Achieving an open defecation free Ghana

By Kweku Quansah

Today, 19th November, 2012 is World Toilet Day. A day set aside by the international community to draw attention to the fact that a whopping 2.5 billion people in the world, representing 37% of the world’s total population, do not have any known place where they defecate.

‘For the sake of my country, not for my sake!’

"Next to knowing when to seize an opportunity, the important thing in life is to know when to forgo an advantage" - Benjamin Disraeli

The other day I read about a teenage girl winning a seat in Uganda's parliament. Proscovia Oromait 19, fresh from high school contested and won elections in eastern Uganda to fill the seat left vacant after her father 's death.

Poor Service Delivery – The Case of Some Banks in Ghana

BY ATTAH ARHIN

The Author

Service provision in Ghana has come a very long way. There has been some remarkable improvement over the years but the situation has never been the best.  Whether you are talking about the civil service or the public services, the hospitality industry or the banking industry, among others, services have generally been poor.

Green Economy in the Context of Sustainable Development

BY JOSHUA AWUKU-APAW

From June 20-22 this year, the United Nations will once again convene a major summit, the United Nations Conference on Sustainable Development, also referred to as RIO+20, in the Brazilian city of Rio de Janeiro to deliberate on the important issue of environment and development.

Election Year Excesses, Cedi Depreciation, and Inflation - The Current Experience

Every election year in the Fourth Republic, especially the hotly contested ones, has been associated with excesses (in spending and behaviour), rapid depreciation of the cedi, and accelerating inflation. The most recent to such years is election year 2000, when the excesses led to an exchange rate depreciation (number of cedis per US dollar) 0f 100 percent from 3,500 old cedis at the beginning of the year to 7,000 at the end of the year.

The next after that was election year 2008 when election year excesses led to a fall in the value of the cedi from 1.0152 cedis per dollar in June 2008 to 1.4524 cedis per dollar in June 2009, a year-on-year depreciation of about 43 percent, which was halted only by the stabilisation programme agreed with the IMF.

The current situation has seen the cedi depreciate by about 17.3 percent in the first half of the year and by about 20.5 percent year-on-year, from June 2011 to June 2012. The pass through from depreciation to inflation is obvious.

A stable cedi (in the sense of predictability of value in domestic foreign exchange and goods markets) must be anchored on the fiscal policy stance. This has proved elusive in post-Independence Ghana.

In the market-oriented Fourth Republic, the cedi has been particularly vulnerable to speculative attacks in every election year, resulting in sharp depreciation in foreign exchange markets, large losses in gross international reserves and upsurge in inflation.

Accelerated growth with productive jobs for poverty reduction, and macroeconomic stability requires fiscal and debt sustainability. Operationally, fiscal policy should target medium to long term economic growth, leaving monetary policy to deal with the short-run trade-off between economic growth and job creation, on the one hand, and macroeconomic stability low inflation and stable exchange rate on the other hand.

The mild depreciation pressure of the fourth quarter of last year was initially mistakenly attributed to seasonal factors rather than financial markets concerns about the excesses of election year spending - the so-called political business cycle (PBC) observable in nascent democracies in developing countries.

Thus in response to the sharp depreciation of the cedi in January, the BOG intervened with a large injection of foreign exchange estimated at about US$800 million. As the record shows, this was neither sufficient nor sustainable.

By the end of the month, it became obvious to the monetary authority that something credible and sustainable needed to be done to improve the attractiveness of the cedi and cedi based financial assets relative to holding foreign exchange. Investor fears about the value of the cedi resulting from excessive election year domestic spending had shifted the balance against holding the cedi. The MPC Press Release of February 2012, observed and reported the flight from the cedi as investors exercised their right and liquidated their holdings of domestic bonds in exchange for foreign exchange in expectation of a rise in yields in subsequent new bond issues.

The decisive shift in preferences against the cedi has been the cause of the fast-depreciation of the cedi and the surge in inflation.

Thus far, the BOG has done the right thing. Beyond the direct interventions in the foreign exchange market, the BOG also instituted a number of off-market measures which seek to enforce existing regulations and in the process support the monetary policy tightening objective.

Among these was the measure to ensure that foreign investors stay firmly off the short-term end of the money and domestic bond market.

Another important measure was the directive to banks to keep the mandatory cash reserve requirement of 9 percent of total deposits i.e. both cedi-based and foreign currency based in cedis only.

