The Vice President together with his Economic Management Team shared the progress on the state of the economy after two years since they took office at the “The Economic Management Team Town Hall Meeting” held in Accra.
Ghana's Vice President had a Town Hall on the state of the country's economy; here's everything to know
The Vice President of Ghana, Dr Mahamudu Bawumia on Wednesday, April 3, 2019, met the general public to tell them what he and his government have done so far to stabilise the economy.
The Vice President’s Address
Dr Bawumia touched on the state of the economy under the previous government before his government took over.
According to him, Ghana’s debt had piled up and the economy became vulnerable to external threats which led the country to seek help from the International Monetary Fund (IMF).
The overall performance of macroeconomy of the previous government according to Mr Bawumia was much worse. The interest rate was high, the banking system was weak, and the rate of unemployment was high. This generated the unemployed graduates association in the country.
Mr Bawumia while comparing the data of the overall performance of the macroeconomy between 2012 and 2016 said that the economy performed worst making Ghana join the African countries with high debt distress.
However, Bawumia claims his government came to change the fortunes of the economy around. Ghana’s growth exceeded the sub-Saharan African growth by 2.7 percent.
According to him, the debt percentage accumulated by his government is the lowest in the last decade.
The major macroeconomic programme, Ghana Beyond Aid has led to the restoration of the growth.
Ghana’s exchange rate and the cedi performance
Mr Bawumia indicated that his government’s worst performance of the cedi was better than that of the previous government. The cedi’s worst depreciation under his government was 8.4 per cent in 2018 but the previous government’s best performance of the cedi was 9.7 in 2016.
“The cedi depreciated by 8.4% in 2018 largely on account of emerging market pressures and US interest rate increases. The data on the annual rate of depreciation of the cedi in recent years shows that the worst performance from 2017-2018 is better than the best performance between 2012 and 2016.”
He attributed the recent depreciation of the Ghana cedi to directives from the International Monetary Fund (IMF) to the Bank of Ghana (BoG).
According to him, at the end of January 2019 as part of the seven prior actions to get to the IMF board and the completion of the IMF programme, the Bretton Woods Institution gave Ghana seven actions to complete before March 15.
He said it was as a result of that the Ghana cedi hit an all-time low recording a rate of GH¢5.86 to $1.
However, the cedi has since recorded some marginal appreciation closing at around GH¢5.56 against the dollar as of March 15, 2019.
He said, “The most important and the proximate cause of the recent depreciation is the time inconsistency of an IMF prior action on the reserves target.”
“One of the conditions that the Bank of Ghana had to meet was to increase its net international reserves to the level of December 2018. To increase the net international reserves, however, meant that the Bank of Ghana could not sell any foreign exchange in the market. They had to essentially hold their hands to the back and could not intervene on the market during this particular period," adding that, “so demands for foreign currency was not met by supply as normally happens on a day-to-day basis, and we know when the demand is greater than the supply or the supply is not coming, the price will go up and this is exactly what was happening.”
Dr Bawumia who denied claims that the Bank of Ghana used about $800 million to shore up the economy to save the cedi said that “the market corrected itself. Investor sentiments acknowledged that the fundamentals are much stronger than expected.”
He said the fundamentals of the economy is currently good so the country has officially exited the IMF programme.
Power outage in the country
The Vice President lamented on the inability of the Ghana Grid Company Limited (GRIDCo) to operate at an optimum level in the country.
The company according to Dr Bawumia is struggling with transmission challenges as a result of obsolete distribution equipment.
He insisted that Ghana is producing enough power but GRIDCO, the power distribution company, is unable to distribute it due to its old systems.
“Even though we don’t have problems with power generation capacity, we have some problems with the transmission. The GRIDCO network is old and it has been unable to invest in high capacity lines because of financial difficulties.”
Dr Bawumia also disclosed that the country is currently paying an amount of $24 million per month for unused power under the agreement with the Independent Power Producers.
The Energy Minister who later added his voice indicated that the current outages are due to some technical hitches facing the Power Distribution Service (PDS) and this problem will be solved within twelve days.
