THE TRUE MESSAGE OF THE PRESENT STATE OF THE NATION, 2015
BY THE MINORITY IN PARLIAMENT – MARCH 9, 2015
Fellow Ghanaians, on Thursday February 26, 2015 His Excellency John Dramani Mahama once again appeared before Parliament, pursuant to Article 67 of the Constitution of the Republic and presented, what, in his view, is the State of the Nation. As we stated last year, the state of a Nation is “the condition, situation or set of circumstances that pertains at a given time” (ref Chambers 21st Century Dictionary). In our case, the state of the nation is the present condition or situation of Ghana and measures that are to be taken (by the President) to advance the cause of the country over one year.
The President presented his message against the backdrop of negotiations with the IMF for a $1 billion bailout. This bailout has become necessary basically because of the fiscal indiscipline that this NDC government has been exhibiting. The background of the message is a nation steeped in reckless over expenditure, a cholera-infested environment, deplorable living conditions, drivers and passengers disagreeing on fares, high utility charges, a rising inflation, a weakening currency and unprecedented corruption unfolding before our eyes.
Going to IMF has implications as it will require the government to remove all subsidies on utilities and petroleum products and introduce new taxes to absorb losses in revenues to government. In the meantime, GETFund, DACF, NHIF are all in arrears. As I speak there is a raging dispute between Ministry of Finance and NHIA in respect of how much monies the former has released to the NHIA to pay service providers in 2013. Road contractors have not been paid for years and months. The message was delivered at a time when the interest on debt servicing today is bigger than the total debt stock in 2008. The nation has become restless and yet the President paints a very rosy picture!
The NPP has since 2011 repeatedly aroused the conscience of the citizenry about the true state of affairs in respect of the country’s economy. Whenever we have done so government has unleashed its attack dogs including some Ministers, NDC communicators, as well as bare-faced apologists in the garbs of social-commentators, senior journalists, et al, to insult and scavenge those who critique the NDC government’s administration. We take the derisory remarks in our strides, recognizing them as “challenges” in the business of righting the wrongs of these times. What better word “challenges” – so abused in usage to use when in the face of glaring humongous economic crisis, President Mahama and his appointees insist that they are mere “challenges”.
We are fortified in this exercise by the critical analysis which persons with the requisite training bring to bear on the issues that we raise in our own criticism of the current administration. We have always insisted that we criticize to reform and not to destroy. That is what is intended by this media interface.
THE STATE OF THE ECONOMY
1. GDP GROWTH
It is sad to relate that when the President had the opportunity to open up on the real state of the economy he sprinted away from the facts because that is the Achilles heel of the government. Last year, the President said to the nation that “our economic fundamentals remain strong and our mid-term prospects are good.” The President then went on to emphasize his bold declaration with statistics on economic growth. He cited GDP growth rate as if GDP is the only measure of economic fundamentals.
When the President recently met some industrialists in Berlin, Germany he stated to them that “Ghana’s economy will register a GDP growth rate of 5% for 2015 compared with 7.1% (GDP growth rate) in 2014. (ref Ghanaian Times, Wednesday January 21, 2015).
The President’s statement was a palpable falsehood because the 2014 GDP growth is given as 6.9% by the Ghana Statistical Service (GSS) whereas the Ministry of Finance (MoF) and Bank of Ghana (BoG) collaboratively state it as 4.6% with a non-oil sector growth of 3.8% (ref page 158 of 2015 Budget). The difference between the figures of GSS and MoF clearly point to the uncoordinated nature of the management of the country’s economy under President John Dramani Mahama.
The 4.6% GDP growth rate has been reviewed further downwards by MoF, BoG to 4.2%. The question is where did the President conjure the 7.1% GDP growth for 2014 from? Again, for 2015, the President’s own budget statement projects a GDP growth rate of 3.9% and not 5% as the President proclaimed at the Berlin forum. At the end of the negotiation with the IMF, the projected grant for 2015 has been revised downwards to 3.5%. The non-oil sector is projected to grow in 2015 at a mere 2.7% in 2015. That projected GDP growth for the non-oil sector represents the worst non-oil sector performance since 1998! That is the huge economic downshift that the maladministration of President Mahama has foisted on the nation.
The exchange rate that had been used in the 2014 Budget was GH¢1.92 to US$1.00. That Budget projected that the cedi will depreciate slightly to GH¢2.35 to US$1 by December 2014. On February 25, 2014 when the President delivered his message the exchange rate was GH¢2.20 to US$1.00. By the first quarter of 2014 the cedi had depreciated by 17.6%. At the end of August 2014 the cedi had depreciated by 75% since December 2013 and was selling at GH¢3.85 to $1. By December 2014 the cedi had made some recovery from GH¢3.85 to US$1 to GH¢3.20 (courtesy of proceeds from the Eurobond issue and the syndicated loan for cocoa) and even that represented a depreciation of over 64% from the December 2013 level.
Today the exchange rate is GH¢3.60 to US$1.00. The simple meaning is that in the space of one year, between the address of the President in 2014 and 2015 the cedi has depreciated by 63.6%.
At the outset of President Kufuor’s administration the exchange rate was GH¢0.72 to US$1.00. At the point of Kufuor’s exit the rate was GH¢1.1 to US$1.0. That represented a depreciation of 53% over the entire 8-years regime of President Kufuor. Six (6) years into the NDC administration the dollar has depreciated by over 227%. That is the true state of the strength of the Ghana Cedi.
INTEREST RATES, INTERNATIONAL RESERVES, ETC
Kufuor inherited a regime of interest rates that were around 42%. By 2008 interest rates had climbed down significantly to 25%. Today interest rates hover around 32-33% thus significantly increasing the cost of doing business in the country.
