Policy think tank, Imani Ghana, has expressed disappointment with the government’s decision to establish a Nation Builders Corps (NabCorp) to deal with the ever-escalating phenomenon of graduate unemployment.
Passing a verdict on the policy, Imani said in its preliminary assessment of the 2018 budget: “This programme is a reflection of policy incoherence and a myopic approach to solving the graduate unemployment challenge.”
Delivering the budget statement to Parliament last Wednesday, the Minister of Finance, Mr Ken Ofori-Atta, said the government would create a Nation Builders Corps which would employ at least 100,000 graduates next year
But Imani, in its statement, said the programme could not be the solution to the canker of graduate unemployment.
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It questioned the viability of investing GHc600 million in the NabCorp when the amount could be channelled into other productive ventures such as agriculture to finance graduates interested in going into agriculture.
It said while the government had said that the focus of the budget was to revamp agriculture for food sustainability and to feed the numerous factories to be established under the one-district, one-factory policy, surprisingly the amount allocated to the Ministry of Agriculture was cut by 21 per cent, a decision that was likely to negatively affect productivity.
“However, the elephant in the room is the ageing cocoa and food crop farmers and the low interest of the youth to venture into agriculture. One would have thought a policy to engage graduates across the country would centre on finding innovative solutions to encourage graduates into agriculture.
“A more prudent solution to graduate unemployment will be to invest the GHc600 million allocated to NabCorp in providing financing through a seed fund to encourage more graduates into the value chain of agriculture,” the statement said.
Affront to NEIP
Imani further stated that the creation of NabCorp would be an affront to the National Entrepreneurial Improvement Policy (NEIP) which sought to create an entrepreneurial nation.
Citing “cheap funds” and business development plans as the biggest challenges graduates faced in starting businesses after their national service, it said it was regrettable that only GHc50 million was allocated to the NEIP as initial funding to support 500 youth businesses in 2018.
“The allocation to the nebulous NabCorp, when channelled to NEIP to create a special venture capital for graduate start-ups/projects, will create more sustainable jobs in the medium term,” it said.
According to the statement, since details were not given on the operationalisation of the NabCorp programme, it was difficult to differentiate between it and the compulsory one-year national service for graduates.
“The National Service programme already provides hands-on training and apprenticeship for graduates and transitions them well into the world of work after school, as they serve their nation in various sectors. What additional skills will the NabCorp offer graduates who have been trained for four years in specialised fields?” it asked.
It indicated that what graduates in Ghana needed were sustainable jobs created by a thriving private sector, entrepreneurial training and seed capital to start their own businesses.
Already, the statement noted, although the government projected in the 2017 budget to create 750,000 jobs under the Planting for Food and Jobs programme, the 2018 budget provided no details on the number of jobs created so far under the programme.
It submitted that financing options for the youth interested in agriculture were “unfavourable, expensive and limited”.
“Existing programmes such as Planting for Food and Jobs target mainly existing farmers and do not make available direct access to funds for agro-based start-ups. Other training programmes targeting the youth at the district levels do not come with grants. Seed funding for graduate agribusinesses will, therefore, be a better option to create immediate jobs across the country which can be scaled up over time with financing from traditional financial institutions,” it added.
Economy on recovery path
It said the economy appeared to be on a trajectory to recovery after the numerous challenges it experienced in the past few years.
“The much talked about debt reprofiling seems to be yielding some positive results, as debt-to-GDP ratio has improved from 73 per cent in December 2016 to 68.3 per cent as of September 2017. GDP growth outlook for 2017 is also set to exceed its target by about 160 basis points. At the same time, fiscal deficit is within range of the target, even in the face of revenue shortfalls — a fiscal deficit of 4.6 per cent of GDP has been projected for 2017, against a target of 4.8 per cent of GDP,” it said.
It welcomed moves to ensure fiscal discipline in expenditure management, saying in the thick of revenue mobilisation challenges, the government had spent below estimated expenditure levels.
“This action, undeniably, contributed to keeping Ghana’s debt below unsustainable levels (70 per cent of GDP). All the above have contributed to the positive ratings Ghana enjoyed in the recent Standard and Poor’s outlook review of the Ghanaian economy. The positive rating will augur well for the economy, as it can attract investors to support both the industrialisation drive and the infrastructure agenda of the government,” it said.
But Imani sounded a caution that although meeting fiscal deficit targets had its advantages, constraining expenditure to achieve it presented challenges of its own.
It stressed the need for the government to consider finding efficient and innovative ways to include the private sector in the provision of social programmes.
“Also, the proposed revenue measures, such as the intended reform of the custom warehousing regime and transit regime, if carried out efficiently and timely, can potentially improve revenue mobilisation,” it said.
The statement commended the government for working to bring inflation down.
While taking notice of the government’s promise to reduce electricity tariffs, it noted that the significance of the reduction in terms of its impact on cost of production and the continued stability of the cedi would be critical.
It recommended that the government consolidate its efforts to provide more stable and reliable power supply.
“The government must also increase efforts to improve the consumption of locally manufactured products. In this regard, the government’s decision to allocate 70 per cent of all government contracts to local contractors and suppliers, though commendable, will require strict enforcement to achieve the intended result,” it said.
Imani also commented on other sectors, including tourism, energy, the Ministry of Special Development and Initiatives, the National LPG Cylinder Recirculation Policy, the rooftop solar energy for MDAs, education, health and infrastructure.