A Senior Lecturer at the Department of Marine and Fisheries Science at the University of Ghana, has warned that
Ghana could soon face a ban on exporting fish and fish products to the European Union (EU) if illegal fishing methods persist, a Senior Lecturer at the Department of Marine and Fisheries Science at the University of Ghana has warned.
The lecturer remarked on the seriousness of the situation, noting that Ghana has already been issued a yellow card by the EU.
This warning indicates that the country engages in unwholesome fishing practices that endanger consumers and the environment. Additionally, Ghana has been cited for lacking effective monitoring systems and legal frameworks to regulate the fishing industry.
“We fear other countries may follow suit if the EU goes ahead to ban our fish from their market, and we may also lose foreign exchange earnings from that area,” Dr. Angela Lamptey has said while addressing stakeholders at the Iwatch Africa meet-up with coastal communities in Ghana, following the publication of a report on the industry’s challenges.
Dr. Lamptey assured that stakeholders in the sector are working diligently to reverse this trend, warning that another yellow card could severely impact the country’s ratings. “We are putting in more efforts to make things right. We hope that the EU will assess us again and provide the necessary recommendations,” she said.
She emphasized the need for all partners to join forces to help the country avoid a ban.
Ghana’s economy is likely to witness credit ratings upgrade after it successfully restructured its Eurobonds, Moody’s has hinted.
Currently, Ghana’s rating stands at Caa3 for local currency and Ca for foreign currency. These ratings reflect the government’s ongoing debt restructuring efforts under the G20 common framework, initiated in December 2022.
Moody’s, in a recent report stated that, once the restructuring is complete, all ratings are likely to be aligned at a higher level, though still within the Caa-rating category due to liquidity constraints typically following a default event. The IMF program supports fiscal consolidation and funding access, benefiting from Ghana’s relatively robust institutional capacity.
“..However, high inflation and tight monetary conditions remain key credit challenges”, New York-based ratings agency has said.
The restructuring of local currency debt, excluding Treasury Bills, was completed in 2023. Regarding foreign currency debt, which constitutes nearly half of Ghana’s total debt, significant progress has been made.
Last month, Ghana’s Ministry of Finance announced an agreement in principle with bondholders to restructure $13.1 billion of Eurobond debt, which accounted for 21% of Ghana’s total debt in 2023. Under this agreement, bondholders would forgo around $4.7 billion in principal without state-contingent triggers. This followed a June 12 MoU between the Finance Ministry and the Official Creditor Committee (OCC) to restructure $5.4 billion of official sector external debt. The IMF confirmed on June 28 that both restructurings are consistent with its program parameters, though the OCC has yet to confirm that the bondholder agreement is comparable in debt treatment to the MoU.
Moody’s assesses Ghana’s economic strength at ‘ba2’, balancing the country’s growth potential in the oil and non-oil sectors against its small size and low wealth levels. The ‘caa2’ rating for institutions and governance strength reflects very weak fiscal and monetary policy effectiveness, which led to unsustainable government debt and the need for restructuring.
Ghana’s fiscal strength is rated ‘ca’, indicating very weak debt affordability and a very high debt burden. The ongoing debt restructuring is expected to improve these metrics. Moody’s also highlighted Ghana’s susceptibility to event risk at ‘ca’, driven by elevated government liquidity risk due to high gross borrowing requirements and limited borrowing options.
The outlook for Ghana remains stable, reflecting the ongoing foreign currency debt restructuring. Expected losses for bondholders align with the current ratings’ loss-given-default range. Moody’s indicated that a rating downgrade is unlikely, given the recent progress on foreign currency debt restructuring and the agreement’s terms with bondholders.
However, if the agreement does not proceed, it could derail the debt restructuring process, potentially leading to downward pressure on both local and foreign currency ratings. Moody’s emphasized that they will likely upgrade the local and foreign currency ratings following the exchange of the Eurobonds.