The Minister of Finance in his budget presentation stated that our Gross International reserves have since August 2014 recovered from 2.2months of import cover to 3.3months but the net international reserves covers less than 3weeks. The nation needs to know what the real quantum of our international reserves is. The reason for this demand is that in paragraph 74 of the 2014 Budget the Minister of Finance stated our reserves decreased from $5.32billion as at December 2012 to US$5.2billion as at September 2013 which provided for 2.9months of import cover. The projection then was that it would go further down subsequently. The Governor of the Bank of Ghana reported in March 2014 that the reserves decreased to US$4.88billion as at February 2014. In the circumstance, when the President through his Minister of Finance now states that the Stock Position of our Gross International Reserves as at December 2013 was US$5.6billion (par 62 of 2015 Budget) there must be a confusion of figures.
Since 2008 the country’s fiscal deficit and current account deficit have all escalated into double digits. The public debt stock has now risen astronomically from GH¢9.5billion as at the end of 2008 to GH¢76.1billion. This figure does not include the undisbursed portion of the CDB loan. It does not include the borrowings ensuing from the IMF negotiations. It does not include the assistance from the EU which is conditional upon successful conclusion of the IMF negotiations, etc.
With a debt stock of over GH¢76billion it means each Ghanaian, including the child being delivered as I speak owes GH¢3,000.00. Last year at this time when we addressed Ghanaians we stated that the debt burden for every Ghanaian was GH¢2,200.00. Just one year on the debt per capita has increased by 36%.
In 2008, the debt stock of GH¢9.5billion represented 33% of GDP. Today 6years into the Mills-Mahama administration the debt stock has increased by over 701% that is an average increase in the stock of debt by 116.8% a year. The debt stock of GH¢76.1billion means our debt stock has escalated to 67% of GDP an increase of GH¢24.2billion in just a year. This rate of debt accumulation must be frightening to everyone else except the President and his ministers. On this trajectory Ghana is on the super highway to unsustainable debt levels that pushed us to HIPC. At this rate, the international rating agencies may soon classify Ghana as a country with high risk of debt distress and thus compromise our ability to raise further financing from the international capital markets, and worse still, incapacitate the country from servicing and paying our debts.
At the Berlin conference the President stated that Ghana is among the top five recipients of foreign direct investment in Africa. The question that we keep asking is how has that, together with the colossal loans contracted over the past 6years totaling US$27billion impacted the socio-economic development of the country?
Mr. President, the country is now at a preci pice with our astronomical debt pile up and this should be extremely worrying to you as it shall, before long, plunge us into the league of countries with high risk of debt distress.
Mr. President, the interest payment on the stock of debt in 2014 was 4 times Ghana’s oil revenue in that year. In 2015 the interest payment on the debt is projected to be ¢9.6billion. This figure is more than the GH¢9.5billion total debt stock in 2008. Then President Mills and Vice President John Mahama did not spare Kufuor. Today, the GH¢9.6billion represents 6 times Ghana’s oil revenue in 2015. In the 2015 budget the entire allocations to the Ministry of Roads and Highways (GH¢931.6million), Ministry of Trade and Industry (GH¢183.8million) Ministry of Fisheries & Aquaculture Development (GH¢72million), Ministry of Food and Agriculture (GH¢411.8million), Ministry of Water Resources, Works and Housing (GH¢463million), Ministry of Transport (GH¢361.6million) amount to a total of GH¢2.4 billion. Interest payments of GH¢9.6 billion on the GH¢76 billion debt stock in 2015 is four times what has been allocated to these six key ministries combined. For 2014, using these same six key ministries, their total budgetary allocation came to GH¢2,062 million and interest payments in 2014 was three times the total allocation to these 6 key ministries. Today, it is four times. Mr. President this is what your unchecked borrowing and debt pile up is doing to the economy. It is scorching out critical space that was available to government for real growth. Fellow Ghanaians, this is our lot.
MISSING TARGETS IN WAMZ CRITERIA
The economic growth in countries in the West African Monetary Zone (WAMZ) averaged 6.7% in 2013. Aside Ghana, the countries in the league are The Gambia, Guinea Conakry, Sierra Leone, Liberia and Nigeria. Apart from Nigeria, the other countries not counting Ghana are non-oil producing. Ghana’s non-oil sector growth in 2013 fell below the countries in the sub-region, including such countries emerging from war situations as Liberia and Sierra Leone. In 2014 the average GDP growth in the WAMZ was provisionally stated as 6.2%. Ghana’s GDP growth, oil-included, was 4.2% and the non-oil sector grew at 3.8% (likely to be reviewed downwards to 3.5%). So Ghana was the country that was pulling the average GDP in the WAMZ growth downwards! Mr. President that is the plain truth that you did not tell Ghanaians.
At the close of 2013 Ghana was the only country out of the 6 WAMZ countries that had failed to attain even one of the 10 convergence criteria. For the second year in succession in 2014, Ghana scored zero out of the 10 convergence criteria involving 4 primary and 6 secondary criteria. Mr. President, this abysmal performance has not been seen for over 22 years! That is the true state of Ghana’s economy.
Ladies and gentlemen, the state of the economy is in such shambolic state that on Thursday March 12, 2015 the Minister of Finance is presenting to Parliament a Reviewed Budget for 2015. Note that this is not a supplementary budget. It is a Reviewed Budget which means that we are throwing aside the 2015 budget approved in December 2014 only 2 months after the approval. It will be recalled that the Minority Leader in closing the debate on the 2015 Budget for the Minority gave the indication that the nation should expect a Reviewed Budget because of the funding gaps, overestimations and incorrect projections in the 2015 Budget.
