Leading economists and academics gathered at the ABCNews Economic Symposium in Accra on Monday, 2nd December 2024, to discuss the future of Ghana’s economy, have attributed much of the country’s economic progress to the policies championed by Vice President Dr. Mahamudu Bawumia and the ruling New Patriotic Party (NPP).
The symposium, held at the GNAT Hall, saw key contributions from Dr. Frank Bannor, Dr. Eric Boachie Yiadom, Prof. Isaac Boadi, and Dr. George Domfe, who each highlighted various aspects of economic reform and growth, emphasizing the significant role played by Bawumia in shaping these initiatives.
Dr. Frank Bannor, a Lecturer at the Ghana Institute of Management and Public Administration (GIMPA) and Head of Research at the Danquah Institute, focused on the importance of the credit scoring system in fostering financial inclusion. Dr. Eric Boachie Yiadom, Senior Lecturer at the University of Professional Studies, Accra (UPSA), spoke on the flat rate tax system.
Dr. Isaac Boadi, a professor of Accounting and Finance at UPSA, addressed the economic impact of the Free Senior High School (SHS) policy and the NDC’s proposed vision of a 24-hour economy.
Dr. George Domfe, a development economist and Senior Research Fellow at the Centre for Social Policy Studies (CSPS) at the University of Ghana, focused on job creation.
Credit score system
Taking his turn during the discussion, Dr. Frank Bannor explained that it is a numerical representation of an individual’s creditworthiness, used by lenders and financial institutions to assess the risk of lending money or extending credit.
It is derived from a person’s financial history and reflects how likely they are to repay borrowed funds on time.
He stated that if Ghanaians vote for Dr. Bawumia on Saturday, the credit score system launched by the Vice President would significantly enhance digital inclusion and economic participation nationwide.
Dr. Bannor explained that the initiative aims to establish a standardised method for evaluating individuals’ creditworthiness across the country, promoting transparency and responsible financial behavior.
The Development Economist stressed that the implementation of this system would mark a significant departure from the prevalent informal practices and the “high purchase system,” which often rely on ad-hoc installment payments without a structured credit assessment process.Dr. Bannor explained how the credit scoring system could revolutionize Ghana’s economy, particularly if the Vice President’s vision is given a mandate in the upcoming general election.
He emphasized that the credit scoring system represents a critical step toward fostering financial inclusion and economic growth in Ghana.
He noted that this initiative, which was rolled out as part of the government’s broader digitalization agenda, seeks to establish a transparent, standardized mechanism for assessing the creditworthiness of individuals and businesses.
According to Dr. Bannor, the credit scoring system addresses one of the significant barriers to financial access in the country: the lack of reliable data for determining credit risk.
“In many cases, individuals and small businesses in Ghana are excluded from accessing loans or credit facilities simply because there is no framework to evaluate their financial reliability.
This system changes the narrative by offering a fair and transparent method to assess creditworthiness, thereby increasing access to financial services for all.”
Dr. Bannor highlighted that the system has the potential to significantly boost economic participation by bringing more Ghanaians into the formal financial sector.
“By voting for Dr. Bawumia on Saturday, Ghanaians will be endorsing a tool that ensures everyone has an opportunity to participate meaningfully in the economy.
The system not only supports individuals but also enhances the ability of small and medium enterprises (SMEs) to secure funding, which is vital for job creation and economic expansion,” he explained.
Dr. Bannor also drew parallels with South Africa’s successful implementation.
He, therefore, indicated that Vice President Bawumia has the potential to replicate a similar credit scoring system in Ghana. “Because of the credit scoring system in South Africa, it is helping them.
It is benefiting underserved communities and small businesses, who previously faced challenges in accessing loans due to inadequate credit histories or lack of collateral.
Now, with a clearer understanding of their creditworthiness, these groups can secure funding to invest in education, housing, and entrepreneurial ventures, thereby stimulating economic growth and reducing poverty levels,” he indicated.This system, he explained, would enable financial institutions in Ghana to evaluate an individual’s creditworthiness based on crucial factors such as credit history, income, debt levels, and repayment behavior. Such standardized evaluations would streamline the process of determining eligibility for loans, credit cards, and other financial products without requiring upfront payment.
Flat rate system
Dr. Eric Boachie Yiadom, who spoke on Bawumia’s flat rate system, described it as a transformative policy that could significantly enhance the nation’s economic prospects.
He highlighted the pressing need for tax policy reforms to address the unique challenges posed by Ghana’s predominantly informal economy.
Dr. Boachie Yiadom emphasized that for Ghana to achieve sustainable development, it must expand its tax revenue base by implementing more efficient and inclusive tax systems.
He applauded the commitment of Dr. Mahamudu Bawumia, flagbearer of the New Patriotic Party (NPP), to introduce a flat tax rate system modeled after Estonia’s globally recognized framework.
Explaining the rationale behind the flat tax rate system, Dr. Boachie Yiadom noted that such a policy would simplify tax administration and promote compliance.
“The Ghanaian economy is largely informal, with many businesses and individuals operating outside the formal tax net.
A flat tax system provides clarity and transparency, making it easier for taxpayers to understand their obligations,” he said.
He further explained that the policy would eliminate the complexities associated with Ghana’s current progressive tax system, which often discourages compliance.
“With a flat tax, businesses can easily calculate, file, and pay their taxes without the burden of navigating convoluted tax structures.
This ease of compliance is essential for fostering trust between taxpayers and the government,” Dr. Boachie Yiadom stated.
Dr. Boachie Yiadom also highlighted the potential of the flat tax system to stimulate economic growth by reducing the financial and administrative burdens on businesses.
