1. Good morning and thank you for welcoming me here today. It's a privilege to address you here at the Youth school.
2. I'm delighted to see so many young people here today. I recognise that your talents, imagination, and energy matter more for our Nation's success than any Government policy, which is why we need to build an economy that provides you with ample opportunity to succeed.
3. Yesterday, I delivered a short intervention in the Great Hall on the State of the Economy. I emphasised that "all Government has done since the onset of the COVID-19 pandemic is not just to help people but also to give people the means to help themselves with dignity".
4. This demanded pragmatism, fiscal responsibility, and an unshakeable belief in the innate potential of our people. It forms the reason why during our 1st term in office, this Government invested:
a. GHS 40.4 billion on education
b. GHS 14.2 billion on healthcare
c. GHS 14.9 billion on enhancing internal security and
d. GHS 18 billion on 19 flagship programmes
5. The benefits these interventions bring are felt everywhere. As of last year, we had:
a. 1.26 million people benefitting from Free SHS
b. 3.45 million pupils covered by the school feeding programme
c. 100,000 young persons employed under NABCO and
d. 344,023 households being given a lifeline under the LEAP programme
6. These initiatives will continue to be funded because they give our people a sense of worth and self-confidence. So, we at the Ministry of Finance will do whatever we can to continue providing for the "absolute basics" while also creating new opportunities. It's not only a policy imperative but also a moral right.
7. Now, we are moving forward. Never in our history have we had to manage an economy amid a global health pandemic. Therefore, today's test is to restore our economy to our pre-growth trajectory (average growth of 7%) while providing Jobs for our people.
An intentional focus on Job creation
8. Job creation is at the heart of what I want to talk about today. That's because, at some stage, each of us will either apply for jobs, be given jobs or create our jobs.
9. In the end, what matters is the security and sense of pride that comes with being a part of something bigger than you. That's why it's so crushing to be stuck at home with no real sense of being able to "do something".
10. Based on available data from the Ghana Statistical Service, 11.5 million people are considered economically active. Of this number, 1.5 million people are unemployed.
11. Therefore, the Unemployment rate among the population 15 years and older was estimated as 13.4% and is higher for females (15.5%) than males (11.6%). Among the population 15-35 years, the unemployment rate is 19.7% and is even much higher for young adults 15-24 years (32.8%).
12. Picture this. In 2020, there were slightly over 547,000 students enrolled in tertiary education. We can assume 100,000 of this cohort completed their education last year. Based on the unemployment stats for young adults (15-24), we can estimate that of these 100,000 young people, about 32,000 are at home unemployed.
13. We cannot just "accept" this.
14. So, the Government reacted with a plan that has a clear goal: "to reap the benefits of our population dividend by building an Entrepreneurial State".
The building blocks of an entrepreneurial state
15. COVID taught us that we must re-orient our approach to job creation, mainly because the future of work has changed dramatically.
16. To give our young people a better chance, we will prioritise skills development and enterprise promotion.
17. This focus on skills and enterprise is an informed one. During the 2021 Mid-Year Budget speech, I highlighted that 50% of local employers report misalignment of or inadequacy of skills in the market.
18. Also, according to Mckinsey, at least 50% of new tertiary institution entrants enrol in programmes in sectors with no or little growth in the labour market.
19. The World Bank also reports that 80% of the population is self-employed in low-income countries, and in lower-middle-income countries, that proportion is about two-thirds.
20. Therein lies our solution to youth unemployment. Building a sustainable entrepreneurial state by:
a. Strengthening the links between education and job market stakeholders
b. Providing access to finance, skills, and markets for our young entrepreneurs
c. Resourcing state institutions to support the ambitions of those who want to pursue enterprise and
d. Growing the capacity of the private sector to create jobs
21. How will we do this? Through initiatives under the Ghana CARES "Obaatanpa" programme, particularly YouStart. The YouStart isn't just a political sound bite. It's one of the central missions of this Government.
22. Never in our Nation's history has there been a commitment of this size (approx. GHS 10 billion) and scale towards extending opportunity for the Youth.
Our chequered history with enterprise
23. I know that we are an enterprising people.
24. In the 1992 book "An Economic History of Ghana from the Earliest times", the author Francis Agbodeka, the first man to obtain a doctorate from the University of Ghana, identified that "before the Gold Coast became a British Colony in 1874, we had an indigenous enterprise culture with a thriving industrial spirit".
25. Similarly, Professor Albert Adu Boahen, in his 1987 book "African Perspectives on Colonialism", revealed that the Gold Coast was producing its building materials, soap, beads, iron tools and cloth for export to Europe and the Mediterranean World. We also had our own well-established manufacturing industries.
26. So, what happened? How did we transition from being "self-sufficient" in our pre-colonial days to predominantly importers by the end of the 20th century?
27. The answer is simple. We stopped believing in the power of the Ghanaian Entrepreneur.
28. First, the colonial administrative policies made it virtually impossible for Ghanaians to be involved in entrepreneurial activities. Then, once we attained independence, we "experimented" with African socialism, which demanded a more interventionist approach by the State and left our entrepreneurs behind.
