All things being equal, Ghana’s $3 billion extended credit facility programme second review by the International Monetary Fund Staff Level team is ready to be presented the Board for consideration before June ending, a senior official of IMF has said.
The second staff review, if approved by the Board will pave way for the release of $360 million more as the third tranche of the $3 billion facility.
International Monetary Fund
The IMF staff team and Ghana’s team reached a staff-level agreement for the second review of the programme in April this year. Already, Ghana has received $1.2 billion in two separate $600 million tranches.
“The aim is to bring the review to the IMF’s Executive Board before the end of June, and once approved by the Board, the review would give Ghana access to about $360 million,” Ms. Julie Kozack, Director of Communications of the International Monetary Fund (IMF), has said at a press conference in Washington, D.C. last week.
She noted that Ghana’s exonomy has seen progress since the programme started.
“The authorities’ strong policy and reform efforts under the programme are bearing fruit, and signs of economic stabilisation are emerging.”
She added: “Growth, for example, in 2023, was higher than anticipated, and the growth projections are being revised upward.”
Also, she noted: “Inflation has been declining rapidly, the fiscal and external positions have improved, and exchange rate volatility has declined quite significantly.”
“The authorities are making good progress on their comprehensive debt restructuring.” “The domestic debt exchange was completed last year, and on January 12th, the government reached agreement in principle with its official bilateral creditors.”
‘Ghana is also engaging with external private creditors to seek their support”, Ms Kazack added.
The Minority Caucus in Ghana’s Parliament is alarmed with the value of tax waivers government is set to request on behalf of the companies under the One District One Factory (1D1F).
The tax waivers amounting to over $335 million meant for 42 companies are awaiting parliamentary approval. Among the beneficiaries is the newly established Sentuo Oil Refinery Limited, set to receive the largest exemption of $164.6 million.
Ghanaian Parliament
In 2021, the Ministry of Finance initiated efforts to secure approximately $335 million in tax exemptions for these companies, part of the 1D1F initiative.These exemptions fall under the Exemptions Act, 2022 (Act 1083), presented to Parliament by former Finance Minister Ken Ofori-Atta. Yet, the obvious politicisation of such critical issue that needs patriotic scrutiny have started.
“It is the considered view of the Minority that these requests for tax exemptions running into several billions of cedis, are unconscionable, inordinate and bear all the trappings of organised crime”, Minority Leader, Dr Cassiel Ato Forson criticised the exemptions.
“..We in the Minority are serving notice that we shall resist these tax waiver applications fiercely! In their current forms, we shall resist each and every one of the tax waiver applications with all the tools and strategies at our disposal.”
Hon Ato Forson, a prominent figure in the Minority, has strongly opposed advancing the entire exemptions list from the committee stage, citing irregularities with some listed companies and their respective requested amounts in tax exemptions.
“The phenomenon of tax exemption as an avenue for corruption is a frightening development that threatens the domestic revenue reforms that the state is currently undertaking … The effect of these new taxes will result in the poor becoming poorer, suffocating industries and businesses and further increasing the hardships Ghanaians are already experiencing. This government is simply robbing Peter to pay Paul by exacting taxes from Ghanaians, only to dole out huge tax exemptions to their cronies for kickbacks. It is for this reason that we call on all Ghanaians to join us in this fight.”
Meanwhile, the Majority Leader, Mr Alexander Afenyo-Markin, has also criticized the delays in the approval of the waivers as a deliberate move by the Minority to hinder the government’s efforts to attract investment into the country.
Hon Afenyo-Markin accused that, the process has been impeded by extensive parliamentary delays, particularly due to demands for further deliberation and scrutiny by members of the Minority caucus.
“The Minority also rejected a proposal to present 15 companies, deemed free of irregularities, to the floor of Parliament, leaving the Majority Leader visibly frustrated. While some arguments against presenting the list may have merit, the prolonged delay—now in its fourth year—raises concerns about an intentional effort to obstruct the government’s agenda.”
