Enhancing gov’t-led productivity – Toma Imihere



Business News of Sunday, 27 December 2015

Source: citifmonline.com

Seth Terkper Minister FinanceMr Seth Terkper, Minister of Finance

Next year, during the run up to the 2016 general elections, Ghana will reach the mid point of its three year Extended Credit Facility programme with the International Monetary Fund (IMF).

Even as the government seeks to intensify fiscal consolidation by bringing its budget deficit down to 5.3% of GDP, it is also aiming to raise economic growth back towards more familiar territory.

The 4.1% GDP growth rate achieved in 2014 and which looks to have been more or less repeated this year, is the lowest since 2009. Between the following year and 2013, Ghana’s growth rate averaged twice the rate that has been achieved over the past two years, indeed peaking at a world beating 14.4% in 2011. In 2016 the target is 5.4%, the first step towards returning growth to over 8% by 2018.

But to resume the robust economic growth Ghana was becoming accustomed too, the country has to win back the confidence of the international donor community on which it necessarily relies as well as that of the IMF and the World Bank whose endorsements are needed to attract both donor support and international investment. While critics abhor Ghana’s heavy reliance on foreign assistance it is currently more important than ever in the face of government’s poor financial circumstances and lack of fiscal space to maneuver in.

Instructively, Ghana hopes to attract grants from its development partners to the tune of GH1.6 billion in 2016, this amounting to 1.0% of GDP and 4.2% of total revenue. This is to be matched by millions of US dollars in foreign loans on concessionary terms.

This will require more prudence, more integrity, more innovation and more commitment from the top level technocrats who run the machinery of government.

Especially in the Ministries, Departments and Agencies (MDAs) that facilitate and regulate activities in the productive sectors of the economy such as the Ministries of Trade & Industry, Agriculture, Petroleum, Energy, Lands and Mines. MDAs such as these are the frontline institutions with responsibility for facilitating economic productivity by ensuring the optimal operating environment and maximal public sector support for the productive private sector.

Interestingly, a major opportunity is about to present itself in this regard as new Chief Directors are about to be appointed for the various Ministries along with other government institutional heads. This offers the chance to identify and appoint the kind of Chief Directors that Ghana needs to fulfil its agenda for restoring high economic growth rates through improved productivity.

Indeed, a think tank, Concerned Citizens for Good Corporate Governance suggests that the Chief Directors and other institutional heads to be appointed should be people who are coming to the position with new ideas and ways of thinking and savvy for the application of technology rather than people who are selected simply because of their longevity in the civil service and their familiarity with the old ways of doing things.

Another key criterion should be their ability to work with bilateral and multilateral development partners to their satisfaction in order to ensure that they contribute the material resources and expertise that the country direly needs currently.

To this end, government’s decision to exclude civil servants with less than four years till they reach retirement is a good one. It deliberately makes the old brigade ineligible even as it ensures that whoever get the positions available will stay in service long enough for there to be continuity in the institutions they have been appointed to head.

The agricultural sector needs this the most.

A non governmental organization, the Alliance for Industrialization and Development, points out that agriculture holds the brightest prospects for inclusive, wide reaching economic growth and improvement in living standards because it employs more than half of the population. Indeed cocoa farming alone impacts on the livelihoods of some 800,000 households across Ghana.

On a wider level, since food and beverages accounts for about half of the entire basket of goods used in computing consumer price inflation, agriculture has the biggest impact on price levels apart from providing food security. Furthermore agricultural production offers the best potential for increasing foreign exchange earnings from non traditional exports which will be crucial in stabilizing the cedi in the face of depressed oil and gold prices on the global markets.

It also offers locally sourced inputs for industry and thus would actually allow for a focused reflation of the economy without leakages of the financial resources applied into higher demand for imports and resultant cedi depreciation.

However, the agricultural sector is now at its lowest ebb. Sectoral growth for 2015 is an inconsequential 0.04%. Its contribution to GDP has fallen to below 15%, down from over 30% as at 2009. And whoever manages the Food and Agriculture Ministry as its Chief Director from 2016 onwards will need to drastically improve the sector’s fortunes with barely 1% of government’s budget.

Which is why it is most worrying that there are clear attempts to over ride the eligibility criteria for the post in that Ministry, by some civil servants who have less than four years till their retirement but are still insisting on presenting themselves for selection. Their actions if accommodated, would defeat the prudent purpose for the eligibility criteria and result in the application of old ways to meet new challenges, an effort bound to simply replicate old institutional failures.

The qualities, capacities and capabilities of the incoming Chief Directors and other institutional heads will be crucial to Ghana’s fortunes going forward. Ghana’s future may depend on government making the right appointments.

By: Toma Imihere

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