29. The assumption in the early 1960s was the State could "capture the commanding heights of the Economy". In the end, our average GDP growth from 1960-1969 was 3.0%, compared to 4.6% in Sub Saharan Africa. In addition, capital was directed more towards supporting State-Owned Enterprises (SOEs) than building local businesses.
30. The Busia government was the first to realise "something had to be done". They passed the Ghanaian Business Promotion Act (Act 334 of 1970), which reserved specific economic activity fields for Ghanaians and introduced the Small Business Loan Scheme (SBLS) to serve as a source of funds for Ghanaians to promote enterprise growth among the population.
31. Back then, we weren't using "entrepreneur"; it was more "businessman". Indeed, during this period, we saw the rise of "businessmen" like John Maxwell Addo Sr in Okaishie, who set up JM Addo & Sons Limited. This pharmaceutical distribution company still exists to this day.
32. History tells us that within three years, progress on these pro-local business initiatives was halted as we went back and forth between military and civilian rule for most of the 70s and 80s.
33. By 1994, Professor Albert Adu Boahen described our entrepreneurial culture in an interview by saying, "we have businessmen being oppressed, high taxation, high-interest rates and few investments from abroad. How can we expect interest from overseas when investments are not secure, and businesses can be confiscated"?.
34. That is our history. Because of this, our "local hubs" in places like Nsawam have largely not fulfilled their potential, and we can only count a few individuals like Kwabena Darko (Darko Farms) and Dr Kwabena Adjei (Kasapreko) that have kept their businesses running for more than 30 years.
35. So today, we act. With a plan that gives our people the confidence to pursue their ambitions. Our approach to restoring the economy is to back hardworking people; create local businesses, and support existing ones.
36. We need to create a culture and mindset that leaves our young people unafraid to challenge themselves. I'm encouraged by places like Nigeria, where despite issues like unreliable electricity and the internet, the desire to use technology to solve problems brought a new culture of entrepreneurship among young people.
37. Digital payments in Nigeria have surged more than fivefold since 2014, hitting 105 trillion naira ($256 billion) by 2019. According to the Economist, companies based in Lagos like Flutterwave and Paga are attracting more than $100 million valuations. Nigerians own these businesses.
38. I know we can do the same here; all we need is to give people opportunity.
39. Will it come cheap? – definitely not.
40. In the 2022 budget Government outlined its intention to use proceeds from the E-levy to fund young business owners through the YouStart programme. Even with these intentions, you all saw what happened in Parliament last year.
41. We look forward to working with our Honourable colleagues to get the E-levy through Parliament so we can start to focus on implementing structures that ensure funds raised through the levy are directed to our young people.
42. It's not just about money when it comes to the Elevy, it's about ensuring everyone contributes towards making a difference in people's lives. With all the stress and harmful effects, unemployment has on families and, in some places communities, we have to contribute to ensuring people have opportunity.
43. In the run-up to the 2016 election, we were told there was no way we could put through Free SHS or 1D1F. We stuck to our guns, and we have successfully implemented these programmes over the past five years.
44. My point is this, as a government, regardless of the opposition we face, we will continue to invest in our people.
45. To those who want to enter the private sector, we will leverage the CARES programme to ensure you have the skills, training, network, and credit to support the transition from the "classroom to the workplace".
46. For those with business ideas, we will provide you with the requisite support and guidance through the YouStart to grow and expand your businesses.
47. Our population structure today and the future is an asset, which we must unlock and deploy. I say must because population structure and economic transformation is not inevitable. We have to turn this into a dividend, not a disaster. We need to be intentional and deliberate.
48. As a nation, it is imperative that we position ourselves to take advantage of the opportunities it offers while taking steps to address the challenges that are associated with it. Our youth are more than a demographic force—they are a force for progress. That is why empowering our young people is a major anchor of Government’s strategy in the coming years.
49. Under the YouStart Initiative, we seeking to ease the two most binding constraints for existing and aspiring young entrepreneurs; skills and access to credit. We are also address acute regulatory and tax burden, mentorship and business ethics. We will do this knowing that training per se does not create jobs; a supportive enterprise environment (with appropriate aftercare, credit and reliable markets) is essential. The programme will ensure that skills training will become much better aligned with the needs of sectors as drivers of future productivity growth and socio-economic transformation.
50. To this end, YouStart will provide our youth with the following:
i. Training: Skills Development, Entrepreneurial Support and Business Advisory service provision;
ii. Funding: Access to Competitive Credit and Starter Packs;
iii. Enterprise Promotion: Mentoring and Access to Markets including Portals to facilitate “digital linkages” between youth-led enterprises and other businesses and relevant Government agencies.
51. Specifically, YouStart will support youth-led enterprises with the following products:
i. Soft loans of up to GH¢50,000 to help start-ups (in particular by young graduates and school leavers) and small businesses to expand;
ii. Starter packs (Soft loans tied to equipment acquisition) of up to GH¢50,000 for individuals and GH¢100,000 for associations and groups;
iii. A standardised loan package of between GH¢100,000 to GH¢400,000 at concessional rates for SMEs from financial institutions;
52. To start with, we understand that enterprenuers need both digital and physical infrastructure to function effectively. However, compared to our peers, we have invested less in infrastructure. Between 1961-2020, Ghana's average Gross Fixed Capital Formation Ratio was 17%, compared to 25% in sub-Saharan Africa. It will cost the Government $10 billion to fix all bad roads in Ghana, roads alone!!.
