2021 Budget: Ghana Sliding Back or Marking time on Financing of TVET

The 9th Commonwealth Youth Ministers Meeting (CYMM); Youth Leaders Forum, held from 31st July to 1st August, 2017 at the Munyonyo Speke Resort, Kampala, Uganda, was convened under the theme “Resourcing and Financing for Youth Development: Empowering Young People”. The Forum aimed at delivering better development outcomes for and with young people.

The Forum noted that apart from the sector being under resourced, youth are disproportionately affected by an ever-rising burden of disease, including polio, malaria, HIV/AIDS, early pregnancy and forced marriages, unemployment, underemployment, legal and other barriers including access to finance, growing illiteracy and poor quality of education.

With the spread of the COVID-19 pandemic, even the limited gains made in the past decades are at risk of being rolled back. The pandemic is deepening pre-existing inequalities, exposing vulnerabilities in social, political and economic systems which are in turn amplifying the impacts of the pandemic on young people. For instance, research by the Foundation for Security and development in Africa (FOSDA) on the impact of COVID-19 on youth entrepreneurs in Ghana revealed that 93% of youth business experienced a decline in sales; only 9% benefited from the Corona Virus Alleviation Program Business Support Scheme (CAPBUSS) support programme among others[1].

This notwithstanding, the President in his State of the Nation Address (SONA) 2021 indicated that government is going to commit to addressing the issue of youth unemployment through TVET, by commencing the implementation of the Ghana Jobs and Skills project this year. And also implement the Ghana Labour Market Information System, and upgrade of district public employment centers and services all geared toward improving youth employment in Ghana.

When it comes to TVET, the Education Sector seem to have a clear track record in terms of expenditure since 2014 through the Programme Based Budget (PBB) Estimates. Importantly, the 2021 Budget Statement and Economic Policy clearly shows that a total amount of GHS 15,631,637,855 has been allocated to the sector awaiting appropriation on 30^th March, 2021 as announced by the Information Minister Kojo Oppong Nkrumah on 21 March, 2021. The budget also saw an increase of GHS11.8 billion in total expenditure.

Read More: Statement: A Call for Timely Justice to 2020 Parliamentary Petitions

Tracking data from the Medium-Term Expenditure Framework; one would see what indicates that between 2011-2018, the highest spending on TVET was GHS 481,950,598 representing 5.31% of the total education expenditure of GHS 9,081,770,030 in 2016[2]. It was lowest at 1.3% in 2018 of the total expenditure for the education sector. After 2016, expenditure has declined to 2% and 1.3% in 2017 and 2018 respectively when nominal figures for the education sector increased to over GHS 10billion and GHS 12billion for the former and latter.

One would have expected that once total expenditure increases, automatically spending of TVET would also increase but unfortunately, the opposite is what is the reality.

Using the past record (2016 and 2018) of highest and lowest spending on TVET to compute for the likely outturn for 2021, expenditure will translate to approximately GHS786million at highest and GHS156million at lowest. Again, considering the current population size of TVET instructors (3,289) and the estimated 80,000 TVET students, government per capita spending in 2021 will be GHS9,437.00 and GHS187.00 based on the high or low expenditure parameters experienced in 2016 and 2018. Against this background, GHS 156million will be among the lowest spending in real terms under TVET expenditure after 2011 spending (GHS126,982,366) and 2013 spending (GHS 103,039,432) between 2011-2018.

This projection can be over turned by channeling the excesses or a percentage (30% proposed) of the 5% communication service tax (CST) to TVET.

Since inception in 2008 to June 2020 the CST has contributed GHS 2.93billion to national development[3]. During the lockdown due to the COVID-19 pandemic the CST exceeded its target by 80% due to high demand for digital services online. CST is projected to grow overtime due to the digitalization of the Ghanaian economy. By 2014 the average young person spent GHS 1.3 per day on digital services either for calls, texts or data. This will translate to GHS 32 in a month. Spending on this service may have increased to about GHS4 averagely per day. Assuming all young people (33% of Ghana’s population i.e 10million between the ages of 15-34) were spending along the GHS1.3 line and considering the 5% Communication Service Tax (CST) rate, government will rake in GHS182,500,00 from this age category alone in a space of 1 year. This represents 84% of the total 217 million CST revenue in the year 2014.

By extension, it clear that a greater chunk of the CST revenue is contributed by young people. Therefore, it is fair that their money is used to build their capacity to contribute to national development. Even though the current arrangement under the Communication Service Tax Act 2008, (Act 754) and (Amendment) Act, 2013 (Act 864) transfers 20% of the revenue generated to the National Youth Employment Programme (NYEP) to benefit young people, it is crucial that more is done since young people are substantial contributors to this tax item. This can be done through increasing investment in TVET Education for the 2021 fiscal year.

The issue is, what is government priority this year after the disruption of COVID-19 and pursuit of recovery pathways from the pandemic? Will government turn to long term and sustainable measures to addressing the age-old youth development and unemployment challenges? Will they be fixated on taxation, with the introduction of new taxes such as fuel price proposed increment; sanitation and pollution levy; COVID-19 levy etc or use proceeds from these to build the productive capacity of the teeming youth through Technical Vocational Education and Training.

As we wait for the Appropriation Act by the last week of March, 2021 it will be interesting to see which side government will choose.

Solomon Okai

Foundation for Security and Development in Africa (FOSDA)

Programmes and Research

[1] Impact of Covid-19 Crisis on Youth Businesses and Local Economies in Ghana, FOSDA 2021

[2] Policy paths for sustainable financing of TVET in Ghana

^[3]https://thebftonline.com/17/02/2021/communication-service-tax-cst-gh%C2%A2-2-93bn-contribution-to-national-development-between-2008-and-june-2020/