The National Youth Authority launched the STEP (Steps Towards Employment and Productivity) Project which aims at equipping 5,000 young persons between the ages of 15 and 35 with artisanal skills. The Authority organised a coaching and mentorship programme for 250 students from selected Senior High Schools in Accra and also provided skills and vocational training to 1,558 trainees at the 11 Youth Leadership and Skills Training Institutes (YLSTIs).
In 2018, the Authority will implement the STEP Project under the Informal Youth Enterprise Development Programme and also commence the development of a National Youth Work Policy and Licensing. The Authority will establish Youth in Sports Development programme to create a platform for the youth to contribute to sports development
PUBLIC SAFETY SECTOR
Office of the Attorney-General and Ministry Of Justice A legal team, with the support of technical experts successfully defended Ghana’s Maritime boundary dispute with La Cote D’Ivoire at International Tribunal for the Law of the Sea (ITLOS) thereby, forestalling the loss of potential revenue from the disputed oil fields.
In the fight against corruption, the Office of the Special Prosecutor’s Bill was just yesterday passed by this Parliament. This is a significant move in the overwhelming national desire to combat corruption. In 2018, the Office of the Attorney-General’s Department will operationalise the Office of the Special Prosecutor, review all agreements for MDAs and MMDAs, with the aim to secure successful convictions in the vast majority of cases referred to the Office by the Police.
Ghana Beyond Aid
Mr. Speaker, at the heart of our government’s vision for Ghana is an “An Agenda for Jobs: Creating Prosperity and Equal opportunity for All”. We are committed to pursuing this agenda of inclusive growth by implementing strategies, policies, and programmes to grow our economy and promote the creation of good jobs at a much faster pace than ever before.
Mr. Speaker, to this end, we envision a Ghana beyond aid where Government and the people of Ghana take full ownership and responsibility for the nation’s economic growth and transformation, in a new partnership with our development partners.
Mr. Speaker, while we greatly appreciate and will continue to welcome assistance from our external development partners, we envisage a new partnership:
where development assistance is targeted and strategically aligned with our national growth and economic transformation priorities;
where domestic resource mobilization is enhanced through higher private savings and higher government revenues raised in a more efficient and equitable manner;
where there is resolute efficiency and accountability in the use of all public resources by government, including resources from external partners;
where strong support is given to the private sector, both domestic and foreign, to drive economic growth and job creation; and
where our engagement with our external partners transitions from one based on aid to one increasingly based on trade and strategic political cooperation.
Mr. Speaker, we envision a Ghana beyond aid where within a generation, Ghana, through rapid and inclusive growth that respects gender equity, safeguards the environment and mitigates climate risk exposure, has attained upper middle-income status. This will be:
a Ghana where each child has the opportunity to graduate from at least a senior secondary school or polytechnic and be equipped with the skills to succeed in the modern work-place;
a Ghana with an economy based on a transformed and highly productive agriculture, a dynamic and competitive manufacturing sector, and high-value services that provide productive employment opportunities for all our young people entering the job market;
a Ghana where no one has to go hungry and everyone has access to the necessities of life including good health care, water, and sanitation in line with the Sustainable Development Goals (SDGs);
a Ghana that provides reliable and affordable supply of infrastructure, including power;
a Ghana that is a hub for manufacturing, financial services, and other high-value modern services; and
a Ghana that is a preferred location for international businesses that are operating in mutually beneficial linkages with vibrant local businesses, and serving the rest of Africa and the global market.
Mr. Speaker, we can do this and we will do this.
And we are confident we can, because we are a nation of smart, dedicated and hard-working people, blessed with abundant natural resources; and a nation that has maintained peace and political stability and earned international respect and goodwill. All we need then is a leadership of integrity, with a clear strategy and the will and determination to pursue it.
Therefore, Mr. Speaker, we will, through consultations inside and outside government, translate the President’s “Coordinated Programme of Economic and Social Development Policies” (CPESDP) into a detailed medium-term national development policy framework for 2018-2021, for fast and sustained growth, building on the achievements of this year and the measures already contained in this budget.
Mr. Speaker, I have every confidence that with all of us working together under the President’s leadership, we can march forward to a Ghana beyond aid in a new, more matured, and mutually beneficial relationship with our external partners, and advance towards our national vision of building: “An optimistic self-confident and prosperous nation, through the creative exploitation of our human and natural resources, and operating with a democratic, open and fair society, in which mutual trust and economic opportunities exist for all”.
SECTION SIX: POLICY INITIATIVES
Mr. Speaker, Government made a commitment in the 2017 Budget Statement and Economic Policy, to structurally transform the economy through investment in agriculture, development of strategic infrastructure, investment in human capital and a deliberate push towards industrialization with active private sector involvement to create jobs and wealth, and improve incomes, thereby improving the standard of living of the Ghanaian.
Mr. Speaker, to achieve this transformation we will continue with the implementation of our flagship programmes and initiatives commenced in 2017 and also outline new initiatives for implementation in 2018.
STATUS OF THE 2017 BUDGET POLICY INITIATIVES
Mr. Speaker, in our maiden Budget Statement and Economic Policy, we outlined a number of short to medium term policy initiatives, to set the stage for our agenda for inclusive growth and job creation.
