On June 9th this year, a certain Daniel Fisher, a Senior Editor at Forbes Magazine specialising in macroeconomic and legal issues, wrote an article in which he “showcased” Ghana as the 9th “worst-managed country” in the world.
This is curious, seeing that in the preceding month Mr. Fisher had written at least 25 articles almost exclusively on the domestic economy of the US. Indeed his only two forays into the global arena concerned this rather peculiar ranking of the “10 worst-managed economies of the world”.
That is far from the only thing curious about the report. For a start, no insight into Mr. Fisher’s methodology appears in the “report”, and though there was no pretension that this was a scholarly treatise, Forbes is considered as somewhat authoritative by the “40 million decision makers” around the world who access its various news platforms, and is probably one of the top 5 most influential periodicals for the global investment crowd.
It is thus odd that in Mr. Fisher’s editorial, he fails to provide even basic contextual information such as over which period his analysis was relevant. After all it is meaningless to say that Liberia is the 6th worst-managed economy “throughout its history” Non? And would Mr. Fisher agree that Zimbabwe has been just as badly managed economically under the dictatorial White regime as it has under the dictatorial black regime of Mugabe, or would he disagree?
One clearly has to be precise in these matters. What exactly are the indicators of “bad economic management” according to this article? Mr. Fisher does make the point that he screened IMF data for countries exhibiting: low and declining per-capita GDP, high trade deficits and high inflation. But over which period? And how much weight was applied to each indicator? The USA for instance has an outrageously high trade deficit, but certainly not high inflation.
As for GDP measurement, one supposes a country must only be compared to its “peers”, since it is important to take into account “initial conditions” if the intention is to evaluate management performance. A country’s economic managers must take a country from point A to point B and be hailed or damned for it. In this latter perspective, some might argue that the United Kingdom is terribly badly managed since if we were to take an arbitrary 3-year period, say 2007 – 2009, we could easily show from the data that nominal GDP has declined by almost 25% This is certainly far steeper than Ghana’s.
There are three quantitative measurements that Mr. Fisher provides in his empirical evaluation of Ghana’s economic management situation, though he may have considered others. They are: Ghana ranks 154 out of 184 countries in the IMF’s GDP per capita measurements; that it has a trade deficit of $3 billion; and, lastly, that it is saddled with a foreign debt stock of $4.9 billion.
He does, in this instance, identify which year is under reference: 2009. But, once again, the lack of methodological notes obscures the analysis. Is this whole analysis based on year 2009 then? How can a sweeping object like “national economic management” be frozen to fit within a year’s assessment?
Moreover, Nominal GDP per capita is rarely considered useful for comparative analysis nowadays. Most development economists and macroeconomists prefer GDP adjusted for purchasing power parity (PPP), since this measure accommodates differences in cost-of-living among countries.
On a PPP basis, Ghana was ranked 151 in 2009 by the IMF, close enough to Mr. Fisher’s figure of 154. Mr. Fisher does not however justify his preference for IMF data. Due to methodological variance, different observers usually report different figures. For instance, the World Bank ranks Ghana 140, while the CIA ranks the country 166 (in the same year of 2009). Mr. Fisher taunts Ghana by citing Haiti’s more favourable ranking in the IMF list, but one assumes he also saw that the World Bank ranks Ghana more favourably, by as much as 10 places higher than Haiti. And , furthermore, in such cross-index comparisons, significant divergence usually emerges. For instance Switzerland is ranked 13th by the CIA, below Ireland, but 7th by the IMF.
Nevertheless, we concede Mr. Fisher’s point that Ghana has a low GDP per capita (even on a PPP basis). We do not see any basis in the data, however, to concede that Ghana has a systemically declining GDP per capita. Over the past decade, Ghana has almost halved the incidence of poverty, a definitively positive influence on historical trends of GDP per capita. Mr. Fisher gets away with his claim because he offers no timelines for his analysis. That may be shrewd but it casts bad light on the overall quality of his presentation.
