Let Us Create Africa,s Best Business Environment In Ghana!

It is extraordinary that so many people in Ghana, constantly look to the government to create jobs - forgetting that in all the nations that have become wealthy, it has been small businesspeople, who have created the most jobs.

Surely, it is time we rather devoted our energies to thinking about how the government can create the necessary conditions, which will enable Ghana's small businesses to thrive?

Not having a PhD in economics, I have often wondered, what catastrophe would befall our nation, for example, if interest rates charged by banks for loans advanced to their customers, were below 3 percent.

Surely, bankers in Ghana, ought to be in the happy position, of being able to turn today's conventional wisdom on its head - and instead of fearing that borrowers wouldn't repay their loans, wonder instead, what fool in the Ghana of today, would abuse the golden opportunity to expand their business: offered by the ability to borrow money from banks at rates of interest below 3 percent?

If they had to contend with interest rates of below 3 percent, instead of the present usurious rates of over some 25 percent, what small businessperson in this country today, wouldn't work hard to ensure that they could always have access to loans - by repaying whatever loans they get from their bankers: and building up a good credit history that way?

And what teacher, nurse or civil servant, able to purchase consumer items on affordable hire-purchase (instalment) terms, would complain about life in Ghana being tough?

Would the businesses selling them such goods and services, also not feel the benefits of an increase in consumer spending? So why are those managing the national economy not doing what the wealthy nations of the West did when they faced the abyss, during the global financial meltdown - and ignore the "book-long" economics textbook theories: by doing what will make businesses and working individuals in the Ghana of today, happy and contented?

I haven't the faintest idea what the theoretical downside of a regime of low interest rates below 3 percent, in our nation's present circumstances might be, aside from possible inflationary pressure building up - according to textbooks on economics.

However, one would guess that somehow, in the real-world hustle and bustle of everyday life in our nation, the increase in economic activity, which low interest rates would trigger, would be advantageous to the national economy generally, and to Ghana's hundreds of thousands of small business owners: and would most probably far outweigh any disadvantages that any textbook on economics would list.

Another of my what-catastrophe-would-befall-Ghana questions that I would like some of our brilliant economists to answer for me, concerns the burden of high taxation in Ghana.

One is curious to know exactly what harm would befall our nation, if personal income tax was abolished, in exchange for adding an hour to the working day, for example - and abolishing the daft convention of making the first working weekday a public holiday, if the actual date for a public holiday happens to fall on a weekend?

And would the economy collapse completely, if business tax rates were set at 5 percent, in exchange for the following:

(1) A new law making tax-avoidance a crime punishable by a fine and a mandatory minimum jail-term of 5 years with hard labour, which also requires that every business in Ghana (even table-top kenkey and fried fish outlets; apampam-store hawkers selling banana's and groundnuts; fresh coconut sellers; and roadside farm-produce sellers!), must buy and keep a computer-readable tax ID card embedded with the owner' s unique business tax number, as well as ownership and location details.

Would the above measure not ensure that anyone venturing into any form of business in Ghana, no matter how small or insignificant its turnover, understands clearly, that failing to pay their taxes would land them straight in jail?

And apart from such a measure dramatically widening the tax net, would it not also effectively free pavements in urban Ghana, of the recalcitrant hawkers who are used by wealthy criminals to distribute goods with expired best-before selling dates, and sundry counterfeit products?

(2) Re-negotiating all our oil and natural gas agreements to increase Ghana's share in the country's oil fields - because of the lowering of corporate tax rates and the abolishing of personal income tax.

(3) With the exception of cocoa farming, withdrawing all tax holidays granted to any entity in Ghana - since the abolishing of personal income tax should still make us competitive, despite any such cancellation of corporate tax holidays.

Naturally, this country would have to become a society with a business culture of ethically-run businesses, big and small.

For that reason, perhaps adherence to corporate good governance principles, ought to be one of the key areas in our nation's business world, which Ghana's business schools and business advocacy groups, ought to focus on - so that bankers would be relieved of the stress produced by the frightening prospect, of operating in an environment in which every loan they advance, has the potential of ending up on their balance sheet, as non-performing assets?

If we did all the above, and the government concentrated on endowing Ghana with world-class infrastructure, using the private finance initiative (PFI) business model (in which private companies build, operate and maintain public schools; hospitals; roads; power plants; etc.), surely, we will be able to create Africa's most conducive business environment in our homeland Ghana? A word to the wise...

Tel (powered by Tigo - the one mobile phone network in Ghana, which actually works!): + 233 (0) 27 745 3109.

Post Script:

I am enclosing a letter on the subject of PFI's, written to the UK newspaper, the Daily Telegraph, by a UK PFI contractor On 27th January, 2011, for the elucidation of the powers that be, in Ghana:

"SIR – I am a private sector developer of PFI projects, with intimate knowledge of more than 30 schemes. It has quickly been forgotten how bad the public sector was at procuring infrastructure. The first PFI hospital was delivered in 1995, on time and on budget. The last acute hospital delivered by the NHS, before PFI was introduced, was delivered three times over budget and three years late.

PFI contracts contain an obligation on the private sector to maintain assets in a first-class condition at all times. Failure to achieve this causes deductions in payments. We all see on a daily basis how maintenance standards on non-PFI assets are often allowed to slip, with the consequent decay and disrepair that follows. A PFI road with coned-off lanes, and no one working in them, is a rare sight, as such closures affect a PFI company’s bottom line. Potholes mean more payment deductions, if they are not quickly repaired.

Finally, much of what is paid to a PFI operator is not inflation-indexed, so a pound paid out in 2040 will be worth less.

Nick Dawson
Marlow, Buckinghamshire"

Culled from The Daily Telegraph.

PPS Hopefully, Ghana's leaders will take a look at some of the UK's PFI contracts - and put in the same kinds of penalty clauses in Ghanaian PFI contracts, to protect the public purse. They definitely don't have to try to reinvent the wheel on this one! Need I say more, dear reader?