extract- dr bawumia speaks on ndc claims on projects & use of resources

7/24/2019 Extract- Dr Bawumia Speaks on Ndc Claims on Projects & Use of Resources

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EXTRACT FROM THE ROLE OF FINANCIAL DISCIPLINE & INVESTMENT IN

NATIONAL DEVELOPMENTSPEECH DELIVERED BY DR. MAHAMUDU BAWUMIA

ON 21STFEB 2016 AT THE UNIVERSITY FOR DEVELOPMENT STUDIES, WA CAMPUS

(The Speech was delivered at a National Financial Literacy and Investment Summit

organised by the University Students Association of Ghana (USAG) at the University for

Development Studies, Wa Campus)

DR. BAWUMIA SPEAKS ON NDC CLAIMS ON PROJECTS & USE OF UNPRECEDENTED

RESOURCES

Use of Borrowed Money / Resources

The burning question for most Ghanaians is that if the government has borrowed the

equivalent of some $37 billion (at the time of borrowing) in seven years, can they point

to an equivalent amount of projects?

Unfortunately and sadly, the answer is no. The government is attempting to hoodwink

Ghanaians by claiming a massive increase in infrastructure investment. Why do I say so?

First, If you sum the cost of all the loan financed projectslisted in the green book (even

including those with artistic impressions, it is less than $7 billion. Meanwhile, thegovernment has borrowed the equivalent of $37 billion so where is the rest of the money?

Indeed, according to the Managing Director of the IMF, most of Ghanas borrowing has

been used for consumption and not for investment. The overpricing of contracts,

corruption and the absence of value for money considerations is partly responsible for

this. For example, a runway rehabilitation alone at Kumasi airport cost this country $23.8

million whereas a proposed airport at Ho is estimated at $25 million. Was the runway in

Kumasi paved with gold?

Indeed, given the resources at its disposal one should expect at least four times the

quantum of investment that the NDC claims to have undertaken. The close to $30 billion

of borrowing that was not used for projects could have inter alia:

Developed the Rail network from Accra to Paga and transformed many parts of

the country just by this investment.

Solved the water problems in Ghana

Solved the energy problem and not put the country through 4 years of dumsor at

the cost of human lives and collapsing businesses and unemployment


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Put in place at least 1000 kilometres of asphalted roads in each region. There will

be no major road problem left in any region after this.

Transformed Agriculture in the Northern regions, Afram Plains and Ghana

through investment in machinery, irrigation and dams

Put in place one world class hospital in each region

Buy at least 1000 ambulances for the Ghana Ambulance service

Set up factories with the private sector across the country to add value to our

raw materials and create jobs. On the issue of jobs, the question is, if the

government has taken a whole 4 years to solve a basic problem like Dumsor, how

long will it take to address unemployment? At this pace, many of the unemployed

youths will be over the pension age before the NDC finds a solution to the

unemployment problem.

Equip our existing health and education institutions with state of the art facilities

Build an additional 600 of the Senior High Schools the government is currently

trying to build.

The second reason why I say the NDC is attempting to hoodwink Ghanaians with claims

of massive infrastructural investments is that investment in infrastructure has actually

been on the decline! Yes, investment in infrastructure in Ghana has actually been on the

decline! I will now explain why this is the case.

Investment in infrastructure is key in any economy to maintain and increase economic

growth. It enhances productivity. In this regard, it is important to note that we measure

investment in an economy relative to GDP and not just in nominal terms. This is a point

that is unfortunately lost on this NDC government and their communicators.

To explain this point, if a person tells you they have invested GHC 1000 in the education

of their children and another tells you they have invested GHC 2000, you cannot conclude

that the second person has invested more in his or her children if you do not compare it

against the number of children in the family. If the first person has one child and the

second has 10 children, then the investment of the person with one child will be higher

(i.e. GHC1000 per child compared to GHC200 per child for the second person).

It is in this context that when we measure the impact of investment, we look at it relative

to the GDP of a country. If as a country, your investment in infrastructure relative to GDP

is declining, then your growth is likely to decline. This background is very important to

understand what is happening in Ghana today.

The evidence shows that notwithstanding the massive increase in the debt stock, capital

expenditure as a percentage (%) of GDP has actually been on the decline from 9.1% of

GDP in 2008 to 4.1% by 2015. Capital expenditure as a percentage of GDP averaged 11%

for 2001-2008 (without oil) while that for 2009-2015 has averaged 5.7% (with oil).


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This means that contrary to all the government claims, of an increase in infrastructure

expenditure on projects all over the country, the reality is that Ghanas expenditure on

infrastructure relative to GDP is declining. The numbers indicate that relative to GDP, this

government is investing about half what the previous government invested in

infrastructure. It is in fact a travesty that Ghana before the discovery of oil was spendinga higher proportion of its income on infrastructure investment than after the discovery

of oil and the massive increase in the debt stock. This decline in investment in

infrastructure runs counter to what one would have expected.

