President Mills Budget for 2009

The Mills administration presented its financial statement for 2009 dubbed ‘Investing in a better Ghana’ last Thursday.

 

The budget is projected at GH¢9.8 billion, which is structured into the three thematic areas of the Growth and Poverty Reduction Strategy (GPRS II): Private Sector Competitiveness, Human Resource Development and Good Governance. GH¢3.013 billion (30.8%) is set aside for mandatory statutory payments, which include External Debt Service, Domestic Interest Payment, Transfers to District Assemblies Common Fund, Ghana Education Trust Funds (GETFUND), Social Security and National Insurance Trust, National Health Insurance Levy (NHIL), Road Fund, Pensions and Gratuities. The remaining GH¢6.780 billion (68.9%) constitute discretionary payments (see 2009 budget, pp. 49-50).

 

The broad macro-economic objectives of the 2009 budget include:

5.9 per cent GDP growth rate (5.7% for agriculture, 5.9% for industry, and 6.6% for services)

15.3 average inflation and 12.5 end period inflation;

an overall budget deficit of 9.4 per cent of GDP;

more than two months gross international reserves to cover import of goods and services.

 

Sectoral Allocations

The Ministry of Food and Agriculture (MoFA) is allocated GH¢202.6 million, representing about 2 percent of total estimated expenditure. In comparison, Ministry of Education merited about 17 percent of total expenditures and Health garnered about 9 percent.

 

The allocation for MoFA may seem inadequate in the context of CAADP commitment of 10 per cent budgetary allocation to the agricultural sector (See Appendix I attached on sectoral allocations). However, the percentage could be higher if one broadens the definition of agriculture to any relevant spending on crops and livestock, fisheries, forestry, natural resource management, agricultural research, agricultural extension services and training, agricultural marketing, agricultural inputs, irrigation, and rural infrastructure (see AU/NEPAD 2005). While FASDEP II offers MoFA a lead responsibility to coordinate agricultural related activities in ministries, departments and agencies, it is evident that some activities earmarked for Ministries of Land and Natural Resources; Trade and Industry; Energy, Transport, Roads and Highways; and Environment Science and Technology will impact on the agricultural sector. Appendix II (attached) provides a listing of the stated commitments within these sectoral areas across the government infrastructure.

 

On funding sources, while about 68 percent of the allocation for MoFA is donor driven, only 4 and 9 percents of allocations for Education and Health respectively are from donor funds. It is about time domestic financing of agriculture is sought for as has been done for the education and heath sectors through a 2.5 per cent levy of VAT each for Ghana Education Trust Fund (GETFUND) and National Health Insurance Levy (NHIL).

 

There may be donor injections as the World Bank has promised to front-load $300 million to support the 2009 budget while the Japanese government is donating $3.5 million. However, in the wake of the global economic crisis, it is possible donor injections might not flow as expected.

 

In other news…

Vetting of deputy ministerial nominees is ongoing amidst mixed reactions on the performances of some nominees. The President has dropped a nominee for Ministry of Communication. He has also appointed 11 people to the Council of State.

 

In Parliament, sub-committees are being constituted. And as Electoral Commission fixes March 17 and 18 as filing dates and April 7 for the by-election, the scramble for the Jirapa MP seat has heated up, especially in the ruling party.

 

On former President Kufour, three BMW cars in his possession are to be returned and to be replaced with three Chrysler cars, while his office accommodation has also attracted media discussions.

 

– Kipo Jimah, Research Officer, IFPRI

President Constitutes Cabinet

The list of 19 ministers constituting President Mills’ Cabinet is out. Though President Mills created 23 sector ministries, he is limited to only 19 cabinet ministers as stipulated in Article 76 of the 1992 Constitution of Ghana.

 

Conspicuously missing in the cabinet is the Information Minister, Ms Zita Okai Kwei. Though there were media speculations that this oversight was due to her competency, it is likely that her ministry was left out to make room for the Ministry of Women and Children’s Affairs, which did not exist during the first NDC regime. Being a non-Cabinet minister suggests Ms. Zita could have problems functioning effectively from outside Cabinet. The functions of the Ministry of Information include facilitating information and feedback, co-ordination of policy; monitoring and evaluation of the implementation of programmes and activities by the Sectors Agencies.

