Imani Alert: What value will the Nation Builders Corp programme bring to economy?

Imani Alert: What value will the Nation Builders Corp programme bring to economy?
Source: IMANI Africa
Date: 17-10-2018 Time: 11:10:32:am
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Snapshot of unemployment

Governments across the world particularly in developing countries have renewed their commitments to fighting youth unemployment in recent years. This, of course, has been on the back of shifts in the structure of labour which appears to be taking on a very youthful profile and different market dynamics at least across some major markets in Africa. Even more crucial is the fight against extreme poverty across most markets, which sees the provision of sustainable jobs to young people as a central strategy.

The case of Ghana is not different. A report by the International Labour Organisation (ILO/O’Higgins) in 2001 examining youth unemployment and employment policy in Ghana[1], argued that ‘…the youth unemployment challenge in Ghana is a consequence of poor macroeconomic performance over the [prior 50 years] and therefore needed to go beyond a purely supply-side response…further suggesting that the problem could not be resolved [credibly] in the absence of sustained economic growth, which must also be sensitive to the profile of unemployed youth in the country.

Surveying nearly a million unemployed people in Ghana, Nsowah-Nuamah and Amankrah (2003), reports the unemployment profile of the country to include; 21.6% of school dropouts, 4.7% acquired skills from TVET including apprenticeship training but needed retraining to fit into the changing dynamics of the labour market, 65.8% completed various stages of formal education at the non-tertiary level (most of whom are JSS products), 4.7% senior high school graduates (but deficient in English, Mathematics and Science), 1.2% graduated from Universities and are first time job seekers without the right work experience and are not therefore able to get work after completing their national service, and some 2.5% who sleep, live and work on the streets.

Recent interventions to curb the spate of unemployment

This unemployment profile looks typical of most countries in sub-Saharan Africa until it is closely examined and balanced against the policy propositions observed as solutions from successive governments over the last decade. The focus of governments in the Fourth Republic particularly post our recent ‘good days’ have been in the area of TVET and creation of [as they describe them] opportunities for graduates. Indeed, the government under the NDC of John Mahama went to the extent of renaming / reclassifying polytechnics as technical universities ostensibly to create some parity in qualification with their peers from other degree awarding universities, without recourse to demands of labour from industry. The obvious results is the increase in number of degree wielding graduates [building from the profile of unemployment provided by Nsowah-Nuamah and Amankrah constitute a marginal component of the problem]. To augment this, of course not in a chronological manner, programmes such as the National Youth Employment Programme (NYEP) and its successor Ghana Youth Employment and Entrepreneurial Development Agency (GYEEDA, launched in 2014 - never mind that with hindsight the CEO and others are serving jail terms for their mismanagement of resources), which subsequently morphed into the Youth Employment Agency (YEA), Local Enterprise Skills Development Programme (LESDEP, which at a point claimed to have opened 170 offices across the various MMDAs in the country - take note that it was claimed to be a private initiative with a COMPLETE GOVERNMENT

BACKUP, whatever that means), Youth Enterprise and Skills Development Centre (YESDEC - a onetime subsidiary of GYEEDA above, which at one time was training people to go into soap production, providing seed capital for such ventures and using ‘susu schemes’ to retrieve funds - never mind that funds were embezzled which led to the abrupt end of the programme), Youth Enterprise Support (YES which was set up with some GHS10million or US$2.5million). The Youth Enterprise Support (YES), has morphed into the now National Entrepreneurship Innovation Programme (NEIP) under the current NPP government.   

 Are you tired of the count? Wait! Within the same focal period, the Graduate Business Support Scheme (GEBSS, aimed at providing 10,000 graduates each year with requisite skills to enhance their potential for self-employment, entrepreneurship and employability - at one time the Export Development and Agriculture Investment Fund [EDAIF] was claimed to be providing some GHS400,000 per annum towards premium payments to unlock some GHS20 million credit/loans without collateral from financial institutions to start businesses), was running together with the Skills Development Fund (SDF which was to improve workforce productivity with agribusiness and sustainable energy as focal areas - never mind it claims to have supported 43,000 businesses across Ghana [measures nearly 84% of total businesses paying SSNIT for their employees including foreign businesses as at 2015]). Again, in agriculture, we saw the Youth in Agriculture (YIAP - coordinated by the Ministry of Food and Agriculture with the objective of motivating the youth to take up farming as a commercial venture). You should definitely have an image of what appears to be the “concerted effort” towards not only developing the economy, but creating jobs for young people, across the identified unemployment profile above. These aren’t the only programmes, there are more!

