Mahama’s 2014 State of the Nation Address

Source: Daily Graphic Ghana  -  It is almost a year today when the President, Mr John Dramani Mahama, presented the State of the Nation Address for 2014 in which he outlined dozens of initiatives categorised in 26 sub-themes under four broader themes for implementation.
More than 90 per cent of the intentions have found their way into the 2014 and 2015 budgets, with varying degrees of implementation and successes so far.

The thrust of the address was ‘Change’ which the President said was the inevitable ingredient that could spur the country’s transition into a middle-income economy.

“We are in the midst of change. And change can often feel uncomfortable, especially as it pulls us away from the systems and practices with which we have become familiar, but are no longer serving our needs efficiently. 

Without change, Mr Speaker, Ghana cannot grow. Change is what will propel us forward, as a nation, to all that lies ahead,” the President said in the February 25, 2014 address to Parliament.

And these new opportunities will enable us to transform ourselves from a lower middle-income, import-dependent, developing country to a proud and robust, self-sufficient middle-income nation.

He said his government would focus on four pillars, which were putting people first; building a strong and resilient economy; expanding infrastructure for growth; and, maintaining transparent and accountable governance.

Putting people first

The people-centred policy of the government covers gender, children and social protection; health, education and youth and sports, where the President announced a number of initiatives.

Under gender, he said, the Ministry of Gender, Children and Social Protection was the major instrument in the government’s effort to create an all-inclusive society in which the weak and disadvantaged would also have a stake in the country’s development.

The ministry, he said, would increase the coverage of the Livelihood Empowerment Against Poverty (LEAP) programme from 74,000 households to 100,000 in 2014, and further to 150,000 this year. Central to the implementation would be an electronic platform to improve the targeting.

The LEAP targets have so far been implemented and the electronic smart card, e-Zwich, is now used to disburse the cash transfers to the identified beneficiaries.

The ministry has also completed the Intestate Succession, and Property Rights of Spouses bills, which are currently being debated in Parliament for passage into law.

Under health, the President’s address proposed that the executive branch of government would contribute a voluntary 10 per cent of their salaries to be used to construct more Community Health Improvement Compounds (CHPS) in villages where there were no health centres.

The compounds are usually staffed with trained nurses, midwives, and other health workers to enable them provide basic healthcare services, including antenatal care to pregnant women, to save the lives of more women during childbirth.

It is not clear how many CHPS compounds had been built, but the target is to construct 1,600 more by 2016.

The Minister of Finance, Mr Seth Terkper, appeared before Parliament in June 2014 and said the 10 per cent deductions had accrued GH¢327,363. This was the last time any update on that laudable initiative was heard. How many CHPS compounds had been constructed as a result still remains unknown.

Checks in the budget and the Ministry of Health websites did not also capture any information on CHPS compounds, leaving analysts confused whether the initiatives was an important element of the country’s health delivery system.

The status of President Mahama’s policy to provide every district with a modern health facility is not known. It must be noted that work on 12 new district hospitals, including Dodowa, Sekondi, Fomena and Garu-Tempane are at the preparatory stages. It is not known whether financing for an extra nine he pledged had been finalised.

The construction of a new teaching hospital at the University of Ghana is ongoing, as well the upgrading of the Ridge Hospital into a full-fledged regional hospital to serve the Greater Accra Region.

Under education, President Mahama said he would work towards improving the quality of education, especially at the basic level. The Ministry of Education puts the percentage of enrolment among Ghanaian children at 96 per cent. More teachers are also being trained. The percentage of trained primary school teachers rose from 58 per cent in 2010 to 70 per cent in 2014.

According to the United States Agency for International Development (USAID), which supports education in the country, those statistics have placed Ghana among the 20 countries globally which are leading the charge to eradicate child illiteracy.

According to the President, the government’s programme to construct 200 new community day secondary schools is on track.

“Architectural drawings, designs and quantities have been completed, sites for the schools have been selected, and the procurement process for the first batch of schools is currently ongoing.”

He cut the sod for construction works to start on the first set of 50 schools on March 3, 2014. It is barely a year and none of those schools have been inaugurated.

He also promised to rationalise fees in the secondary schools in order to reduce the burden on parents. The exercise is scheduled to start with day students, whose fees, estimated at GH¢71 million would be abolished starting this 2015/2016 academic year.

However, that promise of “Ghanaians can remain assured that government will continue in our efforts to rebrand technical and vocational education and give it the important attention and support it deserves in the development of our nation” has seen no action since February last year.

During the course of the year, the GH¢10-million Youth Enterprise Support (YES) initiative was launched.

But economic analysts and financial experts have questioned the wisdom in introducing an initiative which only comes to add to the numerous initiatives meant for supporting start-ups.

