Finance Minister, Ken Ofori-Atta was the main speaker at the 3rd Aliu Mahama memorial lectures held in honour of the former President.
The lecture which took place at the National Theatre in Accra on December 6, was themed: “Ghana Beyond Aid – Au delà de l’aide - How We Get There”.
Below is the full presentation by Mr. Ken Ofori Atta:
DECEMBER 6, 2017
MINISTRY OF FINANCE
Accra International Conference Centre, Ghana
Ghana Beyond Aid – Au delà de l’aide
Your Excellency, The Vice President Dr. Mahamudu Bawumia Chief of Staff, Hon. Akosua Frema Opare Colleague Ministers of State Excellences, Members of the Diplomatic Corps Nii Mei, Na Mei, Nananom Religious Leaders Distinguished Guests, Ladies and Gentlemen
Good evening distinguished ladies and gentlemen, I came here straight from Cabinet. The President of the Republic kept Cabinet relatively short today as a mark of the importance he attaches to the topic of this lecture and also because of the high esteem in which he holds the memory of the late former Vice President Alhaji Aliu Mahama. We usually attend Cabinet every second Thursday unless the President has to go away for another official engagement; which is why we had it today.
My colleagues and I are so used to Cabinet meetings that last beyond 9pm and you are expected to be alert all the time because the President is and, the trouble is, he is so on top of your brief – yes he reads – that you risk a major embarrassment if you choose to enter that room unprepared. Let me stop here before I am reminded of the oath of secrecy.
Suffice to say, he is running the government as if this is his fifth 4-year term. He came into office very, very prepared and it shows each and every day. It reminds me of the story of top golfer Gary Player. Someone said to him, “I’d give anything if I could hit a golf ball like you.” Player calmly responded, “No, you wouldn’t. You’d give anything to hit a golf ball like me, if it were easy.”
The golfer then went on to show why he was the best: “You’ve got to get up at five o’clock in the morning, go out and hit a thousand golf balls; walk up to the club house to put a bandage on your hand where it started bleeding; then go and hit another thousand golf balls. That’s what it takes to hit a golf ball like me.”
In Akufo-Addo, ladies and gentlemen, we have a leader who has worked very long and hard to prepare himself for the job and he is working so hard you might think elections are held yearly. His passion and energy come from a deep and urgent desire to change the circumstances and perception of the Ghanaian people.
Paying tribute to the former Vice President on November 18, 2012, two days after his sad and sudden departure the then candidate Akufo-Addo expressed a deep sense of loss as he reflected on Alhaji Aliu Mahama’s eight years as Vice President to John Agyekum Kufuor. He said, and I quote: “Those who took his calm demeanour for weakness did so at their own risk, because he was not easily moved from his strongly held beliefs.
He did not shy from hard work, and, his enthusiasm on the 2012 campaign trail has been as enthusiastic as he ever was. He has been especially supportive of my running mate, Mahamudu Bawumia, and has been generous with his time and resources. Aliu and I have unfinished business; he wanted us to win over the Zongos and he wanted peace to return to his beloved Dagbon.”
In the end, it turned out in 2012 that the evidence of Aliu Mahama’s work with the Zongos was probably not allowed to reflect properly on the face of the pink sheet, as we all saw and heard in the eloquent testimony of his able successor before the Supreme Court. He would, however, be halfway delighted at the inroads his party made in the 2016 elections.
On Dagbon, true to the President’s pledge, we are today seeing a sincere and genuine push on the side of the government, supported, of course, by a renewed spirit of enthusiasm on all sides of the divide towards finding a lasting solution to the chieftaincy crisis and all for the noblest of goals: achieving peace and justice for development and progress in the North.
I will, Madam Chairperson, take this opportunity, on behalf of the government and the people of Ghana, to encourage all sides to continue investing in the process to returning Dagbon to its full normalcy and that they do so with honesty, mutual respect and in the spirit of true brotherhood and a common willingness to compromise for the collective good.
Aliu added great value to the Kufuor presidency and he did so without having one notable issue of scandal or controversy associated with his name all throughout their eight years in office. Now, that is a remarkable achievement! Whatever his secret was I hope we did not bury it but it is there somewhere for us and future generations of politicians to uncover and learn.
I am also pleased to see that the elaborate events organised by the Aliu Mahama Foundation for this 5th anniversary, including the decision of the President to rename the Tamale Sports Stadium after the former Vice President, are all to keep Aliu’s flame burning as strong as ever.
