Chapter Overview
This chapter is made up of two major sections. Section I provides a conclusion of the research results. Findings of the research that were of significant importance were detailed out for consideration by key stakeholders interested in the uplifting of skills training and development in the Gambia. Section II provides specific recommendations to the National Training Authority, Department of State for Higher Education, Gambia Revenue Authority and the business representative (Gambia Chamber of Commerce and Industry). Recommendations for future research is also provided.
Conclusion
The study seeks to assess the motivational and de-motivating factors influencing employer contribution to the levy in the Gambia. The motivational factors were adopted from a World Bank Consultancy Report. A quantitative research method is employed for the study and both descriptive and inferential statistics were provided during the analysis stage. A pilot study to test the reliability of the research questionnaire was conducted. The field study was executed and supervised by staff of the NTA in the Gambia. Hypotheses were developed to test the research findings, conclusions of which are provided below.
Motivational factor
The analysis showed in order of preference the motivational factors that have highest influence on business willingness to contribution to the levy: accountability and transparency of levy system; employer buy-in; perceived benefits from levy; confidence in the training system and levy exemption policy. It could be concluded that not only do businesses want to know how their contributed funds are utilised but be involved during policy formulation and development.
Furthermore, businesses having paid their levy contributions, would want to benefit from the those funds, either directly through training packages for their staff or indirectly through the
development of training systems that are accessible and relevant to the needs of the Gambian industry. The anticipated involvement and participation of the private sector in skills development as revealed by the study could lay potential foundations for a sound dialogue and strong commitment from key stakeholders.
De-motivating factors
The results of the research concluded that the most de-motivating factors in order of preference to businesses in contributing to the levy are: business overburden with tax payment;
levy purely another form of tax and levy introduced during economic slowdown. Most governments in developing countries like the Gambia depend highly on taxation to generate income to meet the costs of basic services for its populace. It is therefore common that businesses feel the brunt of excessive taxation especially when the financing of new institutions like the NTA are put mainly on the shoulders of the private sector.
Although there was no official pronouncement that there was an economic slowdown in 2007 when the levy was introduced, the dimension on business environment reasonably good during levy introduction was given the lowest ranking. This suggests that the economy was not in a boom period. The introduction of a levy during such economic conditions do not help in the successful implementation.
The imposition of the levy on businesses and the levy perceived as interest to government has been ranked as least de-motivating to business. This is contradictory when compared to the most de-motivating factors highlighted above. However, it is not clear why this contradictory ranking of the de-motivating factors but could be attributed to fact that the dimensions on imposition and interest to government are rather sensitive political questions. Therefore, the respondents did not respond to these questions accurately.
Employer contribution
There is conclusive evidence that the most important employer contribution dimension is the all inclusive contribution to the financing of skills training. This result supports the findings of the literature review where various researchers and consultants had advocated for the inclusive participation in financing of skills training. From the results, business corporate social
responsibility to the citizenry is not an important dimension to measure willingness to contribute to the levy.
Motivational factors based on the demographic dimensions
The findings of the study concluded that businesses with limited liability registration status in the Gambia were significantly different from the rest of other businesses towards the following motivational factors; confidence in training system, accountability and transparency of the levy system, employer buy-in and security of levy proceeds for contribution to the levy.
The limited liability businesses were motivated to contribute to the levy if the NTA provides training to both the formal and informal business and provide feedback on fund allocation that is well documented and understood by all stakeholders. Prior consultation during levy policy development and levy that is put in closed account (only accessible for training use) would encourage them to contribute to the levy.
Managing directors of businesses were motivated to contribute to the levy if prior consultation during levy policy development was done. They would also be motivated if the funds were secured and used for training purposes.
Gender was found to have significant differences based on the motivational factors. It can be concluded that female respondents were more responsive to the following motivational factors than their male counterparts, levy collection regime and the security and stability of funds. The female respondents indicated that despite knowledge of other businesses evading contribution, they were still willing to contribute. They also indicated that if the levy can ensure a secure and sustainable means of funding skills development, it would encouraged them to willingly contribute to the levy.
The study also found that years of operation of the business has significant influence on business contribution to the levy. Young businesses (1–10 years) were motivated to contribute if a payroll levy was introduced. The implications of the results were that small businesses in the Gambia were being forced to pay more proportionally now with the band system than large businesses if the turnover levy was in operation.
Economic sector of business has no influence on employer contribution to the levy as opposed to the notion previously held by the researcher.
De-motivating factors based on the demographic dimensions
Managing directors were found to be de-motivated by all the de-motivating factors (levy Act imposition; perceived high levy rate; perceived tax burden and levy taxed on annual turnover) except one (untimely introduction of levy). The study concluded that managing directors of businesses were de-motivated and were not willing to contribute to the levy because it is purely of interest to government. It is also indicated that if consulted prior to decision, levy would not have been charged at 0.25% annual turnover, which is too high. They were also de-motivated because levy is purely another form of taxation and having charged it on annual turnover is unrealistic and unjustified.
