Finally Ghanaians were, a fortnight ago, given a holistic look at the various specific initiatives government is pursuing under the second, and most potentially transformative phase of its ambitious GHc100 billion, three year Ghana COVID 19 Alleviation and Recovery of Enterprises (Ghana CARES) initiative. Prior to the presentation to Parliament the proposals for the mid-year freview of the 2021 budget by Finance Minister Ken Ofori-Atta, although government had repeatedly declared that the Ghana CARES initiative is potentially the most transformative medium term plan to accelerate the country’s economic growth and development ever designed, it had remained short on details of what the plan actually contained. Indeed there had not appeared to be a holistic plan for the initiative and consequently initiatives to be pursued have been announced in bits and pieces, often as defensive reactions to criticism of government’s economic management, such as that presented under the ambit of the ongoing #fix the country campaign.
All that changed a fortnight ago as an entire section of the Finance Minister’s presentation to Parliament was devoted to a documentation of ongoing or impending initiatives under the Ghana CARES programme.
Explained Ofori-Atta: “Government had launched the audacious GH¢100 billion Ghana COVID-19 Alleviation and Revitalization of Enterprises Support (Ghana CARES) “Obaatan pa” Programme. As already articulated, our approach under this programme is to catalyse the private sector in targeted sectors to fast-track competitive import substitution, export expansion and the creation of decent jobs for our youth.
“Government’s focus on returning to a more sustainable fiscal path in the medium term is underpinned by our current deliberate efforts to ease constraints in agriculture, agri-business and industry. The transformative interventions under the Ghana CARES programme are also to foster structural reforms in the business value chain to support diversification and job creation for our youth.
Since the turn of this year, we have been purposefully pursuing the Phase II of the Ghana CARES programme to revitalise the economy and set it on track for transformation. We are emboldened in this course, knowing that the initiatives in the Stabilisation Phase (Phase I) were vital in sustaining the quality of life of our people and the prospects of our economic recovery.
“Six months on we have made considerable progress towards our pledge to create a well-lubricated financial ecosystem to anchor wealth-building for our youth under the Ghana CARES programme.”
Now to the specifics. The first is one of the few already announced, indeed repeatedly so although the failure of government to keep to its accompanying timelines for implementation has done little to encourage public policy commentators that the entire programme is more than political gimmickry.
This is the much trumpeted Development Bank Ghana which, in March, the Finance Minister had promised would be up and running by the end of July. To be sure the Minister’s latest pronouncements on this institution add nothing new other than to reassure that, although behind schedule, its commencement is as concrete as the benefits it can be expected to deliver.
“With adequate capitalisation this year, we are ready to operationalise the Development Bank of Ghana (DBG) which will address critical constraints to businesses” asserted Ofori-Atta to Parliament. “As a post COVID recovery institution, the Development Bank of Ghana (DBG) would mobilise funds from both the domestic and international markets to support the private sector to invest on a medium to long term basis. The DBG will thus unlock long term financing for actors in the manufacturing, agriculture, agro-processing, mortgage, and housing sub-sectors to propel economic growth, create jobs and improve domestic revenue mobilization. “
To be sure, this initiative is potentially pivotal, if the role of the Ghana Export Import Bank is to serve as a guide. GEXIM Bank has shown how useful a development bank can be and DBG has an even bigger, more critical mandate.
But most importantly, Ofori-Atta’s presentation has revealed DBG as just a part of a wider initiative, to be implemented through the Ghana CARES programme, to overcome the dearth of available commercial financing from Ghana’s financial intermediation industry, which the Bank of Ghana’s Monetary Policy Committee, a fortnight ago itself identified as the biggest single constraint to the country’s ongoing economic rebound from the slump caused by COVID 19.
Another part of this agenda will involve the strengthening of GIRSAL, guarantee scheme introduced by government a couple of years ago to encourage commercial lending to the agricultural sector, which is widely seen as an overly risky credit proposition.
“To ensure that businesses have access to investment financing at a lower interest rate, we are strengthening GIRSAL to collaborate with banks in order to mitigate the challenges within the agricultural value-chain” explained Ofori-Atta. “We have made available additional funding to support the operationalization of the Guarantee Scheme which will allow Medium and Large Scale Enterprises to access investment funding from financial institutions at a lower interest rate, improve productivity, financial performance and sustain employment for our people.”
