Press Release

January 16, 201

Part Two

Part One

2009 IN RETROSPECT: A CATALOGUE OF FAILED PROMISES
NPP INTERFACE WITH MEDIA – JANUARY 2010

Interest rates

In 2008, the rate on the 91-day treasury bill stood at 24.7 percent but by the third quarter of 2009 it stood at above 25.7 percent, an increase of over 4 percent. As would be expected the average lending rates which hovered around 26.4 percent in 2008 rose to above 30 percent in 2009. In contrast the 91-day treasury bill rate which stood at 38 percent in 2000 was reduced to 27 percent in the first year of the NPP administration. Consistent with this trend, average lending rates declined from over 30 percent in 2000 to below 25 percent in 2001, a marked improvement from the trends existing between 2008 and 2009.

Commodity Prices

The Ghanaian economy being small is heavily influenced by trends in our terms of trade particularly as reflected in the prices of our major exports (gold and cocoa) and imports (oil). Thus the assessment of economic performance must be evaluated in the context of the extent to which the trends in these commodity prices impact positively or negatively on the economy. For example in 2008 cocoa prices stood at $2200 per tone. However by the third quarter in 2009, cocoa prices were averaging over $2978 and reaching over $3000 by end year (an increase of over 36 percent). Gold prices which stood at an average of $872.4 an ounce in 2008 rose to over $1000 per ounce in 2009, an increase of over 15 percent. Finally oil prices which averaged over $98.5 per barrel in 2008, declined by over 40 percent to an average of about $56 per barrel in 2009. Together this means that developments in the terms of trade between 2008 and 2009 had a positive impact on the Ghanaian economy. Consequently economic management in 2009 should have been easier.

On the contrary, cocoa prices dropped from $1094 per tone in 2000 to $1020.8 per tone in 2001. Gold prices also dropped from $280.4 in 2000 to $271.6 per ounce in 2001 oil prices however reduced marginally by 1.5 percent from $25.9 per barrel in 2000 to $25.5 per barrel in 2001. These adverse developments in commodity prices should have made the management of the economy more challenging in 2001 as compared to what obtained in 2009.

Gross International Reserves

On the back of the positive terms of trade developments, as well as the global recession the Atta Mills government was able to increase the stock of international gross reserves from the $2.036 billion that it inherited in 2008 to about $2.317 billion in 2009 (a marginal increase of 13.8 percent). During this time period for example the oil import bill was reduced from $2.1 billion in 2008 to $1.1 billion in 2009.

In contrast, despite the negative terms of trade developments that occurred between the year 2000 and 2001, the NPP led government was able to increase the stock of gross international reserves significantly from $233 million to over $364 million in 2001 (an increase of over 56%).

The NDC in their manifesto have assured of “the attainment of a single digit inflation, exchange rate stability and balanced budget with a deficit target not exceeding 3% in any given year”. The have assured of “an annual growth rate of at least 8%” (emphasizes ours). If they have been able to achieve this, the facts speak for themselves. Talk indeed is cheap. We have demonstrated that they have not been able to achieve any of the above.

Specific Revenue Enhancement Measures

In the area of revenue mobilization, Professor Mills had told Ghanaians that the prices of petroleum products were very high primarily because the NPP had loaded the price with many taxes. Upon assuming the reigns of government one of the first things the President did was to remove the levies from the price build. That cost the nation between 600 – 800 billion cedis about 60 – 80 million Ghana Cedis in revenue which could otherwise have accrued to us for development.

Today, faced with that huge revenue gap government is scampering all over and devising other revenue enhancement measures. The NPP waived import duties on rice, wheat, maize and vegetable oil to help stabilize the cost of food prices and curb inflation in the face of escalating world food prices. The effort of government’s actions then were profound against the food riots in all the neighbouring countries especially, Benin, Togo, Mali, Burkina Faso, Guinea, Cotê d’Ivoire and Senegal. Ghana was spared this ordeal.

Early in 2009 government sounded to bring the duties on food items, primarily as a revenue measure but stayed action in the face of good counsel proffered by the Minority in Parliament. Today government has brought the tax on these food items back. Admittedly, it may help local food production if well-managed but it also has its own problems. The World Bank has issued a caution that in the light of rising fuel prices, food prices may soon rise again. One could only hope that the reintroduction of the import duties does not trigger a spiral in the prices of these food items.

