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Opinions of Sunday, 16 February 2014

Columnist: Ata, Kofi

Is President Mahama already eating the bones?

In his State of the Nation address to Parliament on Thursday February 21, 2013, President Mahama declared to Ghanaians and I quote, “Mr. Speaker, the rate of growth of the wage bill has reached a point where we are squeezing out critical investments in the budgetary allocation of goods and services and capital expenditures. Unless we tackle this issue decisively, we may soon reach a point where not much will be left to provide the much-needed infrastructure like roads, bridges, ports, schools, clinics and water to develop our economy.

This issue is even more significant because as we struggle to settle the wage bill, thousands of public workers continue to make demands for wage increases and threaten work stoppage if we do not meet these demands. Mr. Speaker, the meat is now down to the bones, and it is time for serious rethinking about the level of wages in relation to our national competitiveness and the related productivity issues”.

The President also indicated that the public sector wage bill had increased in three years from GHC2.5 billion to about GHC 8 billion in 2013 due to the Single Spine Salary Structure (SSSS) and consuming 60.9% of the national revenue. He added that this was double the globally accepted prudent level of between 30 to 35% (as contained in page nine of his speech).

Ghanaians expected that as President Mahama rightly stated above, he and his government would have taken decisive steps to reduce the public sector wage bill. Instead, the President sits over 678 presidential staff in February 2014, exactly a year after his warning. How on earth can the President claim that he should not be blamed for the current free fall of the cedi?

Mr. President, I reject your comparison of the cedi free fall with what has happened in Argentina, Turkey, South Africa and Russia because Ghana’s situation are self-inflicted from your government’s poor management of the economy, incompetency, corruption and indiscipline.

If you disagree with me here are some examples. The first one is the failure to reduce the public sector wage bill as you opined in your above address. As President, your citizens expect you to set a good example by having a lean presidential wage bill and not 678 workers in your books.

How much are they costing the state? Except some moratorium on recruitment, which I doubt if it’s being enforced, not much, if any, has been done to root out ghost workers within the public sector. Mr. President your failure to reduce the public sector wage bill and by keeping a large army of presidential staff, you have already started eating the bones.

In today’s IT environment, there is no need for that many administrative staff. Gone are the days when offices had a typing pool full of secretarial staff (women) sitting behind typing machines. These days most workers have a pc or laptop to do their own word processing. Only the very top officials have secretaries to word process and produce documents for them.

Mr. President, one of the reasons why you have huge army of staff is your ‘modus operandi’. You are reinventing the wheel instead of using the existing structures. For example, you have appointed a Presidential Task Force on tax collection at the ports headed by a presidential staff (Dr. Appak). If the Ghana Revenue Authority (GRA) is not effective and as a result there are too many leakages into private pockets through corruption, then sack the corrupt ones.

Get rid of the head of the GRA and make it work effectively or appoint Dr. Appak the head of GRA. You do not create a task force and pay them for work that GRA staff should be doing. That is double payment of wages for the same work. What is the value added and how does this reduce the public sector wage bill?

You also announced last year that there would be Public Complaint Centres (PCCs) for people to report corruption. This is another duplication of roles. If CHRAJ, EOCO and the police are unable to deal with corruption, what makes you believe that creating PCCs is the solution?

Instead of spending resources on new institutions or structures, invest the resources into making CHRAJ, EOCO and the police more effective in fighting corruption. The proposed PCCs will be another white elephant, more jobs for the boys, an addition to the already huge public wage bill and more pressure on the cedi.

The free fall of the cedi is simply a matter of Economics. That is, the law of demand and supply. When your government pumps over GHC 600 million a month into the economy through public sector wages without the corresponding increased productivity, coupled with policies that encourage imports, the obvious outcome is that there is large supply of cedi chasing less dollars for imports and consequently the value of the cedi against the dollar and other currencies falls.

Mr. President, the wanton dissipation of the public purse through ‘create, loot and share’ judgement debts payments such as Woyome, Isofoton and others; the corruption through GYEEDA, SADA, SUBA and many others meant that colossal sums of money were pumped into the non productive sectors of the economy.

All these led to increased supply of cedi in circulation without corresponding goods and services leading to higher rate of inflation. I am sure some of the money from these looting ended up in individual dollar accounts either in Ghana or abroad, which also added to the pressure on the cedi.

