2019 Budget Reliant on Sponsorship – SEND Ghana

By Justice Dzido On Nov 22, 2018

Civil society group, Social Enterprise Development (SEND) Ghana, has stated that government’s 2019 budget is mostly dependent on donor and private funding.

In an issued statement, the institution urged government to create a suitable solution to fund and implement its own capital investments.

“According to our analysis, more than half (51.2 percent) of the Ministry of Food & Agriculture projected expenditures in 2019 are set to be sourced from donors,” the statement read.

“To make Ghana self-sufficient and attain a Ghana Beyond Aid as well as Sustainable Development Goals 1, 2 and 17.1, (i.e., no poverty, no hunger and strengthened domestic resource mobilization), government must find a sustainable way to fund and implement its own capital investments,” the statement added.

Read the full statement below:

Press Release

For Immediate Release
Tuesday, November 20, 2018
SEND GHANA

Telephone: 0245-021-871 | Email: [email protected] | Twitter: @SEND_GHANA

SEND GHANA ASSESSES 2019 BUDGET

SEND Ghana’s preliminary assessment of the 2019 budget statement has identified several cross-sector and sector-specific concerns. Issues such as overdependence on donor and private funding, fragmentation and weak governance, short-changed goods and services, and poor targeting cut across assessed sectors, while sector-specific also exist.

Cross-sector observations:

The projected budget for 2019 is too dependent on donor and private funding

After over 60 years of independence, the Government of Ghana still heavily relies on development partners and the capital market for funding.

In the health sector, government has failed to allocate enough GoG funding to the Ministry of Health for capital expenditures in 2019. In fact, 73.9 percent of the allocation for capital expenditures is expected to come from development partners, with the Annual Budget Funding Amount and Internally Generated Funds providing the remaining 26.1 percent.

In the education sector, free primary and secondary education has increased the number of children in schools. However, this increase has led to overcrowding and exposed wide infrastructure gaps within the education system. Without predictable funding, we have observed that many education infrastructure projects are stalled and require critical financial support to progress past low levels of completion. Government has made it so that the main source of funding for education capital expenditures in 2019, including the construction of fundamental education facilities, is set to be the capital market. Since private funding can be unpredictable, government must ensure a sustainable source of adequate funds for infrastructure development. It is time government made use of its mineral revenues to raise human capital in the country.

When it comes to water, hygiene and sanitation, 84.6 percent of money allocated to the Ministry of Sanitation and Water Resources was sourced from development partners in 2017. In 2018 the amount was 60.3 percent. This trend is set to continue in 2019; 70.3 percent of projected funding for the WASH ministry will be donor-driven. According to our analysis, donor support is unpredictable and puts water, sanitation and hygiene interventions at risk. In 2017, only 4.6 percent (GH₵ 9,227,763) of the expected GH₵ 201,824,097 was actually released to the WASH ministry. Goods, services and capital expenditures suffered the most, meaning WASH facilities across the country were not provided.

In the food and agriculture sector, government has for years failed to meet Comprehensive Africa Agriculture Development Programme obligations and invested less than 10 percent of its annual expenditure in agriculture. According to our analysis, more than half (51.2 percent) of the Ministry of Food & Agriculture projected expenditures in 2019 are set to be sourced from donors.

With Ghana’s attainment of lower middle income status, donor support may start to dwindle. To make Ghana self-sufficient and attain a Ghana Beyond Aid as well as Sustainable Development Goals 1, 2 and 17.1, (i.e., no poverty, no hunger and strengthened domestic resource mobilization), government must find a sustainable way to fund and implement its own capital investments.

Fragmentation among ministries, departments and agencies will cause weak governance, incur transaction costs

“A common observation we have made is that the 2019 national budget is characterized by too much fragmented allocation,” said SEND Ghana Country Director George Osei-Bimpeh. “This is a recipe for duplication of functions, poor implementation and coordination, and likely low or no value for money. This must change to avoid unnecessary increases in transaction costs. The ambition of the budget can be greatly undermined by the current poor allocation and implementation framework.”

