Three days after Nana Addo Dankwa Akuffo-Addo swore the oath of office as the president of Ghana, he nominated his first batch of 13 ministers-designate for parliamentary approval1. The minister of finance and economic planning portfolio was highly-anticipated as Ghanaians look for a safe pair of hands to re-orientate the economy and address the bread and butter issues which arguably cost the outgoing National Democratic Congress (NDC)-led government its tenure. So, who is the Minister of Finance designate, Ken Ofori-Atta, and can he deliver on promises?
- This 2017 change in government is the product of a bread and butter issues election won by the New Patriotic Party (NPP) with an "agenda for jobs" manifesto. In addition to promising 'one factory' in each district and 'one dam, one village', the party has committed itself to reducing the corporate income tax rate from 25% to 20%; an abolition of the 17.5% VAT imposed on financial services; abolition of the Special Import Levy; reduction of VAT from 17.5% to 3% for micro and small enterprises; and tax breaks and other incentives for manufacturing businesses and those employing young graduates2.
- The revival of the Senior Minister3 post to be held by Yaw Osafo Marfo, a former finance minister, and the appointment of former investment banker Ken Ofori-Atta as Finance Minister – points to an economic focus for the new government.
- Nevertheless, there are question marks around the feasibility of introducing the proposed tax cuts, jobs agenda and infrastructural development in combination. Outgoing finance minister Seth Terkper has already stated that the 5.3% of GDP target fiscal deficit will likely be missed by 1.5 to 2% of GDP4. Moreover, Ghana is currently participating in an IMF programme which includes conditionalities on the fiscal balance, borrowing, domestic and external arrears amongst other things. Meeting those criteria is a requirement not only for assistance but for confidence of the wider investment community. The sequencing of reforms will therefore be key.
- Ofori-Atta has remained tight-lipped on his plans for reinvigorating the Ghanaian economy despite having been linked with the role since the NPP victory in December last year. His first comment having been confirmed as minister (designate) was to assure the population that there would be no further hikes in fuel prices with prices having already risen 11% since the beginning of 2017. This signals the government's intentions to ease the cost of living and doing business as well as to work with regulators.
What Will Ofori-Atta Bring to the Table?
- Ofori-Atta has a very strong financial background, particularly within the private sector. He is the co-founder of Databank, a successful brokerage and asset management firm. He is also a director of other banking institutions and serves on a number of boards. He is extremely loyal to the NPP and was the Director of Fundraising for the party during the just ended elections5, he even took on personal debt to finance campaigns for the party in 20126. He has a reputation for being an honest and accountable businessman and this will be key in the Akufo-Addo administration's attempts to fight the corruption that has plagued the country in recent years.
- Ofori-Atta is seen as more dynamic than his predecessor, Seth Terkper. Terkper is very much a technocrat who has had a long career with the IMF and little private sector experience. It will be for history to judge but public opinion marked him as passive during an economic crisis and complicit in allowing many controversial deals to be signed off. Contrastingly, Ofori-Atta is well liked by both the business community and the general population. He is more dynamic and connects well with the citizenry.
As a minister-designate, Ofori-Atta is for now unable to act in any official capacity. However, it is almost certain that he will already be at post and doing what he can until he is fully confirmed as minister. This will happen once he has been vetted by the Appointments Committee of Parliament. The vetting itself will only last a morning or an afternoon but the delay comes in finding time for the committee to sit. President Akufo-Addo has asked the speaker of parliament to expedite the confirmation of this first batch of appointees7.
While there is an unresolved tension between the NPP campaign pledges and the wider economic context, sentiment on the ground regarding the economic outlook under Ofori-Atta is positive. There's considerable confidence in his capabilities and that of Osafo Marfo. The former built Databank from the ground up after stints with Wall Street Banks-Morgan Stanley and Salomon Brothers- the latter played a role in Ghana's successful completion of the IMF's Highly Indebted Poor Country (HIPC) initiative.
However, the reality is that in the midst of all this goodwill, Ofori-Atta will have to work hard to meet the expectations of the people. The economic situation the country is facing is dire and he will be constrained by this to make changes that will cause sharp improvements to the quality of life of Ghanaians in tandem with expectations. The business community is also attendant, the promised tax cuts will have an instant and very positive effect for businesses so companies will be calling for the implementation of such promises as soon as possible.
3 The position was held by JH Mensah in 2005-2006 but the position was abolished thereafter
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