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IMANI Report: Ghana heading for decay if...
From: IMANI Ghana (www.imanighana.org)          Published On: November 26, 2012, 05:29 GMT
 
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IMANI Report: Ghana heading for decay if...
Part One: Background

Whoever wins the Ghanaian Presidential Elections of 7th December 2012 will
be confronted when they wake up on 8th January with a country where
virtually all the urgently needed major reforms appear stuck in a ditch.

Over the last 5 years, this country has seen the most dramatic and
frightening slow-down in the reform effort over the last three decades.*

What do we mean by ‘reforms’ and ‘reform effort’?

You have probably heard the phrase ‘Guggisberg Economy’ too many times
already. But it remains a blunt and relevant way of describing where we
are, starting from the notion that for 100 years the structure of our
economy has not really changed.

Ghana remains too susceptible to price cycles of specific raw materials on
the international economy. To diversify the economy away from this
over-dependence on a few commodities and still provide jobs beyond the
imports-fueled informal retail and services sector, we will need to see
growth in overall national capacity.

The government spends nearly all the money it collects on paying wages of
its employees, and has little left to invest in building this capacity. But
its employees also include doctors, teachers, nurses and sanitation
workers, of which more not less is needed.

So how is the government going to pay for all these workers when already
their wages are making it impossible for it to invest in the facilities
they need to build their capacity?

So for example, for many years we had a department of public works with
full-time employees but little or no money to fix anything really. We had a
department of parks and gardens that couldn’t even afford to manage a seed
bank.

Today, we still have hospitals where the lifts don’t work and universities
in which water don’t flow through the taps.

The workers insist however that not only are there no facilities to enable
them train properly and do their work effectively, but also that the wages
they receive are disgracefully low and, with inflation and exchange rate
losses taken into account, declining in real terms.

The government tried to address some of these challenges by coming up with
a concept called ‘single spine’, which was supposed to ensure that there is
fairness in the way wages are paid for work in the public sector. But how
far can fairness go when the real issue is that the majority feel the wages
are way too low, and that the available facilities for training and work
are abysmal? It is like spreading misery equally about.

To improve on the way it does its business, government of Ghana has tried
to ‘decentralise’ its functions. The idea is to reduce the cost of
management, enhance accountability, and thereby ensure more resources go
into the investments that matter, rather than continue to splash it all on
government workers managed from Accra.

But what have been created – the district assemblies – to carry out this
decentralisation is much too weak. District assemblies have limited means
of raising their own money because the notion of a local income tax is
fanciful in a situation where even at central government level taxing a
sprawling informal sector has proved easier on paper than in reality.

Because the district assemblies don’t raise their own money, electing their
heads won’t make much of a difference as the central government will still
hold the purse-strings and call the shots. But being appointed by the
government as they now are, the only real motivation these district
assembly bosses have in their work is to keep the local party bosses happy
so they can remain at post.

The lack of effective local capacity means essential services like health
and education are run from Accra by the government. This has made it
extremely difficult to inject the right level of resources into them and
insist on accountability since, as we have already said, government is
already overburdened with paying the workers and lacks motivated managers
to supervise performance on the ground.

With the essential services workers seen as part of the national
bureaucracy rather than as members of dynamic professions, management is
always going to be a complicated affair anyway.

Consequently our hospitals have become death-traps and our schools
laboratories where ignorance is concocted and administered to our young
people.

Because the schools and hospitals are so bad, lifting the poor from poverty
is several times more difficult. The poor attend weak basic schools where
due to poor teaching they are unable to progress to the best middle
schools.

Malnutrition and childhood disease, poor hygiene and low stimulation in the
environment, all ensure that even the little education available in middle
school sieve through them without leaving much residue. Higher education is
simply out of the question for these wretched of our society.

The most ambitious of the poor end up at vocational and technical
institutes (including polytechnics) to participate in a cycle of mediocrity
in/mediocrity out, thereby depressing the social standing of vocational and
technical sciences in the country.

Meanwhile, the growth of ICT has completely transformed the technical and
vocational disciplines across the world.

Automechanics is no longer what it used to be because of electronics.
Carpentry and masonry, metal fabrication and ceramics, and a myriad other
crafts, are not what they used to be because of AutoCAD and emerging design
technologies.

But the teachers in the technical institutes themselves are not
ICT-proficient. How are they supposed to inject ICTs into technical
training? The end-result is the lack of an industrial workforce for the
secondary portion of the economy.

