CPP’s Response to the State of the Nation

CPP’s Response to the State of the Nation Address by President J.A. Kufuor Accra February 21st 2008

The Convention People’s Party (CPP) wishes to congratulate President J. A. Kufuor for successfully delivering his eighth state of the nation address to Parliament. The address represents yet another manifestation of Ghana’s maturing democracy, where those we put in charge of managing the affairs of state are periodically compelled, by law, to give a public account of their stewardship. The CPP offers its unconditional support for this process and promises to uphold it when it is elected back into office later this year.

In the words of the president, the address represented an “overview of the period since 2001, and what remains to be done”. It was to be expected, therefore, that the president would highlight his achievements, outline any challenges, and spell out a road map for tackling those challenges. Regrettably, the President did not follow his own outline but dwelled instead on what he considered his accomplishments, such as the school feeding programme; infrastructure development; the national health insurance scheme; and improvements in macroeconomic indicators, without addressing the challenges that face us and strategies for dealing with them.

We in the CPP believe that as a nation we cannot make meaningful and sustainable progress if we choose to highlight only our successes and deliberately ignore our shortfalls, for it is in those shortfalls that we learn important lessons for attaining even greater heights. We need a balanced view of the consequences of our national development efforts.

Private Sector (Under)-Development

Despite the president’s repeated claims that the “private sector is the engine of growth” and that this is the “Golden Age of Business”, the available evidence from his own government shows a private sector that is under great stress, with key areas of the sector on the brink of collapse. Manufacturing’s share of the economy, or GDP, for example, has declined steadily from 9.02% in 2000 to 8.1% in 2007 – and there does not seem to be any relief in sight. Indeed, in 2007, the year of the energy crisis, the manufacturing sector posted a negative growth of 2.3% - compared to positive growth of 3.0% in 1998, when we had the previous energy crisis. This is an indication that the recent energy crisis was far more severe than the government would have us believe.

Manufacturing’s agony is compounded further by a financial sector which prefers credit to the commercial sector instead of the productive sector. Hence, data from the Bank of Ghana shows that manufacturing’s share of bank credit declined from 27.1% in 2000 to 19.0% in 2006 while credit to “domestic trade” increased from 13.0% to 23.8% over the same period. This is further proof of the absence of a coherent strategy by the NPP to develop the private sector in general and revive the manufacturing sector in particular.

Further evidence of the absence of a credible private sector development strategy under the NPP comes from the president’s 2007 state of the nation address, in which he admitted that the President’s Special Initiatives, the flagship of his private sector development agenda, had failed to live up to expectation. In that address, the president promised a number of remedial measures, yet his 2008 address was silent on the matter. Could this be an admission that the PSIs, like the larger private sector, have failed completely and that the tax payer’s money has been wasted? We believe that the public deserves an explanation.

As with industry, so it is with agriculture. According to the president’s 2008 address, agriculture is the “biggest part of the private sector…and the obvious sector to lead [Ghana’s] industrialization. Government has sought to modernize the sector.” Indeed, the “modernisation” of the agriculture sector has been a theme of the NPP since it took office in 2001, but government policy has so far failed to either modernise the sector adequately or propel it to the heights it attained under the CPP in the 1960s, for example.

As a result, agriculture’s share of bank credit has fallen from about 11.0% in 2000 to about 6.0% in 2006, according to the Bank of Ghana. Indeed, apart from the cocoa sector, which has benefited immensely from state assistance, the overall agriculture sector has performed poorly under the NPP. Despite the creation of a separate ministry for fisheries, that sub-sector has continued to struggle, suffering negative growth rate of 1.2% in 2005, the first such decline in more than a decade. According to the government’s 2007 budget statement, Ghana imports US$200 million worth of fish annually, despite the fact that the Almighty has endowed us with a long coastline and many river bodies. This is evidence of lack of visionary leadership and sound policies.

Given this unimpressive performance of the private sector under the NPP, it is not surprising that in his 2008 state of the nation address the president failed to cite a single Ghanaian company as evidence of successful entrepreneurship in Ghana. He instead chose to highlight a few foreign companies in Ghana as success stories. We find this failure by the president to acknowledge Ghanaian entrepreneurship to be yet more evidence that the NPP’s concept of private sector development revolves around aiding foreign businesses at the expense of local ones.

This is in sharp contrast to the CPP’s ideology and policy of empowering Ghanaians in every sector, private or public, to give full expression to Dr. Kwame Nkrumah’s declaration that “the Black man is capable of managing his own affairs.”

We must emphasise that in calling for Ghanaians to be placed at the centre of their own development, we do not seek to exclude others who genuinely want to help us. We welcome everybody as partners in trade and in industry, but we do not want the kind of partnership that diminishes or negates the role of Ghanaians in national development. We want partnerships that supplement, not supplant, the efforts of Ghanaians in the national development process.

Macroeconomic Stability – Without Human Development

It is true that there has been relative macroeconomic stability under the NPP, largely due to a rise in the prices of key commodities like cocoa and gold, debt relief from donors, as well as increases in foreign aid, which was drastically reduced by donors in 2000 as punishment for the NDC’s failure to increase petroleum prices. As we show in the table below, in 2000, only 59.7% (US$107.9 million) of the grants pledged by donors were disbursed, down from 88.3% in 1999. By 2006, as the NPP government met various donor conditionalities, grant disbursements (US$838.5 million) were 50.0% higher than those that were pledged. Overall, this represented an increase of 677.0% in disbursed donor grants.

