The high-profile leadership summit brought together leaders from tier one global investment firms, multilateral institutions, top think tanks, and governments.
The FT summit was convened to examine the opportunities and challenges to economic development and investment in Africa. Discussions focused on the impacts of governance, corruption, and political stability on investor confidence and economic growth.
Dr. Bawumia was invited to join a panel discussion alongside esteemed co-panelists: Grant Harris, former Senior Director for African Affairs at the White House; Aubrey Hruby, Senior Fellow at the Atlantic Council; and Bruce Zimmerman, Chief Investment Officer and CEO of UTIMCO, one of America’s largest endowments – with investments at $28 billion.
The discussants assessed Africa’s investment climate and investor perceptions, then delved into Ghana’s economic situation more specifically. The panel moderator asked Dr. Bawumia for his expert analysis on the sharp economic downturn experienced in Ghana in recent years and the decline in fiscal management, which has significantly affected investment.
In response, Dr. Bawumia told the audience: “Ghana experienced an economic transformation over the course of several years – beginning in 2001. Ghana was the star of the ‘Africa rising’ narrative. We had a blossoming economy, strong fiscal management, and a growing private sector. We entered international capital markets and were welcomed with enthusiasm. But in the past few years, it has turned into quite a sad story. After Ghana found oil, expectations rose even higher. And yet, despite all the plans to avoid the ‘oil curse’, the government has allowed us to fall victim to it.”
Dr. Bawumia continued, “We are seeing severe fiscal indiscipline. The current government has an insatiable appetite for debt. It has been on a borrowing binge – the debt to GDP ratio is over 70%. Interest on government debts this year will be four times Ghana’s oil revenue – and that’s just the interest,” he said to an audible reaction of shock from audience.
“They’ve already gone to the IMF this year for a $1billion bailout, and now they’re looking for more loans. But when you’re in a hole, you need to stop digging,” he said, as his co-panelists nodded in agreement.
Dr. Bawumia went on to detail some solutions: “There are plenty of things that can be done to fix the problems we’re facing in Ghana and to spark confidence in our economy. We can change our tax policies – restructuring away from current policies that are killing jobs and destroying companies. We can and should introduce changes that allow companies to produce, to prosper. Then when they’re actually making profits, the government can benefit from taxing them.”
Ending on an optimistic note, Dr. Bawumia told the audience, “Ghana has tremendous potential, that’s the truth. There’s no limit to what we can achieve and how high our economy can climb. The steps to get there are clear to me: we must stabilize the macroeconomy, exhibit fiscal discipline, support and enable the private sector, and deliver a reliable energy supply for our people and businesses.” With this, Dr. Bawumia closed the session to a round of applause.