Mr. Speaker, permit me to present an update on these policy initiatives.
IMPROVING THE BUSINESS ENVIRONMENT.
Mr. Speaker, Government promised in the 2017 Budget to remove some taxes to free additional capital for businesses and provide relief to consumers. In line with this, the following taxes were abolished: one percent Special Import Levy imposed on imported raw materials and machinery;
17.5 percent VAT/NHIL on Financial Services;
17.5 percent VAT/NHIL on domestic airline tickets;
Excise duty on Petroleum;
Import duty on specified vehicle spare parts;
five percent VAT/NHIL on Real Estate sales;
17.5 percent VAT/NHIL on selected imported medicines not produced locally;
Levies imposed on ‘kayayei’ by local authorities.
The following taxes were reduced:
Special Petroleum Tax reduced from 17.5 percent to 15 percent; Energy sector levy rates for National Electrification and Public Lighting also reduced from 5 percent to 2 percent and 5 percent to 3 percent respectively;
Exemption from tax, gains from realization of securities listed on the Ghana Stock Exchange for a period of 5 years; Replacement of 17.5 percent standard rate with a 3 percent flat VAT/NHIL rate for supplies by retailers and wholesalers.
The following tax measures were also implemented:
As part of measures to streamline tax exemptions, Government piloted a refund policy. Based on the lessons learnt, structures, including a paperless system will be implemented for granting and monitoring tax exemptions. Government, in 2018, will introduce a comprehensive policy on the tax exemption regime. The Fiscal Electronic Device Bill was laid before Parliament; and The Excise Tax Stamp policy was launched.
Paperless Port System
To improve efficiency at the Ports, the Ministry introduced paperless transaction at the Ports. The implementation of the paperless system significantly reduced transaction time from 2 days to 8 hours (of compliant transactions) whilst revenue from the Port increased by 35.4 percent.
Banking Sector Initiatives
Mr. Speaker, Government resolved in the 2017 Budget Statement to address the challenges in the financial sector to enable strong private sector credit growth. In this regard, the Bank of Ghana addressed the challenge that UT Bank and Capital Bank posed to the entire banking system by facilitating to a Purchase and Assumption Agreement by GCB Bank. This intervention was made with the clear policy intent to protect the deposit public and prevent any contagion effect on the entire industry. The government is proud to announce that despite the failure of these two banks in 2017, the confidence and trust in the financial sector remain strong.
The Bank of Ghana increased the minimum capital requirement of universal banks from GH¢120m to GH¢400m, and all such banks have up to December 2018 to meet the minimum capital requirements. This was done to ensure that these banks have more capacity to lend to businesses, especially within the purview of their single obligor limits which the Bank of Ghana must enforce strictly.
Mr. Speaker, Government streamlined ESLA flows to accommodate all the existing legacy debts (about GH¢10 billion) owed by the energy sector firms to banks and suppliers, and took steps to issue an ESLA-backed bond to pay off these debts. This initiative is very important in resolving the liquidity challenges faced by the banks and will enable stronger credit to the private sector especially as banks Non-Performing Loans (NPLs) improve.
Government also prepared the Payment Systems and Electronic Transfer Bill to support transition from cash dominant to cash light economy. In 2018, this Bill will be laid before Parliament.
Infrastructure Development initiatives
Infrastructure for Poverty Eradication Programme (Ipep) Government introduced the IPEP to direct capital expenditure towards local, constituency-level specific infrastructure and economic development priorities with particular emphasis on rural and deprived communities. In this regard, the Ministry of Special Development Initiatives (MSDI) was created to provide oversight and strategic direction for the implementation of IPEP.
IPEP projects were selected through standardised guidelines in the categories provided below:
One Village, One Dam;
Small Business Development;
Agricultural inputs, including equipment;
“Water For All” Projects; and
A ten-member regional team was constituted for each of the 10 Regions to oversee the implementation of the IPEP. The teams conducted constituency infrastructure needs assessment to identify projects in all 275 constituencies that are consistent with government priority areas.
The law establishing the three Development Authorities (DAs) namely, Northern Development Authority (NDA) Middle-Belt Development Authority (MDA) and Coastal Development Authority (CDA) has been passed by Parliament.
Establishment of the Zongo Development Fund
In addition, Parliament passed the law establishing the Zongo Development Fund and this has been funded in the 2018 budget.
Industrialising Ghana from the Ground Up: “One District, One Factory” One District, One Factory programme was launched by the President on 25th August, 2017.
The Ministry of Trade and Industry completed technical, financial and commercial viability analysis of 462 proposals out of which 191 covering 102 Districts were selected for implementation. It is envisaged that, these 191 District Enterprise Projects will collectively generate about 250,000 direct and indirect jobs.
191 projects have been appraised and selected for implementation. 104 of these companies will be operating in the Agribusiness sector; 20 in the Meat and Poultry sector; 40 in the Construction and Building Materials sub-sector; and the remaining 27 are businesses in the Cosmetics and Pharmaceuticals sectors.
The regional breakdown of the companies are as follows: Ashanti 35
Brong Ahafo 19
Greater Accra 28
Upper East 4
Upper West 5
In 2018, government will allocate a minimum of GH¢2 million to each district for the implementation of the 1D1F. I am by this challenging the local authorities in the various districts, together with the private sector to take full advantage of these funds.
