Free SHS Nana Addo must stay away from the Heritage Fund - ACEP

Africa Centre for Energy Policy (ACEP) has said the government must stay away from using the Heritage Fund to finance its Free Senior High School

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Energy think tank Africa Centre for Energy Policy (ACEP) has warned the government to stay away from the Heritage Fund to finance its Free Senior High School programme (SHS).

According to ACEP, "it has been campaigning for the use oil revenue to finance the pro-poor sectors of education and agriculture for four years. Therefore, we cannot, in principle, be against the use of oil revenue to finance education."

READ MORE: Here are what students will benefit from Nana Addo's free SHS

In a statement signed by the Deputy Executive Director of ACEP, Benjamin Boakye, he said "In spite of many implementation challenges, the PRMA has been a model for many countries and Ghana can only do better at improving on transparency and accountability around the use of the oil revenues. Much as we support the use of oil revenue for financing education, we want government to recognise the significance of the Heritage Fund and not touch it".

READ ALSO: Free SHS will fail - IMANI

Below is the full statement from ACEP:

ACEP therefore states its position on the use of oil revenue to finance the free SHS as follows;

  1. Heritage Fund Still Relevant – the principle of intergenerational equity which informed the establishment of the fund ensure that ownership of the resources is shared among the living and the yet unborn. It also ensures sustenance of revenue flow after the oil has been exhausted. It is easier to assume that those of us living today can invest the heritage fund to benefit the future generation. This assumption is overly simplistic and takes away the right of the future generation to decide on their own priorities. The heritage fund represents about 9% of Benchmark Revenue (BR), leaving 91% of the BR for the national budget. This conservative amount left for the future should not attract uncontrolled appetite to spent. For the past 6 years the total payments made into the fund plus interest is $277 million. This is enough to fund only about 3 years of the cost items to be waived by government estimated to be about GHS327million, holding the 2015 enrolment constant. With anticipated growth in enrolment occasioned by the programme, the heritage fund could be woefully inadequate to sustain the free SHS programme

 

READ MORE: Nana Addo's free SHS not feasible - K.B Asante

2. Use the Annual Budget Funding Amount (ABFA)- the credible window for financing the free SHS policy from oil revenues will be through the ABFA. It must however be highlighted that the current architecture of the PRMA allows for only 30% of the ABFA for recurrent expenditure. Given that most of the cost items for the implementation of the Free SHS are recurrent expenditures, government will have to amend the law to be able to spend more that 30% of the ABFA

READ ALSO: Ghana will fund its free high school policy with the Heritage Fund

ACEP will want to recommend that;

  1. Government should continue to grow the Heritage Fund. The purpose of establishing the fund is still valid today and we should not deny the future generation an opportunity to decide what they do with their share of the resources as was done by past leader with mineral revenues.

  2. The PRMA should be amended to allow 50% of the ABFA to support the Free SHS programme. This will be a more equitable way of distributing the resources than financing “ghost project” through thin distribution of oil revenues.

  3. Reduce allocation to GNPC- Government should take steps to streamline the operations of GNPC to focus on its core mandate and redirect some of its allocation into the budget to finance education.

READ MORE: Gov’t to spend GHc3.6billion yearly on Free SHS

  1. Use part of Solid Mineral Revenue to support the Free SHS- this is an opportunity for government to introduce governance framework similar to the PRMA on mineral revenues and allocate portion of mineral revenues to education.  

  2. Government should recognize that the capital budget of the education sector has been lower than 6% of the total sector budget in recent past, therefore, education sector financing should equally be big on improving the asset base of the sector.

 Signed

Benjamin Boakye  

Deputy Executive Director 

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