A spotlight on social protection and COVID-19

Ghana has scaled one month of the Corona Virus 2019 outbreak, which intensified with the mandatory quarantining of all travellers arriving from countries hard hit by the virus. Flowing from that is the ongoing two-week partial economic and social lockdown of Greater Accra and the Greater Kumasi Metropolitan Area.

The lockdown has quite expectedly sparked mixed reactions, with partisan politics slipping into merits and demerits of the lockdown. This has raised the stakes on the pulse of the country in these critical moments of our economy. Amid the rumpus over COVID-19, President Akufo-Addo’s four addresses to the nation were just the stimulants Ghanaians needed to combat COVID-19.

Two famous quotations that emanated from his speeches still stand out. The first was, “These are not ordinary times”. The second is, “We know how to bring the economy back to life; but what we do not know is how to bring people back to life”. Particularly, the latter has made equal international headlines to the COVID-19 – judging from the accolades it has received from other president’s and international figures.

In Ghana, the quotation underlies or defines our collective responsibility and the resolve of government to put premium on protecting the human capital first. This article will analyse government’s policy toward combatting COVID-19 with emphasis on social protection.

From my viewpoint, one critical socio-economic issue COVID-19 and the partial lockdown has brought to the national agenda is the large number of our population that is earning a living on the streets through the daily use of their labour. Perhaps these figures far exceed what official statistics capture each year. The sight of hundreds of our youth using every available means to escape the economic trap in urban areas confirms empirical data on the high incidence of rural-urban drift and the resultant urban poverty.

Objectives

Essentially, government’s objective is to combat the pandemic: to limit and stop importation of the virus; to contain its spread; to provide adequate care for the sick; to limit impacts of the virus on social and economic life; and to inspire the expansion of our domestic capability and deepen our self-reliance in tandem with social protection principles.

 

Negative impact

In a statement to Parliament last week, the Finance Minister, Mr. Ken Ofori-Atta, emphasised the negative impact of COVID-19 on “every Ghanaian – from the employer to the employee. From big companies to the farmer and street-hawker selling finished products on the streets of our big cities. The self-employed – especially, the hairdresser, the barber, the carpenter, the trader, the builder, the dressmaker, the musician, the trotro or taxi driver, the kayayie – are all already feeling the pinch from this global pandemic”. Already, the general shortage of food supply has been predicted to intensify in the midst of COVID 19. This could lead to inflation in food prices; especially rice, bread, poultry and other meat products, vegetables and sugar, which are the common commodities for both rich and poor.

“However, as the president has stressed, the COVID-19 pandemic presents an opportunity to boost domestic production and consumption of some food commodities such as rice, maize, cassava, yam and chicken. The plan is for Ghana to use this opportunity to increase the production and export of commodities for which the country has comparative advantage within the West African region, among countries that have not closed their borders to cargo.”

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According to Finance Minister, Mr. Ken Ofori-Atta Covid-19 is particularly damaging to SMEs because most of these businesses rely on social interaction, like hotels, restaurants, drinking bars, chop bars, small retail shops, hairdressers, barbers, builders, musicians, taxi drivers, Kayayies, and street hawkers.

Mr. Ofori-Atta said the preliminary analysis of the macro-fiscal impact shows that there is likely to be a significant slowdown in our GDP growth as a result of significant shortfalls in petroleum revenues, shortfalls in import duties and shortfalls in other tax revenues. Also, the increased health expenditures as a result of COVID 19 could offset the 2020 Budget. Though the pandemic is an imported one, we cannot throw up our hands in despair.  As the president said in one of his addresses, “our survival is in our hands”.

Thinking outside the box

COVID 19 certainly calls for thinking outside the box. The immediate task is acting to minimise the huge threat of job losses and the impact of job losses on poor households. In response to President Akufo-Addo’s directive, the Finance Minister last week submitted a Coronavirus Alleviation Programme (CAP) to Parliament for approval. It is meant to address the disruption in economic activities, the hardship of Ghanaians and to rescue and revitalise local industries. Besides, the president has established a COVID-19 Fund to be managed by an independent board of trustees, chaired by former Chief Justice, Sophia Akuffo.

