24-Hour Economy is Possible via a Carefully Crafted Industrial or Development Plan

24-Hour Economy is Possible via a Carefully Crafted Industrial or Development Plan

Disclaimer: This paper attempts to point out key pillars or features of an Industrialization Plan required to generate  a 24-hour economy in Ghana. The thoughts and opinions expressed here are author’s own and were not copied or  redacted from another source. Kindly revert with the author for further clarification or details if necessary. 

“24-hour economy is meaningless unless it leads to at least two of the following outcomes: increase in  productivity and real incomes, doubling of real GDP growth, drastic reduction in youth unemployment and/or the acceleration of inclusive economic growth”….Author  

First, there is no historical precedent where a country became or evolved into a 24-hour economy without  a carefully executed industrial or development plan. Second, no developing country can develop into an  upper middle/high income country and have a stable currency without having a sustained increase in  manufacturing share of GDP over time (Chang, 2003). Today, countries like Singapore, China, South Korea,  Japan, US, UK have their economies humming for 24 hours because of specific industrial plans  implemented at some point or over a period (examples here). Economist Joseph Stiglitz in his 2018 paper argued the diminished role of manufacturing export-led growth in the 21st century (and recommends a multi 

sectoral development approach because of the rise of artificial intelligence and potential loss of  manufacturing jobs robots), he failed to point out that the positive effects manufacturing/industry has on  import substitution, the current account, productivity, real incomes, and the exchange rate. 

The reason why successive governments have “failed” since Nkrumah is because of the failure to  implement a bold industrial or development plan! What we have had has been the medium and long-term  development plans crafted by the National Development Planning Commission (NDPC)-which have been  largely ignored by the NDC and NPP. The reason they have been largely ignored is because they’re too  long-term instead of short/medium term (e.g., the vision 2057 development plan) and the political parties,  having only 4-8 years in power, only focus on their own campaign promises. Osagyefo Dr. Kwame  Nkrumah laid the foundation for Ghana (and Africa’s) development and gave the blueprint to be  implemented via a 7-year Development (or Industrial) Plan.

An industrial plan is usually a part of a broader  development plan, and the government of National Democratic Congress (NDC) only needs the former to  achieve its vision of creating Africa’s first 24-hour economy. Since Nkrumah’s 1963 7-year development  plan, no government has been able to present Ghana a bold Industrial/Development Plan. A development  or industrial plan is bold when it is short-medium term, and transformational. His Excellency President  John Mahama (“JM”) has the opportunity to be the Nkrumah of our time if he and his team can present  Ghana a 7-year Industrial or Development Plan! And I pray God will grant the NDC the opportunity to do  so come December 7th.

I know His Excellency had thought it through when he announced his vision of 24hr economy as the main  “policy” for economic transformation in the next NDC government. And I believe he meant NDC would  pursue policies to accelerate the pace of economic growth, increase wealth and improve the livelihoods of  Ghanaians. Thus, the goal 24-hour economy should be to double real GDP growth, reduce youth  unemployment and deliver inclusive economic growth. This means 24-hour economy itself can only be  judged as good economic “vision” ex-poste after it has delivered the above. 

But here is the problem. A 24-hour economy cannot be achieved by the multi-sectoral approach as  suggested by Stiglitz (would be difficult in our Ghana context) or a cocktail of “eclectic” policy  interventions. The NDC’s official document on operationalizing the 24-hour economy (www.johnmahama.org/files/shares/FAQs-on-Mahamas-24-hour-strategy.pdf) contains sound and laudable  policy initiatives and interventions, but I believe they would work better within the context of a broader  industrial policy plan. I understand the said document is not final and is only meant to give summary  information or highlights of what JM and the NDC intends to do, but I believe it is still missing the bold  industrial transformation plan or its key requirements needed to make the economy work for 24 hrs. 

When there’s a clear and implementable industrialization plan, a 24-hour economy would be a natural  by-product of it. What am I saying? Instead of looking for the by-product (i.e., 24-hour economy), let us start with a focus on the “meat” or substance (i.e., industrialization plan) and the by-product (which is a 24- hour economy) will consequently come forth. Thus, if a 7-year Industrial plan achieves the goals underlined below, the economy operating 24hrs or 16hrs or 8hrs will not matter much. Thus, the focus or goal of the  industrial policy should be to doubling real GDP growth, reducing youth unemployment, and accelerating  inclusive economic growth, and not necessarily a 24-hour economy; as 24-hour economy in itself is no  benefit if does not increase productivity. The goals above (underlined) are specific, measurable, achievable,  relevant, and time-bound (SMART) but 24-hour economy is not. 

