A Radically Commonsensical Approach to Generating Growth in Ghana — Part 1

Ghana needs growth. With a population growth rate of 2.39% and a GDP growth rate of 3.3% in 2016, the country is treading water at best.

The quickest and most sustainable way to boost growth rates (and employment) is by enabling private sector participation on a massive scale. A public stimulus package is not doable due to the fiscal profile of the country, and it is debatable if it will even work, given the generally accepted view that public spending is rife with corruption.

The single most important thing in Ghana today that will attract capital is making the environment extremely friendly to the set up and operation of a business. We already have extremely aggressive tax incentives and yet people are reluctant to invest. The problems of infrastructure e.g., power and roads will be worked on, but we don’t have to wait for those problems to be solved in their entirety before declaring Ghana open for business.

“The ease of doing business index is an index created by the World Bank Group. Higher rankings (a low numerical value) indicate better, usually simpler, regulations for businesses and stronger protections of property rights.”

Ghana currently ranks 108th in the world as per this index. The index is positively correlated with growth and general well-being to an amazing degree e.g., Singapore is No 2, Rwanda is 56 and Equatorial Guinea is 178.

How can Ghana change this dynamic in its favor and unleash the type of transformational growth that succeeds in lifting large numbers of people out of poverty?

We can move onto a trajectory of such growth by launching a full-bore assault on how the State carries out its regulatory and permitting role. Today, the common experience when dealing with the State is for those gatekeepers (within the State) to use their position to extract what in economic terms is called “rents”. You must grease palms or your application either goes missing or its processing gets delayed indefinitely for no ostensible reason; what is worse is the fact that there is no certainty on who to grease and when such greasing will end!

I propose a solution to this. All regulatory and permitting stages that have to do with private sector investment and operations should by DEFAULT allow the applicant to pass to the next stage, as long as the applicant complies with the laid down procedures for that stage. It should rather be the burden of the State to show why an investor should not be allowed to proceed to the next stage in whatever application or permitting workflow that investor is engaged in.

This sounds radical and rightly so. How would it work in practice? A simple example will illustrate. Let’s assume I want to set up a small agro-processing facility to make drinks and snacks. I will have to deal with a number of agencies e.g. Registrar-General, F&D, Fire Dept., GRA etc. I start off on leg 1 of this process at a particular office where I am given a checklist of requirements I need to fulfill in order to “pass” and move on to leg 2 at some other office. I submit my application with proof of fulfilling those leg 1 requirements to the appropriate office. By statute, the State would have a fixed time period to pass or fail me. Let’s say it is one week. If by the end of that one week period the State hasn’t “failed” me, I have passed and are able to go to leg 2 of the process where the appropriate State entity has to accept that I passed leg 1.

Some would argue that where is the radicalism in this and how effective is this really going to be. Let me add the kicker. The tracking of my application and its associated “passes” and “fails” will be made transparent and widely available via the Internet. A simple (and publicly available) online portal (why don’t we call it the Business Applications Tracking System or BATS — and by the way, this can be operational in short order) will show the workflow associated with my application. Myself and the regulator can add and update as necessary the relevant statuses of my application within BATS. Now, what is essential in making BATS work is the ABSOLUTE requirement for a named State official to sign off on a “failed” application and why he or she did so. That is non-negotiable and it will very quickly make apparent who the “road blockers” are.

In short, when you combine a fixed period of time for each step in an application process, and when you have a publicly visible view into who is failing who (and why), you have a very powerful tool to make people do the right time by the country and not by their own pockets. As the saying goes, “sunshine is the best disinfectant”. Having an high-level in-house (within each ministry or agency) “Ombudsman” as the escalation point for the invariable disputes for why an application was rejected will also be necessary.

The cost of BATS does not have to be shouldered by the State. Private actors will be more than willing to foot the cost and recoup their investment via a percentage of the transactions flowing through the system.

Finally, the implementation does not have to be a multi-year endeavor. We are not talking about integrating BATS with various departmental systems in existence (at least initially). This is essentially a simple interface where the applicant and regulator for a particular transaction go to upload their answers to a few simple questions e.g., what I submitted and when I submitted (applicant) and when I failed the application, why and who (regulator).

The critical factor in making this work is buy-in at the highest national levels and a willingness on the part of the leaders of the various ministries and agencies to fight through the inevitable push back; this will be necessary to ensure compliance on the part of their staff with this deceptively radical program.

The NPP run a campaign based on its principles of encouraging the private sector to play the key role in growth and employment creation. That philosophy is what Ghana needs right now. What they need to do next is to institutionalize support for private investors in order to unleash the wave of capital that will transform the country.

In Part II of this article, I will expand on how we can compassionately right-size the public sector, while simultaneously creating a high performing culture that allows it (the public sector) to productively play its key role in national development.

Please review, comment and share widely. A vigorous debate on the various options available in a quest for an energetic and effective public sector can only benefit the cause of Ghana’s economic transformation.