BREAKING THE BACK OF GLOBAL RECESSION (JULY 24)

THE debate as to whether local companies need a stimulus package in the current global turmoil which, to a large extent, is beginning to bite seems not to go away. The crux of the matter is that organisations which before the turmoil were making profit continue to file for bankruptcy protection, while declining growth rates and soaring unemployment figures have serious implications for the economy.
That was amplified loud and clear at yesterday’s Graphic Business Roundtable Forum on the theme, “Turnaround Strategies in the Global Recession”.
Many speakers pointed to the need for the government to provide the kind of incentives that would stimulate growth, generate employment and cushion the economy against the harsh realities of the global meltdown. This is against the background of our inability to determine the full impact of the credit crunch on the people.
A stimulus package, according to experts, restores or boosts demand, which producers rush to meet. Idle factories quickly return to work and, in the process, they employ more and in paying them continue to boost demand.
While many say Ghana, and for that matter many developing countries, has been less affected by the global crisis, reports, however, indicate that remittances which soared to more than $2 billion last year have begun to take a sharp decline.
Indeed, the Breton Woods institutions have projected that economic growth rate in sub-Saharan Africa is expected to slow down to one per cent, from the 2.4 per cent recorded last year. Indeed, that figure points to how the financial crisis is expected to affect the growth of African economies.
The government itself has alluded to the fact that the crisis is, indeed, going to impact on the Gross Domestic Product, hence its forecast of GDP growth of about four to five per cent, down from 7.3 per cent in 2008. Ghana will, therefore, not go unscathed.
Industry players say the lack of appropriate legislation directly targeted at industries and businesses as a whole to generate the kind of impetus needed to push business further will affect the rate of recovery of the local economy.
The government also points to past interventions that have not yielded any positive rewards, except for businesses to source for such funds and vamoose from the system.
What, then, needs to be done? Our present predicament calls for a strong partnership between the government and the private sector.
The DAILY GRAPHIC believes that the overall good of the people must reign supreme in all policy decisions.
Afterall, governments are voted into power to serve the public good. Businesses too, besides their profit motives (which is perfectly right), cannot be denied the significant role they play in the socio-economic development of every country.
Both parties, therefore, to some extent, serve the public good.
Indeed, the financial crisis has brought to the fore the need for the state to play a more active role in the economy rather than leave it for the market. The government should provide strong oversight of all business transactions and regulatory controls in order to prevent a field day for greed and corruption.
That cannot be lost on both the government and the private sector. They need to act in a manner that will ensure the prudent management of the country’s affairs.