The 1D1F initiative aims to transform Ghana’s economy from one reliant on raw material imports and exports to a manufacturing and value-added export economy.
This private sector-led initiative involves government support to enable businesses to secure funding and additional assistance from government agencies to establish factories.
This initiative aimed to signal to the international investor community that Ghana is a favourable environment for business, thus boosting economic contributions.
These exemptions are designed to reduce operational costs, making it more attractive for businesses to establish and expand their operations.
Without these incentives, affected companies may scale back their plans, leading to slower industrialization and fewer job opportunities, thereby undermining the 1D1F programme’s objectives.
Moreover, the ongoing impasse could negatively affect investor confidence in Ghana.
The perception of political gridlock and uncertainty surrounding the tax exemption process may deter potential investors, who fear similar bureaucratic hurdles and a lack of policy consistency in the future.
It is imperative for Parliament to leverage its unique numerical composition to foster strong bipartisan relations for the benefit of Ghana.
Healthy bipartisan collaborations invariably create more stable environments that favour businesses, irrespective of the government in power.
Ensuring the timely approval of these tax exemptions could enhance Ghana’s industrialization efforts and signal to the global investor community that the country is committed to creating a conducive business environment.
As the situation unfolds, the focus remains on whether Parliament can resolve these delays and move forward with the necessary approvals to support the 1D1F programme and the broader economic goals of the nation.
The Minority Caucus in Ghana’s Parliament has raised concerns over the government’s recent borrowing of GH¢7 billion from the treasury bills market to cover expenses outside its budgetary allocations.
According to the Minority, this practice of extending expenditure beyond the budget for political purposes is exacerbating the depreciation of the cedi against the dollar.
Cedi depreciation
They abhor the government’s management of the Ghanaian cedi, warning that it could jeopardise the International Monetary Fund (IMF) programme by year-end.
“This [IMF] programme is likely to derail by the end of this year, and recovery could take a significant amount of time”, Dr Ato Forson, Minority Leader in Parliament noted in an interview last week. Adding that, “I have strong convictions” that the programme will not stay the course.
“Let’s observe how it unfolds,” he emphasised, putting it all down to fiscal policies.
He said the government was “on course” but pointed out: “As you know, the review dates back”.
“So, the next review is going to use the data as of December last year. So, the programme indicators to check whether the programme is performing or not is going to use data six months before the time of review. So, obviously, six months before, it was good. But I can tell you that based on the data and the way they are conducting the affairs of the policy going forward, there is going to be a complete commotion,” he said.
Dr. Forson, criticised the government’s fiscal strategies, indicating that efforts to stabilise the national currency are inadequate and may pose risks to the economy.
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All things being equal, the Ghanaian economy is set receive a US$200 million boost from the ECOWAS Bank for Investment and Development (EBID) aimed at forstering a transformative partnership. The disbursement of such funds will be through a strategic alliances with the Ghana Export-Import Bank (GEXIM) and GCB Bank PLC. The USD 200 million injection is intended to stimulate the growth of Small and Medium Enterprises (SMEs) in critical sectors of the economy, foster job creation, innovation, and sustainable development. This injection will bring EBID’s total commitments in Ghana to USD 600 million. This was contained in a Memorandum of Understanding (MOU) signed
ECOWAS
and Dr. Mohammed Amin Adam, Minister for Finance of the Republic of Ghana, at a ceremony held at the EBID headquarters in Lome, Togo.
The signing ceremony was attended by key stakeholders, including Mr. Lawrence Agyinsam, Chief Executive Officer of GEXIM, and Mr Samuel Aidoo, Executive Director, Wholesale, and Investment Banking at GCB Bank PLC, among others. The agreement epitomises EBID’s unwavering dedication to fostering economic growth and shoring up resilience across the ECOWAS Member States.
