According to IMANI, a target of 8% of growth annually during the President’s first term was “incredibly optimistic.’
It said, Sustainable economic growth for a developing country is largely dependent on a growing manufacturing sector, which is known to have a greater effect on job creation adding that a look at the numbers however suggests that manufacturing has been suffering from a decline in its growth since 2013.
“Ghana’s high growth rate was boosted by high commodity prices and enhancements in services and construction. Without a substantial plan to diversify the economy, the president’s promise of a growth of a minimum of 8% during his first term was overly optimistic.” it said.
Below is IMANI’s Review:
A Review of President Mahama’s State of the Nation Speeches from 2013-2016.
The President, in his 2013 SOTNA address, set a target of moving Ghana from a lower middle-income status to “full” middle-income bracket. He set a growth rate of a minimum of 8%. He reiterated this promise in 2014 although growth in 2013 was 7.4%. Economic growth since then has miserably fallen to about 4%.
A target of 8% of growth annually during his first term was incredibly optimistic. Sustainable economic growth for a developing country is largely dependent on a growing manufacturing sector, which is known to have a greater effect on job creation. A look at the numbers however suggests that manufacturing has been suffering from a decline in its growth since 2013. Ghana’s high growth rate was boosted by high commodity prices and enhancements in services and construction. Without a substantial plan to diversify the economy, the president’s promise of a growth of a minimum of 8% during his first term was overly optimistic.
Commodity prices have since fallen sharply, with a dampening effect on government revenue and with a large fiscal deficit, Ghana’s growth has been considerably slowed.
The president in his 2016 address sets an optimistic tone for growth as he argues that the fruits of his “investments” will be coming to the fore. Whilst projected growth in the coming year is expected to pick up with the coming on board of the Ten oil field and the normalization of the energy situation, we may not yet be out of our economic difficulties. The IMF in their second review completed in January 2016 say;
“In the short term, economic growth will depend on how fast the electricity crisis will be addressed and whether the cocoa harvest and gold production recover. A further decline in gold prices could lead to cuts in production. Inflation risks are to the upside given the possibility of second round effects from the utility tariffs increase”
The president has boasted in several of addresses about his efforts in transforming (diversifying) the structure of the economy. Whilst we admit that such processes take time and requires consistent efforts, we can say that Ghana’s economy is not experiencing the kind of structural change required to put it on the path of sustainable growth. Inaugurating one or two industries to process primary products can only be a drop in the ocean in terms of what is required. With a deteriorating macroeconomic situation constraining the ability of the private sector to create enough jobs and for manufacturing to thrive, the president’s claim of transforming the economy is at best an exaggerated petition, as pointed out in the following sections.
Employment is such a sensitive topic and many governments are quick to tout their efforts in reducing unemployment. The SOTN address in Ghana does not provide deep insight into this key issue. Government is unable to provide accurate data on the unemployed in Ghana. We also do not have much information on the size of graduate unemployment in the country. The president in his addresses from 2013 till date would normally reference the effect of some of his interventions on employment. However, without corresponding statistics, his claims remain vague and quite difficult to verify.
Whereas much talk is made about the number of jobs that are created from the governments’ investments in infrastructure, its worthy of note that most of these projects are capital intensive and in some instances, require skilled workers. The resulting effect on the overall unemployment situation is thus minimal. It is also important to note that under-employment is more prevalent in developing countries such as Ghana with many people moving into the informal sector where productivity is very low.
The huge size of Ghana’s public service means that the current freeze on hiring under the IMF programme has had a significant effect on unemployment. The energy crisis that was about three years long would inevitably have a serious effect on unemployment as a number of companies went out of business. The current harsh business climate has also constrained the efforts of companies to expand and hence hire more workers. Regrettably, there is limited information on unemployment in the SOTN addresses from 2013 till date. Such gaps make it difficult to assess the president’s claims that his government has been good for job creation.
Without statistics on the unemployment situation and its distribution, one wonders how the government can plan to remedy the situation.
Cost of Living
It may be politically naïve to expect the president to spend significant time dwelling upon the difficulties of the economy. However, what has come to be a common theme in his SOTN addresses is the little or no recognition given to how some questionable some policy decisions of his government have contributed to the difficult economic circumstances Ghanaians find themselves in today.
