Subsidies on utility bills should have been targeted at businesses rather than households - Economist

Senior Lecturer and Coordinator of the Economic Policy Management Programme (EPMP), Dr. Festus Ebo Turkson has said government’s subsidies on electricity and water should have been targeted at businesses.

According to him, offering subsidies on utility bills of businesses rather than homes would lessen the overall negative impact of COVID-19 on the lives of Ghanaians and the economy.

Speaking on JoyNews’ Newsfile, Dr. Turkson said he “would have loved to see a situation where some subsidy to electricity will be given to businesses and not households.

“Why? Because for businesses, especially the manufacturing industry that rely on electricity, part of the support that we can give them is for government to pick up part of the electricity cost so that it can reduce their cost of production in the midst of the pandemic.”

His reaction comes on the back of government’s decision to extend its absorption of 50% cost of electricity and full cost of water bill for three more months.

The Finance Minister, Ken Ofori-Atta, addressing parliament on Thursday during the presentation of the Mid-Year Budget Review, said the extension of the package is to reduce the burden COVID-19 pandemic has on the citizenry.

Ken Ofori-Atta indicated that the free water initiative would be for all water consumers while the electricity supply would be limited to only lifeline consumers.

However, Dr. Turkson believes that although the move is commendable, it is best to offer a more generous subsidy programme to businesses rather than households.

“Also if we’re looking at industry growth rate which we projected at 8.6% this year, dropping to 0.8%, it doesn’t look well in terms of the growth figures but then some of these help that government is coming up with, if properly targeted, and business that offer quite a sizeable amount of employment are supported, I think that indirectly it could have an impact on the negative impact on the households.”