Home » Breaking News » Dissecting 2021 Budget; SEND-Ghana kicks against overreliance on dwindling, unpredictable donor support
George Osei-Bimpeh, Country Director.SEND- Ghana

Dissecting 2021 Budget; SEND-Ghana kicks against overreliance on dwindling, unpredictable donor support

SEND- Ghana, a policy research and advocacy civil society organization has cautioned government against overdependence on donor funding across various sectors of the economy.

The organization said in a statement read by its Country Director, George Osei-Bimpeh that;    “Overreliance on dwindling and unpredictable donor support have serious implications on the implementation of key interventions. To make Ghana self-sufficient and attain a Ghana Beyond Aid, as well as, the Sustainable Development Goals 1, 2, 6, and 17.1, (i.e., no poverty, no hunger, clean water and sanitation for all, and strengthened domestic resource mobilization), the government must find a sustainable way to fund and implement its capital investments, rather than been overly depend on DPs. One clear way to go about this is to begin to renegotiate and control the country’s natural resources.”

This was one of the major concerns raised in SEND- Ghana’s preliminary assessment of the 2021 Budget statement and Economic Policy, specifically focusing on Health, Water, Sanitation and Hygiene (WASH), Education, Agriculture, Social Protection and Child Welfare, and Taxation.

Below is the full statement

 SEND GHANA SEND GHANA ASSESSES 2021 BUDGET

Good morning distinguished Ladies and Gentlemen of the media. I have the pleasure to welcome you to this morning’s press conference and to thank you for honoring our invitation. We recognize the important role of the media in promoting Ghana’s development and good governance practices. This is why we invited you to share with you our preliminary assessment of the 2021 Budget statement and Economic Policy, focusing on the following sectors: Health, Water, Sanitation and Hygiene (WASH), Education, Agriculture, Social Protection and Child Welfare, and Taxation. Our analysis identified some cross-sector and sector-specific concerns. We observe poor budget execution and overdependence on donor funding across the sectors mentioned above. We are drawing government attention to these weaknesses because they possess a threat to attaining Ghana Beyond Aid and accomplishing the Sustainable Development Goals (SDGs).

We are grateful to our partners, including Oxfam, USAID, UNICEF, African Population and Health Research Centre (APHRC), International Budget Partnership (IBP), Global Health Advocacy Incubator, and the CHAMPIONS OF GLOBAL REPRODUCTIVE RIGHTS (PAI) for their immense support.

CROSS-SECTOR OBSERVATIONS

 Low Transparency and Budget Credibility Gives Cause for Concern Budget credibility is about the ability of governments to accurately and consistently meet their expenditure and revenue targets. At its core, budget credibility is about upholding government commitments and seeks to understand why governments deviate from these commitments. When budgets are not implemented as planned, spending priorities can shift, deficits may exceed projections, and critical services may be compromised.

Moreover, governments consistently deviating from their budgets risk an erosion of public trust. This is relevant to the SDGs and specifically recognized by SDG indicator 16.6.1, which assesses whether governments implement their budgets. Government’s commitment to open and credible budget demands that the annual budget statement, execution and performance reports are made available with adequate information and in format that can be accessible and understood by its citizens. These reports, according to the International budget partnership1 must provide detailed information on revenue collected, expenditure and debt incurred, over a period so that citizens can be more informed about budget implementation progress compared to planned interventions. Government of Ghana commitment to budget transparency is expressed in Sections 27, 30 and 34 of the Public Financial Management Act, (PFM) 2016 (Act 921).

The 2021 budget statement did not indicate the actual fiscal performance of Ministries Departments and Agencies and Metropolitan Municipal and District Assemblies on education and other sectors for the year ending 2020. Such information is relevant for assessing previous year’s performance based on which projections are made for the current and other years. 1 IBP 2018, Budget Credibility: What Can We Learn from Budget Execution Reports Page 3 of 15.

