A 24-hour economy: Realism versus erroneousness : 24houreconomy

A 24-hour economy: Realism versus erroneousness

8 January, 2024

The former president of Ghana and the flag bearer of the National Democratic Congress (NDC), Mr. John Dramani Mahama, recently announced his intention to run a 24-hour economy if elected president. This proposal has generated a lot of economic and political discourse on electronic and print media in Ghana and beyond on its realism and erroneousness as an economic development strategy because many people have not yet come to terms with its meaning and underlying features. This article intends to qualitatively, without any political malice, unveil the effulgence of the underlying features of a 24-hour Ghanaian economy. Furthermore, it will stimulate effective discussions, assessments and perhaps, the implementation of the policy prescription. Moreover, it will help readers recognise that the proposed 24-hour Ghanian economy merits careful consideration for the country’s economic advancement because any policy or strategy that has the potential to generate a positive net social benefit needs to be perused and pursued cautiously and vigorously, regardless of one’s political, social, academic, religious or economic inclination.

Benefits of running a 24-hour economy

In its simplest sense, a 24-hour economy maximises the use of economic resources to produce goods and services day and night each day, week, month and year. Some have referred to it as running a shift system in private and government organisations where workers alternate between working day and night hours. Proponents of this development ideology or strategy envision benefits for the Ghanaian economy after its successful implementation, including higher economic growth, improved citizens’ living standards, the creation and expansion of markets and opportunities, and the development of local ingenuity and adaptation of foreign technologies or innovations. Furthermore, benefits like higher government revenue, increased foreign exchange, more public-private sector partnerships, the expansion and maintenance of social overhead infrastructure projects and facilities, and improved national governance quality will accrue to the nation. These benefits are explained as follows:

Higher economic growth: The government will assist businesses with financial and technical support to help them expand and use more resources for the production of goods and services. A 24-hour economy throughout the year will increase the employment of resources and the production of goods and services. It will promote firms’ use of idle and under-utilised resources to increase the output of goods and services and national income. Substantial output growth is possible given an efficient combination of productive inputs, the allocation of resources, and a positive change in citizens’ attitudes toward work.
Improved citizens’ living standards: Higher resource employment, higher incomes for resource owners, and the production and consumption of a wide range of goods and services will all contribute to better living standards for citizens.

Creation and expansion of markets and opportunities: Increased output of goods and services must meet a corresponding and proportionate increase in local and international demand. Production is only complete when consumers use the goods and services the firms have produced. As employment and income levels increase through increased economic opportunities, the supply of goods and services will create a corresponding demand for them. Where there are no markets or they are small, firms will encounter inventory accumulation and rising production costs. The discovery and development of new markets through government efforts, the managerial acumen of managers and employees, and the expansion of existing ones will expand the economy’s demand for goods and services. Business firms will earn more profits to expand their scale of operation.

Development of local ingenuity and adaptation of excellent foreign technologies or innovations: A 24-hour economy can promote the development of local citizens’ ingenuity and the adaptation of excellent foreign technologies or innovations to exploit and develop business opportunities and the economy. The availability of economic and technological opportunities will also enable citizens to birth their ingenuity, entrepreneurial skills, or innovative ideas. For instance, the outbreak of COVID-19 brought in its wake many inventions to contain its spread, protect lives and sustain people’s livelihoods. Businesses thrive on profitable opportunities with varied levels of risk and uncertainty. With nature’s unlimited supply of resources and response to society’s needs, the nation must create different economic opportunities for the people. Innovations have been the fulcrum of industrial transformation and the economic development of economies. Good local conditions sustain local inventions, building self-confidence in the citizens for a better society.

Increased government revenue: The government obtains revenue from numerous sources, but the bulk has always come from personal and corporate taxes. As economic activities increase, it will generate more government tax revenue through personal disposable income, corporate profits and royalties for economic growth. A widened tax base will increase tax revenue and reduce the tax burdens of citizens if it is efficiently managed and collected. The government can expand its activities and responsibilities to the citizens to reduce social and political unrest.