Another facet of the private sector financing agenda under Ghana CARES is the use of the Ghana Commodity Exchange which holds tremendous potential but which is hardly being exploited so far. “We are catalysing the Ghana Commodity Exchange (GCX) this year to be more nimble” asserted Ofori-Atta. “This support will strengthen the GCX to play its critical role in reducing post-harvest losses, providing better access to agricultural and financial markets, creating jobs and improving livelihoods for all actors along the agricultural value chain.”
While all these initiatives aim at facilitating increased volumes of debt financing, government is also looking at providing an improved framework for mobilizing equity financing for private enterprise too. “To provide financial resources for the development and promotion of venture capital financing for Small and Medium Enterprises (SMEs) in priority sectors under Ghana CARES, we are supporting the Venture Capital Trust Fund (VCTF) this year” affirmed Ofori-Atta. “The support will enable the VCTF to tremendously impact financing for venture capitalists, especially the youth, in Ghana.”
Here however the scope of initiatives under Ghana CARES falls short of what is needed. Going by the Finance Minister’s revelations, little attention seems to be given to the Ghana Stock Exchange’s equity segment – which has been largely subsumed by the success of its debt – focused Ghana Fixed Income Market – nor the Ghana Alternative Stock Exchange, established to ease stockmarket access by SMEs, but which so far has attracted debt securities issuances rather than equity. No mention ws made about the newly introduced concept of crowd funding – eminently successful in developed jurisdictions – either despite its potential for mobilizing equity for small start ups if properly structured and regulated by government.
Instructively, the other mooted major initiative for private sector financing under Ghana CARES also focuses on debt. This is the Ghana Enterprises Agency, born out of the restructuring of the erstwhile National Board for Small Scale Industries, NBSSI.
“We are delighted to have completed the institutional rationalization and subsequently launched the Ghana Enterprises Agency (GEA), as a dedicated robust institution to promote the development of Ghanaian MSMEs” enthused Ofori-Atta to Parliament. “The GEA is now better positioned to respond to the growing needs of MSMEs and play a lead role to strengthen the capacity as well as the competitiveness of the enterprises in Ghana. With additional funding and strategic partnership of reputable international organisations, GEA is ready to expand the frontiers of MSMEs in Ghana.”
Related to the funding of the private sector for productive activity is support for home ownership through mortgage financing. Just as with the private sector financing initiatives, this involves pursuing an initiative already underway rather than a brand new one. However government can at least lay claim to its being an initiative designed specifically as a new component of the new Ghana CARES programme. “Government, this year, is supporting the National Housing and Mortgage Fund (NHMF) under the Ghana CARES programme” said the Finance Minister. “This funding will enable the NHMF to provide a lower rate counterpart fund to be matched by the banks. This is will lead to a lower blended rate to finance both construction and mortgages at lower rates in Ghana. Through this intervention, our quest to promote the construction sector and provide more jobs for our youth is on course.”
The continued reference to the youth by the Finance Minister in the presentation on Ghana CARES is interesting in that none of the financing initiatives are actually new, but this is the first time they are being presented as efforts specifically aimed at empowering the youth. This is correctly interpreted as political spin aimed at ameliorating the ire of the #fix the country protestors; but at the same time it represents a recalibration of the Ghana CARES programme towards benefiting the youth in particular as a response to the ongoing protests. Considering the sheer size and duration of Ghana CARES, the protestors should see this as a huge win for themselves.
The next major pillar of Ghana CARES focuses on improving the regulatory and facilitation frameworks within which Ghana’s private sector operates.
“We are doing more to unbound the spirit of entrepreneurship by easing the constraints in the Business Regulatory Process this year” promised Ofori-Atta.” Through the Ghana Economic Transformation project, we are accelerating on-going reforms to enhance the business environment. Our target is to improve Ghana’s “Doing Business” global ranking to be in top-100 in the medium term. The achievement of this will facilitate the attraction of more investments to generate decent jobs for our youth as part of our vision under GhanaCARES.”