Now the question is, where do we begin if Ghana is to transform its industry? A good starting point can be Nkrumah’s 7-year development plan (1963-1970). The key aspects Nkrumah’s development plan were industrialization, agriculture modernization, infrastructure development, education and human capital  development, and state dominance/central socialist planning. Apart from the latter (i.e., replace socialist  planning with Public-Private Partnerships), I would say all these aspects are relevant today and lagging in  our dear nation Ghana.

But a focus on industrial transformation will deliver some, if not all, of the other  aspects of Nkrumah’s plan. Thus, a bold industrialization plan (featuring forward and backward linkages  among industries, and great emphasis on import substitution) will involve or lead to agriculture  modernization, infrastructure development, education and human capital development.

In the pages below, I outline some of the key pillars or requirements needed of a successful industrial  transformation plan in Ghana. Here, I point out the policy interventions that must be preconditions and  those that can be implemented during the take-off stage of the plan. The preconditions are policies or  solutions that must be undertaken before strategic investments or policy interventions are undertaken to  deliver a 24-hour economy. The take-off policies are those which can be pursued as strategic interventions  to double real GDP growth, reduce imports, stabilize our currency, and deliver shared prosperity, and  eventually transform Ghana into a 24-hour economy. Without these key policy interventions or investments,  the implementation of 24-hour economy will come down crashing! 

Preconditions for Take-Off ! 

Pillar 1: Selection of Clear Strategy and Objectives 

• Strategy and Sectoral focus: Aggressive Import Substitution Industrialization! I suggest His  Excellency should aggressively pursue an import substitution industrialization while also  promoting value addition in the export sector. Without a focus on import substitution, Ghana’s cedi  will always be under pressure, driving up import prices and inflation. The problem with the  exchange rate is simply a demand and supply issue. If demand for US dollars is not curtailed, even  a historically high levels of supply of forex will be enough to support the cedi. Ghana’s financial  account (i.e., net FDI and FPI) has never been high enough to address the hemorrhage in the current  account, causing the perennial drawdown of official reserves of Bank of Ghana ( I explain why this  is the case through a chart in the Appendix). This means we can’t rely on FDI and foreign portfolio  investments (FPI) to support the cedi. We must take our destiny into our own hands, and drastic  reduction in annual import bill is the only way to go! 

As pointed out by renowned Cambridge University professor, Ha-Joon Chang, all major developed  nations (USA, UK, Germany, Japan, etc.) pursued import substitution through protectionism at  some point in the development process and some are still pursuing protectionism even as of today.  An example is the USA’s protection of the agricultural sector. The NDC document on 24-hour  economy states “there will be no limit to the sectors the 24-hour economy initiative will target” but  I suggest a bold and targeted 7-year import substitution industrialization plan targeting select  sectors of manufacturing, agro-processing, transportation and infrastructure development.  

• Objectives (Short and medium): Industrial policy should align with national development goals,  focusing on sustainable economic growth, employment creation, technological advancement, and  competitiveness. As pointed out in preceding paragraphs, the short/medium-term objectives of Ghana’s industrial policy should be as follows: drastically reducing imports through domestic 

production, doubling real GDP growth, reducing youth unemployment, and accelerating inclusive  economic growth. There should then be targets assigned to these objectives in the short and median  term. Targets should include reducing Ghana’s annual import bill by 30-40% by 2030, achieving  consistent 7%-10% annual real GDP growth over 10 years, doubling real income per capita, 5%- 7% youth unemployment target, etc. 

• Long-term Vision: A 24-hour economy can be set as the overarching strategic long-term vision ,and it would be a by-product of carefully executed industry plan when policies are progressively  scaled-up or implemented. But I suggest the long-term vision should be to making Ghana  manufacturing hub of Sub-Sahara Africa over the next 7 years. 

Pilar 2: Supportive Regulatory Framework 

Another precondition for industrialization take-off is to create a conducive regulatory environment catering  to the following: 

• Business-friendliness and readiness: Reduce red tape, streamline procedures, and ensure clear,  predictable regulations to ease business operations. This calls for enhancing the ghana.gov website with ease of navigation and 24/7 live support for foreign and local investors to register and obtain  business licenses, pay fees, and file documents. Income Tax law be amended to give tax breaks for  new start-ups and firms engaged in import substitution. 
• Competition and Intellectual property rights (IPR): New laws should be enacted, or current  laws amended to prevent monopolies, promote fair competition and prevent undue market  concentration in all sectors. Also, Strong IPR frameworks to encourage innovation by protecting  businesses’ technological advancements. 