The Fund is mandated to receive contributions and donations from the public to assist in ensuring the welfare of needy and vulnerable citizens. The president and his vice president Dr. Mahamudu Bawumia, in the spirit of leadership by example, have committed three-months of their salaries to the Fund. Other ministers and public officers have followed their example in committing their salaries. And, so far, the public response has been encouraging.

In my previous article I raised the red flag over the slow response of corporate Ghana to government’s COVID-19 response. I am the first to admit that corporate Ghana is living up to their CSR obligations at the time of writing this report. More churches have also responded positively to the public outcry to give back to society. Churches are leading the way in providing food, clothing and shelter for the poor and vulnerable across religious and political divides. I am impressed that, at last, the body of Christ has risen to the challenge of addressing the physical needs of society. To God be the glory.

Under the CAP, the Ministry of Finance has planned to release one billion Ghana cedis into the economy upon approval by Parliament. Additionally, the ministry is proposing to use the equivalent of US$219million from the Stabilisation Fund to augment the CAP.  The anticipated impact of these funds in preventing job losses, protecting livelihoods and supporting small businesses is the way out of the crisis. Beyond that, government’s commitment to using this challenge as an opportunity to fast-track economic recovery, to revitalise industries and become self-reliant, is in line with Ghana’s overall development agenda.

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Heritage Fund

Government is also pushing for withdrawal of money into the contingent fund for emergency.  Thus, the Finance Minister has requested Parliament’s approval for US$100million to be transferred into the Contingency Fund, consistent with Section 23 (4) of the Petroleum Revenue Management Act (PRMA). According to the Finance Minister, the amount will be used to support the Coronavirus Alleviation Programme (CAP). Through this process, an estimated GHȼ1,250million will be transferred into the Contingency Fund.

A few years ago, the previous government made a strong case for the withdrawal of money from the heritage Fund to address economic challenges of the time. The argument in favour of the withdrawal was that the need to address present economic challenges at the time outweighed the argument for keeping the money for future use. However, at the time there was no emergency like we have on our hands now. So, if that argument still holds, then there is every justification for the current government to withdraw money from the Heritage Fund to address present economic challenges facing the country.

We need to address the current challenges – especially the health system that is under pressure, the education of our children (the leaders of tomorrow), and protection of livelihoods as a matter of urgency. More money should be deployed into agriculture to boost local food production and food security in the long-term. In fact, no fanciful theory can justify why money should not be taken from the Heritage Fund in these dire days.

However, Prof. Baah Boateng of the Economics Department of the University of Ghana on the ‘Boling Point’ Programme last week advised government to take the money as a loan to be repaid after the economy rebounds. He advised government to cut unproductive expenditure, if it is to better manage the COVID-19 and lead the economy out of the woods. Prof. Boateng also urged Ghanaians to reconsider some demands on the government, especially in an election year.

Nonetheless, the social protection policies put in place to secure jobs and livelihoods over the foreseeable future must be supported by all stakeholders. The s by the Ministry of Children, Gender and Social Protection to alleviate the short- to medium-term impact of COVID-19 on the poor and vulnerable are equally timely.

As the Finance Minister said in Parliament: “We have a collective responsibility to act now to stem what could so easily become a jobs catastrophe as both the supply and demand ends of businesses struggle. We may not know the full health and economic consequences of this pandemic. We may not know when the world will get over it. We may not know when a vaccine will be found. But what we do know is that we can take steps to protect our people and their livelihoods within the constraints of our fiscal space”.

 

(***The writer is a Development Communications Specialist, and a Social Justice Advocate.  All views expressed in this article are my personal views and do not represent those of any organisation(s). (Email: safoamos@gmail.com: Mobile: 0202642504 0243327586/0264327586

 

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