A Budget is a work plan for government, usually for a period of one year. It offers predictability to investors, domestic and foreign, to plan ahead. Casting aside a budget which has been approved only 2 months back and introducing a new budget means that the John Mahama-led government is incapable of planning for even one year. This has serious repercussions on investment and therefore the growth of the economy. Fellow Ghanaians, this is how deep Ghana has descended into an abyss.
THE POWER SITUATION
Referring to issues afflicting the power sector the President began by quoting Nelson Mandela thus: “the greatest story of living lies not in never falling, but in rising every time we fall”. The simple response to the President is that some falls are avoidable. The President in last year’s address and in reference to the hardships that the power outages had inflicted on industry, commerce, leisure and residences, stated, “we have been there before”. This year in referring to the power crisis, he used the same words “we have been there before”. Ghanaians would have wished to hear the bold declaration, three years into this “adumdum adumdum” saga: “countrymen we are now out of the woods”. The President added, “big businesses and industries are also suffering and threatening to lay off workers”. The fact is, many businesses and industries have already laid off many workers and some have indeed collapsed and yet others are relocating to other countries in the sub-region.
Mr. President, some businesses and residences have been gutted by fire because of power outages; property including houses that have been built with pension money, running into billions of cedis have been lost because of power outages; many people including bread winners for families have lost their lives because of the power crisis. Mr. President, some industries and businesses have already collapsed, increasing the already precarious levels of joblessness. That is the real state of the effect of the power crisis.
In one breadth in his message the President assured the nation, “I, John Dramani Mahama, will fix this energy challenge”. In another he says he will hold the Minister for Power responsible for inability to fix the problem. One hopes the President is not already finding an escape route for himself for non-delivery of his pledge. The buck stops with him.
The President made a very loaded statement in reference to the power crisis in 1983, 1997-98, 2006-2007: He said, “in the past what we have done has been to manage the situation. I do not intend to manage the situation as has been done in the past. I intend to fix it! I owe it to the Ghanaian people. I, John Dramani Mahama, will fix this energy challenge”. To “manage”, could mean ‘to deal with something or handle it successfully or competently’. It could also mean to ‘be able to control, or find enough room, time, etc. for something’. On the other hand, to fix means ‘to mend or repair something’ or to place something firmly somewhere’. So the Presidents’ play on words is an illusion especially when ‘fix’ also means “to arrange (the result of something, e.g. race, trial, etc.) dishonesty”. It also means “to bribe or threaten someone into agreement”, or to ‘thwart, punish or kill someone’. Mr. President, that statement is pregnant with insinuations.
However, since the President was beating his chest in the declaration of “I intend to fix it!” and “I John Dramani Mahama, will fix this energy challenge” it is safe to infer that in the President’s view his predecessors, Jerry John Rawlings, John Agyekum Kufuor and John Evans Atta Mills merely controlled, contained or mitigated the problem but did not decisively and frontally confront it.
That is most unkind and uncharitable especially to Rawlings and Kufuor. Following the 1982 – 85 power crisis VRA came up with a researched paper that defined the architecture of sustainable power generation beyond 1985. The rehabilitation of the 30MW Diesel Power Plants at Tema which President Nkrumah had procured in 1961 but which had been lying fallow was done. In January 1998, under President Rawlings the 220MW Aboadze Thermal Power Plant (Takoradi 1 or T1) came on stream. In June 1999 a 110MW Steam Turbine came on board T1 to make it a combined cycle plant that was capable of generating 330 MW. In response to the 1998 – 2000 power crisis the Rawlings regime engaged Aggreko Plc to generate and supply 30MW into the system.
Rawlings government in 1998 meanwhile further expanded the Aboadze Power complex to roll out additional 330MW. This was undertaken by Takoradi International Company (TICo) also referred to as Takoradi 2 or (T2). The Gas Turbines to deliver 220 MW of the total 330MW were completed and commissioned in year 2000. This is a joint venture between VRA and TAQA of Abu Dhabi (UAE). The remaining 110MW steam component is yet to be completed. One could conclude that Rawlings added at least about 580MW to the nation’s power generation and this does not include the emergency power generations. Mr. President, Rawlings was not merely managing or controlling or tinkering with the problem. He had started to confront the issue of sustainable power generation and utilization!
On Tuesday February 24, 2015 the NPP Minority group in Parliament, led by the Spokesperson on Energy Hon. K.T. Hammond held a press conference in the face of pedestrian-level and infantile propagandist gimmicks to deflate the theory that the darkness that this country has been plunged into is attributed to predecessor governments, especially, Kufuor’s administration. It appears the explanations and facts given did not register on our President which is why he continues on that path in his message to the nation.
Under President Kufuor the country experienced power crisis spanning from August 2006 to September 2007. During the crisis and in the short term government procured and installed 126MW Diesel generating plants; government procured by lease of 25MW generating plant from Trans Tema Ltd; facilitated the rolling out of 80MW Mines Power Plant; procured 6million compact fluorescent bulbs to replace the incandescent bulbs which saved about 120MW. The Kufuor government concerned itself not only with generation but sustainable utilization!!
Learning useful lessons from the crisis, government introduced programs and projects to address the medium to long – term perspectives of power generation. In 2006 accelerated works by VRA began on the 126MW Tema Thermal 1 Power Plant (TTIPP) and by 2008 the project was completed. Under Kufuor’s administration VRA started the procurement and construction of the 50MW Tema Thermal 2 Power Plant (TT2PP) and was completed by mid 2009. The construction of the 230MW Kpone Termal Power civil works were far advanced and due for commissioning in July 2009. The Mills-Mahama government for reasons only known to themselves stopped the project midstream. Works have been allowed to recommence since 2014 and it is expected that 230MW will come on stream in the second quarter of the year, or at worse the third quarter of the year.