The National Industrial Revitalisation Programme- A Stimulus Package for Industry
A Stimulus Programme was designed to support viable existing local companies that are currently distressed or are facing operational challenges but are deemed viable. To date, over 350 applications from business operators have been received, out of which 80 were assessed to be eligible for support in the first phase of the programme. The second phase will involve the provision of a stimulus package consisting of technical and financial support to these eligible companies.
These beneficiary firms operate in the following sectors: Agri-Business 48; Chemicals/Pharmaceuticals 10; Electrical and Electronics 3; Garment and Textiles 5; Building Materials 6; Plastics and Packaging 6; and Services 2.
Building an Entrepreneurial Nation
Government engaged a Private Sector Implementation Partner (PSIP) to manage the US$10 million National Entrepreneurship and Innovation Programme (NEIP) and to raise additional funding from the private sector. This programme was launched by the President on 25th August, 2017. The Ministry for Special Development Initiatives advertised and received 5,500 applications from young Ghanaian entrepreneurs. These applications are being vetted and successful entrepreneurs will receive business advisory services. About 500 of these will receive financial support in addition. Each enterprise will employ a minimum of 12 persons.
Planting for Food and Jobs
Mr. Speaker, the Planting for Food and Jobs Campaign, anchored on five strategic pillars – provision of improved seeds, fertilizers, dedicated extension services, marketing and e-Agriculture was launched by the President on 19th April, 2017.
Major milestones achieved nationwide include:
the distribution of about 80,000 bags of cereal and legume seeds, 36,000 sachets of vegetable seeds and about 2,000,000 bags of fertilizer; recruitment of 822 agricultural extension personnel; establishment of a taskforce to assess status of warehouses and storage facilities nationwide for rehabilitation; creation of market opportunities for farmers by linking them with institutional buyers such as School Feeding Programme and Prisons Service; and electronic registration of over 34,000 farmers out of more than 200,000 manually registered.
National Digital Addressing System
Government implemented the much-awaited National Digital Addressing System on October 18, 2017 to help formalise the economy. In 2018, Government through Ghana Post will develop postal codes to feed into the National Identification System. About 4,000 National Service Personnel will be engaged to emboss digital addresses on all landed properties nationwide. Ghana Post will be established as the preferred government agency for address verification.
National Identification Programme
Mr. Speaker, after eight long years of inaction, the National Identification Programme was revived and on 15th September, 2017 the first card ID was issued to the H.E. the President. The National Identification Authority will commence issuing ‘The Ghanacard’ after the amendment of the National Identification Authority Act, 2006 (Act 707) and subsequent passage of the relevant LI. It will be the first ever multi-purpose card issued in Ghana to support government’s efforts at formalising the economy. Care is being taken to ensure coordination with all other related identification initiatives to prevent waste of resources and maximise government’s investment.
EXPENDITURE MANAGEMENT AND COMMITMENT CONTROL Enforcement of the PFMA
Mr. Speaker, measures were put in place to strengthen commitment controls and ensure that expenditures match revenue inflows to sanitise public expenditure mangement. Government is committed to enforcing the PFM Act. To this end, draft regulations to operationalize the PFMA are being finalised and will be presented to this august house in 2018.
Treasury Single Account (TSA)
The CAGD identified a total of 12,891 bank accounts of MDAs/MMDAs, 5,500 of which were held at BoG whilst the remaining 7,391 were with Commercial Banks. As at 31st October, 2017 a total of 5,244 GoG bank accounts with both Bank of Ghana and Commercial Banks were closed, leaving 7,746 operational accounts.
The next phase of the TSA implementation will be to extend the transfer of GoG’s bank accounts with commercial banks to cover donor funds of MDAs as well as the bank accounts of subvented agencies such as Universities and other institutions. The transfer of Donor Funds of MDAs will, however, be done after agreeing with Development Partners on modalities of transfer. The next key phase which is also to be undertaken in 2018 will be the linking of all bank accounts residing with BoG to form a comprehensive TSA to establish a consolidated view of Government’s cash position.
IMPROVING DEBT AND LIABILITY MANAGEMENT
A maiden 15-year domestic bond was issued to lengthen maturity profile of public debt; The Domestic Debt re-profiling exercise which contributed to improving the debt mix and lowered domestic interest payments will be continued; and The next phase of the liability management programme will include: External debt re-profiling based on market conditions.
Issuance of Euro Bond and use of some of the proceeds for reprofiling more expensive domestic debt
Creation of benchmark domestic bonds through tap-ins rather than new issuances. This will improve secondary market trading. Improving liquidity and reducing yields on the domestic market. Exploring the opportunity to deepen the domestic market by making domestic bonds more tradable on the international market
FREE PUBLIC SENIOR HIGH SCHOOL Mr. Speaker, in fulfillment of our pledge to provide free SHS education to every eligible Ghanaian child, the free SHS was implemented, beginning September 2017. As expected, there has been a significant increment of SHS-1 enrolment from 300,195 in the 2016/17 academic year to 396,951 in the 2017/18 academic year representing 32.2 percent. Government absorbed all fees approved by GES Council and supplied the full complement of core text books to all first year students.
