Analysis by Adu Koranteng
The Minister of Finance, Ken Ofori Atta has said the 2022 budget is intentional about building a sustainable entrepreneurial nation through fiscal consolidation and Job Creation.
The Finance Minister, made this known in Parliament yesterday when he presented the 2022 Budget Statement and Economic Policy of government in accordance with Article 179 of the 1992 constitution and section 21 of the Public Financial Management Act, 2016 (Act 921) on Wednesday, 17th November, 2021.
In his presentation, Ken Ofori-Atta mentioned that the president was fully aware of the challenges of Ghanaians, adding that thoughts of the economic plight of Ghanaians keep the president awake at night.
He further enumerated policies and strategies to achieve the government’s goal of alleviating the suffering of the populace and strengthening the fundamentals of the economy.
“Mr. Speaker, we are under no illusions as to the economic challenges facing our country today. How to ease the sufferings of Ghanaians, transform the economy to create jobs and share the expected wealth across all households, such as providing security and education, keeps the president awake at night.
“How to broaden the revenue base, keep a grip on expenditure, protect the public purse and at the same time build with urgency the needed infrastructure, collecting revenue, managing our debt and expenditure commitments, and paying the bills to stimulate economic activity are the orders he has given to us, his Ministers and other appointees, to carry out over the next three years,” he said.
NABCO Beneficiaries to Get Extra Year
According to the Finance Minister, the remaining 67,000 beneficiaries of the Nation Builders Corps (NABCO) who have not yet secured jobs would not be laid off this year. ‘Instead, two windows; the Youstart program and a Digital inclusion program will gradually absorb them in batches during the next fiscal year.
The youstart initiative will provide youth training through skills development, entrepreneurial support, and advisory services. It will again help the youth get access to competitive credit and starters. Moreover, enterprise promotion will help mentor and gain access to the market including portals to facilitate “digital linkages” between youth-led enterprises and other enterprises. The youstart will support the youth-led enterprises with loans. The loans will come in various forms. The district-level loans will be GHC10,000 after 2-3 months of training.
The soft loans of up to GHC50,000 will help start-ups particularly young graduates and school leavers. The small businesses and the starter packs of up to GHC50,000 for individuals and GHC10,000 for organizations. Of GHC100,000 to GHC400,000 at concessional rates for Small and Mid-Size Enterprises (SMEs) through financial institutions.
He said government will through the initiative support these beneficiaries to gain access to capital, training, technical skills and mentoring to enable them to launch and operate their own businesses under the initiative. He said: “the NABCO programme was designed as a temporary stepping stone for young graduates for a period of three years. In the last three years, 100,000 young graduates have benefitted from the NABCO programme.”
“With over 33,000 trainees already securing jobs, the government will work to ensure that the remaining NABCO trainees are effectively supported to take advantage of the opportunities YouStart presents.”
NABCO was introduced by the Akufo-Addo led administration in 2017 as part of measures to address graduate unemployment in the country. The initiative was run under seven modules namely Educate Ghana, Heal Ghana, Feed Ghana, Revenue Ghana, Digitize Ghana, Enterprise Ghana, and Civic Ghana. He said this might be an uncomfortable transition but “we are a people who think deeply, and we must progress and become a people who also make things for ourselves and the World.” The Minister said, “we must embrace this challenge of becoming a vibrant entrepreneurial nation.”
Scraping of Road Tolls
The Finance Minister also announced that motorists, who ply tolled roads across the country, would no longer be required to pay tolls immediately after the Budget is approved.
“Government has abolished all tolls on public roads and bridges. This takes effect immediately the Budget is approved,” he announced
Although he said the tolling system has played a crucial role in funding the expansion of Ghana’s road infrastructure, the Minister noted that tolling points create unpleasant situations.
“Over the years, the tolling points have become unhealthy market centres, led to heavy traffic on our roads, lengthened travel time from one place to another, and impacted negatively on productivity.
“The congestion generated at the tolling points, besides creating these inconveniences, also leads to pollution in and around those vicinities,” Ken Ofori-Atta said.
To address these challenges, he said that it is necessary for the government to take a decision against the setup of tolling points.
Ken Ofori-Atta mentioned that the “toll collection personnel will be reassigned”
“The expected impact on productivity and reduced environmental pollution will more than offset the revenue forgone by removing the tolls,” he added.
Alternatively, the Finance Minister said, “a portion of the proceeds from the E-Levy will be used to support entrepreneurship, youth employment, cyber security, digital and road infrastructure among others. 3y3 Baako, Ye nyinaa be tua.”
No More Wasteful Tax Exemptions
Government has indicated that it will streamline the country’s tax regime to prevent large companies from abusing tax exemptions.
With Ghana losing about five per cent of its Gross Domestic Product (GDP) annually due to excesses in taxes of companies operating in the free zone, the government says it is putting in place measures to handle wasteful tax exemptions.
Minister of Finance, Ken Ofori-Atta who said this in his presentation of the 2022 budget statement and economic policy to Parliament on Wednesday, November 17, 2021, said the government through the Exemptions Bill which will be laid in the house in 2022 will trim down wasteful tax exemptions to ensure the country gain significant returns from companies enjoying tax exemptions.
“We wish to reiterate that we are in challenging times, which require radical measures, so let us embrace these new policies to enable Government to address the fundamental issues affecting the economy, to ensure that, our Nation continues to maintain its position,” he said.
More Reliefs for Textile Industry
The Minister also announced a two-year extension of the Value Added Tax (VAT) relief on African prints for textile manufacturers in the country. According to him, the extension is to enable them to resuscitate their operations and provide affordable textiles to the market.
Limiting of VAT flat rate to retailers
Mr Ofori-Atta also indicated that the 3 per cent VAT flat rate on the supply of goods by wholesalers and retailers which was introduced in 2017 will now be limited to only retailers explaining that all other supplies of goods and services will attract the standard rate.
This the Minister explained that the object of the flat rate is to provide a simplified system for small scale enterprises noting that to ensure that this objective is achieved, the rate will be applied to retailers with annual turnover not exceeding GH¢500,000. All other retailers and wholesalers will charge the standard rate.
