ACEYE writes: Gov’t must brace itself for severe economic hardship if locks on entrepreneurship are not lifted

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The Africa Centre for Entrepreneurship and Youth Empowerment is urging the Government of Ghana to tread cautiously in adopting steps to address the current level of economic hardship in-country.

Before Ghana’s economic woes in recent times, it will be recalled the government had entrenched its tentacles in almost every aspect of human life. It neglected its most basic yet important functions within the economic spectrum-Government is to protect property rights, adjudicate disputes, and provide a legal framework in which voluntary trade is protected. Unfortunately, the government got itself entangled in a web of activities meant for the private sector. Because of burdensome regulations, businesses do not have the liberty to operate with ease.

The spending spree has been the bane of government including its big “elephant” government with 120 ministers. There is also an increasing wage bill yet, a fall in productivity and the yet-to-do something about corruption and extortion are examples of some pitfalls associated with the current administration.

It is also worth mentioning that the social interventions schemes so far have not eased the burden of Ghanaians. The reward of these schemes is hefty taxes imposed on businesses and individuals. To mention a few are the Free Senior High School Program, Teacher Training Allowances, Nation Builders Corp, School Feeding Program and Planting for food and jobs. Although the intentions of these schemes may have been good, the outcomes of these ideas have proven to be ineffective and unsustainable for the very objectives they were meant to achieve.
These schemes have had severe economic implications on Ghana’s economy as they encourage more spending and fewer savings on the part of the government. This is why we are not surprised Ghana’s debt to GDP hovers around 80.1% according to Bank of Ghana’s Summary of Economic and Financial Data released in March.

It is therefore in order that the cabinet’s meeting is bent on having the economy fixed.
Should the government suspend all these initiatives, some concerns are that unemployment would rise to the brim, young people will drop out of school, the poverty gap would get worst and some children will go hungry.
However true this may sound, a good government for example will prioritise an end to buying past questions for “Free SHS” students to pass their final exams with the majority of whom become unemployed due to government’s deficiencies.
An effective government would prioritize cutting down on expenditure and ensuring fiscal discipline, focusing on adopting and implementing measures that encourage individuality, prosperity and sustained livelihoods. To achieve this, the government must remove all forms of unproductive regulations which usually distorts the entrepreneurial process with ease and reduce taxes for businesses. Here are some 6 interventions we encourage the government to adopt:
1. Government must ensure all regional centres have established regulatory bodies to avoid overconcentration on a few.
2. Government’s Digitization agenda must make each region autonomous in the delivery or issuing of permits/licensing/ certification.
3. Reduce the cost of registering a business by 50% among natives and foreigners.
4. Deregulate the registration of businesses by eliminating letters of consent from auditors to encourage the ease of acquiring business registration certificates.
5. The Bank of Ghana must reduce its monetary policy rate from 14.5% to the Universal Banks and other regulated financial institutions to at most 10%.
6. The Central Bank must decrease the minimum capital of 400million cedis required to set up a bank to at least 300million cedis. This will help break the monopoly of profiteering by existing banks and encourage the creation of indigenous banks. This would also reduce the number of loan defaulters due to high-interest rates.
Government must concentrate its effort on building an enabling entrepreneurial ecosystem that makes it easier for people to start their businesses, existing businesses to grow and hire more employees and of course engage in peaceful, voluntary trade. This is a sustainable option that would absorb people into the private sector who would be able to cater for what governments struggles to do.

In summary, government must get out of the way of innovation and job creation else it risks experiencing an impending danger of economic misery.

Source: Africa Centre for Entrepreneurship and Youth Empowerment (ACEYE)

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