At a time like the present when banks are awash with excess reserves i.e. reserves beyond the mandatory requirement and face a fast depreciating cedi, this single act holds out important potential positive outcomes:

§  It locks up the (cedi) equivalent of 9 percent of foreign currency deposits, thus reducing the excess reserves by as much,

§  It frees the foreign exchange held as reserves, thus increasing the supply of foreign exchange onto the market,

§  It discourages domestic residents who purchase foreign exchange from the forex bureaux to deposit in their foreign exchange accounts, thus reducing the demand for foreign currency and hence the pressure on the cedi.

For the same foreign exchange deposit, the cedi value rises with depreciation. Therefore, the bank would have to hold 9% of this larger value in cedis. This raises the cost of the foreign exchange account to the bank. And, moreover, as market interest rates rise, the cost of holding the foreign currency deposits would rise even further.

The information that banks would pass on the increased cost of holding foreign currency deposits to their clients created a lot of anxiety on the part of would be investors, as this was interpreted by the public to mean that the BOG intended to close foreign exchange accounts.

In response, the BOG issued a statement of denial and emphasized its objective has been that of shifting the balance of preference in favour of the cedi and cedi based assets.

In its statement, the BOG stated that:

“The Bank of Ghana’s attention has been drawn to media reports being attributed to the Bank that it is planning on closing all foreign deposit accounts and has instructed that a 2% per annum charge be levied on all foreign deposit accounts in the banks.

The general public and all stakeholders are assured that the Bank of Ghana has not taken any such decision.

The recent policy measures taken by the Bank are intended to make the cedi assets more attractive to hold.”

A government spokesman also pointed out that the BOG is only taking steps to stop certain uses of foreign exchange accounts that are in breach of the foreign exchange laws and the dollarisation of the economy.

He explained that opening a foreign exchange account in the domestic banking system is legal with the backing of a law passed by Parliament. The BOG cannot close foreign exchange accounts without a repeal of the relevant law.

The spokesman indicated that there is, however, a difference between using the foreign exchange accounts for one’s business and offloading it to another business or a foreign exchange bureau.

This latter activity implies trading in the currency, which is outside the law. The BOG is drawing attention to the fact that such uses of foreign exchange accounts may be in breach of the law.

The idea behind the increased cost of holding large speculative foreign currency balance is therefore to cause people to see some advantage in selling some of their foreign exchange holdings to increase the supply of foreign exchange in the market and thus help bring about the needed exchange rate stabilisation. With the robust tightening of monetary policy, these interventions by the BOG can be expected to be increasingly effective over the course of the year.

There is considerable concern over how much further monetary tightening can go. The MPR has reached 14.5 percent. Money market rates have also risen quite sharply. The recent 5-year bond issued by the GOG to pay maturing issues is the third government bond issued thus far this year and was described as oversubscribed, although the fixed yield rose to 26% per annum - an increase of 1000 basis points.

The most powerful indication and proximate cause of the present macroeconomic instability is the private sector financial balance - the difference between spending and income of households and private business.

Normally, but particularly, in election years, this turns into a significant deficit i.e. debt financed. This puts strong responsibility on the government to contain domestic spending pressure by running a surplus primary balance if at all possible i.e. ensuring that some portion of the debt service requirement is from own resources and not from borrowing.

As the saying goes, the sovereign is the actor upon whom investors depend for rescue during systemic crises. When this appears, unlikely doubt and fright turn to flight to safe havens. The current rapid depreciation of the cedi is one such instance of a flight from the cedi into foreign assets.

In a panic, fear has its own power speculative attacks become self-fulfilling. To assuage fear and panic, one needs a lender of last resort willing and able to act on an unlimited scale. Perceptions matter and, as such, it is in our national interest to have the IMF and the Development Partners by our side; providing support to deal with the speculative attack on the cedi. 

The economy is in a fragile state, facing a trade-off between macroeconomic stability and jobs. Public interest in the policy decisions being taken has also led to anxiety and intense debate over what needs to be done to address the recent challenges facing the country.

An effective management of the situation, therefore, requires first, that the central bank improve its communication of policy measures being taken to reduce the anxiety and misunderstanding on the part of the public.

It also requires that there is better complementarity between fiscal and monetary policy, as well as an improvement in the forecasting of cash flows that would enable the central bank to stay ahead of events.

Accelerated growth with jobs requires fiscal and debt sustainability, with monetary policy playing a complementary role to smoothen any short-term deviations from the trend growth path.

