Senior Finance Lecturer at the University of Ghana Business School, Dr. Lord Mensah says looking at the current strength of the Ghanaian economy, he sees a big challenge as to how manifesto policies of the two main political parties (NPP and the NDC), will be financed should any of the two win come December 7.
He said most of these infrastructural development promises will be financed from outside the country’s resources and this will very much indebt the nation even more.
Dr. Mensah also indicated that, increasing revenue generation as some parties have said is not going to work. He noted that, in order to maximize revenue generation, the expenditure of the country should reflect the projected revenue generation in the short term.
He explained that for Ghana to experience an increase in revenue generation, the nation needs to invest in areas of the economy that will reflect the increase in the shortest time possible.
“Your expenditure needs to reflect the increase in revenue you’re thinking about in the future. If you are spending now and a chunk of the money is going into areas that won’t reflect in your revenue generation, then trust me, increasing revenue generation will not work.”
“We’ve promised all the infrastructural development in the education sector, in the health sector, you can name them. But how are we going to finance these projects… I see a huge challenge going forward.” He stated.
Business strategist and partner at AB & David, Mr. David Ofosu Dortey also added his voice and said, increasing taxes as a form of increasing revenue generation will not work. He said this is because Ghana is going to enter a competitive economic market come January 2021, with the advent of the African Continental Free Trade Area (AfCFTA). In view of that, increasing taxes will not be prudent of government as tax rate in Ghana currently, are not very competitive enough.
He however mentioned that, tax widening will rather be a good bet. He said policies on tax widening in the manifestos of the two main parties “looks real” but his concern is how it will be implemented.
“Can we increase taxes or can we widen taxes? Widening, yes we can and I have looked at a couple of the manifestoes in terms of the promises on how to widen taxes. They look real but the ability to implement is another matter. However increasing taxes, I don’t think it will happen.
“Currently Ghana is doing about 25% of corporate tax. In the new era we are entering from January 1 when we are in the Africa free trade area, the competitor economies like Mauritius who is doing 15% corporate tax while we are doing 25% or you take Botswana who is doing 22.5%, and you look at the fact that you can trade in goods across, then it will not be smart to be increasing tax.” Mr. Dortey added.
Dr. Lord Mensah and Mr. David Ofosu Dortey made these comments in a discussion on the topic “Funding Manifesto Promises and Business Expectation.”
