‘Spend oil cash on education’

Business News of Wednesday, 2 December 2015

Source: B&FT

Oil 3File photo

The Institute of Fiscal Policy (IFP) and the Integrated Social Development Centre (ISODEC) have called on government to consider allocating a higher proportion of its oil revenue to finance the education sector.

The two organisations, at a forum held for the media on the 2016 budget, said government’s failure to commit funds from the Annual Budget Funding Amount (ABFA) of the petroleum revenue to education in the 2016 budget is worrying.

This year, the ABFA contributed 4 percent to government’s GH¢7.58 billion total spending on education. The rest of the funding came from government, internally generated funds, donors, and the Ghana Education Trust Fund (GET Fund).

Education sector spending as a percentage of GDP also experienced a slight drop in 2016; 5 percent compared to this year’s 6 percent.

Mrs. Charlotte Afudego, Policy Analyst, Institute of Fiscal Policy (IFP) speaking at the forum that was supported by the United Nations Children’s Fund (Unicef) said: “Considering the long-term dwindling nature of donor funding, which mainly finances capital goods in the sector, it is important for government to channel more resources from the oil sector to finance social sectors and in particular to provide vital educational training, equipment and infrastructure”.

Next year, government has budgeted to spend GH¢7.55billion on education; which is a 1 percent drop in the resources committed to education this year. Out of this amount GH¢4.88billion, representing 64.6 percent of the total education spending, will be expended on salaries and wages; while provision of goods and services will amount to GH¢1.3billion, about 17.3 percent.

“The issue of education expenditure being heavily skewed toward compensation relative to goods and services has been observed to be an inefficient way of allocating resources toward achieving quality education; especially when education outcomes, in terms of performance of pupils, are not adequately measuring up to the investments.”

The civil society groups further argued that the slight dip in budget allocation for education under the previous year’s does not provide an effective base for promoting quality education, especially considering erosion of the cedi’s purchasing power in terms of inflation.

Budget allocation for the GET Fund, which is a statutory fund, rose from GH¢844million in 2015 to GHC1billion in 2016, which represents about 21 percent increment — a move lauded by the civil society groups.

Meanwhile, discretional allocation for the education sector (excluding the GET Fund), which is used for compensation, goods and services, or capital expenditure, decreased from GHC6.7billion in 2015 to GHC6.5billion, next year — a decline of 3.1 percent.

“This situation should be addressed to forestall negative repercussions on achievements required of educational standards,” the two groups said.