The nexus between Ghana and politics (Ghana and the world in focus)

There is a ‘Nexus’ (relationship, connection, etc.) between politics and economics. Thus, a dysfunctional or tanking economy has a direct impact on the geopolitics of a state. Likewise, an unstable political system; either democratic, totalitarian, authoritarian, dictatorial, etc. has a direct

impact on the economy.

Illuminating further, political instability drives Investors away thereby resulting in a reduction in Foreign Direct Investment (FDI) as well as Foreign aid/grants from both bilateral and multilateral partners.

With this (reduction in FDI/Aid), State economies are affected negatively

and citizens bear the brunt of a tanking economy. In the face of such hardships, the political system itself becomes ungovernable due to incessant agitations, frequent industrial action, and a surge in crime and violence. Clearly, from the aforementioned, politics and economics are inextricably intertwined, with each affecting the other.

The exercise of economics and politics in Africa go a long way to affect how economies are run and the magnitude of impact that follows when hit with a pandemic like Covid19. As economics is primarily about studying and influencing the economy, politics deals with the theoretical aspect and practice of influencing people through the exercise of power – government, elections,

and political parties.

This presupposes that economics is meant to be non-political in theory in its

decision-making process about the foundations of jurisdictions manned by politicians voted into power by the people. In the case of Ghana, an ideal economist will shun away biases in proffering solutions to the economic quagmire that the country has found itself in.

When such solutions are proffered with zero political undertones, political holders will then decide the fate of whether to implement same or not therefore, there exists a strong connection between economics and politics.

Zeroing it down to Ghana, it is public knowledge that elections in the country are fought on the performance of one key indicator – the economy. How well the economy is doing and how it is picking up after the ravages of Covid19 gives a glimpse of how the 2024 elections will turn out.

We have heard the daily discussions of how unstable the Ghanaian Cedi is performing relative to other world currencies such as the American dollar and the British pound sterling. The performance of the currency is an indicator of how importers will pay highly or otherwise in importing goods to Ghana as it is an import-based economy to a large extent.

One interesting aspect that has been overlooked in this whole issue of the relationship is how economists have allowed their expertise to be clouded with politics in designing economic policies for the country. We have economists who seem to be highly neutral when it comes to giving professional advice that has to do with the overall functioning of the state whiles others are not.

This means, if we set out to task different economists to design and report on the desirability of Ghana’s income tax cuts for the rich, there is a high chance that their proposals will reflect their political orientations because evidence abounds to support tax cuts just it is for higher taxes. This further goes to cement the fact that economics and politics are intrinsically woven.

To further stretch the conversation, we look at the implementation side of the economic policies set by professional economists. How then do those policies get implemented? It needs political power or support to create a functioning system. The passage of Ghana’s most controversial e- levy was a result of the support garnered from leadership. The policy was debated in the Parliament of Ghana, and a vote on its approval, thereby giving consent to the policy.

This is a simple case of “one needing the other to function”. Still, at the local level, we have the fiscal policy which is set by the government, and the

monetary policy championed by the Bank of Ghana. Fiscal policy has to do with the use of government revenue and expenditure to influence the smooth running of the economy while monetary deals with the macroeconomic policy laid down by the Bank of Ghana (central bank).

These two sides have a relationship between political officeholders and economists. When we move from the domestic level of analysis to the international one, the nexus between politics and economics is clearly demonstrated in the ongoing crisis and demonstrations in Europe.

The ravages of COVID-19 and its aftermath, the recent Russia-Ukraine war, the

imperfections of crony capitalism, corruption, and maladministration by populist politicians from the right and the left political divide have resulted in economic turmoil for nearly all African countries, Asia and Latin America.

Taking Ghana as an example, the Ghanaian economy has been ravaged by the pandemic, Russia- Ukraine war, maladministration, and wanton corruption as well as fiscal indiscipline, and humongous government.

To state the obvious, no single country has been spared from the ramifications of the ongoing situation in the international system but for the degree of the impact. It is pertinent to note that the economic and strategic miscalculations by the major powers in the ongoing ‘Cold War 2’ has also greatly impacted both domestic politics and the economies of many nations.

In cognisance of the above, it is worthy to note that there is a ‘complex interdependence’ between and amongst states in todays global system. And as such, Global challenges require global and multilateral approaches and solutions; rather than belligerent confrontational unilateralism. There is, therefore, the need for détente and rapprochement between and amongst

major powers!!.

The government of Ghana must embrace lean government, ensure fiscal discipline, sanitise the foreign exchange market, recalibrate our import substitution mechanisms, etc!!

Source: Ghana Web