Somehow, all these efforts appeared not to have left any significant mark in the drive for economic growth and sustainable job creation. Unemployment accentuated over the period of 2011 to date peaking at about 11.9% in 2015 according to the Ghana Statistical Services (GSS). Add the further shrink of agriculture and manufacturing sub-sectors of the economy and the increase in social vices in the last couple of months, protests by nurses and teachers among other workers and the numerous seminars on job creation across the country will make sense.

The Nana Addo Danquah Akufo Addo government in a bid to reverse this trend has several commitments simultaneously running. The focus of this brief is not to access the potency of all the policy prescriptions and programmes aimed at restoring the economy to sustainable paths and create jobs, but to situate one of these flagship programmes - Nation Builders Corps (NABCO), launched in May 2018 , and attempt to see its potency in really making a dent on the challenge of unemployment and the cost at which the government and the economy must make this happen.

Scheme of Nation Builders Corps (NABCO)

The NABCO programme though, the government says, is not like any of its predecessors. However, it is difficult to follow this rationalisation at least from the general objective of the programme’s point of view; an initiative of government to address graduate unemployment to solve social problems. Maybe lexically speaking at least ‘solving social problems’ could be the difference. In terms of specific objectives, which summarily include; provide temporary employment to unemployed graduates, improve skills and employability for transition from programme to permanent employment, improve public service delivery, improve government revenue mobilisation, and provide needed infrastructure to improve access to basic public services, the differences remain to be seen, maybe on the ultimate results over time. The most distinguishing feature of this programme is the sole focus on graduates from tertiary institutions - diploma or degree holders, who must apply to modules closely related to their areas of study.

The scheme of the programme as advertised will span a 36-month period, with the first 3 months being focused on military and soft skills training of the participants, following 27 months used for actual placement of work, with the remaining 6 months used in developing training and strategy for exit out of the programme. For 100,000 applicants to be subjected to any form of military training, for 3 months, will indeed cost resources (time, allocation of military personnel to provide the training, financial resources amongst others - never mind that we do not know how much this costs per head). If the training is indeed on soft skills, that equally will come at a cost to the programme, and could potentially result in loss of man hours.

Economic viability

The proposed programme on the face value is deduced as some kind of a social intervention programme to cushion young people who are aggressively searching for economic opportunities. Some have argued that, it is erroneous to assess the economic viability of the proposed programme given the social orientation and the possible intrinsic value to be accumulated over time. However, this is deceptive! Back of envelop computations indicate that the direct salary cost item alone under the programme could reach some GHS840 million per annum [equivalent to 2.1% of domestic tax revenue including tax revenue from the petroleum sector for 2018]. Clearly to complete the first-year execution of the programme, an additional GHS240million will be required to cover up only the total salary payments due under the programme[2]. Assuming the the mid-point of 10% and 25% which is considered generally as the average cost of general administration of a project is added to this, an additional GHS105million thereabouts will be required per annum. Without accounting for any other potential costs and underlying drivers, a total of GHS945million will be required at least for the first year of the programme, increasing the additional requirement from the salary adjustment of GHS240million to GHS345million. The economy must definitely get something in return for this investment! Table 1 below shows how the labour cost / investment from the programme all factors being equal stacks up against compensation to some key Ministries, Departments and Agencies for 2018.

Table 1: How NACOB salary stands against compensation of selected MDAs

Unit/Department

Amount (GHS)

NACOB

840,000,000

All Economic Ministries*

489,488,730

All Social Sectors**

9,953,725,693

Public Safety

3,717,257,111

o/w Defense Ministry

871,424,402

o/w Interior Ministry

2,109,050,507

 [Source: Budget and Economic Policy of Government, 2018]

*Including [Ministry of Food and Agriculture, Ministry of Fisheries and Aquaculture Dev’t, Ministry of Lands and Natural Resources, Ministry of Trade and Industry, Ministry of Tourism, Culture and Creative Arts, Ministry of Environment Science Technology and Innovation, and Ministry of Energy]

**Including [Ministry of Education, Ministry of Employment and Labour Relations, Ministry of Youth and Sports, National Commission for Civic Education, Ministry of Chieftaincy and Religious Affairs, Ministry of Health, Ministry of Gender, Children and Social Protection and the National Labour Commission]

 

It will be strange but not out of the ordinary if the designers of the programme for instance intend to inject nearly twice the compensation package of all the economic ministries into this programme without expecting a significant return in terms of productivity for the foregoing year. Even more dangerous will be the annual investment of this nature over the medium term which will not be tied to any form of productivity metric, based on which it will be assessed beyond the mere number of beneficiaries. The scenario could even get alarming if one considers some of the objectives of the programme outlined above, which give impetus for one to be curious about the expectations in terms of productivity from the programme.

