Akufo-Addo’s economic headache. Jobs, corruption and power stability high on agenda
Top economists have stated the major areas which the incoming administration under the President –Elect, Nana Addo Dankwa Akufo –Addo,should focus on as his priority when he assumes office on January 7 next year.
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The areas of priority, according to them, range from job creation, tackling corruption head –on, improving revenue mobilisation, making energy cheaper for industry and businesses, as well as calling for a year policy direction on the three-year Extended Credit Facility (ECF) that the outgoing administration had with the international Monetary Fund (IMF) in the April 2014.
The economists, Prof. Peter Quartey, the Head of the Economics Department at the university of Ghana, Legon and Dr John Gatsi, the Head of Department of Finance, School of Business, University of Cape Coast, said these in separate interviews with the Graphic Business on which areas the new government needed to focus its attention on a major priorities.
Job creation
On job creation, Prof. Peter Quartey said the first major priority that the new administration needed to focus on was to undertake pragmatic steps to create employment through the development of the private sector.
“Job creation should be its first priority and this can be done if the necessary steps are put in place to get the private sector back on track once again in a more vibrant way,” he told the Graphic Business
Prof. Quartey said for the private sector to flourish to create the needed jobs, the cost of credit, which had been a major hindrance to borrowing for expansion, must be lower than it is presently, while taxes which affected the growth of the players in the sector needed to be reworked to encourage growth.
He said the government also needed to focus on adding more infrastructure to the present ones available because of the potential for that to generate more jobs.
Prof. Quartey noted that most of such projects must be taken to the rural areas to create a more conducive environment for the new businesses to crop up there to engage the youth who often trekked to the urban centres in search of non-existent jobs.
Already, the President-elect, Nana Akufo-Addo, has pledged his commitment to ensure that each district of the country had one factory under the tag line, “One District, One factory.”
The move, as explained, is meant to ensure that the districts take advantage of their potential to add value to their main resource. Many districts in the country are blessed with natural resources which have remained untapped for many years because of lack of factories in that regard.
Revenue mobilisation
In the area of revenue mobilisation, Prof. Quartey noted that the government needed to seriously focus on how to rope in the informal sector into the tax bracket.
“The old way of taxing the people must change,” he said, adding, “The tax bracket must be widened to ensure that the informal sector players are brought on board to contribute to the tax kitty.”
He said there had been the practice where governments, instead of widening the tax net, have rather increased taxes only to overburden those already in the tax bracket.
Under the present situation, the incumbent government which was supposed to widen the tax net rather focused its attention on introducing additional taxes from many other sources, that only went to burden the same people who were caught in the tax bracket.
Other analysts in the past have described such a move as “lazy”, adding that it has rather become a disincentive for growth.
To be able to capture the players in the informal sector effectively, Prof. Quartey asked the incoming administration to ensure that the National Identification exercise was revived and well undertaken to make it effective.
“Once we are able to capture the bio data and all other information about the people, we can easily trace them and get them to undertake their civic responsibilities,” he said.
The National Identification exercise was started in the Kufuor regime and continued under the late Prof. Atta-Mills and to the present government. Unfortunately, due to mismanagement and the lack of funds for effective implementation, the process has stalled again.
It has been increasingly evident that none of the governments had shown any seriousness in getting the process completed for reasons unknown to many.
However, Prof. Quartey was optimistic that for the incoming government to succeed, it would have to take that exercise seriously as one of its major priorities.
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Corruption
He also called for measures to block all leakages in the system as a means of checking corruption.
He said the resources of the country could not be allowed to be lost when the masses lacked what it took to make their lives better.
Energy
On the energy sector, Prof. Quartey said, “Efforts should be made to ensure that we have stable power because everything else hinges on that.”
The country was plunged into serious energy challenges for more than three years continuous in what gave rise to the nickname “dumsor”.
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During the period, companies had to resort to different costly ventures, including the purchasing of high-capacity generators to run their businesses. This affected their cost of operations and in order to stay afloat, they had to sacrifice some staff members.
Although the situation has improved significantly, Prof. Quartey said there was the need for the new administration to do more to make energy more available, stable and at a cheaper cost.
Clear statement needed
Dr Gatsi on his part said there was the need for the incoming administration to make a policy statement that would serve as a guideline for the investing public and the private sector in general.
That statement, he said, should state categorically if the incoming administration would maintain or abrogate the three-year ECF that the outgoing administration had with the IMF in April 2014.
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Without such a statement, Dr Gatsi said, it would be difficult for people to predict the direction of the incoming administration, given the plethora of promises that were made during the campaign.
“For example, if they want to scrap those taxes that they talked about during the campaign, that will be an affront to the IMF programme we are currently running. So there should be a statement on whether or not it is part of their plan to exit or remain under the IMF programme and what the implications will be to the country,” he stated.
“I think that if they want to remain with the IMF programme, many of the things that they talked about will not be done, at least for now. So what is important right now, for me, is to get a policy statement that will comment on some of these,” he added.
The ECF is a US$918 million-backed front loaded programme that the country entered into to help stabilise the economy and gain confidence.
Since its commencement, some tax rates have gone up, with new taxes slapped on energy and other utilities in line with efforts to increase domestic revenue.
The programme also led to the government cancelling the monthly payment of allowances to nursing and teacher trainees, an action that hurt the political fortunes of President Mahama and his ruling party.
Given that the New Patriotic Party (NPP) had campaigned that it would restore the allowances in its first budget, Dr Gatsi said it was only prudent that the party made a comment on its stance with the IMF programme, which was scheduled to end next year.
That notwithstanding, he said the incoming administration should help to revamp agriculture infrastructure and inspire growth in the private sector to continue with some of the projects that were started by the outgoing administration.
“Also, the situation where a new administration takes office and abrogates contracts and does not allow programmes that are halfway through to continue should be avoided. If you do that, it will affect the growth of the economy and it can bring tension and discomfort, which may not allow for the support that the new administration needs,” he said.