With regard to the trade deficit and external debt indicators, it is baffling how the Forbes Senior Editor treats the data. He does not express this as a percentage of GDP. Using $20 billion as a prudent estimate of the country’s GDP, both indicators can be expressed in percentage terms as approximately 15% and 25% of GDP respectively. Why does Mr. Fisher specifically cite “external debt” rather than “gross public debt”? Are domestic debt burdens any lighter, per his economic theory? Because if he had taken public debt as a percentage of GDP he would no doubt have concluded that the United Kingdom, Canada, Germany, France and Italy are all worse off per this indicator than Ghana, and that it is only as a result of rather exceptional circumstances that Japan has been edged into second place by Zimbabwe (2009 figures – CIA World Fact Book, 2010 edition).
It is also curious that Mr. Fisher uses “trade deficit” rather than the more comprehensive “current account deficit as a percentage of GDP” indicator that would have given a more accurate picture of how the target country has become dependent on foreign countries to service its needs. Because had he used the superior indicator, he would have concluded that in the same 2009, the data favours Ghana over the United Kingdom, Australia, and New Zealand. Ghana and the United States are nearly at par (Composite calculations using 2009 data from the IMF’s World Economic Outlook report and the CIA Fact Book).
Simply put, it is not clear how the Senior Forbes Editor proposes to integrate these indicators to assist his design of ranking countries by the quality of their economic management.
Yet, the ranking has been done, and Ghana has been banished to the dungeons of global underperformance. Millions of influential people would have seen this worldwide. It is true that the majority of commentary about Ghana globally remains generally positive. But it is also true that this Forbes article comes in the wake of a series of rather negative publications all seeking to make the point that Ghana is, by virtue of various factors, not a very good place to invest one’s hard-earned money. The medium-term effects on our country’s brand cannot be dismissed lightly.
Do we blame Mr. Fisher and similarly opinionated folk? Should we impute ill-motive to them? Should we deny them any virtues of objectivity?
Every adult in this country is aware that the undertones in the recent series of international bad press are coloured by the ExxonMobil/Kosmos – GNPC saga. Two of the world’s most powerful private equity funds have nearly a $1billion stuck in a block of deepwater off the shore of Ghana which they are, justifiably, desperate to unlock, at a decent profit of a few multiples. With that kind of money at stake, all the tough rules of international business competition apply.
If this is a competition between the GNPC and a set of American capital interests, then it is certainly a contest between the allies of both contenders. Basic rule of nature. Just business. No hard feelings especially.
We know who the friends of ExxonMobil, Kosmos, Warburg Pincus, Blackstone Capital and their assorted financial and public relations advisory firms are. The least you can expect is that they will press their legitimate claims with all the resources at their disposal. This too is the way of the world.
After all -as we hope we have demonstrated above – as in macroeconomics so in international business: depending on where you stand and the emphases you put on one fact rather than the other, you can assert the most biased position and still base same on the most objective set of data. There is no such thing as an objective analysis when strongly competing interests are at stake. One’s friends become the only arbiters of objectivity.
So the question we want to ask is: who are the GNPC’s friends? And since the GNPC is a proxy for the Government of Ghana, who are the GoG’s friends in this war of contending interests?
If Government of Ghana believes that they are waging this war over Jubilee in Ghana’s interests, it follows naturally then that their friends should be the ordinary citizens of Ghana. But has the government treated us in a manner that creates such an impression? Have they not refused to put out information to justify their conduct, and rebuffed civil society organisations such as ours who have called for greater transparency and demonstrated strong interest in the matter? Have they not been aloof and distant both at home and abroad?
So, as the national brand of Ghana comes under a growing volley of attacks in the global arena, and this state of affairs threaten to dissipate the goodwill accrued from the Obama visit, shall our Government continue to remain detached and haughty? Or will the Foreign Ministry and the Government Communications Team unite forces with a view to engaging with this matter vigorously but also level-headedly?
If that is what they will do, rather than the ill-advised approach of dismissing such publications out of hand, then we hope that they shall focus on identifying and winning over their “friends”. Beginning with their natural allies at home.