In 2008 the NDC in Parliament vehemently opposed the imposition of the Communication Service Tax. The then Minority Leader who is the Majority Leader now christened the tax “talk tax”. The Committee for Joint Action (CJA) including then candidate Mills used placards to register their disapproval of this tax. Hon. Haruna Idrissu, current Minister of Communications, then Ranking Member of Committee on Communications and H.E. John Dramani Mahama, our Vice-President, then Ranking Member on Foreign Affairs were both vociferous in their opposition to the so-called “talk-tax”. Today, government in a sudden u-turn has not only embraced the tax but is initiating moves to increase monitoring of the compliance of the service tax. What do we tell the Professor who joined the CJA in its opposition who now says he wants to “deepen compliance”? The country must grow and grow indeed we will.

Since government revenue has suffered a big jolt with the abolition of the petroleum levy government must still fill its revenue basket. On selected commodities government has shifted from specific to ad-valorem excise taxes. Industry is soon going to be hit hard and the effect may not be what we desire. The effective increase in tax on a bottle of beer is 120%; 163% on malt; 162% on soft drinks (Coca cola, Fanta etc.); 110% on Guiness Stout; 20% on Akpeteshie and the other local dry gins as well as 20% on mineral and other forms of distilled water including water for intravenous infusions.

In the very short term this will have a corresponding increase in the VAT Component on these products but the prices of the products will go up in the medium term. Consumption of alcohol is elastic and if prices escalate consumption will drop; volumes of production will then drop in the medium to long term and VAT collection will correspondingly also drop. Import of inputs will drop; import duties will thus go down and total tax revenue will go down and manufactures in the medium term may lay off workers.

Ladies and gentlemen, what has happened to the NDC manifesto pledge on page 45: Tax policy will be used to encourage people to work? What happened to the NDC policy “to address low productivity and high production costs”; and the policy to address inimical tax regime (page 49). If we are to succeed in making the Ghanaian economy competitive and the industry-destination in the sub-region, we may have to compare and contrast with the prevailing environment in the other countries in the ECOWAS zone. We cannot grow our businesses if taxes become punitive. If we cannot grow our businesses, employment will severely adversely suffer.

On the basis on the assessment of the various economic indicators as discussed above, it is clear that the NPP led government did perform better in its first year of managing the economy that the Atta Mills led government. In spite of the NDC led government’s apparent dislike for “outsiders who know nothing about poverty in Ghana”, it has now handed the nation’s economic management to these same “outsiders by virtue of the PRGF program with the IMF and the EGPRC with the World Bank.

The history of NDC led programs with the IMF is well known. The last PRGF by the NDC led government with the IMF failed abysmally. It had to be saved by the NPP government in 2001. The current EGPRC with the World Bank has had only partial results. The second tranche of $150 million expected from the World bank could not be disbursed in 2009 because the government could not meet at least three conditionalities. This cannot be said to be satisfactory. The Minister of Finance and Economic Planning and his team, as well as the President must come to terms with reality. We have been down this path before. Ghana deserves better. The current program with the IMF and World Bank will simply not get us into a middle income status by 2020. The 2010 budget does not have any innovative programmes and policies that will cure our ills. Instead the government has increased taxes, tariffs, fees and levies that will lead to the erosion of incomes of Ghanaians and lead to more people being thrown into the poverty trap. Is this a better Ghana?

Works, Housing & Water Delivery

In the area of rural water delivery it is significant that for the whole of 2009 only 280 boreholes were constructed. The most noteworthy obstacle is the announcement by the President abolishing the 5% community contribution towards the provision of rural water in fulfillment of the NDC manifesto promise. This populist announcement which was done without proper consultation with stakeholders has stalled the projects.

Dreadfully no funds were provided towards the eradication of the guinea-worm disease even in the endemic areas of Central and West Gonja, Savelugu Nanton in the Northern Region and Gulumkpe in the Brong Ahafo Region.

In year 2009 there was no bold policy to expand urban water coverage apart from the Tamale, Koforidua, Kwanyarko and the Cape Coast projects which were all started by the NPP.

The affordable housing projects started by the NPP government to produce 5140 units of houses were literally left in the bush in 2009. In 2010 government has merely signaled to “explore avenues for securing funding to complete the 5140 units…”. Manifestly, government is not attaching priority to housing delivery and the deficit in the sector may undoubtedly shoot up.

Trade and Industry

Developments in the Trade and Industry sector depend to a large extent on the movements in broad macroeconomic indicators such as inflation rate, interest rate and exchange rate. Beyond these we may talk of sector specific policies and specific fiscal measures towards the growth of the sector.

It is of great concern that the share of manufacturing in DMBs credit declined by 1.2% over 2009.

