Business News of 2014-01-08

Upbeat Mahama pledges jobs

A bullish President John Mahama yesterday pledged more jobs for Ghanaians through his government’s plans this year to boost public investment in infrastructure -- mainly transport, housing, energy and new secondary schools that are the flagship of his educational sector projects.

Seizing on the opportunity of a first-anniversary address and interview with the media at the Flagstaff House in Accra, the President rejected the gloom that some have expressed over the economy because of the spiralling cost of living, saying he is positive about the outlook for 2014.

“I believe 2014 is going to be a good year and the beginning of good things to come. We have the bright hope for a great future...building on the foundation of 2013,” Mr. Mahama told an audience that included journalists, advisors, and ministers.

The President’s words of optimism stand in sharp contrast to the widely-held view that the current year will be financially stressful for consumers and firms because of the impact from government’s fiscal adjustment policies.

The policies, which aim to slash the budget deficit and increase revenue to keep up infrastructure investment, have led to tax hikes, increases in utility costs and petroleum prices -- after subsidies were trimmed -- and a proposal to freeze the salaries of government workers this year, which would imply a reduction in their real wages.

Mr. Mahama defended the measures, likening them to every ordinary family’s efforts to cut back its expenditure when faced with soaring household debt. He said his government seeks to balance-out its expenditure and income, the gap between which was 12 percent of GDP at the start of 2013.

He added that the higher-than-expected deficit in 2013 -- 10.2 percent of GDP as opposed to a target of 9 percent -- shows “the challenge of governance” or the difficulties of having to reconcile the needs of the country with the revenues available to achieve them.

But he insisted that despite the missed targets -- GDP growth was also slower in 2013 than expected -- government laid a good foundation on which it is set to launch major initiatives this year.

He said public works projects to expand the ports, build new roads, revamp the parlous rail lines, increase housing provision, and construct 100 new secondary schools will create more jobs for Ghanaians.

He also promised support for youth start-ups through the Youth Enterprise Centre project that will be launched “in the coming weeks” with GH¢10million funding. The centre will finance the business plans of young entrepreneurs and guide the progress of their enterprises.

The promise of jobs seemed however to rely almost entirely on public investment plans, with little said by the President on how the private sector will be supported by his government to create more jobs -- the route seen by most people as the most sustainable way to expand employment.

And on the question of how his government will address the scourge of graduate unemployment, Mr. Mahama’s style of rhetoric changed from what his government will do, or is doing, to what universities and employers must do to solve what he suggested was a more complex kind of joblessness.

The private sector featured, however, in his strategy to increase housing for workers, as he said he will seek advice from financiers and mortgage providers on how to deepen the mortgage market in Ghana.

The President, who has promised at least 8 percent GDP growth per annum up to 2016, also spoke about restructuring the economy and hinted that this will be the main thrust of the government’s upcoming medium-term development plan to consolidate Ghana’s middle-income status.