Ghana’s social market economy system is poor – Prof. Jonah
He said instead of adopting a level playing field for private sector involvement, the system had resulted in ruling red lines and creating unfavourable conditions for digressing into certain sectors of the economy that had long been perceived as State monopoly.
Prof. Jonah was addressing participants on the Social Market Economy and its implications for Ghana at a public lecture in Accra.
The lecture jointly organised by the Konrad Adenauer Stiftung (Foundation) and the Private Enterprises Foundation, was to review Ghana’s adoption of the Social Market Economy module.
Prof. Jonah said that Ghana would not be able to attain the needed economic growth if government continued to rule red lines that placed huge market restrictions on the private sector.
He stated that overburdening the private sector with high tax rates and high inflation levels amounted to indirect robbery by the State, which would only lead to the collapse of businesses and stifle economic progress and development.
Prof. Jonah reminded government of its huge task of moving the people from their current state of poverty, saying this could only be done by strengthening public-private partnership.
He said countries which had attained huge economic jumps recognised the power of the private sector as a major engine of growth.
Prof. Jonah said Ghana opted for the SME after its Centrally Planned Economy paradigm and Structural Adjustment Programme (SAP) had failed to yield the needed economic growth and development.
He cited how Africa’s economies had failed due to their wrong choice of a Centrally Planned Economy paradigm, where the States owned everything such as airlines, food distribution services, water, oil refineries as well as electricity corporations.
Prof. Jonah said in Ghana this overstretched and dwindle government financial reserves, making it very challenging for the development and management of infrastructure and other areas of the economy.
He said this system failed and the consequence affected all national nations that practiced this system.
Prof. Jonah said introduction of the National Health Insurance Scheme, Capitation Grant, Free School Uniforms and the School Feeding Programme were all efforts by government to correct the mistakes and disadvantages of SAP.
Ms Birgit Schnieber-Jastram, German Member of the European Parliament, commended Ghana for her option for the SME.
She reiterated the critical role of the private sector in promoting employment, industrialisation, market competition as well as development of infrastructure of the country.
Ms Schnieber-Jastram stated that reforms should not be imposed otherwise they would not work.
She said “you will have to decide on your own about what to do. Only you know what you want and what you need”.
Ms Schnieber-Jastram said the recent financial crisis that engulfed the world brought to the fore the need for an economic system that would ensure the necessary balance between the open market system and the individual citizen’s interest.
She noted that inspite of the huge economic progress in most African countries, the continent still remained the poorest and the least developed, saying “approximately one out of every three of the world’s poor live in Africa”.
Ms Schnieber-Jastram said African countries needed strong policies and institutions of enforcement and not necessarily financial assistance all the time.
She called for initiatives for strengthening governance and institutions, especially civil society stakeholders and initiatives for conflict prevention, saying those initiatives had to be aligned with pre-existing structures.
Ms Schnieber-Jastram said Africa stood the economic chance if it focused on industrialisation in the agricultural sector and creative industry.
She asked that African countries be given equal access to the global market.