I am glad for this opportunity to deliver the 3rd Aliu Mahama Memorial Lecture and to speak to a topic that is of utmost importance to the success of our government and the future of our nation. The organisers have asked me to not only re-echo the cross-generational dream of transforming the Ghanaian economy but also to demonstrate how we can get it done and in a sustainable manner that may free our nation forever from the rusty but enduring shackles of aid dependency.
I am not so sure what I can add to the response that President Akufo-Addo gave to his French counterpart, President Emmanuel Macron, last week on the need and necessity for Ghana and Africa to catapult beyond aid. Indeed, I cannot think of the last time that such a passionate and positive statement from an African leader, or any world leader for that matter, went this viral, resonating with hundreds of millions of people across the world. To me it speaks volumes of two things: (1) the broad appeal of the message and (2) what a great leader that Africa today has in Akufo-Addo. Mr President, ayekoo!
It means, therefore, that the iron is hot for Ghana, once again as the African beacon, to take bold, intelligent, creative and decisive steps to strike beyond aid. This means recognising that the only way we can succeed this time without suffering once again the Sisyphean curse is by adding value simpliciter: adding value to our moral values; adding value to our work ethics; adding value to our integrity; adding value to our education; adding value to our service delivery; adding value to the cost of our infrastructural development; adding value to our raw materials; adding value to our law & order; adding value to our job market and taking away substantial value from corruption.
Ghanaians easily get accused of being too ready to tolerate for too long those who offer us so little and that we are too slow to act against those who treat us badly. The converse to that, if I may say, is that we should be quick to recognize leaders, like Akufo-Addo, who mean well and do well. This is because often the success of even the best of leaders can be undone by the lethargy of support from the people they are elected to serve. Ghana is back. But, I believe we can only move forward at Akufo-Addo’s urgent pace and with the full and complete buy-in of the people.
I have been asked this evening by the Aliu Mahama Foundation to share my thoughts on how we transform Ghana beyond aid and I will attempt to do so by focusing on not just the practical steps being taken or to be taken by the government to get us there but will also stress on the individual and collective values, ideals, principles, virtues, sacrifices, contributions and convictions that are necessary to guide us as citizens to that must-build and must-drive on transformation highway within the next decade.
In line with the President’s remarks during his joint press conference with French President Macron, we need to chart our own development path. This requires clarity in vision and of a vision which can be understood, accepted and owned by the people and the leaders of industry, civil society, traditional leaders and faith-based organisations. We do not have a choice but to move Ghana and, indeed, Africa, decisively beyond aid. The conversation has begun and we must make it all inclusive.
It is important that we do not forget the underlining goal to all the talk about economic transformation. It is about people. Back in 1969, Prime Minister Busia articulated in his inaugural speech the purpose of political leadership, at least insofar as our political tradition is concerned. He said, and I quote: “It is this: our yearning concern for every individual citizen. We regard politics as an avenue of service to our fellow men. We hold that political power is to be exercised to make life nobler and happier for those who entrust it to us.
We think the yardstick by which our success or failure should be judged must be the condition of the human being himself. We must judge our progress by the quality of the individual, by his knowledge, his skills, his behaviour as a member of society, the standards of living he is able to enjoy and by the degree of co-operation, harmony and brotherliness in our community life as a nation… Our goal is to enable every man and woman in our country to live a life of dignity in freedom.”
The welfare and wellbeing of the Ghanaian were at the core of Busia’s message yesterday and are germane to the Beyond Aid agenda today.
In order to transform our economy, Beyond Aid, the variables are indeed many. But, for the purposes of this lecture I will draw on references from just six: (1) Agriculture (2) Banking (3) Oil & Gas (4) Bauxite (5) Education & Skills Training, and (6) Entrepreneurship.
Ghana has enough arable land to feed the whole of West Africa and still have a surplus for export further afield. The first task was to reprioritize the sector. So far, we have done so pretty simple but meaningful interventions: by reinvesting in the employment of Agric extension workers and to increase stock and interest in farming through the “Planting for Food and Jobs” policy, for example.
From next year much of the One Village One Dam development and “One District One Factory” rollout will be agro-based. The food market in Africa is estimated to grow over $1 trillion by 2030 – i.e. just three elections away. We must quickly find an answer to the question, what percentage of this huge agribusiness future do we want Ghana to own and work towards it. Why is Ghana importing some $2.2 billion worth of food a year?