The June 24 agreement provides substantial debt relief to the government, complementing earlier local currency debt restructuring. The restructuring of official sector debt will bring additional, yet unknown, liquidity relief. Post-restructuring, Ghana’s ratings are likely to be higher, though still reflecting liquidity constraints.
The Social Security and National Insurance Trust (SSNIT), the country’s largest institutional investor, has announced a significant transition towards a fixed-income-focused portfolio.
This is set to reshape SSNIT’s investment strategy and create ripple effects across various economic sectors.
Currently, SSNIT’s GHS 16.7 billion portfolio is heavily weighted with 49.3 percent in equities, 34% in alternative investments, and only 16.7% in fixed income.
However, under the new strategy, SSNIT plans to more than double its fixed income allocation to 48.8 per cent while significantly reducing its exposure to equities and alternative investments.
SSNIT Director-General Kofi Bosompem Osafo-Maafo elaborated on the shift during a recent media briefing, stating: “The plan is to reduce our real estate and equity investments, reallocating to fixed income, which offers greater stability. This will better align us with our long-term objectives.”
The long-term strategy aims to boost SSNIT’s fixed income allocation to 60 per cent, reduce equities to 26 per cent, and maintain alternative investments at 14 per cent. T
his adjustment is intended to provide more stability and predictability in returns, aligning with the trust’s long-term financial goals.
Mr. Osafo-Maafo underscored the broader economic benefits of the new strategy, saying: “As we shift towards fixed income, we expect increased stability and predictability in our returns, which will ultimately benefit our stakeholders and align with our mission to secure the financial future of our members.”
The Government’s Spokesperson for Administration and Security, Dr. Palgrave Boakye-Danquah, has praised the National Entrepreneurship and Innovation Programme (NEIP) for having a revolutionary effect on Ghana’s entrepreneurial scene.
NEIP, which was introduced in 2017, has been a major programme that promotes innovation and entrepreneurship in Ghana.
The programme offers cash, mentoring, and training—all vital forms of help to newly established businesses. According to Dr. Palgrave Boakye-Danquah, NEIP has had a major impact on Ghana’s startup ecosystem, resulting in the birth of numerous creative enterprises in a variety of industries.
“NEIP has helped 15,000 start-ups grow their operations by providing financial support and business development services,” Dr. Palgrave Boakye-Danquah said.
He emphasised that by the end of 2024, the initiative has helped create 103,871 jobs, promoting economic diversity and empowering young people.
He said significant achievements had been made within the first year of his administration, citing the free senior high school (SHS) implementation, planting for food and jobs and breathing new life into the health insurance scheme among others.
He indicated that they inherited a troubled economy and that through ingenuity, creativity and boldness, it had now been restored to the right path.
He said a solid economic foundation to propel sustainable growth had been laid and added that he was confident things would only get better for the people.
He indicated that they inherited a troubled economy and that through ingenuity, creativity and boldness, it had now been restored to the right path.
He said a solid economic foundation to propel sustainable growth had been laid and added that he was confident things would only get better for the people.
Dr. Palgrave Boakye-Danquah highlighted the various forms of support provided by NEIP, including funding, training, and mentorship.
The programme emphasis on equipping young entrepreneurs with the necessary skills and resources has been instrumental in reducing unemployment and fostering a culture of self-reliance and creativity.
Dr. Palgrave Boakye-Danquah discussed the accomplishments of NEIP and its role in lowering young unemployment and promoting economic growth in an interview on Metro TV.
The Ghana Union of Traders’ Association (GUTA) has expressed strong disapproval over the imposition of a 5 percent excise tax on plastic manufacturing companies, calling for its immediate withdrawal to prevent the collapse of local businesses.
In a statement issued by the association and signed by its General Secretary, Alpha Shaban, GUTA questioned the “economic sense” of imposing such a tax during a time when the government is promoting industrialisation and import substitution.
The statement described the tax as an “obnoxious” measure that threatens to collapse businesses already “suffocating as a result of unbearable taxes in the system.”
The association emphasised: “The business community can no longer accept any additional layer of cost to doing business.”
