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Free SHS takes GH¢211m of oil revenues

By: Jessica Acheampong
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Dr Mohammed Amin Adam  – a Deputy Minister of Energy
Dr Mohammed Amin Adam – a Deputy Minister of Energy

The government expended about GH¢211 million from petroleum revenues on its flagship Free Senior High School (SHS) programme which commenced in September this year. The amount, which was sourced from the annual budget funding amount (ABFA), constituted about 53 percent of the financing requirement for the implementation of the programme in its first year estimated at GH¢400 million.

Earlier indications that the programme would be funded from oil revenues in the Heritage Fund – portion of revenues saved for the future generation - was met with opposition from some industry players, forcing the government to rescind that decision and to explore the option of education being a priority area to fund the initiative.

A Deputy Minister of Energy, Dr Mohammed Amin Adam, said the decision to allocate more of the oil revenues on the programme resulted from the fact that the government wanted to ensure an equitable distribution of oil wealth to benefit all.

“The President of our republic is committed to the implementation of the Free SHS programme which he launched in September this year. What is significant about this is the use of oil revenues to finance this noble social intervention. This year, an amount of GH¢211 million from the ABFA was allocated to the implementation of the programme, constituting 53 per cent of the financing requirement.”

“This in our view ensures the most equitable manner of distributing our oil wealth, the best way to maximise benefits from our oil and will also provide a convenient foundation for the development of our human resource base whose impact base will outlive the oil wealth,” he said at a two-day Africa Oil Governance Summit in Accra.

From 2017, the government, in line with provisions of the Petroleum Revenue Management Act (PRMA), Act 815, selected new priority areas on which oil revenues would be spent. The focus, however, was largely on the pro-poor sectors of the economy such as education, agriculture, and health.

Why education?

Government’s decision to spend on the sector is premised on the fact that every Ghanaian will in one way or the other benefit from it.

“Spending on education, we think, is the most efficient but also the most equitable way of spending the money so that it reaches everybody and people drive the direct benefit from that. The situation where the oil money is spread thinly across so many projects, such that these projects suffer time overruns as a result, cause overruns and, therefore, dilutes the value for money we expect to gain from the resources,” he said.

The government, he said, had shifted from the thinly spreading of oil revenues to focusing on strategic areas of development that would have multiplier effect and democratise the oil and gas sector.

“The government will continue to commit more oil revenues to education because we believe that is right and we will continue to address the problems associated with the implementation of the Free SHS programme,” he said.

ABFA Allocations

According to the 2018 budget presented to Parliament last week, a total of GH¢265.3 million from the ABFA allocation was spent on the four priority areas, out of which the education sector is said to have received GH¢202.4 million.

This means that the entire allocation to education and portions of other priority areas would have been spent on Free SHS much to the detriment of other projects that equally needed attention.

As the financial pressure on Free SHS continues, there are fears that allocations to other priority areas will be sacrificed or reduced in favour of education.  — GB