Dr. Donkor, during his address commended Ghana for its steadfast support through the payment of its subscribed share of capital, and other commitments to the bank. He emphasised that the tripartite alliance between EBID, GEXIM, and GCB Bank PLC exemplifies EBID’s strategic thrust to bolster the recovery and transformation agenda of Member States by channeling vital resources into pivotal sectors of their economies.
According to him, this collaborative involvement underscores EBID’s commitment to forging partnership synergies within the finance and investment domain, serving as a trailblazing model for future regional collaborations and investments.
In his response, Dr. Amin Adam highlighted the importance of organisations like EBID in driving sustainable transformation, especially amidst prevailing global challenges. He lauded the profound impact of EBID under the leadership of Dr. Donkor and expressed unwavering optimism regarding the Bank’s continued role in shaping the region’s developmental agenda.
International Monetary Fund’s Executive Board has approved a hybrid capital as an eligible instrument for channeling of Special Drawing Rights (SDRs).
This has received commendation from the African Development Bank Group (AfDB) and the Inter-American Development Bank (IDB).
The SDR-hybrid-capital based solution proposed by the African Development Bank and the Inter-American Development Bank meets the IMF’s statistical criteria for international reserve-asset status. As such, according to IMF rules, countries that lend their SDRs through this pioneering approach can continue to account for them as reserves.
This innovative SDR-based hybrid capital channeling solution will help unlock new lending by Multilateral Development Banks to address rising global challenges, including climate and food security. The new instrument offers the opportunity to lend at least US$4 for every US$1 equivalent of SDRs, through the African Development Bank and, the Inter-American Development Bank, and other Multilateral Development Banks, to finance development projects.
At a time of multiple crises and scarce resources for development, this is a unique value proposition for governments everywhere. The next step is to secure at least five investors to channel their SDRs through Multilateral Development Banks. The African Development Bank and Inter-American Development Bank will continue their dialogue with SDR holders to drive forward this innovative financial solution.
“The International community now has at its disposal an innovative approach through which development financing can be mobilized with a multiplier effect and at no cost to taxpayers. These are the types of solutions we need to help us tackle Africa’s growing development challenges,” said African Development Bank President Dr Akinwumi Adesina.
“We very much welcome the IMF Executive Board’s decision,” said InterAmerican Development Bank President Dr Ilan Goldfajn. “With the new SDR-based hybrid-capital instrument, we have a cost-efficient way to finance much-needed sustainable development projects to boost climate resilience, reduce poverty and inequality, and lay the foundation for more inclusive growth in many of our countries.”
The G20 has recommended that Multilateral Development Banks optimize the use of their balance sheets through financial innovation to create additional lending capacity to help countries tackle urgent development challenges.
In April, the leaders of 10 Multilateral Development Banks published aViewpoint Note(link is external)and announced joint steps to work more effectively as a system and increase the impact and scale of their work.
The SDR(link is external)is an international reserve asset created by the IMF to supplement the official reserves of its member countries. Its value is based on a basket of world currencies (US dollar, Euro, Chinese Yuan, Japanese Yen and British Pound).
The IMF’s most recent general allocation of SDRs to its members was in 2021, when the equivalent of $650 billion was issued to help countries respond to the COVID-19 pandemic.
Over the years, Ghana’s cocoa sector is faced with challenges which is evident in the cocoa bean production.
Among the factors causing the challenge is the influx of illegal miners who are destroying cocoa farms, delay in fertilizer supply to farmers, delayed rehabilitation of old cocoa trees among others.
These situation threatens that, Ghana could lose its enviable position as the second leading cocoa producer in the world if stringent measures are not taken to protect cocoa farms from illegal mining activities.
Ghana’s cocoa sector
Ghana is currently the second leading producer of cocoa in the world after Ivory Coast. Ghana also produces the world’s premium cocoa beans, making the commodity from the country the best preferred.
However, the General Secretary of GAWU, Edward Kareweh has noted that, other countries are making strong efforts to overtake Ghana in cocoa production by developing sustainable environmental practices.
