The Surprisingly Simple Truth behind end-of-service benefits (ex gratia) for MPs in Ghana

You heard the news about the end-of-service (ex gratia) payments to MPs and you thought one of three things:

• “Oh, what insanity! ‘End-of-service’ gift for what exactly?”
• “Wow, I should really consider going into local politics. That’s some money right there! Imagine if I held on for four terms like ABC, sugar puffs! I’d be rich.”
• Honestly, MPs do a lot and the civil burden on them is absurd, to say the least. If they have done the job, why not? Good for them.

If not any of the above, your reaction fell somewhere in the middle. The point is, there was a reaction. You care; you should care.

I remember the first time I heard it, it sounded bizarre to me. To say I understood the case for MPs getting an ex gratia, would be a little lie. Full transparency, I simply could not fathom the case for it – the economic case for it.

In the past, it usually ended there. But I ask, what use has it been to just accept that “that’s how we do things,” or “Ghana politics? Worry not your head dear.”

It hasn’t served us well to not probe.

To be able to make a change, demand the change, we must understand and engage not as ideologues but as informed citizens – analysts of sorts.

So, the third time I heard the noise about this again, I thought to myself, “there must be more!” And there was…

What did I do? Simple. I found some people who were knowledgeable about the workings of the political space and probed a bit more.

Let’s get started.

The Day of Reckoning (hearing about end-of-service benefits and ex gratia payments to MPs)

January 6th 2021. That was the day I realised we may not have our priorities right. I could not believe what I was hearing.

Are we debating GH₵ 500,000 ex gratia to Members of Parliament (MPs)?

NO. In fact, the fuss was about Members of Parliament making a case for a 20% increase. They were demanding GH₵ 600,000.

Predictably, people were up in arms about this.

For what exactly are they to be paid such exorbitant amounts?

Others, mostly silent in public arenas, understood this or claimed that they did. I was interested in those.

For the record, I was in the former category. It just sounded absurd and I couldn’t understand why we all were not in agreement on the absurdity of it all.

Obviously, ex gratia payments are not a new phenomenon. I am the new entrant in the discussion. The last time such a conversation came up, I was perhaps doing one of two things:

One, trying to figure out how to mourn a dead leader (2012).

Second, trying to understand how an incumbent leader was dethroned (2016). Dramatic? I know. What else do you expect from anyone under 25?

So this time feels different – and it is. I am more attentive, present if you will. Or maybe I was geographically closer to local news.

The briefing: The tale of MP ex gratia-gate

At the end of their service, Ghanaian Members of Parliament (MP) receive an end-of-service benefit commonly called ex gratia.

What is an ex gratia?

According to the Oxford Lexico, an ex gratia (of payment) is given as a favour or from a sense of moral obligation rather than because of any legal requirement.

What does that mean?

They are gifts.

They are not dependent on anything or based on the achievement of anything, in particular, just gifts. Securing the vote as an MP and making it through four years in Parliament is all that qualifies one to receive this – even if you were silent the whole time.

What to know about past end-of-service (ex gratia) benefits

According to Graphic Online, the MPs who retained their membership of the House after the December 7, 2012 elections received GH¢276,000 each. Those who lost their seats were paid GH¢311,000 each.

By 2017, the amount was different; it increases. The sixth Parliament of the Fourth Republic of Ghana, the outgoing class of 2017, received GH₵ 600,000. This, of course, set the precedent for the class of 2021 who are refusing to accept GH₵ 500,000 because, and according to MyJoyOnline, “the package did not meet the minimum threshold of 600 thousand Ghana cedis that was paid to the ordinary MPs in the 6th parliament.”

Pause.

MPs who win subsequent Parliamentary elections are paid an ex gratia as well. That is, in addition to their salaries and perks, returning MPs get an ex gratia. If that makes sense, do let me know because…

The surprisingly simple truth(s) behind end-of-service benefits to MPs in Ghana

It turns out MPs incur significant costs to attain and maintain their position.

That’s it. Really it is.

But you are right, that explanation needs some more colour. The “but why?”

It is expensive to run for parliamentary elections

Did you know that on average, as of 2016 that is, candidates have to raise GH₵389,803 (~ US$70,000) to secure the party primary nomination and to compete in their constituency’s parliamentary election? 

Catch you jaw before it falls to far down. Yes.

Where does one get this amount of money from? More specifically, where does your average Ghanaian get that sum of money?

Sounds impossible right?

It turns out that for most people, the source is their personal wealth.

Certainly, people do get some financial support from political parties. However, the clandestine nature of political activities in Ghana ensures that we understand little about funding structures. As such, funding, even within your own party, is based on wealth from personal relationships and alliances.

As one can imagine, such a culture further increases personal debt amongst politicians. Cue corruption, nepotism, clientelism, tenderpreneurship, etc, when they do ‘get into power.’ You must give back to who ‘invested’ in you.

How else…

MPs – without any additional Ministerial or Deputy assignment – earn a little under GH₵ 234,000 per annum. Do the maths.

And, there are other costs associated with the position, including the cost of actually winning and the costs incurred once elected to a term of office. We all know how people line up at the gates of the homes of MPs daily for one thing or the other, every single day.

