IMANI Brief: Still, Prudent Spending Key To Meeting Ghana’s 2017 Budget Goals

This brief does not include analysis of key government's manifesto promises. IMANI is conducting separate reviews for the promises.

Fiscal data from 2013 to 2016 shows that Ghana has been missing its revenue targets by about 7 percent per annum.^[1]The incumbent government stipulated in its maiden budget ways to reverse this trend.

However, in the first half of 2017, revenue mobilisation has been approximately 15 percent below target[2], a strong indication that 2017 targets may also be missed. Thus, whatever revenue is mobilised must be used prudently to drive development.

This brief analyzes Ghana’s 2017 Budget in light of the missed revenue targets in the first half of 2017. This ‘Value for Money’ (VfM) analysis also suggests ways to efficiently use the available scarce resources across the following Ministries, Departments and Agencies: 1) The Ministry of Education 2) The Ministry of Chieftaincy and Religious Affairs 3) The Ministry of Tourism, Arts, and Culture; and 4) The Ghana Audit Services.

Ministry of Education (Teacher Trainee Allowance)

The 2017 Budget placed teachers at the heart of quality education delivery. To motivate and encourage people to train as teachers, the budget announced the reinstitution of Teacher Trainee allowance: “... to make Colleges of Education freely accessible to all eligible students and train teachers to drive quality education provision, Government will fully restore the payment of teacher trainee allowances, effective September 2017 ...”. A provision of GHS 103 million (USD 23.5 million) has been made for the payment of allowances to all 43,570 trainees in the 43 public Colleges of Education[3] (COE).

This policy was introduced in the 1960s as part of Dr. Kwame Nkrumah’s agenda to attract more people into the teaching profession. It was repealed in the early 1970s but had to be reinstated in the 1980s due to mass exodus of Ghanaian teachers to Nigeria. In 2014, the erstwhile NDC government abolished and replaced it with a student loan and feeding grant policy. Despite the implementation challenges in the form of delays in feeding grant payment and the resistance from the student front, student enrolment in the Colleges of Education increased from 33,526 in 2013/14 to 41,984 in 2015/16 (25 percent)[4].

Outside the political twist of whether or not to maintain the teacher trainee allowance, quality education delivery in Ghana is still riddled with a lot of challenges. There is a teacher deficit gap of 45,000 that needs to be met in order to achieve universal basic education. At the same time, teacher attrition rate is approximately 7,000 per year^[5]. Other pressing challenges include poor and inadequate infrastructure and poor working conditions especially in the rural areas. It is worth noting that out of the GHS 166 million allocated to the COEs; capital expenditure (CAPEX) which is only 5.4% is also funded by Internally Generated Funds (IGFs). The teaching profession has generally become unattractive as about 75 percent of teachers will not recommend the profession to others due to low levels of job satisfaction and poor working condition, which is some of the major reasons for high teacher attrition. The re-introduction of the teacher training allowance can potentially compound the challenges as there could be a re-emergence of the quota system. The GHS 103 million allocated means an allowance of GHS 198 per month per student compared to the GHS 450 per month enjoyed previously.

Given that enrolment increased by 25 percent^[6]in 2015/16 academic year even after removing the teacher trainee allowance, it will be prudent for the government to explore the reasons underpinning the increase. Resources spent on the teacher trainee allowance policy can be channeled to more critical and sustainable use such as improving working conditions of teachers especially in the rural areas. Improving working conditions on its own can attract more talented and brilliant students to the profession and significantly reduce the teacher attrition. This can significantly reduce the 45,000 deficit.

Ministry of Chieftaincy and Religious Affairs

The Ministry for Chieftaincy and Religious Affairs is responsible for harnessing, developing and maximising the utilisation of chieftaincy and traditional assets and values to serve as a basis for wealth creation and socio-cultural empowerment.

Although it appears to be the Ministry with the lowest budget allocation annually, the Ministry’s budget allocation increased significantly from GHS19.5 million and GHS20 million in 2015 and 2016 respectively to GHS 34.3 million in 2017. Out of the GHS 34.3 million, about 85 percent, which is GHS 29.3 million has been allocated to compensation of employees.^[7]

On the face value, this figure appears to be higher for 725 staff especially when compared to other ministries such the Ministry of Local Government and Rural Development which with its 1,366 staff was allocated GHS 18 million as compensation. Further probing revealed that the government has increased the monthly allowance of paramount chiefs and queen mothers by 100 percent. Paramount chiefs and queen mother would now receive GHS 1000.00 and GHS 800.00 respectively as against GHS500 and GHS350 respectively[8]. The government has also increased by 100 percent the sitting allowances paid to paramount chiefs and queen mothers[9].

The main concern is why the government would increase the budgetary allocation of this Ministry. What has been the impact of the Ministry on the overall economy and development of Ghana to warrant such a huge increment? Is it for political gains or borne out of genuine concern for Ghanaians?

As part of their activities for 2017, the Ministry intends to sensitise Chiefs on their roles in land acquisition and the importance of community land use plans. Focus on enhancing the capacity of Traditional Authorities in advocacy, peace building, and dispute resolution and also educate the general public on the positive roles of the chieftaincy institution.

