News Guide Africa

Category: News

  • World Bank Approves Grant to Boost Community Access to Carbon Credits.

    World bank

    The World Bank and Solidaridad West Africa (SWA) – leading implementation for Ghana – have signed a grant agreement for a US$4 million project to boost social inclusion in the sharing of benefits generated within the Ghana Cocoa Forest Reducing Emissions from Deforestation and Forest Degradation (REDD+) Program (GCRP).

    By directly engaging 20,000 farmers from 100 communities, including women, youth, migrant farmers, and persons with disabilities, the project promises to significantly enhance their participation in climate action and provide equitable access to emissions reduction benefits.

     

    The project is financed by the World Bank managed Enhancing Access to Benefits while Lowering Emissions (EnABLE) Trust Fund, which promotes social inclusion and gender equality in climate finance. Ghana is the first country to receive an EnABLE grant that supports the Civil Society Organizations (CSOs) distributing benefits earned by communities for reducing emissions and generating high integrity carbon credits.

     

    “This grant signing is a major milestone for amplifying the voices of Ghana’s most vulnerable groups, particularly women, in the climate change discourse,” said World Bank Country Director for Ghana, Liberia, and Sierra Leone, Robert R. Taliercio. “By partnering with organizations like Solidaridad West Africa that have deep roots in local communities, we can ensure equitable access to emissions reduction benefits in cocoa landscapes.”

     

    The project will build capacity to increase the knowledge and skills of target groups to help them engage in the Emissions Reduction Program (ERP). This includes developing communication toolkits tailored to demystify ERP processes and benefit sharing, as well as training programs to foster a deeper understanding of climate action policies. Moreover, the inclusion of these groups in REDD+ processes will foster inclusive dialogue and policy formulation.

     

    The Forestry Commission which is the lead implementer of the GCFRP in partnership with the Ghana Cocoa Board, is enthusiastic about the project as it has the capacity to stimulate the large-scale participation of local communities in sustainable practices, that will generate more emission reductions and removals with resultant payments for community development.

     

    “Within the Carbon Fund Portfolio and beyond, Ghana has become a reference point for the successful implementation of jurisdictional REDD+. We therefore count on the expertise of Solidaridad West Africa and Tropenbos Ghana to implement the EnABLE project to enhance actions to reverse and halt deforestation and forest degradation for people, Forests and Climate benefits at the national and global level,” said, Mr. John M. Allotey, Chief Executive of Ghana’s Forestry Commission. “We are also grateful to the donors of the EnABLE fund and the World Bank for making this possible,” he added.

     

    Other project activities include support for locally led, climate-resilient livelihoods, particularly for women, through the provision of seed grants and technical support as well as support for the development of green infrastructure and the promotion of climate-smart agricultural practices. Legal literacy on land rights is another crucial aspect of the project, focusing on the new provisions in Ghana’s 2020 Land Act, essential for ensuring the participation of women in REDD+ programs that require access to land.

     

    “The future of Ghana’s forests is at the crossroads, and the EnABLE project is coming at a critical time when the country is entrenching its access to the carbon market. Solidaridad is proud to be associated with the project to secure the inclusion of farmers and other local community groups in decision-making and the protection of forests so they can share in the associated carbon benefits that accrue from their efforts,” said Isaac Kwadwo Gyamfi, Regional Director for Solidaridad West Africa. “It is our expectation that the project will ensure that no one is left behind and ultimately stimulate the scale up of inclusivity in other programs and platforms in the landscape.”

     

    The project will be jointly implemented by Solidaridad West Africa (SWA) and Tropenbos Ghana.

     

    “Our approach highlights inclusiveness, gender equality, and social equity to ensure that, all stakeholders can participate meaningfully and benefit equitably from initiatives aimed at mitigating climate change and promoting environmental sustainability,” said Mercy Owusu Ansah, Country Director Tropenbos Ghana. “As local communities, private sector, the government, and other stakeholders work together to reduce emissions by implementing low-carbon ideas and technology in a sustainable manner, they must receive fair and socially inclusive payments as incentives for this action.”

  • Ghana gets US$260m from World Bank to boost energy sector and clean cooking solutions.

     

    World bank

    The World Bank has approved a US$250 million credit from the International Development Association (IDA) and an additional US$10 million grant from the Energy Sector Management Assistance Programme to support a four-year Ghana Energy Sector Recovery Programme for Results (PforR).

