The Minister of Finance – or possibly the outgoing Minister of Finance – Mr. Ken Ofori-Atta appears to have weathered the storms not only from Minority Members of Parliament, but strangely also from Majority Members of Parliament (MPs of his own government) who have been calling for his head. While the Majority MPs started a campaign to put pressure on him to resign or compel President Akufo-Addo to fire him, the Minority MPs started an impeachment process against him for allegedly misreporting Ghana’s debt, growth and other economic indicators. The Minority action is intended to get Mr. Ofori-Atta removed from office on criminal grounds of misreporting economic data. It was however refreshing to hear the beleaguered Minister of Finance present the 2023 budget statement.
Most refreshing was government’s plan to prioritise local agricultural production, boost exports and create jobs for the youth. Coming out of an agonising parliamentary probe, the minister put on a brave face and announced that Ghana is embarking on a journey to implement a Post-COVID-19 Programme for Economic Growth (PC-PEG). The intervention will be supported by the IMF, World Bank and other friendly sovereigns and the private sector. “We are mindful that it will require broad-based contributions and sacrifices. My pledge to this House is that there will be fiscal discipline. That every pesewa t we ask the Ghanaian people and businesses to contribute will be spent well.”
He announced that the budget will be anchored on an agenda to restore macro-economic stability and accelerate economic transformation in line with the Post-COVID-19 Programme for Economic Growth (PC-PEG). Highlights of the seven points include: mobilising domestic revenue; streamlining and rationalising expenditures; boosting local productive capacity; and promoting and diversifying exports
Boosting local production
According to the budget statement, in order to boost local productive capacity government plans to:
- Cut the imports of public sector institutions that rely on them either for inputs or consumption by 50%, and work with the Ghana Audit Service and Internal Audit Agency to ensure compliance;
- Support the aggressive production of strategic substitutes;
- Support large-scale agriculture and agribusinesses interventions through the Development Bank Ghana and ADB Bank;
- Introduce policies to support newly-formed domestic industries to produce local goods for consumption and export.
Overall, for government to promote exports, there is a need to expand Ghana’s productive capacity in the real sector and actively encourage the consumption of locally-produced rice, poultry, vegetable oil, fruit-juices and ceramic tiles among others.
Engagement with IMF
Ongoing negotiations with the International Monetary Fund (IMF) appear to be the foundation on which government will reset the economy. However, many analysts are concerned about the reliance on an IMF bailout to resuscitate the economy. This raises several questions on government’s plan to build a resilient economy based on ‘Ghana Beyond Aid’. It has always been certain that the neo-liberal agenda will not permit Ghana to wean itself from western-controlled economic development – hence the conspiracy by rating agencies to downgrade Ghana’s creditworthiness. The rating agencies downgraded Ghana to compel lenders to withdraw their money and force Ghana to return to the IMF. What has worsened Ghana’s economic outlook is the impact of global inflation that has made the cedi useless.
Small wonder that success for the Post-COVID-19 Programme for Economic Growth (PC-PEG) depends on negotiating a strong IMF programme; coordinating an equitable debt operation programme; and attracting significant green investments, says Mr. Ofori-Atta. He hopes that the three imperatives will enable government to generate substantial revenue, create needed fiscal space for the provision of essential public services, and facilitate implementation of the PC-PEG programme to revitalise and transform the economy. The PC-PEG is government’s blueprint to restore macroeconomic stability, promote debt sustainability, sustain economic recovery and support structural reforms.
Local capacity for production
The minster alluded to the fact that Ghana’s heavy dependence on imports places tremendous pressure on the cedi, creating an unfavourable balance of payments position. On average, Ghana’s import bill exceeds US$10billion annually and is accounted for by a range of items which include iron, steel, aluminum, sugar, rice, fish, poultry, palm oil, cement, fertiliser, pharmaceuticals, toilet-rolls, toothpicks, fruit-juices, etc. In fact, the importation of items like toothpicks and toilet rolls which can be produced locally is a critical factor of Ghana’s economic weakness; and unless we are able to restructure our economy to shift from importing such cheap goods, Ghana’s economy will remain fundamentally weak.
Thankfully, we have the capacity to produce most of the goods we are currently importing. According to the Finance Minister, Ghana has potential to be competitive in the production of rice, fish, sugar, poultry, cement, pharmaceuticals, jute bags and computers, etc. Therefore, it is prudent to target these products for import substitution by supporting the private sector to expand, rehabilitate and establish manufacturing plants targetted at producing these selected items.
