Letter on Why Bank of Ghana is a Constitutional Body
First of all, let me indicate that my open letters to you since 2018 dubbed as Fixing the Ghana Agenda Series are to provide the facts on national issues on the front burner for you to appreciate why as a patriotic Citizen, you will ensure to continue to be upholding, preserving, protecting and defending the 1992 Constitution which anchors the Fourth Republic of Ghana, in order to ensure National Cohesion. Hence, the objective is for the interest of Ghana First.
So let me use this chance to call on you, especially, a citizen of Ghana by Birth or Naturalization or By Parliament (thus including the two ex-Guantanamo Bay prisoners in our midst) and you are 18 years old and above and you have not registered as a Voter, then go and register at the District Office of the EC by the last day on 02 October 2023.
Please failing to register by 02 October 2023, then use the window to be opened in 2024 for the mass registration exercise towards voting in the Presidential and Parliamentary elections in December 2024, so that you will be eligible to vote in the Presidential Election. Note the Ghana’s Constitutional threshold for the election of President of Ghana is 50% plus one vote, so you must pride yourself as the likely last voter, so vote counts heavily to prevent a very wasteful re-run in a Presidential election for you to make the Candidate of your choice especially on the winnable ticket of any of the two dominated political parties, hence either on the ticket of the NPP or NDC with Capitalism and Socialism ideologies by Adam Smith and Karl Marx respectively.
Constitutional Body
A Constitutional Body is a creature established by the Constitution to enjoy the almost the same Independence like the traditional three Arms of Government namely the Legislature (Parliament), Judiciary and Executive Arms of Government by the principles of Separation Powers with the associated system of checks and Balances. So in some jurisdiction they are collectively termed as the Fourth Arm of Government.
A Constructional Body is a special purpose vehicle for assigning tasks or mandates for the interest of the Country and or as for Public good as delegated to the Body by the Constitution. The Constitutional Bodies actually perform special executive Powers or tasks independently without fear or favour for the State or public good and so they are not profit oriented. .
Constitutional Bodies may be termed as Independent Executive Bodies and as stated may be collectively termed as the Fourth Arm of Government making independent decisions or functions and regulations by Constitutional Instruments.
The Constitutional functions and key membership or Public Policy Office Holders of a Constitutional Body can only be changed by a Constitutional Amendment Bill and not by an Act of Parliament as pertain to Statutory Bodies.
The rules and regulations of Constitutional Bodies are by Constitutional Instruments and must be initiated by the Constitutional Body, which must be laid in Parliament without alteration for it to mature into law within 21 days, that is if not defeated or cancelled within the 21 days by the vote of two-thirds of the whole number of the Members of Parliament, hence 184 members as in the current state of Ghana’s Parliament. National Development Planning Commission (NDPC), CHRAJ, Bank of Ghana and the Electoral Commission are examples of Constitutional Bodies.
Constitutional intention for Constitutional Bodies
The Constitutional intention for Constitutional Bodies like the Bank of Ghana, National Development Planning Commission (NDPC), or the CHRAJ, the EC, just to mention a few examples, is to make them Independent Executive Bodies or Independent Bodies of Parliament and the Executive Arms of Government in decision making process for special tasks for the interest of the State and or for Public Good by exercising autonomous executive powers, they are to be co-equal to the traditional Arms of Government thus with the applicable separation of Powers with the associated system of Checks and Balances for the interest of the Country and or for Public Good, hence not profit oriented.
So, please let me give clear example for your appreciation of why Constitutional Body with NDPC as an example. Based on the fact that the Fourth Republic is a Multi-Party Democratic Country, hence no more Nkrumah’s Ghana which was one Party State, so the likelihood of Political Parties with either Socialism or Capitalism or Conservatism etc ideological concepts.