The third reason why I say the NDC is attempting to hoodwink Ghanaians with claims of

massive infrastructural investments is that most of these projects are over-priced as a

result of the single source procurement method, which has become the procurement

method of choice for this government, as we saw in the SADA, GYEEDA, KARPOWER,

SMARTYS bus branding etc.. I would like to see for example the government explanation

from the government quantity surveyors of the costing on the Kumasi airport runway for

$23.8 million. However, you and I know that they would not explain because they cannot

explain.

The fourth reason why I say the NDC is attempting to hoodwink Ghanaians with claims of

massive infrastructural investments is that in fact, all governments in the past have done

projects. Indeed, in terms of projects accomplished relative to resources available, the

NPP government of 2001-2008 has a very impressive record (including this UDS

campus). In the road sector for example, the NPP investment between 2001-2008 far

exceeds that of the NDC since 2009.

The nations road network stood at 37,321 km at the end of fiscal year 2000, increased to

56,057 km at the end of 2004, moved further up to 67,291 km at the close of year 2008,

increased slightly to 68,134 km at the end of 2012 and as at the close of December 2014

stood at 71,063 km (Table 2).

TABLE 2GHANA ROADS (km) Highways, Urban and Feeder Roads)

AGENCY 2000 2002 2004 2006 2008 2012 2014

GHA 11,122 12,656 12,700 12,786 12,697* 13,344 14,873DFR 23,999 32,597 38,561 40,671 42,194 42,190 42,190

DUR 2,200 4,064 4,796 9,764 12,400 12,600 14,000

TOTAL 37,321 49,317 56,057 63,221 67,291 68,134 71,063

*Some trunk roads within the cities of Accra and Kumasi and other major cities ceded to

Department of Urban Roads.

The nations road network increased by 18,736 km and 29,970 km during the four (4)

and eight (8) years of NPP-led administration respectively. At the end of year 2008, the

network size met as at the end of December 2000 has been increased about 80%. Incontrast, the NDC government has thus far added only 3,772 km to Ghanas road network.


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This means that the NPP constructed 8 times more roads (km) than the NDC even though

they had 10 times more money. Yet when you listen to Government propaganda, they will

tell you of the massive road investments they are making. Unfortunately for them, the

facts completely disprove their attempt to hoodwink Ghanaians.

Indeed, it was His Excellency President Mahama who told us that any government touting

projects as achievements is conducting an exercise in mediocrity, So what has changed?

The real fact is that the NDC has no real achievements to point to outside the undertaking

of some projects hence their resort to mediocrity.

Ladies and Gentlemen, the fifth reason why I say the NDC is attempting to hoodwink

Ghanaians with claims of massive infrastructural investments is that infrastructural

investment is not supposed to be for its own sake but to increase productivity and

production in the economy. The proof of the pudding, as they say, is in the eating. If you

have indeed undertaken massive and unprecedented infrastructural investment, then

why is the economy collapsing?

- Why is the NHIS in trouble?

- Why is unemployment on the increase?

- Why are businesses collapsing?

- Why is agricultural growth stagnant?

- Why is manufacturing growth negative?

- Why is the government having difficulty meeting statutory payments?

-

Why the high interest rates?

- Why the massive exchange rate depreciations?

- Why are the SADA guinea fowls flying to Burkina Faso?

- Why the massive increase in utility prices?

- Why the withdrawal of teacher and nursing training allowances?

- Why all this suffering in the land?

The facts therefore show that the impact of the NDC infrastructure investments have nottranslated into increased output, job creation and better living conditions for the people

of Ghana.

Finally, Mr. Chairman, the sixth reason is that the investments being claimed by the NDC

have not actually translated into making our social services better. A few examples come

will clearly illustrate this point. The NDC claims to have put in over a billion dollars in the

area of water infrastructure. Yet, today many places across the country are seeing the

worst shortages of water in decades. On my way to Wa, I passed through Adoagyiri, where

residents are currently facing the worse water crisis in years. School Children have hadto abandon school in search of water. Water supplied by private enterprises have shot up


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as a result by over 500% in some instances and the poor have virtually been priced out

of getting portable water to drink and for their daily chores. The situation in Adoagyiri

and Nsawam is currently also in play in many parts of the country Obo, Tamale, to

mention a few.

So Mr. Chairman, what is the essence of the claims being made by the NDC with respect

to investments in water when after seven years, the people are rather seeing worse

shortages than they were before these so-called investments?

The government is also claiming unprecedented investments in the Health Sector.

However, Mr. Chairman, many across the country can attest to the fact that the National

Health Insurance Scheme, which provided relief to many Ghanaians and ensured that

millions could access health care regardless of how much money they had at the time of

ailment, is today on its knees. What Ghanaians can relate to is the many illnesses and

drugs which have been taken out of the NHIS care lists, the Capitation policy and the

situation where patients seeking to be treated on the basis of possession of the NHIS Card

are turned away in favor of patients with money. For many Ghanaians, the sad reality is

that the killer Cash and Carry program, which the NPP worked to cancel, has been

technically introduced back as a result of the failure of the NHIA.

