,” he said.
Prof. Emeritus Adei urged policymakers and the government to adopt pragmatic policies to revive the economy.