FIGHTING CORRUPTION Mr. Speaker, as we are all aware, a major source of corruption has been with malfeasance in public procurement and the extensive human inter-face in the provision of public services. In this regard, a number of major interventions have been undertaken, including but not limited to the following: Enhanced oversight responsibility for public procurement with the appointment of a Minister of State for Public Procurement The introduction of e-procurement by the Public Procurement Authority Implementation of a paperless system at Port Implementation of smart vehicle registration and drivers license by the DVLA Enhanced investigation of corruption in the public service by the Office of the Auditor General, EOCO, National Security, and other State Investigative Institutions. Methodical and thorough investigations are being conducted to avoid claims of witch-hunting
The Office of the Special Prosecutor is getting ready to crack the whip of justice.
POLICY INITIATIVES FOR 2018
Infrastructure Development and Job creation The Akufo-Addo Program for Economic Transformation (AAPET) The “Akufo-Addo Program for Economic Transformation (AAPET)” is a three-pronged economic development programme that will accelerate investments in Agriculture, Strategic Infrastructure and Industrialization.
Under the program, we will modernize agriculture, improve production efficiency, achieve food security, and increase profitability for our farmers. The plan is to invest in the entire agricultural and agribusiness value chain, which will create new businesses and job opportunities in the sector.
Mr. Speaker, Government will also invest in infrastructure that supports the opening up of the major agricultural zones of the country, in energy and related infrastructure to accelerate the industrialization agenda of Government. Significant investments will be made in the road and rail sectors of the economy to facilitate trade and the movement of goods and people.
The AAPET will:
abolish duties on some agricultural produce processing equipment and machinery;
Support the development of agribusiness start-ups;
Provide a GHc 400 million fund to de-risk the agriculture and agribusiness sector through sustainable agriculture financing and crop insurance schemes;
Increase the pace of agricultural mechanization;
Provide specific technical assistance and tax incentives to support agro-processing, packaging, and market access;
Launch a major pension scheme for cocoa farmers;
Ramp up investments under the Planting for Food and Jobs (seeds, subsidized fertilizer, etc);
Develop modern storage facilities through the “One District, One Warehouse” programme;
Implement a grant funding facility for agribusiness start-ups;
Launch the commodities exchange
Open up key food basket zones through road construction and irrigation projects.
Over the next three years, the following roads and bridges will be constructed:
Anwiankwanta-Obuasi Nyinahin-Awisesu Nyinahin-Kyekyewere Asuboni Rails-Ekutuaze-kadoaso-Akoari Kasotie Junction-Kasotie Wulugu-Kpasenke-Wa Lawra-Han-Tumu Nandom-Hamile Tamale -Karaga Karaga-Gushegu Bunkpurugu-Nalerigu Nalerigu-Gbintiri Twifo-Praso-Dunkwa on Offin Nkawkaw-New Abirem-Ofoase-Akim Oda Elubo-Asemkrom-Enchi Dome-Maamekrobo-Donkorkrom-Riverside Ewiase-Bosomoise Wiawso-Amfie-Aboyaa Asafo-Acheachen Dwenase-Nsonua-Anglo-Kwabenakwa Datano-Ahokwaa-Suhenso Asawinso-Kajina-Essakrom Kessekrom-Adiembra Penakrom-Futa Bechemaa-Nkwanta-Asuontaa-Oseikrom Akwakrom-Amissano (Ekumfi) Haveh-Hohoe Tamale-Salaga- Bimbilla Nkwanta-Damanko Attebubu-Kwame Danso-Kwadwokrom-Riverside Komfo Anokye/Bekwai Roundabout Interchanges and Apatrapa- Abuakwa Tamale Point 7 Interchange Suame Interchange PTC Interchange, Takoradi Daboya Bridge, Nawumi Bridge, Yapei Bridge, Buipe Bridge, Lawra- Dikpe bridge, Prima-Misio Bridge 99 Steel Bridges
Infrastructure through Ppp
Mr. Speaker in line with our Public Investment Management Policy, we will develop the Public Investment Management Reform Strategy and Action Plan and establish a functional Public Investment Management System.
In furtherance of this, government will enhance the role of the private sector in the provision of the infrastructure through PPP. A new PPP Bill has been prepared and submitted to Cabinet for approval and once passed by Parliament, it will be followed by the relevant regulations.
In the interim, government has attracted investor interest in;
Western Railway Line (Takoradi- Kumasi) Eastern Railway Line (Accra-Kumasi) Central Railway (Kumasi – Paga) Accra City Rail Kumasi City Rail Pwalugu Multi-Purpose Dam and Solar Hybrid Project Accra-Kumasi Highway Volta Lake Transportation Project Integrated Bauxite and Aluminum Development Project with aluminium refineries (and bauxite mines) at Nyinahin and Kyebi
Nation Builders Corps (NBC) Mr. Speaker, the most critical economic problem of our time is youth unemployment, and in particular graduate unemployment. Available data from the Institute of Statistics, Social and Economic Research (ISSER) in March 2017 revealed that only 10 percent of graduates find jobs after their national service and it can take up to 10 years for a large number of graduates to secure employment. This is due to varied challenges that range from the lack of employable skills, unavailability of funding capital for entrepreneurship, as well as low capacity of industry to absorb the huge numbers. We must reverse this trend.
