[ 2017-02-16 ]

President Nana Akufo-Addo

Government urged to re-think decision to "raid" Heritage Fund
The Civil Society Platform on Oil and Gas (CSPOG),
has raised issues with government's intention to
finance the free senior high school education
policy with proceeds from the Heritage Fund.

The Senior Minister, Mr Yaw Osafo-Maafo on Tuesday
gave hints that this year's budget would explain
how government intends to go about the free SHS
policy which is to start in September 2017.

In a statement signed and issued in Accra by Dr
Steve Manteaw, Chairman of the CSPOG which is a
group that has been at the fore front of ensuring
the efficient management of the country’s
hydrocarbon resources, the group said: "the new
government has a well thought-out, properly
costed, and clear financing arrangements for the
implementation of its free SHS programme,
something betrayed by the suggestion to raid the
Heritage Fund for the purpose of financing the
programme."

According to Dr Manteaw, the fact is the ABFA
provides opportunity for leveraging much more
financial resources for the purpose than the
Heritage Fund does, so why target the Heritage
Fund and leave out the ABFA?

Besides, if we cannot find all the money required
to finance the programme at a go, what stops us
from staggering implementation into phases, so
that we cover some of the cost in year 1, and
cover the rest in subsequent years, he added.

Below is a copy of the CSPOG's position on what is
being proposed by the government.

Free SHS financing

…Gov’t Urged to Re-think Decision to Raid
Heritage Fund

The Civil Society Platform on Oil and Gas (CSPOG),
a group that has been at the fore front of
ensuring the efficient management of the
country’s hydrocarbon resources since the
discovery of Jubilee, is urging government to
abandon its decision to raid the oil and gas
Heritage Fund for the purpose of financing its
free Senior High School (SHS) programme.

According to the group, the current arrangement
which sets aside only 9 percent of net petroleum
revenues as a heritage for future generations is
the result of intense negotiations and broad
national consultations. It therefore considers it
as an act in bad faith, if the achieved consensus
is altered by any person(s) without recourse to
the people of Ghana.

CSPOG points out that, the savings versus spending
arrangements, the prohibition of collateralization
of the petroleum funds, and the elaborate
transparency provisions contained in the in
Ghana’s Petroleum Revenue Management Act (PRMA)
have received international acclaim and are often
cited as best practice, and so care must be taken
not to roll back the progress so far made.

It is indeed important for the government to
recognize the fact that the establishment of the
Heritage Fund moves Ghana away from the reckless
practice of spending the entirety of the current
year’s natural resource revenue in the next
year’s budget, often paying for recurrent
expenditure items.

“We have even sold our golden share in AngloGold
Ashanti and used the proceeds to pay salary, and
today we have nothing to show for it” said
CSPOG’s chair, Dr Steve Manteaw.

CSPOG does not discount the importance of
education in nation-building, and is in fact in
full support of the free SHS policy, but beliefs
this can be done without encumbering the small
fund we are preserving for future generation.

The group rejects the suggestion that the children
of today are the future generation referred to in
the PRMA, explaining that the future generation is
the generation unborn, and who are unlikely to
meet the country’s oil wealth by the time they
are born.

This according to CSPOG is the reason the law
provides that when the oil is depleted the
Stabilisation Fund and the Heritage Fund would be
joined to form the Ghana Petroleum Wealth Fund.
This will be invested and the returns, as may be
determined by parliament would be spent through
the budget for the benefit of successive
generations.

CSPOG wishes to also point out that, at the
current production levels and world market prices,
the Heritage Fund is not likely to yield more than
US$25 million a year, and so once the accumulated
fund is exhausted in the first year of the free
SHS programme, which will certainly be the case,
the annual Heritage streams will be woefully in
adequate in meeting the free SHS expenditure,
raising serious questions about its
sustainability.
Feasibility

CSPOG however believes in the feasibility of the
free SHS programme, because even Uganda, whose
economy is by far weaker than Ghana has been
implementing the programme in the last decade, and
Kenya has been implementing same for nine years
now.

A simple comparison of some economic statistics
between Uganda and Ghana will perhaps provide
better anchor for CSPOG’s conviction that free
SHS is implementable in Ghana.

In 2007, when Uganda introduced its free secondary
education programme, the country’s GDP according
to World Bank data, stood at US$12.293 billion.
Ghana’s GDP in the year it is planning to
introduce free SHS is US$37.54 billion, three
folds the GDP of Uganda at the time it embarked on
its programme.

Uganda’s population in 2007 was 29.9 million.
Ghana’s population in the year of its
introduction of the programme is 27.41 million.
Uganda’s Gross National Income (GNI) per capita
was a mere US$380 in 2007 when it introduced the
programme, compared to Ghana’s US$1,480 at the
time it is contemplating the introduction of the
programme.