This would set the foundation on which the Ghana Investment Promotion Centre can up its own game, as it seeks to fulfill its own crucial role in the Ghana CARES programme by mobilizing the GHc70 billion required from the private sector over the three year period.
“To enable the GIPC mobilise the GH¢70billion investment, we are supporting the GIPC to be aggressive and more targeted in seeking investment into the prioritised sectors. The intentional and dedicated effort to attract global and regional brands in the likes of Twitter, Google will be re-invigorated and leveraged to grow local enterprises” said Ofori-Atta in his presentation.
“Together, the DBG, GCX, GEA, GIRSAL, VCTF, NHMF, GIPC and the accompanying reforms of the business regulatory environment, form a nucleus that anchors a new age of entrepreneurship, job creation and wealth building for our post-COVID transformation” he enthused. “The prospects of business and entrepreneurship have been given the needed boost through this ecosystem.”
Also revealed by the Finance Minister are specific interventions in various economic sectors, starting with agriculture. The emphasis on agriculture is for several crucial reasons. Why the most obvious one is food security, agriculture also presents the best potentials for job creation, for both import substitution and foreign exchange earnings to keep the cedi’s exchange rate stable, and perhaps most crucially, for providing raw materials with which Ghana can industrialize. Government is looking at broad based increases in agricultural production, but is targeting certain crops and activities for strategic reasons.
“CARES is investing in initiatives that will improve production and productivity in the rice, poultry, soybean, and tomato subsectors this year” Ofori-Atta told legislators.” Government’s recent successful engagement with all the value-chain actors in these sub-sectors has helped to sharpen the focus of investments and brought a more holistic view to the issues we are confronting in these sectors. We are therefore providing interest rate subsidies, facilitating equipment acquisition, linking markets and promoting relevant research for these sectors.” Again government is now claiming all this is being done deliberately to empower the irate youth. “The youth are being supported this year to become out-growers for anchor farmers to boost their participation in commercial farming.”
Ghana CARES is also investing in data and digital technology for the Agricultural sector. These technologies are meant to revolutionize the targeting of interventions such as fertilizers, seed inputs, extension services and acquisition of land for commercial farming. The aim is to drive efficiency and improve output in the sector.
Accelerated expansion of Ghana’s light manufacturing is an obvious area of focus under Ghana CARES. “Government is delivering dedicated support to expand the processing capacity of actors in the Pharmaceutical, Cassava, Garments and Textiles industries to increase exports and create additional jobs” asserted Ofori-Atta. The specific interventions under the programme include support for the establishment of a cassava processing plant, provision of technical assistance to the Garment and Textile as well as the pharmaceutical industries.
Furthermore, as a commemorative endeavour with massive socio-economic value, Government has also decided to create the Ghana CARES Enclave. This enclave, to be sited at Asutware will accommodate Industrial Parks, Tech/Digital Hubs, Commercial farms operated by our youth as well as suitable housing as a secondary city.
“We believe that the benefits of agglomeration and the expected spillover effect will be vital for sustaining innovation and economic transformation. As Tema symbolised our post-independence audacity, the Ghana CARES Enclave, as a monument of our resilience, will mark the fortitude in our post-COVID transformation: Ofori-Atta enthused. “To date, we are engaging targeted stakeholders to enable us to proceed smoothly and with speed. “
Key Pharmaceutical Manufacturing companies are being supported to upgrade their operations to reach Good Manufacturing Practice Standards although this again suggests that the Ghana CARES programme, as announced is as much a political weapon with which to claim concerted economic response to the recent down turn as it is a genuine economic master plan ; the effort towards achieving GMP standards for the pharmaceutical industry is an effort being executed by GEXIM Bank since 2017, long before the outbreak of COVID 19 and government’s declared response through the Ghana CARES programme. Additionally, Government is working feverishly to establish a garment industrial park which will boost exports and create additional jobs under the Ghana CARES programme. Although plans for this have also been afoot for several years now, it is likely this concept has been adopted for inclusion in the programme as part of the holistic segment that addresses manufacturing.
