The big question: To borrow to fund development or to industrialise to fund development!

The chairman of the Mineral Income Investment Fund Prof Douglas Boateng explores various options available to government in funding developmental projects

There comes a time when we all have to accept the realities on the ground. As a nation, we are not generating enough revenues to fund our expenditure.

This is our current reality!. Many of our current challenges are systemic. They are largely the resultant effects of citizenry generated and chronic internal problems and issues.

As a people, we require an ideological change that embraces innovative alternatives that support industrialisation, locally produced and sourced goods.

As it currently stands, we, as Ghanaians, tend to gravitate towards cheap and subsidized imports, denying the local manufacturers our patronage and support, weakening local manufacturing overall. The consumption of Chinese products in the Ghanaian market has been rising exponentially.

Today, China, South Africa, and increasingly Turkey and Nigeria dominate the Ghanaian market in finished products, clothing and textiles, construction goods, electronics, and technology.

Despite our incredible fertile land, we are sadly now dependent on Burkina Faso for our tomatoes and onions!  By 2030 if we are not careful, we shall be importing cassava flour for our famous Lapewa (aka konkonte and face the wall), plantain flour for our Fufuo, and cornflour for Kenkey, Koko, and Banku, amongst others! After all, it has happened to “farmed in Ghana fresh tomatoes and onions.”

Due to our insatiable appetite for cheap imports without necessarily thinking of the long-term economic implications, it can happen again, resulting in value chain job losses, especially in the rural communities! Have you ever thought that our buying behaviours influence rural to urban migration? Please respectfully judge for your good self.

The citizenry must also note that relatively cheap imports affect our national revenues and infrastructure development. Since 1972 the result of the short-term gains from cheap imports are the associated long-term pains bedevilling our beloved motherland today!

We complain about industrialisation and unemployment as citizenries, but our buying behaviours do not support local producers. Nor are we generally prepared to consciously support local manufacturing.

Ghana has a growing middle class with greater purchasing power, creating immense opportunities for local manufacturers. We have not been able to capitalise on these shifts in spending and consumption because we seem (sometimes without credible reasons!) to prefer cheap imports.

Without question, there are significant regional-wide long-term opportunities and gains associated with AfCFTA. As President Ramaphosa of South Africa rightly pointed out, “the agreement is going to yield benefits for small countries as well as big ones.” However, we must all be prepared for some short-term pains as the smaller economies and their local manufacturers adjust to compete for customers in the over 1.1 BILLION market.

Trade data from the past nine years show that plastics, food commodities, vehicles, electrical appliances, and machinery are some of the most imported products in Ghana. Food imports include commodities such as sugar and rice. The commercial production of sugar in Ghana is effectively non-existent despite the prospects in this area and the availability of natural resources to support this industry.

The reality is that our institutional and infrastructural environment has not helped the growth of the competitive sugar industry. Revalorising our sugar industry and local manufacturing, in general, will play an essential role in reducing foreign exchange expenditure on imports. Import substitution will further support rural industrial development, create jobs, and encourage infrastructural development.

Government-led import substitution schemes have been limited. While such measures are frowned upon in the currently dominant neoliberal ideology, let us not forget that countries such as South Korea have historically embarked on protectionist policies to develop their nascent industries and become important global players.

In the early 1960s, the Government of South Korea imposed protectionist policies in its electronics industry, introducing high import tariffs and effectively restricting imports.

This provided Korean firms with space to grow. In developing their capabilities, they did not merely rely on protectionist measurements but took advantage of government incentives introduced under its export-oriented strategic industry plan.

The Government provided local producers with financial and tax benefits, and Korean firms developed partnerships with foreign companies without losing ownership. They enhanced their competitiveness through research and development, and in the long term, they developed capabilities to produce finished goods, components, and materials. Samsung, a Korean manufacturing conglomerate, is now the second-largest electronics company in the world.

Invariably, long-term economic development is supported by the growth of local industries. Our economic growth continues to be dependent on commodity exports like cocoa, oil, and gold. There is a relatively limited local value addition to our gold, cocoa, salt, lithium, manganese, industrial diamonds, shea nuts, oil, amongst others.

We need to re-orient how we grow these industries. What are we as citizenries doing to support the growth of our industries? Unfortunately, any time the government (past and present!) comes up with innovative solutions for long-term development, there is a significant push back from the citizenry because of the short-term pains coupled with our four-year election cycle!

It is globally accepted that wasteful expenditure can be significantly reduced through procurement. Our public procurement act (Act 663) is regrettably process-driven and not output and developmental-driven, making it virtually impossible for the executive and board to drive the local wealth creation and the beyond Aid agenda.

In the case of Ghana, the Government must revisit and further amend the Act and vest more “clout” in the executive to enable objective interrogation of state-owned entities, ministries, and other public sector organisations. This will require citizenry support and encouragement.

Yes, tackling wasteful expenditure is a must! HOWEVER, we must all bear in mind that it will include bold and painful restructuring, which will come with a massive bill for potential redundancies and process redesigns. We will, nevertheless, reap the long-term benefits.

We cannot keep borrowing if there is currently not enough revenue to pay for loans. Otherwise, our beloved country and its vast resources will eventually be owned by foreign banks. Turning to the IMF and World Bank is frankly not the answer at this particular point time. We must all go back and respectfully check the historical facts to ascertain how successful and sustainable their structural adjustments have been in various developing economies, including Ghana.

According to Statistica, Singapore’s Gross National Debt to GDP in 2021 was just over 139percent, while that of Ghana was 83percent. Yet, Singapore has a Fitch Rating of “AAA” while Ghana was rated B-. The issue is not necessarily about the debt to GDP ratio.

Instead, it is about the net national debt and whether one can pay for what one has borrowed. The Minister for Finance is right about innovative alternatives needed to shore up our revenues. Examples include the proven Royalty streaming as an alternative to borrowing, a win-win E-levy and E-service charges, and the reversal of the Benchmark value policy on selected items.

Truth be told! We cannot keep blaming the Government when we have all intentionally and unintentionally played a role in creating the current problem.

As one people, we have to think long term, be prepared to suffer some short-term pain for long term gain, be open-minded, and be objective regarding potential creative options to beef up our currently very limited national financial kitty. Emotional-based disagreements, alternative facts, and increasingly opinionated noises will definitely not solve our current challenges.

In conclusion, we all suffer when there are challenges in our motherland! A gentle reminder to NDC and NPP loyalists. Ghana 1st and NOT short-termism, partisan and self-driven interests first.

>>the writer is currently chairman of Mineral Income Investment Fund (MIIF), is an international chartered director and Africa’s first-ever appointed Professor Extraordinaire for Industrialisation and Supply Chain Governance. He is the past chairman of the Public Procurement Authority (PPA) also the founding chairman of MY-future YOUR-Future and OUR-Future (MYO) and the highly popular daily Nyansa Kasa series. For more information, visit


Prof Douglas Boateng

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