The argument could be made that, this has been appropriately considered in the determination of the productivity for the foregoing year and subsequent years. This could only lead to more questions about the economic rationale for the project as the number of temporary jobs created will be approximately 1/6 of the total permanent employment in the public sector, which could effectively revive the effectiveness and efficiency of the public sector in the economy. Answers are desperately needed!

Synchronisation of the programme with the broader developments…

The final 6 months of the programme is intended to be used to prepare an exit strategy for participants. Barring any implementation hitches, and assuming the programme fully takes off in June 2018 [now, October 2018] it is expected that these final 6 months will include December 2020 through to August 2021. Now that is a strange time within which an exit strategy of a flagship programme of government will be prepared. A change in government in December 2020 could spell the end of the programme, with damning consequences on the results expected. Away from this political economy concern, the exit strategy the government indicates [bases on their interests] exiting NABCO fellows will be provided with an opportunity to train for 6 months in self employable skills, entrepreneurship or in-demand skills by industry (oil&gas, agriculture, services, etc.)[3].

The following immediately require answers; (i) the nature of soft skills prior to the 27 months temporary employment, (ii) for all the 7 modules under the NABCO programme, it is safe to assume the skills aren’t in-demand which will then justify the context of the exit strategy (iii) the fate of a beneficiary of the programme after 30 months compared to beneficiaries of other modules for job creation (e.g. participants in the planting for food and jobs extension officers vs extension officers in NABCO after 30months of being in the programme) (iv) the synchronisation of the demands of the labour market today with the modules under the programme (v), the transition strategy from the programme into the private sector barring any constraints to private sector growth without burdening the public sector among others. For instance, unless the private health sector registers growth and an increase in demand for the services of health professionals, it is difficult to reconcile the nature of employment opportunities that will be available to potential Heal Ghana ‘exitees’ from the NABCO programme, particularly when the rate of absorption into the public sector continues to present challenges.

The risk of ‘underemployment’ - the condition where participants will be placed in jobs that will not engage their full capabilities to ensure a complete sense of learning as first time job seekers, could pose significant risks. Take Revenue Ghana - to provide a ‘temporary’ work force and support technology solutions to generate requisite revenue for the development of Ghana, for instance, it is hard to see how on a sustainable, basis management of revenue collection programmes from across the country will prefer to plug ‘temporary’ employees into the core operations of the business. Indeed, it is for this reason that most National Service Personnel (NSP), practically go through the service year without being fully employed to further develop. With most businesses in the private sector having designed through time their systems for training first time job seekers to ensure the characteristics of this labour force fits within their immediate need, the ‘real value’ of exitees from the programme barring any constraints on recruitment in the private sector, could be no different from the current status quo under the national service scheme.

Again, the purpose of introduction of technology into the service delivery procedures of any institution is to enhance the service delivery and, in most cases, simply reduce the number of man-hours committed to the same tasks to ensure efficiency of labour. The idea that a module like Digitize Ghana will be aimed at government’s flagship initiatives including, National Identification, Digital Addresses, Land Administration, Health and Safety (e.g. mines, factories, oil and gas), standardise Ghana (Ghana Standards authority), Archival and digitisation at the Registrar - Generals Department as well as the Birth and Death Registry, is also quite interesting. Deployment of NABCO temporary employees, it should be noted occurs 3 months after the military and soft skills training. How are these employees supposed to be value providers to the ongoing digitisation programme across the areas identified under the programme? The critical question which has to be answered is why we seem to be increasing labour temporarily for the purposes of improving technology systems aimed at digitisation. Should it not be the reverse? This could further confirm the seeming underemployment of targeted individuals under the programme, in which case their real value on exit will be no different from the current national service personnel. What is worse? Some of these programmes are yet to commence, and when they do, the focus ought to be ensuring that the manual work-flow systems are functioning properly and logically before the processes are subsequently digitised.

Increasingly, Enterprise Ghana looks to be the only value enhancer in all these modules. However, there are major questions to be answered there as well. The module is construed as one to ‘assist with the effort to industrialise all parts of the country’. What does this mean exactly in terms of policy objectives, deliverables, indicators of success among others? The module is again linked with the government’s district industrial drive under One District One Factory and to stimulate existing industries. What does this mean? How exactly are the temporary NABCO employees going to stimulate existing industries? Are the existing industries private or public? Provision of temporary labour for existing industries will be a dangerous construction as it defeats the fundamental purpose and logical construct giving reason to the programme design itself - graduate unemployment. Industry isn’t saddled with opportunities for which they require ‘unskilled’ labour which the module could provide, bearing in mind that the profile of labour 3 months into the NABCO programme will not be different from the status under the national service. It is easy to see how the programme will be aligned to the One District One Factory initiative of government. It is curious to note that, beyond the fact that the programme hasn’t commenced, it is broadly understood that the district industrialisation programme will be private sector led through public private partnership arrangements. Given this, will the temporary employment of labour under the NABCO programme be considered as pre-conditions for selecting projects under the One District One Factory? The materialisation of some of these risks could further keep the temporary labour on the fringes of actual work, which subsequently adds little value to make them employable post the programme.

