TBY talks to Hon. Kwabena Duffuor, President of the Institute for Fiscal Studies and Former Minister of Finance, on expectations for the economy, reforms, and regulations.

Hon. Kwabena Duffuor
Hon. Kwabena Duffuor started his career in Ghana Commercial Bank in 1969, becoming General Manager and the Head of London branch of the Bank in 1991. In July 1995, he was appointed the Deputy Governor of the Bank of Ghana, where he focused on the restructuring of government accounts. After two years, he was appointed Governor of the Bank of Ghana in July 1997, driving a range of reforms and, thus, achieving sound macroeconomic stability. In February 2009, he was appointed Minister for Finance and Economic Planning in Ghana. In 2011, he was named by The Banker: Africa’s Finance Minister of the Year. He exited the Ministry of Finance and Economic Planning after completing a full political term with the ruling NDC in February 2012. He founded the Institute for Fiscal Studies in Ghana, a non-profit think-tank.

What led you to found the Institute for Fiscal Studies?

There cannot be any disagreement about the fact that as a nation we have had fiscal challenges for years. This Institute has therefore been founded to contribute to Ghana's fiscal management through innovative research into relevant public finance issues. In doing this, we would be able to provide practical recommendations that would help to put government finances on a sustainable path and thus ensure the socio-economic transformation of the country.

Your reports noted how the IMF's rebound expectations for GDP were a bit optimistic. What else can Ghana do to reach its medium-term targets?

Our reports indicated that the price of crude oil started falling in July 2014. A year before that time, the price of crude oil was slightly over $100 per barrel. The general macro-economic environment has also not been stable. We are witnessing exchange rate instability as well as soaring inflation. The view of the Institute is that all of this will work against the growth of the economy this year. As a result our view toward the short-term growth prospects does not look too bright. However, we have a lot of confidence in the medium-term growth prospects and as a country we are working toward the medium-term transformation of the economy. Now a lot is being done in the energy sector, expansion in infrastructure, diversification in the export sector, and a huge growth in human capital through a major improvement in the educational sector.

Transparency and efficiency are watchwords of the current government. What role will technology and software play in driving this agenda?

Technology has long been recognized by the government as a major player in Ghana's quest to achieve transparency and efficiency in the country's fiscal management. In 1997, the government embarked on a wide range of public financial management reforms termed the Public Financial Management Reform Programme (PUFMARP). An important aspect of PUFMARP, which was aimed at enhancing efficiency, accountability, and transparency of the financial management function of the government, was a technology/software component called Budget and Public Expenditure Management System (BPEMS). In 2010, Ghana Integrated Financial Management Information Systems (GIFMIS) was introduced to replace it. The major focus of the GIFMIS is the upgrading and fresh installation of Oracle Public Sector Financial e-business Suite software. As part of GIFMIS, budget reforms focusing on Programme Based Budgeting (PBB) were also implemented. GIFMIS now has widespread use in the country's public sector and there is no doubt that both transparency and efficiency have been enhanced.

What key reforms are you expecting?

I can only talk about the reforms the government itself has stated that it is going to introduce in the financial sector in 2016. Firstly, the government will use the book building approach in allocating issuance on the domestic capital market similar to the approach used for Eurobond on the International Capital Market in order to promote a more active engagement between the government and its book runner as well as large institutional investors such as pension funds, insurance companies, and mutual funds. Secondly, the government is of the view that there exists a significant amount of assets that lie unclaimed in the financial sector. These include dormant bank accounts and unclaimed dividend, interest payments, pensions, and insurance benefits. Currently there is no regulatory framework to govern the management of this large pool of assets, which, according to the government, represents a significant portion of private savings in the economy and which are often forgone without a structure to consciously trace the beneficiary's next of kin. The government plans to implement a Dormant Asset Scheme by proactively taking measures to improve the tracing of beneficiary owners and providing for sound investment of the scheme's assets.

Do you have a message of confidence for investors looking at Africa?

Africa's economy is growing faster than the economies of all other continents. Indeed more than one-third of the 54 African Countries are registering annual GDP growth of more than 6%. Today, Africa's economy stands at about $2 trillion and indeed it is booming and attracting more investors around the world as confidence continues to grow. Intra-African trade is growing rapidly, 20% of governments' spending is on education, the continent is becoming increasingly stable, and we have most of the world's arable land and soon the world's largest workforce. These factors are rapidly shaping the socio-economic transformation of the various economies and thus improving the lives of the African people.