 The education sector is known for overspending its budget, especially on the compensation line item. In 2018, the ministry spent GHS 12.77 billion which was above its allocation of GHS 9.25billion in nominal terms. Even though the continuous overspending in the sector denotes fiscal indiscipline, the absence of information on progress in expenditure and policy intervention for the year ending 2020 cannot be overlooked. This flouts the PFM Act and affects the credibility of the national annual budget. Therefore, we call on the government, within the spirit of transparency, to be consistent with the provision of budget information on all sectors, and in formats that are accessible and understood by all citizens.

The WASH sector has particularly and consistently experienced budget credibility crisis in so far as actual disbursements are concerned. The 2018 performance report of the sector showed that only 39 percent of the approved budget of the ministry was released. In 2019, only 6.32 percent of the approved budget was released by the government. This implies that goods and services and CAPEX suffered the most, and delivery of services to citizens was severely constrained. Projected budget allocation to the Ministry of Fisheries and aquaculture development has seen a budget increase by 163.6 percent in 2021.

This is in line with calls for increased funding for the development of the sector. However, our analysis over the years shows that execution rates have been low, owing to nonreleases of substantial amounts of approved budgets for spending. For instance, in 2018, the total approved budget for CAPEX was GHS 39,142 million, but only 15.8 percent (GHS 6, 208 million) was released. Similarly, in 2019, the ministry spent less than half (45.7 percent) of its approved budget of GH¢59,592,448.

This was because, not a pesewa out of the approved budget expected to be funded by Development Partners (DPs) for CAPEX, (GH¢24,050,000) was released. Meanwhile, in 2021, DPs are expected to contribute about 84. 8 Page 4 of 15 percent to fund CAPEX. This is a worrying trend that could potentially hinder progress in undertaking important infrastructural development in the sector. The implications of weak budget execution are dire and the adverse impact on the delivery of public goods cannot be glossed over.

We reiterate that overspending/underspending communicates poor budget planning, erode citizens trust, and thus government’s fiscal indiscipline ought to be checked. Government must take steps to prepare a realistic budget to avoid credibility issues. Further steps must be taken to ensure that adequate funds are mobilized and timely released to MDAs. Projected Budget Allocations for 2021 is Overly Dependent On Development Partners Despite the Government of Ghana’s vision to pursue a structural economic transformation of Ghana that is “prosperous enough to be beyond needing aid,” our analysis of the national budgets (2018-2021) shows that government still relies heavily on Development Partners (DP) to fund its capital investments. In the Agriculture sector, DPs are expected to contribute 84.8 and 88.9 percent of projected allocations in 2021 to respectively finance capital expenditures (CAPEX) of the Ministry of Fisheries and Aquaculture Development (MOFAD) and the Ministry of Food and Agriculture (MoFA).

While investment in CAPEX is critical in stimulating growth, over reliance on donor support, which is characteristically unpredictable, puts at risk the government’s drive in pursuing agricultural modernization and industrialization. Investments in the provision of Water, Hygiene and Sanitation (WASH) service in the last three years have largely been donor-driven. In 2019, 70.26 percent of projected allocation to WASH was sourced from donors. In 2020, it increased to 82.39 percent. This trend is set to continue in 2021 with projected funds from DPs, for purposes of capital expenditure, constitutes 75.43 percent, while the GoG, Internal Generated Funds (IGF), and the Annual Budget Funding Amount (ABFA) collectively make up of just about 25 percent. With this trend, the government will most likely miss its target to reducing grants by 10% to finance goods and services and CAPEX by 2023 as envisioned in Ghana Beyond Aid strategy document. It is important to note that the ongoing COVID-19 pandemic has significantly transfigured the development financing landscape, and external supports are more focused on combating and defeating the pandemic. Capital inflows to developing countries from external private sources are projected to drop by US$700 billion2 with foreign direct investment flows forecast to decrease by up to 45% in developing economies.

Therefore, overreliance on dwindling and unpredictable donor support have serious implications on the implementation of key interventions. To make Ghana self-sufficient and attain a Ghana Beyond Aid, as well as, the Sustainable Development Goals 1, 2, 6, and 17.1, (i.e., no poverty, no hunger, clean water and sanitation for all, and strengthened domestic resource mobilization), the government must find a sustainable way to fund and implement its capital investments, rather than been overly depend on DPs. One clear way to go about this is to begin to renegotiate and control the country’s natural resources. 2 OECD (2020). The impact of the coronavirus (COVID-19) crisis on development finance 3 UNCTAD (2020). Global Investments Trends and Prospects.

