Economic Growth and Policy Benefit Dilemma in Ghana: A Repetition or New Era?

President Akufo-Addo

Accra, February 20, 2018//-Ghana’s economic growth is robust in figures but its impact may take some years to be felt by people living in the West African country.

The growth is increasing, from 3.6% at December 2016, to 7.9% in  first year of the current government, and the indications are that it will be even better this year.

The President of Ghana, Nana Addo Dankwa Akufo-Addo alluded to this in his second State of Nation Address (SONA) read in Parliament this month.

“We have increased our international reserves, maintained relative exchange rate stability, reduced the debt to GDP ratio and the rate of debt accumulation, we have paid almost half of arrears inherited, and, crucially, we are current on obligations to statutory funds. I am also pleased to report that the 3-year IMF-supported Extended Credit Facility Programme, begun in 2015, comes to an end this year”.

He continued: “The relatively good macroeconomic performance in 2017 will strongly support our successful completion of the IMF programme. We are determined to put in place measures to ensure irreversibility, and sustain macroeconomic stability, so that we will have no reason to seek again the assistance of that powerful global body”.

Dr Mahamadu Bawumia, Vice President and Chairman of the country’s Economic Management Team

Why  the delay results

However, in spite of this impressive economic performance, majority of the citizens in Ghana are yet to see the fruits of the economy. This stems from the fact that the few policies and programmes implemented by the government will start bearing fruits in some few years to come.  Also, most of the government programmes will begin in the course of this year and you don’t expect them to start having impacts immediately, economic analysts said.

Also,  the economy in its current form is yet to create jobs for the teeming unemployed youth.

A renowned Economist at the University of Cape Coast, Professor  John Gatsi, noted that the impacts of the policies and programmes implemented so far by the government “would be felt only minimally and many cases will not be sustained because most of the policies implemented since 1993 including the current regime are the sources of problems that need another policy set to deal with”.

Prof John Gatsi, University of Cape Coast

For instance, under the Planting for Food and Jobs programme which began in 2017, though laudable, its implementers did not foresee the current challenges facing it.

“We are implementing a flagship agriculture policy to among others attract young people into agriculture but have no land banks that young people can easily access for farming”, Prof Gatsi said.

Additionally, as reported by the media some farmers under the programme who benefited from the 50% subsidy on fertilizer could not account for their fertilizers. While some of the fertilizers were smuggled by some party faithful to neighbouring countries for sale.

In the mix of all these embroglio,   the Minister of Food and Agriculture, Dr  Owusu Afriyie Akoto recently announced that the programme created 745,000 jobs in rural Ghana in its first year of implemention. But he was challenged by members of the General Agricultural Workers’ Union (GAWU), minority MPs and some civil society organisations. They described his figure as an exaggeration.

So, that programme’s benefit of job creation is still in doubt. Also, its objective of ensuring food sovereignty may elude the country.  ” It is a disgrace that we have had to rely on our Sahelian neighbours to make up the deficit in foods, such as vegetables”, President Akufo-Addo lamented in his 2018 SONA.

Furthermore, the government restored teacher and nursing training allowances, doubled the capitation grant, and implemented the Free Senior High School  (SHS) education, last year.

The free SHS education programme alone has supported 90,000 more students gain access to SHS education in the country in 2017. This figure is higher than that of the previous year  (2016).  Although, it is laudable, it created congestions in the schools, leading to the outbreak of diseases such as meningitis and H1N1 influenza. Some student event lost their lives due to the diseases.

Amazingly, the government which pride itself as ‘business friendly government’ did not factor in the concerns of private Senior High School managers and went ahead to implement the free SHS programme without addressing their concerns. Till date, private schools are not part of the government’s free SHS programme. Some of them have started diverting to other business areas, while others are at the verge of collapse.

“Also, while implementing enhanced roadmap to free education at the SHS level, solution driven policy would have envisaged that over the past four decades private SHS system has become a business sector for which private schools operated have taken loans to put up school infrastructure and inability to generate revenue through school fees which also depends on enrollment figures will contribute to high loan defaults and non performing loans in the country”, Prof Gatsi said.

He was quick to add: “The conversion of about 95% of Polytechnics to Technical Universities means low enrollment for private universities and its implications for layoffs , loan defaults by private universities and increase non performing loans.

Similarly, since the coming into office of this government, it has renewed the fight against illegal mining popularly called galamsey to save water bodies, forest reserves and the environment at large. But the manner it is being done is not best the best. For instance, legal registered small holder mining companies are out of business due to the ban.

This Prof Gatsi said: “The implementation of the policy to stop galamsey should have envisaged the socioeconomic problems of adding legal small scale license miners as non operation for over a year meant legal job losses and increase loan defaults crystallizing into increased non performing loans which is another problem for the banking sector”.

Upcoming programmes may not make a different 

Agriculture forms the backbone of  the government’s  flagship 1-District-1-Factory programme. “The majority of the proposals that have been evaluated and accepted for support under the scheme are agro-based.

It is food processing, after all, that has been the take-off point for industrialization in most developed societies. It also fits in with our determination to open up our country, and make jobs and facilities available in all parts of the country”. These are the words of the President of the Republic.

This year, the One-Village-One-Dam project starts full operation. It is a simple, low-tech project, but these dams will make a big difference to all our lives and the livelihoods of our farmers. Already, many of the little dams that had been abandoned, have been rehabilitated and brought back into use, according to President Akufo-Addo.

Also, the President  signed into law the Acts setting up the Development Authorities early this year. The creation of these Authorities marks a fundamental change in how part of the development budget, i.e. the equivalent of $1 million per constituency per year, is going to be spent in the country.

“Local people will make the decision on what their greatest needs are, and direct the funds to those areas. Luckily, there is some consensus on what constitutes the basic infrastructure needs in all communities, and we expect a smooth take-off in the work of these authorities”.

However, according to economists these programmes won’t be able to provide immediate jobs for the teeming unemployed youth criss-crossing the length and breadth of the country in search of jobs.

Admittedly, the President said his SONA: “Mr. Speaker, the subject of job creation has to be at the top of my agenda. The number of young people, who cannot find work, is staggering, and a threat to our national security. I am determined to work to guarantee and secure the future of the young men and women of our country”.

“Every major policy that my government has implemented in the past year has been essentially about the youth. We will equip the youth with the skills that will enable them to be productive”, he stressed.

“As a start, this government has established the Nation Builders Corps to employ 100,000 young persons, in 2018 alone, to assist in public sector service delivery in health, education, agriculture, sanitation and the revenue collection department of the Ghana Revenue Authority (GRA).

Stakeholders have had a series of meetings on this policy, and the modules have been designed for each of the designated areas. The details are currently being fine-tuned, and next month, this policy will formally take off to join the other youth employment initiatives”.

Advice to government

Prof Gatsi therefore advised the government: “Good economic policies are carefully considered to address the fundamental problems of the country. Though such policies are expected to solve problems and enhance livelihood of citizens in the medium to long term, they must indicate specific benefits and time period to realize them”.

 ‘The point is that when policies are carved out well as solutions and implemented outside the box they help solve problems and improve socioeconomic growth of the country. The basis and pipeline of benefits for our policies should be objectively interrogated in the interest of Ghana”.

By Masahudu Ankiilu Kunateh, African Eye Report

Emails: mk68008@gmail.com and info@africaneyereport.com

 

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