By Amos Safo
The Minister of Finance, or possibly the outgoing Minister of Finance Mr. Ken Ofori-Attah appears to have weathered the storms not only from minority Members of Parliament, but strangely 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 miss reporting 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 miss reporting economic data. It was however, refreshing to hear the beleaguered Minister of Finance present the 2023 budget statement.
Most refreshing the Government’s plan to prioritize local agricultural production, boost exports and
create jobs for the youth. Coming out of an agonizing Parliamentary probe, the Minister put on a brave face and announced that Ghana was 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 sovereign 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 that we ask the Ghanaian people and businesses to contribute will be spent well.”
He announced that the budget would 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; mobilizing domestic revenue; Streamlining and rationalising expenditures; boosting local productive capacity and promoting and diversify exports.
Boosting local production
According to the budget statement to boost local productive capacity, government plans to
– Cut the imports of public sector institutions that rely on imports either for inputs or
consumption by 50% and will work with the Ghana Audit Service and the 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 for exports.
Overall, for government to promote exports, there is need to expand Ghana’s productive capacity in
the real sector and actively encourage the consumption of locally produced rice, poultry, vegetable oil and fruit juices, ceramic tiles among others.
Engagement with IMF
The ongoing negotiation with the International Monetary Fund (IMF) appears to be the foundation on which government would reset the economy. However, many analysts are concerned about the reliance on IMF bailout to resuscitate the economy. This raises several questions on the Government’s plan to build a resilient economy based on the “Ghana Beyond Aid.” It had always been certain that the neo-liberal agenda will not permit Ghana to weaned itself from western controlled economic development; hence the conspiracy by the rating agencies to downgrade Ghana’s credit worthiness. The rating agencies downgraded Ghana to compel lenders to withdraw their money and compel 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 the success of 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 the 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$10 billion annually and is accounted for by a range of items that include iron, steel, aluminum, sugar, rice, fish, poultry, palm oil, cement, fertilizers, pharmaceuticals, toilet roll, toothpick, fruit juices, etc. In fact, the importation of items like toothpick and toilet roll that 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 the potential to be competitive in the production of rice, fish, sugar,
poultry, cement, pharmaceuticals, jute bags, 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 targeted at producing these selected items.
In furtherance of local production, the Minister announced that the “GhanaCARES “Obaatan pa”
Programme will provide funding to 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, tomato, 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 that 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, tin tomatoes, maize and vegetables is unpardonable, considering the vast arable lands and water resources 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¢500 million 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 & amp; Garments for investments to help build economic resilience.
DBG is also in the process of establishing a private equity fund with an initial capitalization 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¢245,322,000.00 has been disbursed to SME’s 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 the Government should implement a policy to compel 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 sustain the operations of the banks.
Furthermore, the decision to establish an Agricultural Insurance Pool (GAIP) will boost agriculture and reverse the perennial under financing of agriculture and insulate farmers from unnecessary losses.
According to the Budget statement GAIP will provide traditional agricultural insurance to commercial farmers and small-holder farmers. An estimated USD$400 million in agricultural insurance will be extended to eligible farmers in 2023.
One District, One Factory (1D1F)
No 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, out 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 in the heat of the pandemic. Industrialisation is thus Ghana’s hope for a better future, for which the government must sustain the industrialization 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 cannot afford but build on her 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 pursue with aggression. The launch of 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 enhance her 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 products brands, including the completion of 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 of the long awaited YouStart programme with GH¢1.98 million disbursed to 70 youth beneficiaries operating in 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.