The Ministry came under serious attack and scrutiny when it announced its intention to air lift some Christians to Israel by way of pilgrimage, though no amount was allocated in the budget for such an activity.^[10]Despite the Ministry’s decision to play the role of a facilitator, many Ghanaians have chastised them for even contemplating such an initiative.

The Ministry of Tourism, Arts and Culture already has some component in their budget that seeks to promote cultural activities. Does Ghana really need two, separate ministries to promote culture?

Ministry of Tourism, Arts and Culture
According to the World Travel and Tourism Council (WTTC), the sector directly accounted for around 3 percent of GDP in 2016. In addition, the industry contributed both directly and indirectly to the employment of 5.6 percent of the workforce^[11]. The Council expects Ghana’s tourism industry to expand by 5.6 percent in 2017 and maintain an annual rate of growth rate of 5.1 percent through to 2027. Further, income generated from tourism is expected to reach USD 439.0 million in 2017, and expected to increase in subsequent years until it reaches USD 1.3 billion in the terminal year of Phase 3 (2027).

The Ministry of Tourism, Arts and Culture’s budgetary allocation increased from GHS 38.9m in 2016 to GHS 43.9m in 2017 (an increase of approximately 12.9 percent). These increases are mostly due to increases in Compensation of Employees (CoE), which saw an increase from GHS 26.6 million in 2016 to an allocation of GHS 28.3 million in 2017 (6.32 percent increase) and increases in goods and services from GHS 8 million to GHS 12.7 million (58.4 percent increase).

However, the allocation to capital expenditure (CAPEX) decreased significantly (74.42%) from GHS 4.3 million in 2016, to GHS 1.10 million in 2017. The reduction in capital expenditure is concerning, because the dire state of most tourist sites in the country demands some huge investments to promote the tourism industry. Basic necessities such as proper sanitation, signage, good roads, restaurants, etc. seem non-existence at most tourist sites. While the budget has stated the need to leverage private partnerships to develop the tourism sector, and potentially in tourism infrastructure, the public purse will still have to make significant contributions. Consequently, CAPEX to an extent is required to accomplish this, and as such, its allocation should not have been greatly diminished. A key strength of Ghana’s tourism is the overall diversity of resources, which include UNESCO World Heritage Sites (castles and forts), the Asante traditional buildings, which are all of cultural significance. CAPEX, together with private partnerships, can play important roles in maintaining the quality of resources, which, on the whole, is in very poor state.

The summary of expenditure by sub-programme, economic item and funding shows that Culture, Creative Arts and Heritage Management receives a total of GHS 28.1 million, followed by Management and Administration at GHS 5.5 million, Tourism Product Development at GHS 5.2 million, Tourism Quality Assurance at GHS 4.6 million, and Tourism Research and Marketing at approximately GHS 500,000.^[12]Upon a deeper look into the breakdown of the Culture, Creative Arts and Heritage Management, a significant portion of this allocation is put into Cultural Development (GHS 14.2 million). While the budget mentions that the cultural infrastructure needs to be developed nationwide, the development of culture is set to underpin the advancement of the tourism industry. The budget allocations highlight the fact that more is spent on culture, instead of activities directly related to tourism.

Tourism activities, in particular product development, and research and marketing, should be given more funding priority or at least an equal funding priority. However, the budget highlights the fact that research and marketing activities are limited to attending and participating in international conferences, fairs and exhibitions, and researching international tourism trends. To transform the tourism sector in Ghana and put her on the map as a must-see destination for potential visitors, a more intensive marketing strategy is required, with goals to: 1) raise awareness about Ghana globally as a major touristic and cultural destination, and 2) diversify tourism in Ghana, with the necessary resources that offer value for money, which different kinds of travelers (those travelling for business, leisure, or volunteering purposes) may require. The marketing budget should be increased to implement branding and marketing strategies.

The Ghanaian government must consider tourism as a potentially viable outlet, which ensures the diversification of the economy, and so adequate funding must be made available. While the government should work with the private sector to invest in tourism development and infrastructure, it should also not neglect its own investment and development role in the industry, particularly with the potential it has to drive economic growth.

Ghana Audit Service
The Ghana Audit Services is tasked to ensure that activities conducted by public institutions are undertaken with due regard to economy, efficiency and effectiveness. On the premise of this mandate, significant amounts of the country’s scarce resources are made available for its operations. Between 2013 and 2017 an average of GHS 116 million^[13] per annum was allocated to the Ghana Audit Service. In 2017, the government allocated GHS 186 million to it, which is about 33 percent higher than the 2016 allocation. Clearly, their role is an important one. In line with their duties, the Ghana Audit service has over the years been able to uncover a lot of inefficiencies in the management of public resources. In the Ministries, Departments and Agencies (MDAs) alone, the financial cost of weakness and irregularities in 2015 amounted to about GHS 505 million (representing about 2 percent of total revenue).^[14]The table below shows the financial costs of weaknesses and irregularities from 2011 to 2015.

