Why should 6% ‘eat’ over 60% of Ghana’s wealth

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Parent Category: Our Country

Category: Elections & Governance

Created on Tuesday, 12 March 2013 00:00

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Why should 6% ‘eat’ over 60% of Ghana’s wealth

My Ghana, Your Ghana, Our Ghana: Why should less than 6% of the population ‘eat’ over 60% of Ghana’s wealth, and leave 23m people behind?

Did you know that for every GHC 10 that Ghana gets (irrespective of the source), more than GHC 6 go to a public worker directly? Well, I didn’t know until the President said in his State of the Nation Address that the country “now spends a staggering 60.9% of our entire national revenue to pay public sector salaries”. At first sight, this seemed very good news if more than half of our revenue is going directly into the pocket of citizens. But I asked myself, how many Ghanaians are in the public sector (vis-à-vis the total population)? It was then I realised how unequal the country is gradually becoming or has even become.

How many people are employed in the public sector?

There are two broad categories of public sector workers: those whose salaries are determined by the Fair Wages and Salaries Commission (FWSC) and Article 71 holders (who include frontline national leaders such as the President, MPs, Ministers etc).

According to the most recent Population and Housing Census which was published earlier in 2012, about 11.8 million of the country’s population are economically active (employed and unemployed people active and available for work). Of this number, “the public sector, which is the second largest employer, accounts for only 6.3 percent of the economically active population” (page 11). Using this information as proxy, it therefore implies that the public sector employs about 740, 000 people.

In the 2013 Budget Statement (para 700), Government was emphatic that there are 478,566 public sector workers representing 99.70 percent of total public servants that have been migrated onto the Single Spine Salary Structure. However, for the purpose of this discussion, I will use a higher percentage of 10% (of Economic Active population) public sector workers—which translates to about 1.1 million people—to at least take care of the time period changes.

What does this tell us? And should we be concerned?

It is a known fact that there are a little over 24 million people in Ghana. On the surface, this information tells us that Ghana’s entire revenue is ‘eaten’ by less than 1 million people, leaving out over 23 million to share the remaining 40% of the revenue left. Remember, total revenue includes both tax and non-tax sources (such as loans and grants) so there is no more source of revenue left again in principle. Also, the personnel emoluments which is taken the over 60% of government revenue is even only one out of the several items Government has to pay for before the over 23 million Ghanaians come into the picture.

So the question is how much would be left for ‘real development work’ after the Government has paid for domestic debt interest cost, foreign debt interest cost, Goods and Services, utilities and then the obligatory statutory transfers (such as the GETfund, District Assembly Common Fund, Road Fund, pensions and gratuities, National Health Insurance Fund etc.)? Obviously, the nation is left with very few money after these deductions? Why then should the national cake be ‘eaten’ by only few? This is where we need to be concerned.

In addition to the fact that the large chunk of the personnel emolument leaves very little money for other developmental projects which benefit the larger population, the Country is also becoming unequal as ever…with more people suffering to work for few to benefit. The implementation of the Prof. Addy’s recommendations on salaries for Members of Parliament, Ministers and other leading public officials seem to suggest that frontline national leaders are cutting the coat of Ghana over its size. They are simply being overpaid in relation to our available revenue!

Why should this be so? We all desire better conditions of services for our leaders to enable them ‘die’ for the nation. But the current state of affair is highly inequitable and needs revision. We are failing the larger population! Let me give an example. Few weeks ago, the Central Regional Minister, Mr. Enoch Kweku Teye Addo was reported to have poured out his frustration over the ‘unending poverty’ in his region during an address to the Regional Administration.

According to the media reports, the Minister was ‘troubled’ when he was briefed that more than 50% of the population of the Region lives on 90 Ghana Cedis per annum. For me, it is not just the ‘low’ income levels which are a matter of concern. Rather, we probably fail to recognise that the MONTHLY salary of the Minister alone (i.e. GHC 8000.00) is equivalent to the ANNUAL (average) income of about 90 people.