    This initiative aims to improve the financial viability of electricity distribution and increase access to clean cooking solutions in Ghana.

    The PforR is expected to provide financing directly to energy sector utilities to implement capital expenditure programs and complement regulatory and policy reforms in the energy sector under the World Bank’s Development Policy Financing series and the ongoing IMF Extended Credit Facility Programme for Ghana.

    The Clean Cooking Component of the programme is designed to increase access for Ghanaian households, schools, and businesses to Liquefied Petroleum Gas (LPG) for domestic and commercial use.

    The PforR will provide direct incentives to subsidize the cost of stoves and accessories.

    The ESRP is expected to offer a wide range of benefits to consumers, including market development, affordability, energy access and equity, health improvements, and environmental protection against air pollution and associated health risks.

    These details were disclosed by the Ministry of Finance in a statement issued last week.

  • First phase of petroleum hub project to begin soon as US$12bn funding secured.

    Petroleum Gas

    Adnan Adams Mohammed

    The first phase of the Petroleum Hub Development Corporation (PHDC), aimed at providing a significant boost to local employment and value for the economy, is set to begin soon as US$12 billion in funding is being secured..

    The Corporation which is private led initiative is targeting to increase Ghana’s Gross Domestic Product by 70 percent by 2036. This is expected to generate substantial tax revenue while supporting the country’s vision of economic self-sufficiency and industrialization.

    PHDC officially signed a US$12 billion agreement with TCP-UIC Consortium last week. The Consortium comprises of Touchstone Capital Group Holdings Ltd., UIC Energy Ghana Ltd., China Wuhan Engineering Co. Ltd., and China Construction Third Engineering Bureau Co. Ltd.

    “This project is a testament to our commitment to industrializing Ghana and creating sustainable jobs for our people”, the Minister of Energy Dr. Matthew Opoku Prempeh said during the signing ceremony.

    The CEO of PHDC, Charles Owusu, expressed optimism about the collaboration with TCP-UIC Consortium, highlighting their expertise and crucial role in the project’s success.

    The ‘Petroleum Hub,’ covering over 20,000 acres of land in the Jomoro Municipal Area in the Western Region, is a multi-phased US$60 billion investment in all, aimed at revolutionizing Ghana’s energy sector and dramatically boosting its economy.

    The key infrastructure includes three refineries, five petrochemical plants, 10 million cubic metre storage facilities, jetties and port infrastructure. The first phase of the project, a cornerstone of Ghana’s industrialization strategy, will focus on establishing some of this critical infrastructure.

    With a capacity of 300,000 barrels per day (bpd), the first refinery will significantly enhance Ghana’s ability to process crude oil domestically.

    The first petrochemical plant will convert petroleum byproducts into valuable chemicals used in various industries, ranging from plastics to fertilizers.

    Also, construction of storage tanks with a capacity of 3 million cubic meters will be done to ensure a steady supply and efficient distribution of petroleum products.

    There is also plan to develop an oil jetty and port infrastructure to facilitate seamless import and export activities.

    Ancillary Infrastructure planned: Include pipelines, power plants, and a cutting-edge laboratory for product testing.

    The hub’s strategic location is poised to make Ghana a pivotal player in the West African petroleum market. The hub will leverage Ghana’s stable political climate, strategic geographic position, and attractive investment incentives to draw further investments and foster economic growth.

    The Petroleum Hub Project will be developed in three phases over the next 12 years.

    After the completion of the first phase, subsequent phases will see the addition of more refineries, petrochemical plants, storage tanks, jetties and port infrastructure and will develop additional support facilities, including Liquified Natural Gas (LNG) terminals.

    The signing of the agreements underpinning the first phase is a significant step towards realizing the full potential of Ghana’s petroleum sector.

    The PHDC remains committed to ensuring that this project drives sustainable economic growth and brings long-term prosperity to the people of Ghana.

  • NDC Zango Caucus lineup formidable campaign team for election 2024…includes former Parl. Leaders

    NDC Running Mate

    Adnan Adams Mohammed

    The Zango Caucus wing of the National Democratic Congress (NDC) party has announced its campaign team members for the 2024 elections.

    The campaign team is blessed with formidable men and women from all walks of life, including former leaders in Ghana’s Parliament; Hon Haruna Iddrisu and Hon Mubarak Muntaka.