The downturn in activities at the Ghana Stock Exchange culminating in a decline of 39.7% in the Ghana Stock Exchange index in 2009 as against an increase of 63.5% in 2008 is a reflection of the lack of confidence of the investor community in the Ghanaian economy under the NDC government. In 2009 stocks also lost on the average 11% of their value.

In 2009 government promised in the 2009 Budget that sheanut processing facilities would be established in the three northern regions. Only a sod-cutting ceremony involving a private sector initiative has taken place at Buipe.

The effect of other revenue measures that government initiated has already been discussed and government would be mindful of its effect on industry and employment.

Education

Education is fundamental to all social interventions. A well educated society is a great asset to a nation and determines to a large extent the quality of its human resources. The impact of education cuts across all sectors. In health it helps to improve sanitation, reduces the incident of malaria and all types of diseases. In agriculture, attitudinal change and the ability of farmers to adapt to modern farming practices are a pre-requisite for a successful agricultural revolution and extension programme.

In view of the on-going education reform, it was expected that the government would give due weight to the education sector budget. What we rather see is the usual ministerial allocation with a small top up. No wonder the government failed to meet many of the social intervention targets set in education for the 2009 financial year e.g:

• The 1.6 million Ghanaian school children promised free school uniforms in 2009 never materialized as at December of the same year.
• The 10 free exercise books per pupil for 5 million pupils for 2009 became a deception.
• The 20% incentive to teachers in deprived schools in rural areas, and professional duty and incentive allowances to science and mathematics teachers in 2009 also became a mirage only to be re-echoed in the 2010 budget.

Because of the NDC government’s bad policies the chicken that lays the eggs was starved of nutritious feed. Consequently, the Getfund and the District Assemblies’ Common Fund which provide funding base for most educational activities suffered serious shortages.

Getfund suffered a deficit of 25 million Ghana Cedis and the DACF a deficit of 10 million Ghana Cedis by August 2009 and all by 15% by the end of the year. How then can Ghanaians take the NDC government under President John Atta Mills serious on fresh pledges and promises made in the 2010 budget?

On page 314 item 907 of the 2010 budget statement government states, “government in the medium term will provide permanent accommodation to every single school currently under trees. The government plans to build 165 in 2010”. The figure 165 does not match the reality on the ground. It is established that the total number of school under trees is about 5,227. Only a crawling government can boast of 165 structures in a year as a great achievement.
In the 2009 budget, page 147 item 633 the NDC government acknowledges the laudable performance of the NPP administration in 2008 as having built 377 schools under trees made up of 230 6-unit classrooms and 147 3-unit classrooms in addition to 250 other classrooms.

It is absolutely impossible that at the pace of 165 per year total elimination of schools under trees and the Shift system would be achieved in the medium-term as proposed by the NDC government. The NPP believes that a more resourceful approach, dynamism and affirmative action is required such as a goal.

As far as the motivation and incentives to teachers is concerned, the NPP government can claim to be the pace-setter.

By the recognition of teachers as the centre around which the success of the reform can be built a number of policy measures were implemented. Such as:

• Granting of exemption of duty on teachers’ imported vehicles
• Vehicle allocation to heads of Educational Institutions – for the first time to college principals and SHS heads
• 300 buses to second cycle schools

These weigh far in the hearts of teachers than the mere promise of allowance increase which after one year has not progressed beyond the negotiation stage the NPP government left off.

The NPP is extremely shocked at the callous attitude displayed by the NDC government towards the SHS programme and in particular the future of Ghanaian youth from disadvantaged socio-economic background.

By reducing the 4 year programme to 3 years, 75% of SHS leavers who hope for a better education and a better future through the 4 year reform programme have, once again been dislodged.

The reasons the government gives for sacrificing the welfare of our future generation and valuable human resource for the 21st century are untenable;

• The 4 year will cost extra to parents
• Government should concentrate on providing infrastructure, motivating teachers, providing teaching and learning materials
We, members of the NPP, find these arguments objectionable. No cost is higher when dealing with human resource development and the future of our young generation. Parents will like to see their wards receive quality education once and for all than to have mass failures and spend several Ghana Cedis on extra classes/remedial classes.
On page 144, item 428 of the 2010 budget statement it is stated: “government reversed the duration of the Senior High School from 4 year to 3 years”. Such a statement smacks of illegality and arbitrariness and undermines the Education Act of 2008 and the authority of parliament to amend its own laws passed. The Act clearly and unambiguously states that the SHS shall be 4 years and is still in force.