GUTA therefore appealed to the government to urgently halt the implementation of the 5 per cent excise tax on plastic manufacturing companies to alleviate economic hardship in the country.
The Ghana Plastic Manufacturers Association (GPMA) has raised alarms over the country’s tax regime, warning that it is rapidly driving businesses to collapse.
The Association highlighted the existing 10% Environmental Excise Tax on selected plastic materials at entry ports, emphasizing that the newly proposed 5% Excise Tax would be “obnoxious and retrogressive” for the manufacturing sector.
The GPMA argued that Ghana’s tax regime is unparalleled globally, suggesting it is excessively burdensome.
The Association warned that this additional tax would significantly affect various industries dependent on plastic products, including food and beverage, retail, water, and pharmaceuticals, ultimately leading to higher consumer prices.
Mr. Ebow Botchwey, President of the Association, voiced these concerns during an appearance on The Citizen’s Show, hosted by Kwabena Bobie Ansah last week.
He stated that these taxes are crippling the sector, and many plastic company owners are afraid to express their frustrations publicly for fear of victimization.
He also revealed that a large number of these owners are foreigners.
Mr Botchwey underscored the significant contributions of the plastic industry to Ghana’s economy, noting that it provides direct employment to over 39,260 people and generates millions of jobs in plastic waste recycling and the sachet and bottled water industry.
Mr. Botchwey highlighted the industry’s substantial payments in import duties, electricity bills, and corporate taxes, and raised concerns about illegal sales of plastic raw materials by Free Zones Companies.
The US$450 million joint venture (JV) manganese refinery project involving the Ghana Manganese Company (GMC) and Ningxia Tianyuan Manganese Industry Group (TMI) is set to be ready next month, August 2024, the Mineral’s Commission have said.
The Government of Ghana and the Chinese manganese company signed a strategic partnership agreement in March 2024 after President Nana Akufo-Addo announced the intention to construct a manganese ore refinery near GMC’s Nsuta mine in the Western region during the 2024 State of the Nation Address (SONA). The refinery, is to add value to the country’s manganese production while expanding the benefits from the resource to the citizen through job creation and expanding the economy.
The project is expected to increase Ghana’s manganese revenue with a new refinery. He emphasized the positive economic impact, noting that the refinery will also create approximately 400 jobs for the Ghanaian youth.
“Ghana has been exporting raw manganese since 1916, the current government is focused on ending this practice and adding value locally”, Chief Executive Officer of the Minerals Commission, Martin Ayisi, has moted when speaking at the 7th Annual Mining on Top Africa Summit in Paris-France last week.
Mr. Ayisi discussed the topic: “Mining Partnership for Long-Term Successful Projects: Meeting Obligations and Exploring New Avenues.” He highlighted the government’s commitment to initiating construction of the refinery in August 2024, underscoring that Ghana, through its Ministry of Lands and Natural Resources, is dedicated to transforming the mineral sector.
Also, there are plans to establish a lithium mine by the end of 2024, with the project expected to take 22 months to complete. This will further enhance local processing capabilities and add value to Ghana’s mineral resources.
Mr Ayisi urged other African countries to follow Ghana’s lead in local participation in mineral resource projects. He advocated for policies that allow local citizens to benefit from the value chain, even suggesting local ownership of shares in mining companies. While emphasizing on the importance of stable governance for long-term partnerships, advising investors to consider a country’s regime and practices before committing.
According to data from Statista, in 2022, an estimated volume of 3.2 million metric tons of manganese was produced in Ghana. This stood against the 5.4 million metric tons produced in 2019, which was the highest since 2009. Moreover, except for the major drop in 2014 and 2020, manganese production in the country followed an upward trend.
Ghana is one of the leading world producers of manganese. As of August 2023, the price of manganese in the country reached around US$51 per metric ton.
In 2023, Ghana was the fourth-largest global producer of manganese ore, exporting over 4Mt. Notably, the country lacks refining capacity, with 95% of its ore being exported to China. The potential to extract additional value from its resources is contingent upon infrastructure investments from industry players, such as TMI, according to Project Blue data.