Kufuor initiated the 400MW Bui Hydro-electric Power Plant. The development and procurement of the financing of the 132MW Takoradi 3 Power Plant (T3) at Aboadze was under Kufuor. The project was continued by the NDC in 2009. The turbines at Akosombo were retrofitted to generate additional 108MW. The 200MW Sunon Asogli Power Plant IPP project was facilitated by President Kufuor and so also was the 126MW Osonor power plant which has been acquired by SSNIT subsequently and rechristened CENIT Power Plant.
Manifestly, therefore, under President Kufuor the generation capacity that was added to or commenced totaled 1,452MW. This plus the 120MW savings accruing from the resort to energy saving bulbs means that under Kufuor power availability was projected to increase by 1,572 MW. This figure does not include the 126MW generating plant which we are informed are Sierra Leone bound. If they are activated, the generation capacity will have been increased by 1698MW. Add this to the 580MW power generation addition under Rawlings and that is already 2278MW between the two former Presidents.
Mr. President, this reality is attested to by the statement which your predecessor President John Evans Atta Mills, through the then Finance Minister Dr. Kwabena Duffuor, read in Parliament on Thursday March 5, 2009 in presenting the Budget of the year 2009. The Hansard of that day attests to this. President John Dramani Mahama, do you know or not the efforts of your predecessors to terminate the power crisis in the country or you are just trying to discredit them?
THE CURRENT POWER CRISIS
The power crisis that the nation is yoking under has lasted for two and a half years already. It all began in August 2012. The reasons that have been adduced include the alleged wreckage done to the gas-pipe lines from Nigeria by a ship; the unforeseen hitches that had affected the scheduled completion of the Atuabo gas pipeline; alleged sabotage of the West African Gas Pipeline by saboteurs; poor water intake into the Akosombo dam; maintenance works on some of the thermal plants at Aboadze and lack of funds to procure crude for the thermal plants or even diesel for the Diesel plants and, the mother of all comic reliefs, the appeasement of the deities at the Aboadze Thermal Plant enclave to stop them from causing the malfunctioning of the systems there!!
The heavens were exceedingly gracious to us in 2011. The Akosombo Dam was approaching capacity that year and in anticipation of further rainfall VRA spilled away impounded water for three days. The water levels dropped. The rains ceased. We had less than average rainfall in 2012 but in both 2013 and 2014 we have not had drought. The truth is that we have not managed the impounded water well.
The other dimension, Mr. President is that because of your government’s indebtedness to VRA, the latter could not import crude to fire the thermal plants and VRA was thus compelled to overly depend on Akosombo to generate more power into the system. This has been the practice since 2012. It is said that VRA has been generating between 25 – 30% much more power from Akosombo than they ought to be doing. Therefore Mr. President, the fall in the level of the Akosombo reservoir to a critical level is not solely due to low rainfall in the catchment areas as you stated but more as a result of the spillage and the over generation by VRA.
Government is indebted to ECG by more than GH¢700million and they are also indebted to VRA. ECG which needs to change some of their distribution lines cannot do that because of lack of funds. In the event, about 20% of the already insufficient power that is generated is lost through faulty transmission lines. Government owes the BDCs hugely and huge interests are piling up. It is one reason why government does not want reduce fuel prices.
Jubilee gas has been flared for close to four years because the NDC government re-negotiated a previously planned investment scheme. There was absolutely no need for that delay except that some people wanted to own the process and have their stamp and seal on the package. Even now that the gas is available, about half of it is stuck and cannot be ferried to the Tema thermal plants because there is yet no interconnection between the Atuabo Gas Pipeline and the West Africa Gas Pipeline which passes through Tema.
Whilst we are at this the compressors at Atuabo Gas enclave have broken down. The questions that need to be asked are 1) why is Government unable to resource VRA to procure crude oil to fire the thermal plants at Tema even though the prices of crude have halved?) What is the maintenance and service schedule of the power generation system such that all major facilities could break down at the same time? 3) Why is it that government still cannot settle its indebtedness to ECG to enable its change the overused and over aged lines to make savings into the distribution system.
The President stated that “as an immediate measure to resolve the current crisis 1000MW of emergency power” will be fed into the system by Karpower ship (Turkey) 450MW, APR (UAE) 250MW, and GE300MW. This is the emergency solution that the nation requires and has required since August 2012. A nation that is distressed, indeed comatose, needs immediate revival. In an emergency ward the patient needs first to be revived even though medium-term and long-term remedies are good. Why has it taken so long for government to bring in these emergency power generating systems? The answer is simple: there was no money.
After superintending the collapse of industries, fire gutting property and lives the President now admits that emergency power must be procured. The President revealed that guarantees are now being agreed for Karpower, APR and GE. We insist that the guarantees involved in the agreements are a collateral cover by the state and must all be subject to parliamentary scrutiny before possible approval by the House. Even though the nation is in distress there cannot be any short circuits in this. As well, all Power Purchase Agreements, because they are international business transactions must be approved by Parliament. Nothing should be done which may create a future dispute as happened in the cases of Faroe Atlantic in 2000 – 2001 and SIIF who could not deliver emergency power in 1999 – 2000 but did so in late 2001 – 2002 long after the power crisis of that time was over.