Folks, in order to ensure the President of Ghana regardless of his or her political ideology of either Socialism or Capitalism conducts effective economic development of Ghana through the consideration of the resource potential of Ghana and by the application of the principle of comparative advantage of the different District in Ghana, was the wisdom by the framers of the 1992 Constitution when they ceded the Ministry of Economy Wing from the hitherto Ministry of Finance and Economy Planning and established at Article 86 of the 1992 Constitution, the National Development Planning Commission or the authentic Economic Management Team of Ghana as a Constitutional Body which membership include the Government Statistician as well as the Governor of Bank of Ghana to for him or her help in the secondary constitutional mandates of the Governor of Bank of Ghana. Note the Constitution ousted or excluded the Vice President of Ghana as the Chairman of the authentic Economy Management Team.
So per the provisions of the 1992 Constitution, the Vice President of Ghana has no locus on matters on the National Economy aside making his or her personal or non-binding contributions at the Cabinet meetings. Matters on the Economy of Ghana is by the NDPC, a pseudo-Ministry of Economy Planning with membership to include the Government Statistician and Governor of Bank of Ghana as well as the Minister for Finance or Minister for borrowing Loans and not for economy planning.
Please note that Article 73 of the 1979 Constitution made the Vice President as the Chairman of the National Development Planning Commission (NDPC) or the authentic Economic Management Team of Ghana as a Constitutional Body. But for the reason that a person like Madam Akua Donkor is qualified to occupy the Office of the VP, the framers of the 1992 Constitution ousted the Vice President as Chairman of the authentic Economic Management Team of Ghana at Article 86 (2).
So those who have been castigating his Excellency VP Dr Bawumia need to revise their notes on Constitutional Bodies especially the NDPC as the Constitutional mandatory Economic Management Team in at Article 86 of the 1992 Constitutions which is an entrenched clause as the advisory body on economy planning matters to advise the President. So, the Buck Stops with the President. Hence Dr Bawumia a competent economist has a very good chance to break the 8. Hence his witty motto IT IS POSSIBLE.
The Constitutional Intention for the establishment of the National Development Planning Commission as one of the Constitutional Bodies was therefore to ensure an independent body with a qualified competent person as the Chairman of the Economy Management Team of Ghana with the Governor of Bank of Ghana as a member of the NDPC with the constitutional mandates for coming out with short, medium and long time economy development Plans based on the consideration of the resource potential of Ghana and with the application of the principle of comparative advantage of the different Districts in Ghana regardless of the ideology of the President in power.
Folks, one can say that this National Development Planning Commission is the best idea after a consideration of the different economy/political ideologies in Multiparty State. So, to ensure the fulfillment of their dream and avoid fiery populism, the NDPC was established with an entrenched Clause 86 of the Constitution, by the framers of the 1992 Constitution. So the Governor of Bank of Ghana placed NDPC gives a conflicting role in fiscal planning.
Let me reiterate that the Constitutional intention of the NDPC which membership includes the Governor of Bank of Ghana is to make it as a special purpose vehicle for effective economy planning including employment generation , hence members include Sector Minister for all the sectors for economic growth or productions both primary and secondary, hence the Minister of Agriculture, the Minister for Trade and Industries, then the Minister for Finance, the Regional Economy Planning Officers and the Governor of Bank of Ghana for them to come out with Common national development issues and the way forward.
The Governor of Bank of Ghana, is a key member of the NDPC so that he may be able to do what the Governor of the Central Bank of Nigeria did with the recommendations made by a Ghanaian by name Hon Mr. Abraham Odoom to the Governor of the Central Bank of Nigeria in the massive rice production by 2022 as import substitution in order to help sustain the Nigeria Currency and for inclusive growth etc. as the core mandate of the Central Bank. So a Governor of a Bank of Ghana must jointly and severally participate with other members of the NDPC in taking an independent decision in economy planning but solely takes an independent decision making in Monetary Policy.
So Mr Adison, as the Governor of Bank of Ghana must be judged by actions to meet Constitutional mandates and in time of crisis he is required to employ risk management tools to navigate the economy towards Price Stability the core mandate of the Bank. He exactly did so, hence he must be applauded by you the patriotic citizens. Note detractors are permissible in democratic system, so a demo against Dr Adison the Governor of Bank of Ghana is welcomed for him to afford further and better explanation as part of one of the pillars of a Central Bank as Accountability to the people through another pillar of Transparency or openness by Communication to the Public by Press Release etc. after independent decision a third pillar of a Central Bank.