Pillar 3: Access to Finance 

• Amend the Bank of Ghana Act 612 to give the BoG a dual mandate of (i) price stability and (ii)  full employment . Thus, BoG’s inflation targeting framework needs to be abandoned, because  it has never achieved its targets since it was adopted in 2007. Ghana needs a low-interest rate  regime! And we cannot wait for interest rates to fall in line with inflation rates. The current interest  rate regime is too high to offer any support to industrialization and must be drastically reduced!  BoG’s policy rate need not necessarily be above the inflation rate (e.g., the Nigeria Central Bank  kept the official policy rate well below the inflation rate for very long time until recently, and the  naira did not crash! This is another discussion the author would like to have later). And even if the  BoG wants to keep the policy rate above the inflation rate, the risk premium must be reduced or 

eliminated entirely to keep interest rates low. Currently, the BoG sets its short-term interest rate  policy adhering to the international interest rate parity rule which, in simple terms, determines  Ghana’s policy rate as follows; Policy Rate GH = Policy Rate USA + Expected Cedi Depreciation Rate + Risk Premium

With this equation, the only thing making BoG’s policy rate consistently and ridiculously high is  the risk premium it attaches or adds to Ghana interest rates. If you minimize or eliminate the risk  premium (which many Africa central banks have been doing), BoG’s current policy rate should not  exceed 15%. 

The solution? Amend the Bank of Ghana Act 2002 to give the BoG a dual mandate of (i) inflation  targeting(i.e., price stability) and (ii) full employment just like the US federal reserve. The current inflation targeting regime of Bank of Ghana (BoG) -which sacrifices economic growth  for inflation targeting- does not urger well for developing nations like Ghana. Has the BoG been  successful in reaching its targeted inflation rate since Act 612? The last time was under Prof Mills  administration, I remember. So, to ensure the BoG plays active role in Ghana’s economic  development, the Bank of Ghana Act 612 should be amended to give the BoG a dual mandate to  enable it to lower the interest rate to levels conducive for the business environment. 

• Affordable credit: Create credit financing schemes and vehicles ensuring businesses, especially  SMEs, have access to financing through banks, venture capital, or government-backed funds to  encourage investment. 
• Incentives for Growth: Provide tax breaks, grants, or subsidies for new and existing  manufacturing firms, especially those engaged in import substitution or expanding into high growth sectors. 

Pillar 4: Investment in Official Statistics-Create Database for These Relevant Statistics.  I believe the following initiatives will greatly support any industrialization and economic growth agenda. 

• Create Database for the Demand and Supply of Made in Ghana Goods : A database to support  domestic industry and import substitution will be to create a platform (on ghana.gov or new  website) which publishes contacts of companies producing locally manufactured intermediate and  final goods. The platform should also contain information (address and contacts) of local suppliers  of raw materials and inputs. For example, a company producing plastics and paper supplies needing  raw materials should be able to find a local supplier of the input in the database. Likewise, an  importer of baby food or building materials should be able to find local producers on the website.
• Create a dedicated Labour Statistics Unit (LSU) to report Monthly/Quarterly Jobs  Gains/Losses: Since independence, Ghana has not had a credible employment (jobs) tracking  system to report monthly jobs gained or lost. Being able to track job gains/losses consistently is a  better leading indicator of economic prosperity than reporting the growth rate of GDP. When the  economy is recording positive net job growth consistently, all other macroeconomic indicators will  be good. In advanced economies like USA, people care less about GDP growth, inflation rate,etc what matters is the monthly jobs report! Once there’s positive net jobs, other indicators do not  matter much. The LSU can be created as a sub-unit of Ghana Statistical Service or the employment  ministry. 

The Take-Off or Implementation Stage! 

