In 2009, President Mills turned to Dr. Kwabena Duffuor to lead Ghana’s economic renaissance, recovery and rebuilding. His main task was to make the economy work for the middle class, lower class and the ordinary Ghanaian.
Dr. Duffuor’s sound economic policies as Finance Minister yielded results and the economy was rescued and placed on proper footing through creation of jobs and opportunities for all.
Twelve years on, under the auspices of Institute of Fiscal Studies(IFS), the former Finance Minister and Govenor of Bank of Ghana has delighted a lot of us with a well-delivered economic lecture under the topic; THE Ghanaian Dream: TRANSFORMING THE ECONOMY THROUGH THE CREATION OF JOBS AND OPPORTUNITIES FOR ALL.
The thrust of Dr. Duffuor’s lecture contained proposals and recommendations on how to get our economy back on track, how to create employment in both existing and new arenas and how to use economic policy to create real change and opportunity for every man, woman and child in Ghana.
Probably, this is the most eye-catching example of Dr. Duffuor’s desire to tame “irresponsible” capitalism through robust recommendations. For NDC activists who have been looking for policies to sell and to counter Vice president Bawumia’s incessant outings, Dr Duffuor’s lecture is a godsend.
Here are the key extracts of the lecture:
Dr. Duffuor said his main theme was for Ghanaians to live the dream- The “GHANAIAN DREAM” and that Ghana could do better.
☑He said there’s the need to “widen the circle of opportunity” through sustainable employment generation because decent, sustainable incomes, improves the tax base and relieve pressures on the state to provide welfare and safety-net services.
“As we continue our discussion today, we mustn’t forget that, behind all these numbers and policies, are real people with real hardship and it is our responsibility as a nation to address. A job is much more than an income, it is a key to dignity, self-reliance and empowerment. A job will allow a person to dream, to plan, to challenge oneself and to build and support a family who in turn will go on that journey. That is the Ghanaian dream, and it should be available to all, regardless of his or her background”
☑Dr. Duffuor said the barriers to employment must be removed to ensure inclusive opportunities in the labour market; “Our policymakers must ensure that our young women and young men have the requisite education and skills to succeed in the jobs of the modern economy. It is only through such means that our youth will have good jobs which will lift them out of poverty and which in turn will make them more stable economically and socially.”
☑He said a new commitment to “quality vocational skills”, giving them the same worth as academic education is the way forward. “Ghana must place vocational education and training at the center of job-creation strategies, so as to successfully address high youth unemployment and skills gaps in the workforce.
This calls for investment in vocational education in formal institutions, where the training provided should be aligned with labour market requirements. The government should work with employers to determine these requirements and establish a program whereby employers can provide practical on-the-job experience to the trainees.”
☑He said the commercial banks’ lending rate in Ghana has remained stubbornly high for decades and the high cost of borrowing, has continued to pose a real challenge to Ghanaian business community.
“There is a need for public intervention to create a level playing field in the entire bank credit market for both the larger and smaller banks. This will lower their cost of funds and thus be able to lend at a lower lending interest rate to support the growth of businesses in our economy and help generate decent jobs. We want to be a nation of entrepreneurs and in order to achieve that, we have to give people a realistic chance to start and maintain businesses, and the first step in doing so is lowering the cost of borrowing.”
☑He said a comprehensive policy reforms in the Agric Sector is needed to improve the sector’s contribution to the economy and job creation.
“We need to unearth the employment generation capacity of the agro-processing sector, and in order to do that, the key constraints that inhibit growth have to be addressed. These constraints include electricity supply, access to credit, unfair practices of informal competitors, and customs and trade regulations. Policymakers must strive to incorporate such capacity building into curricula.”
☑ He spoke about developing the cassava value chain to create jobs and incomes. “It’s time to elevate the status of cassava in the national economy. Increased industrialization and commercialization of cassava to support rapid economic growth and job creation.”
☑ He said the country has a huge potential for renewable energy which remains underexploited, and it is high time we convert these renewable potentials into actual energy. “With industrialization, Ghana’s demand for electricity has been growing. This has prompted the country to seek alternative renewable energy sources to complement the currently dominant hydropower energy supply. Nevertheless, the electricity generation company, Volta River Authority, is unable to generate enough electricity to meet the demand of all sectors. Therefore, Ghana has been struggling with increased power rationing in the country over the past decade. The expansion of renewable energy has therefore become imperative to Ghana not only to fulfil people’s electricity needs but also to take initiative to reduce carbon gas emissions and to combat climate change. The fuel which is derived from natural and available resources reduces the cost of operation as it will also reduce the country’s dependence on fuels and energy from foreign sources. Furthermore, renewable energies are the cleanest and promising energy sources for future generations, with stable price and environmentally friendly due to their zero carbon emission compared to fossil fuel technologies, which are typically mechanized and capital intensive, whereas, the renewable energy industry is more labor intensive. More jobs are created for each unit of electricity generated from renewable sources and is environmentally friendly.”