Folks, calling for Mr Adison’s resignation is both unconstitutional and infantile especially from Hon Members of Parliament who must use Constitutional tools to deal with sensitive National issues and not enter into the gutter with the man on the street who is driven by his emotion because a Hungary man is Angry man. Hence, the framers of the Constitution made it permissible for him or her to demo to ventilate his or her frustration or off load any garbage on his or her head but not a member of Parliament with the title Honorable otherwise they be termed as Dishonorable MPs for being dishonest because like President Mills asked in connection with the Wayome debt, one may borrow his words or question as who and what caused the debt which warranted payment by Bank of Ghana in 2022 as a price for public good.
So a constitutional or political question is rearing its ugly heads and the litmus test is should be conducted in Parliament and or in a Court of competent jurisdiction as provided by the Constitution which must be used by Hon Members of Parliament by using the principles of Separation of Powers with the associated Checks and Balances.
So the NDPC was/is to deal with mainly economic development plans especially in the production of primary products in Agricultural productions, production of minerals and citing of Industries/factories or refineries based on comparative advantage of each area regardless of a Political Party’s ideology that is, be it as socialism as in the case of the NDC or Capitalism as in the case of the NPP. It was/is expected that Political Parties or Independent Presidential Candidates were/are to tap and tweak the plans or policies recommended by the NDPC and come out with their manifestos for a very good purpose and this has been abused or not used effectively by all Presidents of Ghana in the Fourth Republic.
So, Cry for the Beloved Country, during President Kofour’s Regime, the NDPC, conducted good research work or feasibility studies on Sugar Production Series which is made of three standalones Units, namely the Cultivation of Sugar Plantation unit, the Sugar Mill unit and the Sugar or ethanol Refinery or Factory unit.
It was found that it was necessary to consider certain factors including the principles of economics of Scale and economics for location of Industries in the determination of where to locate the Sugar or ethanol Refinery or Factory unit. Hence, Tema with the port is an ideal location for Sugar Refinery or Factory, which must operate all year round if Ghana is to meet market demand or import substitution policy. So that cheap raw sugar may be imported from Brazil or India etc if short in supply or farmers decide to play a game and also for market proximity consideration.
The research was done with the support of the Brazilian Government through a Brazilian firm by name Embrampa Sugar Production Consultants, it was found that Salaga or the Savanna areas have the best comparative advantage for Sugar Production Series, due to sufficient land with potential for irrigation from River Daka and with very good yield in tonnage per hectare for production of sufficient raw sugar which unlike harvested sugarcane is storable with high brix level of raw sugar for refinery work as maintainable, so the colocation of all the three Standalone Units in Salaga was recommended. Salaga is the best place because Sugar cane belongs to the grass family and a C4 Plant, through photosynthetic process of carbon fixation with the need for good sunshine.
Copious research work by the NPDC with the external support revealed that the Savannah areas of Ghana especially Salaga near river Daka for irrigation as the best place for Sugar Production Series in Ghana that can even make Ghana the second world largest producer of Sugar. This is so because of the terrain or the area is with large hectares of land, close to River Daka which can be used for both Irrigation and mini-hydropower. Mini-power was also to be generated by steam and waste sugar material like bagasse and above all the climatic condition was even better than Sao Paulo in Brazil, the world largest Producer of Sugar or Ethanol.
So production of 80% sugar recovery was expected in Salaga as well as the expectation of very huge yield of over 70 metric tons per hectare was expected as against less than 20 metric tons per hectare at Komenda as confirmed by University of Cape Coast, you may read this by Google for Spatial assessment of Sugarcane production for Komenda Sugar Factory.
The late President Mills also tried to pursue the same good development Plans and he was initially told by experts including Cargill International and University of Cape Coast that Komenda was not a good place for Sugar Factory for an import substitution policy.
Ironically, President Mahama in September 2014 visited Mauritius and invited Omanicane Flexi Sugarcane Sugar Production Series to invest in Sugar Production in Ghana and the Company visited Ghana and like the Brazilians, their studies confirmed that the Salaga area as the best place for Sugar production. Google for Mauritius Sugar Cane Sweeten trade with Ghana dated 10 September 2014.