Pillar 5: Increase Ghana’s National Grid & Electricity Generation Capacity 

• Double the Power Grid: For the economy for work for 24-hours, we all agree it would need the  national power grid be at least doubled. And any industrial plan would need electricity power  behind it; reason Nkrumah installed the Akosombo dam. As of 2024, Ghana’s total installed power  generation capacity is estimated to be approximately 5,500 MW (hydro~33%, Thermal~65%, Solar  & Renewables~1%). Lots of room for investments in Solar & Renewable energy sector. 
• Partnership with Elon Musk and Tesla Energy for Solar Power Generation: Solar energy is  abundant in Ghana, and we have a great opportunity to tap into the abundant sunshine by partnering  with Tesla energy to increase solar power generation over next 7 years.  

Pillar 6: Investments in Public Transportation 

• Provision of Free (or Subsidized) Public Transportation: Availability of Public Transportation (  to foster easy movement of people and goods) is vital for economic growth and 24-hour economy. The blanket adoption of privatization policies under the structural adjustment program (SAP) has hurt critical sectors such as transportation in the country. Almost all developed and advanced have  reliable, affordable, or subsidized public transport systems comprising buses, rails and trams.  Reason advanced economies have invested so much in free (or subsidized) public transportation is  because of its critical importance in boosting or stimulating economic activity by enabling free and  easy movement of people (i.e., labour) and goods (i.e., firms). When people and labour can move  freely for 24 hours, supply of labour is increased (and according to Say’s Law, supply will create  its own demand)- and the supply of labour will be demanded by businesses who need people to  work around the clock. Thus, classical economists believe supply creates its own demand , and 

Keynesian economists believe demand creates supply- and both are right, because there is evidence  which supports both. So, a huge public investment in “free” and accessible transportation will be  money-well-spent because of its huge economic benefits. 

• Investment in Railways Linking all Regional Capitals: One of the missing pillars for industrial  development in Ghana has been inadequate of investments in railway transportation. Railways  linkage all regional capitals is a non-negotiable foundation that must be laid before any serious  industrialization can thrive. We should also invest in both cargo and passenger trains to provide  easy transport of people and goods. Passenger rail transportation access to regional capitals will  also ease the congestion in Accra. For example, of people can, by rail, get to Accra from Winneba  in less than 20mins, rural-urban migration will ease. People will buy lands and build outside Accra. 

Pillar 7: Forward and Backward Linkage Industrialization 

• Targeting Top 10 Imports: To build a resilient economy ( and a Ghana beyond aid), we have to  take import substitution industrialization seriously. And a good starting point should be to target  Ghana’s top 10 imports. According to the 2023 Ghana Trade Report, our top 10 imports are; 

With exception of secondhand vehicles, all top 10 imports involve demand for US dollars (Ghana  Cedi buying US dollars). Therefore, import substitution local firms should be developed to produce  these goods locally. We should: revive Tema Oil Refinery, aggressive investment in local rice  production via public-private partnerships, develop a local producer of cement clinker, etc.  Agri-business firms must be targeted to produce rice, cereal grains, chicken, etc., to attain food  sufficiency. 

• Forward Linkages: Any industrialization policy in Ghana must consider forward and backward  linkages for its to be effective in reducing importation of raw materials and intermediate goods. Forward linkages occur when the output of an industry serves as an input for other industries 

downstream. For example, firms producing cement clinker will have a forward linkage with local  cement producers. 

• Backward Linkages: Backward linkages occur when an industry creates demand for inputs from  industries upstream in the supply chain. Thus, the product of the newly emerging industry induces  demand for materials and enables the emergence of supply industries. This means local firms  should be developed to supply inputs ( raw materials & intermediate goods) to import substitution  industries. Without forward and backward linkages, local producing firms would still be importing  inputs and keep the cost of production high, making them non-competitive. 

Pillar 8: Investment in Critical Infrastructure 

• Physical infrastructure: Expand the road network, dualize Accra-Kumasi, and investments in  energy, and digital infrastructure are critical for the efficient operation of industries. 
• Digital infrastructure: Make affordable high-speed internet and digital technologies to ensure  industry is well-connected and competitive globally. 

Conclusion 

The author holds the view that, although the policy initiatives mentioned in the NDC’s document on  24-hour economy are laudable, they can be effectively implemented (or achieve success) within the  context of a broader and well-crafted industrial policy plan. The best industrial policy will be one with  prime focus on import substitution, and the eight (8) points outlined above should be critical pillars of  an industrial policy for Ghana. An industrial plan, having these pillars, will make the economy resilient,  prosperous, make our currency stable, and deliver food sufficiency. 

Author: Jeff Sampong, Graduate Teaching Assistant, Johns Hopkins University 

Email: jefsam5@yahoo.com