Ningxia Tianyuan Manganese Industry, a diversified industrial group involved in ore mining, metallurgy, and chemicals, holds a significant share in Consmin, overseeing the Nsuta mine in Ghana and the Woodie Woodie mine in Australia. TMI stands as the largest manganese metal producer and has plans to establish a 1Mt HP MSM production line in China.
TMI’s involvement in both the EV battery and alloy sectors suggests a strategic investment in its current supply chain. This positions GMC to potentially develop a production line with a lower carbon footprint, aligning with the government’s broader objectives for a green transition.
The Ghana government has assured its steadfast commitment to fiscal discipline and responsible spending inspite of pending elections on December 7, 2024.
The government through the Finance Ministry has underscored the importance of maintaining economic stability and pursuing sustainable growth amid the upcoming political season.
Ghana has a track record of managing budget overrun with huge deficits in every electioneering year. This phenomenon has become a cyclical event under every government thereby plunging the country into financial and macro and micro economic constraints. But, addressing journalists at a joint International Monetary Fund (IMF) and MoF press conference, the finance minister is optimistic of breaking the jinx.
“Despite the fact that 2024 is an election year, we are committed to enhancing domestic revenue mobilisation and tightening expenditure commitment controls to avoid policy slippages,” Dr Mohammed Amin Adam asserted.
The IMF Board’s has approved the second review of Ghana’s US$3 billion programme, which has led to the immediate release of US$360 million, bringing total disbursements to US$1.56 billion.
The Finance Minister highlighting government’s approach to change the status quo indicated: “We are committed to sustaining our macroeconomic policy adjustment and reforms to fully restore macroeconomic stability and debt sustainability while fostering a sustainable increase in economic growth and poverty reduction.”
Dr. Amin Adam outlined government’s strategic focus on enhancing domestic revenue sources and implementing stringent controls on public expenditure.
This strategy aims to prevent any policy deviations and ensure that economic policies are effectively maintained through the election year.
“This approach is crucial to maintaining economic stability,” Dr. Amin Adam asserted. “We must ensure that our policies are not derailed by the political calendar and that we continue to work towards achieving comprehensive macroeconomic stability and sustainable growth.”
The World Bank plans to triple the provision of guarantees and risk insurance provided around the world to US$20 billion a year.
This will be implemented through a new one-stop-shop loan and investment guarantee platform.
The Breton Wood plans to achieve the target by 2030 and which aims to lift investment in riskier areas from Africa to Ukraine, will combine key units of World Bank, International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA).
“The combination would see it start to back new innovative financing including carbon credits, debt-for-nature swaps and off-grid energy solutions in remote parts of Africa”, Hiroshi Matano, MIGA Executive Vice President, told Reuters last week.
“Guarantees could also be used to attract private sector investors to provide “take-out” financing to replace standard World Bank or IFC loans, freeing up overall lending capacity.”
He said that with guarantee products becoming more mainstream across the World Bank Group, there would be new uses developed for them, adding: “How you use it, I think it’s where we can be really innovative and creative.”
For context, the World Bank Group gave almost $6.5 billion of guarantees last year and is expecting to provide roughly $10 billion this year, so the target will see a huge expansion and swell MIGA’s balance sheet which currently sits at around $30 billion.
Asked whether the annual amounts could even top the $20 billion target he added World Bank president “Ajay (Banga) wants us to be ambitious, so if there is demand, of course, we’ll consider that.”
The changes are the first tangible results from a group of private-sector investment executives assembled last year by Banga, dubbed the Private Sector Investment Lab, to develop ideas to draw more private capital to clean energy and other investments in developing countries.
The plan aims to simplify guarantee products into a single comprehensive menu that would allow clients to easily identify and select the instrument best suiting their needs. A new common approach should standardize guarantee reviews, replacing a patchwork of different processes, rules and standards.
Total trade volume between Ghana and the European Union reached €6.0 billion in 2023, the Ministry of Trade and Industry have indicated.