The record has so far not been impressive. Our cocoa industry has enriched everyone but ourselves. That Ghana and Côte d’Ivoire produce a combined average of 65% (nearly 70% in a good year) of the world’s cocoa but only get a paltry 5% in total of cocoa value chain revenue of $120 billion speaks to our failure to collaborate not only for the sake of pricing and also to industrialise, but the catastrophic failure of leadership of the two countries to cooperate for our common good.
President of the African Development Bank, Akinwumi Adesina, recently said, and I quote: “the price of cocoa may decline, but never the price of chocolates. The price of cotton may fall, but never the price of garments and apparels. While coffee farmers face declining prices, coffee grinders smile all the way to the markets”. Imagine instead if these two countries received 30% of the industry revenue, i.e. $36 billion. It is then that we can pay our farmers comfortably above the world cocoa price and stimulate industrial production and consumption.
The drive for ownership is what has inspired President Akufo-Addo’s decision to work with Côte d’Ivoire to create a mechanism that President Alassane Ouattara recently suggested could be a Cocoa OPEC.
That Malaysia and Indonesia control 85% of the world’s palm oil production and enjoy 85% of the world’s total revenue in that same sector speaks volumes. But we should not stop at just cocoa production. Like Malaysia and Indonesia did with palm oil, we should also target the cocoa-chocolate value chain.
Comparative advantage in our own indigenous cocoa sector is of the essence. The African Development Bank is providing us with a $2bn instrument to develop this strategic shift in the cocoa sector. We must not waste this opportunity.
For Ghana to take greater control of her economic destiny we must be clear on the need to have a robust financial sector capable of financing the transformation. Let me use one obvious example. For the last two years (2016/2017 and 2017/2018 crop seasons) alone Ghana raised syndicated loans totaling $3.1 billion ($1.8bn and $1.3bn, respectively). This transaction is no doubt one of the easiest and most lucrative credit facilities for the banks involved.
But, the syndication is done and led by non-indigenous financial houses. Not a single indigenous bank was involved in the last $1.3 billion raised. I think it is time we take deliberate steps to build the capacity of our local banks to become major participants in this assured multibillion dollar money market right here in Ghana. But, if that is to happen, our banking sector needs to grow up, both literally and metaphorically.
In my view, the current situation where we have an oversupply of small Ghanaian banks is not sustainable. In banking, big is better. Indeed, it is not by accident that the big banks in Ghana are mainly from Nigeria, UK, France, or South Africa, for example. We want to see our banks talking to each other and consolidating their forces to take a bigger stake in the domestic market and gather the muscle to venture beyond our borders.
The Ministry of Finance is working with the Bank of Ghana and other stakeholders in stabilizing and strengthening the financial services sector. Efforts to establish a national development bank that is strong enough to mobilise private capital towards agricultural and industrial transformation are all part of this strategy. Also, we are seeding the Ghana Infrastructure Investment Fund (GIIF) with $250 million and restructuring to enable it mobilise foreign private capital to fund key infrastructure development. Again, we are intensifying efforts to increase the asset base of the Ghana Exim Bank to support agriculture and industrialisation for export.
This move to grow the financial sector in Ghana is only possible and sustainable if we are able to inject discipline to bring sanity in the management of the macroeconomic field. We are happy with the progress so far, with interest rates and inflation all heading downwards and the cedi holding its own against the major currencies. We are determined to add a conducive macroeconomic environment to our position as the strongest pillar of socio-political stability in our West African region. Our goal is to leverage this to make Ghana the international financial services centre of our region.
Over the next five years our intention is to grow a multibillion dollar international financial services centre in Ghana, making our country the preferred headquarters for all international banks operating in the region. Linked to this are efforts towards projecting Ghana as the regional centre for financial technology and payment systems. We know how it has worked elsewhere and we know Ghana has what it takes to become such a hub, hosting, among others, international insurance companies, international private equity and venture capital firms.
Weaning ourselves off aid means trading with each other more. West Africa has no choice but to intensify the regional economic integration agenda and to do so we need a regional financial infrastructure to support entrepreneurship and access to long term capital for the private sector in the region.
In our push next year to make Ghana a full-fledged financial services centre, it is not our wish to build this for foreign players alone. That is why I wish to repeat: Ghanaian banks must grow up in the shortest possible time, and government is committed to promoting and facilitating that development.
Oil & Gas
The strategy of the Akufo-Addo government is to focus on leveraging our basic sources of comparative advantage; namely, relatively inexpensive and versatile labour force and natural resources from agriculture and mining, especially the emerging oil/gas sector, to develop a value-added industrial sector that is globally competitive.
