Battle of manifestos: 2 Ways to manage Ghana's economy

The two main political parties, the ruling New Patriotic Party (NPP) and the opposition National Democratic Congress (NDC) have promised in their manifestos accelerated economic growth and development if elected into power on December 7.

Both parties have offered similar fundamental objectives for macroeconomic management, although the strategies to achieve them differ somewhat.

Each has committed to accelerating the growth rate and reining in the fiscal deficit. They also converge on having a positive primary balance, along with a lowering of inflation and interest rates, as well as achieving trade surplus balances.

The NDC manifesto promises “fiscal responsibility”, but without any quantitative targets.

The party promises to stop applying personal and corporate income taxes on small businesses altogether, while reducing the corporate tax rate for medium-size companies from the current 25 per cent to 15 per cent.

For the NDC, start-up enterprises employing up to 20 people will be exempt from corporate income tax for the first year, while medium-size firms employing more than 20 people will enjoy exemption from corporate income tax for two years.

It is also promising many tax reliefs and a massive investment in infrastructure with a $10-billion investment, while the NPP has already rolled out a GH¢100-billion Ghana CARES Obatanpa programme.

The NPP has, with the benefit of experience, now turned its focus towards expanding the tax net, instead of narrowing it, by bringing the informal sector into the net through a combination of data provided by the national ID card initiative and digital addressing and leveraging the use of tax identification numbers (TINs) as a prerogative for accessing public goods and services.

Both parties have differing approaches to decentralising development — the NPP seeks to use private capital through its flagship One-district, One-factory initiative, while the NDC says it will establish agro-processing facilities nationwide, based on the competitive advantages of each region.

But the biggest point of departure between the two parties, as contained in their respective manifestos, is the issue of business ownership. While both parties say they will actively encourage local content and local participation in the economy, the NPP will rely on local cost competitiveness to make this happen, while the NDC says it will engage in “open affirmative action” to ensure that more women get involved in business ownership.

The NPP plans to develop strategic growth poles, such as the cultivation and processing of shea butter and other tree crops, where local investors will be competitive against their foreign counterparts, while the NDC wants to legislate local content and participation — for example, it wants to amend the Public Procurement Act “to give parity to Ghanaian businesses”.

Thus, while the NPP is looking to attract huge foreign direct investments for major strategic initiatives such as automobile assemblying and financial services (where it wants to establish an international financial services centre), the NDC is more focused on local participation, size of investment notwithstanding, and will, therefore, reverse the ban on salvage vehicles importation.

The NPP has dedicated a chapter in its manifesto on creating a government machinery that works by digitising services.

Areas earmarked for digitisation include the national digital address system; drivers licence; online application of passports; paperless port; automated business operating permits, and universal QR code payments system.

Analysts

Meanwhile, two economists have bemoaned the increasing resort to political party manifestos as blueprints to governing the country.

They said the lack of a long-term development plan to which political parties could align their policies had ensured that the parties turned campaign promises into development policies, which they forcefully implemented when they won power, irrespective of the dangers such policies posed to the economy and the country at large.

A Professor of Economics, Prof. Peter Quartey, and an Economics Researcher, Dr Said Boakye, said in separate interviews yesterday that the country needed to change from that practice or risk collapsing the system in the long run.

The two professionals were speaking to the Daily Graphic after the launch of the manifestos of the NPP and the NDC, which the parties are now using to canvass for votes ahead of the December 7 general election.

Both Prof. Quartey, who is the Director of the Institute for Statistical, Social and Economic Research (ISSER) of the University of Ghana, Legon, and Dr Boakye, the Director of Research at the Institute for Fiscal Studies (IFS), declined to comment on the substance of the two manifestos.

They explained that the logic behind them was flawed and so any attempt to analyse them would mean that one was lending credence to the practice.

They said until the manifestos were aligned to and anchored on a long-term development plan, the NPP and the NDC would continue to toy with the development aspirations of the country through promises that sought to win them power and not to entrench development.

Context

On two occasions, the National Development Planning Commission (NDPC), which is legally mandated to plan the country's long-term development, had developed long-term plans spanning 40 years and seven years.

However, those plans have been shelved by the counter parties, mainly on the bases of ideological disagreements.

Article 87(2)(b) of the 1992 Constitution mandates the NDPC to, among other things, make proposals for the development of multi-year rolling plans, taking into consideration the resource potential and comparative advantage of the different districts of Ghana.

The Petroleum Revenue Management Act, 2011 (Act 815) underlines the importance of a long-term development plan.

The law stipulates that the petroleum revenue channeled into the annual budget should go into funding projects that are in line with the long-term development goal of the country.

Section 21(2) talks about the use of petroleum revenue allocation into the annual budget funding amount (ABFA).

Subsection 2(d) says the use of the allocation shall be guided by a medium-term expenditure framework aligned with a long-term national development plan approved by Parliament.

It is only in the absence of that long-term plan that the law allows the selection of four priority areas, which for the past 10 years has rather become the default position for the use of the revenue.

Some views

Some traders at Tudu in the central business district of Accra proffered some views on the manifestos launched by the NPP and the NDC.

While some said the manifestos did not address or speak to their needs as citizens, others were of the view that the promises made in them would not be delivered by the parties, even if they won the December 7 elections, reports Kester Aburam Korankye. 

A man in his 30s who sells locally made shoes, Mr Sammy Ayensu, told the Daily Graphic that although he had not read the two documents, he had heard snippets of the promises made by the parties on radio.

He said his first impression of the manifestos was that both parties were making new promises, while they failed to outline measures to deal with existing challenges that confronted ordinary Ghanaians, especially traders.

“I think both parties are promising more than they know they can deliver, and that should be a source of worry to some of us who are not politicians because we have seen both parties make similar promises in the past and underperform when in government,” he said.

Touching on his understanding of the manifestos in relation to support for the private sector and small-scale businesses, Mr Ayensu said from what he had gathered, not much focus was given to small businesses. 

However, he said, traders were hopeful that the economy would rebound after the devastating effects of the coronavirus disease (COVID-19) and praised the government for putting in place measures to help cushion small businesses.

Consultation

Mrs Rose Adu-Marfo, a distributor of wholesale rice, said her understanding of most of the promises made was that they were politically motivated, as both parties professed similar promises.

Asked which promises captured her attention the most, she said the decision by the NDC to extend the maternity leave period from three to four months was laudable and seemed realistic to achieve.