In furtherance of local production, the minister announced that the GhanaCARES ‘Obaatan pa’ programme will provide funding for farmers to cultivate up to 110,000 acres of land in the Greater Accra, Ashanti, Central, Savannah and Oti Regions. The initiative seeks to expand our production and productivity in rice, tomatoes, maize, vegetables and poultry.
Furthermore, the programme will engage interested private sector investors to expand and agricultural production and processing in the Asutuare-Tsopoli Economic Enclave. The same approach will be adopted for the lands secured in the Ashanti, Central, Savannah and Oti regions. I hope these laudable initiatives will not remain on the drawing board as in previous years. Given the current global turbulence, we do not need a reminder that only local production and consumption will enhance our economic recovery – not foreign handouts. In fact, Ghana’s continuous importation of rice, tinned tomatoes, maize and vegetables is unpardonable, considering the vast arable lands and water resources with which God has endowed our country.
Financing local production
One of the biggest challenges facing agriculture is financing. In this regard, plans to boost agricultural productivity through the Development Bank Ghana initiative (DBG) is prudent. The minister announced a GH¢500million special credit programme to support the agribusiness value chain over the next five years. The priority sectors are Poultry, Rice & Cereals, Pharmaceutical manufacturing, Tourism, Textiles & Garments for investments to help build economic resilience.
DBG is also in the process of establishing a private equity fund with an initial capitalisation of about GH¢400m (US$30m). Also, DBG will engage other financial institutions to expand its loan channels. According to the minister, a total of GH¢245,322,000 has been disbursed to SMEs – saving over 1,000 jobs. Also, the DBG has partnered with a PFI to build a digital lending platform to shorten the processing time for lending to SMEs and increase its ability to reach a lot more businesses across the country. I think government should implement a policy that compels all commercial banks to lend an appreciable percentage of their lending portfolio to agriculture. The commercial banks must be part of the agenda to improve local capacity, because it is our money that sustains the operations of banks.
Furthermore, the decision to establish an Agricultural Insurance Pool (GAIP) will boost agriculture and reverse the perennial under-financing of agriculture while insulating farmers from unnecessary losses. According to the Budget statement, GAIP will provide traditional agricultural insurance to commercial and smallholder farmers. An estimated US$400million in agricultural insurance will be extended to eligible farmers in 2023.
One District, One Factory (1D1F)
Without doubt, agricultural productivity will not only reduce imports of food but also feed agro-processing industries that are springing up under the One District, One Factory (1D1F). According to Mr. Ofori-Atta, a total of 296 1D1F projects are at various stages of implementation – of which 126 are currently operational, 143 are under construction and 27 are pipeline projects. In 2023, government will intensify support to existing and new manufacturing enterprises with technical assistance, credit facilitation, and access to electricity and other infrastructure. In Ghana COVID-19 brought out the best in our local industries, which produced most of the items needed at the heightt of the pandemic. Industrialisation is thus Ghana’s hope for a better future, for which reason government must sustain the industrialisation moment.
African Continental Free Trade Agreement (AfCFTA)
A strong local economy based on local production will no doubt position Ghana to take advantage of the African Continental Free Trade Agreement (AfCFTA). As host of AfCFTA, Ghana can’t afford to not build on its competitive advantage. Competitiveness can be built on an export-led economic drive. In this regard, the decision to facilitate the entry of 200 local companies into the African market must be pursued with aggression. Launching the AfCFTA Guided Trade Initiative (GTI) to start commercial production of batteries, tea, coffee, ceramic tiles, processed meat products, corn-starch, sugar and pasta, etc. will further enhance Ghana’s competitiveness.
More than ever, Ghana needs to enhance its support to key export-sector stakeholders. The Budget statement hinted that Export Trade Houses (ETHs) will be established in selected markets to promote made-in-Ghana product brands, including completing the first ETH in Kenya. Additionally, opportunities will be created for local Ghanaian businessmen and investors to invest in export product transformation and value addition at the district level, in partnership with the Ministry of Local Government and Rural Development.
YouStart
Perhaps piloting the long-awaited YouStart programme with GH¢1.98million disbursed to 70 youth beneficiaries operating in the poultry, agro-processing, ICT, textiles and food processing sectors signals an inclusive economic agenda. Undoubtedly, empowering the youth with entrepreneurial skills is the surest way of building a sustainable economy, since youth unemployment constitutes one of the biggest security threats to the economy.