There must, therefore, be a strong national all political parties and relevant stakeholders commitment to fiscal responsibility and expenditure accountability.

The agreement between the MoFEP and the IMF to extend the programme with the IMF is a move in the right direction towards showing Government’s commitment to fiscal responsibility during this election year.

In CEPA’s view, however, there is a need for an agreed IMF staff-monitored programme that would run into the first quarter of 2013.

This would assure:

§  The commitment of the IMF to provide support in the face of speculative attacks; and  

§  A national commitment to fiscal responsibility, which would be independent of the outcome of the 2012 elections.

Source: Centre for Economic and Policy Analysis (CEPA) http://www.cepa.org.gh/pressreleases2/Election%20Year%20Excesses%20Cedi%20Depreciation%20and%20Inflation55.pdf

Making Water and Sanitation a Reality for All Africans

By Jamal Saghir
Dirty water and poor sanitation sicken and kill tens of thousands of people each year in Sub-Saharan Africa, and imposes a heavy economic cost on countries equal to 1.4 percent of GDP in some countries. No one should accept this situation as destiny. We can change it.

Since access to potable water and sanitation was first recognized as a Millennium Development Goal in 2000, budgets for water and sanitation has grown in much of Africa. But bigger budgets and more spending have not appreciably expanded access to services in most countries. This is because the continent's population continues to grow strongly, the extra public financing is not being effectively spent, too little is being done to maintain existing water facilities and infrastructure, and water systems in countries embroiled in conflict have been destroyed or damaged.

Later this week, the World Bank and UNICEF will co-host a high-level Ministerial Dialogue on Sanitation and Water, to take stock of the water and sanitation situation around the world. This will be a vital opportunity for governments, donors, civil society, the private sector, and other key partners to confront the stark truth that safe water and sanitation in Africa remains out of reach of many, especially poor people.

In a recent World Bank study of water and sanitation services in 15 countries of Sub-Saharan Africa, we found that public spending still falls considerably short of government commitments and of international and national policy goals. On average, governments spent $1.71 per person on water supply and sanitation. This corresponds to less than half a percent of gross domestic product (GDP) and is five times lower than what is estimated to be needed each year to meet Sub-Saharan MDG targets.

We also found that actual patterns of spending stand in stark contrast to the economic and social rationales behind such spending. Too small a share of available funds is spent to expand poor peoples access to essential services and to address the health and environmental problems created by unsafe water. Too little is spent on maintaining the water supply infrastructure. Too little is spent on sanitation, which is saves lives, especially those of young children. Too great a share of public funding goes to subsidize water for richer citizens who can afford to pay unsubsidized prices. Too great a share is wasted by inefficient utility practices such as over-staffing and underbilling, just to name several problems.

Targeting public spending to the poor will call for well-off citizens to pay for the water they use. Water and sanitation cannot develop sustainably until the wealthy begin paying for their services so that public financing can be directed to where it is needed most, to improve the lives of poor people.

Low utility tariffs are a major issue. However, before making changes to the tariffs, utilities should improve their efficiency by addressing their low billing and collection ratios. Promoting better maintenance of existing assets can cut spending on costly rehabilitation and thus increase the budget available for expanding access.

While many African governments have updated their water policies, they have been less effective at putting them into practice, with national and local governments unsure about what their respective duties should be. Tanzania, a notable exception, has embraced a decentralized approach to water and sanitation where national government transfers to Tanzanian local governments reached nearly 40 percent of the water budget in 2008, up from zero in 2005.

Only two thirds of water and sanitation budgets are actually spent. To improve budget execution, government capacities in project management, especially at the local level, will need to be strengthened to make well-intentioned plans succeed. More detailed planning and speedier procurement will decrease the number of abandoned works and reduce delays.

Fortunately, we found some positive examples. For example, Benin has combined reforms of public expenditure management, while developing new investment programs. Donors helped the government to improve its management and implementation capacity so that the allocated budget was actually spent within a budget cycle. Between 2001 and 2008, the number of new water points built annually surged more than fourfold. Meanwhile, better budgeting and greater transparency in public financing persuaded several donors to increase their funding to Benin.

Finally, we found that donor funds were often badly targeted and unpredictable, resulting in execution rates that are lower than those of internal resources. Donors need to work together more closely and organize themselves behind a countrys water and development plans. Donor funding is critical, as internal spending is not enough to fund improved water and sanitation. But donor funds are often fragmented.