Mr. Speaker, we note that several transition programs run under the various government institutions and agencies including the Ministry of Local Government and Rural Development, the National Vocational and Technical Institute (NVTI), Council for Technical and Vocational Education and Training (COTVET), Youth Enterprises Support and the Youth Employment Authority, have targeted non-tertiary graduates. With this background, our government is proposing a new jobs program, the Nation Builders Corps, to focus on graduate unemployment. The Nation Builders Corps program will be a major government initiative to address livelihood empowerment and graduate unemployment to solve economic and social problems. The focus of the initiative will be solving public service delivery in health, education, agriculture, sanitation and drive revenue mobilization and collection.
The objectives of the program would be to: Provide employment to unemployed graduates Improve skills and employability Improve public service delivery Improve government revenue mobilization. Under the Nation Builders Corps program, graduates will be trained, equipped with the necessary work tools and deployed around the country to be engaged as:
Graduate Teachers in a “Teach Ghana” program focused on Science, Technology, Engineering and Technology and Mathematics (STEM) and other relevant subjects in primary and secondary schools across the country. Sanitation Inspectors in a “Clean Ghana” program focused on enforcing sanitation laws and inspection to ensure clean communities. Trained nurses and other healthcare workers in a “Heal Ghana” program that will provide healthcare delivery to deprived and rural communities across Ghana. Trained Agricultural extension and other allied workers in a “Feed Ghana” program that will provide extensive support to farmers along the agriculture value chains. Tertiary graduates in a “Revenue Ghana” program that will mobilize the youth to collect taxes that have been difficult to mobilize and enforce collection for the development of Ghana.
Mr. Speaker, the Nation Builders Corps program will hire 100,000 graduates in 2018 to be posted to various districts across the country. On average, under this program every district should be able to provide jobs for 462 graduates.
Mr. Speaker, the Nation Builders Corps It will be housed under the Office of the President as a special initiative.
Collaboration with Faith Based Organisations: Mr. Speaker, Faith Based Organisations (FBOs) are a significant part of our economic and social construct. Indeed, across the length and breadth of the country, they have more visible presence than our state institutions. Every hamlet has an FBO of one form or the other. It is our considered view that engaging them to invest in viable economic ventures in our communities will be an effective way to expedite business development and job creation, especially for the youth.
In 2018, government intends to partner these FBOs not only to delivery critical social services in education, health and water, but also to support provision of skills and entrepreneurial training for the youth and the establishment of commercial enterprises.
ENERGY SECTOR POLICY INITIATIVES Electricity Tariff Reforms
Mr. Speaker, we have all too soon forgotten how the menace of dumsor from 2012- 2016 crippled the economy. It contributed to the lowest growth rate recorded in the past decade, the loss of jobs, reduced economic output and the loss of consumer and investor confidence in the economy. Dumsor was also compounded by high electricity tariffs, increasing the cost of doing business in the country.
Mr. Speaker, during the 2016 election campaign, H.E. the President, Nana Addo Dankwa Akufo-Addo, promised Ghanaians that with prudent management of the economy, the NPP government would ensure that electricity tariffs are reduced. In fulfilment of this promise, government has reviewed the tariff setting methodology and cost structure of power production. This review has resulted in recommendations that will be made to the PURC for consideration.
In this regard, in 2018, efforts will be geared towards keeping the lights on at affordable rates to consumers, particularly industries and small businesses through reform and policy interventions over a two-year period. The electricity tariff structure will be realigned with government’s developmental goals of industrial transformation, growth and job creation.
To give relief to the poor whose individual consumption actually falls in the subsidised life-line category but who live in a compound house, the existing 4-tier tariff classification of residential consumers will be collapsed into Lifeline and Non-Lifeline consumers in phases.
On the basis of these interventions, if government recommendations to PURC are accepted, consumers will be expected to benefit from reductions in electricity tariffs. The expected average tariff reductions across various customer categories will be as follows:
2018 Electricity Tariff Proposals
Customer Category Average Reduction
Non Residential 13%
Special Load Tariff- Low Voltage 13%
Special Load Tariff -Medium Voltage 11%
Special Load Tariff -High Voltage 14%
High Voltage Mines 21%
Renewable and Alternative Energy Development In line with the Ministry’s goal of increasing the penetration of renewable energy in the energy mix and the promotion of distributed solar power for government and public buildings, the Ministry will embark on an MDA Solar Rooftop Programme dubbed “Government goes Solar” to reduce Government’s expenditure on utilities.
Improving Domestic Resource Mobilisation
Mr. Speaker, consistent with Government’s objective of ensuring fiscal consolidation without compromising growth as well as our resolve to consolidate our LMIC status and move towards a Middle Income country, and eventually wean ourselves from donor dependency, the need to significantly improve our domestic resource mobilisation has become imperative. There is, therefore, the need to reverse the flat trend on tax-to-GDP ratios in the last few years. Mr. Speaker, in doing so we will keep balance across all sources of revenue and improve burden sharing across tax payers using the most equitable and efficient administrative procedures and make the tax system more transparent and fair.
