The success of any economic recovery after the pandemic in Ghana, and African at large, will depend on how resources can be efficiently mobilised and managed with digitisation and innovation as well as an improved business and investment environment.
These, along with transparency in governance and expenditure, according to K.Y. Amoako founder and President of African Center for Economic Transformation (ACET), can act as economic “rebound” measures that will help position Ghana and the continent for a more rapid and sustainable period of growth in the years ahead.
Pursuing such policies, will also ensure that the continent’s transformation agenda is not permanently derailed by the pandemic shock, he said in a release titled, Africa after COVID-19: Policy priorities to drive economic transformation.
“Creating fiscal space through efficient resource mobilisation and management is critical to allow for adequate COVID-19 health and economic response. With the collapse of industry in most countries and the extra burden of tax forgiveness related to COVID-19 response packages, revenue generation will become significantly more difficult. Governments should move swiftly to close tax loopholes and eliminate exemptions and concessions, particularly for global corporates and wealthy individuals.
This would include taking steps to prevent tax-base erosion and profit shifting by companies from one jurisdiction to another. Complementing this could be medium-term measures to increase tax revenues by simplifying VAT policy, extending tax collection to the informal sector, and improving enforcement and collections through credible inspections and professional audits,” Mr. Amoako advocated.
On digitisation, he said long-term economic recovery and growth in Africa require accelerating digital economies and fostering broad innovation. In this regard, he said, in seeking investments, governments should actively encourage venture capital funding to encourage entrepreneurship and advances in technology and innovation.
“African digital startups mobilized a mere US$1.1 billion in funding in 2018, compared to US$7 billion in India and US$70 billion in China. Crowding in more venture capital will help African countries spur business and economic activity, especially in technology. Countries should also prioritise a more robust and interconnected innovation ecosystem between entrepreneurs and tech hubs, funders and development partners, and policymakers and other government actors.
These efforts to drive innovation and entrepreneurship would be served well by a comprehensive national innovation policy that aligns with national development priorities and highlights sectors that will support job creation,” he stated.
Additionally, African COVID-19 recovery plans should focus on eliminating overlapping government initiatives, streamlining implementation, and addressing bureaucratic bloat. It also implies improving budget management by line ministries, with special attention to waste and fraud.
“This would include vigorous vetting of government projects based on sound economic, technical, and financial criteria. The capacity of the auditor general should be strengthened for rapid and robust audits and reviews. Where applicable, results-based budgeting should be introduced,” Mr. Amoako said.
Although the Coronavirus induced crisis has not spared any aspect of the global economy, he posited that it offers an opportunity to re-examine national development strategies and ensure that they have adequate financing to serve as implementable roadmaps to economic recovery on the continent.
He, meanwhile, said a sustainable post-pandemic recovery will not be possible without improving the business and investment environment in Africa.
According to Doing Business 2020, Sub-Saharan African economies raised their average ease of doing business score by just 1 percentage point in the last year. Such an entrepreneurial environment, to him, will not enable businesses to grow and thrive—or create much-needed jobs.
Ideally, he said governments must move quickly to foster investment in key sectors after the crisis, particularly in infrastructure and manufacturing. This, coupled with improving the ease of doing business, can help Africa tap into a very large latent capital base looking for bankable projects globally, despite the crisis.
“Moving beyond the short-term, extraordinary efforts should be taken now to pave the way for easy and rapid private sector activity, including the establishment of new firms, corporate expansion, and improved company registration and taxation policy,” he said.
“Lastly, these or any policy initiatives will only go as far as country leaders are willing to take them. COVID-19 has created deep and potentially catastrophic economic challenges across the continent, and the implementation of the type of measures outlined here will require sometimes painful trade-offs for policymakers.
In that context, the transformative political leadership—having clarity of vision, governing selflessly, building trust among citizens, maintaining political will—is going to be more important than ever. To their credit, many African leaders and heads of state reacted swiftly to contain the spread of the pandemic and saved lives. They must show the same fortitude to save economies and ensure the eventual success of Africa’s transformation agenda,” he further noted.