 

The three other sector ministers left out of Cabinet are Tourism, Youth and Sports, and Chieftaincy. In the last NDC regime the three were similarly not cabinet ministries (see list of Cabinet Ministers below).

 

In Parliament, eight (8) and five (5) Members of Parliament (MPs) have been appointed to the ECOWAS and PAN African Parliaments respectively. The members are drawn from both the Majority and Minority sides of the house. The reconstitution of the two became necessary because some MPs who served on the two lost their seats while the MP of Bole-Bamboi is now the Vice President.

 

In other news…

The Bank of Ghana has increased the prime from 17% to 18.5% as a measure to reduce inflation. While the Private Enterprise Foundation feels the increase will increase cost of production which is already a problem for the private sector, the President of the Association of Ghana Industries feels the decision will rather stifle the growth of businesses.

 

As calm returns to Tamale, violence has erupted in the Bawku Municipality in the Upper East Region leading to the death of five including a woman. Though the Bawku conflict is between Mamprusis and Kosasis ethnic groups, the MP for Bawku feels the recent violence is political and not Tribal. But in any case, the Bawku conflict is similar to the Tamale conflict with chieftaincy undertones. The only difference is while in Tamale the dispute is within the same ethnic group, the Dagomba that of Bawku is between two ethnic groups.

 

The New Patriotic Party and its sympathizers have heightened their displeasure of Alhaji Mohammed Mumuni, Minister of Foreign Affair and Regional Integration in government. While there are calls for his resignation after an Accra court dismissed his plea for damages from the Daily Guide Newspaper, the Minister feels he will only resign if found guilty of a criminal case.

 

The Electoral Commission (EC) has begun a post-election dialogue with its stakeholders to assess the performance of the EC. At a forum in Kumasi the EC hinted it will weed out parties that went dormant after elections.

 

S/N	Name	Ministry
1.	Dr. Kwabena Dufuor,	Minister for Finance
2.	Lt. General J.H. Smith (Rtd),	Minister for Defence
3.	Hon. Cletus Avorka,	Minister for Interior
4.	Alhaji Mohammed Mumuni,	Minister for Foreign Affairs and Regional Integration
5.	Hon. Joe Gidisu,	Minister for Roads and Highways
6.	Hon. Joseph Yieleh Chireh,	Minister for Local Government and Rural Development
7.	Dr. George Sepa Yankey.	Minister for Health
8.	Mr. Kwesi Awhoi,	Minister for Food and Agriculture
9.	Mrs. Betty Mould Iddrisu,	Minister for Justice and Attorney General
10.	Hon. Alex Tettey-Enyo,	Minister for Education
11.	Ms. Hannah Tetteh,	Minister for Trade and Industry
12.	Hon. Haruna Iddrisu,	Minister for Communications
13.	Hon. Albert Abongo,	Minster for Water Resources, Works and Housing
14.	Ms. Hani Sherry Ayittey,	Minister for Environment Science and Technology
15.	Dr. Joe Oteng Adjei,	Minster for Energy
16.	Mr. Collins Dauda,	Minister for Lands and Natural Resources
17.	Hon. Mike Hammah,	Minister for Transport
18.	Hon. Stephen Kwao Amoanor	Minister for Employment and Social Welfare
19.	Hon. Akua Sena Dansua,	Minster for Women and Children’s Affairs

Plans for 2009

How can Ghana transform agriculture into a modernized sector that makes substantial contribution to overall economic growth?

This year, GSSP is implementing a new workplan organized around this single underlying strategic question. Our research will focus on (1) identifying opportunities for change, (2) analyzing costs and benefits of such development opportunities, (3) identifying constraints to transformation that can be addressed through policy and strategy-making, and (4) improving the quality of sectoral governance.