Why can’t the government wait at least for the cohort of the four year system to pass out and compare the results? Why can’t the government wait to assess the impact of the corrective one-year added to the programme to determine its efficacy?

In the interest of the future of our students, parents and the educational system, the NPP calls upon the Minister of Education and the government to refrain from making such misguided statements to the public.

We also know that effective monitoring and supervision brings about quality assurance. Hence, on P153, item 665, of the Minister’s 2009 budget statement he stated that the National Inspectorate Board will be in operation. As at the time of presenting his 2010 budget nothing significant has taken place. The Minister chose to be silent on it. Indeed, the National Inspectorate Board, the national curriculum and research unit and other important institutional structures necessary for smooth implementation of the reform as enshrined in Act 778 have not been established as at now.

What has happened to the 1 year free apprenticeship training programme for JHS leavers who are unable to gain admission into SHS? The only one important programme which ensures that pupils leave JHS with some basic skills has disappeared and never mentioned in budgetary allocations. This clearly shows that the NDC government’s commitment to the education reform is negative. It wants the reform to fail and describe it as a bad programme.

At the time of presenting the 2009 budget, it was felt that the government had just taken office and could be pardoned for not initiating new policies and ideas. After one year in office, still nothing new seems to be evidenced. From pages 148-151 (just 4 pages) one can count the use of the word “continue” (NPP policies) 14 times. So what is new in the education section of the 2010 budget? What is there that is new in the government’s so-called “Better Ghana” in education for Ghanaian children and youth?

Employment and Social Welfare

Ladies and gentlemen, employment is a key to poverty alleviation. Not surprisingly, the NDC has indicated in their manifesto (Pg 22) that “as social democrats our goal is to significantly improve the lives of citizens”. Government continued the NYEP and afforestation programmes. When Government boasted at the end of the year that they had provided 110,798 persons with jobs, they were literally referring to the effort of the NPP. But what about all those District Co-ordinators and other youth on the various modules who have been thrown out on the streets? Create unemployment to provide employment, that is the NDC style!

In 2009 government assured that the single-spine salary structure would take off that year. The pledge did not materialize just like many other promises. We are told of its implementation in January, 2010. Let us hope for the best.

On pages 73 and 74 of their manifesto, the NDC have stated that they will, among others, reduce child labour, street hawking to the minimum and introduce a range of social protection schemes for the urban poor. For both 2009 and 2010 no new schemes are mentioned.

In the face of the contrivance, problems which surrounded school feeding programme it is no wonder that the feeding target is behind schedule. The ordinary parent in the countryside needs that.
There has been no new bold policy to offer employment to the teeming unemployed youth.

What has been done is to replace young people in the NYEP with NDC sympathizers.

There is also a so called ZOIL (Beach Sanitation Gangs), announced with fanfare but no budgetary provision has been made.
The National Youth Employment policy which would have placed employment especially of the youth on the national policy agenda has seen no action one year after it had been approved by the last NPP cabinet meeting.

Health

The National Health Insurance Scheme is one of the few organizations fully decentralized at birth. Pursuant to the national policy on decentralization, it will not only be the height of absurdity but inimical to the Scheme’s operations if it is centralized.

There is no proper actuarial studies on the one-time payment and it is no wonder that one year on there is no clear guidance by the NDC.
Foreign Affairs and Investment Climate

In 2009 government assured (par.884-886 of 2009 budget) to “pursue policies and programs in its engagement with the international community with optimal benefits while protecting and promoting the interest of Ghana. Government pledged to “establish a just and equitable international economic and social order through a robust pursuit of economic diplomacy, respect for international law etc, and that the ministry would work towards enhancing the image of Ghana both home and abroad.

Foreign Direct Investments (FDIs) flow into a country when investors feel comfortable that their investments will be safe. Therefore when you have a situation where agreements entered into with a legitimate government are being reviewed because a party imposes that obligation on itself in its manifesto then we have a problem. It puts fear into potential investors-this is dangerous for attracting investment. That is why the nation cannot be happy with what happened with the handling of the Ghana Telecom-Vodafon Agreement. After the ballyhoo we have come to square one. The exercise was much ado about nothing. The nation is watching in how COSMOS will be treated. Government must demonstrate circumspection. Domestic policy has major implications for foreign policy.

Potential investors are carefully watching and they will make decisions on how they perceive investors are being treated.

Another matter that may shake investor confidence is the upping of mining royalty payment to 6%. The tax was imposed before the process to re-engage the companies which had signed individual agreement with a legitimate government. There might be problems for us as a nation is our politico-economic environment is judged to be unpredictable.

