Professor Michael Kpessa-Whyte, Director-General of the State Interests and Governance Authority (SIGA), asserted that the quality of public institutions is a direct determinant of Ghana's economic performance. He stated this at the EPL Ghana Seventh Cohort inauguration. His argument connects institutional strength to investor confidence, tax compliance, and business formation rates.
Professor Kpessa-Whyte framed institutional quality as central to Ghana's current economic stabilisation. Ghana is navigating fiscal turbulence, rebuilding international credibility, and restructuring public debt. A transparent and responsive public sector actively reduces business costs and attracts foreign investment. This also builds what economists call 'tax morale', enabling government to fund essential services.
This argument fits squarely within Ghana's broader economic narrative. The country is under an International Monetary Fund (IMF) Extended Credit Facility program. It faces significant revenue mobilisation pressures, impacting the relationship between the government and taxpayers. The IMF's 2024 Article IV Consultation on Ghana identified governance and institutional capacity as critical for medium-term fiscal consolidation. SIGA's role in overseeing state-owned enterprises, which represent substantial fiscal liabilities, underlines this point.
Professor Kpessa-Whyte explicitly linked institutional quality to the concept of 'tax morale'. Tax morale describes citizens' willingness to pay taxes, distinct from enforced compliance. Research consistently shows that institutional fairness, transparency, and responsiveness boost tax morale. He stressed, “A transparent and responsive public sector reduces the cost of doing business. It attracts investment. It builds the tax morale that funds the schools and clinics and roads that determine whether the next generation gets a fair start.”
The implications of this perspective are significant for Ghana's economic future. Improving governance within state institutions could unlock greater tax revenue and foreign investment. This would support the country’s recovery program. Policy makers will need to focus on reforms that enhance transparency and accountability. This is crucial for strengthening the civic compact between the state and its citizens. The success of Ghana's debt restructuring and revenue targets hinges on these institutional improvements.
The emphasis on institutional quality signals a strategic shift in Ghana's recovery plan. It moves beyond purely fiscal adjustments to address underlying structural issues. Better governance can lead to a more predictable business environment. This will encourage both local and international investment. The government's ability to demonstrate tangible improvements in this area will be closely watched by citizens and international partners alike.
Ghana’s capacity to achieve its economic goals depends heavily on these governance reforms. Enhanced public sector efficiency and accountability will directly influence economic growth. It will also impact the fairness of the tax system. This approach aims to create a sustainable economic foundation for long-term development.