Reforms in Ghana’s digitisation stage
The Vice President outlined some reforms his government has undertaken since they took office.
According to him, the government has put in place some reforms in the digitalization stage of the country and these have yielded good results so far.
The reforms included the issuance of the National Identification card simply called the Ghana card, digitising the acquisition of driver’s licence, mobile payments systems in various institutions and online ticketing.
He further said the government is looking forward to digitising the land registry.
Ghana beyond macroeconomic stability
Vice President Bawumia further disclosed where the government is leading the country to achieve beyond macroeconomic stability.
The inclusive transformational agenda is what the President seeks to achieve. According to Dr Bawumia, the government wants to include every individual in achieving the inclusive transformational agenda and it could be achieved in three ways.
They include building human development capacity and expanding job creation opportunities, enhancing access to public service and empowering the local community.
Ports reform to enhance competitiveness
The Vice President, Dr Bawumia revealed that his government has put in place some measures at the ports to enhance competition.
According to him, they will reduce the cost of importing products by 50 per cent and as well reduce the cost of importing vehicles by 30 per cent.
“Government set up a Ports Review Committee to review the competitiveness of Ghana’s ports within the West Africa Region,” adding that, “To reduce the incidence of smuggling and enhance revenue, the benchmark or delivery values of imports have been reduced by 50 percent except for vehicles which will be reduced by 30% effective 4th April 2019. This means, for example, if a container was previously assessed for duty at a value of $20,000, it will now be assessed from tomorrow at a value of $10,000. We expect that the higher volumes of at least 50% annually and increase custom revenues.”
Ghana will adopt a flat fee structure for port and customs charges for any new single window operator in line with best practices of charges at major ports globally and this will be subjected to parliament’s approval.
Government’s remarkable performance
The Vice President applauded his government for having performed remarkably well within two years.
He said the achievements of his government have been remarkable given the situation they inherited from the previous government.
“Ladies and gentlemen, this is just two years of hard work. The achievements our government have been remarkable given the situation we inherited. When you manage any economy, you are bound to face challenges and surprises from time to time but it is how you deal with the challenges that matter. What we need to do is to develop the capacity of the economy to respond to the ups and downs of the market forces through strong fiscal and monetary management and coordination. Ghanaians can be assured that this is what the fiscal and monetary managers are doing so well.”
However, Dr Bawumia noted that there is lots of work to be done in the country and his government will not be reluctant in doing them.
“We will be the first to admit it has not all been rosy and that there is still a lot more to do, and the full impact of some of our initiatives are not immediate but will be very significant to the country in the very near future,” he said.
He added that “Our hospitals still need a lot of work and attention to enhance the quality of medical care, our education system will continue to need improvement, we still have challenges in the energy sector and so on. We are dealing with many problems that we have had as a country for over 60 years but I am sure that any neutral observer will agree that we have after only two yours in office (given the situation we inherited), made a solid start.”
The future is bright
Dr Bawumia projected that the future of the country is bright revealing that, “Ghana’s future under the leadership of President Nana Addo Dankwa Akufo-Addo is bright and the prospects of growth are promising.”
The Vice President said they are implementing a plan to change the structure of the economy.
These structures include intensifying Planting for Food and Jobs and exporting the food generated.
“We are implementing a plan to change the structure of the economy,” adding that, Under the One District and One Factory and the stimulus package for businesses, industry growth is on the uptake. Gradual improvements in the Ease of Doing Business and the National Entrepreneurship and Innovation Programme are stimulating business start-ups.”
“The emerging automobile industry, the integrated bauxite and aluminium industry to be followed by iron and steel, petrochemical and value addition processing are our pillars of diversification to change the structure of the economy. And we must train our young labour force to match these changes in the economy,” he said.
He further noted that” The new Aker discovery contains at least 500 million barrels and that will raise economic growth to 10% and above from 2021. There are potentially other discoveries likely by Exxon, and other big players currently exploring. The apparent discovery of oil onshore in the Voltain basin will add to Ghana’s potential economic boom. If we manage these resources properly and don’t take risks with people who have demonstrated an inability to manage our economy, Ghana will be a very positively different country in a few years’ time. This will help change the structure of production, move Ghana away from the Guggisberg economy, and further boost Ghana’s economic prospects.”