This reflected Ghana’s net exports to the EU €2.6 billion while import from the EU to Ghana recorded €3.3 billion.
The data further indicatesld that, Ghana’s export saw a notable increase of 8 percent in 2023, rising to €2.6 billion from €2.4 billion the previous year. Contrary, imports from the EU to Ghana fell from €3.7 billion in 2022 to €3.3 billion in 2023.
“2023 export from Ghana saw an 8 percent increase, rising from some 2.4 billion euros to 2.6 billion euros, while import from the opposite direction experienced, unfortunately, some 11 percent decline, 3.7 billion euros to 3.3 billion euros,” Minister for Trade and Industry KT Hammond reassured investors of Ghana’s favourable investment climate while speaking at the 2nd Ghana-EU Business Forum.
The forum, themed “Fostering Investment in Non-Traditional Chains Under EU Global Gateways Strategy,” aimed to strengthen trade and investment ties between Ghana and the EU.
Deputy Director-General of the European Commission, Directorate-General for International Partnerships, Myriam Ferran, highlighted the EU’s dedication to bolstering trade and investment relations to meet the Sustainable Development Goals (SDGs).
“This strategy is definitely the strategy of the European Union to engage with like-minded partners in building sustainable infrastructure and connectivity around the world, and this is the EU’s offer for sustainable bonds in full partnership.
“This is extremely important for us because in the everyday more challenged world in which we live, not to speak about the geopolitical consequences of the Russia-Ukraine war or what’s happening in Gaza,” the Deputy Director-General of the European Commission noted.
During the forum, the European Union launched a 32 million euro Special Measure on Manufacturing and Access to Vaccines, Medicines, and Health Technologies in Africa (MAV+).
This initiative aims to support the development of vaccine manufacturing and the pharmaceutical industry in Ghana.
Ghana is a member of the African Union as well as of other major international bodies. It is a longstanding member of the World Trade Organization (WTO), a founding country of the regional Economic Community of West African States (ECOWAS) and an early supporter of the African Continental Free Trade Area (AfCFTA), signed in 2018. The Secretariat of the AfCFTA is based in Ghana’s capital, Accra.
Ghana is becoming increasingly engaged in international trade. Over the last 20 years, Ghana’s international trade has significantly increased. Hence, while in 2002 the country’s total value of exports and imports were US$4.9 billion, it reached US$32.4 billion by 2022. In parallel, while Ghana’s balance of trade during the period 1990-2010 was dominated by imports, the last years (2017-2022) have shown a balance of trade surplus (US$6.71 billion in 2022) driven by a boost in exports of crude oil, gold and cocoa beans. However, Foreign Direct Investment (FDI) inflows to Ghana have somewhat stagnated in the last ten years (below $3 billion per year).
Since 2016, Ghana is implementing an Economic Partnership Agreement (EPA) with the EU. The EU-Ghana EPA is a trade and development agreement under which Ghanaian exporters benefit from duty-free and quota-free access to the EU market. Equally, under the EPA, Ghana has agreed to open gradually (from 2021 till 2029) its market to around 80% of EU products, which will increase the country’s competitiveness in the regional markets. Products that are sensitive in Ghana are excluded from liberalisation. Additionally, the EU is providing Ghana with development cooperation and financial adjustment support to help with the implementation of the iEPA. In addition, the EU is providing technical assistance to the Ministry of Trade and Investment for managing all obligations from the Agreement.
The EU continues to be one of the most important trade partners for Ghana. Value of exports/imports with the EU In 2022, the EU was Ghana’s largest source of imports, accounting for 17.4% of Ghana’s imports, ahead of China at 16.8 % and the USA at 11.5 % and the fourth-largest export destination, accounting for 11.3% of Ghana’s export (behind China (23.3%), Switzerland (18.7%) and South Africa (15.7%)). Overall, the EU is accounting for around 13.9% of Ghana’s total external trade in 2022, being the second most important partner after China (20.5%).
