Terkper cautions against fiscal sustainability risk of Free SHS

A Former Finance Minister, Mr. Seth Terkper, has cautioned government against the fiscal sustainability risk of its flagship Free Senior High School (SHS) programme in the future, as it requires long-term effective planning.

“Although the current discussions are focused on the 2018-2019 academic year, we should bear in mind that in 2020-2021 we are going to have the first batch of the Free SHS students going into the tertiary level. The question is whether or not we are prepared already.

“It is not a matter of making fiscal plans for the next two-three years, but for long-term sustainability of the programme,” Mr. Terkper told the B&FT during a telephone interview. 

According to Mr. Terkper, in commitment to budget responsibility laws, the advocacy means stopping numerous budget imbalances which are created by unfunded mandates. Examples he mentioned include the mistakes in introduction of the Free SHS.

“We can use resources more efficiently by amending the Public Financial Management Act, 2016, (Act 921) to ensure that tax cuts and spending proposals will keep some core expenditures properly funded,” he advised.

Mr. Terkper proposed that promises such as the Free SHS must come with revenue-raising or cost-cutting measures in order not to compromise stated budget thresholds. These include fixed percentages of revenue allocated for compensation, amortisation, and transfers as well as current and capital expenditures.

“An impressive government programme may not necessarily be fiscally sustainable. We’re a nation that could not sustain subsidies and brought our energy sector down, so I’m only posting a caution to ensure that we plan effectively.”

Mr. Terkper said the programme’s high cost is already throwing government’s budget out of gear - warning that other critical sectors of the economy will be cash-strapped if allocations meant for them are diverted to finance the Free Senior High School project.

“Free SHS helps a lot of poor people, no question about that. But what is the cost? We have taken a lot more of our oil revenue there. We said we would raise revenue for Free SHS; but now we are using the traditional sources of revenue,” he stated.

Professor Ernest Aryeetey, former Chancellor of the University of Ghana - speaking at the Stanbic Breakfast meeting in Accra on the theme ‘Financing Free Quality Education in Ghana – Sustainable Funding Options’ - said the strong growth in cost of the Free SHS will be influenced by its maturity from the current two streams to three streams.

Advancing, his argument, Mr. Aryeetey stated that it will cost the economy about GH¢3.3billion to fund the Free SHS Policy in the next academic year - an amount that is exclusive of salaries for staff and is more than double the GH¢1.3billion budgeted for Free SHS in the 2018 budget.

He indicated that the cost estimate was based on data obtained from running SHSs nationwide, adding that the cost of Free SHS could be pegged at GH¢5billion per annum in the coming years.

Prof. Aryeetey recommended that in order to finance free quality education in the country, it should be possible to categorise schools depending on their endowments and conditions, and set eligibility criteria.

Investors express interest in Central-Western airport

Investors have expressed interest in partnering government on a Public-Private-Partnership (PPP) basis for construction of the proposed Central-Western Airport, designed to serve both the Central and Western Regions.

Deputy Aviation Minister, Joseph K. Adda, told B&FT after a tour of cargo companies at the Kotoka International enclave that: “We have various expressions of interests and we have initial designs of what we want to do”.

The Central Region, which is a major tourism destination in the country given its rich history and UNESCO World Heritage castles sited along the coast, is only accessible to tourists –domestic and foreign – by road.

Connecting with the regional capital, Cape Coast, from Accra is hampered by heavy vehicular traffic. It takes about two (2) hours to connect from Accra on a typical weekend when many people usually travel for tourism and social events.

Takoradi, on the other hand, has a military aerodrome that is used by civilian airline operators for domestic flights.

However, the limited use of on-ground military-owned facilities necessitates the establishment of a new civilian airport in keeping up with current and future growth – following the grant of more licences for oil exploration activities off-shore the Western Region.

Following the Exxonmobil deal, the country is looking at doing business with global E&P giants to allocate about six new oil blocks in a bid to sustain production in the oil and gas sector.

All Expressions of Interest (EOI) from International Oil Companies (IOC) are to be submitted by end of November, while pre-qualification of local partnering companies and IOC’s will be done in December. Successful bidders are expected to be selected by August, 2019.

These new developments in the oil and gas sector, in addition to existing use of Takoradi Port for exporting minerals and lumber, will expectedly lead to increased activity on the Accra-Takoradi corridor.

Design of the New Facility

Mr. Adda said the Aviation Ministry and its allied agencies are considering three different scenarios for the proposed Central-Western Airport.

“We are looking at two or three scenarios [for the project] and will decide which one will be most convenient for us. We may well be able to take all three on-board.”

