Ghana’s political landscape has been dominated by two major political parties, the National Democratic Congress (NDC) and the New Patriotic Party (NPP). Since the adoption of democracy which birthed the fourth Republic in 1992, these two parties have had sixteen terms each in office, with the NPP serving its final term before the next election to elect a new government. While the NPP insists on breaking the eight and enjoying a third successive term in Government, the NDC is not ready to spend three successive terms in opposition. It’s a battle of promises and ideas. This upcoming election on 7th December 2024 is undoubtedly one important election that will still test the viability of democracy in the country.
In the midst of all these, a lot of promises have been made seeking to win the vote of electorates. As a free market think tank, we take a dear interest in how these two political parties promise to promote free market in Ghana. We take great delight in policies and initiatives that will ensure an amiable climate that will facilitate trade and business pursuits in the country. We have critically examined the manifestoes of both parties and identified key proposals that reflect their commitment to free-market ideals. Below, we explore three major free-market initiatives from each manifesto, providing an analysis of how they aim to shape Ghana’s business environment and drive economic growth.
The NDC Manifesto: Three Key Policies Shaping Ghana’s Free Market Path
The National Democratic Congress (NDC) although fairly recognized as a socialist party, is building its campaign message around a capitalist policy which it describes as building a 24-hour economy, which promises to revamp the economy of Ghana by introducing a 24-hour working system that will be based on three working shifts per job. By this, they promise to create an enabling environment by providing and ensuring a secure atmosphere with a public/private security architecture, cheaper and reliable electricity for participating businesses, and tax cuts that will support businesses that operate 24 hours. They also promise financial support through the Ghana EXIM Bank for strategic and specific agro-processing and manufacturing businesses to encourage production, serving as import substitution and increasing export. This policy will cover a wide range of sectors including construction, manufacturing, agro-processing, health, and hospitality among others.
This ambitious policy, if developed and implemented as described, will serve as a win for free market ideology in Ghana. Previous governments’ establishment of industries among others have not seen a lot of success. These firms are normally run at a loss. Creating an environment that will put the private sector at the forefront of establishing industries and driving the economy will certainly fast-track development, riding on the experiences of developed countries who shared in and practiced the ideals of the free market.
2-Year Tax Exemption for Small Businesses
The NDC again promises in their manifesto, the exemption of new small businesses from paying corporate and personal income tax for the first two years after incorporation. Undoubtedly, the burden and cost of starting a business in Ghana is overwhelming, and as such many businesses are forced to fold up after a few years, making entrepreneurship barely attractive. The introduction of such policy will offer start-ups the freedom to start small and strengthen their foundations which will place the business in a position to thrive and excel. Additionally, the manifesto promises to scrap a lot of nuisance taxes that are crippling businesses like the COVID-19 tax and Electronic Transaction Levy (E-Levy).
Establishing the National Women’s Development Bank
Finally, the NDC promises the establishment of the National Women’s Development Bank to support women-led and women-owned businesses. These loans promise to come with low interest and very flexible terms. Women make up a major component of Ghana’s workforce and dominant informal sector businesses, often operating small businesses. Empowering women and putting them at the forefront of business drive and growth is one that is laudable and auspicious. This initiative will afford women in business the dear privilege of expanding and thriving. A lot of women are also likely to be lifted out of poverty by this initiative.
The NPP Manifesto: Three Key Policies Shaping Ghana’s Free Market Path
The NPP’s manifesto offers interesting proposals aimed at fostering entrepreneurship, supporting small and medium-sized enterprises (SMEs), and promoting public-private partnerships (PPPs). These policies, on the surface, align with the principles of economic freedom, private sector-driven growth, and reduced government interference. However, the party’s recent track record being the incumbent government reveals gaps in delivery, raising questions about the viability of their promises.
Investment in Ghanaian Businesses
The NPP’s 2024 manifesto places a significant focus on supporting local businesses, particularly small and medium-sized enterprises (SMEs), which employ over 80% of Ghanaians. Their flagship proposal is the establishment of an SME Bank, aimed at addressing the long-standing challenge of limited financing for smaller businesses. The manifesto promises additional support through tax incentives and investment credits, recognizing SMEs as drivers of employment and economic growth.
While this proposal holds significant potential, it is not without its challenges. The NPP has previously rolled out initiatives like the National Entrepreneurship and Innovation Plan (NEIP), which, while well-intentioned, was marred by inefficiencies and delays. Trust in the government’s ability to deliver on such promises has been eroded over time, meaning the NPP will need to demonstrate a clearer commitment to ensuring that the SME Bank is more effective and transparent than previous efforts.
Tax Reforms to Encourage Entrepreneurship
Tax reforms aimed at encouraging entrepreneurship form another pillar of the NPP’s manifesto. The party promises a digitized tax system, tax incentives for businesses, and a flat-rate tax system to simplify compliance. In principle, these reforms could create a more business-friendly environment by reducing the tax burden and streamlining processes for entrepreneurs.
However, the recent introduction of taxes like the Electronic Transactions Levy (E-Levy), Tourism Levy, Betting Tax, and the COVID-19 Levy have been points of contention. These levies have increased the financial burden on businesses and individuals, particularly SMEs, and have drawn criticism for contradicting the NPP’s earlier stance on reducing taxes to spur entrepreneurship. Even though, been the implementer of these nuisance levies, the party is promising to scrub them off when voted into power for the third successive term. The party’s history of implementing contradictory tax measures has led to skepticism about whether their proposed tax reforms will truly foster a pro-business environment or simply be another missed opportunity.
Public-Private Partnerships for Infrastructure
Public-Private Partnerships (PPPs) remain central to the NPP’s infrastructure development strategy. By leveraging private sector expertise and capital, the party aims to accelerate the development of critical infrastructure without heavily relying on government intervention. In theory, this aligns with free-market ideals, which favor minimal government interference and a strong role for private enterprise.
Yet, execution remains the party’s Achilles heel. Over the past eight years, several PPP projects have either stalled or failed to meet their objectives due to bureaucratic bottlenecks and inadequate coordination between the public and private sectors. For instance, the launching of the Free SHS Policy totally neglected private sector participation in education which led to the collapse of many private secondary schools and rendered their infrastructure facilities empty while public secondary schools remained congested. To regain voter confidence, the NPP will need to address these shortcomings and provide concrete plans to ensure PPPs deliver on their promises.
Conclusion
To summarize, while the NPP’s manifesto echoes many free-market ideals, their past actions, especially about taxation, reveal inconsistencies. This is even more concerning as the party has been in office for the past eight years and critics have raised questions as to why are they not scraping these nuisance levies as the COVID-19 and Electronic levies whilst still in power. The YAFO Institute has a campaign that is gathering signatures to abolish the COVID-19 tax in Ghana: click here.
To realign with these principles, the party will need to demonstrate a clearer commitment to reducing government interference and tax burdens, while improving the transparency and effectiveness of their policy execution.
The 24-hour economy by the NDC, even though ambitious and coming at a time when the country is overly burdened with importation and a high rate of unemployment, might not be easy to implement as has been described on paper. A lot of investment commitments into infrastructure, technology, and security will have to be made. The country is currently under an IMF intervention programme which expires after 2025. Rolling out this programme will also require that the government forsakes certain taxes and provide incentives. Our economy and current financial burden do not seem to support this. It will require a lot more effort and effective planning to successfully implement this programme.
It is trite that policies must be judged based on the results they produce. If parties compromise on free-market ideas backing the policies, the results would expose them.
Commentary by
Asamoah Isaac Eli and Richard Nyarko
The authors are Policy Scholars at the YAFO Institute
