The Minister of Finance of Ghana, Ken Ofori-Atta, has stated that E-Levy, as proposed in Ghana’s 2022 budget, would ensure the employment of over 11 million people. He made this revelation at the Springboard Youth Dialogue held at the University of Cape Coast.
The E-levy on page 74 of the 2022 budget statement specifically outlines the introduction of a 1.75% levy on electronic transactions covering mobile money payments, bank transfers, merchant payments, and inward remittances. The introduction of the E-levy has faced strong opposition from ordinary Ghanaians necessitating a reduction to 1.50%. However, E-Levy is yet to gain parliamentary approval.
Justifying a policy is important to gain public support for easy acceptance and implementation. In recent times, the belief that – E-Levy could create jobs for 11 million and over youths – has informed many government spokespersons and discussions at various town hall meetings in the bid to build broad consultation for the E-Levy. This essay would analyze government job creation programs and elucidate the myth of job creation.
Over the years, Government policy papers have rolled out job creation programs, therefore, the ploy to use job creation to justify government programs is not new, yet job created by a government program is either magical or mythical.
According to the Ghana Living Standard Survey – GLSS 7, youth (15-35 years) constitute 34.2% of the total population of Ghana of which females (51.5%) are more than males (49.5%). The same survey reveals that the private sector engages the majority of the youth (92%) with only 6.9% of youth employed in the government sector. What is significant is that youths are employed hugely in the private informal sector with most being underemployed. The private informal sector has great businesses that engage the youth but poor record-keeping to attract bank loans to expand.
The government continues to pump millions of funds into programs geared toward increasing youth employability with no measurable outcomes. The Ghana 2022 budget statement referred to the private informal sector as the ‘shadow economy’ in paragraph 314, yet that is the sector that would be affected by the E-Levy. The sector dominates mobile money usage due to the less documentation involved in transferring and receiving money. In 2020, the value of mobile money transactions grew to Ghs500 billion as compared to Ghs257 billion in 2019 according to data from the Bank of Ghana. As enviable as it is, the government is seeking to raise Ghs6 Billion in taxes with the introduction of E-Levy, of which part will go into the Youth Start program – a government program that supports entrepreneurship – the game-changer that could create 11 million jobs for the youth even-though the project in the 2022 budget is 1 million jobs.
It might sound convincing that a government program geared towards developing entrepreneurship would be helpful, however, under the President Nana Addo-led government, at least three of such programs have been launched and have yielded no results, this includes National Entrepreneurship and Innovation Plan, Nation Builders Corps and Presidential Pitch. All these programs are geared towards job creation and entrepreneurial development by giving funds to support individual entrepreneurs. In reality, only funds are distributed but the enterprises fall in the sand. In effect, no jobs are created.
Since 1996, every government undertakes an initiative to help enterprises and create jobs. The National Development Policy Framework (Ghana’s Vision 202) policy document established the Private Enterprise Foundation under the Trade and Investment Project where Ghs10 Billion Cedis (old currency) government-sponsored Business Assistance Fund (BAF) was given to assist distressed but potentially viable industries.
Before Planting for Food and Jobs, there was a Food for Work project under the Ghana Poverty Reduction Strategy Paper (GPRSP) which outlined several projects to provide employment. These included Priority Public Work Projects, Labour Intensive Projects, Feeder Roads Projects, Labour Based Feeder Road Rehabilitation and Maintenance Projects, and Special Employment Schemes.
It is trite to say that, all these programs are the same thing under different names which is deepened by the winner-takes-all syndrome in Ghanaian body politics. For instance, what started as the National Youth Employment Program (NYEP) was changed to Ghana Youth Employment and Entrepreneurial Development Agency (GYEEDA) after a change of government in 2008. In addition, volume II of the Ghana Shared Growth and Development Agenda was popularly known as the ‘Better Ghana Agenda’ established Youth Employment Agency under the Youth Employment Act 2015 (Act 887) which replaced GYEEDA to serve as an oversight to the development, coordination, supervision, and facilitation of employment for the youth and related matters in Ghana.
More so, the John Mahama-led presidency established Youth Enterprise Support (YES) with Ghs10 Million Ghana Cedis to assist young Ghanaian entrepreneurs with business ideas to apply for funding. In 2017, President Nana Addo replaced YES with the National Entrepreneurship and Innovation Plan (NEIP) with a new seed fund of $10 million and is now introducing YouStart Initiative with Ghs1 Billion Cedis in his second term. Both YES, NEIP and YouStart are government initiatives to help the youth with start-up ideas through business pitch competitions with different names and no jobs created.
Having done all these government-sponsored youth employment programs with no measurable outcomes but persisting youth unemployment, then the YouStart Initiative would not be any different. The Ghana 2022 budget stated in paragraph 414 that, the YouStart initiative would be a key vehicle to create 1 million jobs in 3 years. It is also in the plan to use the estimated revenue of Gh6 Billion from E-Levy as a catalyst to fund YouStart.
You cannot create a job by passing laws, nor can you do the same by taxing everyone. Since the 4th Republic, successive Governments have committed Billions of cedis to job creation programs, yet have not been able to curb the menace of youth unemployment. However, the same old solution is repeated over and over with no measurable outcomes and less accountability. It was not surprising when Dr. Akoto Afriyie, Minister of Agriculture, reported that the Planting for Food and Job program created millions of jobs in the informal sector where tracking for accountability was difficult. Data from World Bank reveals that 48% of youth in Ghana are unemployed which is among the highest in the world. It is important to ask, where are the jobs? Where are the beneficiaries of government start-up support? Where are the enterprises? We cannot continue to pump more money into a scheme that yields no results to the unemployment problem in Ghana.
In conclusion, it is mythical so far as government programs focused on job creation are unable to create jobs yet we keep investing in one program after another. If we continue along this path, YouStart would end and another program would be launched, yet there will be no jobs for the youth. We have more government-sponsored job creation programs than jobs themselves.
Article By
Nathaniel Dwamena
Nathaniel is a free-market policy analyst and president of the YAFO Institute. He engages in activities that promote civil liberty and economic freedom in Ghana. He was part of the team consulted by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ Ghana) to undertake a study on business red tape in Ghana. He has a background in law, geography, and economics.
Photo credit: The Daily Statesman Newspaper