“This initiative will allow businesses, especially those in the informal sector, to expand their operations.
It will also encourage entrepreneurship by removing the disincentives associated with high and variable tax rates,” he said.
He commended Dr. Bawumia’s proposal to complement the flat tax system with a Tax Amnesty Programme.
This initiative, he explained, would encourage businesses and individuals to regularize their tax status without fear of penalties, enabling industries to reinvest their resources into growth, expansion, and job creation. “The Tax Amnesty Programme will provide breathing room for businesses to finance their operations, recruit more employees, and energize overall economic activity,” he added.
Drawing parallels with Estonia, Dr. Boachie Yiadom cited the success of the flat tax model in simplifying tax administration and fostering economic growth in the European country. “Estonia’s flat tax rate system has proven to be an effective tool for increasing tax compliance, broadening the tax base, and driving economic development. Ghana stands to benefit significantly from adopting a similar approach,” he remarked.
Dr. Boachie Yiadom urged Ghanaians to embrace bold tax reforms as a critical step toward national development. “If we expect development in Ghana, then we must expect more efficient taxation.
A flat tax system is not just a fiscal policy; it is an economic growth strategy that will benefit every Ghanaian,” he stated.
Life-changing proposals
Dr. Isaac Boadi, who spoke on Free SHS and the NDC’s proposed policy of 24-hour economy, called on Ghanaians to embrace Dr Mahamudu Bawumia’s policy ideas, such as the digitalization agenda and other equally sound policy propositions than those proposed by John Dramani Mahama.
“As we head for the polls, one key determinant for the electorate to cast their votes is the kind of policy ideas by the presidential candidates.
Having listened to all that the two leading candidates have said, those from Dr. Bawumia stand out,” he said.“Take for instance, the digitalization agenda of Dr Bawumia.
This will create at least 4 million jobs in 4 years for the teeming youth.
The youth are to be trained in various employable IT skills, and this is the way to go” Professor Boadi further stated.
“Former President Mahama is heard loudly propagating and promoting policies like nkoko nketenkete and youth wearing Wellington boots with polytanks in aboboyaa watering plants as means of generating employment for the youth.
These ideas belong to the past, not even the present, let alone the future”Appealing to the electorate not to fall for the gimmicks of the opposition NDC, Professor Isaac Boadi indicated that Mahama’s ideas are too run-of-the-mill or ordinary to make any meaningful impact in the lives of Ghanaians. “How can giving nkoko nketenkete to unemployed youth lead to the creation of jobs on a larger scale? Which jobs can be created by giving Wellington boots to the youth who are to sit in aboboyaa with polytanks, watering plants? These policy ideas will never lead to the transformation of the economy” he said.
Underscoring the importance of digitalization in the times we are in and beyond, Prof Boadi said that digitalization is what the 4th Industrial Revolution is all about and should be taken seriously.
“The 4th Industrial Revolution, as already espoused, is hinged largely on Digitalization. Economic growth is no longer based on agriculture again. Digitalization is what is driving the global economy today. Economic growth is driven by technological advancement now.
It is, therefore, imperative that the nation focuses on digitalization, and that is exactly what Dr. Bawumia is heading towards” he further said.
He also mentioned the flat-rated duties at the ports, cancellation of E-levy, credit scoring system, expansion of the economy, amongst other policies by Dr Bawumia as worthy ideas that must be supported.
Touching on the Free SHS policy, Professor Boadi had this to say; “No achievement by any president in Ghana’s history is greater than the Free SHS program. It is the single most important pro-poor policy ever to have been introduced by any administration” he said.
Strategic thinking
Dr. George Domfe, a development economist and senior research fellow at the Centre for Social Policy Studies (CSPS) at the University of Ghana, who spoke on job creation, called for strategic interventions to address Ghana’s persistent unemployment issues.
Speaking on job creation, Dr. Domfe shared a personal encounter that underscores the depth of the problem.
“One of the most unpleasant experiences I have encountered is walking around and meeting students I taught 15 years ago who still do not have jobs,” he said, expressing concern over the state of unemployment in the country.
He emphasized that genuine concern for Ghana’s development must translate into practical efforts to create sustainable employment opportunities.
Dr. Domfe reflected on Ghana’s economic potential at independence in 1957, noting that the country had what it took to achieve economic independence alongside its political sovereignty.
Drawing comparisons with nations like South Korea and Singapore, he lamented how Ghana, which was on a similar developmental trajectory at the time, had fallen behind. “In those days, Ghana was not different from countries like South Korea and Singapore.
They were not better than us. Per capita income of $200 was significant then, and we had the resources to transform our economy,” he said.
Dr. Domfe explained that every economy progresses through three main sectors: the primary sector (agriculture, mining, and natural resource extraction), the secondary sector (manufacturing and industrial production), and the tertiary sector (services and knowledge-based industries). “Economic development typically begins with the primary sector as the lead contributor to GDP.
As development advances, the secondary sector takes over, followed by the tertiary sector,” he explained.
He noted that Ghana must align its developmental policies with this natural economic progression to achieve sustainable growth.
Dr. Domfe stressed the need for innovative and critical thinkers to reposition Ghana for economic success.
He cited the establishment of six automobile assembly plants in Ghana as a step in the right direction and a potential catalyst for industrialization.
“If we start with determination, economic independence is possible,” he stated, urging policymakers to leverage such opportunities to drive job creation and sustainable development.
He emphasized the importance of leadership that prioritizes industrial growth, innovation, and the alignment of educational outputs with market demands.