As for the cynicism that the President implores the nation that we should purge ourselves of he must do serious introspection. From the presidency through the cabinet, ministers, communicators, and activists….the litany of pledges and assurances that they have given, why should people not have cause to disbelieve them. It all looks like they all resort to an assortment of promises not caring two hoots about how to redeem those contractual obligations. They have ghosts, dwarfs and opposition elements to blame when they cannot deliver!
PILLAR 1: PUTTING PEOPLE FIRST
The President’s message on basic education is this: “A decade and half into the new millennium we are providing through our Basic Education Program, equitable access to good quality, child-friendly Universal Basic Education”. The President is no longer talking about Free Compulsory Universal Basic Education but rather child-friendly education whatever that means.
Article 38(1) and (2) are clear on this. Kufuor deepened this by introducing: i. School Feeding; ii. Capitation Grant; iii. Free Exercise books; iv. Mass Transit (free) for school pupils.
Article 38(2) provides that 12 years into the Fourth Republic we must make basic education free, compulsory and universal. Article 38(3) provides that beyond the FCUBE period we must strive to make secondary education free.
It is important to remind the President that the NDC stated in their 2008 manifesto that they will expand the school feeding to cover all basic schools in the country in 4 years, i.e. by the end of 2012. The process did not materialise. In 2013 President Mahama shifted the goal post and stated in his message that the school feeding would be provided to “all public basic schools in rural communities”. There has not been any account of how many such schools have benefitted in the 2014 or the 2015 statements. There is no indication because nothing happened. The contractors engaged in the cooking have not been paid over long periods and they have accordingly diminished their rations whilst some have simply stopped.
The Capitation Grant is wilting and withering. In most schools, for a year, grants have not been released. Chalk, the most basic tool for teachers, is unavailable in most basic schools!
The President assured in 2013 to reintegrate Kindergarten (KG) education into the mainstream system which policy had been rolled out by President Kufuor between 2005-2008. Kufuor’s administration included a 2-unit K.G block into the basic schools that were constructed at the time.
It was programmed to commence the training of teachers to acquire the relevant skills for that level. The policy was truncated in 2009 and that is why in 2013 when the President indicated a reversal of that policy it was hailed. Unfortunately, the new basic school structures that have been awarded since 2013 do not have the KG components. Also, the training of teachers to cater for the KG system have not been mentioned since then. Mr. President if we strengthen the base of basic education, the case of the 46-year old Alexander Dorbaareh and four others in Upper West may not even have come up for mention.
In the previous messages on the State of the Nation since 2009 both President Mills and Mahama have dwelt on the eradication of “Schools Under Trees”. There are still over 2,200 schools under trees crying for eradication. It is noteworthy that the President does not find it worthy to mention the effort to eradicate “schools under trees” when he talks about equitable access to his version of good quality, child-friendly Universal Basic Education.
The President did a comparison of results in WASCE in basically two nodal years, 2007 and 2012. If you want to do a critical analysis of performance you must use the pass grade as a base to assess the performance in the years chosen. The President chose not to do that. He set his own questions and applied his own marking scheme. In any event, it was the performance of students in the 2012 WASCE that generated a lot of discussions, why did the President not talk about the 2014 results. If the President disingenuously resorts to propaganda, his followers will follow the same path and if he is criticized for picking and choosing, he turns round to refer to those people as cynics.
The budget for education in 2015 which is GH¢6.74billion increased by 15.9% over the 2014 allocation of GH¢5.8billion. End of year inflation in 2014 was 17.5% whilst the cedi in real terms had depreciated by over 60% at the end of the year. In real terms therefore there is negative increase in funding education since personnel emolument cannot be touched, investment in the sector shall suffer.
Performance of pupils in public basic schools continues to be poor due in particular to poor management and administration as well as poor supervision of and output from teachers. That explains why even when gross enrollment rate is rising at the levels of basic education the dropout rate at the JHS and SHS level is becoming frightening.
Mr. President, there are still huge arrears in GETFund, School Feeding, Capitation Grant and the salaries of new teacher recruits. The combined effect of these is the plummeting of morale. In both 2013 and 2014 there have been several strike actions affecting the education sector involving POTAG, NAGRAT, TEWU, etc. This is the state of the educational sector and the President and his government must show concern because they will negatively impact the performance of pupils and students.
The President also spoke about ensuring the relevance of education to lead the transformation agenda of the country. That is a good statement, a good declaration of intent. However in both the 2015 Budget and the 2015 President’s message there is no indication as to how education would feed into the strategic needs of the economy. In other words, how is education programmed to positively impact on the efficiency of labour force in both agriculture and industry to engender greater productivity? There is no such interface.
The President alluded to the construction, refurbishment and expansion of many health facilities: Hospitals – teaching, regional, district, institutional, and all. These are in the category of curative medicine and giving them proper standing must be commended within our borrowing capabilities.
In the 2015 State of the Nation Address the President stated that his government has a “vision to extend quality health care to all our people…”. The Ministry of Health’s mandate is “to promote good health for all Ghanaians through the prevention of diseases,” among others.
In the 2015 Budget Statement the President, speaking through the Minister of Finance, after chronicling these star health projects then spoke about preparations to confront Ebola which, by divine providence, has not entered Ghana yet. The President, in that Budget statement did not find it worthy to make any statement on cholera. In his 2015 State of the Nation Address our President could not spare one sentence or word on cholera. In 2014 the outbreak of Cholera assumed epidemic levels in Ghana. Indeed, 2014 was the worst year since the early 70s that the nation witnessed such high levels of cholera infections. In 2014 reported cases of cholera in Ghana exceeded 2,850 out of which about 205 people died. As the chairman of the Authority of Heads of State and Governments in the ECOWAS zone, the President had to show solidarity with his colleagues in the sub-region. However, it is profoundly important that the President shows same, if not greater, care for his fellow Ghanaians who became so traumatized with the cholera outbreak. How prepared is the nation if cholera should break out again in the face of the impending rains? Charity, Mr. President, begins at home.