Increased foreign exchange: As output and exports increase, the country’s foreign exchange will increase and possibly strengthen the value of the local currency, improve the balance of payments position, and increase its foreign reserves. These benefits will enhance Ghana’s international status and cushion the economy against economic mishaps. A stable foreign exchange rate increases the confidence of local and foreign producers, importers and exporters to do more business and grow the economy. Foreign companies will come into the country and grow the economy.

More public-private sector partnerships: The larger economy will need the cooperation of public and private sector players to ensure the efficient utilisation of resources for the betterment of the citizenry. Joint execution of projects based on effectiveness, efficiency and resource availability will reduce the burden on the government. Government and private sector corporations or partnerships, in executing projects, will provide value for money, leading to a stable macroeconomy and economic, productive, allocative and social efficiencies in resource use. Public-private partnerships will help address market and public sector failures easily through subsidies, taxes, regulations, prohibitions, the creation of markets, efficient monitoring of economic activities, etc. Public-private partnerships promote effective project evaluation. The three evaluation methods that have relevance for assessing economic programmes, projects and activities are cost-benefit analysis, financial evaluation and cost-effectiveness analysis.

Expansions and maintenanceof social overhead infrastructure projects and facilities: The government will spur other economic agents to heighten their performances and increase economic activities or opportunities to speed up economic development. It will, therefore, massively increase its infrastructure projects and facilities to efficiently and effectively exploit resources for maximum benefits. Social overhead infrastructure like roads, bridges, information technology/digitisation, transportation, offices, energy, water, streetlights, etc., are the drivers of sectoral, geographical, regional, industrial and economic transformation in countries. They facilitate the easy usage and movement of goods and services and the application of modern technologies meant for firms’ production and consumption of goods and services in the economy.

Improved national governance quality: A more efficient 24-hour economy can be achieved by ensuring high-quality national governance that is supported by political stability, the implementation of numerous active policies, ease of doing business, inclusive governance, transparency, accountability, and private sector involvement in development issues. The quality of the governance system affects the development of its economic agents and sectors. Political inclusion, transparency, target setting for institutions and workers, reduced bureaucracies and nepotism, an improved legal system, peace and security, etc., will instill confidence in all economic agents to achieve their goals and sustainable economic growth and development. Political inclusiveness, ‘where winners will not take all’, will help the nation or the ruling government exploit all relevant expertise and physical resources to run a 24-hour economy.

Drawbacks of a 24-hour economy

Achieving the proposed or expected benefits of a 24-hour Ghanaian economy will cause higher national debt, demand constraints, hyper corruption, increased criminal activities, dynamic inconsistency, market and government failures, the depletion of natural resources, and frequent breakdown or deterioration of equipment and infrastructure facilities in organisations and the country. The explanations of the anticipated costs of running a 24-hour economy are as follows:

Higher national debts: Rising national debts in most developing countries have tended to pose many negative consequences for national development. Since the government will, directly and indirectly, create more opportunities and provide infrastructure projects and facilities for all sectors of the economy, and the cost of their provision falls on the shoulders of the government, the government or national debt will increase drastically. The financing of government expenditures through local and foreign capital borrowing will have negative economic ramifications, such as high-interest rates, more taxes or tax burdens on citizens and businesses, and a return to the IMF and the World Bank for financial bailout packages. Additionally, the government will give private sector firms subsidies, tax holidays or lower tax rates to expand and employ more resources for production. These incentive packages lower government tax revenue, whereas its expenditure rises, causing budget deficits. Financing budget deficits will increase the future tax burdens on citizens and vibrant businesses, which will inhibit their growth and the living standards of the citizenry. Moreover, it will increase political and social instability, making the government unpopular.
Hyper-corruption: As the size of the economy increases, monitoring becomes a problem for the managers of the economy and private sector entities, and the desire of people and organisations to cheat on the system will increase corruption-related cases. Underhand dealing, influence peddling, commissions, fees, insider trading, bribes, kickbacks, extortion and embezzlement are examples of corruption and are embedded in greed. In another development, the government’s attempts to increase or create more economic opportunities for people and organisations will boost the desire of public and private sector officials or individuals to exploit the system to enrich themselves and place the economy on an uneven keel of economic growth and development. For instance, there will be high-level corrupt practices when government representatives grant entrepreneurs contracts, leases and licences to develop and grow markets, industries and economic opportunities. Also, firms will under-declare their production volumes and profits to evade taxes. Moreover, money laundering, capital flight, the award of contracts to political party financiers or cronies, etc., will soar in the economy. According to Ceesay (2019), sub-Saharan Africa is one of the most corrupt regions in the world, contributing to its low economic growth. About US$150billion is lost to corruption annually, compared to at least US$25billion of foreign aid to the region.
Increased criminal activities: Criminals or armed robbers will operate under the cover of darkness to rub business organisations, individuals and the homes of people who will be at work at night. The inadequacy of security in the country in terms of police and military personnel and equipment, the absence of streetlights, and closed-circuit television (CCTV) cameras or video surveillance technology at vantage points to expose criminal activities will negatively affect the running of a 24-hour Ghanaian economy. Enhancing security services will pose additional costs to society, businesses and the government. If the government does not deal with these problems properly, people may decide to stay away from nighttime economic activities. Many Ghanaians have witnessed daylight robberies that take place in filling stations, supermarkets, bank premises, and on mobile money vendors and bullion vans of banks in recent times, leading to the deaths of police personnel.

Dynamic inconsistency: Dynamic inconsistency is when a government shelves its promise or decision after the public has been informed about it and has affected public expectations. Usually, the lack of political will, resource constraints, unfavourable local and foreign economic conditions, and the agitations of the people and political opponents when things do not go as planned or envisaged will cause the government to abandon the proposed policy or strategy. Currently, the 12-hour Ghanaian economy is bedevilled with inefficiencies and hardships, posing doubts about the workability of the proposed 24-hour economy. The aftermath of unmet public expectations will result in social and political unrest throughout the nation.
Market and government failures: In a liberalised and mixed economy, the lack of markets and market power will most likely lead to market failures. Goods and services that are overpriced or underpriced through variations in supply and demand will hamper the efficient functioning of the market. Additionally, sometimes the government produces or sells certain goods and services due to a lack of markets or significant capital expenditures. Insufficient government and private sector funding could result in the inadequate provision of goods and services, triggering economic crises. Furthermore, since increased economic activities will inevitably lead to higher externalities, the economy and the populace will suffer if government or interventionist policies to address them are inadequate. Usually, such policies include taxes, subsidies, stricter regulations and prohibitions. Inefficient policies, rent-seeking, bureaucracies and other factors can lead to the government and the economy failing to function well.
Demand constraints: Two possible demand problems the economy may suffer from the policy are hyperinflation or recession (low demand). First, the expansion of the economy increases employment of factors of production, leading to increased spending on goods and services. Without correspondingly increasing returns to scale, there will be unintended inventory rundown, galloping inflation, and a fall in people’s living standards. In other words, a lack of the economy’s capacity to contain the increased money supplied or currency in circulation will make everything in the economy cost more. On the contrary, because many citizens earn low incomes, there will likely be inadequate demand for the increased quantity of goods and services produced in the 24-hour economy. Low incomes stifle savings mobilisation and business growth. Again, the low incomes among the larger population will lower the demand for goods and services, resulting in increased inventory accumulation and production costs, collapsed firms, and a decline in economic growth.
Depletion of natural resources, frequent breakdowns, or deterioration in equipment and infrastructural facilities: The extra pressure on the extraction of natural resources and the use of equipment, machinery and infrastructural facilities will deplete them and make them deteriorate or break down easily and faster, increasing the costs of repairs, replacement and the discovery of new resources. Unfortunately, in Ghana, maintenance and repair of equipment and facilities are problems for national development. A 24-hour economy may portend a bleak future for the nation, likely reducing the production of goods and services and the pace of economic growth and development if the authorities do not address these challenges well.