 Sector Specific Observations Health

Provide Adequate Budgetary Allocation to the Health Sector to Reflect Government Commitments to Fulfilling the Abuja Declaration Adequate health financing is critical for the implementation of Primary Health Care as the country’s strategy for attaining Universal Health Coverage (UHC).

Twenty years after Ghana signed the Abuja Declaration (to allocate a minimum of 15% of its total expenditure to the health sector year on year), it continues to perform at around half the rate of the target. Indeed, in 2021, only 7.5 percent of the total government expenditure is allocated to the health sector. This declined from 8.2 percent in 2019 to 7.6 percent in 2020 and further down to the current level. The 2021 per capita expenditure on health (GH¢ 270.72 equivalent of US$ 47.08) also missed the target of more than US$ 50 set in the Medium-Term National Development Policy Framework (MTNDPF; 2018 – 2021). In 2021 Government will use almost all (99.1%) tax revenue (GOG) allocated to the health sector to cater for its wage bill, leaving just 0.9% for goods and services and capital infrastructure.

 However, items in the goods and services line are essential for diagnosing and treating illnesses at all levels of health care. These include health commodities such as essential medicines, vaccines, medical supplies (personal protective equipment, contraceptives, dressings, needles and syringes, and laboratory/diagnostic consumables), medical equipment, office equipment and accessories, and payment of utilities.

The COVID-19 pandemic has exposed weak resilience in our healthcare system and at the same time accentuated the need and urgency to prioritize health service delivery, particularly primary healthcare. Therefore, one would have expected the government to use the 2021 budget to demonstrate commitment to meeting the Abuja declaration target. This certainly represents a missed opportunity. Raising the share of health expenditure close to 15% will provide Page 7 of 15 adequate allocation to address infrastructure deficit, and finance the provision of goods and services to cater for HIV and AIDS, Malaria, Maternal, and Child Health and vaccine procurements and immunization services.

Ensure Commitment to Establish Ghana Centre for Disease Control and Financing General Epidemic Preparedness Before the emergence of COVID-19, Ghana’s health infrastructure (buildings, equipment, drugs, and human resources) especially for infectious disease control was extremely weak. Outbreaks of pandemic such as COVID-19 and epidermic such as Cerebrospinal Meningitis have further revealed the existing gaps in Ghana’s epidemic and pandemic preparedness.

The government’s announcement to introduce the COVID-19 levy is commendable. However, the utilisation of the levy should not be limited to combating only COVID-19. We are now presented with the opportunity to apply revenues realized from the COVID19 levy to cover the provision of all vaccines and immunization-related services. The establishment of a Ghana CDC as contained in the 2021 budget is a welcoming news. This was part of inputs into the 2021 budget submitted by SEND GHANA on behalf of citizens to the Ministry of Finance for consideration.

Whiles commending the government for the show of commitment and prioritizing pandemic preparedness in the 2021 budget, we are calling for a dedicated budget to finance Epidemic Preparedness in general and implementation of the National Action Plan for Health Security (NAPHS), as well as the Ghana Centre for Disease Control, to respond to the threat of epidemics since the budget is silent on a dedicated expenditure line in respect of these. We also call upon government to take steps to promote initiatives that prevent disease occurrence, including enforcement of the ban of public smoking and banning the practice of using plastic products to keep hot foods.

Water Sanitation and Hygiene

 Increase WASH Allocation In Line With The eThekwini Declaration and Sanitation and Water for All Ghana Compact The eThekwini Declaration in 2008 and Sanitation and Water for All Ghana Compact provide that African governments commit a minimum of 0.5 percent of gross domestic product (GDP) for sanitation and hygiene and ensure increased budgetary allocation for sanitation and water to reach $200 million annually. Our analysis of the allocation to the WASH sector shows that the government is only doing 0.09 and 0.13 percent allocation for sanitation and hygiene as a percentage of GDP for 2020 and 2021 respectively.