The hollowing out of the small and medium-scale manufacturing sector, and
the near collapse of the agro-processing industrial base in Ghana, are
testimony to the ongoing extinction of light manufacturing in this country.

The tertiary portion of the industrial sector can of course not stand
without legs. Even in the area of pharmaceuticals, arguably one of the few
bright spots in Ghanaian industry, there is little evidence of genuine
depth. Not a single WHO-certified manufacturing facility is up and running
in Ghana today.

Tertiary industry of course requires energy supply. We are unfortunately
nowhere near the development of a rational electricity tariff policy,
without which even further investments in installed capacity will not
change the erratic supply situation in the country.

Having the power plants is one thing, fuelling, servicing, and maintaining
them is another. Unless a discriminatory tariff policy is introduced to
ensure that those who can afford to pay more do so, power plant operators
cannot run at full capacity. A discriminatory tariff policy however
requires a modern grid, yet we have no policy for attracting investment for
grid optimisation. Having discovered that PPPs can help with the
‘generation’ side of things, we have neglected to create a robust framework
for investment in other parts of the power system.

So, as we are sure is evident by now, our problems in this country are
inter-dependent and inter-connected. It is actually one problem
manifesting in different guises in different sectors: the CHAOS OF
POLICY-ILLOGICALITY.

It is in search for relief from this chaos that reforms have been pursued
since the early 50s to the present to re-orient the social and material
economy and inject logic into the dysfunction. Otherwise, politicians pull
in opposite directions, technocrats work at cross-purposes, and the
population become estranged from the national purpose.

So when we said the ‘reform process’ has stalled, we meant reforms to
re-set this country on a **logical course through policy coherence**. This
is something we have been trying to do as a modern, contiguous, country for
more than a century now.

We argue that the last 5 years has seen the deepest stagnation ever
witnessed in this country, and we will elaborate by taking major elements
of the reform process and analysing their progress. We have a chosen a
5-year timeframe because this is the unit most favoured in national
planning cycles worldwide. We have also focussed on structural issues from
a strategic perspective.


If on 8th January 2013, the reform process is not brought back on course
Ghana will continue on this descent from policy chaos towards national
decay.


*Part Two:*

1.0 Industrial Policy

Successive governments have given pride of place to the ‘integrated
aluminium industrial complex’ plans that date to Ghana’s first republic.

The decisions over the last few years to engage strategic partners of
either dubious intent or dubious capacity have severely crippled this goal.
Following the haphazard sale of Ghana’s bauxite resources, and an arthritic
revival of Valco on one potline, the entire policy has been dealt one blow
after another. IMANI has recorded these affairs in great detail here:

http://www.modernghana.com/news/262638/1/imani-special-report-ghanas-integrated-aluminum-fe.html

The decision to establish a defence industrial holding structure was
similarly poor, and has served to divert critical attention from the
stalled divestiture process, by means of which some of the factories
targeted by the defence holding entity, such as the shoe factory, were
supposed to be transferred to the private sector.

The decision to implement a modular strategy for the development of the
country’s gas resources has also led to complications in procurement,
engineering and commissioning.

The further decision of completely outsourcing this integrated gas project
to a foreign entity instead of pursuing local and international
public-private partnerships, for the sheer reason of meeting unrealistic
timelines, has robbed this country of a golden opportunity to develop a
skills base, and vital linkages with the financial sector, for this
critical new resource.

There is now evidence that the gas infrastructure project will have
significant, perhaps permanent, shortcomings. The quantity of gas produced,
the pricing and marketing framework, the timeframe of actual integration
into the power grid, maintenance policy and a host of factors have come
together in this severely challenged project to prevent the prospect of
Ghana’s gas being used to power industry in the near term.

2.0 Hydrocarbon Policy

The discovery of significant oil and gas reserves in Ghana 5 years ago and
the commencement of production 2 years ago promised to open up a new source
of vital revenues for government of Ghana.

We have already touched on the gas matter, but only from the point of view
of industry. From a financial services and wider economy point of view, the
country’ oil and gas sector has in the last two years proved a depressing
disappointment.

Weak regulatory oversight has led to massive cost-overruns and constrained
the revenues generated by that sector. An incoherent local content strategy
has failed to identify champions and seen niche areas like aviation,
catering and logistics that were emerging to support the industry evaporate
even before they could form. The oil companies continue to
shift ancillary activity to the Ivory Coast, and investment is beginning to
seep out of Ghana to countries on the West Coast considered more
investor-friendly.

