HERITAGE FUND IN TROUBLE

 – Free SHS (Part 2)

…As Nana Hints At Raiding State’s ‘Oil Money’ ATM

 The announcement by President Nana Addo Dankwa Akufo-Addo that the flagship Free Senior High School (FSHS) policy will be funded with money from Ghana’s petroleum resources has been touted as finality to the crucial question of funding for the policy.

Even as it is very curious that it had to take Nana nine years to finally state the source of funding, at the 11th hour during the launch of the policy, after he had first promised FSHS in 2008, everybody, including the media, appears to have been thrown into euphoria.

As the watchdog loses focus in its engrossment with the bone, however, the interesting fact is that, this is not the first time that ‘oil money’ has been mentioned as the source of funding for FSHS.

The first time petroleum money was cited as the source of funding for the policy, the same Ghanaian people who are in a frenzy today over FSHS had expressed shock amidst fear resistance, the reason being that the oil money in question had been specified.

Senior Minister, Yaw Osafo-Maafo, had had his head bitten off when he hinted in February, this year, that the New Patriotic Party (NPP) government would use money from the Heritage Fund to sponsor FSHS.

Leading the outcry were civil society groups and the media which are today leading the frenzy of praise and adulation, even though money in the Heritage Fund is also “oil money” which President Akufo-Addo had said at the launch would be used.

Mr. Osafo-Maafo’s proposition about the Heritage Fund was very typical – this is a man who is also on record to have said that there is nothing wrong with giving out the Atiwa forest Reserve to the Chinese to be dug up for bauxite in exchange for $15billion.

However, when he ventured his ‘live only for the moment’ mentality on the Heritage Fund, Ghanaians went after him because of the purpose of the Heritage Fund.

Established by the Petroleum Revenue Management Act in 2011, the Heritage Fund, by its name, is meant to support development for future generations when the petroleum reserves are depleted – because the petroleum reserves of the country will surely be depleted.

The Fund receives 30% of the excess revenue from oil after the amount transferred for the budget is effected.

As part of arrangements to ensure the Fund is sustained and grows, it is invested in financial instruments with the advice of an Investment Advisory Committee.

Interest on the Fund can be transferred to another fund by parliament after 15 years after its establishment.

Within a year after the depletion of petroleum reserves, in future, the Fund is supposed to be placed in a vehicle known as the Ghana Petroleum Wealth Fund.

As of December 2017, the Fund had yielded some $277million.

It is because of the strategic, futuristic importance of the Fund that the Senior Minister was heavily rebuked when he indicated at a forum in Accra in February that the NPP government was thinking of applying the Heritage fund to sponsor Free SHS.

Amidst the outpouring of scorn, the Finance Minister, Ken Ofori-Atta had claimed that it was the Annual Budget Funding Amount (ABFA) rather that would be used.

It is as questions regarding how the resultant deficits in the budget for funding items that the ABFA currently sponsors, if the money is spent on FSHS that President Akufo-Addo has come out to announce that petroleum resources are what would be used.

“We have decided to use proceeds from our natural (oil) resources to help educate our economic transformation,” the President had said.

As the Heritage Fund, which is highly coveted by this government, is also from oil resources, indications are that Senior Minister, Yaw Osafo-Maafo’s hint about the Fund’s application to FSHS is still in effect.

On 12 September when President Akufo-Addo launched Free SHS at the West African Secondary School (WASS) and categorically announced the funding source for the policy for the first time, he had only changed Osafo-Maafo’s language – rather than Heritage Fund he indicated petroleum funds.

The way the President had waited for nine whole years, to clearly articulate that it is petroleum money that will be used to fund Free SHS, has only enriched suspicion that the policy had not been thought through.

In the buildup to the announcement of petroleum cash as the funding source, the President had not been able to clearly state this in an infamous interview with the BBC in 2012.

Also, President Akufo-Addo’s Minister for Finance, Ken Ofori-Atta and Senior Minister, Yaw Osafo-Maafo, had contradicted each other on what the Funding source would be, with Ofori-Atta claiming it would be the ABFA, while Osafo-Maafo had said it would the Heritage Fund.

President Akufo-Addo’s statement of natural (petroleum) resources sounds like a verification of both the words of his Senior Minister and his Finance Minister – the Senior Minister had mentioned the Heritage Fund in February.

Meanwhile, the hinging of Free SHS on petroleum money has been seen as risky, given the fact that petroleum prices are more difficult to predict than the weather. Apart from this, Ghana’s petroleum involvement is quite peculiar with the country both exporting petroleum and importing petroleum products at the same time.

In the face of the unreliability of the funding formula for the FSHS, Economist, Dr. John Gatsi, who is a lecturer at the University of Cape Coast Business School, has suggested that the government institute a special tax for Free SHS.

 

 

Source: therepublicnewsonline.com/Fiifi Samuels

The Republic News Online

Leave a Reply

Your email address will not be published. Required fields are marked *