Against this background, Government will embark on the following measures to improve domestic resource mobilisation:
create fiscal space by reducing budget rigidities. In this light, the Earmarked Funds Capping and Realignment Act was passed this year to cap all earmarked funds to 25 percent of tax revenues to free resources for priority programmes;
broaden the tax base to rope in more tax payers into the tax net. The implementation of the National Identification Scheme, the National Digital Addressing System, Tax Identification Number System, and the Presumptive Tax System, among others, will significantly contribute to the broadening of the tax base; improve tax compliance through the review of suspense regimes, special audits, use of fiscal electronic devices, implementation of the excise tax stamps, and the implementation of common reporting standards for exchange of information, among others; strengthen the design and administration of property taxes; rationalize taxation of the mining sector. We intend to preserve our commitment to secure a level-playing field for investors, while tackling discretionary application of taxes that are not justified on economic terms; examine the design of our VAT system, and address any significant policy shortcomings that might be identified; and overhaul the exemptions system to curtail large revenue losses which occur due to special regimes, reduced tax rates, and other exemptions which do not serve social or economic purpose and are exploited by insiders.
Mr. speaker, as these policy changes require careful study and preparations, we plan to come back to this august House in the course of 2018 to make additional proposals to make the requisite proposals for enactment of the appropriate laws to pave way for implementation.
Tax Compliance Measures
Mr. Speaker, government’s strategy to shift the focus of economic policy from taxation to production must necessarily come with greater need to broaden the tax base and ensure compliance. That is the only way to spread the national tax burden evenly across the population and lessen the tax burden on compliant tax payers. Accordingly, in 2018, the following tax compliance measures, among others, will be applied with greater urgency:
Reform of the Customs Suspense and Transit Regimes: The customs suspense regime permits importers to suspend payment of import duties because the imports are to be kept in bonded warehouses. There is evidence that these trade facilitation arrangements are being abused. To remedy this and reduce the risk to revenue, importers will be required to submit Letters of Credit (LC), guarantees or insurance cover from participating financial institutions before their goods are warehoused. The duties paid on goods removed from the warehouses will be set-off against the LC sum. Further to this new policy, current defaulters will be required to settle all their arrears including penalties before they will be permitted to warehouse additional goods.
The transit regime permits the clearing of transit goods without payment of duty. Modalities will be developed to ensure that transit importers pay the duties on imports in Ghana which will be transferred to the designated destination country.
Deployment of Fiscal Electronic Device: the frequent audit (or control verification) of businesses has been a source of concern for the businesses community. In response to these concerns, government, in 2018, will deploy the Fiscal Electronic Device to VAT registered businesses. This will have the effect of VAT compliance and record keeping.
Improving Property Tax Collection The Constitution enjoins MMDAs to mobilise revenue for provision of services. A major source of revenue is property tax, collection of which is low due to insufficient valuation capacity and the high cost of valuation.
To enhance efficiency both in the valuation of properties and revenue collection process from this source, in 2018, GRA will collaborate with the Ministry of Local Government and Rural Development (MLGRD) to support the MMDAs in the assessment and collection of property taxes.
Tax Initiatives for Economic Growth
Mr. Speaker, in the 2017 Budget Statement and Economic Policy, Government stated its intention to use tax policy as a tool to stimulate investment and to shape economic behaviour. In furtherance of this objective, the following policies will be introduced in 2018:
Tax Breaks to help Position Ghana as a Higher-Education Hub: The education sector represents a high growth potential with multiplier effects on the economy as confirmed by a recent “Country Private Sector Diagnostic’’ study by the World Bank Group. This is also borne out by the rapid growth in privately-owned and managed universities as well as in the inward flow of students from the West Africa sub-region. It is government’s intention to support the sector in order to position Ghana as the premier higher education hub of the sub-region and to attract critical foreign direct investment into the sector. In view of this, and also as part of government’s strategy for the long-term development of a local human capital base fit for a changing world, we will grant relief from corporate income tax paid by privately-owned and managed universities to the extent that profits are ploughed back to expand or maintain facilities. We would work to do the same for privately-owned SHS in the near future.
Tax Incentives for Young Entrepreneurs: As a further commitment to creating a supportive ecosystem for young Ghanaian entrepreneurs of age 35 years and below who start their own businesses, government will, through the National Entrepreneurship and Innovation Plan (NEIP), grant tax holidays based on the number of persons employed by a start-up or early-stage business. A preferential tax rate of between 3 to 5 years will be granted after the tax holiday. They will also be allowed to carry forward losses for five years.
Income Tax Threshold: To protect low-income earners and ensure fairness in our income tax administration, government will review the current income tax thresholds by pegging the tax-free threshold to the current minimum wage. In effect, government will abolish income tax on the incomes of minimum wage earners.
Taxation of Lottery: The ongoing reform of the lotteries industry will continue, and the measures against illegal lottery business intensified. To remove the incentives for people to engage in illegal lottery, the 7.5% income tax on the commission of lotto marketing companies will be abolished and the 5% withholding tax on lotto prizes removed.
Tax Amnesty: In 2018, parliamentary approval will be sought to exempt taxpayers who register and file returns within a targeted period from paying penalties and interests for late or non-submission of returns and late payments. This includes exemption from prosecution. GRA will, after the amnesty period, wage an intense campaign to prosecute continuing defaulters and offenders.
