Abandon all failed economic policies - TUC
The
Trade Union Congress (TUC) has raised issues with the management of the country’s economy and urged the government to initiate dialogue for home grown solutions.
Advertisement
At its bi-annual general council meeting on June 27 and 28, this year , in Tema, the labour union discussed economic policy management and its implications for workers.
In a statement issued at the end of the meeting, the TUC said it was important for the government to abandon all the failed economic policies that were based on inflation targeting and management, and to show greater transparency and prudence in the management of national resources.
That, it said, would rebuild confidence in the state and its agencies.
In addition, it urged the government to initiate dialogue on the management of the national economy in order to generate home grown ideas for the formulation and implementation of economic policies.
The first day of the meeting was devoted to policy analysis and discussion of the social, economic and political situation in Ghana with special focus on economic policy management and its implications for the working people of Ghana and their families.
After a thorough discussion of the economic management policies and the current economic situation in the country, the general council, which is the second highest decision-making body of the TUC, made a number of observations.
Progress of economy
The statement signed by its Secretary-General, Mr Kofi Asamoah, the TUC said a steady progress had been made in the last few years in terms of the growth of the national economy. Gross Domestic Product (GDP) had grown by an average of 8.7 per cent in the last five years. In nominal terms, GDP increased from GH¢30 billion to GH¢73 billion over the five-year period. This translated into an increase in GDP per capita from GH¢1,318 in 2008 to GH¢2,822 in 2012.
The statement said the agricultural sector, which employed a very large proportion of Ghanaians, had performed poorly in the last five years. The growth of the agricultural sector as of June, 2013 has declined. In 2011, when the country recorded the highest GDP growth of 15 per cent, on the back of oil production, the agricultural sector grew by 0.8 per cent.
It said in the last five years the government had implemented a number of important interventions in the agricultural sector, including buffer stock management; fertiliser subsidy; livestock and fisheries development; irrigation development and mechanisation systems; and youth in agriculture programme.
“In spite of these initiatives, the fortunes of the agriculture sector remain poor. The performance of the major sub-sectors has been poor and highly volatile.
For instance, the crops sub-sector grew by five per cent in 2010, but in 2011, growth of the sub-sector declined to 3.7 per cent (compared to overall GDP growth of 15 per cent) and declined further to one per cent in 2012.
The statement said the slow growth of the agriculture sector did not reflect the recent investments in the sector due largely to low productivity in the sector
Land acquisitions for commercial farming
The statement also expressed concern about the rising spate of land acquisitions by foreign nationals and governments for large scale commercial farming in the country. “This is the phenomenon called land grab in which foreign governments secures large parcels of land, particularly in Africa for commercial farming. The lands so acquired are used primarily for the production of food crops for export to their home countries”.
The practice, the council said, was seriously affecting agriculture, particularly smallholder farmers who, in the past have provided food for domestic consumption. “Further, the practice undermines our ability to leverage our abundant fertile lands for food production to serve both the domestic and exports markets. It is important that government intervenes by developing appropriate regulations to curb the practice to forestall a complete takeover of the country by foreigners,” it said.
Industrial growth
While the industrial sector growth has been impressive during the period, the statement said the council was concerned that industrial growth had been fueled largely by natural resources, particularly oil and mining, “but as noted earlier, both sectors (oil and mining) are dominated by foreign firms and are also highly capital-intensive with very limited potential for job creation”
The statement said manufacturing which had traditionally been the most dynamic sub sector with the greatest potential to create decent employment had not fared well in the last few years.
Manufacturing growth has been highly erratic over the period. “We attribute that to our over-dependence on imports combined with the unbridled external trade liberalisation that continue to negatively affect the growth of local manufacturing.
The impressive growth of sectors such as information and communications, finance and insurance, and real estate have made the services sector the largest sector in terms of contribution to GDP.
It said for real transformation that provided decent employment, economic policies must support manufacturing by the private sector, adding “that the private sector did not only need support but protection from dumping. Our trade policy is too liberal; it penalises domestic manufacturing and makes trading in imported products excessively lucrative. This must change”
Interest rate regime
The General Council also said there was the need for the interest rate regime to be changed so that local investors could access credit at affordable rates like their competitors. Council reiterated TUC’s call for government to intervene directly in the financial market to bring interest rates down to reasonable levels.
The TUC was of the view that the high interest rate regime prevailing in the country was fundamentally a policy choice informed by an extreme obsession with inflation-targeting.
The meeting also discussed at length the “Galamsey” menace and acknowledged the efforts of government and, in particular the task force in successfully flushing out the illegal miners.
Petroleum revenue
On petroleum revenues, the TUC expressed reservations about the way the revenues had been utilised so far. For example, in 2011, 70 per cent of Ghana’s benchmark revenue from oil was allocated to the national budget – the so-called Annual Budget Funding Amount (ABFA).
That represented GH¢261,539,430. The allocation was in line with section 21(5) of Act 815 – Petroleum Revenue Management Act (PRMA, 2011). Out of the amount, 87 per cent (or GH¢227,641,768) was allocated to roads and other infrastructure.
Roads infrastructure
In the road sector, 16 different roads were prioritised, but only one of them was completed at the end of 2012. In 2012, GH¢ 232,403,269 was committed to road infrastructure.
Capacity building
The council was also alarmed by the huge amounts of resources that were allocated to ‘so-called capacity building’.
“In 2011, GH¢750,000 was allocated to capacity building. In 2012, the share of capacity building increased 150 times to GH¢111,959,738. Yet, it remains unclear how this money was spent and whose capacity has been built.
“The council also took note of the allocation of GH¢65,000,000 to the office of Government Machinery for capital expenditure in 2012. The office of Government Machinery is essentially the Office of the President. And it is not clear which capital expenditures the office of the President directly undertakes,” it said.
The council, the statement said, was concerned that government and its agencies were not efficiently managing the oil resources for the benefit of Ghanaians, and that while allocating large sums of revenues to groups that had very little to do with the oil resources, the accountability institutions, including the Public Interest and Accountability Committee, set up under Act 815 had been starved of funds for their activities.
Utility tariffs
On utility tariffs, the statement said the TUC took great exception to the way government had handled the issue.
It recalled an agreement the stakeholders reached in 2010 to allow for the automatic adjustments of utility tariffs to forestall the need for one-off huge increases that had negative implications for Ghanaians.
“For reasons of political expediency, government conveniently failed to allow the automatic adjustment mechanism to work. Now, in the midst of crisis in both water and electricity when nearly everyone is dissatisfied with service delivery, government is prodding the PURC to increase tariffs at levels that fly in the face of the hardships Ghanaians are confronted with. The council, therefore, urges government to be cautious and sensitive to the plight of the ordinary Ghanaian, and to recognise that there is a limit to what the people can endure”.
