I Command… Cedi, Arise; Cedi Resurrect Brrrr……Abracadabra
But that ye may know that the son of man hath power on earth to forgive sins, (then saith he to the sick of the palsy), ‘Arise, take up thy bed and go unto thine house;
And he arose and departed to his house.
‘CETERIS PARIBUS’ (pronounced: keitaris paribas) was popular in our O and A level Economics class. The expression translates close to: ‘holding other things being the same’. The expression goes ‘pari passu’, (side – by – side) with ‘mutatis mutandis’ which means ‘things being changed that have to be changed’.
‘Ceteris paribus’ is used to simplify the formulation and description of economic outcomes. For example, if the price of beef increases, ceteris paribus, the quantity of beef demanded by buyers will decrease. All other factors would be deliberately ignored and these include the relative change in the price of substitute goods (venison, pork), the level of risk aversion among buyers (like mad cow disease), and the level of overall demand for a particular good in spite of its current price level (for example a shift of taste towards vegetarianism).
Dr Mumuni Bawumia gave a clean (or was it dirty?) picture of the economy in his speech in Accra on “Discipline in Economic Management: the key to Sustainable Growth and Prosperity in the Aliu Memorial Lectures in November, 2013. He mentioned National Health Insurance Scheme and said it was “in a state of disrepair and on the verge of collapse, in spite of the one–time premium the NDC promised,” and warned of a “probable return to the cash and carry system”
On education, he mentioned 180,000 poorly educated youngsters being thrown out onto the streets with no employable skills; then went on to state that tertiary institutions were plagued with infrastructure constraints, falling standards and many graduates were faced with unemployment leading to the formation of Graduate Unemployment Association.
Dr Bawumia further went on to indicate that corruption was on the increase; and that there was over –pricing of supply contracts; there were dubious payments of judgment debts; and the prevalence of single – source procurement process.
On the Ghana cedi, he warned that it was currently in “free fall and depreciating virtually on a daily basis. He remarked: “When in doubt, observe the exchange rate, “and further advised: “The lesson from history for governments is that you cannot manage the economy with propaganda. In fact, you can engage in all the propaganda you want but if the macro-economic fundamentals are weak, the exchange rate will expose you.” He noted that “the current rapid depreciation of the cedi is a sign that the fiscal /momentary policy stance is inappropriate” The Statistical Service of Ghana had got a new head who decided to re –base its national accounts and migrated to the 1993 System of National Accounts (SINA93), with the result that for the first time in so many years, Ghana cedi enjoyed single – digit inflation, Dr Bawumia was roundly condemned for his speech. Seth Terkper, the Minister of Finance described it as a “calculated attempt to mislead the public about the true state of the economy”.
Kwakye Ofosu gored Dr Bawumia mercilessly, suggesting that Dr Bawumia lacked competence to advise government on the economy. Fiifi Kwetey, the man who championed the “setting –the-records-straight” when Kufour was in power spared no sympathy for Dr Bawumia. Now, what do we see? The exchange rate of GH¢2.1 to $1.00 predicted by Bawumia has now reached GH¢2.7 to $ 1.00 and heading towards GH 3.00 to $1.00.
After so much propaganda and the irresponsible bashing of honest commentators (including veritable organisations), the government has now resorted to panicky measures to shore up the cedi. As part of the measures, it has banned commercial banks and other financial houses from issuing cheques on foreign accounts and foreign currency accounts. Furthermore, no bank should grant a foreign currency – denominated loan to a customer who is not a foreign exchange owner; then over – the- counter cash withdrawals for travel purposes (only) shall not exceed US$10,000,
What is the effect of the government’s directive? No dollarization. Do we know the implications? Ghana (the government) exports cocoa; does she pay the freight in cedis or dollars? What about the Ghana Revenue Authority (Customs Division) assessment of taxes. The Final Classification and Valuation Reports (FCVRs) issued by the inspection companies quote the base values (cost, insurance, freight: cif) in dollars, pound, euro, yen, rand, CFA, Naira depending on whether the import goods being assessed for valuation have come from the U.S.A, Great Britain, European countries, Japan, South Africa, Senegal, Nigeria respectively. Will that system also be affected by the new directive?
There came one Minister of Finance under whose tenure the ‘black market’ (euphemistically called ‘alternative exchange system or operation’) was completely ineffective. Everyone went to the Forex Bureaus to exchange their cedis. I am talking about the late Kwadwo Baah Wired, my holy room – mate, with support from Dr Akoto Osei and Professor Gyan Baffuor. The Minister streamlined the economy so well: he kept speculators at bay. How did he do it? He had a small note book in which he recorded most daily happenings. Any hint he got that related to the economy, he would record it. And he consulted a lot! He targeted people who worked within the economic web. Before he prepared his last budget, he went into went into hiding at Kokrobite and he invited ‘some of us’, including industrialists, importers, ordinary persons there to discuss – in great detail, certain aspects of the budget. No wonder the ‘talk tax’ came into being at that time, because Customs could hardly detect people who decided to smuggle mobile phones. Running a government is very serious business.
Immediately after the exit of the Kufour administration in 2008, the ‘money – changers’ around the Kotoka International Airport who could hardly be seen during President Kufour’s era, were back to business in great numbers. In Kumasi, these people are currently found, not only at Alabar but the stretch from St Louis Training College right up to Alabar. It is business in Ecowas goods –money- and people from all over ECOWAS (Togolese, Ivorians, Nigerians, Beninois, Burkina Faso) have descended unto Ghana. It is lucrative business, for a rudderless economy, untamed and running wild.
Alhaji Collins Dauda, the Minister of Water Resources, Works and Housing thinks that we are in ‘end – times’ and hardships are bound to come on us. But the big question is: Is Ghana the only country in ‘end – times’? Anita de Sooso, NDC National Women’s Organiser believes witch doctors who use dwarfs are stealing Ghana’s foreign currencies from banks and other financial institutions. Are we jokers? If the big players themselves do not accept the economic and financial realities, how do ordinary Ghanaians assist in solving the problem, Seth Terkper, whose solution to our economic woes appears to be taxes, taxes and more taxes should fix the problem which he himself has created.
Who said economic theories are rigid, specific and sacrosanct? That is why the concept of ‘ceteris paribus’ is important in economics. In the real world, it is difficult to isolate all the different variables. When one theory fails, it may be because ‘other’ variables did not remain the same. Even though Dr Tony Aidoo has criticized Duncan Williams for his abracadabra, I am in no way capable of assessing the contiguity of a currency and the mystic world.
Africanus Owusu Ansah