One water utility in Mozambique, for example, had 19 separate donors in 2008. Donor funding commitments for the coming years are a good start. But greater harmonization and pooling of their aid money are vital to avoid overwhelming a countrys ability to plan, budget, implement, and report back to the donors on how their aid is being used effectively. As a first step, development partners should consider forming a donor group for the sector to jumpstart the necessary pooling, harmonization, and joint evaluation.

Our review revealed a lack of efficient public spending and showed how better-off citizens end up capturing the benefits of public spending on water and sanitation at the expense of poorer people. The emotional argument for more on clean water and better sanitation will be greatly strengthened by improving the targeting and the execution of public spending so that clean drinking water and healthy sanitation services become a reality for all Africans.

The writer, Jamal Saghir, is Director for Sustainable Development in the World Banks Africa Region.

It’s Time to Deliver for Girls and Women

BY EDMUND SMITH-ASANTE
A few weeks ago, on 8 March, the world celebrated International Women’s Day, which serves as a clarion call to honour girls’ and women’s contributions to their families, communities and nations. As our global population swells to over seven (7) billion, we must heed this call by working to ensure that every girl and woman lives a long, healthy and happy life.
Here in Africa, we are doing just that. On 27-28 March, policymakers, researchers and advocates from across the continent – including former Ghanaian Minister of Health (1996 to 1998), Ambassador Dr. Eunice Brookman-Amissah, Ghanaian Member of Parliament, Hon. Dr. Richard W. Anane and international reproductive health adviser Dr. Fred Sai – are gathering in Kampala, Uganda, for a regional consultation on maternal and reproductive health.
At this meeting, convened by Partners in Population and Development and global advocacy organisation Women Deliver, experts will discuss lessons learned, best practices and challenges for improving the health and wellbeing of girls and women.
Across Africa, far too many women die while giving life. Africa has the highest maternal mortality rates in the world, with 48% of all global maternal deaths occurring in this region. A woman in Ghana has a 1 in 66 lifetime risk of dying in pregnancy or childbirth, and this risk is even higher in other African countries. Hundreds of thousands more women are injured while giving birth.
In rural areas, the outlook for women and girls is often even bleaker. Rural girls and women are less likely to receive an education, own property or be financially independent, despite the contributions they make to our societies and economies. They are also less likely to receive the health services they need, such as family planning or skilled care before, during or after birth.
A recent study found that 640 rural women die during pregnancy and childbirth per every 100,000 live births, as compared to 447 urban women. Many women in rural areas do not have the financial resources and transportation needed to travel to far-off health facilities, and if they do make it to a facility, many encounter language barriers, unaffordable fees or shuttered doors.
Many of Africa’s maternal deaths could be prevented with increased access to family planning services. Unfortunately, many women do not have this access. In Ghana, for example, 38% of rural women want, but do not have access to, family planning services and, overall, only 17% of married women report using modern contraceptives regularly.
If we provide girls, women and their partners with family planning information and services we can empower them to decide the number, timing and spacing of their children – and whether they want to become pregnant at all. Intended pregnancies are safer and healthier pregnancies.
Despite the many challenges, there is some good news. According to the World Health Organisation, an estimated one-third fewer women worldwide are dying from complications during pregnancy and childbirth now than in 1990. In sub-Saharan Africa in particular, maternal mortality has declined by 26% over the past two decades.
We have also seen greater political commitment towards reducing maternal deaths. In recent months, both First Lady Mrs. Ernestina Naadu Mills and Health Minister Alban S.K. Bagbin, have stressed the importance of prioritising women’s health.
The Campaign on Accelerated Reduction of Maternal Mortality (CARMMA), launched in 2009 with more than 30 African countries’ support, sets clear pathways to reach measurable goals around maternal health.
The Office of the United Nations Secretary-General’s Every Woman Every Child campaign and the Partnership for Maternal, Newborn and Child Health are two global initiatives that have each convened government, civil society and corporate leaders to improve the lives of women and children.
The recent decline in maternal deaths in Africa and increase in political will are welcome signs that real and lasting progress can – and will – be a reality. The Kampala consultation will provide Africa’s leaders with an unprecedented opportunity to work together to build on past successes and pave a way forward for improving the lives of girls and women in Ghana and worldwide.
The time is now to deliver for girls and women. Let’s join together to celebrate them every day by making their health and wellbeing a top global priority.
By Dr. Jotham Musinguzi
Dr. Jotham Musinguzi is the Regional Director of the Partners in Population and Development Africa Regional Office in Kampala, Uganda.