Ghana: We are listening to business - John Mahama

 

The list of the government's priorities for reform is long, from improving the business environment to cutting deficits and expanding the provision of free secondary education.

 The Africa Report: You spoke of the country's serious economic problems in your state of the nation address. What is your strategy and when is Ghana going to get out of these financial difficulties?

John Dramani Mahama: The major problems – the twin [budget and trade] deficits – are due to several factors: the implementation of the single spine salary system which saw a ballooning of wages and salaries, and the delay in reducing subsidies on petroleum products and utilities. From the 2013 budget we've been implementing adjustments. But 2014 is the first full year of adjustment measures: reducing subsidies on petroleum prices and utilities; increasing value-added tax by 2.5%; introducing the national stabilisation levy and the special import levies; and also putting the brakes on wages. We've been in discussion with labour organisations to moderate the demands for wage increases. So the end of 2014 will be a better time to judge what progress we have made.

Many people are saying your new foreign exchange rules might exacerbate the problem by creating panic.

We went from one extreme in a command and control environment, where foreign exchange was strictly controlled and the Bank of Ghana set the exchange rates, to the other extreme where our foreign exchange rules were so lax that speculators took advantage of them. In line with best practice around the world, we're putting in the necessary regulations to ensure people play by the rules. The initial reaction was panic but clarifications have gone out. All existing agreements on investments still hold. The free zone's guidelines and regulations still hold, so I think the investor community is reassured.


Some of the government's toughest critics are in business. When you convened meetings with the executives of these companies at Peduase Lodge, what did they want?

We held one meeting with the big companies such as the telecoms giants, then we had the small and medium-sized enterprises. Different issues were raised, but we had a very lively dialogue. They said we need strong public-sector reform to make the public service more client-friendly in terms of the private sector.

 A lot of complaints came about the revenue authorities and the speed with which they process tax refunds and duty exemptions. I think we have a major challenge there and that ran through all the three categories of companies that I met with. There were complaints about slowness of business registration, the Investment Promotion Centre and how we could make its services better.
There was a major complaint about the length of time it takes to clear things from the port, the congestion in the port and illegal fees collected by various agencies in the port. It was a very, very comprehensive discussion.


You have launched the Made in Ghana campaign. Do you have a time frame for Ghana-made products to replace imports?

I cannot produce enough rice with a click of a finger to make Ghana self-sufficient. There is no reason why we have hectares of arable land good for rice growing and yet we have to import $400m worth of rice every year. We have land for sugarcane, yet import nearly $200m worth of sugar a year. We're going to target seven crops and if we put in the right investment we should reduce drastically the billions we spend importing these items.


You are also promising free and universal secondary education. That was the policy of your opponents in the last election. Your party said it was impractical. What has changed?

We're all on the same side and I think that it's just the pettiness of our politics that makes us look like we were singing from different hymn sheets. The basic vision for secondary education is in our constitution, which says that we shall make it available to all children and that we shall make it progressively free. It's just how it should be achieved that was the difference [between the parties]. Our intention is between now and 2016 to build 200 community-based schools across the country. Ours is a package that had to do with affordability but also with access and quality.


As public finances tighten, people are getting more concerned about losses to the state treasury. What are you doing to stop corruption and mismanagement?

The national anti-corruption action plan was spearheaded by the Commission on Human Rights and Administrative Justice. The thrust of the plan is to make us look at corruption in a more systemic manner, not in the ad hoc and anecdotal manner we have done in the past. That plan is currently with parliament. The anti-corruption institutions will be be more independent and track corruption in a more aggressive manner. [The plan] also promotes transparency in government procurement. It also has accompanying legislation, like the right-to-information bill and an amendment to the whistleblowers bill.

Do you know how much these losses to public finances cost each year?

If you take the auditor general's report alone then it appears that government losses – if you include misappropriations and lack of due diligence – are about ¢1.5bn ($580m) a year.

Source:

The Africa Report