“Every time I thought I was being rejected from something good, I was actually being re-directed to do something better.” ~ Dr. Steve Maraboli
In our desperation to break our silence,
We mistakenly imitated their eloquence.
But nowhere did their touted intelligence,
Manifested in their supposed competence.
Their minds could not even be equated to a passive soothsayer,
Yet they are the first to call you an active naysayer. [Author’s Poem]
The Finance Minister, Ken Ofori-Atta, on Wednesday, November 17, 2021 presented the Budget Statement and Economic Policy of the government for 2022 in Parliament in fulfillment of Article 179 of the 1992 Constitution of the Republic of Ghana. What made the most headline from the GHc100.50 billion budget was the electronic levy (slogan-ed as e-levy).
The e-levy if approved intends to tax 1.75% on the extra amount above GHc100.00 per day sent on any electronic or digitized platform. Many have explained it to be the equivalent of transport fare for sending money electronically. The motive behind this e-initiative by the taxmen who hitherto promised to move Ghana from taxation to production, is to widen the tax net and rope in the informal sector. This is not to mean that, the formal sector is exempted; it will be double taxed.
The economic policy proposal or principle debate on the 2022 budget thereafter the presentation, commenced in Parliament with diverse expressions of concerns in favor or disfavor towards its approval. On Wednesday, November 24, 2021, the Minister for Information, Hon. Kojo Oppong Nkrumah (KON) in his contribution to the debate, outlined five reasons for which you and I should support the budget.
His submissions were weightier for me because he was speaking in the House of Records (Parliament) not as a member but also as the piper who is paid by the government to sing its tunes.
The five tracks on KON’s “Sweet Words album” as premiered were:
Track 1 – Unemployment
According to KON, an Afrobarometer report conducted by Prof. Emmanuel Gyimah-Boadi’s Center for Democratic Development Ghana (CDD-Ghana) disclosed that, undoubtedly unemployment was one of the major concerns of the Ghanaian youth. Through the 2022 budget, the Nana Addo-Bawumia government intends to create 1 million jobs in the next three years (2022-2024) using GHc1 billion cedis from the GHc6.9 billion to be raised from the e-levy to fund its YouStart initiative. This translates to spending an average amount of GHc1,000.00 to create a job. So is it logical to conclude that, the Ghanaian youth is unemployed because s/he lacks a GHc1,000.00 start-up capital to create a sustainable job?
Is an impression also being signalled that, government is planning of spending GHc1 billion to create another NABCO-like scheme to (re)employed a million youth? What has been the documented success stories of NABCO which temporarily engaged 10% of this new target for 2022? If 1 million jobs is to be created over three years, why budget GHc1 billion in a single year’s budget? Why create a million jobs over three years when government rightly knows that, 6.6 million job seekers will be out there by 2024; who inherits this net legacy?
How does the government intends to sustainably support the private sector to expand and employ more when Ghana is projected to overall rank, 120/190 on the Ease of Doing Business table in 2022?
Track 2 – Infrastructure
Per KON, after forecasting and spending about GHc12 billion on infrastructure in the yet to end 2021, citizens still go on demonstration in demand for roads. In 2022, government intends spending GHc16 billion and I ask, if that will be the panacea to end or reduce demonstration for roads? If that is rightly so, then we have renewed reason to be very committed to our fight against corruption rather than the lip service. The Auditor General has pointed out that, GHc12 billion was sunk into financial irregularities in 2020 alone.
Does this GHc16 billion out of GHc100.50 billion budget estimation for capital expenditure include the GHc1.6 billion to be taken from proceeds from the e-levy? Will 2022 be tagged by government as the Year of Roads Reloaded?
Track 3 – Boosting Local Industries
How can local industries be supported when it takes GHc21 billion to salvage a financial sector with GHc9 billion challenge? The financial sector is the measure of the health of the economy so it is good to know, that sector has been “cleaned up”.
The reason for removing benchmark/discount values on some forty products is not only to achieve import substitution agenda but also to raise revenue through import duties. Buying made in Ghana products is no longer a decision of patriotism but prudence. When the cost of doing business is relatively low in Ghana, then it can compete with imported products in terms of prices and quality which will incentivise local patronage.
Import substitution is the surest way to go but should be done in response to our industrialization drive otherwise, demand will outweigh supply thereby causing shortages and price hikes in certain commodities which in the long run, adversely impact on inflation. When the budget is approved, I will be happy to see made in Ghana furniture replacing China’s in the Chamber of Parliament.