In 2008 when the case of 44 Ghanaians who had been murdered in Gambia blew up the NDC was most vociferous. The sitting Vice President made the loudest noise when he filed a question and after the then minister had answered, he Hon. Mahama insisted that the NPP administration had not done enough for the 44 victims.

Today, the NDC in government has nicodemously settled with the Gambian government, hiding behind a Fact-finding mission’s report that there were 6 Ghanaian victims and not 44 as they the NDC had hitherto told the world. Diplomacy is about protecting and promoting the interest of Ghana, 6 out of 44 cannot be described as optimizing the interest of Ghana.

Agric Sector

Regarding the performance of the agriculture sector in 2009 the budget statement of 2010 states that the growth of the Agric sector was 6.2%, thus exceeding the target of 5.7% (Pg 18).
This projected out turn cannot be correct since all the major subsectors in the sector recorded under performance. A few example will demonstrate this point.

In the case of livestock in 2009, 2 million chicks were to be supplied to poultry farmers but only 25,000 representing only 1.25% of the target were actually supplied.

In the fisheries subsector we are witnesses to the fact that fishermen could not fish during the peak of the fishing season as a result of shortages of pre mix fuel.

So if the subsector performed below targets, how can the sector as a whole exceed the target? To all intents and purposes, this is a case of polishing figures to throw dust into the eyes of the public.

In any case even the below target figures are doubtful, how can you project figures for crops at a time that land preparation for the minor season had just began?

We believe that it is imperative for the government to provide the nation with accurate information. We note that at the beginning of year 2009 the NPP administration had procured 778 tractors, 200 power tillers, 16 water pumps, 20 rice mills, 15 tractor mounted drilling rigs for the 2009 Farming Season. If with all these we could only manage a 5% increase in maize production and a 20% increase in rice production then this is an inefficient use of resources.

One is tempted to question whether these resources were actually allocated to real farmers given what happened in the matter of self-appropriation to top NDC government functionaries involving tractors which the NPP administration brought in the before exiting.

It is worth noting that in 2008 we achieved a 20% increase in maize and a 62% increase in paddy rice over the production figures of 2007. The NDC government has not initiated any new policies and programmes as they seek to portray. The Afram Plains District Agricultural Development Project was initiated in 2005 and implementation started in 2007. The implementation of the livestock development project started during the first term of the NPP administration.

The National Strategic Buffer stock was started in 2007. Three warehouses each in Yendi, Tamale and Wenchi were re-habilitated for that purpose and grain pro-cocoons were procured for grain storage. By the end of 2008 Nine Hundred (900) metric tons of maize had been stored in pro-cocoons at Sunyani, Wenchi and Ejura. These are there for anybody who cares to verify.

Irrigation

Small Scale Irrigation Development Project and Small Farms Irrigation Project were all initiated during the First term of the NPP administration. Tono and Bontanga, the two big irrigation systems in the country, had been rehabilitated.

The Fertilizer subsidy was initiated and implemented by the NPP administration. These are just but a few examples of projects and programmes that the NDC administration want to claim credit for. We as a Nation must learn to give credit where credit is due.

CONCLUSION

Ladies and gentlemen of the press given the limited time and space at our disposal we have not been able to cover every blade of grass. That is regrettable. However there cannot be any shred of doubt that the one year rule of the Professor Mills’ NDC can be captured in one simple phrase: a catalogue failed promises.

From the failed promise to reduce prices of petroleum products drastically; through the failed promise of putting money in people’s pockets; the failed promise of building consensus; the failed promise of being the President for all Ghanaians; the failed promise of healing wounds; the failed promise of ensuring the unity of our country, the failed promise of no Ghanaian should live in fear of armed robbery; the failed promise that there would be no room for political vendetta, blame game and witch-hunting; the failed promise of massive job-creation, expansion in infrastructure and open and honest government; the failed promise of creating a congenial atmosphere for businesses, especially, Ghanaian businesses, no one could be in doubt that the performance of the Prof. Mills-led NDC has been most abysmal.

Indeed, the administration is nothing but a tale of failed promises. We believe this appraisal is indeed a charitable one, made in utmost good faith and made in the supreme interest of our beloved country, Ghana. In the words of Prof. Mills in the last part of his inaugural address we are doing “what is right, right by human standards and right by divine standards” as we continue to pray that “God continues to bless our homeland Ghana and make our country even greater and stronger”.
We thank you all very much indeed.

NPP Press Office, January 16, 2010

Go to Part One