We are keen on local content but, more importantly, we are keen on not just the profit-sharing kind but one that seeks to industrialise Ghana. The Ministry of Energy, through a directive last month, is aggressively implementing the local content regulations in the energy sector, particularly, in the procurement of manufactured goods such as steel pipes, electrical cables and wires, meters, etc.
Our oil and gas fields provide us with the perfect opportunity to create a petrochemical industry in Ghana. To do so, we will have to leverage our oil & gas resources and develop new assets as envisioned in the plan to create a petrochemical hub in the Western Region. But, we did not start well. We were happy before to contract a $3 billion commercial loan from China, using our oil, and agreeing to at least 80% of the contractual work from the facility going to the Chinese.
Also, as a clear result of that era of misplaced priorities, we saw the virtual collapse of the only oil refinery we have just as we started producing oil in commercial quantities.
I am happy to say that things are changing. Latest by the first quarter of 2018, we expect the Tema Oil Refinery to run continuously. The higher strategic goal is to engage local and international partners to significantly expand its refining and storage capacity. TOR has a strategic role in our petrochemical industry as it can provide a platform for the development of other related industries.
Lveraging Ghana’s resources requires a focused strategy that targets the benefits of specific fuels to drive growth. Gas is often misidentified as a fuel simply for power generation. This government will facilitate the setting up of a multi-billion-dollar gas feedstock industrial estate in the Nzema area producing methanol, ammonia, urea and natural gas liquids, which hopefully will feed from the oil and gas industry in both Ghana and Cote d'Ivoire.
We have the potential to convert our petrochemicals into hundreds of industrial and consumer products produced right here in Ghana. Industrialised agriculture requires access to cost effective fertilizer. And Ghana is well placed to develop such an industry. For instance, for the 2015/2016 season, Cocobod alone spent GH¢716 million on importing fertilizer. Localised production of fertilizer will insulate our cocoa farmers from a key input costs, whilst reducing a significant financial burden on the state and the use of our foreign exchange reserves.
Beyond plans to set up a fertiliser plant, the development of a regasification terminal in Tema, which will feed more than a 1,000MW of thermal energy and at rate which translates into nearly $1 billion cheaper than a previous deal negotiated last year, tells us that we can invest heavily in critical sectors and in a way that gives value for money and help our quest to move beyond aid. That LNG terminal and other LPG facilities will significantly reduce our dependency on the relatively expensive petrol and diesel options.
Low cost gas can also unlock other high value resources that are present in Ghana but are currently not being exploited. The development of aluminium and other heavy industries is entirely dependent on access to cost effective energy.
Just yesterday, one tireless woman from Trinidad & Tobago who, for the past 9 years, had been campaigning for Ghana to monetize its gas as feedstock, passed away at Korle Bu. May the soul of Ann Marie de Silva rests in perfect peace.
Integrated Aluminum Industry
The naysayers are plenty in our midst. Thankfully, those of us who believe in Ghana and the destiny that God has for Ghana are far more than the doubters. The doubts were ingrained in us even at the height of the fight against colonial rule. Chairperson, please permit me to share a passage from The Report of the Commission of Enquiry into Disturbances in the Gold Coast – 1948, known as the Watson Report, at P.54:
“At every turn, we were pressed with the cry of industrialization. We doubt very much if the authors of this cry really understood more than their vague desire for something that promised wealth and higher standards of life. Apart from the possibilities of a hydro-electric scheme, the establishment of any heavy industry on the Gold Coast capable of finding an export market must remain a dream… The standard of life in a country producing primary commodities need not, in an expanding world production, be materially less than in an industrial country.”
Even though the report was dismissive of Ghana developing heavy industries, it was supportive of harnessing the waters of the Volta to produce electricity, essentially for the manufacture of aluminum alloy. At the time, aluminum was observed as (I quote) “a scheme which has passed the visionary stage. The bauxite deposits which lie at hand for use in the process of manufacture of aluminum doubtless hastened practical consideration of the scheme.”
The Akosombo Dam was built to provide electricity and a smelter was built to feed from the dam and to process alumina but it was bauxite from another country, Jamaica. This was the situation for 40 years until the foreign investor found no more use for VALCO (the smelter) and sold it back to us.
Ghana has some of the richest bauxite deposits in the world, with total proven reserves in excess of one billion metric tonnes – this is potentially a half a trilliondollar industry if we optimize the value chain. Today, the local aluminium industry has two of the major pillars required for full integration – huge bauxite reserves and a smelter. A refinery remains the key missing piece.
