Bawumia speaks at Financial Times summit in London
The 2016 running mate to the flag bearer of the New Patriotic Party (NPP), Dr Mahamudu Bawumia, has suggested a change in the tax policies of the country.
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According to the renowned economist, the tax policies must be restructured away from the current policies that are killing jobs and destroying companies. He stated: “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.”
He was speaking at the Financial Times' Private Equity in Africa Summit in London on Wednesday. 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-panellists, including 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 of 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, he said, was the star of the ‘Africa rising’ narrative with a blossoming economy, strong fiscal management and a growing private sector.
But in the past few years, Dr Bawumia pointed out, Ghana had turned into quite a sad story.
He said 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 per cent. Interest on government debts this year will be four times Ghana’s oil revenue – and that’s just the interest,” he said to the audience.
“They’ve already gone to the IMF this year for a US$1 billion bailout, and now they’re looking for more loans. But when you’re in a hole, you need to stop digging,” he declared.
Dr Bawumia went on to detail some solutions, saying: “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.”
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.”
He, however, stated that the steps to get there included stabilising the macro-economy, exhibiting fiscal discipline, supporting and enabling the private sector, and delivering a reliable energy supply for our people and businesses.