No need to go to the IMF

Events surrounding President Akufo-Addo’s decision to engage the IMF show yet again that corruption by both major parties is driving Ghana further into a hole. Unless the Government takes responsible steps to end corruption, another IMF bailout will put Ghana in an even more precarious position.

An IMF bailout is a mechanism by which the wealthy countries keep a poorer country impoverished and dependent on the debt model of development. IMF conditions may terminate discretionary programs like School Feeding, Free SHS, and tax breaks for 1D1F companies; sell state assets as happened before to palm oil plantations; and slash subsidies to farmers and import duties to open the Ghanaian market more broadly to imports like expensive wheat from wealthier countries.

Ghana has too many resources at its disposal to continue down that spiral. Economists have pointed to its stock of residential property that presently goes untaxed as a potential significant new source of revenue. I have argued that stopping corruption, including massive galamsey being committed by insiders, would produce a windfall to propel Ghana’s development.

As predicted would be the case in my column of 21 April 2022, https://www.ghanaweb.com/GhanaHomePage/features/The-undisclosed-65m-in-E-levy-money-1520192, the Government did not take long to admit that E-levy failed to fix Ghana’s financial maladjustment.

The announcement came in the form of a 27 June tweet by Gabby Asare Otchere-Darko, who is a cousin of the President and not even a member of the Government. He reported that E-levy is delivering only 10 percent of the revenues the Government was counting on. He blamed the reluctance of many people to impose this tax in the first place. He pinned the decline in the Ghana cedis' value on a strong U.S. dollar, although a close comparison currency, the Franc CFA, has lost one-third as much, 11 percent to 30 percent for the cedis over the last year. Gabby’s tweet laid the ground for the President four days later to order speaking with the IMF.

Does Gabby’s tweet mean that mobile money transfers above the threshold that E-levy taxes, 100 Ghana cedis per person per day, have diminished by 90 percent in volume (number of transactions) or magnitude (grand total of amounts transacted)? This is the only logical way to read Gabby’s tweet. Since the tax is automatic, revenue is simply a function of transaction volume and magnitude. A 90 percent loss in revenue should indicate the cause was a 90 percent reduction in the overall number and scale of transactions. Sure enough, a survey conducted by the Imani Centre for Policy and Education and the German Agency for International Cooperation found that 83 percent of Ghanaians have lessened their mobile money transactions following the introduction of E-levy.

The question is, Have these 83 percent done away with transactions above GHS 100 altogether? Have 83 percent of the people you know who used to conduct mobile money transactions above GHS 100 per day suddenly and completely stopped? Highly unlikely. Even if they had, they would account for a discrepancy between E-levy projections and actual revenue of only 83 percent, not the 90 percent hailed by Gabby.

Since the Government variously estimated the E-levy intake to be between GHS 4 and 7 billion, the disappearance of 7 percent of this total, much less 90 percent, should be a major cause for concern.

In a transparent democracy, there would be an outcry and an independent investigation, including a subpoena of the Telcos’ mobile money transfer volumes and magnitudes to find out if they really fell by 90 percent.

Did the Government or even Gabby ever disclose any data to support his tweet of a 90 percent loss in E-levy revenue? No. Or is his pronouncement as opaque as the revelation that Ghana’s cocoa harvest mysteriously declined by 50 percent this year? Yes.

Since the Finance Minister, another relative of the President, never publicly reported its calculation of E-levy revenue projection in the first place, he cannot now publish credible data showing any drop from such revenue.

We are left only with Gabby’s tweet, on which basis the President is subjecting Ghana to the mercies of the IMF.

A reasonable possibility is that revenue from E-levy is not down by 90 percent, but instead, this revenue is in fact coming in, and then disappearing somehow and somewhere.

Where is it going and in whose pockets is it ending up?

After Dean of the University of Ghana Law School Raymond Atuguba raised the prospect that some of the $5 billion the Government borrowed to prevent and combat COVID-19 had fallen into corrupt hands, the Government announced an investigation into part of these funds.

This announcement preceded the Government’s resort to the IMF, as if to ward off the IMF from tracing the COVID funds in its own right, which scrutiny Atuguba professed to fear.

I have been blessed to make Tamale my home for most of the last eight years, with a temporary sojourn now in Mali approaching nine months. The American culture in which I was raised does not prioritize respect for others, as the African culture ingrains in children from infancy. Please forgive my criticism, but I would say that a resulting manifestation was a President like Donald Trump, who is nothing but a big baby.

It is dangerous to generalize about a people, and there are of course always many individual exceptions and particular circumstances, and Mali’s economy is poorer than Ghana’s, making corruption less evident, but I can now say that the Malinke people are for the most part, honest and just. Facing war in their north for the last ten years and on-and-off for the last thirty, their politics are real and substantive.

I love the Ghanaian people, but you have a curious cultural flaw in being willfully naïve about corruption. Have you grown so accustomed to it? You tend to turn a blind eye when leaders you support steal, rather than holding them accountable. You fail to draw the conclusion that they are stealing from you, and that is the cause of the cedis’s devaluation, rising inflation, and now, an IMF bailout.