IS SADA SLIDING AGAIN

SADA the Savanna Accelerated development Authority was set up to help bridge the the economic gap between the South of Ghana and the North (Savanna région). Less than two years into its operation, it was riddled with corruption, ineptitude and recklessness all in gargantuan proportions. These were serialised by joyfm's Manesseh Awuni as the Sad SADA Saga. The huge embarassment led to the chief exécutive been fired and the Whole setup bein reorganised.
SADA is yet to demostrate to Ghanaians that valuable lessons have been learned from its chequred short history.
Some few months a go SADA was in The news again This time it is investing in energy sector. That in itself is not a bad idea, but is that the most pressing need at the Moment and how many people will be taking out of poverty with that Project.
It does appear to me that either the SADA authorities have no clue about what they are supposed to or they are deliberately being reckless with the tax payers money.
Common sense demands that they find out why there is an economic gap between the SADA Zone and the south in The first place before they think about what can be done to bridge that Gap.
There are several reasons for the widening economic gap between the two climatic zones.
the major ones are colonialism, resources endowment ans climate, yes climate. The colonial powers only wanted the north to ne source of cheap labour for extracting the resources in the south for Export. There was therefore no need to build infrastructure there or to educate the people. After independence attempts habe been made by some government to bridge the gap especially on The educational front secondary schools and Training colleges under Dr Nkrumah and The UDS under Flt Lt Rawlings. But economic structure of the country has not changed that much so the infrastructure gap is still glaring. For example there is no Single industry that employs More than 500 people in The SADA region.
Climate is a factor because as one moves from the Burkinafaso border towards the south, the level of poverty also reduces as the level of rainfall increases. This is so because the rainy months reduces from year round in western south to a little over four months in The upper east Region. How does any one expect farmers to survive the whole year on five months productivitie?
The number of people who are reliant on farming for their livelihood is also very high in The SADA Region. This is understandable becuase the Region has very little alternative livelihood opportunities outside farming.

With This background I was expecting that the first projects that SADA will be undertaking will be the construction of dams, which will enable farmers in The SADA region to be able to produce a little More into the year. This is an effective and quick Way of reducing poverty on a large scale sustainable Basis. Is not surprising that Ghana is importing tomatoes ans other vegetables from Burkinafaso which is even further north? What is that they are getting right that we are getting wrong? The answer is not far,Dams, yes dams,they recognised they have water Problem so they have build a lot of dams that are used dort irrigation during the dry season. I am surprised this common sense eluded the authorities at SADA.
The next expected area of intervention by SADA, would have been The construction of feeder roads to bring The little that is produced into The market. The area I building of factories for processing.

Asiedu Nketia is right, Let us take a second look at the heritage fund

Some days ago the General Secretary of the ruling National Democratic Congress (NDC) Mr Johnson Asiedu Nketia suggested that considering the hardships that Ghana’s economy is facing, we should consider using the money from our petroleum revenue that has been lodged in the heritage fund to solve our problems. As would be expected the rented press of the opposition descended rather heavily on him with headings such as “let’s blow heritage cash- Asiedu Nketia”, “let’s chop heritage money General Mosquito”.

The heritage fund, a creature of the petroleum management act 2010, is for all intent and purposes a good law as it is intended to ensure intergeneration equity and as a preventive measure against the Dutch disease. But a good law is just like a dangerous weapon, what it will be used for good or bad depends who is wielding it.

Ghana’s petroleum management Act 2010 is fashioned in a way that is supposed to conform to international best practices as is the case in Norway. Norway one of the most developed countries in Europe has a population of 5m and a GDP of 282 billion in 2012, the third largest exporter of natural gas. Norway was one of the few countries that recorded positive growth between 2010 and 2012 when most of Europe were in a recession, Norway has  one of the lowest unemployment rate in the world (3%), Literacy rate is 100%, GDP per capita is 56,000, ranked 9^th in the world.

Ghana has a GDP of 98 billion a population that is five times that of Norway, with literacy rate of 71%, and GDP per capita $3,700 (Each Norwegian earns 15 times more than what his counterpart in Ghana earns). Ghana’s economy is completely different from that of the Norwegian Economy. So right from the word go importing a law that has served the Norwegians well (international Best practise) might not be best practice for Ghana.