Further analysis of the sector for the past three years (2019, 2020, and 2021) shows that the government is not meeting the required threshold of 200million dollars annually as stated in the Sanitation and Water for All Ghana Compact. It is against the backdrop of the foregoing, that we call on the government to show commitment to the eThekwini declaration and the Sanitation and Water for All Ghana Compact of making a budgetary allocation of 0.5 percent of gross domestic product (GDP) for sanitation and hygiene. Indeed, with the current COVID-19 pandemic and the need to ensure regular handwashing and other hygiene practices, this call would not have come at any better time.

Education

Basic Education Schools Need Text Books Too In the 2020 budget, Government committed to develop, print, and supply teaching and learning materials (TLMs) for 1,250,144 KG pupils and 1,614,280 pupils in lower primary, 1,561,058 pupils in upper primary, and 1,215,088 pieces of Teachers Guide for teachers from KG to Primary 6. But this has not been done.

Two years into the implementation of the new curriculum, teachers at the basic education level have been using their guide pack but with no corresponding textbook and workbook for the pupils. The current practice is that the approved Page 9 of 15 textbooks are on the market where parents are expected to purchase for their wards. What then becomes of the plight of poor parents and those in deprived communities, who cannot afford the cost of these books or may not have access to them on the market due to unavailability of the bookshops in their localities? With the same level of priority accorded free SHS where students are provided textbooks, government as a matter of urgency address the public concern regarding the production and supply of textbooks at the basic level.

 Reduce Inequity in Regional Expenditure, Access and Quality performance Government should equitably distribute resources and ensure appropriate implementation to reach above-average education outcomes. Some regions such as Greater Accra, Ashanti, and Eastern received more funds than other regions in 2020. There is also a decline in enrolment in selected regions such as the Volta region and unavailability of textbooks particularly in Northern, Bono and Ahafo regions. The impact of inequities on education performance is well documented and lasting solutions are desired now more than ever.

Food and Agriculture

Give equal priority to Rearing for Food and Jobs Just as Planting for Food and Jobs. The continuous yearly allocation to Planting for Food and Jobs (PFJ) must be commended. However, government should prioritize and provide clear budgetary allocation to Rearing for Food and Jobs (RFJ) too. Although the budget statement outlined key activities to be implemented in 2021 under the RFJ programme, the budget is silent on a dedicated expenditure line. In the wake of climate change and uncertainties in crop yields, an alternative to improve incomes and sustain livelihoods of crop farmers will be the rearing of small ruminants. In addition, the effective implementation of RFJ will improve household nutrition of smallholder farmers.

 Fisheries and Aquaculture

Ensure gender responsive budget implementation Men and women play an important role in the fishing industry in Ghana with both genders contributing significantly to the growth of the industry. While some 500,000 affiliated workers are engaged in processing, distribution and marketing of fish (which are female dominated), the sector employs some 135,000 fishers4. Whereas access to outboard motors, fishing nets etc. are of primary concern to men, access to improved ovens remains a challenge for women, with only about one percent of them using improved ovens for processing5 . However, the Fisheries Input Support Scheme does not seem to prioritize the needs of women in the provision of inputs. With specific challenges of men and women in the industry, the seeming lack of due consideration for both men and women in the budget of the ministry is worrying. Government must therefore ensure gender responsiveness in the implementation of projects and activities of the ministry.

Social Protection

 Expedite action on the Ghana National Household Registry (GNHR) The completion of the GNHR is critical in ensuring effective targeting of extremely poor households for social protection (SP) delivery. Consecutive national budgets continuously make pronouncements about governments’ commitment to establishing the registry.

Despite these promises, the process of rolling out this exercise has been super slow. The ongoing COVID-19 pandemic that elicited the government’s response in mitigating the impact on vulnerable people further underscores the need to double efforts in producing the GNHR. There were widespread media reports, and indeed, SEND GHANA’s social audit of the COVID-19 Alleviation Programme (CAP) confirmed that some vulnerable 4 FAO (2016). http://www.fao.org/fishery/facp/GHA/en 5 FAO (2020).