Folks, so it is very difficult to understand what the Citizens of Ghana have done wrong (adien or Boni Beain in twi) for their leaders to punish or rob them with the Komenda Sugar Production Series at Komenda, which is an albatross on the necks of the Citizens/Government.
As stated the economy of Ghana is in shambles and will continue to be in shambles due to reckless acts or mismanagement by our governments including the current regime of President Nana Addo. Note Komenda Sugar Production Series was cited without considering agronomic and economic facts but on emotions or populism or socialist political stance, same as the history of why the original Sugar beet Factory which was bought in 1965 or so by Dr Nkrumah from a Dutch Company for Political reason which included his support to address the way local gin as akpteshi was brewed in the area, so it was not for economic reason.
Copies reports on Komenda not an ideal for an economic sugar cane production series include that of reports of experts commissioned by the NLC, the Brazilian Company, Cargill International and reports of Cape Coast University, so the location of the Sugar Production series at Komenda was a very big mistake because sugar losses quality if not treated within 16hrs or so and production must be within 60miles radius It was also not based on available good Sugar Policy before establishment otherwise the factory may not able to function if it does not have adequate land to produce own sugarcane because without the support of the farmers for an accepted fixed price suitable for the farmers and the factory and the factory providing input especially high yielding sugar cane with good brix quality and other material for the farmers and finally off taker Agreements by the affected parties, these requirement very important in Sugar Production.
Hmm, So, Ghana’s economy is in shambles and will continue to be in shambles due to poor Economy management of Ghana by all Presidents in the Fourth Republic without exception for failing to use the Constitutional vehicle of National Development Planning Commission which is a pseudo-Ministry of Economy Planning as stated so as to draw the National Economy Development Plans and let the Minister of Finance to concentrate in the National budget ( raising revenue by tax/investments etc or by Loans and allocation of funds to Agencies.) .
There must be something wrong with our Leaders for the failure of not improving the economy fundamentals of Ghana through production ventures in order to enhance the foreign exchange status, as reserves by Bank of Ghana through import substitution and export of ethanol This is difficult to appreciate. So, Governor Dr Addison cannot do anything with a penchant for foreign goods and our leaders are failing in the import substitution bid.
So the Governor of Bank of Ghana cannot be blamed for our woes in the impairment of the GHC60.8 Billion after Ghana borrowed huge loans including loans for the very bad ventures like the Komenda Sugar Production Series and others which were approved by the same members of Parliament. Hence, the accumulated unsustainable debt which the Governor of Bank of Ghana had to rescue the economy of Ghana from collapse as well as facilitated for Ghana to qualify for the IMF Bailout, as recommended by Ex-President Mahama.
Those who caused the debt by approving the loans or debts are to be blamed and unfortunately, these are the same members of Parliament who are calling for the resignation of Dr Ernest Adison, Governor of Bank of Ghana for correcting their sins. There must be something wrong, so Ex-President Mahama and others should consider re-appointing Hon Mr Haruna Iddrisu to replace the current Minority Leader.
The detractors of Dr Ernest Adison, the Governor of Bank of Ghana must be told in clear language that they are logically going to demonstrate against Ex-President Mahama and not Dr Ernest Adison, the Governor of Bank of Ghana and the two Deputies for Bank of Ghana. This is common sense. Dr Ernest Adison’s excellent work allowed Ghana to gain IMF support at a very good time before the collapse of the economy of Ghana, the support of IMF allowed the rebooting of the Economy and navigation towards Macroeconomic and financial stability and inclusive growth.
This is my epistle to you my fellow compatriots.
So, the impairment of GHC55Billion less GHC5Billion as what was a loss due to exchange movements was the price Bank of Ghana had to pay in 2022 for public good in order to ensure the early gain of the support of the IMF Bailout to facilitate the navigation towards Price Stability for Public Good which is the Core or Constitutional or primary mandate of a Central Bank. Thus Dr Ernest Adison, the Governor of Bank of Ghana arrested a situation which would have precipitated a Military Coup.
