A pro-business budget with affirmative policies to reduce fiscal constraints for startups and give incentives for businesses to take on more people like never before is badly needed, Dr. Sam Ankrah, President of Africa Investment Group, has said.
He said a pro-business budget holds numerous benefits for the country, as it will help private businesses to thrive, expand and employ more youth; which will in turn ease the ballooning public wage bill as well as generate value for the state in taxes.
He, therefore, believes that the 2021 budget statement and economic policy should offer bold and business-centred policies, along with measurable steps to positively shape the economy and citizens’ welfare. Likewise, it must shift away from rhetoric to actionable strategies, with home-grown solutions to the country’s economic challenges at its heart.
“The budget must be conducive to positively shaping Ghana’s economy and the welfare of its people; taken together, not as separate agendas. A pro-business budget that reduces fiscal constraints for start-ups and gives incentives for businesses to take on more people is badly needed,” he said in a pre-budget expectation statement to the B&FT.
Dr. Ankrah, a Fellow of the Institute of Chartered Economists, said the national budget should also be accountable to the public on transparency and accountability metrics, ensuring that every penny spent yields value for money.
In this respect, he urged government to be transparent with regard to how it wishes to develop more novel borrowing solutions, given the likelihood of increased coupon rates attached to Eurobonds.
“There must be more accountability and transparency with sovereign borrowing. To date the national debt has indeed ballooned, but the nation is unable to point out what it has been used for. The oft-heard refrain is ‘COVID expenditure’, yet there has been no granular audit of this supposed expenditure.
“Such demands get dismissed into the ‘political’ box; but as taxpayers there is an absolute and inherent right to demand accountability from the government of the day on such expenditures,” he said.
He warned against forward-selling gold royalties, just like leveraging the ESLA bond, as simply mortgaging away future income streams. “In plain English, forward-selling gold royalties is no different from rooting up income tax revenue for the next 10 years and then selling it forward at a discount. It’s lazy, unimaginative and mortgages the youths’ future.”
More importantly, he said, a credible and extraordinary plan for fiscal consolidation is needed. “Bonds have sold significantly in October; importantly, Eurobonds and the LCs. Investors have bought and are holding till the budget reading; gambling, and with the expectation they will come up with an extraordinary fiscal plan that assuages the market. So, I would be very surprised if they don’t propose a solid, extraordinary fiscal plan.”
Business first
On how the budget could promote and stimulate the private sector – especially as the economy bids to recover from the COVID-19 chaos – Dr. Ankrah, who is also an international business consultant and an investment banker, said it must outline steps to reduce red tape for businesses, and promote digital economy through incentives for foreign direct investment in fibre-optic cable and mobile network operator infrastructure, particularly 5G.
Others include how to promote investment in renewable energy, climate change and energy transition, smart agriculture and education.
He explained that clear and business-friendly policy direction on these sectors of the economy, through the budget, will stimulate massive private sector interest and participation.
In addition to the above, he wants government to demonstrate how it plans to reduce expenditure and digitise revenue mobilisation.
Equally important is how it intends to allow for private sector participation in state-owned enterprises like Tema Oil Refinery, BOST, MASLOC and Venture Capital, among others, to ensure efficiency. These institutions, he advocated, need to be offloaded for more competent people to run them with expertise instead of the party faithful. This, he said, will create value and curb the country’s worsening unemployment situation.
“Government should focus on the regulating aspect and allow the private sector to really be an engine of growth. Business opportunities/contracts are all going to either family and friends or party cronies who lack the competence or know-how. These are institutions which are meant to improve and grow the economy, and also help with revenue mobilisation and employment,” he concluded.