    Read Full Press Statement Below:

    PRESS RELEASE ZONGO CAUCUS APPOINTEES-4(1)

     

  • Almost half of Ghanaians enduring severe poverty – GSS report.

    Ghana Statistical Service

     

    Adnan Adams Mohammed

    Data released by the Ghana Statistical Service indicates a worrying situation of widespread extreme poverty levels in the country.

    The Service has revealed that, about 43.8 percent of the population, are currently facing extreme poverty due to various deprivations.

    The data contained in the newest GSS survey report indicates that, the severity of poverty is consistent in both rural and urban areas, highlighting widespread challenges across the nation.

    In terms of multidimensional poverty, the Ashanti Region has the highest number of affected individuals. The region recorded over 900,000 people identified as multi-dimensionally poor.

    Meanwhile, the Savannah Region, stands out with the highest proportion of multi-dimensionally poor residents at 49.5%, nearly double the national average..

    Other regions with significant rates of multidimensional poverty include the Northeast, Upper East, Oti, and Northern Regions.

    Despite having a lower percentage of its population living in poverty, the Ashanti Region leads in absolute numbers, with over 900,000 individuals affected.

    The Northern Region follows closely with over 800,000 people living in such conditions, while the Ahafo Region has the lowest count at about 100,000.

    The report also highlights that in the Savannah, Northeast, Upper East, and Northern Regions, more than half of the rural population is living in multidimensional poverty.

    Additionally, it notes that female-headed households, large households, and those headed by youths or elderly persons are more likely to experience multidimensional poverty, driven primarily by employment and living conditions.

  • Petroleum revenue plummet 25% amidst declining production.

    Crude oil production

     

    Adnan Adams Mohammed

    Ghana’s receipt into its Petroleum Holding Fund (PHF) significantly reduced by 25.65 percent in 2023 as against 2022 receipts to record US$1,06 million.

    The receipts was made of Carried and Participating Interest (CAPI) which contributed 44.31 percent, followed by Corporate Income Tax (CIT) and Royalties with 34.38 percent and 20.67 percent respectively.

    However, total proceeds from JOHL liftings received in 2023, amounting to US$70.46 million were not paid into the PHF for the second consecutive year. This brings the cumulative proceeds of unpaid revenue into the PHF by JOHL to US$343.11 million as at end of 2023 as contained in the PIAC 2023 report.

    These were as result of crude oil production decline for the fourth consecutive year in 2023. Production dropped from a high of 71.44 million barrels in 2019 to 48.25 million barrels in 2023 representing an annual average decline of 9.2 percent.

    “PIAC reiterates its position that proceeds from liftings of JOHL and other subsidiaries of GNPC constitute petroleum revenues within the meaning of Section 6(e) of the Petroleum Revenue Management Act, 2011 (Act 815) and Section 2 of the Petroleum Revenue Management (Amendment), 2015 (Act 893), and therefore must be paid into the PHF”, the report recommended.

    Also, Surface Rental owed by IOCs remain high at US$2,738,365.29 as at the end of 2023. The Committee however tasked the Ghana Revenue Authority (GRA) to intensify its efforts to recover the Surface Rental arrears with the usual default penalties applied.

    ALLOCATION AND UTILISATION OF PETROLEUM REVENUE
    Out of the total actual petroleum receipts for the period,the statutory allocation of the PHF were; GNPC received US$245.59 million, Annual Budget Funding Amount received US$485.97 million, and the GPFs US$330.58 million.

    On expiry of the Priority Areas for 2020 to 2022, new Priority Areas were selected for the utilisation of the ABFA for the period 2023 to 2025. The selection of Priority Areas every three (3) years has become necessary because of the absence of a long-term national development plan approved by Parliament.

    However, PIAC observed that, since the coming into force of the PRMA in 2011, the use of the ABFA has been guided by a medium-term development strategy, without a long-term national development plan approved by Parliament.

    The Committee therefore restates its recommendation that, the selection of the ABFA Priority Areas must be guided by a long-term national development plan approved by Parliament in conformity with the Act.

    Meanwhile, the ABFA amount disbursed to support the Agenda 111 project was
    GH¢758.98 million in 2023. This brings the total ABFA contribution to the Project to GH¢1,708.29 million, amounting to 65.24 percent of the total spending on the project, which is GH¢2.6 billion.

