The Bank of Ghana earlier last year closed down five banks because they were said to have breached several banking regulations. This was after it closed down UT Bank and Capital Bank in August 2017.
The two banks were closed down because their liabilities were more than their assets, forcing the Regulator to allow GCB to take their good assets, while PricewaterhouseCoopers recovers their bad debts.
Some of the banks were saddled with high non-performing loans, $2.4 billion energy sector legacy debts and were also thinly capitalised, and as such, were unable to underwrite big ticket transactions. According to the Central bank, the cost of liquidating the troubled banks reached over 13 billion cedis.
These activities was done to strengthen the financial sector, which is one of the backbone of the economy. But for the economy to achieve a sustained economic development, the environmental sector would also need the same special attention given to the financial sector.
A dirty environment has quantifiable cost for the economy and the well-being of societies. For example, over US$700 million would be needed to permanently resolve the problem of perennial flooding in Accra alone.
More than 17,000 people die annually as a result of exposure to air pollution, with children and women being the most affected victims. Ghana need over $650bn to reclaim galamsey lands, this was according to Prof. Frimpong boateng, and among others including high rate deforestation, illegal mining and logging, improper land settlement and open defecation.
Without adequate policy action, these cost will continue to increase, and can have tangible effects on the economic, for instance via reduced labour productivity. Similarly, the prospects for long term growth are also under stress – for example, climate change is projected to decrease global GDP by 1 to 3.3% by 2060.
These are of course, but a microcosm of all the environmental challenges we face. Yet, action to address these pressures often proceeds too slowly.
Policy makers shouldn’t fear that stringent environmental policies may constrain competitiveness and growth. Because there is a lot of studies that shows stringent environmental policies with high economic growth. Evidence from the OECD clarifies this.
Based on analysis of two decades of data on the stringency of a subset of environmental policies and economic outcomes in 24 OECD countries, it shows that productivity has generally not been negatively affected by the introduction of more stringent environmental policies. In the quest of this, there are loser and winners.
The most productive and technologically advanced companies tends to actually gain from tighter environmental policies, an outcome likely reflecting their superior ability to grasp the new opportunities by innovating and improving their products, but also potentially by relocating part of their production abroad.
In contrast, the least productive firms – which generally use their resources less efficiently – may see a temporary fall in their productivity growth, possibly as they require more investments to cope with the more stringent environmental requirements. Some of the least productive firms may cease to operate. But with the case of Ghana where industrialisation is low.
And most of the environmental pressures is created by citizens, hence the government has the greatest responsibilities in the area of law enforcement, innovation and technology and commitment to ensure environmental quality. In the area of law enforcement, the town and country planning division should be up and doing as they were previously, by summoning people who flaunts the law.
Finally, we can also do much more to align policies across many different areas, such as taxation, investment, land-use or sectoral policies, to be more consistent with environmental goals.
Article by Adu Gyamfi Derrick