Empowering women in small-scale fisheries for sustainable food systems Page 11 of 15 people, including street children and homeless people were excluded at the height of the crisis when cooked and uncooked food, in particular, were distributed by the government and other benevolent organizations. This was largely due to several factors, including a lack of comprehensive and reliable data on vulnerable populations for SP targeting. Prioritizing the completion of the GNHR by providing the needed resources to the GNHR Secretariat is a sure way to overcome such challenges. Implement Re-Certification Mechanism to Pave Way for Graduation of LEAP Beneficiaries The government have severally made commitments to implement the Recertification Mechanism and Productive Inclusion to enhance graduation of LEAP beneficiaries as stipulated in the program design. Paragraphs 362, 363, and 1019 of the 2020 and 2021 budgets respectively, made emphatic statements that the government will start the implementation of the re-certification strategy for exiting LEAP beneficiaries. In December 2018, the MoGCSP said it would, begin the recertification of LEAP beneficiaries to graduate them in 2019. “From next year, for instance, those who have been on LEAP are going to go through a re-certification system where we will recertify them. If you are on LEAP and you need to exit on LEAP, we give you employable skills and small startup capital for you to set up your own business.6” These pronouncements have largely remained unimplemented.

 The government has not demonstrated enough commitment in implementing the policy. As far as we know, there has not been as yet, a clear-cut exit strategy/plan aimed at supporting beneficiaries with a productive capacity to warrant weaning them off the program. As a result, not a single person has purposefully exited from the program since its commencement in 2008. To scale up the number of beneficiary households and gradually attain universal coverage, it would be important for the government to go beyond paying lip service and undertake a comprehensive assessment of the economic status of the current beneficiaries, support those with productive 6 https://starrfm.com.gh/2018/12/leap-recertification-exercise-kicks-off-2019/ Page 12 of 15 capacity, employable skill, and start-up capitals to pave a way for their graduation. Increase School Feeding Grant to at Least Ghc2.00 Per Child To Improve Quality Of Meals The government effort in training over 9,000 caterers and cooks on nutrition in some 9 regions under the school feeding programme during the 2020 fiscal year is highly commendable. In the 2021 budget, government committed to continue to train caterers and cooks. This is important in contributing to improving the quality of food served to pupils. However, it is not enough to just train cooks and caterers on nutrition without accompanying increase in the grant size per child. The current amount of GHC 1 per child for a plate of food is unsatisfactory and cannot guarantee an adequate and healthy meal for child development. A teacher had this to say about the programme “These children complain about eating the same food every day.

There is no meat, fish or egg and …since they started this school feeding programme here, I have never seen the children eat an egg or meat7”. Indeed, the School Feeding Secretariat has also been asking the government to consider increasing the grant. The National Coordinator of the programme, in October 2018, publicly admitted at a stakeholder meeting in Accra that the GHC 1.00 budgeted for the GSFP per child was “inadequate8” We are therefore proposing to the government to make a conscious effort to increase the amount to at least GHc2.00 per child if it needs to fully attain the program’s short-term objective to reduce hunger and malnutrition. 7 https://www.ghanabusinessnews.com/2019/01/23/poor-quality-food-stark-malnutrition-in-children-of-miondistrict-despite-school-feeding-programme/ 8 https://starrfm.com.gh/2018/10/school-feeding-secretariat-asks-for-increase-in-grants/

Child Protection and Welfare

 Implement the Early Childhood Education Policy Now Despite the progress that Ghana has made in improving access to school, several children do not have the required literacy and numeracy skills. A large number of pupils struggle to meet the proficiency cut-off point for English and Mathematics between grades four and six (UNICEF). As a result, the Ministry of Education with support from UNICEF developed the Early Childhood Education (ECE) policy, which provides a framework for comprehensive early childhood education, including standards for teaching and monitoring of public and private service providers (2020 budget statement). This policy was approved by Cabinet in 2020 with a costed implementation plan. Implementation was expected to commence nationwide in 2020. It is refreshing to note that government considered inputs into the 2021 budget on the implementation of ECE policy submitted by SEND GHANA.