Table 1: Financial Cost of Systemic Weaknesses in Ministries, Departments and Agencies in Ghana (2011 – 2015)

Years
Financial Cost of System Weaknesses
[In Million Ghana Cedis]
2011
119.50
2012
395.70
2013
477.70
2014
252.80
2015
505.20
Source: Auditor-General Report on Ministries, Departments and Agencies

As can be seen from the table, high losses have accrued to the country over the years. Even more worrying is the fact that the amount of losses is rising as the years go by. It makes us question whether actions taken after these irregularities are found are not punitive enough to deter others from robbing the state. The Auditor-General’s statement in his transmittal letter for the 2013 audit says it all. It states that the ‘report on MDAs for 2013 indicates continued infractions and financial indiscipline on the part of MDAs in acknowledging and observing legislative supremacy. Several irregularities have been highlighted in the report. The irregularities show the lack of probity and propriety or the extent of non-compliance with or deviation from and disregard for the tenets of laws, rules and regulations, which are designed to secure the conduct of government financial and preserve or improve the nation’s wealth and resources’.^[15]

When the Auditor-General finishes with the audit for the year, a report is submitted to the public accounts committee in parliament for review. After parliamentary review, an audit committee is set up within each MDA to implement the recommendations from the audit. So clearly, the structures are there to ensure that lessons are learnt; however, the results are not being achieved. Unarguably, the role of audit in ensuring efficient use of scarce resources is an important one. This role however loses its significance when audit reports are two to three years lagging. Thus results and recommendations from previous audits tend to have little or no effect on efficiency. It becomes a waste of very limited resources especially in a country where basic needs such as quality health care remain a major problem.

Conclusion
Ghana has had a long history of budget deficits; between 2013 and 2016, budget deficits averaged GHS 10 billion per annum. This has led to very high debt levels, which has compounded the challenges to development. Access to basic amenities like education, health and sanitation still remain a major problem for both urban and rural dwellers. Yet expenditure patterns do not demonstrate a country committed to solving pressing issues of society and deriving the most of its scarce resources. There simply is no justification for increasing the Ministry of Tourism, Arts and Culture’s (an economically viable sector) budget by only GHS 5 million (which represents an increment of 12.9 percent) while the Ministry of Chieftaincy and Religious Affairs receives an increment of about GHS 14 million (representing a 58.9 percent increase) in the 2017 budget. The government needs to properly align its priorities to reflect the needs of society and work to derive the most from the country’s limited resources.

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[1]. 2017 Government of Ghana Mid-Year Budget Review, http://www.mofep.gov.gh/sites/default/files/budget/Highlights%20Of%20The%20Mid-Year%20Fiscal%20Policy%20Review%20of%20the%202017%20Budget%20Statement%20and%20Economic%20Policy.pdf

[2]. Calculated from Ghana’s Provisional Fiscal Date for January – April 2017; http://www.mofep.gov.gh/?q=fiscal-data

[3]. 2017 Government of Ghana Budget Statement, p. 106.

[4]. Calculated from Education Sector Performance Reports(2014 – 2016)

[5]. 2017 Government of Ghana Budget Statement and Economic Policy

[6]. Calculated from Education Sector Performance Report from 2014 – 2016.

[7]. Ministry of Chieftaincy and Religious Affairs Medium Term Expenditure Framework (2017-2019).

[8]. Citifmonline.com (May 24, 2017) Gov’t increases allowances for chiefs by 100%. Available at: http://citifmonline.com/2017/05/24/govt-increases-allowances-for-chiefs-by-100/

[9]. Ibid
[10]. Citifmonline.com (June 16, 2017), Gov’t to begin overseeing Christian pilgrimages. Available at: http://citifmonline.com/2017/06/16/govt-to-begin-overseeing-christian-pilgrimages/

[11]. Oxford Business Group (2017), ‘Ghana lays foundations for tourism growth’, Oxford Business Group, 28 April. Available from: http://www.oxfordbusinessgroup.com/news/ghana-lays-foundations-tourism-growth

[12]. Ministry of Finance (2017), 1.5. Appropriation Bill – Summary of Expenditure by Sub-Programme, Economic Item and Funding, Ministry of Tourism, Arts and Culture. Available from: http://www.mofep.gov.gh/sites/default/files/budget/2017/MDAs/02/2017-Budget-by-Sub-Prog_016_MTAC.pdf

[13]. Average is calculated from budgetary allocations from 2013 to 2017.

[14]. Annual Report of the Auditor-General on the Public Accounts of Ghana – Ministries, Departments and Other Agencies (MDAs) for the year ended 31 December 2015, p.5.

[15]. Annual Report of the Auditor-General on the Public Accounts of Ghana – Ministries, Departments and Other Agencies (MDAs) for the year ended 31 December 2013, page iii.

Respectfully yours,
Franklin Cudjoe
Founding President & CEO, IMANI
www.imaniafrica.org
Bio: http://www.franklincudjoe.org/home/
Twitter: @lordcudjoe