As has been contemplated since 1962, this government’s objective is to establish a fully integrated aluminium industry with the adjoining downstream aluminium enterprises such as fabrication, rolling, extrusion, etc. We are determined to enable maximum value extraction from this primary resource. It can generate anything between $2 billion to $10 billion annually to the economy for the next 50 to 70 years, depending on how far down the value chain we commit to go. President Akufo-Addo is committed to breaking the colonial chain of exporting such a rich natural resource to see to it that much of the value stays here to help us also build our country.
As a cardinal campaign promise, the Akufo-Addo government wants this rolled out by next year. This will include a bauxite mine, railroad development, red mud disposal land, an alumina refinery, a co-generation power plant and a large tract of land(s) to develop a free zone industrial park for value chain manufacturing for the aero and auto industries, among others.
International interest in our bauxite is huge and welcome. Our aim is not to be trapped into exporting raw bauxite in the other richer reserves as has been the case with Awaso over the last 60 years or so. The International Aluminium Institute predicts that in 3 years’ time, global primary aluminium production will exceed 70 million tonnes per annum, with more than 60% of that expected to be consumed in China. We envisage Ghana being a major industry player within the next five years.
In order to ensure that bauxite serves as the major catalyst for driving the national industrialisation project, the President has initiated the establishment of an aluminium authority, which will have the responsibility of intelligently steering the process of implementing a comprehensive integrated aluminium industry in Ghana – which will be the first of its kind in Africa. Currently, a draft bill for the establishment of the Authority is going through the necessary approval processes.
Railways have historically proven to be an engine of industrial, economic, and social development everywhere across the world where they’ve been established. The Industrial Revolution gained impetus on the back of the invention of the Steam Engine. Railways have a uniqueness that aids socioeconomic developments that is missing in other modes of transport, and is a crucial adjunct to any progressive nation’s ambitions towards further industrial, social and economic growth. This is the reason why President Akufo-Addo is determined that Ghana would no longer lose out on the transformational advantage that developing a modern railway system in Ghana would bring.
Within the context of Ghana, a visit to towns and communities that were previously the hub of railway stations would reveal a marked loss of spirit and vibrancy. Railways impact development by the nature of their positioning and relatively shorter point to point intermediate stops or stations. They provide an assured means of transporting wares, foodstuff, and passengers for local communities from place to place. This inevitably boosts the agro sector and local entrepreneurialship, and with that, the local economy. Beyond the peasant or small-scale farming levels, railways would most definitely catalyse the expansion and success of the President’s ‘Planting for Food and Jobs’ initiative and 1D1F vision.
Efficient, safe and affordable transportation has always been the bane of the local farmer, and producers of goods and services. Removing that bottleneck with the provision of a revitalised railway network, would instantly boost productivity, create jobs, and directly and positively impact the socioeconomic growth of those communities. The NPP’s manifesto program of ‘One District One Factory’ would also benefit from a revitalised railway system. Entrepreneurs would site their ‘factories’ strategically close to railway stations thereby guaranteeing distribution and delivery of their produce/products to markets. Social life necessarily develops around centres of job creation and availability and major cities will develop.
Besides these aforementioned socio-economic benefits, the railway sector also has other very significant benefits, including reduction in urban traffic with the provision of light railway system. In a properly designed city, intermodal connectivity between the various transport modes is vital in obtaining the optimum performance from each mode. Thus, for example, both Ghana Ports and Harbours Authority [sea] and Ghana Railways Development [rail] have actively liaised with each other as the Tema port expansion program feeds into the rail development between Tema and Akosombo.
This cooperation would at its completion ensure an efficient movement of freight containers from the ship onto the rails, thereby freeing the roads from vehicular congestion and its attendant issues. These will also be linked to an aerotropolis, welcoming some 20 million travellers a year as we establish world standard logistics throughput in our country.
The Ghana Railway Master Plan proposes a new railway network of 4,007.6km with an estimated investment of some US$21 billion. Out of the lot, we have identified six priority lines which we plan to build from 2016 to 2020.
The priority projects are:
a. The 339KM Western Line, which runs from Takoradi Port to Kumasi, with a branch line from Dunkwa to Awaso, served as a major cocoa corridor, also serving manganese from Nsuta and bauxite from Awaso, which now relies 100% on road haulage. The last time the Western Line was used for cocoa was 11 years ago.
b. Another historic line of immense economic relevance was the 300KM Eastern Line from Accra to Kumasi, with a branch line from Accra to Tema. Apart from the 20km Accra-Nsawam line which is used for passenger services (and, even that has been closed down), the rest of the line is completely dead.
