Business News of 2014-03-28

‘Single Spine Pay Policy not cause of economic challenges’

A chartered accountant, Mr Sydney Casely-Hayford, has urged the government to maintain the Single Spine Pay Policy (SSPP), since it is not the cause of the current challenges facing Ghana's economy.

He said less than 50 per cent of the country's revenue was used in the payment of salaries and allowances of civil and public servants, but not the 70 per cent that the government had been putting out.

Mr Casely-Hayford said his conclusion was based on his analysis of the 2013 financial figures published by the Ministry of Finance and Economic Planning on the government website.

He was delivering a lecture on the topic; 'The public wage bill, labour agitations and the falling cedi...Is Ghana's economy on the brink of collapse?' organised by the 'Today Newspaper' in Accra yesterday.

The lecture touched on the public wage bill, the state of the SSPP, government revenue, government borrowing and the high interest rates.

SSPP

The chartered accountant said the SSPP was introduced to improve the salaries of public sector workers, with the view to enhancing their purchasing power.

He said although the payment of salaries and allowances of workers had gone up, the about 8,700 public sector workers alone could not have received the GH¢9.2 billion as their salaries and allowances in 2013.

He claimed that there were many ghost names on government payroll that needed to be eliminated to reduce government spending on salaries.

Mr Casely-Hayford said the educational and health sectors took greater part of the salaries and suggested that the government could consider selling off senior high and junior high schools to the private sector, and consequently allow the private sector to generate their revenue and pay teachers.

Besides, Mr Casely-Hayford said, the government could privatise the district hospitals and allow the owners to take over the payment of salaries of the health workers.

He said the government could generate enough money from the capital raised from the sale of the schools and hospitals, as well as from income tax.

High interest rate

The chartered accountant said interest rates were too high in Ghana, with the government borrowing at 30 per cent interest rate.

Mr Casely-Hayford said the commercial banks gave out the money to micro-finance companies for onward lending to people in the small and medium-scale enterprises at high interest rates.

"What we are doing here (in Ghana) is not banking. It is usury. The central bank has to push them to drop the interest rate," he said.

Other challenges

Mr Casely-Hayford said Ghana's economy was facing challenges due to weak economic fundamentals, but indicated that the country's economy was not collapsing.

He mentioned poor state of the national purse, the government's excessive borrowing, high interest rate, poor management of the SSPP and erratic electricity and water supply as some of the challenges facing the economy.

He said the government generated only GH¢438 million from the budgeted grant of GH¢1.3 billion in 2013.

The chartered accountant expressed the hope that the economy would pick up because the government would yield more revenue from the increases on Value Added Tax and imports.

Recommendations

Mr Casely-Hayford recommended that the government devised ways of raising more revenue from the informal sector, which constituted two-thirds of the nation's workforce. He stressed the need for the Auditor General to take steps to remove ghost names from the government payroll.

The chartered accountant stressed the need for the country to explore other markets in Africa to increase business opportunities.