The president has for some time now been making the case that the current difficulties Ghanaians are going through are the bitter pills that must be taken in order to reach the transformation that is needed. This view is quite not the case.
Ghana has been exposed to the effects of her bad choices by the fall in commodity prices. The strain on the government’s books following the dwindling revenues and a large deficit required some adjustments to be made which has led to painful pills to be taken by the ordinary Ghanaian. The President has had cause to complain about the fiscal deficit in previous SOTN addresses. He identified the implementation of the Single Spine salary structure as one of the major reasons for this deficit. He has also mentioned investments in infrastructure and excessive spending by government agencies apparently under his aegis. While these factors are true, it is important to also bring to the fore some of the factors that are not mentioned but have contributed to a ballooning fiscal deficit.
The deficit saw a steep rise in 2012 due to the election; a phenomenon that has become rather common in election years. Corruption, particularly through the abuse of procurement activities has further contributed to this malaise. Continuous borrowing by the government from the international capital market has had a deleterious effect on the economy as the servicing of those debts is choking the space for development by the government. The net effect of this has been an austerity programme by the government, which has seen investments in certain services curtailed, freezes in employment, reduction in allocations to certain ministries among others. The IMF has called for even bolder initiatives including the removal of tax exemptions to further the fiscal consolidation efforts of the government.
The net effect of “living above our means” and unbridled borrowing with very high debt service requirements has been the current harsh conditions we face. A high pass through from the exchange rate to inflation has led to rising inflation following a fall in the value of the currency. Inflation has further risen following the high increase in utility tariffs. Interest rates are also incredibly high and the persistent borrowing from the domestic economy has squeezed funds for private sector investment. A thorough value for money analysis on the use of the borrowed funds vis-à-vis infrastructure investments has not been made but scandals surrounding the bus branding and other contracts suggest that some monies have not been put to judicious use.
The president has promised in his address to check wasteful spending in this election year. This is an important target, which he must keep to prevent the situation from deteriorating particularly as the commodity price slump is expected to continue much longer.
In the past four years, the President has addressed the following major agricultural topics in the State of the Nation speeches.
I. Food Security & Irrigation
Snap short of 2013-2016 SOTN
In 2014, the President raised the issue of rising importation of basic food items. In later years, he lays down plans to tackle this issue but not entirely. Only plans to increase poultry and palm oil are stated. Issues relating to other crucial staples such as rice, sugar, wheat, tomato remain unaddressed. In 2015, the speech mentions investment in rice production. However, we have not seen any improvement in the rice productivity. The rice imports have only been increasing. The growth rate of the crops has been rapidly declining and the Ghana Annual Budget 2016 highlights that, in 2015, the growth has been negative (-1.7% growth). In 2016 SOTN, it is surprising that such a crucial matter has been not addressed. In 2016 SOTN, there has been only an update in investment in other cash crops such as coffee, cocoa, shea nut and palm oil but basic staple food crops are left out.
In 2013 and 2014 SOTNs, the update on different irrigation and hydroelectric projects are mentioned. However, it is interesting to note that the latter years do not contain any update on these projects nor any announcement of new projects. The monsoon seasons have been so erratic that it led to a poor hydroelectric generation situation last year. Akosombo dam was non-functional for quite a long period because the minimum water level to operate was not reached. It is crucial to understand how new upcoming hydro projects would obtain an adequate amount of water needed to operate. Also, irrigation would be the only way to continue the cultivation of crops when rains fail and to adapt to changing climate. However, such issues remain unaddressed in 2015 and 2016.
Modernisation of agriculture
Modernisation is crucial to increase the productivity of poor farmers. Every SOTN speech contains varying promises to modernise agriculture. The question is whether the plans are sufficient to cover all the beneficiaries (i.e. poor farmers). Further, some crops, such as cassava, which had surplus production, are highlighted whilst crops like maize and rice, which have not done as relatively well, have been provided with no update. Maize production had faced constraints in the previous years due to drought leading to import of this staple crop.
