JOB CREATION – NPP fails Ghanaian youth
The issue of joblessness among young people in Ghana, Africa, and the world at large is a critical one which some experts have variously described as a national security issue. It is rightly so because this phenomenon is a dangerous time bomb ticking away slowly to a catastrophic explosion, when the latent power of youthful and energetic people who should hitherto be engaged in useful undertakings and contributing to meaningful nation building are deployed into wrongful and destructive activities.
This is the reason why job creation became a central theme in this year’s electioneering campaign and rhetoric prior to the launching of the manifestos of the, the National Democratic Congress(NDC) and the New Patriotic Party(NPP) two major parties with a real chance of winning this year’s general elections.
With the publication of the two manifestos; the NDC christened theirs “CHANGING LIVES AND TRANSFORMING GHANA”, and the NPP named theirs “ CHANGE; AN AGENDA FOR JOBS”, on first sight, it is the caption of the NPP’s manifesto which draws attention to the issue of jobs, creating the impression that job creation is central to their agenda and that concrete policies, programmes and projects have been crafted to deal a frontal blow to the menacing issue of joblessness among our teeming youth. It is variously estimated that some 1.5million able bodied well built, young men and women, some of whom have been educated to the highest levels of our best Universities and other tertiary institutions although admittedly, a lot often did not make it past Junior High School. This is a fact that further complicates the solution to the issue making it a very difficult one .
An exercise to find out which of the two leading political parties, NDC and NPP has put together a more appropriate proposal for mitigating this dangerous unemployment problem, undoubtedly one of our most prompting headaches is in perfect order here.
The National Democratic Congress devoted pages 34 through to 38 of its manifesto to specific job creation issues in the form of projects, programmes and policies. The NDC,s document gave an overview of what it carried out in the period 2012 to 2016 in the area of job creation, and then carefully laid out a comprehensive plan of new policies, programmes and projects to tackle head on job creation from 2017 to 2021. The NDC has ascribed specific numbers to those policies, programmes and projects that such interventions would create, thereby giving hope to young expectant people. The NDC has room for private businesses as well to actively participate in the national effort to create jobs for young people.
In comparison, the New Patriotic Party on the other hand has completely ceded its responsibility for job creation to a third party –Ghanaian Businesses.
It is important that we take a comprehensive look at the job creation proposals of both parties in order to draw our conclusions. Stating clearly on page23 under Chapter Two, which dealt with Trade and Industry, the NPP stated:
“Since job creation, for us in the NPP, is essentially a private sector activity, the number one priority of the next NPP government will be to put in place the policy framework that will help businesses expand and create jobs, as well as promote the growth of entrepreneurship opportunities for young Ghanaians in particular.”
It is clear from the foregoing that should the NPP find itself in government in the period 2017 to 2021, it will NOT by itself, as a government, undertake any job creation projects, as clearly indicated by the above quotation from their manifesto. It is abundantly clear that the NPP is firmly held hostage by its 18th Century outdated “laissez-faire” economic philosophy, by which the state is a passive onlooker in economic affairs of the country.
In furtherance of the policy, the NPP listed in its manifesto taxes, rates and levies that it will abolish completely or reduce significantly in order to provide the private business community, the opportunity to make huge profits, hopping that as a result businesses would plough back those profits into their business thereby expanding and employing people as a result. In the main, the incentives in the form of reductions of levies, taxes and rates to be effected by a future NPP government would include:
1. Reduction of Corporate Tax from 25% to 20%
2. Removing import duties on raw materials and machinery for production within the context of the Ecowas Common External Tariffs.
3. Abolishing the Special Import Levy
4. Abolishing the 17.5% VAT on imported medicines not produced in the country.
5. Abolishing the 17.5% VAT on financial Services
6. Abolishing the 5% VAT on Real estate
7. Abolishing the 17.5% VAT on domestic airline tickets
8. Reducing VAT for micro and small enterprises from the current 17.5% to 3% flat Rate
9. Introducing tax credits and other incentives for businesses that hire young graduates from tertiary institutions.
10. Reviewing withholding taxes imposed on various sectors, including the mining sector.
It is estimated that the cumulative amount of these taxes to be removed would amount to some GH¢6.5 billion per year by 2015 revenue estimates.
One of the most tantalizing promises for job creation by the NPP has been its “One District – One Factory” promise made by their Flagbearer Nana Addo Dankwa Akufo-Addo in his campaign in the Central Region. One would have thought that this inviting proposition would receive an elaborate treatment in the NPP manifesto. I am sure thousands of Ghanaian Youth who have pinned their hopes on the NPP to provide them with jobs should they win are dismally disappointed in what the NPP had to say about their flagship manifesto promise for job creation. Please take a read on page 31 under Chapter 2 “Trade and Industry.” Of the NPP’s position on this promise.
“XXIII. FLAGSHIP INDUSTRIAL DEVELOPMENT INITIATIVES
“ One District One Factory Initiative” : In collaboration with the private sector, the NPP will implement the “One District, One Factory” Initiative. This district industrialization programme will ensure an even, spatial spread of industries.”