The Health Insurance scheme is collapsing and many service providers are pulling out. Indeed, service providers have not been paid since May 2014. Whereas the Minister of Finance states that his ministry has paid all outstanding arrears to the NHIS, the officers at NHIA disagree and insist that the MoF owes huge amounts to the NHIA. In a bid to assure Ghanaians the President told the nation that the scheme is rather growing and subscription has exceeded 27 million. One wants to believe that President meant utilization or access and not subscription since it is not possible to have 100 percent sign up of the entire population which is in the region of 26-27 million.
The President has given an indication to Ghanaians in his 2015 budget that Capitation in Health service delivery will be scaled up to all the regions in Ghana except Greater Accra and the Northern Region (ref par 633 of the 2015 Budget). Capitation in insurance increases out-of-pocket expenditure and therefore further impoverishes subscribers. In other words, it will lower the living conditions of subscribers.
Beyond all this, one must relate to the many frictions that have embroiled the relationship between government and health practitioners. The incessant hiccups certainly affects the quality of life of the people. We have time and again suggested to government to devise appropriate conflict resolution mechanisms to deal with the souring relationship. In both 2013 and 2014 there were several confrontations between health practitioners and government. Unfortunately, there was no new policy direction in the President’s message to thaw the relationship between government and the health practitioners. The nation needs that from you, Mr. President.
The words of the President on the road sector include the following: “This year we are beginning what would be the single largest intervention in the road sector in this country. The project would see investments of about GH¢1 billion in roads commencing this year and ending in 2019. These projects will be funded with a mix of cocoa infrastructure fund financing and Government of Ghana budgetary support.”
The cat is now out of the bag. We in the NPP Minority have always made the point that the syndicated loans that COCOBOD has lately been contracting have been heavily padded because the loans are often far higher than the intended purpose. The development of cocoa roads (i.e. roads in coca growing areas) with a portion of the margins made on the sale of cocoa beans is acceptable. What is not acceptable is the emerging trend where, on behalf of Ghana Government, COCOBOD will contract loans for the construction of roads that are outside cocoa growing areas and thereby depriving the cocoa, coffee and shea nut farmers of the optimum benefits from the sale of their produce.
Most of the roads that the President went on to list as examples of roads that are “progressing steadily” started during President Kufuor’s time. For instance, in Brong-Ahafo region he mentioned Nsawkaw-Namasa section of the Wenchi-Sampa road. This road was about 50% complete when the NPP left office. The second phase of this road which is part of the Wenchi-Sampa road had commenced from Menje. The President also mentioned the Berekum – Sampa Road.
The Drobo – Sampa stretch of the Brekum – Sampa road is about 60km. The Kufuor government had done the Drobo – Suma section leaving about 3km to Sampa. The 3km stretch has remained undone for 6 years since the Mills-Mahama administration took over. This project is being executed by Messrs J.A. Adom Construction Ltd. The President mentions Goaso-Kukuom junction road that work is said to be progressing. There is no road of such description. The main Goaso – Kukuom road, however, was completed under Rawlings and funded by EU. Again, the President mentioned Prang –Kintampo and Kintampo-Abease as two different roads that are receiving attention. That can only be described as ridiculous. The Prang – Kintampo road passes through Abease and therefore the Kintampo-Abease section is a subset of the Prang-Kintampo Road. The question is why did the President list these as two different roads?
In the Eastern Region he mentions Kwafokrom-Apedwa road which was started by Kufuor but which since 2009 has been abandoned. The Nkawkaw-Atibie section was rehabilitated under Kufuor’s administration. Lack of maintenance after six years has rendered the road almost unmotorable and the President believes he must be applauded for this.
The Sofo-Line interchange which started in April 2007 was programmed to be completed in 3years, i.e. in April 2010. Five years after the due date of completion, the President comes to tell Ghanaians that the project “would be completed this year”. The story repeats itself in most of the projects that the President listed in the other regions in the country.
At the beginning of 2000 the nation’s road network was 37,321km. It increased to 56,057km in 2004 and a further to 67,291km at the end of 2008. Enter Mills-Mahama Government, it increased to 68,134 km at the end of 2012 and 71,063 at the end of 2014.
The nation’s road network increased by 18,736km in the first four years under Kufuor and by a total of 29,970 during the 8-year of the NPP administration. At the end of Kufuor’s eight-year tenure, therefore, the road network size had increased by 80%. That is the largest intervention in the road sector in the history of this country. This enabled several communities, especially commercial crops and food growing areas, to be opened up. The network of Feeder Roads increased by 18,195km and thus facilitated increased production of commercial crops for export and food for domestic consumption. This positively impacted the country’s agricultural growth as the marketing of farm produce became easier and uplifted the socio-economic development of the local farmers.
The road network since the NPP left office has, by the end of 2014 increased by only 3772km.
In road infrastructure, maintenance is pivotal for the preservation of the huge capital investment that is involved in road construction which ensures growth in the various sectors and alleviate poverty.
The nation’s road network has experienced the worst maintenance in the history of Ghana since 2009. Since then maintenance of our roads have been poor, erratic, usually delayed interventions. This has resulted in the rapid deterioration of our roads. The cause of the poor performances on our road network is the inadequate funding of maintenance works. The average performance of road maintenance between 2009-2014 is 37% per year.