The effectiveness of fertilizer subsidy program is questionable. The Ghana Budget 2016 has allotted 85.17% of the allocation on poverty-focused policies, which includes the fertilizer subsidy policy. These policies were introduced to increase food production and attain food self-sufficiency in Ghana. Despite a huge investment, these policies have proven to be inefficient, evident from the decline in the sectoral performance.
The Fertilizer Subsidy Program has proven time and again to be a counterproductive policy. It has been critiqued that subsidised fertilizers are not reaching the target farmer groups. It gets distributed amongst affluent farmers who do not require fertilizers at subsidized prices.
II. Cocoa Sector
There seems to be an increase in efforts to augment the production of cocoa, with a large boost in the number of nurseries in the past year. It remains to be seen whether this increase, and the measures taken to increase the yield per hectare, will in fact enable Ghana to meet their sales quotas, which have, in the past, fallen short, such as in the 2014/2015 season, when Ghana committed itself to selling 1 million tonnes of cocoa beans and fell short by only growing 700,000 cocoa beans.
The encouragement of the engagement of the youth in this sector is welcome, as, in 2015, the average age of cocoa farmers was estimated to be 55 years.
As the cocoa industry is a large section of the Ghanaian agriculture sector, attempts to strengthen and improve it need to continue, to ensure, not only increases in production, but also the wellbeing of farmers.
III. Partnership with Private sector
In the 2016 address, no update was given on the status of either the Komenda sugar factory, nor the negotiations of the proposed sugar estate in the North. These are two partnerships that have been in the pipeline since 2014. No other partnerships with the private sector, or with other governments, in the agriculture sector were mentioned either. Partnerships with the private sector are important in the agriculture sector, as they offer a way to build infrastructure and knowledge.
IV. Poultry Production
From 2014, the SOTN addresses have mentioned increasing poultry production as a means of reducing poultry imports by 40% by 2016. In 2014, the Animal Production Division of the Ministry of Agriculture was assisting farmers in the sub-sector to improve the quality and quantity of meat to reduce the deficit in demand and supply. By 2015, the imports of poultry had reduced by 30% with 200 poultry farmers receiving financial support under the Broiler project. In 2016, it was stated that the Broiler Project was creating jobs, had produced 650,000 birds, and was helping with the reduction in importation. There have been consistent updates about this programme with reports of the progress made.
Education falls under the pillar, Putting People First. The top areas of focus are quality, access and affordability. On the issue of access, the main point is to expend access at all levels of education and the notable programmes highlighted in the SOTNA over years are: elimination of schools under trees programme, Complementary Basic Education Programme, Secondary Education Improvement Programme or the Construction of New 200 Day SHS or Progressive Free SHS policy.
Since the 2014 SOTNA mentioned that some 1900 communities in Ghana were seeing refurbishment and outright replacement of sub-standard school structures, there has been little update. However, in a news article published by newsghana.com dated 04/12/2015, the Deputy Minister of Education had been credited with a citation that the government has eliminated 1700 Schools under the trees.
On the famous Construction of 200 new Day SHS, the president provided updates in all the SOTNAs. The updates were ambiguous in terms of the timelines for the execution of the entire project but he was specific on the number of schools under construction and the ones awaiting contract. The current state of this programme according to the President is that 123 New Day SHS are at various stages of construction and completion.
The president highlighted the implementation of the Progressively Free Secondary Education Programme in the 2015 SOTNA. He stated the programmes will benefit will benefit an estimated three hundred and sixty-seven thousand, five hundred and sixty-five (367,565) day students. However, in 2016 budget statement stated 320,488 day students in public senior high schools. Perhaps the remainder were absorbed into some other training programmes we have not been told.
Secondary Education Improvement Project (SEIP)
The president provided updates on the project in the SOTNAs. In 2016 SOTNA, the president stated 10,400 student benefited under the scholarship component out of which 60% were women. But the 2016 budget stated that the first batch of 2,300 needy students out of a target of 10,400 were presented with scholarship packages. In 2016, 4,300 additional students will be provided with scholarships for the 2015/16 academic year. It is unclear which government agency is communicating the right information.