He stated that more farmers are abandoning their farms due to the level of water pollution in farm areas.
“It’s no more lucrative to be in cocoa production. There are many factors which are real. Even the cocoa farmers who are patriotic and insist that they will not sell their farms and stay with their farms are forced to sell them out”.
He disclosed that while government looks on unconcern, illegal miners are forcibly ceasing cocoa farms with impunity for mining.
Mr. Kareweh said contaminated water bodies are diverted to cocoa farms, destroying the plants.
“The illegal miners will flood your farms with all the dirty water and will take your farm by force. You cannot even enter the farm again. It is so pathetic and heartbreaking that we can sit down and allow such a monumental criminal act to continue. This crime is against generations to come”.
Sounding distressed, Mr. Kareweh said it is a matter of time for Ghana to lose its production capacity and long good will as the country with the premium cocoa beans.
It is therefore imminent that, the president shows a personal interest in the current situation and come down to the level of the farmers to acquaint himself to the realities of the factors causing the challenges, so as to proffer pragmatic and nationalistic solutions.
According to data from statistica.com; in 2024, the contribution from the cocoa sector to Ghana’s Gross Domestic Product (GDP) is projected to experience a rise by three percent.
In 2021, the growth rate was registered at 10.4 percent. Moreover, the cocoa sector’s contribution to the GDP has been projected to grow by five percent in 2027.
In 2023, cocoa in Ghana was forecast to contribute GHC3.15 billion, around US$262.8 million, to the country’s Gross Domestic Product (GDP). The value was measured at GHC3.1 billion (roughly US$258.6 million) in 2021.
Also, the agricultural product was expected to account for GHC3.75 billion (around US$312.9 million) of the country’s GDP by 2027, the highest contribution within the period observed.
Meanwhile, in 2021/2022 crop season, an estimated 689,000 metric tons of cocoa beans were produced in Ghana.
These are significant contribution to the Ghanaian economy.
African Risk Capacity (ARC) welcomed leading partners in Africa’s climate and food security space to the Africa Climate Roundtable this week.
Held in Johannesburg South Africa from 7th to 8th of May, the Roundtable addressed key challenges facing Africa’s climate action and food security landscape, seeking to drive collaboration, innovation and the coordination of efforts between countries as well as financial institutions.
A global audience of attendees included policymakers, industry leaders and researchers exploring innovative technologies and strategies aimed at mitigating climate change impacts and promoting sustainability.
Key takeaways from the Roundtable included:
Accelerate Funding to Africa: Financial commitments made at climate conventions need to be honoured, and existing climate funds must be accessible and efficiently managed. The focus should be on adaptation measures, attracting private sector capital, and leveraging domestic resources. Issues include:
Attracting more private sector capital to adaptation efforts by selling the opportunities, rather than positioning the issue as a social one.
Developing risk-sharing models to attract private investment into climate change initiatives, particularly adaptation. The AGF guarantees for SME lending is one example. More need to be developed in collaboration with financial institutions and other stakeholders, or shared, where they exist.
Mobilising Development Finance Institutions to leverage their balance sheets and risk profile to provide more affordable and accessible finance.
Domestic resource mobilisation efforts must be leveraged to boost climate funding at source. Resources include the capital assets of the African banking network, capital markets, diaspora funds, African Private Equity funds and pension funds.
Learn from previous setback in disbursements and access to funding. Ensure the Loss and Damage Fund is effective and accessible.
Climate Resources & Capacity Building: Africa has an abundance of climate resources, but lacks the capacity to access and absorb funds to manage them. Building human capital, enhancing data collection and raising awareness at government-level are key areas that need to be urgently addressed. R&D must be linked to improving the models and efficiencies of current programmes. Organizations such as the African Capacity Building Foundation must be tapped.
Local Context: Climate finance should be demand-driven and take into account local knowledge and concerns. Engaging with communities, tapping into African expertise, and maintaining this standpoint in engagements with international organisations are crucial to achieving this.
