What an X’mas, New Year present!

Ti-Kelenkelen

Osikani Yaw

The Mills administration has for the last three years presided over a closed economy, and the only companies that benefit are foreign companies.  No, Ti-Kelenkelen has nothing against foreign companies.  I am only worried that our national administration is pursuing policies that intrinsically destroy indigenous companies on whom the survival of Ghana as a sovereign state depends. 

Indeed, while the Mills administration keeps praising itself for attaining slim macro-economic indices, such as single-digit inflation, the independent but critical observer, standing his/her somewhere and watching, knows the single-digit inflation is just for demonstration effect and has nothing to do with the reality on the ground.  Real inflation, rising along with the increasing prices of commodities, has gone up by the hundreds of percentages since salaries have not kept up with several increases in the prices of petroleum fuels, utilities, and the consequent multiple increases in the prices of general commodities.

Two examples will show what I mean.  One, basic fare, which was 25p in December 2008 is today, 2012, 40p.  Second, Dear Readers constant with this column, will recall my example of a bag of rice going up from GH¢35.00 (December 2008,) to GH¢90.00 (2012.); 157% increase.  It has affected the price of cooked rice on the street – quantity we used to buy for 80p is today GH¢1.50, because the prices of vegetables, fish, meat, cooking oil, etc., have all been affected.  Wele that used to go for 50p is now GH¢1.00; fried fish has gone up from 40p to GH¢1.00, and; meat from 50p toGH¢1.50.  The smallest size of kenkey (or banku) still goes for 50p, but the size is shrinking.

The Mills administration is yet to get a grip on the economy, let alone run it for Ghanaians to taste progress.  That is the fundamental reason Ghanaians are living through ever growing tougher times.  And yet the Mills administration makes it all worse with fuel-price increments at a time people were taking stock of their lives and nurturing hope for 2012.  For many therefore hopes they have already been delivered as still births.

Interestingly, after workers unions raised serious reservations about the increases in petrol fuel prices, the Vice President, John Mahama, met their representatives on Friday, January13, 2011, and announced three measures to mitigate the cost of (people’s) adjustment to the higher prices of everything.  He proposed that public workers will receive their salaries in the middle of January.  As someone asked on radio however, how about the majority of the people who are not public workers?  Still, union leaders and workers are wondering what that measure is intended to achieve, since it will be at least the usual 30 days before the next salary comes; they are thus calling for higher salaries.

A second measure, the vice president said, is the public transport agencies will soon put more buses on the roads.  So what happens in the interim, union leaders have asked.  If you ask me, that is putting the cart before the horse, or should I say, thoughts of how the fuel prices increase will affect the people came to the Mills administration as an after-thought.  Considering how long we the people have trusted national administrations in biting the bullet in anticipation of a better life, we do not deserve to be treated as an after-thought.

Where the insincerity of the Mills administration becomes most obvious is in the third measure.  The vice president promised that all salary arrears will be paid by June 2012.  To simplify the issue, national administration has for over a year been rolling out a Single Spine Salary Scheme to normalise pay levels across all its institutions, agencies and corporations.  While some institutions are yet to make it onto the scheme, those already put on it have serious reservations about a lot of major issues about their new salaries.

What concerns us here is that, those public workers that have been transferred onto the SSSS have their salaries raised, but their back pay for several months are yet to paid; those are the arrears the vice president says will be paid in June.  But see, where is the benefit of you raise salary levels, but before you start paying these you raise utilities and fuel prices, which have pervasive and multiplying effect on the prices of almost all commodities and services?

In a past article I described that as giving money with one hand and taking it right back with the other, but that is only in the case of public workers.  In the case of most private workers, they hardly get any pay raises and whatever additional monies that come their way hardly cover the additional cost of living due to and consequent on the increase in fuel prices; and it is so for public workers too.

Here is a more picturesque rendition of the same fact: After the increase in fuel prices, business people, sellers and service providers also increase their prices, fares and charges.  Retailers and wholesalers collect their higher prices, while paying higher prices for other commodities and services and higher fares and cargo/freight charges.  They and those who own vehicles then pay the higher charges for fuel and national administration reaps the cash.  National administration then uses the cash thus reaped to pay the higher salaries – give away money with one hand and take it right back with the other.

In our part of the world, nothing kills hope for many as does starting a year with increases in fuel prices.  That is so especially when cost of living is always going up and standard of living is always coming down.  Go onto the street any day and ask anyone you come across if living conditions will get better in future and ninety-nine chances out of hundred the response will be negative.

And with the Mills administration going about state business the way it is doing the situation can only get worse.  As I told a friend on facebook, we will be lucky if we are not buying super petrol at GH¢10.00 by the end of the year.  As I write, Iran has threatened to block the Strait of Hormuz through which comes about a third of all the crude oil that on a daily basis must reach the world markets.

Few weeks ago, the US moved its warship out of the Persian Gulf when Iran was about to commence war drills.  Iran has henceforth warned the US to keep its warship out of the gulf, and the US says Iran cannot stop her.  Escalating tension in the Persian Gulf could drive up the price of crude oil.  Again, Iran has threatened to block the Hormuz if more sanctions are piled on her by the west over her (Iran’s) nuclear programme.  The US says it could stop that blockade, but experts say it will take only a war to do that, and it could take a month to end it.  A war in the Gulf will drive crude oil prices through the roof.

Even on-going problems between Sudan and South Sudan, which has led to the shutting down of vital oil pipelines from oil well in the South to refineries in Sudan could push up crude oil prices if speculators on stock markets around the world latch on to it and start their scar-mongering.

We thus need to pray that those incidents do not happen or escalate if they do.

The unfortunate truth is this: If our national administration were running the economy the way an economy should be run, the effect of those external incidents on our economy could be less.  But a national administration that makes money largely from increasing petrol fuel prices (and from borrowing) has not prepared Ghana against anticipated shocks of higher crude oil prices.  In a nutshell, Ti-Kelenkelen is saying if the Mills administration had opened up the economy and indigenous businesses were doing well, employing more people, paying more taxes and expanding, Ghana will not have to increase the price of petrol fuels anytime crude oil prices go up.

It is convenient for African state administrations to talk about withdrawing state subsidies on petrol fuels, because they themselves hardly go to the pumps.  But those subsidies mean a lot to a people who for decades have been asked to sacrifice for the promise of a better life, which today is as further away than when the promise was first made.

Eventually, the problem is that when a national administration fails it is the people that pay the harsh price.  Those in political public office always enjoy fat salaries, perks and per diems, and when they are voted out they enjoy good pensions or fat ESBs.  But the ordinary people are the ones always left to bear the stress of the economic mess.  That, in the mind of Ti-Kelenkelen, is the situation the recent increase in fuel prices has created.  For most, it throws hope out of the window, for this year and for the long-term.

Highlights

“It is convenient for African state administrations to talk about withdrawing state subsidies on petrol fuels, because they themselves hardly go to the pumps.  But those subsidies mean a lot to a people who for decades have been asked to sacrifice for the promise of a better life, which today is as further away than when the promise was first made.”