As the November 7 elections inches nearer several competitive ideas have surfaced especially regarding the best way(s) Ghana's teething problem of graduate unemployment can be solved. Vice presidential candidate of the opposition New Patriotic Party (NPP) Dr Mahamadu Bawumia, in an address to students at the Kwame Nkrumah University of Science and Technology (KNUST) dubbed ‘High Graduate Unemployment and the Employment Embargo, What is the Solution’ explores four strategies an NPP government would use in tackling the issue of unemployment in Ghana.
1. Formalizing the Economy
The first key, according to Dr. Bawumia, to creating the needed jobs and transforming the Ghanaian economy is formalizing the economy. He noted that no developed economy could have reached their current status without formalizing their economies, according to him, Data Revolution was critical to Ghana’s development, indicating that such a Revolution would involve linking databases across institutions such as DVLA, Police, Courts, Immigration, Revenue Agencies, etc.
“All modern economies all formalized. Formalization makes the collection of taxes, discipline and job creation easier. The keys to formalizing an economy are the existence of a National ID System and a functioning Property Address System. The benefits of a national ID system or a unique identification number for residents and a well-functioning Property Address System are significant. Activities of residents with regards to taxes, loan applications, crime, job applications, housing, insurance, health, etc. are uniquely identifiable”, he said.
2. Financial Inclusion
The second key for Dr. Bawumia is financial inclusion as he has described it; banking the unbanked.
“The financial system cannot develop to its potential and monetary policy cannot be effective if the majority of the population continues to be excluded from access to financial services. The importance and urgency of banking the unbanked is something that is clearly not appreciated by many governments. As well as formalizing the economy, it holds the key to reducing interest rates sustainably with the support of disciplined fiscal policy. This is because banking the unbanked increases the supply of savings in the banking system.”
Citing examples from various countries, Dr. Bawumia noted that a deliberate governmental policy was necessary to spur financial inclusion and that if achieved, it will ensure that businesses can borrow at very low and stable rates to grow business and employ more.
3. Diversifying Export Base & Developing the Property Market
The third key, according to Dr. Bawumia, is diversifying the export base of the country and deliberately pursuing policies to make Ghana the production hub in the sub-region to attract the needed industries and investment to create jobs.
The fourth key in the ten point plan is developing the mortgage market which, according to the NPP Vice-Presidential Candidate, holds the key to awakening the dead capital in Ghana’s property market and boosting growth and jobs.He noted that developing the mortgage market requires finding a solution to the issues that bog land acquisition and streamlining the processes around the acquisition and development of property.
4. Favourable Policy Framework & Economic Stability
The fourth key to ending the massive joblessness that confronts the nation today is putting in place a trade policy that encourages production, especially in key sectors Ghana has a competitive advantage in and one that utilizes tax policy to boost production and jobs instead of focusing on revenue to the detriment of production and jobs.
“Ghana should focus on providing the tax incentives for increasing production and generating employment. In the process, revenue can be raised from corporate and income taxes. What we should not allow to happen is for the desire to generate revenue to kill businesses and cause unemployment”, he argues.
Dr. Bawumia also stated that the institution of a tax credit incentive for businesses that employ fresh graduates will encourage the hiring of more youths and discourage the tendency of businesses to require ‘years of experience’ before they employing job seekers.
5. Macro-economic stability and debt sustainability.
Dr. Bawumia pointed out that macro-economic instability affects businesses negatively and hinders business growth and employment. “High fiscal deficits, high current account deficits, -high inflation, high-interest rates, exchange rate depreciation, do not provide supportive environments for job creation. They in fact result in job losses”, he said.
“With such large scale borrowing, government is crowding out the private sector which is unable to borrow to grow their business. Risk-free Treasury bill rates are around 25% (up from 10.6% in 2011) and bank lending rates are on the rise because of excessive government borrowing. Lending rates are now above 30 percent," Dr Bawumia revealed.
He noted that while the economic slump the country faces has discouraged several investors from setting up businesses in Ghana, preferring countries like La Cote d'Ivoire and others with favourable economic conditions, the situation had led the government into introducing several desperate policies like astronomic increases in taxes, which had affected businesses more negatively and the abolishment of several expenditure items, which is hampering the development of the quality human resource needed by the country.