Ghana’s central bank on Tuesday announced that the governor, Henry Kofi Wampah, will step down on Friday ahead his compulsory retirement expected in August. Founding President of IMANI Africa, Franklin Cudjoe writes about this anticipated development.
He did ensure that the banking industry was fairly expanded but evidently he allowed himself to be caught up in the storm of armstrong politics. He made it easy for his predecessor and current Vice-President Paa Kwesi Amissah-Arthur to be missed. Paa Kwesi was one who could tell the Finance Minister literally to go to hell over the payment of arrears when the latter wanted to unduly delay payment. Paa Kwesi was a good listener. I recall when IMANI conducted series of exposé in the banking industry and within hours, he had called IMANI and our professional allies to meet and explain the challenges we identified and crucially what to do about them.
Wampah was too subservient. He should not have allowed the sloppy management of the Merchant Bank sale. That was one big miscalculation and sent signals of supporting underhand dealings in a divestiture arrangement involving hidden players.
The question about when the dirigiste forex rules will end simply exacted a response along the lines of waiting for the finance ministry to be fiscally responsible first. Perhaps a brilliant answer and one that struck at the core of incoherence in policy making IMANI identified, is one major bane of economic policy making in Ghana. Given how long and painful it has taken to end the crazy forex rules, the efforts should have been louder.
Wampah should have been bolder in reigning in the voracious appetite for borrowing by the government to fund mostly poorly costed projects with dire consequences for the moribund private sector.
Wampah should have been bolder to tell it to the face of the Finance Minister that he cannot be borrowing hefty sums from the NHIL and render it penniless all the time. If readers will remember, I warned that by June this year, the NHIS will be cash strapped as the finance ministry has improperly borrowed almost 300m cedis from the fund for yet to be disclosed expenditure. Now news reports of cash strapped NHIS vindicate my position and it is NOT because we didn’t pay our 2.5% levy. It was paid and the fund is a consolidated one and Wampah should have been admonishing the finance ministry of such economic autarky!
Wampah should have opposed the setting up of the Ghana Infrastructure Fund whose mandate is clearly not economic but simply a political slush fund for petty projects. Wampah should have been telling government to sell off non – performing state assets and use the proceeds to fund critical infrastructure instead of setting a political bank to play with our money.
There is more but I will stop here and hope that the next Central Bank Governor ensures at least a more pragmatic monetary policy that truly asserts the independence and effectiveness of the Central Bank. Perhaps the next Governor can be bolder and aspire to copy the habits of highly effective countries such as what I experienced last November in the UK after an insightful meeting at the Bank of England with its Director for International Development my notes were: Three roles for the central bank, ensuring micro prudential, macro prudential and monetary Policy. The Bank is independent in ensuing the fiscal targets set by any UK government is met. However, if the government deviates from what the bank proposes to be done, then it loses credibility and will be punished by the voting public. Curiously, the Monetary Policy Committee’s decisions are published but will in the interest of transparency and market confidence, publish minutes of its meetings including what each of the nine -member committee said in its meetings. So, prudent monetary policy management must resonate with prudent fiscal foresight. Our finance minister in Ghana should not have a fiscal target whilst the central bank can have a mind of its own, and the electorate can simply applaud.
Author: Franklin Cudjoe, President, Imani Ghana