Again, Mr. Chairman, despite these huge claims of investment, our Hospitals across the

country, keep crying over very essential equipment and facilities. I had this sad reality hit

home when a close relative passed away last year as a result of the lack of oxygen at

Tamale Teaching Hospital. The recent closure of certain departments in Korle-Bu also re-

emphasizes this point.

The latest case which brings this sad reality into focus was the gory Kintampo accident

last week, which claimed over 60 lives. According to the Medical Superintendent of the

Kintampo Government Hospital (where all the victims of the accident were sent), Dr.

Bismark Owusu Ofosu, who spoke to the BBCs Sammy Darko, some victims of the

accident who were brought in alive died because the Hospital lacked some vital logistics

and medicine. There is no supply of oxygen. Even Common Emergency Drugs are not

available, Dr. Owusu Ofosu said while addressing the media on Thursday.

Also, the Acting Administrator of the Ambulance Service in the Brong Ahafo Region,

Samuel Karikari, confirmed to Citi News that at the time of the accident, the only

Ambulance in Kintampo was out of commission. He confirmed that the nearest

Ambulances to where the Accident occurred were all not functioning. These factors

ensured that it took emergency services several hours to get to the scene and save the

lives of the victims.

The Hospital Superintendent, who spoke on Class FM, said We could have saveda lot oflives because called the National Ambulance and I was told that the National Ambulance


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was out of function.. If we had an ambulance which could take five, six people at a time,

(we) would have done better.

So again, Mr. Chairman, what is the point in the claims of massive investment in the Health

Sector when after seven years and with over 200 billion in Resources, we cannot sustainthe Health Insurance Scheme which was functional when Ghana had less than 10 times

the resources this government has had; and cannot provide vital logistics for our existing

Hospitals and service our Ambulances to save the lives of our countrymen?

Lastly, to the Education Sector. Despite claims of unprecedented investments also in the

Education sector, the sad reality most Ghanaians can relate to, is the fact that Education

has become less affordable to access. While Fees and other charges have multiplied

steeply, the government has worsened matters by cancelling / abolishing several

allowances and subventions in Education. The cancellation of Teacher and Nursing

Training allowances, now mean that students are finding it unbearable to keep

themselves in the Teacher and Nursing Training colleges.

Students in our various campuses are also being asked to pay more and more, which can

only mean additional burden on the already burdened student and parent. Education is

increasingly being priced out of the reach of the middle class and poor Ghanaian.

At the Teaching level, Teachers from the basic to tertiary level have also seen the

cancellation of several allowances and pegs which made their all-important work, a bit

more satisfying.

So once again, what is the point in claiming huge investments in the Education sector

when the ordinary Student is today more burdened than ever and when the most critical

factors in Education, Teachers, have seen a worsening of their conditions of service and

have to spend so much time demanding for their due?

Mr. Chairman, it is therefore clear that despite the huge claims of investment, the reality

for many Ghanaians is that livelihoods have worsened and social services are not

functioning.

One point I would like to make is that investments must be assessed critically on the basis

of what they mean to production and lives and not just on the basis of numbers. For

example, early reports on the Kintampo Accident, which was later confirmed to the

Graphic by the Police, indicate that the Accident could have been caused by a faulty brake.

So while the government may add the recent GHC 3million rebranding of the MMT Buses

as an investment in the Metro Mass Transit Company, the question is, would this

investment not have been more prudent if it was put in the maintenance and servicing of

these Buses? Will that not have saved more lives and improved on the effectiveness of theMMT, compared to the decision to rebrand these Buses?


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In contrast, the NPP government of 2001-2008 undertook massive infrastructure

investment across the various sectors: education, health, roads, energy, etc. but the

impact of this infrastructure investment was felt positively with :

a significant increase in GDP growth from 3.7% to 8.4% without oil

Massive improvement in cocoa production

National Youth Employment Programme providing opportunities and jobs for

the youth to get a start in the job market

The School Feeding Programme to provide food to pupils in basic schools

Capitation Grant to make education affordable and accessible

Free Metro Bus ride for children in basic school.

The National Health Insurance Scheme (NHIS) to provide accessible healthcare tothe population.

The National Youth Employment Programme (NYEP)

Free maternal care for all pregnant women under the NHIS.

Introduction of a Metro Mass Transit transport service for urban areas to provide

subsidized transport for commuters and a free bus ride for basic school pupils in

Ghana.

Introduction of the Livelihood Empowerment Against Poverty (LEAP) programme

under which welfare grants are paid to the extreme poor.

Payment of nursing and teacher training allowances even when HIPC

What this goes to show is that Infrastructure investment alone is not sufficient to drive

an economy. You need to manage an economy with competence and keep corruption

under check if you are going to make progress. Unfortunately, this NDC government is

riddled with incompetent economic management and corruption. It is a toxic mixture that

has exploded into all the suffering that we are seeing.

extract- dr bawumia speaks on ndc claims on projects & use of resources

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