Gender also had significant differences based on the de-motivating factors; perceived high levy rate and untimely introduction of the levy. The research findings concluded that male respondents were de-motivated because of the levy rate charged at 0.25% of annual turnover coupled with the introduction of the levy during economic slowdown.
The study also found that number of employees in the business (size) has significant influence on the de-motivating factors; levy Act perceived imposition and perceived tax burden by employers. Small businesses with 1-15 employees were de-motivated to contribute to the levy because of their perceived belief that the levy is interest to government. However, bigger businesses were also de-motivated because of their perceived belief that levy is purely another form of taxation.
Employer contribution dimensions based on the demographic dimensions
Limited liability registered businesses in the Gambia were significantly different from the rest of other businesses because of their lack of anticipation in fulfilling their obligations towards the levy and the view they upheld on the all inclusive contribution to financing of skills training.
The results concluded that managers were more willing to contribute to the levy than managing directors. This phenomenon is of great concern because decision making to contribute to the levy is mostly the responsibility of managing directors instead of managers.
Businesses that are members of a sector body are also more willing to contribute to the levy than non-sector body members. It is strongly argued that businesses that are members of sector bodies have higher likelihood to contribute to a levy based on their awareness on the needs of the sector in which they operate.
Motivational factors influence on employer contribution dimensions
A levy exemption policy was found to be the only motivational factor that could influence businesses to voluntarily contribute to the levy. From this result, it could be concluded that businesses would welcome the introduction of a levy exemption policy. However, such a policy should be thoroughly investigated. Businesses should be fully sensitised of their requirements in order to avoid problems being encountered as in other SSA countries that have introduced the policy.
Three motivational factors were found to be influential in preventing businesses from anticipating in fulfilling their obligations: tight levy collection regime; accountability and transparency of the levy system and an unrestricted levy coverage system.
During this study, a number of databases on Gambian businesses were reviewed including the list provided by GRA (levy contributors). It is evident that a bulk of Gambian businesses had not contributed to the levy since its enforcement. The evasion of certain businesses in contributing to the levy will certainly not motivate others but rather de-motivate them from contributing to the levy as evident from the findings of the study.
Limited liability businesses showed greater concern on accountability and transparency of the levy system. This is entirely the responsibility of the board and management of the NTA but is being challenged by limited liability businesses however audited accounts and annual reports were submitted to parliament annually for review.
The small businesses showed greater willingness to contribute if the levy contribution included all key stakeholders; the public sector, private sector, NGO’s and non-formal businesses.
The current levy Act only covers private businesses with five or more employees. An amendment to the levy Act is required if an unrestricted levy coverage is to be introduced.
Implications for an all inclusive policy should be closely studied and understood, as logistical arrangements for this would be huge and complicated.
Levy charged on payroll bill and a tight levy collection regime was found to be motivators for businesses with corporate social responsibility. It is conclusive that businesses with corporate social responsibility have greater preference for a payroll levy than annual turnover. This finding if to be implemented would require further research as the numbers of businesses implementing a corporate social responsibility are not identified in the research.
Businesses having the opinion that the financing of skills training should be an all inclusive affair were motivated by the following motivational factors: confidence in the training system;
security of levy proceeds; accountability and transparency of levy system and unrestricted levy coverage. It could therefore be concluded that the introduction of an all inclusive contribution to financing of skills training, confidence in the training system must be built and that the levy funds must be not be accessible by government but used purely for training purposes.
De-motivating factors influence on employer contribution dimensions
The findings concluded that businesses with no corporate social responsibility perceived the levy Act as an imposition and thus de-motivates them from contributing to the levy, indicating that the levy is interest to government. Businesses having the opinion that the financing of skills training should be an all inclusive affair were also de-motivated because they perceived the levy as tax burden. It could be concluded that the two de-motivating factors influencing businesses lack of contribution to the levy were the perceived levy Act imposition and the tax burden.
Recommendations
Based on the conclusions of the research findings the researcher provided recommendations to the National Training Authority, Department of State for Higher Education, the Gambia Revenue Authority and the Gambia Chamber of Commerce and Industry. The recommendations to the aforementioned institutions were based on their mandates and roles corresponding to the activities required to execute those recommendations. It is hope that the NTA will forge strong relationship with the said institutions to ensure effective and efficient implementation of the recommendations listed below.