He added that: “We have a lot of tourists going to the Cape Coast area, there is a lot of development going on in the oil and gas enclave in the Western Region, and the Takoradi Port is there as well. The fishing harbour in Elmina is also there. All these show that people will be travelling to and from the Central and Western Regions, so we plan to move on that.”

Cargo handling companies

The visit to three handling companies was to afford the Aviation Minister an opportunity to appraise himself of their operations, listen to their challenges, and work with them to grow the sector.

He interacted with officials of Menzies, Swissport and Aviance, and inspected their facilities within the Kotoka International Airport (KIA).

Aviance Ghana provides a range of ground handling services at KIA airport in Ghana. It provides services to its customer airlines, passenger check-in and baggage handling; loading and unloading of cargo from freight flights; and a cargo warehouse operation for all import and export needs.

Swissport Ghana Ltd. is responsible for the management, development, maintenance and continuous improvement of the warehouse facility; offering Import, Export and transit air cargo handling services within a modern ‘state of the art’ cargo terminal fully-equipped to meet International Cargo Security directives.

Swissport is also providing full ramp handling services to all cargo aircraft operating into Accra, using all new ground handling equipment.

Menzies also provides handling and cargo services to the airlines industry in the country.

Invest in new drugs discovery to boost hub ambitions —Prof Ohemeng

Government’s ambition of making the country a pharmaceutical hub in the Sub-region could be achieved if strategic investments are made by government and industry to discover new drugs, a renowned Ghanaian Industrial Pharmacist, Professor Kwasi Adomako Ohemeng, has said.

“The bulk of the profit in the pharmaceutical industry is made by companies that discover new drugs and secure patents for them,” he said.

Prof. Ohemang told B&FT in an interview in Accra that: “There are several ailments being treated in Ghana with drugs which have been developed from outside the country and are not necessarily working. Our purpose for developing the pharmaceutical industry must, therefore, include the quest to fill in the unmet medical needs of the country.”

He indicated that the pharmaceutical companies in the country have not invested into any commercial research that will enable them to discover new drugs to help address the many health challenges peculiar to the country.

“Currently there is no company in the country discovering drugs and that is quite disturbing because we need to do things here and find drugs to meet our peculiar unmet medical needs,” he said.

Speaking about his new discovery, Omadacycline, a world-class antibiotic which is expected to enter the global pharmaceutical market next year, Prof. Ohemeng, explained that he led an optimisation team to successfully develop the Omadacycline, an antibiotic which is under US Patent number 7,056,902 assigned to Paratek Pharmaceuticals, a US-based Biotech Company.

Prof. Ohemeng, who is also the Dean of the School of Pharmacy, Central University College, was recruited from another global pharmaceutical giant Bristol Myers Squibb (BMS) to help the company fast-track the process of development.

“It took 17 years between discovery, clinical test and approvals to get the Omadacycline product finally approved,” he said. 

The US Food and Drugs Administration (FDA) has granted approval for the use of Omadacycline for the treatment of adults with community-acquired bacterial pneumonia (CABP) and Acute skin and skin structure infections (ABSSSI).

The once-daily Intravenous (IV) and oral antibiotic is a modern tetracycline that has the activity against broad spectrum of bacteria including drug-resistant strains of gram-positive and gram-negative bacteria.

Omadacycline is the first-in-class aminomethylcycline, which can overcome antibiotic-resistant bacteria in two main ways, by ribosomal protection and efinx group.

The intravenous (IV) and oral antibiotic is a product assigned to Paratek. It offers clinicians the opportunity to treat patients intravenously and the transition to oral administration which can reduce hospitalization and cost associated with hospital admission.

The FDA decision to approve the drug for the approved indications was based on multiple clinical trials that assessed the efficacy and safety of the drug in a total of three phase trials that evaluated the drug in 2,150 participants. Omadacycline is also being evaluated for the treatment of urinary tract infections.

Industrial potential 

Although 70 per cent of pharmaceutical products used in the country are imported, the industry is expected to reach US$1 billion in value by the end of 2018.

Contained in the Ghana Business Development Review Report, compiled by the University of Ghana Business School (UGBS) in June this year, the report said although local manufacturers had the capacity to fill the gap, Ghana still depended on the importation of pharmaceutical products.

The report indicated that most of the imports were from India and China and had left the local manufacturers with only 30 per cent of the market share in the country.

“The local industry has an installed capacity for both solid and liquid dosage forms to supply all domestic needs, as well as enough for export. There is, however, capacity under-utilisation--less than 55 per cent on average—as a result of inadequate resources,” the report said.