Franklin Cudjoe : Pontificating the Penury of People

Jul 22, 2004

I had been reeling under the painful paradox of living a dignified life in my country. On one hand is the measuring of one’s standard of living according to the enhanced Highly Indebted Poor Country Initiative (HIPC) yet another stillborn initiative of the Bretton Woods institutions. On the other hand is the United Nations Development Programme (UNDP) Human Development Index (HDI).

The two in reality have the same goals –ostensibly perfecting the lives of people through increased per capita income, educational level, health care and life expectancy. However, my country’s politicians make us believe that evidence generated by the two stands in isolation of each other. One needs not look far for proof of this position. Last week, Ghana’s best selling state-owned newspapers and national television carried varied news conferences on Ghana attaining the HIPC Completion Point, becoming the 14th country to do so and thus joining the club of paupers: Benin, Bolivia, Burkina Faso, Ethiopia, Guyana (6.1), Mali, Mauritania, Mozambique, Nicaragua, Niger, Senegal, Tanzania and Uganda who had done same. The event was climaxed with a HIPC party at the State Banquet hall. The HIPC completion point, theoretically, means that all of Ghana’s “creditors would commit irrevocably to and fully deliver debt relief”.

The UNDP’s report on human development also released simultaneously was not given such fanfare. In fact, it suffered what I call media tyranny by being placed in obscure pages of the state-owned and many private-owned media outlets. They were all busy discussing which way impoverished voters would cast their ballots in the December general elections. Yet the HDI report truthfully described Ghana as well as Sub-Sharan Africa’s quality of life as taking a deeply worrying tumble. Ghana in particular is ranked 131 out of the 177 UN member states, down from last year’s 128th position. Perhaps HIPC will turn things around.

Ghana’s Finance Minister cautioned that only prudent economic measures would sustain gains made from HIPC. Unfortunately the minister believes a redistribution of HIPC money to poverty recycling ventures by subsidizing government departments and agencies, education, utilities, and healthcare will lay a solid foundation for robust growth and enhance wealth creation. However, that signifies one of the numerous verses in an ode to poor developing countries whose wish list often fit the command list of the Bretton Woods institutions. So the Minister can comfortably say the completion point is “a benchmark that has been attained as a result of sustained implementation of sound economic policies, which have received international recognition”.
Yet our per capita has hovered around US$400 for more than a decade. Our score on globally respected economic freedom indices measured in the categories of trade policy, fiscal burden of government, government intervention in the economy, monetary policy, capital flows and foreign investment, banking and finance, wages and prices, property rights, regulation and informal (or black) market activity have for more than three decades been progressively slow from a 3.9 in 1975 to 5.7 on a scale of 1 to 10 as indicated by the 2002 Annual Report of the Economic Freedom of the World. The countries that have already reached the HIPC completion point have not fared any better. Yet it has been proven that there is a strong correlation between economic freedom and prosperity, with those nations with the highest economic freedom ratings over time also enjoying higher standards of living and higher per capita incomes.

According to the Index of World Freedom 2004 annual report published by the Heritage Foundation and Wall Street Journal, Botswana is Africa’s freest economy. She even pitched base with France and South Korea in 2002 when it registered a summary rating of 7.0 on the scoreboard of 1 to 10.

Interestingly the UNDP report thinks that the overriding source of conflict and instability within and between states will emanate from the poorly managed struggle over identity occasioned by cultural liberty and diversity. I think Africans will be busy thinking about bread and butter issues, as you wouldn’t get the attention of any empty stomach when you discuss the rule of law with him. Unfortunately many of our corrupt leaders who will be busy chasing aid money would not help us.

All the government needs to do is to stop pretending to be everybody’s keeper and focus on its role of providing protection for privately created wealth while enforcing the rules of just conduct. It should leave wealth and job creation to Ghanaians, and encourage individual efforts at providing superior goods to Ghanaians. As entrepreneurship takes root the economy will grow and develop, Ghanaians will be able to afford better technologies, clean water, superior energy sources, better healthcare, and insurance.

HIPC is a Trojan horse whose croup, loin, back, withers and crest are luring but in its belly lays the nemesis. For the moment, the initial benefits from HIPC are being rolled into supervised physical projects but no one is asking how they would be maintained. And this will all be coming back to us.

In my mind the HIPC annunciation was a well-attended funeral with last respects paid to the valour of a people for continuing to accept aid, debt forgivess, higher taxes, subsidies, business, labour and market regulation as the norm.