Rapid acquisition of capabilities to manufacture machine tools to support industrialization is a major priority under Ghana CARES. Government has therefore established the Foundry to assist with the fabrication of tools and the process to identify a suitable private sector operator to manage the Foundry is ongoing. “We are also providing incentives to the private sector to manufacture key agricultural implements and prototype industrial research on a commercial basis” assured the Minister.
The Tourism, Arts and Culture sector was perhaps the most affected by this pandemic and this has occurred just as government had realized its huge latent potentials. Therefore it forms a major pillar of the CARES initiative.
“Government is cognisant of the enormous potential of this sector in creating jobs, earning foreign exchange and projecting Ghana for investment” the Finance Minister told Parliamentarians a fortnight ago. “We are also aggressively promoting international and domestic tourism through Ghana CARES by supporting the modernisation and development of identified tourist sites. We are therefore revitalizing the skill sets of sector operators, working to reduce the cost of doing business in the sector to make actors more competitive and transforming targeted tourist beaches to increase patronage.”
Next is the ICT sector which has been a key component of the incumbent administration’s efforts to modernize the economy and improve its performance right from when it first assumed office.
“Ghana CARES is providing catalytic investment for the development of communication infrastructure this year” asserted Ofori-Atta. “Government is consolidating and expediting projects on Smart Workplace, National ID, Digital address systems, Land Records Digitisation, Births and Death Registry, Health Records Digitisation, virtual learning platforms this year to bridge the digital divide for the benefit of all citizens.
“Ongoing efforts to consolidate the fibre assets of VRA, ECG, GRIDCO, Ghana Gas, BNC, GIFEC and others are being sustained under this programme. We are also enhancing the capacity of key institutions and improving coordination with the private sector for quality service delivery to facilitate business expansion and economic transformation.”
Government is expected to provide GFHc30 billion out of the GHc100 billion in total financing of the programme. Even though this amounts to just 30 percent of the total amount it still presents a massive hurdle for an administration notorious for cutting away capital expenditure in order to stay within or at least close to its fiscal deficit targets. Indeed the biggest genuine criticism of the administration is that the rising public debt is the result largely of consumption rather than infrastructural development.
Aware of its own shortcomings the Ghana CARES initiative comes with a framework for ensuring that it is actually executed.
“Government is aware of the critical importance of additional revenue to implement the recovery and transformation agenda” Ofori Atta has assured. “We are therefore transforming the Ghana Revenue Authority to drive our quest for burden-sharing and sustainable revenue mobilization. This transformation agenda is not just about mobilizing more, it is equally about mobilizing sustainably with the help of technology. Government is building robust and integrated data systems under Ghana CARES to advance this cause.
“We have also established the Revenue Assurance and Compliance Enforcement (RACE) Initiative to complement the efforts of the Ghana Revenue Authority (GRA). The remit of RACE is to identify and prevent revenue leakages while reinforcing the culture of compliance nationwide. A formal launch of this Initiative is scheduled.
“We have heeded the call from H.E. the President not to see the Ghana CARES programme as business as usual. To this end, nine Implementation Compacts with comprehensive result frameworks have been developed with the participating institutions.
“The Compacts are partnership agreements between the Ministry of Finance and participating Institutions to ensure effective and timely delivery of targets under Ghana CARES for the 2021 fiscal year. It ensures predictability of and the flow of catalytic resources to the agreed interventions. We have strongly linked resources to results to facilitate optimal delivery of outputs and outcomes. Through the Compacts, we are also strengthening sustainable alliances and collaboration with private sector players and development partners for economic transformation in a post-COVID era.”
All this provides the first real glimpse of what the Ghana CARES programme will entail. To be sure, large parts of it are actually simply the continuation of ongoing policies and initiatives designed and started long before the CARES programme itself. However, their being integrated into a holistic development plan with linkages to other initiatives does count for something.
Ahead of a closer examination, the components of the CARES programme appear well thought out and implementation, Ghana’s albatross in the past, is being properly addressed through a combination of revenue generation measures and implementation compacts.
Finally Ghana CARES phase two is no longer a political rallying cry and electoral promise; it has now become a real programme with real components and a game plan to see them actually implemented.