Oh, one thing you did not know. A huge part of the costs that burden sitting MPs lie in the pearly black Land Cruisers they speed about town in. You thought it was theirs? No, not at all. Not for many of them at least. Most of these cars are loaned to them by banks. And by the time the next elections come around, the banks are always hot on the heels of MPs, collecting their wheels…

Thus, in order to fund their campaigns, pacify their electorates, grease the palms of the numerous gatekeepers, afford the ceremonial luxuries, etc, MPs do incur a substantial amount of debt that makes the ex gratia more a requirement than the ‘thank you’ it is meant to be.

People also point to the idea that MPs put their lives on hold for public service. As such, the extra compensation is necessary as they may not be able to return to their previously-held positions for political reasons.

To that I say, what was your plan?

“This is a lot, and a little sad for MPs”

I agree.

But don’t feel sorry for them. As Sherlock said, “You’re being emotional, it’s understandable but unnecessary.” 😊

Harsh Realities

These costs have preposterous implications.

First, the incentives for MPs, almost logically, move from serving the public interest to recouping their own investment.

Second, with the cost of politics rising to such an unaffordable level, it certainly becomes the playing ground for the wealthy and elite only. In case you have not figured it out yet, this means that we are only entrenching ourselves deeper in the duopoly that is the NPP and NDC. Average Joe will find it incredibly tough to break in financially.

What must we do?

The cost of politics in Ghana is nothing to play with. It is expensive, unreasonable -and artificially created.

The Electoral Commission can, and must, do much better. It can start with capping the slightly ridiculous fee to be able to declare candidacy. Having more money does not make you a better quality candidate. We need other ways to sift through the lot. Our electoral institutions need to stop the habit of hiking the entry fee into politics just because.

Second, initiating and opening up national dialogue with Ghana’s political parties and civil society leaders to discuss the impact of money on politics and the political arena would serve the country well.

Third, the EC must consider more transparency around electoral funding, spending and the enforcement of party finance legislation.

Lastly, there are more ideas, places to learn from, and places to run from. We must, for the sake of our democracy, change the incentives around running for office. If we cannot generate ideas about how to go about a challenge (which I doubt is the case), we can, and must, look at where it has worked to the benefit of public interest. These best practices will save us time, cost, and livelihoods.

Concluding thoughts on the end-of-service benefits to MPs in Ghana

“The system is the way it is because we have allowed it to be so.” – Me

Business is business. If the job is to come and make laws and advocate for the interests of your constituency, they must do that. Because that is the job.

The taxes of the people of the land need not support much more than that. Especially when you consider that quality of performance does not factor into the gifts, salaries and perks. Yes, we can vote ineffective ones out but four years is 1460 days too many to waste.

A gift that comes at the expense and to the detriment of the state bursary is not much of a moral obligation. It doesn’t make sense.

Hello MPs, COVID-19 happened too, right?

For a country with debt to GDP over 80%, I would think that it would be a bit more cautious about non-essential expenditure, especially as a result of Covid-19. That, perhaps should be a priority?

Given the hardships of the past year, economic downturn, and the need for tough(er) choices, there is evidently a failure to focus on growth. Synonymous with a failure to make good chices.

That we are arguing over GH₵ 600,000 instead of GH₵ 500,000 is bizarre. Maybe been more so is the idea that Ghana’s MPs have come together (rare) to lobby this cause.

And yet, the nation is faced with the stark realities of lost lives and dwindling livelihoods.

One can say that our actions – policies and the likes – are perhaps on their own self-sabotaging and self-destructive.

As has been said numerous times, the main reason for Africa’s poverty and slow pace is the bad choices made by our rulers.

Too often have brave policy decisions been shunned and political self-interest taken preeminence, at the expense of long-term policies crafted for the national interest. Popular welfare.

It must not be personal interest first, but it is.

How we personalise politics and why that’s a problem

Have you heard of perverse incentives?

The ‘truths’ that justify the ex gratia payments is what we call perverse incentives.

Perverse incentives those that encourage people to act in, or do, inappropriate and dysfunctional things. How does that apply?

What I mean by that is that our electoral institutions are, to a large extent, rewarding bad behaviour. ‘We will set an impossible task for them and they must strive to meet it. And we don’t care how.”

They could, as described above, eliminate the cause(s) of this mess and save the state an economically unnecessary ‘gift.’

We cannot blame anyone else or look elsewhere for such injustices to state resources and the Ghanaian taxpayer.

The solution is within our means and our governing institutions. The examples of other countries who have done well for themselves show us that the secret sauce for those who have grown and developed their economies is simple. They take sound decisions in the national interest.

We ought to do that, more of that.

THE END

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What I’m reading (apart from this MP mess)

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What I’m watching

More like what I’m lowkey reading because this time I chose to read the summary, thanks to Lewis Howes and his team for providing that option.

“Greatness does not mean you beat everybody else. Greatness, to me, means that [you] went right to the edge of what you were capable of doing in this moment. And so I think it is possible to be great and come in 400th [place] at the New York Marathon because compared to what you would have done if you hadn’t shown up the way you showed up, never would have happened.” 

Seth Godin

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