On the issue of quality education, the president identifies the importance of teachers in the delivery of quality education. All the four SOTNAs have boasted the roll out of programmes aimed at training Teachers efficiently. In 2015 SOTNA, the president stated that about one hundred and sixty thousand (160,000) teachers, representing 56% of teachers at the basic education level received career development training. Another one thousand (1,000) teachers have also undergone In-Service Training in line with the objective of improving the teaching of mathematics and science’’.
In the 2016 SOTNA, the president discloses a new Teacher Professional Development programme to train teachers across the country. The aim of this programme, the president said, is to polish the skills of about 95 percent of teachers at the basic level by 2020. Over 30,000 teachers are expected to benefit from the initiative.
On tertiary education, the SOTNAs provided updates on the various new universities being built and ones completed, also provides information on the enrolment figure in the new universities. Secondly the SOTNAs provided information on the status of converting the Polytechnics to Technical Universities. The 2016 SOTNA stated the 6 polytechnics that have met the 16 criteria for the conversion. Also the SOTNAs provide the percentage increase in enrolment at the tertiary level of education.
The major highlight of President Mahama’s SOTNAs has been several major hospital projects under construction. When completed will collectively deliver approximately six thousand (6,000) new hospital beds to facilitate access to improved.
The hospitals include:
• A 617-bed University of Ghana Teaching Hospital
• The 420-bed Ridge Hospital Expansion Project
• A 104-bed Police Hospital Project
• The 500-bed Military Hospital Project in Kumasi
• The Second phase of the Tamale Teaching Hospital Expansion
• A 160-bed Upper West Regional Hospital
• A 130-bed Maritime Hospital, Tema
• The 295-bed Bolgatanga Regional Hospital
The 2015 and 2016 SOTNs stated end of 2017 and 2018 respectively as timelines for the achievement of this target. The SOTNAs provided updates on the implementation on the various projects in line with the achievement of the 6000 hospitals beds. 2016 SOTNA stated amount of $2 billion expended on the projects.
Still on the access to basic health care, the SOTNAs stated the provision of 1600 CHPS compound by the end of 2016. The 2014 and 2015 failed to provide updates on the specific number provided but the 2016 SOTNA stated 1000 CHPS compounds.
NHIS features in 3 of the SOTNAs with 2014 being the exception. The SOTNAs provided update on out of patient utilization of the NHIS. 2016 SOTNA stated the formation of a technical team to look at making the NHIS efficient and Effect.
Undoubtedly, investment into water infrastructure is one of President John Mahama’s most profound achievements in his four year term. According to the President in 2016, 77.5million gallons of water per day have been added to water production stock with 7 million people now having water flowing through their taps for the first time. This was achieved through several urban and rural expansion water projects undertaken since 2014.
Just as in the 2014 and 2015 SOTNAs, the President failed to inform Ghanaians as to the stages of work on the numerals water projects dotted across the country he mentioned in the 2016 SOTNA. Lack of metrics on these projects makes it difficult to appreciate the progress towards reaching the 85% water coverage promised.
Also updates were not given on future water projects such as the Weija Water Supply Expansion, Kpong Water, Supply Expansion Phase 2, and Asutsuare Water Supply the President mentioned in the 2015 SOTNA.
In spite of about $1 billion investment in water supply projects by the government, most Ghanaians still lack direct access to water in their homes. A 2014 Demographic and Health Survey report by the Ghana Health Service and the Ghana Statistical Service, revealed that only 7.9% of urban dwellers have piped water to their homes. So where does the millions of gallons of water supplied daily go? The President in all the SOTNAs did not mention any ongoing project to bridge this gap. It is not surprisingly therefore that the same report revealed that 43% of Ghana’s urban dwellers depend on sachet water as a source of drinking water.
President Mahama in all his four SOTNAs failed to enumerate strategies to secure our water bodies. Though the changing weather patterns contribute to drying up of water sources, pollution of these water bodies especially by activities of illegal miners is largely to blame. The recent water shortage hitting residents of Nsawam-Adoagyiri as a result of drying of the Densu, as well as residents in Winneba and other parts of the country is a wakeup call. The commissioning of the £75 million five-town water project in Kyebi in the Eastern Region in 2014 got a mention in this year’s SOTNA by the President. In his innovative evidence based strategy, the president crowed; “Mr. Speaker, the old treatment plant was designed to treat much less turbid water in those days when if you drop a pin in the famous river brim, you could it at the bottom of the river. The water was so pure. Over the years the activities of illegal miners, a problem not limited to Kyebi alone has physically change the properties of the fresh water in the river brim rendering the old water treatment plant essentially useless because it was not designed to sieve the increasing portions of mud it had to process every year but this situation has been resolved”
Mr President, where is the strategy to curb the pollution of our water bodies which feed all these water projects being constructed?
