Dr.
Mahamudu Bawumia, NPP Vice-Presidential Candidate, has outlined a
comprehensive ten-point plan to boosting job creation and ending the
massive joblessness that affects millions of the Ghanaian youth today.
Dr.
Bawumia laid out this plan during a Lecture on the topic – ‘High
Graduate Unemployment and the Employment Embargo, What is the Solution’
to students of the Kwame Nkrumah University College at a Public Lecture
organized by the Economics Students Association on Tuesday.
He
stated that the goal for now is to build the most people friendly and
most business friendly, globally competitive economy in Africa.
Formalizing the Economy
The
first key, according to Dr. Bawumia, to creating the needed jobs and
transforming the Ghanaian economy is formalizing the economy. He noted
that no developed economy could have reached their current status
without formalizing their economies.
He indicated that a
comprehensive National identification database with unique identifiers
for each person and a well-functioning property address system are some
of the pillars to formalising the economy.
He said that a Data
Revolution was critical to Ghana’s development, indicating that such a
Revolution would involve linking databases across institutions such as
DVLA, Police, Courts, Immigration, Revenue Agencies etc.
“All
modern economies all formalized. Formalization makes the collection of
taxes, discipline and job creation easier. The keys to formalizing an
economy are the existence of a National ID System and a functioning
Property Address System.
The benefits of a national ID system or
a unique identification number for residents and a well-functioning
Property Address System are significant. Activities of residents with
regards to taxes, loan applications, crime, job applications, housing,
insurance, health, etc. are uniquely identifiable”, he said.
Dr.
Bawumia also identified the movement from cash to electronic payments
using mobile and other ICT platforms as another pillar to formalizing
the economy.
Financial Inclusion
The second key for Dr. Bawumia is financial inclusion – banking the unbanked.
“The
financial system cannot develop to its potential and monetary policy
cannot be effective if the majority of the population continues to be
excluded from access to financial services. The importance and urgency
of banking the unbanked is something that is clearly not appreciated by
many governments.
As well as formalizing the economy, it holds
the key to reducing interest rates sustainably with the support of
disciplined fiscal policy. This is because banking the unbanked
increases the supply of savings in the banking system.”
Citing
examples from various countries, Dr. Bawumia noted that a deliberate
governmental policy was necessary to spur financial inclusion and that
if achieved, it will ensure that businesses can borrow at very low and
stable rates to grow business and employ more.
“Wide access to
financial services in the developed economies increased the supply of
savings in their banking systems and reduced the cost of borrowing”, he
added.
Diversifying Export Base & Developing the Property Market
The
third key, according to Dr. Bawumia, is diversifying the export base of
the country and deliberately pursuing policies to make Ghana the
production hub in the sub-region to attract the needed industries and
investment to create jobs.
The fourth key in the ten point plan
is developing the mortgage market which, according to the NPP
Vice-Presidential Candidate, holds the key to awakening the dead capital
in Ghana’s property market and boosting growth and jobs.
He
noted that developing the mortgage market requires finding a solution to
the issues that bog land acquisition and streamlining the processes
around the acquisition and development of property.
“From our
Zongos like Nima, our inner cities like James Town to our well developed
neighbourhoods like East Legon in Accra, so many people do not have
titles to land. Our people are sitting on very valuable property but
without title to them. Finding a solution to this problem would jump
start the mortgage market in a big way.
“Solving this problem
would increase the supply of houses by the private sector, empower the
poor who would be able to borrow against the collateral of their houses
and start or expand businesses, and result in a housing sector led boom
in the economy and higher tax revenue for government.
“A
blossoming Mortgage Market, with the necessary structures and pillars,
will see openings for several well-paying jobs which our youth can be
beneficiaries of. The property market is perhaps one of the most labour
intensive sectors and it is thus a critical cornerstone for an economy
that seeks to win the war against employment”, he said. |
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Favourable Policy Framework & Economic Stability
The
fifth key to ending the massive joblessness that confronts the nation
today is putting in place a trade policy that encourages production,
especially in key sectors Ghana has a competitive advantage in and one
that utilizes tax policy to boost production and jobs instead of
focusing on revenue to the detriment of production and jobs.
“Ghana
should focus on providing the tax incentives for increasing production
and generating employment. In the process revenue can be raised from
corporate and income taxes. What we should not allow to happen is for
the desire to generate revenue to kill businesses and cause
unemployment”, he said.
Dr. Bawumia also stated that the
institution of a tax credit incentive for businesses that employ fresh
graduates will encourage the hiring of more youths and discourage the
tendency of businesses to require ‘years of experience’ before they
employing job seekers.
The sixth key to creating an economy of jobs is macro-economic stability and debt sustainability.
Dr.
Bawumia pointed out that macro-economic instability affects businesses
negatively and hinders business growth and employment.
“High
fiscal deficits, high current account deficits, -high inflation, high
interest rates, exchange rate depreciation, do not provide supportive
environments for job creation. They in fact result in job losses”, he
said.
“With such large scale borrowing, government is crowding
out the private sector which is unable to borrow to grow their business.
Risk free Treasury bill rates are around 25% (up from 10.6% in 2011)
and bank lending rates are on the rise because of excessive government
borrowing. Lending rates are now above 30 percent.
“This
development means it has become virtually impossible for business to
borrow in the financial sector to grow and produce more. Government has
today become the biggest competitor to private business and by its
actions squeezing the little life left in them.”
He noted that
while the economic slump the country faces has discouraged several
investors from setting up businesses in Ghana, preferring countries like
La Cote d’ivoire and others with favourable economic conditions, the
situation had led the government into introducing several desperate
policies like astronomic increases in taxes, which had affected
businesses more negatively and the abolishment of several expenditure
items, which is hampering the development of the quality human resource
needed by the country.
The four other critical keys to creating
an economy of jobs which Dr. Bawumia explained were increase
infrastructure investment to match growth in economy and to support
production; addressing corruption, the cost of which is borne ultimately
by businesses and citizens, prioritizing Agriculture and ensuring value
addition to raw materials and investing in skills training and
research.
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