Folks, the bravado, wisdom/ foresight and very competent Dr Ernest Adison, Governor of Bank of Ghana with outstanding sense of imagination and judgment are unparalleled. He and the two Deputies have preserved, defended and protected the 1992 Constitution which created Bank of Ghana as a Constitutional Body.
There must be something wrong with the detractors. Yes it is constitutionally permissible to organize the unwarranted and unpatriotic demo since demo is a Constitutional right to ventilate their frustrations indirectly against Ex-President Mahama for being the first person who made the good recommendation for the IMF Bailout and Bank of Ghana has to act accordingly to a sister , the IMF, as a Lender of last resort , which thus resulted in the financial haircut in the Debt Exchange or Restructuring Program, which affected the Bank, as the holder of the National debt which included the debts of the Komenda Sugar Factory and other loans/ debts of the Government of Ghana since the 1990s.
Hmm, Folks Country Hot or what a country of hopeless people, Can you imagine that Dr Nkrumah’s Ghana as at date has no good research work by Crop Research Institute or the Universities and or the West Africa Rice Institute to ensure good massive rice production, so the Group CEO/Chairman of the Jospong Group has to see the VC of the University of Cape Coast in April 2023, in Dr Nkrumah’s Ghana to assist his Company with research work on very good yielding in rice variety and other supports.
Bank of Ghana is a Constitutional Body with three pillars as an Independent, transparent and accountable body, created by the framers of the Constitution for the core mandate of Price and financial or currency stability and inclusive growth. So in times of crisis or Force Majeure situation, a Central Bank hence Bank of Ghana must be judged by the ability to navigate towards achieving and sustaining the core mandate of Price or financial or currency stability and inclusive growth.
Let me drive my point home that the main objective of a Central Banks globally hence including Bank of Ghana is to ensure or maintain macroeconomic and financial or price stability through Open Market Operations, hence Monetary Policy to adjust the money supply etc.
It must be noted that Central Banks of Countries though enjoy independence, the independence may not be absolute because Countries have different laws guiding the determination of the Monetary Policy. In USA the Federal Reserve set the Monetary Policy without input from the Executive Arm of Government and is required to deal with both Houses of the Reps and Senate. But in UK, the Executive Arm of Government gives Bank of England the Monetary Policy Target for the Bank to achieve and communicate to the Public.
In Canada, the Central Bank and the Executive Arm of Government through Contract approach both jointly establish a monetary policy by agreement which the Bank is to work to attain. Ghana has adopted almost the USA method but with some difference since deputy Minister of Finance and other Government appointees are Directors of Bank of Ghana, so the Constitution regardless of Article 285 made the Governor as the Chairman of the Board to afford some resemblance of independence.
Other functions of a Central Bank, hence Bank of Ghana among others like Lender of Last Resort to the Government and Commercial Banks and regulating or overseeing the financial/ Banking System as at Section 1 (c) and (d) of Article 183 of the 1992 Constitutions of Ghana are secondary roles of a Central Bank, hence Bank of Ghana.
Folks let me propound and reiterate on relevant matters on the topic and educate you on relevant matters which will help me to finally drive my point home that the Governor of Bank of Ghana namely Dr Ernest Addison and his two Deputies did very excellent job for Public good as required of a Constitutional Body like Bank of Ghana, a creature of the Constitution mainly for Public Good and not for profit.
The first point is that the Framers of the1992 Constitution took cognizant that even God, the maker of Heaven and Earth did not use his powers to whip or force everybody in line example was/is the story of Lucifer. So the framers made provisions for the possibility for demonstrations by some citizens to air or vent dissenting views whether good or bad for the Country. Hence, a demo against State Institutions or the Government and or Bank of Ghana is permissible because it is another way of demanding for accountability a principle of the Constitution and a pillar of a Central Bank.
Fortunately, Bank of Ghana has accounted for its transactions on matters of public interest or on the front burner. The explanations as proclaimed with Press Releases from the Communication Department or the Bank’s Secretary as well as encounters with the Press by the Governor and others during briefing on the monetary policy.
