The Director of the Institute of Economic Affairs, Dr John Kwakye, has called on the government to split the cost of Free SHS with parents, to help the government focus on other sectors for national development.
Addressing a press conference organised by the IEA yesterday to review the State of the Nation Address given by the President on Thursday, Dr Kwakye said that the option of splitting the cost of Free SHS is worthy of consideration in the interest of quality and sustainability of the Free SHS policy.
He indicated that the Free SHS has occupied a large percentage of the government’s budget, which has caused the government to contribute just a little to the other sectors, leaving the other sectors lagging behind.
“Because of the large numbers of intakes, [educational] infrastructure and other facilities have lagged behind, which could compromise quality,” he added.
He identified that the key challenge associated with the Free SHS policy was how to balance the large numbers against the quality of students being produced.
He said that the government, much as it wants to make sure that it educates the youth or a large percentage of its human capital, must also consider how much can be accomplished.
Dr Kwakye, when addressing the issue of road infrastructure, noted that Ghana continues to face a large infrastructure deficit, which is partly because the budget has been hijacked by personal emoluments, interest payments and statutory funds, which have consumed almost the entire government revenue.
“The government has introduced several new policy initiatives that have put additional strain on revenue, and as such spending on infrastructure has been relatively low during 2017 to 2019 while it has not spent enough on physical capital or infrastructure,” he added.
Weighing government’s focus on human capital to infrastructure development, he mentioned that it’s uncertain as to how much the government can accomplish in a year regarding infrastructure, considering that this year is the year of roads. He said this to caution the government that “roads are more visible than human capital”.
On the issue of agriculture, he noted that local food prices are still high and beyond the means of many Ghanaians, and that many crops are still subject to seasonality and considerable price fluctuations.
He stressed, “The fact that food accounts for 43% of the average Ghanaian’s monthly spending is enough evidence that food prices are still prohibitively high.”
He added, “We as a country have not been able to stabilise the problem of the supply of food throughout the year.”
Dr Kwakye advised the government to be cognisant of the policy lapses faced by the Nkrumah government in its industrialisation agenda.
He advised the government to learn lessons from the nation’s previous industrialisation experiences and international best practices in implementing the ‘One District, One Factory’, for instance.
He also urged the government to support domestic industries with the relaxed regulatory framework, good infrastructure, stable and affordable power, affordable credit, taxes, availability of supply chain, availability of markets, favourable trade policies, R&D support and stable macroeconomic environment.
He, however, commended the government for its management of the financial aspect of the power sector.
Oil & gas
On the oil sector, he accused all administrations of breaching the Petroleum Exploration and Production Act, 2016(Act 919), which stipulates that contracts should be signed on a product-sharing basis, whereby the investor and Ghana agree on a formula to share the oil without the investor being offered any block concessions.
He described the state’s attempts at job creation, especially through the Nation Builder’s Corps (NaBCo), government’s flagship employment programme, as providing only a palliative, instead of a permanent, solution to the unemployment problem bedevilling the country.
According to Dr Kwakye, the only real means by which government could deal with the rising unemployment numbers is to have a vibrant private sector which will create jobs on a scale necessary to absorb the numbers.
He concluded that the private sector will need public support to create an enabling environment for growth.
On the issue of the state of the economy, he noted that in the past three years, the government has returned the economy to growth and stability.
He stated that Ghana has the potential to grow at a higher rate if we can tap our vast natural resource wealth and utilise our human resource capacities, including leveraging the demographic dividend of our youth.
He wondered how macroeconomic stability has trickled down to the people.
“Macroeconomic stability, in general, is good for both businesses and households, but the benefits normally take time to be felt,” he added.
He cited public sentiments that the economic growth at the macroeconomic level has not trickled down to the general populace, thereby leaving a feeling that economic hardship is high in the country.
This, he put down to a number of factors, including the economic growth only accruing to the oil and gas sector, leaving the less buoyant non-oil sectors in the lurch.
Secondly, the ongoing fiscal consolidation policy, he said, has constrained government spending, leaving an unpalatable economic after taste.
He also cited the economic crises and the recent Menzgold and DKM sagas as reasons why Ghanaians are reeling economically.
Touching on the finance sector, he was optimistic about the sector of the economy post-clean-up as stated by the President in the State of the Nation Address. Following the recapitalisations, consolidations, strengthened management and corporate governance, assets, deposits and loans have all shown marked increases.
Similarly, Capital Adequacy Ratio (CAR) has increased with a reciprocal decrease in the Non-Performing Loan (NPL) ratio. This has led to an increase in liquidity, solvency and profitability. The lending rate has also seen a decline in the same period.
He bemoaned the reduced indigenous ownership following the banking sector clean-up on the question of whether we could have adopted a different approach to the banking sector clean-up. He agreed with those who said the government could have saved the local banks. According to him, “Indigenous ownership is key to the overall health of the economy.”
This approach, he said, would have maintained the side of Ghanaian ownership in the banking sector.
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