The housing deficit in Ghana is estimated to be 1.7 million and rising. The President in his 2013 SOTNA indicated his passion for urban renewal and desire to bridge the gap. The 12,400 affordable housing unit project, touted by the President in the 2016 SOTNA as the biggest investment by any government in that sector in recent history is woefully inadequate. With our current housing deficit, a minimum annual delivery of about 170,000 units is required for the next 10 years.
Progress of most of the major housing projects listed in the 2014 and 2015 SOTNAs is painfully slow. Only 1,500 housing units out of 5,000 unit housing project at Ningo in the Greater Accra Region as mentioned in the 2014 and 2015 SOTNAs would be ready this year according to the president.
In the 2014 SOTNA, the President tasked The Tema Development Corporation (TDC) and Security and National Insurance Trust (SSNIT) to complete the 15,000 affordable housing units across five (5) regions which were initiated under the John Kufour administration. This was great news since the uncompleted structures were also left to rot under the Mills government. Disappointingly, in reporting on the progress of work in the 2o15 and 2016 SOTNA, the President conveniently failed to specify the progress of work and number of housing units completed.
The social housing scheme with improved sanitation and water supply the President promised dense slum dwellers in the 2013 SOTNA is yet to see the light of day.
Aside the slow pace of progress, the biggest question yet to be addressed is the degree of affordability of the housing units being constructed for the middle to low income Ghanaian worker.
On the policy front, the President in the 2013 SOTNA promised to work with Parliament to provide appropriate policy frameworks to deal with housing issues. Though a National Housing Policy has been launched, the appropriate Legislative Instruments (Lis) which will make it operational are still yet to be passed. The President did not give updates on the Ghana Building Code and Review of Building Regulations, Legislation on Condominium Properties and the Establishment of a Regulatory agency for the Real Estate sector.
As repeated throughout all the President’s four SOTNAs, tackling the housing deficit cannot be done solely by government. A public private partnership approach is the best way to go. Currently, the housing units being constructed by private firms are just unaffordable for the average Ghanaian. The decline of the Cedi against the dollar has worsened the case with housing prices shooting up due to increasing prices of cement and other building materials. It is therefore unfathomable why the Ghana Revenue Authority (GRA) recently authorized a flat rate of 5 percent Value Added Tax on all housing units sold. This implies prospective home owners will now have to pay more for decent accommodation.
The telecommunication industry in Ghana is fast growing, evident in the over 30 million mobile phone subscriptions recorded as at August 2015. The President in the 2015 SOTNA approved four policies to provide regulatory framework for the growing telecommunication industry: The Mobile Virtual Network Operating License; The Interconnect Clearing House License, The International Wholesale Carrier License and the Unified Telecom License. However actions and inactions of regulators in the industry are not only illiberal but have the potential to stifle innovation in the industry. The National Communication Authority’s insistence to impose a single clearing house on telcos and the fraudulent award of the Interconnect clearing house license to Afriwave is a recent case.
The famous 800km Eastern corridor fiber optic mentioned by the President in the 2014 SOTNA has been completed. Some 120 communities along the Eastern corridors of the country will now have access to a high-speed internet broadband. This is commendable.
Curiously, the Better Ghana ICT Project mentioned by the President in the 2013 SOTNA to distribute Four Hundred Thousand (400,000) laptop computers to schools and students was missing in all the subsequent SOTNAs.
No progress report was also given on the state of the 20 enhanced community information centers to be built in all 10 regions, a project aimed at using ICT to promote an all-inclusive society.
It is refreshing to note that the Girls in ICT program captured in the 2014 SOTNA has been continued, with several girls being encouraged to develop interest in ICT.
This has been compiled by IMANI. Citations are free as long as IMANI is referenced. For interviews please call Brian Dzansi on 0207597969 .