Their fears stem from the fact that the Venture Capital Trust Fund, which finances start-ups, could do better. Again, the Export Trade, Agricultural and Industrial Development Fund (EDAIF), this year announced that it wanted to support 20 young graduates with entrepreneurship ideas. How similar!

A strong and resilient economy

Under this, the President outlined economic performance, foreign exchange, transforming our economy, agriculture and food security, trade and industry as well as boosting the private sector through local content policies as some of the areas that would underpin the performance of the economy for last year.

Economic performance

What the President described as short-term challenges for the economy and assured the people that the estimated 7.4 per cent growth rate (revised: 7.3%) for 2013 would be maintained and improved to eight per cent going forward.

The challenges have rather deepened, especially with a worsening energy crisis which had impacted industry negatively, and falling commodity prices such as gold, cocoa, and recently crude oil.

According to the Ghana Statistical Service, real GDP growth rate for 2014 was 4.2 per cent, compared to 7.3 per cent in 2013. The deceleration in economic activity during 2014 was broadly attributed to energy supply constraints and rising input costs.

Headline inflation, which peaked at 17 per cent in November and December 2014, declined to 16.4 per cent in January 2015.

Interest rates generally trended up on the money market during the year. The Bank of Ghana reports that the 91-day instrument increased to 25.8 per cent from 19.2 per cent at the end of 2013, with the 182-day bill going up to 26.4 per cent from 18.7 per cent.

The one-year note rose to 22.5 per cent from 17 per cent, with the two-year rate increasing from 16.8 per cent to 23 per cent.

The budget ended implementation with a seven per cent deficit at the end of last year, which left the government with little fiscal space to finance projects, especially when it takes out public sector compensation which is about 55 per cent of domestic revenues.

Debt stock

Although the State of the Nation Address promised to reduce the debt to GDP ratio, which stood at 52 per cent by February 2014. The total public debt, according to the MPC?report released last week, stands at GH¢76.1 billion (67.1 per cent of GDP), up from GH¢51.9 billion (55.3 per cent of GDP) in 2013.

Transforming our economy

“Mr Speaker, the basic structure of our economy has not changed from colonial times. The Gold Coast was designed by the colonial masters to be exporters of raw material and importers of finished goods. This is what best served their needs and purposes,” he stated.

He complained about how the country spent large sums of foreign exchange, about US$1.5 billion, to import rice, sugar, wheat, tomato, poultry products and vegetable oil among others.

He, therefore, announced some measures to transform the structure of the economy.

As an interim measure, President Mahama asked the then Export Development and Agriculture Investment Fund to extend assistance to local investors for increased production of poultry, rice, tomatoes, cooking oil, and fish.

Although EDAIF agreed in principle to carry out the task, none of such funds had been disbursed. The National Association of Poultry Farmers (GNAPF) told the GRAPHIC BUSINESS early this year that it was yet to receive the GH¢40 million financial support the President promised to enable them produce to reduce poultry import by 38.9 per cent and save about US$132 million by the end of 2016.

However, pharmaceutical companies in the country have been supported with GH¢200 million to enable them to produce some essential drugs locally to cut importation.

The President also cut the sod for the construction of a new sugar processing plant in Komenda in the Central Region. There is no information on the status of that project. Interestingly, a second sugar factory meant for Savelugu in the north of Ghana has not taken off.

All in the name of cutting imports, neither have initiatives such as milling flour with local ingredients such as cassava, maize and sorghum seen the light of day nor have the integrated bauxite and aluminium industry, including the revamping of VALCO.

The proposed joint venture between the Tema Oil Refinery (TOR) and Petro Saudi to revamp the operations of the oil refinery remains a mirage.

Other initiatives that have remained on the shelves or at various stages of development and implementation include the revival of the Tema Shipyard and Dry Dock industry; Ghana Cocoa Board, leading the production of jute sacks in the country; the local production of electricity transformers, meters and other components etc by purchasing from local producers who meet their quality standard.

Perhaps, the silence which is most deafening is the promised campaign to encourage Ghanaians to buy made-in-Ghana goods.

Indeed, it was at this juncture that names such as Mr Magnus Nunoo of Mobile Water and Mr Tony Senayah, of Horseman Shoes and local companies such as CAL Bank, Reroy Cables, Beige Capital and Agbeve Herbal became instant talk of the month.

As a long term measure, however, the President said, he had charged the National Development Planning Commission (NDPC) to work on a medium term development framework capable of addressing weaknesses in the economy. This plan, which was to be ready by the close of last year, is still in the woods.

As the President prepares to address the state of the nation in the coming weeks, Ghanaians are still wondering which new initiatives will be introduced, what old ones will be firmed up and some lucky entrepreneurs whose names could make it into the almost 20,000-worded State of the Nation Address, 2015.

Indeed, economists have cautioned that the President’s address should better not contain any new policy initiatives than what had already been outlined in the budget, else the economy risks another fiscal slippages or those policies will remain a white elephant.