Unity & Collaboration: A more regional approach to climate strategies and project preparation is needed, along with more and better collaboration among stakeholders. A more regional approach to Nationally Determined Contributions could be more effective in distributing resources, attracting investment and offsetting capacity issues.
Leveraging Technology: This is essential for improving early warning efforts and effective disaster management, as well as helping governments make informed decisions and guide responses that mitigate social impacts.
Common African Position: Ahead of the November 2024 COP29 in Baku Azerbaijan, key asks by Africa need to be agreed upon, such as better collaboration, stronger representation in decision-making structures, and reforms to the decision-making process.
Africa Climate Roundtable’s convening partners included: Afreximbank; African Adaptation Initiative; African Capacity Building Foundation; African Risk Capacity; African Union Development Agency (AUDA-NEPAD); Arab Bank for Economic Development in Africa; Global Green Growth Institute; UN Habitat; and the United Nations World Food Programme.
Confident level in the stability of the local currency (Cedi) on the forex trading market is low as Bank of Ghana is not able to meet corporate demand.
Key stakeholders of forex trade are sceptical
Cedi stability
as to how soon the cedi will strengthen against the major international trading currencies (US dollar, Euro and Pounds Sterling) as current rate of depreciation stand at 13.35 percent at the end of April.
Although, the Central Bank has mulled efforts by selling US$13 million in the spot market last week, this has failed to bolster the cedi, ending the week by 0.90% against the dollar on the retail market. However, on the interbank market, the cedi lost by 1.10% against the dollar.
Already, the Ghana Association of Forex Bureaux has claimed that the Ghana Cedi can only gain stability through miracle, if things remain as it is. This assertion is stemmed from the current downward trajectory of the Ghana cedi and the cyclical election-year trends, where governments loose control of the economy.
“Looking at the trends, and this year also being an election year, the government would have to spend a lot to be retained. I am not politicising, but that is the case”, Vice President for the Association, Dr. Alex Akpabli explained
“From my experiences over the years, I don’t see any appreciation going forward unless something dramatically or miraculously happens.”
Dr. Akpabli in an interview opined that, “We are not doing things that will bring foreign currencies into the country. We need to be innovative otherwise we will always see ourselves in a vicious cycle”.
Meanwhile, the Bank of Ghana’s forthcoming auction, where $20 million will be sold to Bulk Oil Distribution Companies (BDCs), is anticipated to alleviate some forex demand.
However, analysts caution that prevailing corporate pressures are likely to continue weakening the local currency.
It is currently one of the worst-performing currencies in the world.
Apparently, Fitch’s projected that the cedi will gain about 1.0% against the US dollar in 2024.
CediThe country’s fiat currency has come under pressure due to delay in the disbursement of the second tranche of cocoa syndicated loan as well as the third tranche of the International Monetary Fund, (IMF) Extended Credit Facility, (ECF).
Additionally, the cedi came under some pressure in recent weeks amid the stronger dollar, the usual seasonal demand pressures emanating from the energy and corporate sectors, as well as the ongoing discussions on external debt restructuring.
The Bank of Ghana, (BoG), is expecting US$200million as the second tranche of the cocoa syndicated loan as well as US$360 from the IMF to help stem the speed depreciation of the cedi which is currently trading at GHC14.25 to the American green back on the retail market.
The foreign exchange market came under some seasonal pressures in February and early March 2024. The pressures emanated mainly from the strengthening of the US dollar in international markets, and payments made for the energy and corporate sectors. These were compounded by delays and uncertainties associated with the second tranche of the cocoa loan inflow and World Bank’s disbursement of Budget Support.
According to BoG, the tight monetary policy stance and the signalled policy rates cuts in some advanced economies are expected to support the relative stability of the cedi.
Gross International Reserves at end-February 2024 was US$6.2 billion, providing cover for 2.8 months of imports of goods and services. This represents a build-up of US$292.95 million when compared with the end-December 2023 position of US$5.9 billion, equivalent to 2.7 months of import cover.
