The path to delivering socio-economic development in Africa has been a subject of mixed evidence which has received divergent policy approaches among various governments in the continent over the years. Indeed, it has been an argument deeply posited in academia especially the arena of political economy. A central question which has triggered the differing viewpoints is whether strong government or the market is the most efficient and effective approach to delivering development? Zeroing in focus on Ghana, for one reason or the other, many parties across the political divide have over the years avoided taking clear stance on such a pertinent and crucial issue which is at the heart of development. Although many profess association with certain philosophical lineage, their actions differ beyond the rhetoric. However, this is a critical issue which deserves the attention of policy and the public.
Prior to sharing my thoughts, it is important to admit that a newspaper article is not exhaustive enough to explore the length and breadth of the topic. This piece is perhaps only scratching the surface of the argument. To begin with, it is imperative to understand the type of future we envisage as a society.
What is an ideal society?
Once again, what represents an ideal society is a subject of relativism. Is it a society where the State caters for everybody or a society where everybody caters for himself/herself? Well, there is no right or wrong answer since preferences differ. In general, these are ends which are extremely difficult to achieve if not impossible. However, owing to the fact that man (woman) has the natural tendency of being self independent, I subscribe to the latter. Despite the subjectivity of the matter, I am highly convinced that majority of Ghanaians share this inclination. From this premise, it is implicative that emphasising strong government presence at the expense of the private sector or the market is second best. Stemming from the unrealistic nature of achieving both ends, considering the socio-economic circumstances at the micro and macro- economic levels of the country, the hybrid approach seems to be the way forward. In the mixed approach, the argument holds that much emphasis should be on the market in terms of achieving a desirable end.
What about the poor majority in the country? Indeed, this has been the basis of the antithesis of the pro market thesis. According to this school of thought, the overwhelming presence of poverty in Ghana and at large Africa, justifies the strong hand of government. The countless number of instances whereby the market excludes the poor and worsens general socio-economic conditions are alluded by the proponents of the pro- government approach. Indeed, many believe that a paternalistic or welfare state is the way out for Ghana and the rest of the African continent.
Should there be a Welfare State? Taking into cognisance the pervasive nature of poverty in the country, it is hardly disputable that a welfare State is required. Of course even in the cases of the most neo-liberalized economies, there is a Welfare State. The divergence of stance is not with the need for a welfare state but the approach to delivering it.
How can a Welfare State be delivered?
The supporters of strong government presence argue that emphasising the market will compound the adversities of the poor in Africa. In extreme cases, advocates of strong market are tagged as being insensitive to the plight of the poor. However, what is the evidence base for strong government presence being the solution to the socio-economic problems in Ghana and Africa? In an attempt at answering the question, let’s briefly look at how one of the most welfare States in the World, England, delivers its welfare programmes.
In terms of supplying housing, education, health and transport, few will disagree that England has one of the most vibrant welfare programmes. The highly neo-liberalised State made an executive and legislative decision in the early 1990s to actively deliver its community infrastructure through the private sector or the market. With the enactment of Section 106 agreements of the 1990 Town and Country Planning Act, private developers were/are required to contribute to local community infrastructure (housing, education, health, open space, etc) as estimated by Local Planning Authorities. Although there have been some challenges, the English approach has significantly contributed to community infrastructural needs. For instance, the affordable and social housing programme which houses many low income households in England (including some immigrants) is largely delivered through this system which hinges on the market. Indeed, it is rather the case that the most neo-liberalized countries have one of most resilient welfare interventions. There is therefore little or no evidence to suggest that strong government presence at the expense of the market is the solution to catering for the poor in Ghana. Indeed, it is highly paradoxical to advance for direct government provision of services.
Over the years, taxation has emerged as one of heavily relied internal sources of funding for projects of most governments across the world. Since the argument of poverty prevalence is consistently referenced to rationalize strong government presence, it presupposes that government is not a profit making entity. Essentially, if government which is a non-profit making entity is to provide for services, how will these be funded? Will government tax itself? It is not surprising that various governments in Ghana and Africa resort to external sources in financing budget deficits.
The way forward
Going forward, policy makers in Africa must wake up to the reality that developing a strong market is the key to delivering socio-economic development. The wealthier the private sector, the wealthier the government/state (as there could be the potential for government to tax more). This is far from ruling out government presence as it will be required in cases of market failures (which do exist). In sum, although the time for developing the market is long overdue, policy makers in Ghana and at large Africa can make amends now.
The Government’s Affordable Housing and National Mortgage Scheme: A Good Example of Public-Private Partnership and Matters Arising.
The Government of Ghana announced plans to implement some interventions in the housing and housing finance markets in its 2019 budget last