The Bank made it clear that part of her Balance Sheet amounting to about GHC55Billion was lost as result of the financial haircut or support for the Domestic Debt Exchange Program and this facilitated for the IMF’s early bailout hence a price for public good and that the Monetary Policy has not been disturbed.
The Bank disclosed that due to marketable stocks of government and non-marketable instrument of government held in the books of Bank of Ghana which were built over the past years plus Bank of Ghana’s exposure to COCOBOD, also built over the years, so, as the result of the Domestic Debt restructuring, Bank of Ghana had to pay the price for Public good when the Bank served as the loss or shock absorber of the entire debt exchange program, in order to meet the threshold for the approval of the INF bailout program, So BOG took 50% haircut on a total principle which stood at GHC64.5 Billion at the time of the Domestic Debt exchange based on the cedi and dollar exchange then.
Bank of Ghana explained that it had a new instrument with extended tenor at significantly reduced coupon rate. The non-marketable amounted to GHC32.3 Billion, whilst the marketable instruments was GHC16 Billion with loss from COCOBOD amounted to GHC4.7 Billion. According to the Bank, the three Domestic Debt Exchange Program items of non-marketable, marketable and bill of COCOBOD amounted to GHC53.1 Billion out of the GHC60.Billion for 2022 and price and exchange rate valuation effect was about GHC6.9 Billion of the total loss. Finally, on posting to the General Reserve Account, resulted in an overall negative equity of GHC55.1 Billion.
Bank of Ghana made it clear that the situation did not render the inability to meet its core mandate of price stability and not affect its Constitutional mandate. The Governor indicated that the Bank was fully aware that a sustained negative equity could undermine the Bank’s Credibility, consequently, structures have been put in place to ensure the BOG remains policy solvent and capable of delivering on its primary mandate.
The Bank has furthermore stated that it has sufficient funds to cover cost and build up long term capital reserves without looking to the Government for capital injection and thus undermining the BOG’s independence and credibility of monetary policy and also affect public confidence in the Central Bank’s operations.
For historical records and your consumption, It is important to state some Central Banks globally also had fair share of the negative equity. These include Israel, Germany, Czech Republic, but were able to maintain price and financial stability. Negative Equity means a Central Bank‘s liabilities exceeds its Assets.
Report from the Financial Times news dated 25 July 2023 disclosed that UK Government faced 150 Billion Pounds Bill to cover Bank of England’s losses. Singapore was reportedly posted a loss of$30.8 billion for financial year ending March 2023.
Bank of Ghana also gave very good reasons on why the construction for the fit for purpose Headquarters, as due to the current location of the Main Offices as prone to earthquake and for other technical reasons. It also explained that the source of the fund being used for the work came from huge profit made by the Bank, which ordinary, the Bank should have handed over to the Shareholder, the Government but the Governing Board with the approval of the 100% shareholder decided to use the profit for the construction of the fit for purpose Headquarters. Additional profits were made in subsequent years and was made clear that the Initial work started before the crisis that occasioned the economic depression
The construction is about 50 % complete and it is providing employment to artisans/ construction elements and suppliers of construction inputs and meals and security personnel and it is going to house the subunits of the Bank and some International Institutions from which it will earn revenue in dollars.
It should also be noted that it will improve on the Landscape of Accra and thus enhance the tourist potential of Ghana with associated revenue and employment generations. It will be easily accessible hence with a reduction of turnaround, hence save of fuel cost, Lastly, the old Site could be sold out or rented out to Companies for revenue hence the Project is cost effective. This submission from the comfort of my bedroom is based on the Press Releases etc. of BOG, in the public domain thus a clear authentication of the Bank’s openness or Transparency and accountability to the people, the very important pillars of the Bank as a Constitutional Body, which works for public good and accountable to the people.
It is therefore odd and unacceptable that members of Parliaments with their leader as a former Director of Bank of Ghana and therefore he should be one of the MPs or one of the persons in the Nation who should speak against foolhardiness on financial matters of Bank of Ghana.
As a Leader or as a MP, the Minority Leader in Parliament does not need to be educated that Parliament has constitutional tools by the principle of separation powers with its checks and balances mechanism opened to Parliament to deal with the Executive Arms of Government particularly on Fiscal Policy matters.