Is it real or erroneous?

After weighing the benefits and drawbacks of the 24-hour economy concept, it can be true to say that although not a novel approach for fostering economic growth and development, it is a reality, having already been implemented in some sectors of the Ghanaian economy and the most developed countries on the planet. The concept is already ongoing in the health, education, manufacturing, trade, security, and transportation sub-sectors in Ghana. It, however, needs to be expanded gradually through the expansion and creation of economic opportunities in sectors, industries and geographical locations. The source of the supply of all good things, the Almighty God of heaven and earth, makes all things abound to all who desire and persevere to make positive changes in life. According to Ben Sweetland (cited in Musau, 2009), the world is full of abundance and opportunity, but the majority of people approach the fountain of life with a teaspoon rather than a steam shovel and a sieve rather than a car tank. They do not make many demands, so they do not get many things in return.

It is noteworthy that not all economic sectors in Ghana can run a 24-hour system at the moment or in the foreseeable future. This is especially true for rural areas where there are inadequate economic prospects, an insufficient transportation system, and limited human, financial and material resources to support economic growth and development. Moreover, the current 12-hour economic system does not provide a sufficient foundation for the efficient running of a 24-hour economy, requiring public and private sector players to work together to address the problems and provide a strong foundation for a 24-hour economy. Furthermore, sight must also not be lost on the fact that no single economic policy has ever provided a magic wand for any nation’s economic development, so the exponents of the strategy should not assume that this policy is an end in itself in delivering Ghana’s economic transformation or development aspirations. Effective leadership and comprehensive economic policies that guarantee efficient resource allocation and coordination have given rise to economic development in economies. The economy has numerous problems, including the policy’s implementation and management costs.

What is the way forward?

It will be unfortunate for any person or group to discard this proposed economic strategy. However, what is needed now is a careful application of cost-benefit analysis, financial or investment evaluations, and cost-effectiveness analysis to determine the proposed system’s net social benefits, if any, and on a non-partisan basis once all signals point to its possible implementation. In other words, members of the political divide must be involved in its planning and implementation processes. The government should engage international governments and diplomatic agencies to seek personnel, markets, financial and technical support for successful implementation and management. Critics of The Free Senior High School (SHS) programme of the NPP Government of Ghana bashed it extensively at its teething stage, but the policy is now providing immense benefits to society. No one should be encouraged to envisage destructive competition of ideas because ideas have built lives and great nations. They may hurt other people or require that others sacrifice their lives for them, but the end will speak for itself.

Notwithstanding the perceived problems of the system, opportunities to tackle them also abound. They just need to be discovered and exploited appropriately and adequately. The Ghanaian economy will see the light of day, given that the policy and opportunities are urgently and gradually exploited, spearheaded by visionary leadership, strong political will, excellent support from all stakeholders, and a change in the attitude of citizens toward work. The efficient operation of a 24-hour economy also depends on the availability of financial capital, developments in digitisation, the expansion of organisations, industries and markets, enhanced transportation networks, security systems, infrastructure development, and the availability of productive inputs.

The proposed 24-hour economy can broaden economic activities in Ghana, so whoever wins the 2024 General Elections in Ghana must not shelve the idea but try and invite workable ideas to fine-tune with and implement based on the gradualist approach to economic growth and development. The strategy can be one of the nation’s antidotes to lifting it out of poverty. In a related development, national concerns such as this emphasise how important it is for governments, legislators, curriculum designers and the media to focus on how economic and development issues are taught, disseminated and applied to the nation’s economic growth agenda. During this time of preparation for the 2024 General Elections, presidential aspirants and their parties must be allowed to spell out their proposed strategies for Ghana’s economic transformation and leave them to experts and the public for scrutiny. The winners of the elections must collaborate with their political opponents to pursue all the good proposed policies necessary to advance the nation’s development.

The writer is a Senior lecturer and the Dean of the Faculty of Humanities and Social Sciences at Wisconsin International University College, Ghana

Email: samacquah@yahoo.com

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