In my locality where the average population of a community is 1000, the ANNUAL SALARY of the Minister (i.e. GHC 96,000) is equivalent to the COMBINED INCOME of about 90 villages. Is this not shocking! This is where my concern is: the insidious creeping of inequality in the Country. The current situation where large pie of the national cake is ‘eaten’ by ‘few’ is therefore unfair to the citizens.

Single-Spine Salary: A scapegoat or the real culprit?

Much of the current situation (and the budget deficit of 12% of GDP) is blamed on the implementation of the Single Spine Salary Structure (SSSS). But is it really the Single Spine Structure driving this? I dare to say not exactly so! Of course the SSSS has led to increase in the wage bill of the Government; and so I join the call for increased productivity among public sector workers. However, the SSSS cannot be blamed largely for the situation where less than 1 million of the people are directly ‘eating’ over 60% of the national total revenue.

Infact, while Government functionaries and the Propaganda team are constantly ‘bashing’ the SSSS for leading us to this situation, the Government’s own 2013 Budget Statement stated that it only contributed to GH¢1.91 billion (out of the GHC 8 billion) incurred as budget deficit (paragraph 23 and 87). How then are we ‘evilising’ the SSSS? In my view, the SSSS is only been used as a scapegoat. The real culprit has been the astronomical increase in what I call the cost of governance—where our Politicians and national leaders have allocated upon themselves large sum of money as monthly income and other condition of services.

Advancing socio-economic development: District Assemblies to the rescue?

The District Assembly concept is very central towards our drive for promoting social and economic development for the larger population. But these Assemblies have inadequate capacity to generate much funds internally and thus rely much on the District Assembly Common Fund (DACF) for projects. On the average, DACF has been accounting for 96% of total revenue of any given Assembly. And the current financial situation leaves very few money (even with the ring-fencing of 7.5% of GDP) for the DACF. In many cases, the combined income of 10 to 20 MPs is almost equivalent to all the DACF received for a particular District. Here are few examples:

In 2010, the DACF transferred to Karaga District of the Northern Region was about GHC 182,344—which is equivalent to the combined annual salary of just 3 MPs (GHC 259, 200). Infact, by June 2011 only about GHC 53, 326 (Source: District’s Composite Budget for 2012) had been transferred to this District. In 2010, the Kwahu East District received a DACF (according to the District’s Composite Budget for 2012) of just 676, 306 (which is less than the combined salary of only 9 MPs). Do you want more? Then let’s go to Savelugu-Nanton District.

In 2009, this district received a DACF of GHC 479,000 which was increased to GHC 777,008 in 2010 and then about GH¢982,392 at the second-half of the 2011 (according to the District’s Composite Budget for 2012). From this, a combined annual salary of just 12 MPs (i.e. GHC 1,036, 800) was more than the DACF received over these years in a particular year.

In line with the introduction of the Composite budget policy, it is this seemingly small amount of money that the District Assembly has to allocate among departments such as Agriculture, Health, Education, Water and Sanitation among others as well its own recurrent and administrative costs. How can the District Assembly which is the pivot of our decentralisation and poverty reduction effort be ‘treated’ this way? Nearly all our social support institutions such as the NHIS, LEAP, NYEP etc are seriously complaining of money.

It was sad hearing that some hospitals including the Christian Health Association of Ghana, which is made up of over 180 hospitals have decided to turn away NHIS subscribers. Interestingly, there are already nearly 60% of the population which are not covered under the NHIS (who are already living cash and carry). How come are we unable to look after the just 40% who are enrolled? We may be doing very well with ‘unprecedented economic growth rate’ but the distribution is sadly skewed. More Ghanaians are being left behind from enjoying the national cake!

Private sector: our last saviour?

I have used the private sector here to mean non-public sector workers (including private firms, farmers, carpenters, traders and the self-employed). From the 2010 Population and Housing Census, the private sector accounts for 93 percent of the economically active persons—or over 10.9 million people. This sector therefore provides a haven to large number of Ghanaians—but they need ‘enabling environment’ to thrive and promote development.