    Additionally, allocation and disbursements of annual ABFA to the Industrialisation Priority Area has reduced from 1.15% in 2020 to 0.11% in 2023, thereby undermining the essence of prioritisation.

    The Committee urges the Ministry of Finance to demonstrate the essence of prioritisation by the amount of ABFA disbursed to the Industrialisation Priority Area.

    Also, an amount of US$24.30 million (GH¢270,907,662.28), representing 5 percent of the 2023 ABFA, was disbursed to the DACF in compliance with the decision of the Supreme Court of Ghana in the case of Kpodo and Another vrs Attorney General in 2019, to transfer at least 5
    percent of the ABFA to the Fund.

    While it is commendable that the Ministry of Finance disbursed five (5) percent of the ABFA to the DACF, the Committee urges the Ministry to ensure that subsequent disbursements to the DACF meet the minimum requirements of five (5) percent of the ABFA.

  • PIAC sensitizes media on 2023 report.

    Public Interest and Accountability Committee

    By Stephanie Nkrumah

    The Public Interest Accountability Committee (PIAC) has organised a sensitisation workshop for media persons to deepen understanding and share knowledge on its 2023 annual report.

    The two-day workshop was to discuss the 2023 annual report to help the media be aware with the findings and recommendations on how Ghana’s petroleum revenue receipts are utilized

    The 2023 Annual Report is in fulfilment of PIAC’s statutory obligation under the Petroleum Revenue Management Act, 2011 (Act815), as amended by Act 893, to publish Semi-Annual and Annual Reports.

    “This Report is a reconciliation of data supplied by stakeholder institutions, and an independent assessment of the collection, management, and use of the country’s petroleum revenues”, PIAC indicated in the report.

    Mark O. Agyemang, Technical Manager at PIAC, in a his presentation commended GNPC for its role in managing Ghana’s interest in oil upstream petroleum activities for over 30 years since its establishment.

    However, he emphasised that, “the NOC must start refocusing on its core mandate , and increase its efforts at becoming a viable stand alone operator.”

    “Additionally, to survive and thrive in the energy transition , the GNPC needs to rethink its strategy and business models and explore new opportunities and markets”, he added.

  • Africa’ll be the pivotal continent in the world, given its economic prospects: AfDB President .

    In a packed auditorium at the renowned Chatham House, African Development Bank President Group Dr Akinwumi Adesina delivered an inspiring address to a diverse audience of diplomats, investors, academics, politicians, and media, emphasizing Africa’s untapped potential and abundant opportunities.

    In his presentation on, “Envisioning Africa’s Economic Prospects,” Adesina explained the reasons behind his optimism and passion for Africa.

    The Bank Group president said Africa is a continent of tremendous opportunities. It is endowed with and characterized by a young, dynamic and vibrant workforce, massive renewable energy potential, abundant biodiversity resources, rapid regional integration and innovative solutions designed to unlock the continent’s vast natural capital.

    Africa Development bank

    He cited the Bank’sAfrican Economic Outlook Report, which shows the the continent’s 3.7% economic growth for 2024, increasing to 4.3% in 2025. The report which was launched during the Bank’s May Annual Meetings in Nairobi revealed that 15 countries achieved real growth rates of at least 5 percent, and half of the world’s 20 fastest-growing economiesare in Africa.

    However, he said achieving strong economic prospects and resilience will require overcoming some significant headwinds, including tackling climate change and rising debt, and through critical global financial reforms.

    “As Africa’s economic resilience is bolstered, unlocking its economic prospects requires ensuring structural change of its economies, raising the productivity of agriculture, provision of electricity, accelerating infrastructure investments, supporting faster pace digitalization, unleashing economic and job opportunities for women and youth, and driving industrialization through greater mobilization of the private sector,” he stated.

    Addressing infrastructure and agricultural production, Adesina shared successes like the Bank’s flagship Technologies for African Agricultural Transformation (TAAT) program, which has helped 13 million farmers to increase crop productivity. In Ethiopia, the distribution of 65 metric tons of heat-resistant wheat has led to self-sufficiency in wheat production, covering 2.2 million hectares.