The Ministry for Special Development Initiatives, through its three development authorities, has been allocated GH₵ 1.3 billion in the 2019 budget statement to fund infrastructure for health, education, water and sanitation, agriculture, and roads. Meanwhile, the Ministry of Health is also projected to receive GH₵ 846 million for capital investment. Allocations and interventions for the education, water, sanitation and hygiene, and food and agriculture sectors have also been fragmented between sector ministries and the Ministry for Special Development Initiatives.

Fragmentation also exists in the 2019 budget statement when it comes to social protection. Allocations for the School Feeding programme have been split between the Ministry of Gender, Children and Social Protection and metropolitan, municipal and district assemblies. The ministry has been allocated GH₵ 262 million and GH₵ 200 million has also been earmarked under the District Assembly Common Fund (DACF) for the feeding programme. We have observed that disbursements to the DACF are often irregular and institutional collaboration is weak, so implementation of the programme is likely to be negatively impacted by the fragmentation. Indeed, SEND Ghana’s “WHO IS MONITORING? A Potential Financial Leakage In the Ghana School Feeding Programme” report has already revealed financial leakages caused by poor financial management of the programme.

Since the projected allocation to the Ministry for Special Development Initiatives is set to be a lump sum without specific allocations for infrastructure projects in different sectors, budget transparency and the ability to track allocations and expenditures has been obstructed, putting government commitment to the Open Budget Initiative into question.

It should be noted that transparency issues also exist in information provided on health priority programme areas and the National Health Insurance Scheme. The 2018 budget statement provided detailed information on programmes government intended to implement in the areas of HIV, maternal and child health, malaria and nutrition. However, the 2019 budget statement lacks detail on these health priority programme areas, with the exception of neo-natal and under-five mortality. It reads that government intends to continue with interventions in “…Ensuring affordable, equitable, easily accessible and Universal Health Coverage (UHC), and reducing disability, morbidity and mortality.” When it comes to NHIS, the scheme is projected to receive a total of GH₵ 2,381,014,749 from the National Health Fund in 2019. Government plans to transfer GH₵ 1,692,678,294 of that to the National Health Insurance Authority and use GH₵ 187,967,235 to purchase essential vaccines. However, the budget statement has neglected to provide a purpose for the remaining GH₵ 500,369,220. This raises serious questions about government transparency. What does government intend to use this huge amount for?

To improve transparency, the Ministry for Special Development Initiatives must provide clear information on how much money is supposed to be spent on each of the relevant sector ministries and adequate information about health priority programme areas must be provided.

Further, persistent poor coordination among ministries and project ownership issues raise serious concerns as to how departments and agencies will effectively coordinate their activities. Indeed, the transaction cost of more than one institution implementing the same or similar activities would be enormous. To avoid the duplication of functions and needless costs, and ensure efficient infrastructure delivery, government should adequately equip sector ministries rather than the Ministry for Special Development Initiatives to take charge of capital investment and development.

Government must also increase funding to operationalize the existing institutional structure for coordinating social protection programmes at all levels and fast track the passage of the social protection law.

Low budgetary allocation and overspending on government salaries is short-changing goods and services

In 2018, government gave 25.6 percent of total allocation to the Ministry of Food & Agriculture to goods and services. The allocation was used to fund initiatives like the Planting for Food and Jobs programme. Despite the fact that government has introduced new initiatives for 2019, such as the Rearing for Food and Jobs programme, Planting for Export and Rural Development, and the establishment of 13 commercial greenhouses, allocation for goods and services to the Ministry of Food & Agriculture has declined by 6.7 percent. The decline poses a potential challenge to the implementation of continuing and new initiatives, and risks government missing its target of having 1 million farmer beneficiaries.

Low budgetary allocation to goods and services is even more worrying considering the Ministry of Food & Agriculture only received 33.3 percent of what was allocated to goods and services in 2017, the most recent year available. We believe our trend analysis for the education sector at least partly explains this fact. According to our analysis, government has been prioritizing the payment of compensation, such as salaries and benefits, over disbursements to goods and services, which are used for the implementation of sector initiatives. In 2016 and 2017, payment of government salaries went over budget by 32.2 percent and 13.5 percent, respectively. Goods and services in the education sector suffered significant setbacks in those same years, receiving only 0.8 percent and 14.8 percent of allocated budget.