It is noteworthy that over the past four years in this NDC administration the nation is witnessing a trend where many of the roads selected for COCOBOD funding are not in the cocoa, shea butter and coffee growing areas. Equally significant, albeit reprehensible, is the fact that the procurement of cocoa road works are now being done by the new COCOBOD administration instead of the Agency under the Ministry of Roads and Highways. COCOBOD does not have the experts in road planning, design, procurement and construction. The Board is not equipped with the technical staff for supervision of cocoa road projects which would be paid for by the sweat of cocoa, coffee and shea-nut farmers. In other words, much money is going down the drain.
PAYMENT TO CONTRACTORS
The six (6) agonizing years of the NDC government has been characterized by undue delay in paying for works done by road contractors. Payments are in arrears of between 12-20 months, although the terms of the contract provide for payment within ninety (90) days. Many banks now refuse to deal with road contractors because of undue delay on the part of government in honouring certificates. Many exasperated contractors have died as a result of poor cash flow in their businesses occasioned by government’s non-performance.
INTEREST ON DELAYED PAYMENT
As a result of the undue delay in paying for work done, the Ghanaian contractor is compelled to raise invoices for interest on all amounts that have been delayed for payment in accordance with the conditions that govern the contracts. These amounts are huge and the longer the payments delay the closer these interest amounts approach the contract sums of the respective projects, thereby doubling the cost of the project.
Most of the on-going projects have, therefore, become exceedingly expensive and, therefore negated their cost-effectiveness. In simple terms, the NDC-led government has paid humongous amounts in the road sector (US$1929.13 million for 2009, 2010, 2011, 2012 fiscal years) but has achieved very little. Only 652km of roads were tarred from January 2009 to December 2012 whereas the NPP-led administration from January 2005 – December 2008 spent US$1282.56 million and tarred 4413km of roads.
Fellow Ghanaians that is the level of dissipation and cost-ineffectiveness in road construction in these times. That is the state of affairs in the road sector.
Ladies and gentlemen, to all intents and purposes the GH1billion investment in roads which the President says will be the single largest investment in the sector will not be able to do more than 220km judging by the track record of this government. We shall deal much more with the deterioration and degeneration in the road sector under this inept administration in the coming few weeks.
The President boldly declared that “in 2014 agriculture continued on the trajectory of positive growth”. What this means is that, in the eyes of the President agriculture growth has been very good and we are continuing on that path. Nothing is further from the truth, fellow countrymen. Real growth in agriculture has consistently spiraled downwards from 7.4% in 2008 to 7.2% in 2009, through 5.3% in 2010 then to 0.8% in 2011, 2.3% in 2012 and 3.4% in 2013. In 2014 Agriculture registered a growth of 5.3% but this was propelled by a 16.5% growth in the logging subsector of agriculture. Logging, including uncontrolled chain-saw activities, has gone into high gear and it simply means that we are depleting our forest cover.
At the turn of the 20th Century the forest cover of Ghana was 8.5million hectares. Today, our forest cover is less than 800,000 hectares. And if agricultural growth is being led by logging in the face of serious deforestation, the nation should rather be scared.
Agriculture is not doing well because of the scant budgetary allocation to the sector. From 3.0% of total budgetary allocation in 2009 it climbed down to 1.9% in 2012 and for 2013 it was 1.09%. For 2014 only 1.07% of total budgetary allocation went to Agriculture. This explains why in 2014 $1.5billion worth of foodstuffs were imported into the country against a food import bill of US$600million in 2008.
Out of the total GH¢44billion budget amount for 2015 only GH¢484.3million representing 1.1% has been allocated to the Ministries of Food and Agriculture and Fisheries and Aquaculture Development. How can agriculture grow effectively with such pittance? The taxes that were slapped on matchetes, fertilizer, hoes, other farming implements, fishing nets and premix fuel did not improve food security. It rather led to low productivity and reduced the incomes of farmers.
That is the state of the agriculture in the country and that is also why logging, cutting trees to sell is the leader in the agriculture sub-sector.
The good thing however is that the obnoxious taxes imposed on agricultural equipment and inputs have been removed.
There is no mention of fertilizer subsidies in the 2015 budget. The President stated in his message that for 2015 “government will distribute 180,000 metric tonnes of fertilizer”. In 2014 the President said government would “distribute 180,000 of subsidized fertilizers to farmers”. Nothing happened. Last year it was supposed to be “subsidized fertilizers”. 2015 it is fertilizer that will be distributed. It appears fertilizer is not going to be subsidized in 2015. Today one bag of NPL fertilizer sells at GH¢140. Not many farmers can afford this and this is another reason why food security is being threatened. Still on the subsidy for the 2014 fertilizers, which never were one would want to know how much money was set aside for this exercise and what has happened to the money especially since farmers are unanimous that for 2014 no new fertilizer were imported or distributed.
A few months ago the Ministry of Agriculture stated that farmers shall have to get used to less subsidies from government. Are farmers to take it as a new policy? Has government calculated the effect on production and hence on income to farmers, and, consequently on poverty reduction in the country?
The President in his statement acknowledged “the pivotal role (cocoa) plays in our economy”. The President then referred to increase in producer price of the produce; the application of hi-tech programs for cocoa farmers; the distribution of improved cocoa seedlings and the request to COCOBOD to acquire land to engage more people in cocoa farming. Undoubtedly, these are programs that might help to attract some people to cocoa farming.