    The event, attended by over 150 guests in person and hundreds more virtually, included diplomats from more than 18 African countries, the Commonwealth Secretariat, international financial institutions, private and corporate investors, startups, civil society, students and academics from some of the UK’s leading academic institutions and international media houses.

    Adesina acknowledged challenges such as youth unemployment, poverty, debt vulnerability, and political instability but dispelled perceptions of Africa as a risky investment destination. He referenced a 14-year Moody’s Analytics study showing Africa’s low infrastructure loan default rate at 1.9 percent, compared to between 4.6 and 12.4 percent in other regions around the world.

    He reiterated the Bank’s advocacy for an independent African credit rating agency to counteract misperceptions that lead to underinvestment due to excessive risk premiums. Quoting the United Nations Development Program, Adesina said fairer credit ratings for African countries could save at least $75 billion annually in debt service payments.

    “The trajectory for Africa will be much stronger as we tackle these challenges, as well as improve security and expand more concessional financing and private sector financing,” he emphasized.

    Repositioning the Bank to do more

    Adesina recalled theBank Group shareholders’ recent approval of a $117 billion callable capital increase, raising the Bank’s total authorized capital to $318 billion to preserve its AAA credit rating and enhance its lending capacity. The approval announced during the just concluded 2024 annual meetings of the Bank will align the institution with the changing global financial architecture and enhance its support for the continent.

    “We’re going to be bigger, bolder, and better,” he declared, predicting Africa’s rise as a pivotal global region.

    Reflecting on the Bank’s achievements, Adesina highlighted the Bank’s successful launch ofsustainable hybrid capital, marking the first such issuance by a multilateral development bank in line with the G20 Capital Adequacy Framework recommendations to boost lending capacity. The transaction won global commendation,including from the G7 finance ministers(link is external)and central bank governors.

    Adesina also cited the Bank’s Alliance for Green Infrastructure In Africa (AGIA),which the G7 has backed with a $150 million contribution. AGIA is working to leverage $3 billion in private sector investment for green projects.

    He also mentioned the $20 billion Desert-to-Power project in the Sahel to generate 10,000 megawatts of solar power for nearly 250 million people across 11 countries. When completed, it will be the largest solar zone in the world. In addition, Adesina and the President of the World Bank Group Ajay Banga recently announced a joint effort by their two institutions to connect 300 million Africans to electricity by 2030.

    The Bank Group president praised the recent International Monetary Fund approval of $20 billion Special Drawing Rights channeling for hybrid capital in line with proposals by the African Development Bank and the Inter-American Development Bank.

    “The African Development Bank is mobilizing more private sector investments into Africa. We supported the $24billion LNG (Liquified Natural Gas) project in Mozambique, which will provide over $66billion in revenue for Mozambique and make it the third-largest exporter of LNG in the world. We supported the $19.5billion Dangote Refinery Complex, the largest single-train refinery in the world and the largest ammonia plant globally. We supported the $13billion OCP phosphate company in Morocco, the largest phosphate fertilizer plant in the world,” he said.

    He said these achievements have fuelled the Bank’s ambitions as reflected in its new ten-year strategy (2024-2033), which outlines the vision of an Africa that is prosperous, inclusive, resilient and integrated. “Africa can no longer be ignored. I fully expect Africa to be the pivotal continent in the world, given its economic prospects,” he said.

    He said that the future of energy transition for a world primarily powered by renewable energy will depend on Africa, which accounts for 25 percent of global biodiversity and contributes substantially to providing key minerals. According to African Development Bank estimates, Africa’s natural capital stood at $6.2trillion in 2018, with mineral and fossil fuel resources alone valued at $290billion and $1.05trillion, respectively.

    He said Africa must work out how to tap the potential of its youth, turning this asset into an economic dividend.

    “We are supporting universities of science and technology, expanding training in science, technology, engineering and mathematics, centers of excellence in biotechnology and material sciences, as well as technical and vocational training. We have committed $700million to education and skills development, which has supported 4,000 tertiary education and training facilities, and provided 1.7million African youths with access to science, technology, engineering and mathematics education, providing critical digital skills in computer coding.” He added that the African Development Bank is also focusing heavily on women. “The African Development Bank’s flagship initiative, Affirmative Finance Action for Women in Africa (AFAWA), is de-risking financial institutions to lend to women. It is working with 169 financial institutions in 43 countries and has so far approved $1.7billion in financing for 18,300 women-led businesses. Our goal is to mobilize $5billion for women-led businesses.”