For 2019, government has budgeted a 25 percent increase in funding to goods and services for education. However, after the amounts for SHS and compensation are allocated, we feel the increase will be insufficient to deliver quality education at other levels of education. This is especially true if good and services funding is not actually paid out in full. To attempt social interventions at all levels of education next year, government must at least ensure budget allocated to goods and services is released on time and in full.

To attain the Sustainable Development Goals, government must increase allocations for goods and services overall, and ensure they are released as promised.

Inadequate targeting of marginalized groups

The 2019 budget statement is silent on how to track the poor and vulnerable to include them in social protection programmes.

For example, the budget statement does not include a strategy to link women, disabled farmers and abled-bodied LEAP beneficiaries to the Planting for Food and Jobs programme, which has great potential to lift them out of poverty. In 2017, only 4.6 percent of PFJ beneficiaries in the Northern Region were women. To link the poor and vulnerable to PFJ, government should enrol LEAP beneficiaries on the programme as a graduation measure and implement a quota system to target marginalized groups.

Further, government must fast track the completion of the Ghana National Household Registry to improve targeting. Currently, disaggregation of data to identify vulnerable beneficiaries is bad. The Ghana National Household Registry has suffered undue delays and transactions costs since it started in 2015, with completion only taking place in the Upper West and East regions to date. As a result, the creation of a database to target the extremely poor, and improve transparency, accountability and efficiency has also stalled. Government must prioritize and provide a timeframe for completion of the registry in the other regions. This is especially important given that government intends to operationalize a new productive and financial inclusion programme with livelihood creation opportunities linked to LEAP and other social protection beneficiaries in 2019.

Other issues by sector:

Health

Low health staff employment provision will prolong human resource problems

Through Minister of Health Kwaku Agyemang-Manu, government stated in October 2018 that the ministry would recruit 40,000 nurses by February 2019. However, the 2019 budget statement makes a provision for the employment of only 6,280 health staff. This huge difference risks increasing unemployment in the health sector as well as health staff shortages.

To address the human resource needs of the Ministry of Health and ensure high quality health care, government must provide additional allocations toward the employment of health staff during its midyear budget review.

Education

Children at foundational levels of the school system need teaching and learning materials, too

Under the government SHS education policy, funding for senior high schools increased from GH₵ 400 million in 2017 to GH₵ 1.1 billion in 2018. That represents 83.9 percent of the goods and services allocation, leaving less than 20 percent for other levels of education. In 2019, it is set to be GH₵ 1.6 billion, representing 88.8 percent. Inconsistent funding across levels of education results in the inconsistent provision of inputs. For example, while pre-schools, primary schools and junior high schools only received furniture and school uniforms in 2018, senior high schools received those inputs and many more, from exercise books, textbooks and accessories to iBox education portals and E-learning multimedia laboratories.

To ensure that “every child is equipped with foundational reading, writing, arithmetic and creativity skills by the time they complete Primary 6” as envisioned in the budget statement, government must equitably supply teaching and learning materials, such as textbooks and exercise books, at all levels of the education system.

Develop strategies to absorb tertiary school swell up before 2020

In addition to increased provision of inputs, the government SHS education policy has led to increased attendance at senior high schools. With free SHS, the student population has soared from 361,771 students in 2017 to 490,882 in 2018.

While improved access to SHS is cause for celebration, government has been silent to date on the swell up expected to hit high-level education at tertiary schools in 2020. We have observed that tertiary institutions already have limited space. Government must develop strategies, such as expanding the infrastructure base and human resources, to absorb increased enrolment into tertiary institutions in order to ensure students are able to continue their education past SHS.

Institutions for persons with disabilities received zero compensation money in 2016 or 2017

According to reports of the accountant general, none of the compensation money released in 2016 or 2017 was for special education. In those years, institutions for persons with disabilities also received 0 percent of the goods and services line item. This is especially concerning compared to the 100 percent received by the Office of the Chief Director and 97 percent received by general administration last year.