☑Dr. Duffuor said sustainable forest management can become an integral component of employment generation efforts and offer some unique advantages in fulfilling several economic, social and environmental objectives. “Targeted public investment can generate about 10 million new jobs in afforestation and reforestation, eco-tourism, manage natural forests, establish and manage urban and peri-urban green spaces, improve watersheds and protect forests from fire. Such investments can also absorb unemployed workers and school leavers, increasing their income and consumption and supporting the growth of the economy. More importantly, such investments can help rebuild natural assets that have been severely depleted in the past. A glaring example which needs to be highlighted is this. The Ghana Forestry Commission’s available data reveals that by 2008, Ghana’s forest cover had depleted to 1.2 million hectares from a forest cover level of over 8.5 million hectares on the turn of the millennium. This severe depletion was through irresponsible timber harvesting and the mismanagement of the charcoal industry. This unfortunate situation should be reversed at all cost and based on the current costs of sustainable forest management activities, 10 million jobs could help to establish, restore or improve about 8-10 million hectares of forests and woodlands, reversing deforestation and degradation, placing Ghana on the very cutting edge of the green economy.”
☑He said we need to make Recycling an easy way in Ghana to protect the earth, help the economy grow, and generate jobs. “It is a labor-intensive work, involving collection, sorting, and processing activities. It also includes other supporting roles such as facilities operations, sales, and logistical support. By making recycling a daily habit here in Ghana, we will create jobs and clean up our environment; there are no losers in this matter and no excuse not to pursue it.”
☑He said Ghana needs to create adequate fiscal space to raise infrastructure spending substantially and in order to narrow the deficits and ensure rapid economic growth and job creation.
This should be done by taking bold decisions to increase public revenue and control the growth of debt service spending and consumption-based expenditures like employee compensation and purchase of goods and services.
Areas that should be prioritized for increased infrastructure investment include: (1) roads, where the problem is quite pressing and has given rise to community agitations, expressed through public demonstrations, in many places; (2) health infrastructure, where investment will directly yield thousands of good, permanent jobs in the health sector; (3) electricity transmission and distribution, to ensure households and firms enjoy truly stable power supply to improve productivity; and (4) education, to eliminate, with urgency, dilapidated classroom blocks and many schools under trees that are a dent on our national conscience.
“A substantial increase in infrastructure investment over a sustained period will directly grow the economy and create thousands of jobs while strengthening the economy’s productive base to support long-term growth. It will also attract private investment and create a more competitive private sector that is better placed to benefit from new opportunities for international trade, such as the African Continental Free Trade Area (AfCFTA) project. Infrastructure projects either hope, or lack thereof. A. nation which builds is a nation with confidence, as it invests in the quality of life of its people today and tomorrow. Ghana is a growing nation, a nation on the cusp of greatness, and investing in our infrastructure is a crucial step on the journey to a bright future.”
☑Dr. Duffuor also touched on the controversial E-Levy introduced in the 2022 Budget statement. “The proposed E-Levy is very problematic because it could be fraught with serious implementation challenges. This tax could undermine the Ghanaian Digital Economy.”
☑ He said there is so much additional revenue that can be generated from the extractive sector, which is currently left in the hands of private investors who extract publicly endowed resources in the sector. Accroding to him, the IFS estimates show that by adopting the same approach that Ghana’s peers use to generate revenue from their extractive sector (oil and mining subsectors), Ghana can generate additional US$4.3 billion from the sector yearly. Currently, this amount is equivalent to more than GH€25 billion. This lost revenue clearly dwarfs the GH 6.9 billion in revenue that the proposed E-Levy is projected to fetch the country in 2022.
☑He said research conducted by the Institute for Fiscal Studies(IFS) has shown that exchange rate depreciation is a significant driver of Ghana’s public debt dynamics, as it accounted for almost 30% of the growth of public debt between 2006 and 2019.
These problems call for the effective management of inflation and the exchange rate to ensure their stability to protect living standards and support rapid economic growth and development. To achieve this requires, from the macroeconomic perspective, disciplined fiscal and monetary policies.
“Mr. Chairman, this has been done before. In 2009–2012 under the Mills NDC administration, our success in lowering the fiscal deficit from 14.5% of GDP in 2008 to 4% of GDP by 2011, as well as our success in slowing the rate of monetary growth, facilitated a fall in inflation from 18.1% in December 2008 to single digits for 31 consecutive months starting from June 2010 to December 2012. This remains to date the longest period of single-digit inflation in Ghana since independence. The exchange rate also achieved a measure of stability during the period, as it depreciated by 10.1% per annum on average in 2009–2012, which is one of the lowest rates of average depreciation during the Fourth Republic. The World Bank indicated in their 2011 report that in 2011, Ghana was the fastest growing economy in the World with GDP of 14.5% and a decline in interest rates to the lowest level in four decades.
In his 1999 speech at “President Ball and Fundraising dinner” at the Tema Rotary Club, Dr. J.L.S Abbey lauded the 1998 Macro-Economic Performance of Ghana, saying “Last year, most of the financial targets of Government were met: monetary growth over the period was less than 18 percent: the exchange rate depreciated by less than 5% and the rate of inflation declined. These targets were achieved by the strong enforcement of laws relating to banking and use of foreign currency, by prudent use of repurchase agreements in monetary management, and by placing a limit on excessive budgetary spending by government”. We have done this before. Mr. Chairman, I have personally been part of doing this before, so I know it can be done and that it must be done.”