05 Feb Managing Ghana’s Economy: Getting the right man for the job by Yaw K.Dei
The role of a Minister for Finance requires someone with an appreciation of economics as well as the practical understanding of how an economy works, a deep understanding of financial markets and public finance; and for a developing country like Ghana, someone with market credibility at both the domestic and international levels.
These create the respect and trust necessary for the Minister to work with relevant stakeholders on Ghana’s development agenda. One must also be mindful of the fact that a Finance Minister must be able to protect the public purse against pressures that come with profligate spending, sometimes even to the annoyance of his own government.
As parliament is about to vet Ministers nominated for the second Akufo-Addo led Government, one of the key positions that appears to have drawn a significant amount of attention is that of the Minister for Finance – especially in light of the impact of the COVID-19 pandemic on our economic progress and the critical need for experienced, skillful, creative and internationally respected leadership if we are to emerge from this COVID nightmare stronger and more resilient.
A key trend for selecting a Minister for Finance in countries that have active participation in local and global capital markets, is for the person to have a deep understanding and connection to these markets or more than substantial pedigree in the practice of economic policy in order for markets to have confidence in the person. Evidence for this is prevalent in countries like the US, UK, among others.
For example, the current Chancellor of the Exchequer in the UK was a former investment banker at Goldman Sachs, the immediate US Treasury Secretary is also an ex investment banker and hedge fund manager. Others who played similar roles at critical times include Henry Paulson, Jack Lew, who were both investment bankers, among others.
In Ghana, a significant success in navigating the financial sector clean-up, which was a difficult crisis inherited from the previous Government, the successful exit from the IMF without international investors getting overly jittery about their portfolio holdings in Ghana and the more than successful raising of over US$8b dollars through Eurobond issuances to support budget spending over the past years have been largely due to the pedigree of the Minister for Finance.
Who then is Ken Ofori-Atta? Ken was born on 7 November, 1959 in Kibi. He went to the prestigious Achimota School, and subsequently obtained a BA in Economics from Columbia University in 1984, and an MBA from the esteem Yale University School of Management in 1988. He practiced as an investment banker both in the US and in Ghana for over 30 years. His track record as the Executive Chairman of Databank, and through the successes at firm, he built an enviable track record as a leading emerging market investment banker and entrepreneur, with global and domestic understanding of financial markets and economic issues.
Ken was honored as a Donaldson Fellow at Yale University and is the first African to receive the John Jay Award from Columbia University which is presented to alumni of Columbia College in recognition of their commitment to a new generation of African leaders.
He was also the first African to testify at the US Congress Ways and Means Committee to support the AGOA law. This background and experience puts Ken in the league of the qualified and suitable candidates for the position of Finance Minister. It is important that the country puts its best foot forward in selecting a Minister for Finance in the next 4 years as uncertainties remain in the global financial system.
The Covid-19 pandemic has made it even more urgent for Ghana to have a Finance Minister whose track record engenders confidence from global economic institutions, and capital markets in a way never before seen in our history.
It is clear that the next couple of Eurobond issuances by Ghana will have to be done without in-person meetings, and many investors will want to identify with whoever is responsible for the economy.
At the same time, businesses will want a situation where there is a clear understanding of the impact of Covid-19 on their balance sheets and what interventions are required to fix them at the economy-wide level. Ken’s experience as an investment banker and entrepreneur fits this.
So what are some of the legacies of Ken Ofori-Atta over the last 4 years? Ken has led the Ministry of Finance with unprecedented energy over the last 4 years. Under his leadership, the Ministry spearheaded various policy reforms and initiatives to ensure effective economic policy management for the attainment of macroeconomic stability and sustainable economic growth.
His understanding of the economy and its prudent management resulted in him working with President Akufo-Addo and his colleagues in Government to achieve an average decline in Ghana’s fiscal deficit from 6.5% of GDP in 2016 to 4.8% in 2017, 3.9% in 2018 and 4.8% in 2019. While fiscal deficit declined on the average, the overall real GDP growth rebounded from 3.4% in 2016 to 8.1% in 2017, moderating to 6.3% in 2018, and then rising to 6.5% in 2019.
The projected real GDP growth for 2020 was revised considerably downwards from 6.8% to 0.9% reflecting the impact of Covid-19 on economic activities. Provisional third quarter GDP data released by the GSS, shows that Overall GDP, after growing by 4.9% in the first quarter contracted by 3.2 percent and 1.1 percent in the second and third quarter of 2020 respectively, averaging 0.2 percent.
Importantly, there were also many real sector initiatives undertaken at the Ministry during the period of Ken’s 4 years stewardship which include paying down accumulated Contractor arrears and Energy Sector Legacy debts, expending over GHS21 billion on Financial Sector Clean-Up to protect the savings and investments of over 4.6 million Ghanaians and businesses, supporting local banks to stay in business through the set-up of Ghana Amalgamated Trust (GAT), the development of Capital Market Master Plan (CMMP), establishment of the Ghana Commodity Exchange (GCX), support for the re-development of the mortgage sector and availability of cheaper loans to local developers through the National Housing and Mortgage Fund (NHMF), facilitating Ghana’s Membership into the African Trade Insurance Agency (ATI), and leading efforts to develop a blue-print economic policy for Ghana’s response to the Covid-19 crisis – the Ghana CARES (Obaatan Pa) Programme.
Ken is the first Minster for Finance to establish a formal relationship with Faith-based institutions, organized labor and employer’s association by setting-up the social partnership council for industrial harmony, transparency of policy and take advise from these critical stakeholders.
Ken’s success can also be summed up over the last 4 years by recognitions such as the World Bank naming him as “African Finance Minister of the Year” for 2018, successfully chairing the World Bank-IMF joint Development Committee, and the Governing Board of African Capacity Building Foundation (ACBF). With the above experience, Hon. Ken Ofori-Atta has the required knowledge, skill, attitude and mind-set to continue his public service role as the Minister for Finance.
It will also give him the opportunity to complete ongoing flagship programmes for economic and social development. As a country, we must seize the moment and ensure that we continue to make use of our best talent to support our economic growth and development at any given moment.