Bureaucratic inertia and lack of clarity and coherence on the policy-making
front have led to severe delays in the updating of laws and regulations
governing new exploration, leading to a massive damping down of enthusiasm
on the part of greenfield investors and high-risk exploration financiers.

The same lack of imagination and competence bedevils the mineral regime.
The Minerals Commission and allied agencies have proved so ineffectual,
despite claims of restructuring the prospecting and exploration system,
that the illegal small-scale mining problem in Ghana has been deepened by
an invasion of foreign plunderers.

The inability to decentralise the enforcement of mineral rights and
holdings to the district level and the confusion inherent in the land
control regime as it affects mineral rights management has made mining
administration in this country a joke.

Several plans to site regional oil refineries in Ghana have stalled, and
the Tema Oil Refinery (TOR) continues to chase one clumsy international
loan after the other. Government’s absorption of operational debts ‘on
behalf of’ the refinery has merely provided respite for the accumulation of
more debt, delayed urgently needed restructuring, and done little to reduce
the inefficiencies at the plant.

Perennial inability to supply products for the local market has now become
the refinery’s hallmark. Very soon, there would be no economic case for
local production anymore, especially as the TOR continues to haemorrhage
talent and burn the confidence of suppliers, customers and partners.

Plans to deepen the petrochemical industrial complex in the last 3 years by
establishing maritime trade in liquefied natural gas, produce methanol for
industrial applications, produce fertiliser chemicals, build bulk storage
complexes, and pipelines, amongst other transportation solutions, have all
failed to receive clear-eyed, forceful, leadership from the government’s
energy policy team.

3.0 Infrastructure, Housing & Energy Policy

Railways, ports and regional road corridors form the nexus of the
infrastructure policy in Ghana.

Not a single integrated railway deal has been shepherded to success over
the last five years.

The Chinese CDB package has been managed so arthritically that more than 2
years after it was broached as the key infrastructure financing mechanism
in Ghana disbursements have yet to begin.

Meanwhile, not a single large-scale residential real estate program has
survived the test of reality in the last 5 years, with the result that the
housing deficit has widened not closed.

Industrial estate projects in the Western Region, oil and gas terminals,
major port rehabilitation exercises, mass housing developments, and
cross-country rail projects litter ‘infrastructure blueprints’ with little
hope of coordination and actual packaging for credible investment, not to
talk about seeing the light of day. Shady investors have been given free
rein to distort their role in these projects, making the projects less and
less attractive to serious investors.

Poor bureaucratic coordination means that proposals in their hundreds from
several serious players receive scant attention whilst poorly thought
through agreements are rushed for rubber-stamping in parliament. (See: www.*
imanighana*.com/wordpress/?p=337 ).


4.0 Public Sector Capacity

The integrated payroll management system continues to totter. Despite the
focus on eliminating ghost names through biometric enrollment report after
report suggests that hiring outside regulations continue to burden and
weaken the public workforce strategy.

Salaries are sometimes paid more than several months late, and
the enrollment of new hires into the public workforce register and payroll
can take upwards of a year in many documented cases.

Regression analysis indicates clearly that over the last year the
inter-relationships between investment into payroll reforms (including the
purchasing of expensive software) and actual improvements in management
performance have worsened or stagnated.

The same challenge is evident in the management of public finances
generally.

Reforms to implement a Treasury Single Account, to align departmental
spending with the central budgeting process, to eliminate arrears in
payments due government contractors, and to ensure that budget
implementation tracking is steamrolled into all departmental processes have
all stalled, and in the case of the latter actually worsened.

The same weaknesses that lead to poor budget implementation tracking also
show up when the state has to spend borrowed monies from donors. Despite
the growing spotlight on the issue, government’s ability to move donor
projects even after money has been committed has shown remarkably little
improvement, with more than a billion-dollar’ worth of projects stalled
for nothing more than incompetence.

Departments continue to initiate projects and fail to align them with
national budgeting priorities leading to abandoned projects all over Ghana.

Projects initiated by GETFund, DACF and other pools of government
investment cash have particularly shown a worsening tendency to be
mismanaged even prior to commissioning.

Rather than focus on actual departmental level service infrastructure,
including digital archiving, analytics, inter-agency communication,
automation, etc. the Ministry of Communications is instead voting a
suspicious amount of money building brick-and-mortar datacenters when no
capacity has so far been built in the more promising modern cloud and
remote access architectures needed for an effective IT-driven government
ecosystem.