Some forthcoming infrastructure projects
The government’s integrated infrastructure development and investment programme according to the Vice president are on course across the country and this covers investments in a modern road network, water systems, aviation, ports, harbours and railways.
Some forthcoming projects include Sinohydro Master Project Support Agreement, twelve fish landing sites, Pwalugu multi-purpose dam, Bui solar hybrid and irrigation project and between Pwalugu and Bui, 60,000 hectares to be brought under irrigation compared to 12,980 hectares of government-financed irrigation since GIDA was set up in 1977.
In the railway sector, the forthcoming projects include the rehabilitation of the Kojokrom to Tarkwa, work on the standard gauge section from Kojokrom to Manso, Eastern Line, Western and Tema-Ouagadougou lines.
Housing ( 100,000 affordable housing units with United Nations Office of Project Services), $1.5 billion GETFUND school infrastructure projects, Volta Lake Transport( Mpakandan to Mankango), Tamale Airport Phase 2, Kumasi Market Phase 2, Construction of Four (4) Dedicated Container Terminals, Multi-Purpose Container Terminal at Takoradi Port, Dry Bulk Jetty at Takoradi Port, Construction of Ferry Landing Sites( Dambai, Yeji, Makango and Agordeke), and 10 Youth and Sports Resource Centers of Excellence are all underway.
Dr Bawumia in conclusion of his speech noted that within the two years of their office, there have performed better than the previous government.
“Ladies and Gentlemen, in conclusion, let me reiterate that we are managing the economy better and fulfilling our promises. But as I mentioned earlier, we still have more to do.”
He noted that they have performed better with the following interventions better than the NDC government.
The interventions include GDP growth, Agricultural growth, industry, inflation, interest rates, exchange rate depreciation, fiscal deficit, trade balance, current account balance, gross international reserves.
Some also were jobs, teacher training allowances, nursing training allowances, passport application, driver’s license, renewal of NHIS membership, registering a business, cost of electricity, taxes, efficiency of clearing goods at the ports, cost of clearing goods at the ports, fighting corruption and the Right to Information Act.
Others were Zongo Community needs, national ID cards, mobile payment, digital address system, one district one factory, one village one dam, one constituency one ambulance and free SHS.
Business Insider SSA’s take on Vice President Bawumia's economic indicators
The Vice President gave room for questions to be posed to his panel for answers.
Business Insider SSA was present at the meeting and sought clarifications from both the Minister of Energy and the Vice President on the issues of power outages and Ghana's economic indicators.
The Energy Minister, Peter Amewu who responded to the issue on the power outage saying that he did not understand why the PDS had not made available a schedule. He assured he will make sure a schedule was made available to citizens.
The Minister for Planning, Prof. Gyan Baffour who first attempted answering the question as to how the macroeconomic indicators can translate into the pockets of ordinary Ghanaian said that he was feeling the indicators in his pocket because the intervention of the free SHS has reduced the number of people who ask for support from him to enable their wards to go to school, hence a way to saving money in his pocket.
The Finance Minister further added that individuals should ignore the cheap politics of the opposition as to whether the indicators are translating into individuals’ pocket.
He said while jobs are created, individuals get jobs to do and that’s the most important thing.
Senior Minister Osafo Marfo took another angle to answer the question by explaining that while the economy grows, people will become comfortable with their living and this is an indication of the indicators translating into the ordinary Ghanaians pocket.
Members of the Economic Management Team (EMT)
The Economic Management Team (EMT) is made up of a nine-member team chaired by the Vice President Alhaji Dr Mahammudu Bawumia.
The other members are Minister of Finance, Mr Ken Ofori Atta, Minister for Monitoring and Evaluation, Anthony Akoto Osei, Minister for Agriculture, Dr Afriyie Akoto, Minister of Energy Mr Peter John Amewu, and, Minister of Trade and Industry, Mr John Alan Kyerematen.
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