Again Norway discovered oil in the 60s when they already had a relatively developed infrastructure and a full blown industrial sector, these are non-existing in Ghana.  Also Norway owns about 60% of all their petroleum resources, how much does Ghana own? Here we are taking about 60% of a much bigger resource, this gives the Norwegians much space to do so many things that Ghana with our negligible petrol resource that is spread over a five times bigger population cannot do.

I stand to be corrected, the heritage fund have been invested abroad and is earning us 1% interest per annum which is less the average inflation in Europe which is 2%, so technically were are paying for our heritage fund to be managed, while our government borrows at an average rate of 8%. This leaves one to wonder whether our decision makers have their heads properly screwed on. In one breath we are saving to secure the future of generations unborn and in another we are borrowing at 8 time’s higher interest rate for them to pay. Why can’t we invest these funds locally to create jobs for the youth like this writer whose future we are pretending to secure with this fund. It could also be another anchor to stabilise the cedi that seem about to summersault.  Why can’t we spend this fund on developing some selected sectors that we have comparative advantage in?

The main argument for the heritage fund I am told is that the politician is short sighted and might squander all the resources and future generations will then suffer. Which I agree but the fact is that future generations are even going to suffer more judging by the rate at which we are rushing for loans left right and centre.

Putting one set of money beyond the reach of politician while allowing him full access to another is a little bit foolish. As we say it in twi “Sika bi Nkyen sika bi” (money is money). After passing the Petroleum Management Act, parliament should have gone further to tie the hands of the politician (should I say his legs) by putting a ceiling on how much they can borrow over a period of time taking into account how much is accumulating in the Heritage fund. That is the only way we can really ensure intergenerational equity in the use of our natural resources.

The Norwegians did not invest abroad right from the word go as we are doing, they invested in infrastructure, health and education before venturing abroad. Today 2% of all investment in Europe is financed from the Norwegian petrol fund. Norway’s system of managing petroleum revenue has been adjudge the international best practice because they learned from what happened to the Netherlands and other countries that stroke oil before them and we have Norway and all the others to learn from

He who have eyes to see let him see, she who have ears to hear let her hear.

Yakubu Musah

Tamale

Single Spine is the Problem

Running an economy is a balancing act so any injection must ensure that the system have enough room to accommodate it or an outlet have been created for it. When salaries and wages rise faster than productivity, inflation is the natural consequence. As workers get more money than they are producing as happened in spain, italy, portugal etc. On the other hand when productivity rises faster than salaries and wages, stagflation is the result. As workers cannot buy what the produce as happened to germany. Except in they case of germany what cannot be bought was exported. Ghana and Germany are sitting on opposite ends of the economic spectrum. The Single Spine Salary Structure (SSS) in Ghana has doubled and in some cases tripled the salary of some public sector workers without commensurate increase in productivity. At The same time The government embarked on massive expenditures mostly for political reasons which pushed even more money into The economy. While the germans were exporting their surplus, Ghana was/is importing to make up for the rising demand occassioned by the steep rises in incomes(disposable income) Just at the same time that our imports surged the prices of our major exports mainly cocoa and gold went down. So More dollars (foreign currency) were flowing out than flowing in. As if that was not bad enough ghana's economy was rebased making us a middle income country overnight, therefore other grants from development partners that could have helped also dried up overnight. Also 8 months of litigation over presidency, The GEEDA and Woyome saga's have not given The donor Community the confidence they needed. With fewer and fewer dollars remaining in ghana the price of the dollar will also keep rising as a result of higher and higher demand and lower and lower supply. The turbulences that the ghanaian economy is facing is therefore to a larger extent self inflicted. From where I sit it is more political than economic. And both the NDC and NPP are guilty considering the fact that both sides used the SSS for political gains. Although some other factors have been mentioned here as contributing to the imbalance in the ghanaian economy namely other government expenditure, lower commodity prices, lower inflow of grants, the SSS is the most important straw the broke the camels back. Having diagnosed The Problem I will offer my treatment. Which is rollback of the SSS. I know This politically not feasible. But it is the only quick and fast remedy to the Problem. There are several ways of treating tumors, prayer, drugs etc but the most effective means is the surgical removal and it is also the most painful. A word to the wise is enough.