Bawumia visited Kenya to witness the inauguration of new President William Ruto on September 13th 2022.
Speaking to the Financial Standard, Bawumia said relations between Ghana and Kenya date back all the way to the first President of either country, legendary figures Kwame Nkrumah and Jomo Kenyatta.
“We have very good relations that date back to independence, where our first President Kwame Nkurumah and Kenya’s first President Jomo Kenyatta shared good relations. They both engaged in the independence struggle against colonialism through their respective movements. Subsequently, our relationship has been growing. There is a sizeable Kenyan community in Ghana and because of Kenya Airways, a direct flight which I come on, there are a lot more commercial ties between the two countries.” Dr Bawumia said.
Ghana’s Vice President went on to praise the new President Ruto, signalling approval of his campaign message of running a bottom-up economic model.
“The bottom-up economic model is a model of inclusiveness, which is fundamentally a good model. What we have seen in Africa since independence is that we have had development without inclusion. Sixty years after independence, many people do not have a bank account or access to electricity. So many people are excluded from the economic system. If you are trying to transform an economy, you cannot do it on exclusion because a substantial population are among those excluded. The idea that President Ruto has of the bottom-up model is a good one, and I think is one that many other African countries should emulate.” he said.
The Vice President also spoke on the Africa Free Continental Trade Area (AFCTA), a revolutionary free trade agreement expected to usher a new era of trade for African countries.
“People like Kwame Nkurumah were a bit ahead of their time with their vision as they held a view that Africa needed to be cooperative and united, which is today being manifested. AfCTA is the biggest free trade area in the world. It is important that Africa trades by itself as we have largely traded with our colonial masters. AfCTA is an idea whose time has come, and Ghana is the secretariat hence we are passionate about it. There are a lot of opportunities to be realised,” Bawumia said.
“The bottlenecks include logistics, transportation and payments, but recently, I launched the Pan African Payment and Settlement Systems (PAPS) in collaboration with the Central Bank that allows someone from Kenya to buy something in Ghana in Kenya shillings without the need to worry about third-party currency like the US dollar to trade. This is a major innovation that will help us bridge the gap that we have in the payment and settlement area.” he added.
Bawumia was also asked about rising inflation not just in Ghana but across the continent and the Vice President pointed towards COVID-19 and the Russia/Ukraine war as drivers of the phenomenon, whilst also highlighting mitigating measures being implemented by the government and Ghana’s central bank to deal with it.
“The cost of living across the world has just increased phenomenally on the back of the Covid-19, which disrupted the global supply chain and increased shipping costs almost 12-fold. When we thought we were recovering, we had Russia-Ukraine war that has caused an increase in energy costs and as result, food prices skyrocketed. It has affected every country and Ghana has been no exception.
“We are trying to deal with the issue in the context of very squeezed and tight budgets. On the monetary side, the Central Bank is trying to contain inflation with their monetary policy through a number of interest rate increases to try to contain the situation. The government continues to offer free senior secondary school education to our citizens, which lessens the burden on families in terms of the cost of living.” Bawumia said.
He added: “To reduce inflation, you need a good mix of fiscal policy and monetary policy. Inflation is fundamentally a monetary phenomenon, and it’s the fiscal that can drive the monetary side of it. If the fiscal side is not excessive, and your balances are not excessive, you may have to enrol on monetary financing of that deficit, which reduces pressure on prices. You are then able to contain inflation.”