The Eastern Line passes through huge bauxite deposits and connects to the Central Spine which terminates on the border with Burkina Faso at Paga. It has potential for significant passenger as well as freight traffic. A proposed inland rail terminal (Boankra Inland Port) also lies on the Eastern Rail Line. Indeed, just this morning my colleague Ministers from Transport and Railway and I launched the market sounding for a $1.8 billion PPP/BOT transaction. Ghana is coming back.
c. The Central Spine runs from Kumasi through the central part of Ghana to Paga, in the north of Ghana and on the border with Burkina Faso. The Central Spine is 595km. When developed, it will facilitate the transportation of freight cargo from the south to the north of Ghana and onward to Burkina Faso and the Sahelian Region. In Kumasi Central Spine (Line) splits into two lines southwards - the Eastern Line and the Western Line.
The development of these (three) lines will lead to major economic transformation of the economy and the President is absolutely determined to get this done.
The President has said: “One of the legacies I want to leave is a modern railway network from Accra to Paga which has interconnectivity with Burkina Faso.” This we will do to transform Ghana and this is another important pillar in creating a Ghana beyond aid. Remember the poem by Chief Moomen. Well, in 1957 we had some 947km of rail functioning in this country and today we have less than 100km. SAD.
Over the years, government revenue has not been at par with its expenditure, and successive governments have always plugged the gap either through domestic borrowing or bilateral aid from donors. But with the country's current lower middle-income status, donor aid is shrinking and should soon belong to the past. Ghana Beyond Aid calls for a rethink of our trajectory, our systems, and our aspirations. Ghana is a beacon to countries across Africa.
We led the way to independence, and it is our moral duty to continue being a positive role model. Besides, we cannot, we must not continue going to our former colonial masters, cap in hand, forever. Our dignity as a people is at stake. Ghana should not be poor. The President has said this on many occasions. The Vice President has said it. And I reiterate. GHANA SHOULD NOT BE POOR. Let us recall Moses’ encounter with burning bush in Horeb. What a reluctant leader! A chance to transform the destiny of Israel, a poor shepherd, seemingly hapless.
The Lord asked, “What is that in your hand?” And, he replied, “A staff.” “Throw it on the ground,” the Lord said. And, it came alive as a snake. The Lord has indeed blessed us, Ghana, with more than a staff and we should not be poor.
Aside from being blessed with abundant natural resources, Ghanaians are smart, hardworking, and peaceful. This should be the perfect cocktail for an unparalleled success.
Yet, where we are now is not an enviable place. As a nation, we have failed to properly harness and manage our resources to generate prosperity and equal opportunities for all Ghanaians. We have lacked discipline. To quote Heb. 12:11: “No discipline seems pleasant at the time, but painful. Later on, however, it produces a harvest of righteousness and peace for those who have been trained by it.”
If we are bold and patriotic enough to tackle the integrity deficit in the award of contracts the task of moving Ghana beyond aid would be nothing because we lose more by disregarding value for money in the awards of contract than we gain from foreign aid. Indeed, it can be rather self-serving if the majority of us gather the courage to put the national interest above that of our person or group.
Ghana Beyond Aid does not mean we are turning our back on assistance from our external development partners. Not at all. After all, the majority of EU countries depend on the EU for support. We will continue to welcome development assistance. But aid has to be firmly in line with economic and social priorities set by Ghana. Even though the amounts provided by donors pale in comparison to what we raise from our own sources, donor funds and advice have sometimes tended to become the “tail that wags the dog”. We need to set clear national strategies and priorities, take full responsibility for their implementation, and progressively raise our contribution to their financing.
So while we will continue to supplement our own resources with external resources, we will do so in much smarter ways. Aid, or official development assistance (ODA), is just one form of external resource inflows. I have already said that we are going to be more strategic in our use of aid. But, to be honest, the aid envelope is quite constrained and becoming even more so as donor governments face economic challenges in their own countries.
There is another side to aid which may be more pernicious and costly to the nation. This we call ‘Donor Capture’ – where the Executives spend inordinate time responding to donors’ legitimate need to monitor and supervise their grant projects. In the end, Cabinet may spend more time with them than with our entrepreneurs, who are the real engine of growth. In view of this, when it comes to external resources, we must set our focus more on raising foreign private investment—from foreign direct investments, venture capital and private equity firms, institutional investors, sovereign wealth funds, among others.
There’s never been a better time to crowd in private sector investment. Right now, there’s more than 10 trillion dollars invested in negative interest rate bonds; 24 trillion dollars in low-yield government securities; and 5 trillion dollars sitting in cash, waiting for better investment with higher returns. So, thus the compact with Africa with the G20 redefines a new partnership of trade and investments to cascade these resources into our economy.