Track 4 – Debt Sustainability
With borrowing intentions on the Government’s Issuance Calendar, Ghana’s debt as at May 2021 stood at GHc332.4 billion which is about 76.66% of Gross Domestic Product. A credible budget which plans to reduce fiscal deficit, wasteful expenditure and debt should be welcoming but question is, if this 2022 budget is an example of such.
For KON, the exchange rate is what increases our debts levels and not necessarily fresh borrowings. If that is the truth in its entirety, is government not responsible for managing the exchange rate which when well-managed, will reduce our debts? Was the dollar not arrested by H.E. Vice President Dr. Bawumia and keys handed over to the then Inspector General of Police (IGP)?
Did IGP Dampare’s predecessor fail to hand over the keys to the dungeon of the dollar to him? What has become of the committee which was constituted to investigate the causes of our currency depreciation? Why has the exchange rate exposed the nakedness of the King of Competence especially at a time when we are made to believe that, the economic fundamentals are strong?
The more Ghana borrows, the wider our fiscal deficit all things being equal because borrowing is a way of financing deficit. Though, Ghana has passed a Fiscal Responsibility Act, 2018 (Act 982) not to exceed a deficit of 5% of Gross Domestic Product in any particular year, it recorded a deficit of 15% (including financial and energy sector cost) in 2020 on the back of COVID-19 excuses. Laws are meant to guide our actions so if one can put them on suspension, then are you not naturally lawless?
The 2022 budget intends to record a deficit of 7.90% from the 11% expected for 2021 then to, 6% and 5% for 2023 and 2024 respectively possibly on the assumption that, government will not decide on which challenge it can equate to a pandemic like COVID-19.
Track 5 – Revenue Mobilisation
In 2020, the central government intends to assist Metropolitan, Municipal and District Assemblies (MMDAs) to collect property rates in an efficient and equitable way. Concern about this proposal by government has been raised by the Chamber for Local Governance (ChaLoG) as not only being defeatist but also, a desperate attempt by the central government to deprive MMDAs of the collection of property rates taxes, which constitutes a significant source of Internally Generated Funds for the assemblies knowing the delays associated with release of the District Assemblies Common Funds.
A new tax introduction in the 2022 budget is the e-levy. Electronic transactions in the context of this levy includes frontline mobile money (momo) payments, bank transfers, merchant payments, and inward remittances. The levy will be charged at an applicable rate of 1.75%, which shall be borne by the sender, except for inward remittances which will be borne by the recipient. All transactions that add up to GHc100.00 or less per day and approximately GHc3,000.00 per month are exempted to protect the poor and ensure financial inclusion. Less than 2 million pay tax to cater for the needs of a population of 30 million Ghanaians and for which these proposals will significantly aim to grow domestic revenue mobilization by 44%.
In short, KON’s 15 minute tracks on the 2022 budget debate was that, government intends to be fiscal disciplined, allow you free passage at the toll booths in lieu of the high fuel cost, remove benchmark discounts on certain imported products, tax your electronic payments and assist your MMDAs to collect your property rates all in the name of fulfilling its promise of employment and infrastructure.
It was however, disappointing that on Friday, November 26, 2021, when both the majority and minority leaders have presented their stance on behalf of their members and finality has to be brought to the debate on the 2022 budget, KON likewise his other colleague Members of Parliament on the majority side, for reasons best known to them decided to stage a walkout. This act of theirs made me questioned if their prior arguments in favor of the budget were partisan and not nationalistic. KON who made those strong arguments for you and I to support the budget was nowhere to be found on the floor of Parliament when it mattered the most.
The 2022 budget has been rejected which means, the government through the Finance Minister has to present to Parliament, another budget for consideration. This time it is the expectation of many that, the Finance Ministry pays attention to the advice of the Danquah Institute for broader consultation and its own hint of reviewing the e-levy so as to present a usual caring and reasonable budget because the earlier rejected, lacked education from communicators, was overly caring and reasonable which is unusual of the government.
Rejection does not mean one is weaker but an opportunity to come back better and stronger. Until otherwise, the 2022 budget has neither redeemed trust nor reaffirmed mistrust, however, the 1.75% billion e-levy, 15% increment in government services, closure of toll booths, GHc1 billion YouStart, GHc3 billion allocation to Office of Government Machinery, e-suffering or e-hope and all other goodies and/or baddies in the 2022 budget have been rejected.
Whether the resurrection of the “killed” 2022 budget after that prayerless night, returns to Parliament as the same “sinner” or a “repented” one, will be the question for the future to answer.
My Common Sense Opinion
Long Live The Resurrected 2022 Budget
Long Live The Taxpayer
Long Live Ghana.
Common Sense Opinion 