In adding to the President’s recognition of the central role cocoa plays in our economy one must recount the stabilizing effect of cocobod’s yearly syndicated loans, especially in recent years. Last year it was the US$1.7billion COCOBOD syndicated loan that salvaged the cedi from utter pulverization in September. The loan saved the economy from virtual collapse. It is for this reason that it becomes imperative for farmers to be given their fair share of their toils
The annual bonuses which farmers are entitled to have not been paid for three consecutive years i.e. 2011/12 – 2013/14 cocoa years. The GH¢5 bonus per bag of the produce announced recently is simply disgusting, as “by day” labour attracts between two and three times that amount.
Government has for three years paid a fixed producer price to cocoa farmers in the face of escalating prices in every facet of our national life. Recently, the price of a bag of cocoa beans has increased to GH¢345. Given the world market price today, the current exchange rate of US$1 to GH¢3.50 as well as the NDC’s own manifesto pledge to pay at least 70% of the FoB price, the cocoa farmer should be paid not less than GH¢480 per bag. The current produce price will neither encourage farm land expansion nor engender increase in the quantum produced, and that has nothing to do with the President’s public relations dressing or bringing a cocoa farmer to Parliament to listen to him and point him out in the gallery of Parliament.
Mr. President, today in the cocoa growing areas in the Volta Region close to Togo; in the cocoa producing areas in the Western and Brong Ahafo regions that are close to the Ivory Coast, cocoa is crossing to the other countries and Ghana is losing out. The farmers need better remuneration, pure and simple. Otherwise no pleas admonitions or even border controls by security personnel will deter smuggling.
AFRAM PLAINS & ACCRA IRRIGATION
The Afram Plains and Accra Plains irrigation projects together constitute a huge potential to improving the food security of the country. The President in his 2015 document mentions the development of the Accra Plains as has always been done since 2009 but that is all that there is to it and his State of the Nation Address the President makes no mention of it.
TRADE AND INDUSTRY
In 2012 the trade deficit was US$4.2 billion. In 2013 the deficit was US$3.84 billion and in 2014 the deficit stood at US$1.6billon. The decline in 2014 was mainly because of reduced imports due to uncertainty on the part of importers because of the instability in the value of the cedi and the partial control of foreign exchange supply due to the shortage of foreign exchange.
Notwithstanding the reduced balance of trade deficit in 2014 the balance of payments continued to be in deficit, three years in a row. In 2012 the balance of payment deficit was US$ 1.21 billion, in 2013 the deficit was US$1.16 billion and in 2014 the deficit was US$ 699.7 million. This persistent deficit appropriately described as chronic balance of payment difficulties triggered the need for an IMF bailout. And the bailout will come with stringent conditionalities.
Because of the instability in the foreign exchange market and the Bank of Ghana’s partial control on supply of foreign currencies local traders have had difficulty keeping their shops due to their inability to protect their working capital. This difficulty has been compounded by continuous invasion of Chinese and other foreigners in the retail trade.
The effect is that most Ghanaian retailers are operating at losses and some have had to fold their operations. As if these problems are not enough to cripple traders the Government as we speak is stacking up some additional costs of doing business by introducing a new Ghana Conformity Assessment Program (G-CAP) which will inspect goods before shipment for a fee; and a tax stamp to be charged by the Ghana Shippers’ Council. All these new charges will be in addition to the existing destination inspection charges. While these will be additional costs to importers they will in the end be passed on to the consumer.
Another issue facing internal trade is the huge price differential between the farm-gate and the markets in the urban centers. These wide differentials are as a result of huge cost of transportation resulting from previous and current price escalation of petroleum products despite the reduced world price of crude oil. High transportation cost affects every facet of our national, collective and individual lives.
PERFORMANCE OF INDUSTRY
On industry the President insisted that the sector “continues on the trajectory of positive growth with significant outputs in the construction sub-sector”. The truth however is that industry is not doing well. Industry in 2014 was targeted to grow at 6.8%, it grew at 4.6% and even that was driven by petroleum activities which grew by 18.2% (par 44 of 2015 Budget). Construction grew at 12.8% but as is known by many economic planners employment in construction is usually short term.
The manufacturing sector together with agriculture hold the key to our national development in spite of our oil discovery. However, since 2008 manufacturing sector has not fared well. The share of manufacturing to GDP declined from 6.9% in 2009 to 6.7% in 2011 and continues to dwindle. The growth in the sector was -1.3% in 2009, rose to 7.6 in 2010 but fell to 1.7% in 2011, rose to 2% in 2012, fell to 0.5% in 2013 and in 2014 went into recession with a growth rate of -8%.
Manufacturing is not doing well and the afflictions are legion: First, is lack of access to long term credit. Second, industry lacks access to even short term credit because of the excessive government borrowing from the local banks which is squeezing out private entrepreneurs. Third, is the high interest rates. Fourth, is the unreliable and erratic supplies of utilities to industry. Fifth is the escalating utility prices. Sixth, the peculiar long-lasting “dum dum s4, dum dum s4” phenomenon. Seventh, is the multiplicity and hugeness of taxes imposed on industry at various times which does not allow for fair competition against imports and, finally, the continuous depreciation of the cedi which renders fiscal environment unpredictable. One may also add the ineffective border controls and loose inspection at the ports that allows dumping of cheep on the local market especially from China.
LOW INVESTOR CONFIDENCE
Fellow Ghanaians, the rising cost of doing business arising from the huge taxes, high interest rates, the power outages which leads to reliance on very expensive diesel plant power generation and an ever weakening currency all are combining to make the Ghanaian business environment hostile and uncompetitive. Today, businesses are collapsing and throwing out employees and some are relocating to other countries in the sub-region. There is capital flight as investor and consumer confidence have plummeted. Ladies and gentlemen, this is the real state of industry and one thought the President would have unveiled ingenious ways to stimulate growth in investor and confidence.