5.0 Education & Health

The National Health Insurance System (NHIS) has consistently failed to
achieve any of its core strategic reform objectives. Premium mobilisation
continues to fall as a percentage of resources available to the Insurance
Authority (NHIA).

The total number of active providers (as opposed to those on paper) is
falling at a frightening rate. A comprehensive quality of care index does
not exist making empirical measurements of the success of patients in
obtaining treatment within the system virtually impossible.

Whilst the NHIA claims to be investing in efficiency systems, the adoption
of ICT as a core driver of service delivery remains rudimentary.

The Authority has no systems to analyse disease burdens at a disaggregated
level. Its ability to target its investments where it matters most, through
a continuous monitoring of ground-level compliance with the essential
medicines list, treatment guidelines etc. is virtually nil.

At present, the Authority operates more or less blind of the dynamics at
the delivery point. With no co-payer or premium-rationalisation policy to
incentivise and empower the patient to monitor treatment conditions, the
Authority’s goal of enforcing ethics at the level of the health provider
has remained a sad dream. All this as the insurance fund (NHIF) dips
further and further into deficit.

The Ghana Education Reform Project implemented in late 2007 has now run for
a full length of five years, but not without disruption. The change of
government at the turn of 2009 saw the duration of the secondary education
program reversed from 4 years to 3 years. Apart from this action no
significant work has been done to review the trajectory of the reform and
its impact on any of the key aspects of education identified by successive
commissions: administration, content, human resources, coverage and
socio-economic justice, to name a couple.

A good example of the policy-logic dysfunction in operation is the ongoing
distribution of free computer hardware in the country without a
corresponding effort to develop and disseminate even more vital software
learning tools and content, including training software. Classroom and lab
resourcing have seen no improvement.

The national broadband policy is revealed for the paper-husk it is when
probed for its contribution to critical areas of national life such as
education and health. The program to connect rural schools to the internet
has moved at a snail pace for several years now, with little sign of
progress.

ICT is far from being incorporated into the learning and teaching process
in Ghana, all in contravention of the Anamuah-Mensah report, and yet free
hardware is being distributed to pupils. The limitations of hardware and
connectivity in developing youth capacity are clearly seen in the growing
conversions of internet cafes across urban Ghana into sites of anti-social
behaviour.

6.0 Agriculture

The goal of agricultural reform in this country has been to prioritise
agro-processing and food-security.

The ‘food security’ goal has not always been well-defined historically,
particularly in terms of its connection with other parts of agricultural
policy. Ghana has experienced only a few episodes of famine in its history
because the growing trans-border trade in agricultural produce has ensured
that supply buffers exist during periods of disruption.

Agro-processing on the other hand remains a clear and coherent emphasis of
successive governments.

Sadly, attempts to spearhead agro-processing using some key crops such as
cotton, cocoa, sheanut, tomato, soya and cowpea have largely floundered.
Fish-processing has fared no better. Ghanaian fish and fruit processing
plants are becoming permanently dependent on imports for their feedstock.
In fact, Ghana’s largest fruit processor today imports the bulk of its
fruits.

Meanwhile, fertiliser policy has failed to raise the use of fertiliser per
acre by Ghanaian farmers. The voucher management system for fertiliser
subsidies has failed due to poor coordination and management.

On the issue of irrigation, a core item in the agriculture reform program,
the contract management and procurement system has been so weak that very
few, coherent, useful projects have seen the light of day since a much
publicised revamp of the irrigation authority concept in 2009.

Part Three: Conclusion

The time and convenience of our readers prevent us from touching on all the
key reform issues in this report. We have also referred to, rather than
reproduced, the many policy prescriptions we have made to the several
problems identified in this report in previous commentary. Subsequent
commentary in the print and electronic press may allow us to fill some of
the still remaining gaps.

There are areas such as law and justice; defence and national security;
social security, employment, disability and pensions; sanitation and the
built environment; sports and the creative arts; the natural environment;
gender; youth; tourism; and diplomacy, that are so important in any scheme
of things that their omission will obviously affect the effectiveness of
our argument in certain respects.

However, we selected the areas above because we believed we could raise
systemic points that cut across multiple sectors and provide a strong
illustration of our central thesis: the interconnections across our
problems as a country worsen and amplify the effects of **illogical
policy-making** in key areas and accelerate our downward slide as a country.

Whoever takes up the mantle of leadership in Ghana on 7th January 2013 will
have their work cut out for them.


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