Ghana’s Edible Statistics

According to the Statistical Service, Ghana’s official inflation between July and September 2011 stood at an interesting 8.4 percent. The figure jumped slightly to 8.56 percent by October 2011. This compares favourably with the current 8.7 percent inflation figure quoted by the International Monetary Fund (IMF) on its official website.

The current government has touted how effectively they have been able to play the macro-economic chess game. They have actually ‘held’ inflation to a single digit for almost two years. A feat that government spin doctors claim is unprecedented in government economic management in the country.

It has also managed to stave off the free fall of the Ghanaian Cedi against some (not all) international major trading currencies. This position is being challenged with the US Dollar currently going for 1.60 Cedis, while the British Pound Sterling is going for as much as 2.547 Cedis. Note that these are just mid-rates from the interbank boards. An indication that the Cedi may well be running towards 1.7 to the Dollar getting into the 2012 elections where big spending is a sure bet.

These statistics are impressive to any avid economist and particularly so to the Bretton Woods institutions. To the ordinary man on the streets of Accra however, these are just mere numbers manipulated by the suit-wearing bureaucrats in Accra who are wont to please the West and court favours for a few bucks of stringed aid.

The expectations of the ordinary man, who believes that statistics are good but statistics don’t really put food on the table might be right because it is believed that all these macro-economic statistics must be juxtaposed against others such as the human development index (HDI), which is a comparative means of measuring life expectancy, literacy, education, and standards of living for countries worldwide.

For the sake of information, Ghana ranks 135th country out of 185 countries worldwide (on the UN’s 2010 HDI) with a figure of 0.541. Here, we just managed to ‘beat’ Teodoro Obiang Nguema’s Equatorial Guinea and Joseph Kabila’s Congo DR who came in 136th and 137th in that order. Ghana’s HDI figure is projected to inch up slightly by some 0.008 units in 2011.

Aren’t these statistics just beautiful? Indeed they are on paper. But on the ground, the situation is entirely different. Prices of basic goods and services are actually chasing the roof with prompt alacrity. Forget about that drab argument that the fact that inflation is falling doesn’t mean that commodity prices won’t jump.

Just look at this other side of the equation. The average lending rate in the country today is 25.5 percent. This is despite the fact that the central bank’s policy lending rate is 12.5 percent. Can you imagine the spread? It’s one of two scenarios here. Either the banks have little or no confidence in the state regulator’s actions or because of the high default rate by borrowers commercial banks are simply not bothered. Whichever way the pendulum swings, confidence has still not built up enough within the economy to allow banks to use moral suasion to substantially lower their lending rates.

Guess now readers are getting fed up with these figures. One very good argument the NDC, then in opposition used against the NPP government was that ordinary voters did not eat statistics. Valid point, particularly in a country where ‘voodoo economics’ has become the most fundamental driver of growth.

At that time, the opposition NDC vilified the NPP government for stifling real economic growth in favour of achieving unrealistic macro economic targets. The NDC argued that all those figures were not necessary so long as they did not translate into a better living standard for the ordinary man—the human development index argument right? The people buy from the Madina, Agbogbloshie, Kaneshie, Kotokraba, Kejetia, Ho, and Atebubu markets respectively. Maybe, the political class depending on whether or not they are in government possibly makes their purchases from shopping malls where prices are fairly stable or ‘controlled’.

Now, to my take – government is the biggest spender. When government spends, money circulates. When mega projects such as hospitals, roads, schools, modern leisure facilities are invested into by the state and contractors and suppliers are paid, money circulates in the system. Government therefore restricts growth when it collects more taxes and spends less on productive ventures. It is called a contractionist policy. Square this one with what the IMF and its partners have done for sinking Europe and you will see that just achieving single digit inflation and asking your citizens to ‘bite’ the bullet into perpetuity wont spur growth. If the IMF thinks stimulus funds are good for European economies, then petroleum and farm subsidies might just work for African economies as well.

Maybe, government officials do not purchase goods and services from the market from which they collect the macro data to make up the so-called basket of goods that are used in determining inflation. If they do, I am sure the inflationary figures they spew out will always be higher than what we read about. In any case, inflation alone does not mean anything. How long have we not structurally adjusted the Ghanaian economy? But this economy remains highly jaundiced more than ever. How long shall we continue to allow the man on the street to go hungry so as to please the new world dominion and a crumbling Europe?

The other side of the envelope could well be that national statistics have become so succulent if edible. I am not a fun of these artificially stable African economies anyway because many countries in the CFA zone have had year-on-year inflation at a single digit for many years, but their economies have not improved substantially. So the question is what at all makes the Ghanaian politicians in opposition believe that Ghanaians don’t eat statistics but as soon as they lay their hands on the Golden Fleece, they clasp their fist on inflation targeting?

They answer may very well be that statistics are now EDIBLE!

Source: Kojo Owusu-Mbire

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