Recommendations to the National Training Authority
xtensive and prolonged sensitisation programmes be undertaken
The study has revealed private sector’s acute lack of knowledge and awareness of the levy system in which they were legally required to contribute. It is also indicative that prior consultation with the private sector was not exhaustive and could not achieve the support required from them. Information dissemination amongst the key stakeholders is a vital necessity for successful implementation of such a programme. It is strongly recommended that extensive and prolonged sensitisation programmes be undertaken with the view to inform the private sector on the levy scheme.
Mechanisms for public access to information regarding management and utilisation of the levy funds
The NTA should develop reporting mechanisms from which all interested parties could get access to information pertaining to the management and utilisation of the levy funds. Such mechanisms would boost public confidence and renew private sector commitment to contribute to the levy.
Revisit Levy Act and provide opportunity for consultative process with the private sector
However, since the levy Act has been perceived as imposition, it is important that the Act be revisited with the view for discussion and amendment to the levy Act for the benefit of all key stakeholders. This will provide the opportunity for a consultative process with the private sector, which they feel has been lacking during the development of the levy.
Immediate implementation of training fund - ensure that eligible applicants benefit
The proposed training fund for employers should be implemented immediately and must ensure that eligible applicants gain access and benefit to the training programmes and packages on offer. Such a process will bring the authority, employers and trainers to a conducive ground for dialogue and collaboration. Through the acquisition of private sector perceived benefit from the levy, they would be motivated to contribute willingly.
Differentiate levy from other tax systems - training tax levy for private sector employees
It is quite difficult to convince the private sector businesses and their managing directors that the levy is not a tax system but it should be possible to differentiate it from other tax systems.
If the funds were used purely for training and training related activities, the NTA could argue that the levy is training tax and is being spent on training for private sector employees. In this way, it could be seen in a much subtle form of taxation and would lessen their unwillingness to contribute to the levy.
Mobilise the female employers, to spearhead a vigorous and sustained sensitization campaign The NTA should mobilise the female employers in the private sector who have shown considerable support to the levy as compared to their male counterparts, to spearhead a vigorous and sustained sensitization campaign amongst their colleagues. Such a campaign should highlight to businesses the importance of the levy in the national drive to skills training and
development. It should also be a forum to allow employers to be heard and pertinent issues on training and development discussed.
Recommendations to the Department of State for Higher Education
Organise consultative forums to review and revise and amend redundant the levy Act
As reported earlier, the National Education and Technical Training Levy Act enforced in 2007 to collect 0.25% of annual turnover on businesses employing five (5) or more employees, seized operations 1½ months immediately after it was enforced. The Department of State for Higher Education in collaboration with the NTA should organise consultative forums with the private sector and all other key stakeholders to review and revise the levy Act, which has since been redundant with a view to carryout necessary amendments with immediate effect. As the umbrella Department of State to which NTA is answerable, all legislative issues should be channelled through them for onward transmission to the House of Parliament.
Recommendations to the Department of State for Finance (Gambia Revenue Authority) Establish a tight levy collection regime
The collection of the levy funds is the responsibility of the GRA under the Department of State for Finance. Based on the results of the study, it is recommended that a tight levy collection regime be established. Such collection processes and procedures should ensure that all those eligible for contribution are made to pay their dues. Once employers are aware that there are no loopholes for contribution to the levy, this would encourage payment as no one would evade contribution.
Provide database of all businesses eligible for contribution to the levy and provide quarterly feedback on levy contributors to the NTA
The GRA could develop database of all businesses that are eligible for contribution to the levy and provide quarterly and annual reports to the NTA. The list of businesses contributing to the levy during the period 2007-2008, totalled to a mere two-hundred and sixty-six (266) businesses as provided by GRA. This list when compared with the MSI database (2243 registered businesses), revealed a huge unexplained gap. The GPPA and GCCI databases also had far more registered businesses than the number that contributed into the levy in the last three years. This situation is of concern if the levy is to provide the requisite funds required to provide the training needed for both the formal and informal sectors of the economy.
Take a lead role in future discussions and/or amendments to the levy Act
It is also recommended that the GRA should take a lead role in future discussions and/or amendments to the levy Act. As the sole collectors of the levy and all other taxes, they should be in an advantaged position to advice government, NTA and the private sector on workable levy systems that would benefit all parties concerned.
Recommendations to the Gambia Chamber of Commerce and Industry Take a lead role in the setting up of sector bodies for businesses
The study has revealed the importance of businesses’ membership to sector bodies in relation to contribution of the levy. Businesses chronic lack of membership to sector bodies was also highlighted in the research findings. The importance of sector bodies in industry’s progress and development has been reiterated in the paper. It is recommended that the GCCI should take a lead role in organising businesses in establishing strong sector bodies that will be responsible for the management of their day-to-day activities.
Recommendations for future research
Study be repeated with a view for national coverage of the sample population
Study be repeated with a view for national coverage of the sample population