Mr. President, you presided over Chinese loan agreements on very bad terms that are inimical to Ghana’s economy in the short/medium terms. For example, your government agreed to pay 1% in interest on the total loan of £3 billion instead of only on the portion that is actually disbursed to and accessed by Ghana.

Moreover, having agreed on such detrimental terms, the Chinese reneged on their part of the deal and are delaying releasing the loan to Ghana as expected. As a result, Ghana is spending more of her dollars to pay interest to China whilst less is received from the loan. This again increases demand for dollars by the state and puts pressure on the cedi.

Again, your government also allowed Chinese construction companies to bring in even Chinese labourers under the same loan agreement to construct projects in Ghana. By so doing, the Chinese companies will pay their Chinese labourers in dollars, most of which will be repatriated back to China. Their personal needs such food and other essentials will be imported from China.

This has not only denied the unemployed in Ghana jobs and regular income but the economy will also suffer relatively lower economic activity. This also leads to less dollars in the economy because the Chinese bring the dollars in one hand and take it back with the other through this unfair relationship.

Your Excellency, when your government allows selfish importers to take Ghanaian textile designs to China to manufacture wax prints cheaply and import them into Ghana, they deny Ghanaian textile manufacturers from production, rob them of their patent rights and drive them into bankruptcy because they cannot compete with the cheap imports from China.

This is particularly worrying when the traders come to see you and you order that the policy of seizing the imported textiles should stop because of the Christmas holidays. Mr. President, you are not only directly contributing to the pressures on the cedi but also sabotaging Ghana’s economy by putting the local textile industry out of business and killing jobs.

Mr. President, what stops your government from reviewing the arrangements that allow foreign companies, especially in the extractive industries to keep all or most of their profits abroad and denying Ghana access to huge sums of foreign exchange? There are indications that some of these same companies also inflate the prices of their imports. That is not only fraud but it puts pressure on the cedi, contributing to its free fall.

Again, your government is supervising a system that allows foreign companies in the extractive industry five year tax free concessions. After five years of making profits the companies file for bankruptcy and start a new company in order to benefit from another five year tax free. This is abuse and an insult to the people of Ghana by these greedy and criminal companies.

In their countries of origin such abuse would be criminal and in fact, the directors of the company that filed for insolvency would be barred from holding directorship in any company for at least, five years. This also denies Ghana revenue by way of unpaid taxes as well as adds pressure on the cedi by both non payment of taxes and repatriation of all profits in dollars.

What about the rot in the GRA where more of the taxes collected or should have been collected end up in private pockets, including the contract between GRA and SUBA?

Mr. President, is it not your government that has become the ostrich and pretended that it was unaware of dollarization of the economy? Is your government, including Bank of Ghana not aware of hotels in Ghana charging dollars, schools charging fees in dollars, landlords charging rents in dollars as well as other goods and services priced in dollars? Where have you been and what did your government do about these until now?

I can go on and on with many examples of the mismanagement, incompetency, corruption, impunity and indiscipline in Ghana under your watch that have contributed directly to the free fall of the cedi. Mr. President, your ministers, advisers and appointees should stop blaming the housing market, dwarfs, spiritual curse and the global economic effects for what is happening to the cedi. You may say that the examples I have outlined did not only appear when you became president but have been there since the era of Adam. That is not a good excuse because you are now the President and you should take responsibility for the current state of the poor economic management.

Your Excellency, cut down your presidential staff, ministers and advisers and rely on the technocrats within the civil service. Does the Ministry of Information really require two deputy ministers who do nothing except use foul language and contradict each other? With one substantive minister and two deputies, the three could not even tell the nation how many laptops were purchased with the Media Development Fund. Each gave different numbers. They are too many things contributing to the huge public sector wage bill, a burden and a drain on the state. You, your numerous ministers, advisers, and appointees are already eating the bones and you must act to save the bones for development for today’s and future generations.

I hope when you go before Parliament to give your second State of the Nation address, you tell the nation what decisive steps you and your government took in the past year to reduce the public sector wage bill and their impact in order to at least, save the bones for development. We will be listening.

Kofi Ata, Cambridge, UK