Every single element in the Ghana Beyond Aid agenda requires specific work— strategies, policies, and focused implementation. And each step along the way will require great effort from Government, and every Ghanaian. This calls for conversations between Government and citizens, about our values, our love for our country: patriotism. Protecting our resources, the public purse, our integrity and by allowing the law to work, irrespective of party affiliation. Whether in town hall settings or one on one dialogues, some of the conversations will be long.
But we should be unwavering in our determination to fight for change. The tragedy of slavery and brutal treatment of our fellow citizens caught in Libya while trying to escape economic hardships by migrating to Europe speaks to the urgency of the situation. Our dignity as a people, a country, a continent even, hangs in the balance. A paradigm change is of the essence. And, even here we have an open secret weapon. Our faith-based organisations (FBOs), civil society and Parliament should lead these conversations.
Today presents a wonderful opportunity to expand on some aspects of our Ghana Beyond Aid agenda. It is our “YES WE CAN” moment. And by the way, I was not quite surprised to hear that the French President had chosen the slogan “Au dela de l’aide” (Beyond Aid) for his Africa tour. Our Western partners are beginning to learn from our new paradigm. It proves this government’s point: The future does not look good for aid dependent countries.
We expect to double the average income of Ghanaians in seven years as envisaged in the President’s Coordinated programme requires GDP growth of around 7.2 percent a year. This will take us close to the East Asian experience. For example, over the 30-year period from 1968 to 1997, average annual GDP growth was: 7.3 in Thailand, 7.4 in Malaysia, and 9.3 in South Korea. But, we can do better than that in a decade – a fully-fledged middle-income country, 50% home-ownership, 3% unemployment rate, decent jobs with decent pay, welleducated, well-skilled, 90% tax penetration and healthy
To achieve and sustain our targeted growth rate, gross domestic investment has to rise to around 30 percent of GDP from the current level of around 24 percent. And to give meaning to Ghana Beyond Aid, a rising percentage of the higher national investment has to come from domestic savings.
Currently, domestic savings are only 13 percent of GDP. We must raise it substantially by increased revenue mobilization in the public sector and by policies, institutions, instruments, and incentives that raise private savings.
As a low middle-income country, our total tax revenue is a paltry 16% of our GDP compared with other peer countries at between 20-25 percent. Therefore, with a total revenue of GH¢41bn for 2017, we are leaving at least GH¢10bn in leakages, even though we achieved a 24% growth in collection from GH¢33bn collected in 2016.
Our VAT collections at 11% penetration rate yielded some GH¢7.5bn in revenue. At 20% penetration, we can as a nation haul in another GH¢7bn.
Our income tax is even more pitiful with only about 1.3 million of the 4million formal sector employees, generating approximately GH¢3.5bn of Pay as You Earn (PAYE) receipts.
We can raise GH¢10bn from this category if we institute robust systems and ensure that the 2.7 million other formal sector employees are compliant. That, less than 2 million people out of our 27 million plus population are captured in the tax net shows 3 things: waste of a potential; an overburdened few; and how unimaginatively weak we have equally been at local revenue mobilization.
I have not even included our corporate taxes in these calculations and here our Western companies, our Indian Companies, Our Lebanese companies, among others, should also join us in this partnership and crusade for taxes due in 2018 to “Caesar” to be paid.
Again, we are not a poor country. But we are impaling ourselves due to our weak tax infrastructure: a hostile attitude to our tax payers, difficulties in paying our taxes, noncompliance and corruption to cite a few. It is time to arise and build.
Over the last 11 months we have been tenacious in seeking to plug leakages, which lead to billions of Ghana Cedis being lost annually. We must all help to defeat this canker and we do not help when we are quick to defend those who are alleged to have duped the state with the excuse that “he is one of us.” If you are one of us, please, assist us to win for Ghana – for all of us and not just you! We have a duty to build a better society for your children and their children.
From the foregoing analysis, no one needs to tell you that tax administration and tax compliance more so than mere tax increases is what is required to meet our revenue targets. Our philosophy to remove coercive tax burden and promote production will endure. The very fabric of our definition of citizen-hood must be radically transformed. We must all pay our way as government has shown faith in fulfilling her promises and now as Ephraim Amoo writes: 3du me no wuso s3 y3 b3 y3 yen dia.