Extension of National Fiscal Stabilization Levy (NFSL) and Special Import Levy (SIL): Government removed and reduced some taxes in 2017 to support businesses and provide relief to individuals. Government is still committed to carrying out social interventions to improve the well-being of her citizens especially the poor and the vulnerable. As such, some tax handles have to be maintained in the short term as we make efforts to improve compliance. In this regard, the NFSL and SIL will be extended to the end of 2019.
FINANCIAL SECTOR INITIATIVES
A strong and efficient financial sector is fundamental to realising “Ghana Beyond Aid”. This requires innovative and long term financing instruments to support economic development for higher productivity, jobs and inclusive growth.
Mr. Speaker, to achieve this, Government will design the requisite financial architecture that is capable of mobilizing resources to help rapidly advance our country’s development through the following:
Launch of a national development bank, with the capacity to mobilize private capital towards agricultural and industrial transformation, among others. Government has set-up a task force to develop a roadmap for its establishment Restructure the Ghana Infrastructure Investment Fund (GIIF) with the capability to mobilise foreign private capital for critical infrastructure development using a private sector model.
Enhancing the capacity of Ghana Exim Bank to support agriculture and industrialisation for export.
Mr. Speaker, the financial sector of our country remains heavily dominated by banks. The total banking sector assets to GDP ratio as at September 2017 is 50 percent. This compares unfavourably with the total market capitalization of the Ghana Stock Exchange (GSE) to GDP ratio of 30 percent as well as the total corporate debt to GDP ratio of 0.36 percent on the Ghana Fixed Income Market (GFIM), for the same period.
Mr. Speaker, in effect, access to long-term funds by the private sector is not sufficient to drive accelerated economic growth of the country. To address this challenge, Government will strengthen the pensions, insurance and securities industries, which are the key agents of providing long term capital for the economy.
Mr. Speaker, the following specific reforms will aim to address some of these challenges in 2018.
National Pensions, Insurance and Securities Industry Reforms
Initiate reforms to the investment guidelines of pensions, insurance and collective investment schemes to enable them support capital market growth. This reform will encourage Banks to issue fixed income securities through the capital market instead of private placement in fixed deposits. Additionally, pensions and insurance firms will be encouraged to invest in private equity, Real Estates Investment Trusts (REITs).
National Informal Sector Pension Scheme
Mr. Speaker, the Cocoa Board Law, 1984 (section 26) enjoins the Board of Directors of the Ghana Cocoa Board to establish a contributory pension scheme for the nation’s Cocoa, Coffee, and Sheanut farmers. In this regard, government has started a process of setting up a broader Informal Sector Pension Scheme under the third tier of the National Pension Scheme to cover cocoa farmers among others. The framework to operationalise the scheme will be developed in 2018.
Mr. Speaker, this scheme will complement the effort of private sector corporate trustees, provide social protection for a large segment of Ghanaians who are in the informal sector especially our hardworking cocoa farmers.
Establishment of an Agriculture Commodities Exchange
Mr. Speaker, work on setting up the Ghana Commodity Exchange (GCX) and Warehouse Receipt System has been on-going for a decade. The Exchange, is expected to enable easy access to markets, fair pricing for smallholder farmers and formalise informal agriculture trading activities. Government’s priority is to operationalise the Commodities Exchange in 2018 to support agriculture transformation including the Planting for Food and Jobs initiative.
Development of the Housing and Mortgage Finance Industry
Mr. Speaker, developing a vibrant mortgage and housing finance market is key for social equity and economic development and job creation. To support private sector efforts in expanding access to housing, the Ministry of Finance will partner with banks, pension trustees and securities market players to start a process of developing and deepening the local mortgage and housing finance market to offer affordable mortgages at subsidized interest rate beginning with public sector workers.
The policy objective is to reduce the cost of local currency mortgage offered by banks and to encourage the use of technology to lower the cost of housing by the private sector. This is expected to contribute to the reduction of Ghana’s housing deficit which currently stands at about 1.7 million.
Positioning Ghana as a Regional Financial Services Hub
Over the past decades, Ghana has positioned itself as a pillar of stability in the sub-region, with relatively strong institutions and entrenched democracy. Government intends to capitalise on this success by positioning Ghana as a regional financial services hub.
Mr. Speaker, positioning Ghana as an international financial services centre is intended to make it the preferred headquarters for all international banks operating in the sub-region. Ghana also becoming the hub for the financial technology and payment systems for the region. The Hub is also intended to host the international private equity and venture capital firms to support entrepreneurship and access to long term capital by the private sector in the sub-region.
Mr. Speaker, a special task force will be set up to provide Government with a strategy and framework for the establishment of Ghana as a regional financial services hub.
National Health Insurance Scheme
Mr. Speaker, provision of health services is essential for a productive economy. The National Health Insurance Scheme exists to ensure that citizens obtain quality health care at all times. Mental Health is also of paramount importance to Government. Studies have indicated that the current revenue sources do not guarantee the sustainability of the Fund given that enrolment to the Scheme has increased over the years.
