Feature Article of Friday, 21 September 2012
Columnist: Danquah Institute
, The Growth In Corruption Is A Major Election Issue, So Is Ghana’s Gh¢28.3bn Public Debt
Former President Jerry john Rawlings has once again injected some excitement into the December elections with the issues he raised in his recent meeting with members of the Volta Regional House of Chiefs.
In our view, he was sincere about the issues he raised and the angles he took. The ruling National Democratic Congress was, until July 24, going into a general election with a leader who was, understandably, very unwell. Now, in President John Dramani Mahama, they have a leader who has, indeed, added “a spark to the governing party…” in a presidential contest which is, after all, between the two main political parties, the New Patriotic Party and the NDC.
We believe what was profound about what the former President said at that meeting was his observation on corruption. Corruption, the frightening acceleration in the debt profile of Ghana and the mad rush for loans by this NDC government are big political issues that are yet to make it to the top of the issues chart of this 2012 election.
Corruption and the national debt are threatening the future of the youth of this country and Ghana’s future, generally.
What are the facts?
Nominally, this NDC government has borrowed more money than all other previous governments put together managed to borrow in the previous 52 years. At our last check, the current Parliament has approved a whopping $14 billion of loan agreements under the last four years alone, with more loan agreements before the House, awaiting approval.
Nominally, in this government’s first three years alone (2009, 2010, 2011), its expenditure (grants and revenues) has exceeded what President J A Kufuor’s government spent in 8 years.
GH¢28.3 BILLION NATIONAL DEBT AND $14 BILLION LOAN AGREEMENTS UNDER 4 YEARS
Again, according to the Bank of Ghana, the nation’s total debt as at July 2012 stood at GH¢28.3 billion, and still growing. Notably, this figure does not include half of the $14 billion worth of loans that have received parliamentary approval, awaiting disbursement, including the $3 billion China Development Bank facility.
President J A Kufuor left a national debt of GH¢8.9 billion ($8.2 billion). It means, under Kufuor, every Ghanaian, from the baby to the grandma, owed GH¢376. It went up to GH¢13.7 billion in 2009, GH¢17.2 billion in 2010 and GH¢23.6 billion in 2011, to the current GH¢28.3 billion. if shared among the total population, every Ghanaian owes GH¢1,132. The question is, what has Government done with all the money that has come its way since 2009?
The travesty of the last four years, regarding these massivfe loan contracts is that, very little, if any, value for money analysis was done, first by the Executive, and, secondly, no serious financial scrutiny was allowed to be done by the Legislature so as to evaluate and ascertain whether or not the nation was getting real value for its money.
RECKLESS SOLE SOURCING AND INFLATED COST OF CONTRACTS
The slapdash culture by which these loans and other public procurement deals have been negotiated by an economic management team, led, in most parts, by President J D Mahama, the reckless preference of his government for sole sourcing public procurement contracts, stuffed with inflated cost prices, have put the future of this nation onto a dangerous, slippery slope into unsustainable debt trough.
The recklessness with which the current government has treated the national purse under these four years should be a major issue of public concern, and we are calling on civil society and the media to focus a lot more attention on this. This reckless mad loan rush has unleashed the kind of corruption never before witnessed in Ghana.
Besides falling standards in education, it is the view of the Danquah Institute that the combination of this reckless mad rush for loans, spiraling national debt and inflated cost of public contracts pose the biggest threat to the kind of future we are building for the youth of Ghana. It is potentially a future pregnant with substantial difficulties; it is a future of arrested development and; a future of limited room for fiscal manoeuver.
It is our fear that, with more money chasing after fewer developments, the expected economic expansion would not be significant enough to generate the kind of incomes needed to pay off debts and, at the same time, undertake other statutory fiscal obligations such as paying salaries and meeting social spending imperatives, including health and education.
LACK OF VALUE FOR MONEY
Today’s edition of the Times newspaper, on page 12, reported (Parliament Demands Value for Money) on the recognition by the Legislature that loans presented to the House come without any certificate indicating value for money assessment. The Speaker was quoted as saying, “Parliament has oversight responsibilities for value for money in all loan agreements and we are interested in tracing how our monies are being spent.” However belated, the Danquah Institute is gladdened by this recognition by the constitutional body.
It is difficult to argue against Mr Rawlings when he says, “the corruption that is going on is so deep. Some aspects of this corruption are literally holding your national resources to ransom by just a handful of people.”
For example, Government stubbornly awarded a $1.5 billion housing deal to STX Korea, which came with an insurance tag of $264 million to build 30,000 “affordable” houses, most of them one bedroom flats, at an average cost of $50,000. In 2008, with inflation at 18.1%, the cost of building a six-classroom block cost GH¢80,000, but under this government, the cost of building the same classroom block is now GH¢260,000.
INFLATED COST OF BUILDING ROADS
The cost of inflated contracts is obvious on our roads. In the last 3 years, less than 1,000km of roads have been added to the road network. The NPP, on the other hand, built an average of 4,750km of new roads annually in its 8 years in office. The NDC is today building a kilometre of bitumised road at $1.6 million, when, under the NPP, just four years ago, the average cost of constructing a kilometre of the same road was $450,000.
Ghananians deserve value for money on negotiations done on behalf of Ghana, whether it is for loan agreements, public procurements, allocation of oil blocks, building contracts, or in the payment of judgment debts.
The NDC government has had plenty of resources at its disposal because of the expanded economy it inherited, record cocoa and gold prices on the world market, new taxes, together with the improved fiscal attractiveness that Ghana enjoys from being an oil-rich economy, however limited. The question is, what have they done with this unprecedented abundance of funds?
NPP SPENT GH¢31 BILLION IN 8 YEARS, NDC HAS SPENT GH¢35 BILLION IN 3 YEARS
For example, when it comes to grants and revenues, President Kufuor in 8 years, received a total amount of GH¢24.29 billion. In just 3 years, the NDC, on the other hand, has received GH¢28.25 billion.
For his eight-year rule, President Kufuor’s total nominal expenditure was GH¢31.24 billion. Compare it to the first three years of this NDC administration, where total nominal expenditure stood at GH¢35.11 billion.
We have seen some resources come in the way of this government and what they are doing with these public funds have not necessarily corresponded with the amount of resources coming their way.
This is a dangerous trend and the public must focus more on this future-bursting development. Government, the President and his appointees have a responsibility to explain to the electorate what they have done with all the resources that have come their way.
We cannot disagree with former President Rawlings when he says, “If you mean well to want to fight corruption, if you are not going to devote 30, 40 per cent of your time to fighting corruption from within your own government, you will fail.” More importantly, you would be failing Ghanaians, failing Ghana.