These large inflows contributed in no small measure to the building up of our depleted reserves, the stabilisation of the cedi, and the consequent reduction in inflation, most of which was due to high import prices. Unfortunately, the NPP has not taken full advantage of this generosity of donors to grow the economy and improve the living conditions of the people. As shown in the government’s various budget statements, most of the economic growth has occurred in either the cocoa or mining sector, both of which have weak linkages to the rest of the economy and thus create few jobs. What we have had then is a period of jobless growth – which accounts for the large unemployment problem in the country. In 2001, the NPP registered about one million unemployed youth. By 2008, it had been able to provide only 107,114 jobs, according to the 2007 budget statement. We find this unacceptable and worrisome.

We are equally worried that 8 years after the NPP government replaced the NDC’s draft youth policy with its own draft youth policy, this important document for national development remains uncompleted. In the 2007 budget statement, government assured us that the youth policy document had been “completed” and that it was to be placed before cabinet for “appropriate” action. In paragraph 834 of the 2008 budget statement, however, we are told that a “new Youth Policy [is] to be completed by March 2008.” Earlier in paragraph 815, the same budget claims that the youth policy document, along with an “implementation action plan was completed in September” 2007.

The only reasonable conclusion we at the CPP can draw from these fragmentary and contradictory statements is that the NPP government does not care about the youth of Ghana beyond exploiting them for electoral purposes.

The failure of the National Youth Employment Programme as well as the increase in criminal activities and other social vices among the youth can be directly traced to the continued absence of a national youth policy to inform various programmes ostensibly meant to help the youth. We call on the government to do better by placing the youth at the centre of national development in our common interest.

Table 1. Donors have been generous to the NPP since 2000...but with little impact on the welfare of Ghanaians

Besides inadequate jobs and the neglect of youth policy, it appears that human development in Ghana has also not kept pace with the high economic growth experienced under the NPP. According to the United Nation’s Human Development Report of 2007, Ghana’s Human Development Index declined under the NPP for the first time since 1975 – from 56.8 in 2000 to 55.3 in 2005. It seems that the benefits of the high growth have accrued to a small segment of the society – depriving the vast majority of Ghanaians of the opportunity to share in the national cake.

Figure 2. Ghana's Human Development Index has declined under the NPP...

Where is the good governance?

Good governance involves more than freedom of speech and the absence of political prisoners. It also means credible and transparent public institutions as well as the effective delivery of essential social services, such as water and public safety. In this regard, we believe that the NPP has woefully failed Ghanaians over the nearly eight years that it has been in power.

The casual manner in which the president dealt with corruption in his state of the nation address gives a great deal of cause for concern, especially since the President made “zero tolerance for corruption” his battle cry at his inauguration in 2001. While the president was quick to point to the public hearings of Parliament’s Public Accounts Committee (PAC) as evidence of his fight against corruption, it is important to note that this initiative by the Legislature was financed by donors and is different from those we expect from the Executive. Hence, it would have been more appropriate for the president to tell the nation about the activities and record of the Office of Public Accountability, which he created, as well as the number of prosecutions and convictions his government had obtained in its fight against corruption. But the president once again disappointed us by his deafening silence on the matter.

In the event, he leaves office after eight years without having a clear legacy of his purported fight against corruption. We hope that in his remaining months in office, the President would find the opportunity to address this serious omission from his state of the nation address.

Another unfinished business is the failure of the NPP government to fully implement its decentralisation agenda, including a pledge to elect local officials to make them more accountable to the people they serve and thus bring development to the door-steps of Ghanaians. By failing to address this failure in his state of the nation address, the President and his government leave us with yet another bitter legacy of unfulfilled promises.

The president’s silence on the drug menace has received widespread public condemnation – and rightly so. We share in this condemnation, because the drug menace is not only soiling Ghana’s reputation abroad and corrupting all levels of the government bureaucracy, but it is also ravaging the lives of young men and women, who have now taken to using narcotics. Our mental hospitals, already under-resourced, are overflowing with these young victims of failed government policy and an uncaring government. We find it unconscionable that the president would overlook such a damaging social problem.

Last, but not least in importance, is the over-arching problem of public safety, which has deteriorated in recent years. Under the NPP, the crime rate has increased dramatically and violent crimes, such as armed robberies, have evolved from being occasional nuisance to serious threat to human life and property. The whole country, including members of Parliament, lives in fear, and seldom does a day go by without a story of armed robbers shooting it out with our ill-equipped police or killing innocent citizens. Entire communities are terrorised by these criminals, and yet the President remains silent about it.

We believe, as stated above, that it is not too late for the President to do something about this social canker. We want a clear strategy, backed by resources, for fighting this problem at all levels – from enforcement to the judiciary to penal reforms – for there can not be social progress when the general population lives in fear of criminals. The president owes it to Ghanaian to offer such a package in his last year in office.

Forward Ever! Backward Never!