    He also mentioned the Africa Investment Forum, founded by the Bank group and seven other partners, saying it continues to provide a transparent platform for investors interested in Africa to meet, assess projects, evaluate risks, seek counter-risk mitigants, as well as address political risks to investors. Since the establishment of the Africa Investment Forum in 2018, it has attracted investor interests in Africa worth over $180billion.

    He expressed optimism that Africa’s prosperity is within reach and it will emerge as a pivotal continent: “Africa is critical to the future of the world. It’s a vision Africa deserves and it’s a vision we’ll achieve.”

  • Central Banks’ profits and losses – Where do they come from?

    Central Banks’ profits and losses – Where do they come from?

    The European Central Bank (ECB) in a podcast published on February 23, 2023, has explained the sources of central bank profits and losses, and whether it did matter whether central banks made a profit or loss.

    The release, which was done after the ECB had released its financial statement for the year ended 2022, stressed on the primacy of central bank’s mandate of keeping prices low, hence, are not expected to negate this role and avoid losses in order to report handsome profit.

    “In today’s difficult economic environment central banks across the world are either making or warning of losses. It’s important to remember though that central banks are not like ordinary companies; they can lose money and still operate effectively” the podcast stated. Even though the conversation was on where profits and losses could come from in the context of the ECB and the central banks in the 20 countries using the Euro, it provided insightful information that explained how and why central banks globally incur losses.

    Central Banks

    “We are a public institution and like an ordinary company we can make profits and losses but making profits or avoiding losses at all costs is not our aim, our aim is to keep prices stable”, the podcast explained, further stressing that profit is “basically a by-product of what we do, of our mandate”.

    Analysing the composition of cost to the ECB, the podcast explained that “when banks deposit money with us, and banks do deposit money with us because they have accounts with us just like citizens have accounts with commercial Banks, commercial banks have accounts with the Euro system and we pay interest rate on these deposits and that’s, I would say, the biggest source of costs”.

    The ECB sets three interest rates, and one of them is the deposit facility rate, at which rate the ECB pays interest to the banks. This is similar to the cost of open market operations that some central banks use to mop excess liquidity from the economy.

    “These losses that we’ve seen this year have been down to different things, some of them a little bit tricky to explain than others, but this last point that we talked about, the interest rates, this is key here because they’re closely linked to some of those losses. I just want to zoom out a second to look at the economic environment that we’re in right now because it’s also important. Inflation is high and we are raising our key interest rates to tackle that including the deposit facility”, the ECB explained.

    It may be recalled that the Bank of Ghana released its Annual Report and Financial Statements just a few weeks back, depicting a cost of GHc8.3 billion on its open market operations to tame inflation. This cost incurred has proved significant, as the mopping up exercise contributed to the reduction of inflation by more than 30 percentage points, from a high of 54.1% at the end of December 2022 to 23.2 % at the end of December 2023.

    The Bank of Ghana has further explained that keeping inflation low and stable was a precondition for economic growth and that within a floating exchange rate regime it also contributes to exchange rate stability. The Bank of Ghana’s medium term inflation target is 8%, however, the central bank accepts fluctuations of plus/minus 2% of this target.

  • Traders lament unfavorable VAT regime .

    Some traders are urging the government to amend the Value Added Tax (VAT) Act to facilitate its smoother implementation across the country.

    But, the Ghana Revenue Authority (GRA) has explained that the VAT Act mandates a value-added tax on the supply of goods and services within the country, excluding exempt items, as well as on the importation of goods and services.

    The VAT is charged on taxable supplies made by taxable persons during their taxable activities, and on imported goods under the laws and regulations applicable to customs duties and other import taxes, with necessary modifications.

    Traders acknowledge the legal backing of the VAT Act and express their willingness to comply. However, they argue that the current implementation poses significant challenges and casts traders in a negative light among consumers.

    A concerned trader, who preferred to remain anonymous, highlighted in an exclusive interview that the VAT implementation undermines business growth efforts.

    He criticized the GRA’s aggressive enforcement tactics, which deters business diversification.

    Ghana Revenue Authority

    Explaining the situation of double taxation, he added that the retailer goes to the factory and pay all the levies and the VAT.

    Which he complies without any problem and add to the cost of the item.