But with large pie of Government revenue going into personnel emolument, very little is further left to undertake development of infrastructure and other services that facilitate private sector’s work. With the ongoing electricity, water problems and high interest cost among others, the growth potentials of many of these people are further limited. It is a good news that the President has observed this when he said:“We may soon reach a point where not much will be left to provide the much--?needed roads, bridges, ports, infrastructure we need to develop our economy”. From all indications, that time has indeed come! And we need take action from the economy of “we will do” to “we have done” and also spread the wealth by cutting down the expenditure being incurred on politicians to advance our infrastructure needs.

Better Ghana in a “Better Ghana Era”: Humble Plea to President Mahama

Mr President, the current situation is highly unfair and inequitable especially in a ‘better Ghana era’. What then do we have to do? The fundamental option is to cut the salaries of MPs, Ministers, Deputy Ministers, the Vice President and the President—and strengthen our tax efficiency systems. While we are talking about reviewing or increasing taxes, we also need to look at strengthening our tax administration. Indeed, the 2013 Budget shows that Government tax estimate from (corporate firms alone) fell short by almost GH¢708.2 million (or 1.0 per cent of GDP). How come? What happened?

At the expenditure side, my suggestion is that the current SSSS plan for the various public sector workers (other than the politicians) should be maintained. For a long time, public sector wages/salary has been very unattractive—and so the objective of the SSSS to give better reward to them is indeed welcome news. However, it is sad that politicians and frontline national leaders has capitalised on the situation to reward themselves astronomically. I also call for unpacking Single Spine Salary a bit to see which categories of public sector workers gain much and who gain less.

At the heart of the implementation of SSSS is to remove inequities and standardise wage and salary in line with educational levels and professional status. But why is that MPs/Ministers holding a Middle School Leaving Certificate (MSLC), or even SSSCE earn the same amount with their counterparts holding graduate/postgraduate and professional degrees? If an MP (as well as the frontline national leaders including Ministers) works for 8 hours a day on the average (of which in actual fact they normally start work after 10am), on what basis are their earnings so much different from professional bodies such as doctors, lecturers or even teachers? Two, the end of service benefits of an MP at the end of his 4-year term is way higher than that of other public officials who have worked for more than 30 years.

Why is this so? Without prejudice and any intention to undermine the work of Parliament or Ministries, I dare to say that some of them are overpaid. About GHC 4000-5000.00 a month, I propose, will still look attractive to attract people into becoming MPs, Ministers and so on. If we are really committed to reducing expenditure and ensuring equitable benefits for the populace, we need to start from the top!

In the State of the Nation Address delivered on Feb 2013, the President did not mince words over his vision when he said that “I entered public service out of a genuine desire…to create a Ghana in which we all create and share in the benefits”. This vision is in tandem with the late President Mills’ vision of ‘prosperity for all’. Indeed, our current National Medium Term Development Planning Framework is christened “Ghana Shared Growth...”—all placing emphasis on our wish to let majority of Ghanaians benefit from the growth of the economy. But in a situation where over 60% of our national wealth is commanded by less than 6% of the population, we seem to be very far off from the vision of sharing our benefits equitably.

Mr President, we are witnesses to your commitment, at least through your verbal expressions, to reducing poverty and promoting equitable growth. We ask you to take a decisive step in reducing our cost of governance—especially those related to emoluments to our MPs, Ministers and other frontline national leaders. As a President, we know you have the authority to review ‘anything’ (at least as we saw over the past four years).

It is time to review how much we give to these categories of public workers. The Professor Ewurama Addy Committee only made recommendations—which you had the power to reject or accept. If the Presidency rejected some recommendations from the Constitutional Review Commission, how much more power it does not have to reject or review a recommendation on salaries from a Committee (which is lower in status than a Commission). Mr President, as you rightly noted, the meat is indeed down to the bone but sadly only 6% chewed it—and are still chewing. As you rightly noted also, it is time for serious rethinking—and the starting point should be reducing those high salaries (and cost of governance) of yourself, MPs, Ministers, Deputy Ministers.

Albert Arhin, University of Cambridge, UK This email address is being protected from spambots. You need JavaScript enabled to view it.