The Institute of Statistics, Social and Economic Research, ISSER, University of Ghana on Tuesday, 21st November, 2017 made its position known on the 2018 Budget presented to the nation by Mr. Ken Ofori Atta, Finance Minister which was themed: “ From stabilization to growth: putting Ghana back to work”.
Dr. Charles Ackah, head of the Economics Division at the Institute made the stand of the Institute known at a press conference held at the ISSER Conference Facility, Room 11.
The press conference was attended by the Economic Team whose members critiqued aspects of the budget which was put together by Dr. Ackah. The team includes; Prof Felix Asante who is the Director of the Institute, Prof Augustin Fosu, Prof Peter Quartey, Prof Robert Osei, Dr. Ackah, Dr. Isaac Osei-Akoto, Dr. Ama Fenny, Dr. Fred Dzanku and Dr. Richmond Atta-Ankomah.
Before the presentation, Prof Asante explained the rationale for undertaking the analysis. He stated that over the years ISSER did not subject the national budgets to scrutiny but attempted it in March 2017 with the first Budget of the Akufo-Addo Administration.
The exercise, he noted has been acknowledged as worthwhile and within the remit of the Institute.
Putting the perspectives of the Institute in context, Dr. Ackah made reference to the theme of the last budget read in March this year which was: “Sowing the seeds for growth and jobs” which introduced a number of bold policy initiatives designed to restore macroeconomic stability and restore private sector confidence in an extraordinary tough economic environment.
Dr. Ackah stated that the Ghanaian economy in 2016 recorded its lowest growth in over 20 years, but there are encouraging signs that growth is strengthening again in 2017. In 2017, the overall GDP growth is projected to more than double to 7.9%, from 3.7% in 2016.
This rebound, he noted marks a welcome break from the prolonged period of deceleration in growth since 2011. However, it seems this turnaround was largely driven by the surprising performance of the oil sector, owing mainly to the larger than planned oil production, following delayed Jubilee FPSO Turret Remediation Project, which has now been deferred to 2018.
ISSER commended the government for turning the economy around in such a short time, but expressed worry about how narrow, non-inclusive and unsustainable the sources of growth has been.
Arguing further, Dr. Ackah pointed out that “whereas overall growth was driven by the non-oil sector in 2016, the current growth is largely a result of the oil sector. Non-oil growth has declined from 5.0% in 2016 to 4.8% in 2017. As such, the growth performance for 2017 is highly vulnerable to external shocks and could not have translated into meaningful job creation”.
To achieve sustained higher growth, he lay bare recommendation that serious effort should be taken to use the recent commodity-based growth to start a more sustainable growth based on the development of the manufacturing sector, including but not exclusively the processing of primary commodities.
In respect of the prospects for Ghana’s growth, compared with 2016, Dr Ackah was of the view that global developments have been and are projected to be on the whole favourable with commodity prices generally, particularly oil prices (but not gold or cocoa), rising, and global GDP growth in 2017 projected to be relatively high, with positive implications for Ghana’s exports and growth.
On agriculture, he observed that the sector continues to face challenges that considerably slow down the transformational agenda notably low productivity and competitiveness.
On cocoa, Dr Ackah noted that the crop continues to be Ghana’s most important agricultural export commodity although production increased during the 2016/17 season, productivity remains low.
He was however glad that measures such as the proposed re-introduction of compensation payments under the Cocoa Disease and Pest Control Programme (CODAPEC) and the plans to introduce artificial pollination aimed at increasing productivity by almost threefold, from the current average of 450kg/ha convey good news.
He stated that “Another policy proposal worth mentioning is the plan to operationalize the pending agriculture commodities exchange and warehouse receipt system. This, if properly implemented, has the potential of addressing not only commodity marketing challenges faced by farmers but also leveraging agricultural finance through commodity title transfers from the warehouse receipt system which could serve as an instrument for financing production activities for future production cycles”.
On education, Dr Ackah disclosed key achievements as reforming and strengthening the education system and institutions to provide education for all Ghanaians, including implementation of the free SHS and investment for Technical, Vocational and Agricultural Education and Training
He mentioned the roll-out of the free SHS that will ensure equal opportunities for all and enhancement of human capital for the country and also the restoration of teachers and nurses training allowances (43,570 trainees).
In winding up, Dr. Ackah noted that despite the sterling economic performance, mostly owed to the impressive outturn of the oil sector, Ghana’s manufacturing sector still commands a smaller proportion of the GDP, churns out fewer exports, and employs fewer people compared with manufacturing sectors elsewhere.
“The Ghanaian economy is still heavily dependent on the production and export of primary products (cocoa, gold and oil) and consequently suffers from the associated risks of this dependence. The challenge facing Ghana, as with many other African countries, is to transform the economy from a resource-dependent one to a dynamic, diversified industrial economy”, he stated.
After the presentation questions were taken and answered by members of the team that put the critique together.