GEF 2024: Re-engineering economic model critical to rebuilding resilient economy

By Rashidatu IBRAHIM and Ernest Bako WUBONTO

Experts and stakeholders at the Ghana Economic Forum (GEF) 2024 have emphasised the need to re-engineer the country’s economic model to ensure a robust and resilient economy.

They firmly believe that current recovery efforts present a timely opportunity to reshape the economy, making it more sustainable and efficient. For the nation to rebuild resiliently from the current economic downturn’s aftermath with a long-term approach toward the future, for instance, they said any development strategy must comprehensively and inclusively be re-engineered on new models.

This, the experts highlighted, can be achieved through concerted and collaborative efforts by both the private and public sectors with everyone putting their shoulders to the wheel.

A senior partner at KPMG, Evans Asare, highlighted that by working hand-in-hand with the re-engineering process, the country can create an economy that is better-equipped to withstand future shocks, drive sustainable growth and provide opportunities for all Ghanaians to thrive.

He reiterated that re-engineering Ghana’s economic model for sustainable development is timely and critical as the global economy grapples with the aftermath of COVID-19 pandemic, Climate Change and geopolitical tensions.

Additionally, he said, it is imperative to rethink and reshape current economic strategies to ensure resilient and sustainable growth – especially as significant shifts in supply chain disruptions, artificial intelligence (AI) and other technological advancements continue to redefine economic operations in the country.

“Countries worldwide are re-evaluating their economic models to balance growth with environmental stewardship and social equity. We face our own set of challenges and have our opportunities.

Therefore, our economic mode -, often referred to as the Guggisberg Economy – must be re-engineered to address pressing issues such as public debt management, economic diversification and the need for robust infrastructure development,” he said.

The Ghana Economic Forum (GEF) 2024 was held under the theme ‘Unlocking Opportunities: Re-engineering Ghana’s Economic Model for Sustainable Development’. This year’s 13^th edition of the flagship programme organised by the B&FT brought together a cross-section of experts, policymakers and industry leaders to chart a new course for Ghana’s economic future.

Founder and Senior Partner of AB & David Africa – a pan-Africa business-law firm – David Ofosu-Dorte underscored that the current lack of cohesion between financial sector players and regulators, the manufacturing industry and sector ministries as well as policymakers has created a mismatch that is hurting the consumption of locally produced goods and sustainability of localised foreign investments.

He asserted that external factors have always impacted the nation adversely due to government’s over-reliance on foreign direct investments while failing to protect localised FDIs once they establish – a reason he that believes has caused most of them to fold-up within five years of their inception and move to neighbouring countries.

“When it comes to our economy, creating opportunities has often been thwarted by external factors. In other words, our problem has never been a lack of a model or a plan, but abandoning the national strategy along the line under every leadership regime.

“This means that we are not a resilient people in terms of managing our economic models. The need to change our mindset is central not only to the economy but the very sustenance of our business ecosystem, otherwise we will continue a situation wherein political agenda is greater than the national agenda,” he said.

Agriculture, energy and state-owned enterprises (SOES) have been mentioned as being key to the re-engineering drive for rebuilding a sustainable economy. By leveraging advancements in renewable energy, investing in the agriculture value chain and enhancing efficiency in SOEs, the country can build a resilient and dynamic economic foundation toward more inclusive and sustainable growth.

Agriculture as an economic powerhouse

Speaking to the theme about the agricultural sector, renowned agronomist and farmer Abu Sakara – a panellist in one of the event’s sessions – alluded to certain key issues about re-engineering the economic model. According to him, the action is hinged mainly on what the model is being adapted to.

He specifically bemoaned the high transaction cost involved in production as a major bottleneck in the sector – and advised adopting a market-led economic model as the surest way of maintaining a competitive environment for agric businesses to thrive

“Yes, we have the central economic model and the market-led economic model, and depending on whether you are socialist or capitalist government you go somewhere between those. But what they both demand is that you can maintain a competitive environment for your producers and entrepreneurs in agriculture. And that means the transaction cost that aggregate cost of capital, cost of fuel, transportation, labour, cost of machinery and all of thi, relative to prices determines whether you are competitive in the marketplace or not; and in most instances it is not the farmer or the researcher who decides these things.

“But the policy environment dictates what you can achieve, and therefore if you want to re-engineer agric in a re-engineered economy you have to decide that, yes, we are going to go into a market-led economy,” he said.

Questioning why the country still struggles with some of the problems facing the agric sector after many years, he criticised the high lending rates available, arguing the need to have a separate window for agric-lending especially.

This, he noted, will ensure access to more affordable financing to support production and growth in the sector.

“Why have we not been able to reduce our transaction cost to be competitive when we know the starting point is cost of capital? Should we have two windows – a window for agric in terms of lending and banking services and another one for trade?

“If the nature of your economy is such that it is leaning toward trade and buying and selling, you are going to be using high interest rates because you are using short-term loans. But if the nature of your economy is based on industry and production, you have to use lower interest rates. if you don’t have two different windows and the central bank’s Governor says all of you must use the same window, then you are going to start already at a disadvantage,” he further stated.

Dr. Sankara also pushed for more investments in the country’s agriculture infrastructure as parts of interventions to reduce transaction costs. One of such interventions, he noted, is investment in water infrastructure to cater for irrigation.

“If you don’t invest in irrigation and invest in the waterway system that you have to reduce transaction cost, you cannot be competitive in the market place; and you cannot start talking about making additional investments beyond conventional agriculture into climate change agriculture, which is another level altogether.

“So, these are fundamental issues when we talk about how we will remodel. We have to remodel purposefully, taking into account that we must obey certain basic principles and adhere to normal business practices in ensuring we reduce our transaction cost and remain competitive in the marketplace.”

The Ghana Dream

CEO-Business and Financial Times, Dr. Godwin Acquaye, in a call to action urged reflection on the ‘Ghanaian Dream’ – what he described as a vision of prosperity, equity and opportunity for all citizens.

“The Ghanaian Dream visions a society where hard work, innovation and integrity are rewarded, and where our cultural heritage and natural resources are preserved for future generations. It’s a dream wherein poverty, which currently affects the about-12.5 percent of our population living below the international poverty line, becomes a thing of the past.”

He added that: “The Ghanaian Dream is not just an abstract concept; it is a call to action. It urges us to break down barriers, bridge gaps and create an environment where every individual can thrive”.

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