A number of projects are in the works, including:

• An evaluation of the 2008 fertilizer subsidy program
• A look at how rural service provision affects agricultural productivity, and thus the push for outmigration from the North
• A cost-benefit analysis of private irrigation systems
• An explanation for the low levels of mechanization in Ghana
• A critical examination of farmer-based organizations – when are they useful, and when are they set-up for failure?

Keep posted here for updates on each of these projects and more.

New Background Papers

The Ghana Strategy Support Program has released six new Background Papers:

The Role of Cocoa in Ghana’s Future Development looks at the growth and poverty reduction implications of future growth in the country’s cocoa sector. It finds that increasing cocoa production by about 60,000 tons annually is necessary for Ghana to reach its middle-income country target by 2015. However, because cocoa’s poverty-growth elasticity is low, further growth is unlikely to lead to the large reductions in poverty experienced in the past. This finding emphasizes the need for structural diversification, which remains a key challenge for Ghana. By Clemens Breisinger, Xinshen Diao, Shashidhara Kolavalli, and James Thurlow.

Identifying Opportunities in Ghana’s Agriculture: Results from a Policy Analysis Matrix uses a budget-based method to study the social and private profitability of six maize and six rice production systems. It finds that maize systems show a higher rate of return than rice systems. While both systems contributed to national economic growth and private income generation under the high cereals prices that prevailed in 2007, if prices fell to those of 2005, rice would be socially and privately unprofitable. Return to the still lower prices of 2002 would leave both maize and rice systems unprofitable. Priority interventions to alter cost-benefit rations of the cropping systems are ones that reduce the real costs of production or physical and quality losses rather than those that intervene through altering producer prices. By Alex Winter-Nelson and Emmanuel Aggrey-Fynn.

Drivers of Change in Ghana’s Cocoa Sector takes a closer look at the cocoa sector by analyzing the production boom observed between 2002 and 2004. It suggests that most of the increased production can be attributed to good weather, and more intensive use of household labor and, to some extent, of fertilizer. The production boom did not, however, alter the more fundamental problems of the Ghanaian cocoa sector, where yields remain well below those observed in other producing countries. The key constraint of the sector remains its lack of innovation, and questions are raised on the incentives and policies necessary to promote technological innovation in cocoa. By Marcella Vigneri.

What Does Liberalization Without Price Competition Achieve: The Case of Cocoa in Ghana delves into the economic incentives created by the deregulation of Ghana’s domestic supply chain in the 1990s. While it was expected that competition would emerge among private buyers by means of price bonuses and/or premiums, it was found in practiced that instead the increasing numbers of Licensed Buying Companies compete for cocoa supplies based on the provision of different services to farmers. The cash payment and credit for inputs offered by companies to attract cocoa sales mainly benefit liquidity-constrained farmers, enabling them to invest in productive inputs. Since cash-constrained farmers are likely to be the poorest as measured by simple welfare indicators, liberalization may be seen to have had a progressive impact on Ghana’s cocoa farmers. By Marcella Vigneri and Paulo Santos.

Local Impacts of a Global Food Crisis: Food Price Transmission and Poverty Impacts in Ghana takes a local perspective on global food price shocks in Ghana by analyzing: (1) food price transmission from world markets to regional markets in Ghana, and (2) the impacts of differential local food price increases on various household groups. Domestic staple prices are found to be correlated with imported rice prices, but price transmission between regional markets is limited. The negative welfare effect of high prices for households as consumers appears modest at the aggregate national level due to relatively diverse consumption patterns, however the urban poor and those living in the North appear to be harder hit by high food prices than the average consumer. By Godsway Cudjoe, Clemens Breisinger, and Xinshen Diao.

Decentralization and Local Public Services in Ghana: Do Geography and Ethnicity Matter? explores disparities in local public service provision between districts in Ghana.  It finds that district geography plays a major role in shaping disparities in access to local public services.  As well, ethnic diversity has a negative impact on a district’s access to local public services, especially in rural areas.  The negative impact of ethnic diversity decreases as the average literacy level increases.

(Note: Hyperlinks should launch PDF download. If you would like a hard copy, please contact l.horowitz@cgiar.org)