    Then he is required by the current law to add again same levies and VAT again for the consumer to pay.

    The consumer can choose to go to the non- registered retailer or the 4% retailer or the 18.5% and all rational consumers will like to buy at low cost.

    He explained that in local parlance, VAT is referred to as “Fabi Tuudo Ma Aban,” meaning “add to the price for the government.”

    He questioned why businesses should face penalties for failing to collect VAT when they are unable to pass it on to consumers, who often opt to buy from VAT-unregistered distributors.

    He pointed out that many businesses end up using their profits to pay VAT because consumers prefer to purchase from vendors who do not charge VAT.

    The GRA’s compliance measures, involving armed police and camera crews, exacerbate the situation, making business owners feel criminalized.

    The trader proposed that VAT should be incorporated into the factory price of goods, thereby eliminating the option for consumers to buy from unregistered dealers.

    This would ensure uniform pricing across all distributors and prevent VAT avoidance.

    He also highlighted the cumbersome nature of VAT calculations, which discourages compliance.

    For instance, a commodity sold at GHS 199 inclusive of VAT at the factory level can be sold at 124 GHS inclusive of VAT by distributors with a turnover below GHS 500,000, and at GHS 142 by those above the threshold.

    This discrepancy allows buyers to choose cheaper options, often from unregistered dealers. The trader suggested that incorporating VAT into the product price for all distributors to sell at the same price would resolve these issues.

    He cited the example of varying cement prices as a result of the current VAT implementation system.

    By addressing these challenges, traders believe that the VAT system can be made more efficient and equitable, benefiting both businesses and the economy at large.

    lament unfavorable VAT regime

    Some traders are urging the government to amend the Value Added Tax (VAT) Act to facilitate its smoother implementation across the country.

    But, the Ghana Revenue Authority (GRA) has explained that the VAT Act mandates a value-added tax on the supply of goods and services within the country, excluding exempt items, as well as on the importation of goods and services.

    The VAT is charged on taxable supplies made by taxable persons during their taxable activities, and on imported goods under the laws and regulations applicable to customs duties and other import taxes, with necessary modifications.

    Traders acknowledge the legal backing of the VAT Act and express their willingness to comply. However, they argue that the current implementation poses significant challenges and casts traders in a negative light among consumers.

    A concerned trader, who preferred to remain anonymous, highlighted in an exclusive interview that the VAT implementation undermines business growth efforts.

    He criticized the GRA’s aggressive enforcement tactics, which deters business diversification.

    The trader emphasized specific difficulties in the hardware distribution sector, where the VAT implementation resembles double taxation.

    Explaining the situation of double taxation, he added that the retailer goes to the factory and pay all the levies and the VAT.

    Which he complies without any problem and add to the cost of the item.

    Then he is required by the current law to add again same levies and VAT again for the consumer to pay.

    The consumer can choose to go to the non- registered retailer or the 4% retailer or the 18.5% and all rational consumers will like to buy at low cost.

    He explained that in local parlance, VAT is referred to as “Fabi Tuudo Ma Aban,” meaning “add to the price for the government.”

    He questioned why businesses should face penalties for failing to collect VAT when they are unable to pass it on to consumers, who often opt to buy from VAT-unregistered distributors.

    He pointed out that many businesses end up using their profits to pay VAT because consumers prefer to purchase from vendors who do not charge VAT.

    The GRA’s compliance measures, involving armed police and camera crews, exacerbate the situation, making business owners feel criminalized.

    The trader proposed that VAT should be incorporated into the factory price of goods, thereby eliminating the option for consumers to buy from unregistered dealers.

    This would ensure uniform pricing across all distributors and prevent VAT avoidance.

    He also highlighted the cumbersome nature of VAT calculations, which discourages compliance.

    For instance, a commodity sold at GHS 199 inclusive of VAT at the factory level can be sold at 124 GHS inclusive of VAT by distributors with a turnover below GHS 500,000, and at GHS 142 by those above the threshold.

    This discrepancy allows buyers to choose cheaper options, often from unregistered dealers. The trader suggested that incorporating VAT into the product price for all distributors to sell at the same price would resolve these issues.

    He cited the example of varying cement prices as a result of the current VAT implementation system.

    By addressing these challenges, traders believe that the VAT system can be made more efficient and equitable, benefiting both businesses and the economy at large.