Other NPP proposals such as :
1. Strategic anchor initiatives
2. Industrial sub-contracting exchange
3. Managing industrial waste
4. Empowering local businesses
5. Support to indigenous construction industry
6. Attracting FDIs into labour intensive sector
These remain vague academic proposals that depend on the goodwill and willingness of the private individual businesses to take advantage of in order to create jobs. All through the NPP manifesto, one is bound to find some such similar vague and lofty proposals or promises but not one specific programme or policy or project which a future NPP government would undertake to generate employment for young people. It is important to recognize that the problem of youth unemployment is a national security matter and that government has to be at the forefront of efforts designed to tackle it.
Completely Ceding such responsibility to some unknown third party is indeed reckless and dereliction of responsibility on the part of the New Patriotic Party, and the youth of this country would recognize the NPP as NOT worthy of their trust.
The New Patriotic Party needs to recognize that the Ghanaian business landscape is dominated by mini, micro, and small businesses which operate in the informal sector. These businesses are said to make up over 80% of Ghanaian businesses.
These are businesses that essentially do not keep accounting books and therefore do not have examinable records of transactions from which their profits and losses could be determined and from which Tax Officers could base realistic assessments of taxes to generate tax revenue.
They are very difficult to deal with in terms of revenue mobilization unlike the formal sector businesses. It is therefore a very dangerous and realistic gamble for the NPP to pin its hopes on the business sector to generate huge revenues and to generate employment to absorb unemployed youth. It is also important to recognize the fact that business people like all human beings do not always behave rationally.
Therefore, the premise that reducing or abolishing taxes will enable businesses make profits and that those profits will necessarily be ploughed back into expanding businesses and that subsequently those businesses would employ more people in large numbers may be indeed a tantalizing mirage.
More importantly it must be pointed out that many Ghanaian businesses are by and large small One-man, One-Woman entities that are mostly buy and sell enterprises and not large manufacturing entities as may be found in the formal sector.
Again the NPP must realize that corporate decision making in terms of deciding to expand and employ more people takes time. The primary concern of businesses is to make and maximize their profits as much as possible. Businesses do not see providing solutions to unemployment as a primary responsibility to which they must commit themselves. A government must craft policies, programmes and projects to solve such problems.
It is important that we draw back a little to ponder over what outcome the NPP’s economic blue print of massive tax cancellations and huge tantalizing promises could be. We need to step back from the brink and ponder over where the NPP’s policies will take the economy of this nation.
In 2008 the NPP left the country with a huge deficit of over 14.2%; the largest in our nation’s history in the 4th Republic. In the run up to the end of their regime in 2008, the NPP government under President Kufuor had to sell the then Ghana Telecom, Voltacom a fibre optic subsidiary belonging to the Volta River Authority(VRA) and Westel Telecommunication Ltd, belong to the Ghana National Petroleum Corporation (GNPC) before it could pay even salaries and pensions of government workers.
In the year 2007, the NPP led Government went to the international capital market to burrow USD750Million.
The uses to which that very expensive money was put should remind us of the dire straits in which the NPP had plunged the Ghanaian economy due to the implementation of similar policies. You would be amazed to know the use to which some amounts of this money were put.
1. Supply of prepaid meters and electromechanical meters –USD37.32M
2. Enable VRA pay GCB to cover importation of January –USD41.78M
2008 crude oil
3. Payment for transactional advisory fees on sale of 75%
Of government shares in Westel Ltd –USD982k
4. Transfer of funds to facilitate payment of
Nov 2008 Salaries –USD6.8M
5. Disbursed to NYEP, MASLOC, Min of Local Govt and Ghana
Road Fund –USD75.5M
6. Payment to enable government meet immediate
expenditure (this was 17th June, 2008) –USD14.79M
7. Payment of Pensions and Salaries for
Month of July 2008 –USD107.2M
8. Payment to enable GOG pay for rights issue
Of Anglo Gold Ashanti –USD55.6M
A cursory look at these expenditures demonstrates that the Ghanaian economy under the NPP government in 2008 was on its knees and that the government had to rely on very expensive loans and the proceeds of the sale of state assets such as Ghana Telecom and the rest to even pay salaries and pensions. Such governmental expenditure should normally be met with proceeds from tax revenue and not loans as we have seen.
The NPP’s plan to abolish or reduce such a large number of taxes at a go is certainly a recipe for disaster. It has been estimated that such a move would most likely result in a huge fiscal deficit of some GH¢27.2billion or 20% of the country’s Gross Domestic Product(GDP). Such a huge fiscal deficit would spell catastrophe for the Ghanaian economy leading to high inflation and instability in our foreign exchange regime. These facts have been articulated by the Vice President in a recent interaction with students of the Cape Coast Polytechnic.
From the foregoing, it is clear that either the NPP is out to deceive the Ghanaian people and does not intend to implement such a policy or it does not understand the real import of its policies on the economy.
The economic ideas in the NPP’s manifesto were lifted line hook and sinker from Dr. Mahamudu Bawumia’s lecture notes. Bawumia has never been in Government and does not know the intricacies in managing an economy at first hand. Hard economic decision making on a day to day basis is not like being on a political campaign trail spewing falsehood or even outright lies to deceive the electorate. It is an act of dexterity that must be mastered on the job and it is best done by those who have had the chance to practice it at first hand.
This is the short coming of the NPP which has ceded all responsibility to a political novice to lead their economic policy and leading them into a blind alley.
BY: ERIC AMETOR-QUARMYNE