Subsidies Come Under Contention

It was a tough academic and mind-boggling exercise when two contesting groups presented their opinions so convincingly in a case for and against the provision of subsidies. At the first in a series of national debate sessions organised by the IMANI Centre for Policy and Education and other partner institutions, strong evidence was given by each sides of the debating groups that included very brilliant academics and technocrats, leaving the teaming audience uncertain with choice. Arguing on the side of the motion, �Subsidies are required now for Ghana�s development,� Nana Asante Bediatuo, Managing Partner of Ampem Chambers, Mr Augustine Adongo, Business Development Specialist and Mr Kingsley Ofei-Nkansah, General Secretary of the General Agricultural Workers Union, Ghana Trades Union Congress, were able to drive home the point that subsidies are relevant in the socio-economic development of the country. In opening his defense on the topic, proposition Advocate Nana Asante Bediatuo, a former Wall stress Legal Luminary, explained that the provision of subsidies, in the form of direct and indirect support, to the vulnerable in such areas as education, health, feeder roads and agriculture ensured their very survival. He argued that the elimination of such subsidies would hit the poor, who form the majority of this country, hard, resulting in a number of social problems. Speaking as a principal witness in favour of the motion, Kingsley Offei-Nkansah pointed out that the country�s agric sector presented a clear case for the importance of subsidies in enhancing productivity. He lamented the fact that between 40 to 50 per cent of the incomes of Ghanaians is spent on food, saying the situation is unacceptable. According to him, food sufficiency could be achieved if government provided enough subsidies for the agric sector. �The average age for cocoa farmers in the country is currently 52 years. If nothing is done about this, gains from the cocoa sector cannot be sustained�, Mr Offei-Nkansah observed. �The terms of trade between agric products and those of industry keeps worsening, resulting in a decline in the purchasing ability of farmers,� he added. To him, it is the provisions of adequate subsidies that would make the sector attractive and increase yields for the over 5.8 million small holder farmers in the country. On his part, Augustine Adongo stressed that subsidies in the country are �market-correcting� rather than market-distorting. He explained that government support to programmes such as the national health insurance scheme (NHIS) has enable many poor people to access quality health care. Speaking against the motion, lead opposition advocate, Ernest Abotsi, a Lecturer in the Law Faculty of KNUST and Guest Lecturer of prestigious legal training institutions in the United States. pointed out unequivocally that subsidies had left Ghanaians with a dependency syndrome that has had a dampening effect on �our development efforts.� To him, subsidies ultimately hurt the poor as they eventually do to benefit from the intended benefits. �It is those who can afford cars who ultimately benefit from subsidies on petroleum products�It has been estimated that just about 9% per cent of subsidies in electricity eventually benefit the bottom poor,� the Harvard trained lawyer noted. Making reference to a recent World Bank report, he indicated that �100 billion dollars could be saved annually if all forms of subsidies were abolished,� adding that it is developing countries that stand to benefit the most from the abolishing of subsidies. With advanced countries pushing for the elimination of subsidies constituted the misapplication of society�s resources. The seasoned entrepreneur called on government to eschew corruption and create the right investment environment for private businesses to thrive on their own. Kwaku-Agyemang Duah, Coordinator of the Association of Oil Marketing Companies pointed out that the provision of subsidies was largely responsible for the unreasonably high demand for petroleum products even in the heat of the global recession when oil prices hit the roof. He also cited smuggling into neighbouring countries as a clear case for the abolition of subsidies in the petroleum sector. Most participants rooted in favour of the motion, in view of the convincing augments that were raised. They held that subsidies are important to help sustain infant industries and to ensure affordability by the poor in society. It was generally agreed though that there must be put in place mechanisms to monitor and control abuses or manipulations by stakeholders whose actions and inactions often led to the failure of intended objectives of such subsidies and support.