The most rational conclusion to draw from this
comparison therefore, is that Ghana is
economically much stronger to implement its free
SHS programme today, than Uganda was when it did
so in 2007.

A further comparison, using a common baseline data
i.e. 2015, still shows Ghana in a stronger
position economically to undertake such
initiative. Uganda’s GDP in 2015 was US$27.529
billion, while Ghana’s was US$37.54 billion, a
whooping US$10 billion difference. The Gross
National per capita for Uganda in 2015 was US$700
while Ghana’s was more than double i.e.
US$1,480.

Reasons for concern

In spite of CSPOG’s conviction that the policy
is implementable it has reasons to be concern
about the government’s approach.

First, it does not look like the government has a
well rehearsed and properly costed implementation
plan with clearly identified sources of funding.

Again, the rollout of the scheme risks abuse if
adequate built-in safeguards are not put in place
to prevent foreigners, especially from
neighbouring countries from taking undue advantage
of it, and through that, compounding the cost to
be borne by the state.

Other reasons for concern arise out of lessons
that can be drawn from the Ugandan experience,
which indeed resonates with Ghana’s own
experience at the basic school level. In Uganda,
the impact of the decade old free secondary school
programme has been mixed. On the positive side,
more children from poor families are able to
transition from the basic level of education to
the secondary level.

Enrollments have increased, and this has created
increased demand for more teachers leading to job
creation in the education sector. Further jobs
have been created in the construction sector, as
government developed more educational
infrastructure to respond to the increases in
enrollment.

On the negative side however, there has been a
sharp decline in the quality of secondary
education arising out of inadequate numbers of
teachers required to teach the teeming student
population, as well as insufficient teaching and
learning materials. These are of course
consequences that Ghana faced in the early years
of the implementation of universal basic education
and till date, not all of them have been
effectively addressed.

Missing details

In Uganda, students who obtain set benchmark
grades in each of the four primary school-leaving
examinations are automatically allowed to proceed
to study free in public schools and participating
private schools. The government pays the schools
an annual grant of up to $52 (Ugandan Shillings
equivalent) per student, spread over three school
terms. The amount covers fees and text books,
while parents are made to provide uniforms,
stationery and meals.

In the case of Ghana, it is not clear yet what the
cut-off point would be for admission to the SHS or
whether there will be a cut-off point at all. The
impression one gets from the rhetoric is that we
could end up with a wholesale transition of
children from JHS to SHS. If that happens to be
the case, then WASSSE will remain useful only for
the purpose determining who gets selected to which
school, and not as a decider on who gets to
continue to SHS. That will then mean that greater
numbers will have to be provided for in the
budget.

It also appears that Ghana’s free secondary
school programme will not cover students in
private schools. If that is the case, then it is
likely we will see a massive drift of students
from private secondary schools to the public ones
as facilities are expanded, ostensibly to also
benefit from the scheme.

This will serve as a disincentive to private
sector participation in education delivery at the
secondary level in the short to medium term, but
in the long term, as overcrowding and inadequate
teaching and learning materials cause quality to
suffer, the private sector is likely to cash-in by
providing a more quality education at that level,
leading to the replication of the situation at the
basic level, where private schools deliver better
quality in terms of examination outcomes.

CSPOG’s Proposals for the free SHS Policy

1. Government should re-think the policy as
currently conceived to make its implementation
smooth and painless for the economy;

2. Ghana can avoid the pitfalls in its bid to give
every Ghanaian child a fair chance in life, by
finding ways to stagger the implementation into
phases, to allow the expansion of facilities,
recruitment of teachers, and procurement of
teaching and learning materials to run in tandem
with the expected enrolment boom;

3. The government should seize upon the public
interest the issue has generated to convene a
national dialogue on financing options for its
free SHS programme. This will help procure the
public’s buy-in into whatever financing option
is settled on;

4. Government has an option within the law as it
stands, to prioritise education in the ABFA
expenditure framework, where much more financial
resources can be leveraged than from the Heritage
Fund;

5. In the medium to long term, government should
be working to close all the financial leakages in
the education sector. A research conducted by the
Ghana National Education Campaign Coalition
(GNECC) in the last decade indicated that about
25% of educational budget do not get to the
intended beneficiaries or targets.

CSPOG wishes to caution the government and all
Ghanaians alike, that the over-reliance on oil
revenue, which presently constitutes a paltry 3
percent of total government revenue could lead to
the country being afflicted by the dreaded Dutch
disease. We must look more to taxes as the major
financing mechanism for our development, and treat
oil as a mere addition.
Signed

Dr Steve Manteaw
Chairman, CSPOG

Source - Graphic.com.gh

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