Without proper funding, institutions for persons with disabilities will continue to have challenges providing teaching and learning materials, such as braille for the visually-impaired, allocating appropriate human resources, or making accessibility considerations, such as building ramps. Government must improve its responsiveness to special institutions in 2019 to ensure the country does not digress from its quest to attain inclusive lifelong learning.

WASH

Rural areas require drinking water

Access to potable drinking water remains a challenge in hard-to-reach, underserved rural communities. According to the Sustainable Development Goal Indicator Baseline report, only 6.7 percent of the population in rural areas had access to safe drinking water services in 2015, compared to 44.7 percent of the urban population in the same year.

Despite this disparity, 2019 budget allocations and plans to provide potable water are heavily concentrated in urban centers. To achieve SDG 6.1 – universal and equitable access to safe and affordable drinking water for all by 2030 – government must develop a clear strategy to reach rural communities.

Schools cannot wait for accessible WASH facilities

Water, sanitation and hygiene in schools is poor across the country, with only about 60 percent of schools having adequate sanitation, such as urinals and toilets, and 40 percent having adequate water facilities. However, the budget statement for 2019 does not include a strategy to incorporate WASH facilities at educational institutions.

Government should develop and fund a strategy to provide these facilities to ensure good hygiene at existing and new schools. The design and execution of the strategy should also ensure facilities are accessible to persons with disabilities.

Social Protection

Bring LEAP beneficiaries above the extreme poverty line

As it stands, a single member household on the Livelihood Empowerment Against Poverty programme receives a GH₵ 64 cash transfer every two months. However, since the extreme poverty line was GH₵ 2.69 a day in the 2018 Ghana Living Standard Survey, a single member household should receive GH₵ 161.4 bimonthly from LEAP. This means LEAP beneficiaries are receiving 60 percent less than what they require to meet daily nutrition requirements. Despite government promises to scale up the programme, projected funds for LEAP are actually lower than last year. The allocation to LEAP in the 2018 national budget was GH₵ 168,369,800 million. In the 2019 budget statement, funding allocated for LEAP is GH₵ 168,000,000 million, a decrease of more than GH₵ 350,000.

To ensure LEAP beneficiaries are living above the extreme poverty line, government should scale up its funding for the programme and increase cash transfer amounts. Increased cash transfers for LEAP beneficiaries would contribute to the achievement of Sustainable Development Goals 1, 2 and 10 (i.e., No Poverty, Zero Hunger and Reduced Inequalities).

Address the NHIS funding gap

Government currently spends about $30 (about GH₵ 144) to provide care to National Health Insurance Scheme members, however, the World Health Organization recommends spending $86 per member. This low level of funding leads to delays in payment claims to suppliers and facilities, forces out-of-pocket payments and compromises healthcare quality.

To address the NHIS funding gap, government must guarantee financial sustainability of the scheme. Additionally, government should ensure efficient utilization of NHIS funds. The ongoing NHIS audit should be expedited to support these recommendations and the strengthening of financial systems.

Tax

Proposed review of personal income tax band is not revenue enhancing

The introduction of the personal income tax band rate exceeding GH₵ 10,000 at a rate of 35 percent in the 2018 mid-year budget review was seen as a key revenue enhancing measure. Indeed, by our estimation, the revenue targets for the last half year of 2018 were exceeded partly due to this and other progressive tax measures that were introduced. From the 2018 performance indicators, records show that personal tax revenue projection out-turn recorded a 0.6 percent increase over the revised budget figure. It can be inferred that the tax band contributed significantly to this achievement and has the potential to reduce increasing income inequality in the country.

Unfortunately, the 2019 budget proposal to review the income tax band to exceeding GH₵ 20,000 at a lower rate of 30 percent will adversely affect revenue generation. The question is, how many Ghanaians are in such a high income bracket? We see the proposed upward review of the income tax band as a move by government to bow to pressure from various interest groups and economic elites.

Media Contact: Signed:
Benedict Mensah George Osei-Bimpeh
Communications Assistant Country Director
0245-021-871
[email protected]