To ensure sustainability of the Scheme there is the need to review the sources of funding to increase the revenue flow into the Fund. We will consult the relevant stakeholders and make proposals based on the consultations.
Voluntary Education Fund
Mr. Speaker, with the successful launch of the FREE SHS, Government has received proposals from the public, several of which encourage the establishment of a fund to receive voluntary contributions to support education. Thankfully, the GET FUND Law allows for the setting up of other education-related funds.
In 2018, the Ministry will work with GET FUND to set up this education fund to enable Ghanaians make voluntary contributions to support education.
Promoting Economic Opportunities for Women Mr. Speaker, empowering women and achieving gender equality is fundamental to the realization of the SDG goals. The President is committed to empowering women and creating opportunities for their participation in the job and wealth creation agenda. In order to promote economic opportunities for women, special considerations will be given to women in Government’s procurement.
SECTION SEVEN: CONCLUSION
Mr. Speaker, we have very good reasons to be optimistic about our country again. Government has shown and will continue to demonstrate through its actions that the welfare of the Ghanaian is paramount. Plans to restore and sustain faith with Ghanaians and external partners. This is evident in our decision to extend the IMF ECF Program to December 2018 to ensure that all our targets are met.
Mr. Speaker, we would like to assure Ghanaians that the government of Nana Addo Dankwa Akufo-Addo is a government which delivers on its promises: We promised to implement a free senior high school policy and we have delivered.
We promised to restore nursing training allowances, and we have delivered. We promised to restore Teacher training allowances and we have delivered We promised to end dumsor and we have delivered
We promised to reduced fertilizer prices by 50% and we have delivered We promised to establish a Ministry of Zongo and Inner City Affairs and we have delivered We promised to increase and pay peacekeeping allowances increased from $31 to $35 and we have delivered We promised to increase the share of the DACF to persons with disabilities from 2% to 3% and we have delivered We promised a stimulus package to support local industry and we have delivered We promised to implement a National Entrepreneurship and Innovation Plan and we have delivered We promised a more efficient port system and we have delivered We promised to reduce the rapid rate of borrowing and accumulation of the public debt and we have delivered We promised to restore economic growth and we have delivered
We promised to reduce inflation and we have delivered. We promised to reduce interest rates and we have delivered We promised to Improve Ghana’s sovereign credit rating and we have delivered We promised to enhance fiscal discipline in the management of our economy and we have delivered We promised to reduce taxes and we have delivered We promised to stay current on its statutory obligations like the NHIS, DACF, GETFUND, SSNIT and we have delivered We promised a National Digital Property Address System and we have delivered We promised to institute measures to deal with corruption (including the Office of the Special Prosecutor) and we have delivered We promised to issue National ID Cards and we are delivering We promised to establish a Zongo Development Fund and we are delivering We promised to establish 3 Development Authorities – Northern, Middle Belt, and Coastal, as vehicles for the allocation of the $1 million per constituency, and we are delivering We promised to revive the collapsed the railway sector and we are delivering We promised One District One Factory and we are delivering We promised to reduce electricity tariffs and we are on course to deliver We promised to implement a strategy to curb the menace of galamsey and we are delivering We promised to pursue policies that will create jobs in the economy and we are delivering. This budget, by the grace of God, will deliver massively on jobs!
“Putting Ghana Back to Work”
Planting for Food and Jobs GH¢700 million
Stimulus Packages for Industrialization GH¢236 million
One District One Factory GH¢40 million
National Digital Property Addressing System
Zongo Development Fund GH¢100 million
Development Authorities GH¢1.26 billion
One Village One Dam
Water For All
Toilets For All
NEIP GH¢50 million
Akufo-Addo Plan for Economic Transformation
Roads – 1,600 Km Of Roads GH¢500 million
Bridges – 110 Bridges
GIRSIL GH¢400 million
IDA Credit GH¢100 million
Establishment of an Agriculture Commodity Exchange
One District One Warehouse
Improved Business Environment
Taxes – Education
Lower Electricity Tariffs
Nation Builders Corps – 100,000 GH¢600 million
Digitization of the Economy
Tax Incentives for Young Entrepreneur Tax Holidays and Preferential Tax Rate
Tax Incentives Higher Education – Elimination of Taxes on Private Universities
Enhancement Of Property Tax Collection
Positioning Ghana as a Regional Financial Hub
A multi-billion dollar industry
Infrastructure through PPP – US$8 billion
Accra City Railway
Kumasi City Railway
Integrated Bauxite Aluminum
Collaboration with Faith-Based Organisations
Mr. Speaker, in my debut appearance in this august House, my backbencher friends across the aisle traded Bible quotations with me, as I invoked the miracle of Jesus feeding the 5,000 with five loaves of bread and three fish (Mathew 13), they responded with Philipines 4:19 “And my God will meet all your needs according to the riches of His glory in Christ Jesus.” Mr. Speaker, with the little inherited from the Mahama Government, our performance these ten months are indeed nothing less than a miracle as evidenced by the blessings and achievements I have just enumerated. I can only add Mr Speaker, that the combination of Philipines 4:19 and Mathew 13, hard work and obediance have greatly benefited our dear country.
Mr. Speaker, ‘Adwuma re ba. Mr. Speaker, I present to you the ‘Adwuma’ Budget.