53. Government is also working towards meeting the credit and financial needs of entreprenuers. By working with our international development partners and financial institutions, an unprecedented GH¢10 billion is being committed over the next three years to support entrepreneurship. Indeed, the foresight to restructure and revitalise the financial sector since 2018 is beginning to bear fruits. The question therefore is how does the Government find an estimated GH¢1 billion annually in the next three years to match this generous contributions from our partners?
54. To do this, we need to aggressively and quickly mobilise additional resources. Between 2017 and now our tax to GDP has hovered between 11%-13% compared to our peers who were between 16%-20%. Moreover, Compensation, Interest Payments & Statutory Funds constitute 146.5% of Tax Revenue in 2021; rising from 141.3% in 2016. This reflects the constraints on Government’s ability to extend needed financial support and undertake major infrastructural projects, without resorting to borrowing which tends to also crowd-out the private sector.
Anchoring the New Paradigm
55. Ladies and Gentlemen and my dear young people, that is why Government is proposing the E-Levy. The E-Levy is intrinsically linked to the YouStart Initiative. We consider the E-Levy is an essential tool to increase our Tax to GDP from around 13% to 16% and above. The E-Levy would not only ensure that we do not crowd-out the private sector by reducing borrowing, but would also ensure that we have the revenues to sustainably invest in entrepreneurship, youth employment, cyber security, digital and road infrastructure. The E-Levy also provides a means for all Ghanaians to help support their country and grow this economy as compliant citizens.
Why 1.75 percent for the E-Levy
56. The initial sentiments around the 1.75 percent E-Levy energised our stakeholder consultations. As I indicated in the presentation to Parliament on 17th November, 2021, the E-Levy is based on a market study and assessment. The exemption of transactions valued below the GH¢100 per day threshold is sensitive to the plight of the almost 40 percent vulnerable users of the service.
57. The 1.75 percent is informed by an assessment of prevailing fiscal constriants and the need to pursue transformative interventions such as the YouStart and infrastructure delivery. Any enforced reduction of this rate will mean a loss of planned revenue, which will result in either additional borrowing, more expenditure cuts and a higher deficit. Without a corresponding reduction in expenditures, this will seriously undermine our fiscal position. In the face of current agitations from public sector workers for increased compensation, any case for a downward review of the 1.75 percent needs to be seriously scrutinised and accompanied with corresponding expenditure rationalisation.
58. Whilst we believe that this a fair share to be paid, our ability to demonstrate the capacity to mobilise substantial domestic revenue through this progressive tax will signal our collective resolve and strength as a resilient nation.
59. Fortunately, and after extensive consultations, the Telcos have agreed to reduce their charges by 0.25% to reduce the overall net impact of the levy on subscribers. This complements the GH¢10 billion committment from the financial sector as well as the development partners which I previously alluded to.
60. It is all coming together!! Industry players and development partners have seen the times we live in and have committed to burden-share. It is now time for each of us to carry a part of this burden of harnessing the population dividend. This will enable us to transform our youth Bulge into a active and employed workforce.
61. Let me indicate that our success in entreprenuership will support us to leverage the AfCFTA and match the opportunities it presents. Africa in 2050 will have a $7-trillion combined GDP with $5.6 trillion in business opportunities by the year 2025. In addition, consumer spending growth in Africa is projected to rise to $2.1 trillion by 2025 and $2.5 trillion by 2030.
62. This is our opportunity to make the Ghanaian Youth the architects of those Made-in-Africa products that the market is about.
63. Ladies and Gentlemen and my dear young people, as a Government, we know that the secret to getting ahead is getting started. We have started the process to recreating our country, after the severe impact of the pandemic; and moving it beyond Aid as well as entrenching an export-orientation. The journey to reap the many rewards from our demographic dividend has started. We know the road may be bumpy. But we know we will get there. We know we can and we will.
64. There are endless opportunities, if we remain focussed. As President Akufo-Addo intimated, “What our forebears dreamed of, we will achieve! If we inherited dreams and visions from our founding fathers, we should leave legacies of achievements and realities to our children and their children”. Building an entrepreneurial Nation remains one of the dreams of our forebears which we must achieve for ourselves and next generation.
65. My dear young people, there is a musician call “six strings”- Ahoma Nsia! He has a song called “Just do it”. He has some interesting quotes in Ga that says “don’t let anyone fool you, just go ahead and do it”!!
66. We plan to anchor our post-COVID-19 recovery on our young people's renewed hope and dynamism.
67. The consequence of this will be the realisation of a WISER (Wealthy, Inclusive, Sustainable, Empowered, and Resilient) society, with our young people more confident about their place in the World.
68. It is within our grasp, and I look forward to working with you to make that vision a reality.
69. Thank you and God Bless.