 It is worth noting, however, that whereas the 2021 budget reinforces the government’s commitment to start the implementation this year, it lacks details in terms of allocating specific funding amounts for its realization. This raises some concerns regarding government commitment to open budgeting. We therefore urge the government to provide information on a dedicated budget line to implement the policy. TAX Government could have been more innovative with the taxation option by targeting the ‘haves’ instead of burdening ‘the have-nots’, too, with the same taxes. Research has shown that once the tax revenue as a percentage of GDP reaches around 15 percent, GDP per capita increases sharply, and thus it ensures that the country has the money necessary to invest in the future and achieve sustainable economic growth. Ghana’s tax-to GDP ratio over the past three years (16.5% in 2018, 13.1% in 2019 and 12.4 % in 2020) indicates that the country has more to do to cross this threshold. This is way below the median tax-to-GDP Page 14 of 15 ratio of 19.1% in Africa, 22.8% in Latin America and 34.3% in the OECD and 26.2% worldwide). Mobilizing domestic revenue through taxation is thus critical in addressing the worsening tax-to GDP ratio and consequently, to finance the ambitious development projects outlined in the 2021 budget statement and economic policy. Consequently, the tax proposals in the 2021 budget are therefore a great idea. Our major concern, however, is the incidence (where the burden of tax falls) of some of the new tax measures. A major characteristic of a fair and just tax system is equity, where tax payers contribute according to their ability to pay. We are concerned that some of the tax proposals in the 2021 budget are more consumption based, and the fact is, the burden will fall more on the poor and vulnerable. In particular:

 • The COVID-19 Health Levy (1% increase in NHI levy; 1% increase in VAT Flat Rate)

The 5.7 % increase in petroleum prices at the pump (Energy Sector Recovery Levy of 20 pesewas; the 10 pesewas Sanitation and Pollution Levy per litre on petrol/diesel). The increase in the VAT rate and the Petroleum taxes have multiplier effect on all other sectors. These will obviously translate into high public transport fare, cost of food and other basic goods and services consumed by all, with the poor feeling the brunt more. We believe that government could have been more innovative with the taxation option by targeting the haves instead of burdening the have-nots, too, with the same taxes. Progressive taxation, where corporations and the richest individuals are taxed more in order to redistribute resources, is the way to go as far as governments quest to reducing inequality is concerned. The potential role in reducing inequality has been documented in both developing and OECD countries.

 What options are there for government?

• The Sanitation and Pollution Levy could have been flapped as a kind of ‘sin tax’ or ‘polluter pay tax’ on plastic bag usage to address the plastic bag menace, as exist elsewhere (Germany, Belgium, Hong Kong, Bangladesh, South Africa, Kenya, Rwanda, Botswana, among others). • Government could relook at the implementation challenges/bottlenecks with the luxury vehicle tax and consider reintroducing it; and the highincome earner tax (personal income tax band rate exceeding GH₵ 10,000 at a rate of 35%; reviewed to include an additional band of GHC 20,000 and above at a rate of 30%) introduced in the 2018 mid-year budget review. To our disappointment, the government bowed to pressure from various interest groups and economic elites and repealed these taxes in less than a year. Records from the 2018 performance indicatorsshow that personal tax revenue projection out-turn recorded a 0.6 percent increase over the revised budget figure. Indeed, by our estimation, the revenue targets for the last half year of 2018 were exceeded partly due to these and other progressive tax measures that were introduced. •

Other progressive tax measures such as enhancing the efficiency in the collection of property taxation, taxing high net worth individuals, reducing excessive tax holidays for multinational companies, should have been looked at.

 WE THANK YOU FOR YOUR ATTENTION

Media Contact: George Osei-Bimpeh Country Director

Abdulai Mohammed Tajudeen Communications Officer 0244-967-842 [email protected]

Source: Publicagendagh.com

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