We have a clear plan to raise government revenue by expanding the tax-base, ensuring that everyone pays his or her fair share, and that the whole system is equitable and operates efficiently and without leakages. Tackling leakages and efficiently allocating resources would necessitate a number of actions such as the ongoing exercise to formalise the economy, the promotion of a paperless society, street-naming and post-coding, and National ID system.
The Beyond Aid agenda demands us to encourage and resource local entrepreneurs, small businesses, private investment, and innovation, while building the average Ghanaian’s confidence in investing in the nation. Ghanaian ownership is at the core of this entrepreneurial drive.
We cannot nurture entrepreneurial skills, advance technological innovation, and take advantage of technology transfer and adoption without inclusive access to education. That is why our government’s first major initiative was the introduction of the free Senior High School (fee SHS) programme. Nations develop within environments with competent and skilled human resource base. It is the key to economic transformation, and Technical and Vocational Education is the master key. Against all odds, government has made free senior secondary school a possibility.
Ghana beyond aid will have to ensure most individuals acquire skills at any point of exit and to re-skill or up-skill the formal and informal sectors to support the local industry. Technical and Vocational Education and Training (TVET) leads to skill development in most cases. Germany and Japan are two cases in point.
Currently, the Ghana TVET voucher project is supporting vocational training in the informal sector and has increased its pace in facilitating the training of 15000 artisans in five trade areas: cosmetology, welding and fabrication, automotive repair, consumer electronics and garment/dressmaking.
Government has also initiated the process to establish 20 New State of the Art Institutions and 10 STEM [that is: Science, Technology, Engineering & Mathematics] centres as part of the process of increasing access and quality.
The Free SHS programme, the pending Strategic Plan for TVET Transformation and STEM initiatives go hand in glove with the One-District-One-Factory programme. The Stimulus Package is intended to give entrepreneurship a crucial leg up. With these initiatives, we hope to help engender an organic creation of value-chain clusters that may, in turn, trigger diverse sectorial specialisations in innovative manufacturing among others.
A pertinent question that emerges from this strategy is the protection of our intellectual property. Innovation thrives in environments where intellectual property is protected, sometimes within the confines of national security. Our innovations need an environment in which they can thrive.
Behind almost all successful examples of rapid economic growth and transformation has been a strong and effective partnership between the government, the private sector, and labour. In addition to the tripartite partnership between government, business and labour, we are also seeking to develop a strong partnership with Faith-Based Organizations (FBOs). FBOs represent a tremendous potential for driving economic and social development. Government is, therefore, exploring how to partner with them to unleash this potential.
FBOs offer the most powerful transmission belt for development throughout this country with over 30,000 branches across the breadth and depth of the country. They have the capacity to transform the nation physically and morally and we must as a matter of urgency invite them to participate in the Ghana Beyond Aid.
The late former Singaporean Prime Minister Lee Kuan Yew suggested that the East Asian miracle blossomed in an environment where the culture of hard work and sacrifice for a better future was somehow grafted to the DNA of East Asians. Ghanaians express similar characteristics. We are hardworking, smart, and willing to make sacrifices where there are guarantees. Ghana Beyond Aid promises those guarantees.
Akufo-Addo’s vision of transforming Ghana beyond aid, I humbly submit, is not just visionary, it resonates with our current economic situation and of our great ancient past of the Ghana Empire which was bestowed on us by J B Danquah. The task now is to win it greater public ownership and drive. We will win if we continue to put our faith in a leadership that makes the right choices. We will win if those appointed to help him execute the vision do so with candour, integrity and competence.
We will win if public servants do not treat this project as business as usual. We will win if those who manage the economy do so with the requisite fiscal discipline. We will win if we all wear the perpetual badge of responsible citizenship. We will win if we all passionately protect the public purse. Hard work, hard choices, integrity and discipline do pay. It has paid for others, like the Asian Tigers, and will pay for us because we have what it takes to chart a new path for the African Lions. We must believe in it. We must believe in ourselves. We must believe in Ghana and we must believe in God who makes all things possible.
Our God has promised us that if we “seek first His Kingdom and His righteousness then all these things will be given to you as well.” But, we must as a people be of one accord and live in love, joy, peace, forbearance, kindness, goodness, faithfulness and self-control. We will then be God’s handiwork to do good works. And, Vice President Aliu will call us good and faithful servants.
“God did not give us a spirit of timidity, but a spirit of power, of love and of self-discipline” (2 Timothy 1:7). Yen ara ye asase ne; edu me ne wo so. I thank you.
God bless you God bless Ghana
Nananom, onuanom, aseda pii.