FEATURE: Scrapping road tolls in Ghana; what are the economic costs?

November 25, 2021 By 0 Comments

On Wednesday, the Minister for Finance, Ken Ofori-Attah, presented to Parliament the Budget Statement and Economic Policy of the Government of Ghana for the 2022 Financial Year on the theme: “Building a Sustainable Entrepreneurial Nation: Fiscal Consolidation and Job Creation”. One of the major highlights of the budget statement is the scrapping or removal of road tolls in Ghana.

Shortly after the Budget presentation, the Minister for Roads and Highways, Kwasi Amoako-Attah, immediately issued a letter instructing the cessation of all road tolls effective Thursday, 18th November, 2021.

This has received mixed reactions. Though both the policy and the directive are clear, what remains unclear are the economic costs associated with this toll-free policy?

In this feature article, I attempt to explore some of the economic costs of the policy, if approved by the Parliament of Ghana. In doing so, let me indicate that I am not an Economist, and I don’t pretend to be one. I am a Health and Development Geographer. This notwithstanding, my views here are worthy of consideration in this critical time of high unemployment rate in the country.

Reasons for scrapping road tolls 

The reasons for the removal of the road tolls were captured succinctly on pages 72 and 73, paragraphs 305 and 306, of the Budget Statement and Economic Policy as follows:

Removal of Road Tolls

  1. Mr Speaker, Government is currently charging tolls on some public roads to raise funds for road construction and maintenance. Over the years, however, the tolling points have led to heavy vehicular traffic and lengthened travel time from one place to another, impacting negatively on time and productivity. The congestion generated at the tolling points, besides creating these inconveniences, also leads to pollution in and around those vicinities.
  2. To address these challenges, Government will zero-rate tolls on all public roads and bridges. This takes effect immediately the Budget is approved. The tolling points will be removed and the toll collection personnel reassigned. It is anticipated that this Policy will help reduce congestion on the tolled roads, allow free flow of vehicles, reduce travel time and the pollution caused by emissions from vehicles in and around the tolling points. The expected impact on productivity and reduced environmental pollution will more than off-set the revenue forgone from removing the tolls.

From my experience as a frequent road traveller in Ghana, one of the major causes of the delays or heavy traffic congestions at the toll booths is the poor roads (large potholes) at the toll booths. One can observe that about 50-meter or so stretch of roads at almost all toll booths in the country are bad, thereby slowing traffic along the stretch. While we can use the traffic congestion at major toll booths like Kasoa, Tema etc as a case study, these are not representative of the traffic situations for all the toll booths in the country.

First, most toll booths in the country do not experience this heavy congestion. Second, the heaviest traffic congestions in our major cities have nothing to do with toll booths. Check all the major traffic congestions in Accra, Tema, Kumasi, Takoradi etc. Are they generally caused by toll booths? I don’t think so! Meanwhile, this is where the highest productivity loss resulting from the delays is likely to occur?

Economic costs of the toll-free policy

  1. Wasted Investment in toll booth infrastructure:I have no idea about the cost of constructing a toll booth in Ghana. However, with some little knowledge on the high costs of government projects (sometimes due to procurement processes), I can estimate that the cost of each toll booth is not as ordinarily as you might think. Your guess on the average cost is as good as mine. Strangely, some of these toll booths have recently been refurbished and new installations fitted. All of these are going to be abandoned and wasted away with this toll-free policy.
  2. Loss of employment for the collectors at the toll booth:Since the workers run shifts on a 24-hour schedule, it is expected that every toll booth should have at least two collectors during a shift (one for each side of the road). This is higher for two or more lanes. Thus, for each toll booth of two collectors per shift, we will need three shifts for the 24 hours per day. Thus, each toll booth will require 6 collectors, because per the Labour Act of 2003 (Act 651), each worker has to do 8 hours per day or 40 hours a week (that is, for the 5 working days). It also means that we will need at least two (2) additional collectors for the weekends. So, based on the number of toll booths in the country, calculate how many jobs will be lost. Though such collectors have been assured of reassignment to other sectors, we are not sure about where they will be and how effective or acceptable, they will be. This is for another day.
  3. Loss of employment for the hawkers around the toll booth:Several hundreds of people eke out their living selling at the various toll booths in the country. For the purpose of this argument, let’s assume an average of 10-20 hawkers per toll booth and 20-30 toll booths in the country. Calculate the number of jobs to be lost and the number of dependants who will be indirectly affected by this policy. It can be massive.
  4. Loss of income from the tolls:A conservative estimate of the number of vehicles traveling distances on our roads (and paying tolls where and when necessary) gives a fair idea of how much money the country makes on daily basis. It is a huge source of income for the country. However, if we are not realising the maximum income from toll booths, then we should find innovative ways to plug the leakages, rather than abandoning them.

Scrapping road tolls may save an individual road user of the cost of tolls, but I am not sure the benefits can offset the associated costs. The economic, psychological and emotional costs associated with job loss are worthy of further analysis and consideration. More importantly, since most of the hawkers and collectors at the toll booths are vulnerable people such as women and persons with disability, the implications for stigmatisation and domestic violence are imperative.

Once again, I am not an economist, but my undergraduate degree in Economics is enough to inform this perspective of mine. However, for critical analysis, I entreat professional economists to conduct a scientific cost-benefit analysis of this policy and advise government accordingly. Until then, let’s hope and pray.

By Prof Simon Mariwah  

Source: myjoyonline.com