The 2024 edition of the Awards spotlights infrastructure, sustainability, and gender equality. A total of 59 institutions and individuals have passed first round judging and are in the running for the Awards – the highlight of Africa’s banking calendar.
07 May 2024, London – African Banker magazine has announced today the shortlist of nominees for this year’s edition of its African Banker Awards. Since its inception in 2007, the African Banker Awards has recognised the exceptional individuals and organisations driving Africa’s rapidly transforming financial services sector.
The Award winners will be announced during a spectacular gala dinner ceremony on the 28th May, in Nairobi, Kenya – a part of the official programme of The Annual Meetings of the African Development Bank Group.
The African Banker Awards is organised by IC Events. It is held under the patronage of the African Development Bank. The Awards’ Platinum Sponsor is the African Guarantee Fund, with African Export-Import Bank and Vista Bank as the Gold Sponsors, and the Cocktail Reception being sponsored by African Trade & Investment Development Insurance.
Nominees were selected from a record number of entries from across the entirety of the African continent. For the first time in the Award’s 18 year history, three nominees for the most prestigious ‘Banker of the Year’ are women, reflecting the growing number of female leaders in finance.
Speaking about the Awards, Omar Ben Yedder, Chair of the Awards Committee, also noted the growing role of Development Finance Institutions. “Over the years, we have seen the evolving role of DFIs,” he said. “They are playing an important role in structuring transactions and in catalysing development, often filling the gaps in areas that are under-served or under-represented.
“That said, the finance gap in infrastructure, trade and climate finance mean that the banking sector as a whole will need to be even better capitalised. But looking back at the 18 years of the Awards, it is night and day when you look at the size of our domestic banks and the transactions they are capable of structuring.”
The nominees for the African Banker Awards 2024 are as follows:
Bank of the Year
African Export-Import Bank
Ecobank
KCB Group
Rawbank
Trade and Development Bank Group
Uganda Development Bank
United Bank for Africa
Banker of the Year
Admassu Tadesse – Trade and Development Bank Group
Anel Bosman – Nedbank
Karim Awad – EFG Holding
Miriam Olusanya – Guaranty Trust Bank
Patricia Ojangole – Uganda Development Bank
Serge Ekue – Banque Ouest-Africaine de Développement
Sidi Ould Tah – Arab Bank for Economic Development in Africa
Trade Finance Award
Access Bank Nigeria
Attijariwafa Bank (AWB) Group
Bank of Africa (BOA/BMCE) Group
Diamond Trust Bank Kenya
First Bank Nigeria (FBN)
Deal of the Year – Debt
Absa Bank Ltd – 2 tranches valued at TZS 212bn and USD 73mn respectively – Absa – NMB Bank
African Development Bank – $117 million The Globeleq Menengai Geothermal Power Project in Kenya
Africa Finance Corporation – $1.82bn Project KaMa
African Frontier Capital – $500m Brighter Life Securitization
Hogan Lovells – $16bn Ghana Debt Restructuring
MUFG Bank – €774m Project Strada – UKEF backed loan to support FERA and the Republic of Senegal in its nation-wide road programme
Standard Bank – $775m Foschini Group Syndicated Funding Package
Deal of the Year – Equity
Absa Bank – $500m Airtel Uganda IPO
Banque Ouest Africaine de Développement – $100m BOAD Hybrid Bond
Pangaea Securities – $145m Affirma Capital Limited’s acquisition of Copperbelt Energy Corporation
Rothschild – $1.1bn investment into Mopani Copper Mines plc by International Resources Holding RSC
Standard Bank – $200 million Meridiam’s acquisition of controlling stake in Kipeto
Infrastructure Deal of the Year
African Export-Import Bank – $203m Great Horn Investments Holding “GHIH”
African Export-Import Bank/Standard Chartered – $1.762bn (of which $363m is the commercial tranche) Tanzania Railways, Government of Tanzania