Of course, the above is all based on a possible expectation of value from the investment the government is making over time. The programme could as well be broadly construed as a ‘cash handout’ or as has been argued in some jurisdictions basic income for unemployed graduates. To this end, any additional skill or experienced acquired could be considered as value addition. Perceived this way, questions around opportunity cost of the programme given the current economic constraints ought to be answered. The absence of proper performance management systems in the public sector could easily mean limited monitoring of performance under the programme by its participants. This could eventually create undesirable qualities and characteristics of potential fellows, as far as private sector is enrolment is concerned. The result could mean that graduates who may not have been beneficiaries of the programme may have a competitive edge compared to those from the programme as systems for providing additional skills sets by most private businesses for first time employees in ensuring they fit within these corporates, may not have room for non-performers from systems with limited performance monitoring. For instance, will the recruitment team from a particular bank with one final slot for new entrants prefer to have a fresh graduate without work experience and no knowledge of remuneration, expectations, or have a NABCO fellow who may have same qualifications, but spent nearly two and a half years on a schedule without properly defined performance indicators. The answer may not be that obvious, but to the extent that the NABCO fellow may not have an overly superior advantage will be telling on the investment made.

To further bring home the point about weakness in the exit strategy from the programme, one of the areas identified for the six months exit strategy preparation is the oil and gas industry. This is very curious! If a six months training can guarantee this kind of a transition, one wonders why we have to make the investment of nearly thirty months in wages, which ostensibly come at a cost to the government. The industry is such that, there is a glut of prospective job seekers with education and professional training in various part of the oil and gas value chain, who are still out of jobs! None of the models looks to specifically address this and it difficult to see how exitees secure jobs in the sector as defined by the scheme’s strategy.

The fate of the programme

 The social intervention programmes for cushioning the poor have for a long time been on the agenda of all governments. Indeed, those aimed at improving the economic livelihoods for young job seekers, and entrepreneurs are critical. How does the proposed programme help fix the constraints for graduate job-seekers and potential graduate entrepreneurs? The provision of momentary income is of coursed desired by the beneficiaries of the programme, in the absence of no income. The sustainability of the income over time, and more crucially at the point of exit of the programme, if the above risks materialise could present difficult challenges for the government. The recent debacle around the payment of allowances for the various colleges of training in the country from teachers, nurses to agriculture is a case in point. Governments across the political divide recognise the fiscal constraints from the payment of these allowances, and have tried to remove them. The political economy considerations around the decision, has made this difficult. This programme could potentially results in a similar fate which significant fiscal constraints, despite the initial target of 100,000 beneficiaries.

The recent history of most of such programmes outlined in this brief, that appear to be cash handouts in orientation, creates room for one to question sustainability of this initiative and whether it will not suffer same fate. Time is the arbiter! The absence of clear expectations in productivity, and value addition, from the huge investments the programme is likely to make over the next 3 years, raises questions about its fate! The government appears to have arrogated potential pressure onto itself by launching this programme without recourse to developments around revenue. With the protracted transfers from the consolidated fund to key programmes and in some cases statutory commitments does not create room for one to believe that this programme will not suffer same difficulties. It should be noted that GHS600 million allocation in the 2018 budget is not equal to the total disbursements likely to be made in support of the programme. Any revenue shocks could negatively affect programmes such as this as has been observed in the last couple of years.

 Accountability is another critical factor that requires consideration. The after the facts systems of accountability which has engulfed most of these programmes outlined in this brief, only leads to further burdens on the tax payer. How insulated is the programme from misuse and misapplication of funds and accompanying sanctions. Will they be subjected to the same dictates of accountability systems across the public sector? This leaves little to be desired. A social intervention programme which has twice as much the labour cost as the compensation to the economic ministries of this country and nearly same as that of the defence ministry, deserves much attention.


[1] O’Higgins Niall,.Youth Unemployment and Employment Policy - A Global Perspective. ILO, Geneva 2001.

[2] Appendix 6 of 2018 budget provides under ministry of employment GHS300 million budgetary allocation and GHS300 million aligned to statutory funds. This gives a total of GHS 600 million.

[3] NABCO, what you must know, 2018. [https://nabco.gov.gh/NABCO_what_you_must_know.pdf] Accessed on May 17 2018


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