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Opinions of Saturday, 4 September 2010

Columnist: Otchere-Darko, Gabby Asare

Spilling Our Oil Revenue Over NHIS Seas

Gabby Asare Otchere-Darko

85 million barrels of oil is supplied everyday across the globe. Ghana hopes to add an additional 120,000 barrels a day to this number - pretty modest by any stretch of expectation. For the next 10 years, revenue accruing to the state from oil production may not go beyond $5 billion. We, therefore, need to be very, very wise in how we use the oil revenue in a way that it will open other potential areas of wealth for us rather than using it to cure all our social ills. The key is identifying a few winnable growth pillars and supporting them with resources.

As I write, after a whole year’s national road show and countless verbal assurances from the President that Govt will use oil revenues responsibly there is very little detailed indication of that. Responsible usage should not be viewed only through the cloudy vortex of transparency but by which specific programmes or projects those revenues will be spent on. Our revenues can be transparently wasted.

We should be cautious in seeing in the oil our entire panacea. $5 billion (or even twice that amount as oil revenue for the next decade) will be less than half of our annual GDP for the period. Some put Ghana’s annual basic infrastructural funding at $2 billion. Can the oil revenue alone even take care of this? No!

A look at the long list of priority spending sectors outlined in the oil revenue management bill is likely to feed the fear that the oil may come and go without a legacy of impact of significance on our development. We are likely to follow the usual paradigm at spreading limited cash thin across the vast poverty landscape like water on a desert, with its predictable evaporationalist consequences. Why can't we do as the Norwegians do - treat the oil revenue separately from our annual budget - but rather than investing the bulk of it in sovereign wealth funds abroad, identify pillars of growth and use them to construct and support the brighter Ghana that we know we can have in 20-30 years time?

I was moved to put down these thoughts when I read in the Graphic (online) that “The government is considering the option of using part of the country’s oil revenue for the intended one-time premium payment of the National Health Insurance Scheme (NHIS), the Vice-President, John Dramani Mahama has announced."

This would be absolutely wasteful! Dare I say irresponsible! The projected spending on healthcare this year is Ghc980.3 million, below the OECD average of 8.5% of GDP. This is bound to increase as access goes up. Rapid advances in medical technologies, population ageing and rising public expectations will necessarily increase our health spending over the years. As the scheme becomes more and more accessible to a greater majority of Ghanaians the healthcare budget will rise and the subsidy from oil will also presumably rise.

As I write, my younger sister, an anaesthesiologist in America, and my host for now, asked what I was writing. When I told her, so sharp was her response. "That would be wasteful! It is very difficult to monitor waste in healthcare. You can't challenge what the physician prescribes. The best way is to spread the cost of healthcare funding. It is too much of a bottomless pit to plunge government revenue into without any escape ropes," she remarked.

Because the public purse funds the bulk of health spending, countries across the world are under constant and increasing pressure to reconcile economic and health concerns. The NHIS levy and the annual premium of Ghc20 was Ghana’s response to this. Why do we want to put needless burden on our already over-burdened development struggles?

My view is that we should treat health spending as if Ghana is not an oil-rich country and would never be. We should spare our oil revenues from the dearth of most of our social spending areas unless where clear benefits to human capital enhancement can be ascertained. For instance, it would be responsible to earmark a percentage of the revenue on science and technology education, research & development. But, please let the NHIS take care of itself. Don't subsidise it!

Govt should come out and tell us how much of an extra budgetary burden will the removal of the annual NHIS premium payment be and how much of the oil revenue it anticipates spending to fill this gap. When the NDC promised this in their manifesto in 2008 there were many of us who criticised it as not sustainable. The NDC said it could be done but nowhere in those discussions did they ever give a hint that they would be looking at oil as a source of funding.

This concept of getting government to pay for everything is hopelessly against our quest for development. It has never worked anywhere constructively. The Scandinavian countries sponsor their egalitarian system through a responsible combination of a buoyant industrial and service sectors and a society which is taxed from the cradle to the grave. Their citizens pay the taxes that are used to keep the pillars of egalitarity in place.

Getting people to pay to get the service instills greater sense of responsible citizenship. Ghanaians have gotten used to this annual NHIS premium so why take it away and take money that could be spent elsewhere to spend on it? It is not the way to build a better Ghana.

What happened to the whole concept of investing money in areas that will empower people to take personal and responsible decisions for themselves? This populist flirtation with spent socialism would ruin us! We all have to pay for healthcare and raise enough money to support those who can’t. Decoupling the system so that every under 18 can get access to free healthcare, as was being contemplated by the NPP, would even make much more egalitarian sense than this bizarre stubbornness to by all means implement a one-time premium.

Already NHIS has placed immense pressure on our health resources and facilities as the number of people accessing healthcare now has risen dramatically. Ghana is certainly nowhere near reaching the optimum skill mix in the delivery of healthcare. Greater access means more nurses, more doctors, more medicine, and more facilities. How do we anticipate funding this if we are going the way of turning off one useful source of funding?

No sector accounts for more non-traceable waste as healthcare. To consider using oil revenue for this area would lead to a spillage of our oil revenue in a manner that we would all wake up in three decades time and ask: where did all the money go?

The author is the Executive Director of the Danquah Institute, a centre-right policy think tank. gabby@danquahinstitute.org

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