The country of Ghana is an exciting place to reside. Recently, the IMF ordered the Bank of Ghana to eliminate the multiple foreign exchange rates it had instituted to make life easier for many beneficiaries. Presumably, some are corrupt government officials who wish to line their pockets at the expense of the public purse, after the country received a US$3 billion foreign exchange bailout.
“Achieving these goals will be underpinned by efforts to ensure a unified and flexible exchange rate and to create the conditions for FX market deepening. At times, the BoG has provided FX support at rates other than those prevailing in the market, leading to the emergence of multiple exchange rates. Going forward the BoG will ensure its FX liquidity is provided at prevailing market exchange rates and implement measures to further support unifying the exchange rates. In this respect, the staff welcomes the authorities’ commitment not to introduce measures that give rise to Multiple Currency Practices (MCPs). To support price discovery and efficient allocation, the BoG will employ auctions as the primary channel for any FX intervention. Any bilateral trades will be conducted at the market rate. The BoG will gradually phase out the special FX auctions for fuel distributors introduced in March 2022 and enhance the design of the regular FX auctions with the support of Fund technical assistance. The BoG will also gradually reverse the recently imposed surrender requirement on gold exports to BoG. These measures will help bolster FX liquidity in the banking sector and encourage price discovery and FX market deepening.” (INTERNATIONAL MONETARY FUND: Ghana’s Request For An Extended Fund Facility, May 2023)
A major part of Ghana’s economic problem is that government ministers have been attempting to run the country like a privately owned plantation. Many of the fiscal measures imposed on the nation by politicians were just plainly contrary to common sense. We sincerely hope that going forward the positive international measures required by the Fund’s managers. Won’t be sabotaged by the bloody-minded actions of the country’s elected leaders. It now appears that for the foreseeable future, Ghana has been shut out of obtaining any new loans from the International Money Market.
The problems of Ghana on the international stage are not far removed from the conduct of many of its private citizens. Recently I hired a very attractive, immaculately dressed, and dignified, young woman to work in my home. She accepted the job and assured me that she knew how to cook delicious food, iron clothes, and keep a clean and charming house. To my disappointment, I soon discovered that she used too much heat while cooking. Since the food was always boiling over the sides of the pot and soiling the surface of my gas range. The amount of salt she used in the food was extravagant. Even after she swept and mopped the floors there was a blatant cloud on the surface of the tiles. Finally, my clothes weren’t being properly ironed. After thirty days I had no choice but to bid her farewell. What really amazes me is that she thought that she could bluff/con her way through this assignment. An observant employer would have soon discovered that she knew nothing about the importance of cooking vegetables at a low temperature. Or destroying the nutrients that over-cooking them facilitates. She also didn’t understand that using too much salt would shut down the kidneys. She certainly knew how to dress up and look beautiful but that was the full extent of her achievements.
Hopefully, the Ghanaian technocrats and politicians will understand that good marketing skills. Being employed to secure international loans. Are no substitute for fulfilling the performance criteria clearly and specifically outlined in the agreements. Spelling out the onerous conditions under which such loans are approved and granted. Everything we do in life has consequences. There is absolutely no free lunch. If a country borrows other people’s money to take care of all of their current expenses legitimate or illegitimate. Then at some point in time, all of the chickens will eventually come home to roost. There are many warnings in Scripture about the consequences of wrong decisions. For example “The rich rules over the poor, And the borrower is a servant to the lender.” Proverbs 22:7.
“A report by the IMF on Ghana’s external debts shows that should Ghana fail to honor obligations under the loan agreement with China, it could lose revenue from its mineral resource and electricity sales. Details of Ghana’s collateralized loans from China show that the Asian country could have the right to use proceeds from Ghana’s oil, cocoa, bauxite, or even the sales from electricity to settle the debt. China owns about two-thirds of all of Ghana’s external loans, making the Asian superpower an important party in discussions about Ghana’s loans.” (YEN: China To Take Over Ghana’s Mineral Revenue And Electricity Sales In Default Of 4 Loans, Says IMF Report Read By George Nyavor, Tuesday, May 23, 2023).
Unfortunately, China has had a great deal of previous experience with how exactly to rip off other less suspecting and more trusting people and they have employed such methodology for their own benefit.
“The U.S. Securities and Exchange Commission this month finalized rules to implement a law that would allow the market regulator to ban foreign companies listed in the U.S. from trading if their auditors do not comply with requests for information from American regulators. The law was passed in 2020 after Chinese regulators repeatedly denied requests from the Public Company Accounting Oversight Board to inspect the audits of Chinese firms that list and trade in the United States. Given the current level of distrust between the U.S. and Chinese governments, and with the bilateral relationship unlikely to improve anytime soon, there is “no way we are going to solve this in the next few years,” Loevinger said. “So the reality is, I think, by 2024, most Chinese companies listed on U.S. exchanges are no longer going to be listed in the United States. Most are going to gravitate back to Hong Kong or Shanghai,” he told CNBC’s “Street Signs Asia.” Less than six months after going public, Chinese ride-hailing giant Didi said it will start delisting from the New York Stock Exchange, and make plans to list in Hong Kong instead. When a company delists from an exchange like the Nasdaq or the New York Stock Exchange, it loses access to a broad pool of buyers, sellers, and intermediaries.” (CNBC FINANCIAL ADVISOR SUMMIT: Game Over For U.S. Listed Chinese Companies Published Wednesday, December 15, 2021.)
For several years, Chinese State-owned companies have been finding clandestine ways to shepherd money out of the USA and into China. Therefore, they certainly know how to protect themselves. When African countries like Ghana borrow large sums of money which they have no intention of ever repaying. Then announcing at some, self-serving, opportune time that their foreign exchange liquidity is so severely limited. That it is impossible for them to repay such loans. A fitting and revealing commentary upon the pervasive African Anancy mentality.
I recently ran into a Ghanaian male, who claimed to have a Bachelor’s degree in Physics and expressed great interest in traveling to the USA to obtain an advanced degree there. I subsequently sent him many pieces of information regarding available university scholarships. That could easily be obtained merely by applying for them. I noticed however that his command of the English Language was fragile. Consequently, I asked him to present me with a copy of his diploma. He was never able to show it to me. But instead sent me a scanned copy of some document through his phone which he claimed belonged to him. During the course of our many conversations, I discovered that he could hardly decipher the difference between 0.8, 8.0, and 80 grams. Ghanaian gold dealers routinely sell 8.0 grams of gold at the world market price. Most of them, however, because of numerical illiteracy claim that they are selling you 80.0 grams.
They barely understand the difference. Even though Ghana’s gold is neither stamped nor certified. In fact, there are only eleven countries in the world where gold can be stamped or certified and Ghana is certainly not one of them. Primarily because of widespread, uncontrollable, indigenous, and insidious fraud. Part of their problem is that in most countries throughout Europe and North America, 1 pound consists of 16 ounces. Here in Ghana, 1 pound of gold is 28 grams or 1 ounce. Predictably, if you are attempting to purchase gold anywhere in Ghana. Unless you are armed with a digital scale and have intricate knowledge of the culture, you will invariably be robbed.
(TO BE CONTINUED)
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