News Guide Africa

Category: News

  • Banks’ profitability growth shrinks

    Banks’ profitability growth shrinks

    By Elorm Desewu

    Universal banks’ profitability growth has shrunk for the first six months of this year. The banking sector’s profit before tax was GH¢4.4 billion, representing 21.6 percent annual growth in June 2022, compared to 32.1 percent in the previous year.

    The net interest income grew at 12.4 percent, compared with 19.4 percent a year ago. Net fees and commissions, however, grew by 29.2 percent, compared to 19.6 percent in the previous year, reflecting a rebound in trade financerelated business. These developments culminated in a 23.0 percent growth in operating income, compared with a growth of 15.7 percent in the corresponding year.

    Operating expenses also recorded a higher growth of 22.9 percent, compared to 7.3 percent in the previous year, moderating the growth in profit before tax during the first half of 2022.  

    Total assets grew by 22.8 percent on a year-on-year basis to GH¢200.0 billion at endJune 2022, compared to the growth of 17.2 percent in the previous year. Total deposits grew at a slower pace by 19.1 percent to GH¢131.3 billion, relative to 22.5 percent growth a year earlier.

    Key Financial Soundness Indicators of the banking industry remained positive. The Capital Adequacy Ratio was 19.4 percent in June 2022, well above the regulatory minimum of 13.0 percent.

    Core liquid assets to short-term liabilities improved to 30.2 percent, compared with 27.5 percent in the previous year. The non-performing loans ratio also improved to 14.1 percent at end-June 2022 compared with 17.0 percent in June 2021, reflecting some moderation in the growth of the stock of non-performing loans, as well as the rebound in credit growth.

  • Mould hints of fuel shortage as forex crunch hit banks

    Mould hints of fuel shortage as forex crunch hit banks

    Adnan Adams Mohammed

    A former Chief Executive Officer of National Petroleum Authority (NPA) has hinted of fuel shortage in the country if government do not intervene in providing foreign excharge to the banking sector immediately.

    The energy and finance consultant indicates that, banks are not providing sufficient foreign currency needed to meet the payment of their maturing Letter of Credits (LCs) issued to international fuel traders.

    The banks are crying out that the Bank of Ghana is not able to provide enough foreign currencies (especially the U.S dollar), through its forex auctions, to meet their trading partners needs.

    “This is causing BDC‘s to max out on their credit-line limits with their banks, and the implication is that the banks will no longer be able to finance fuel imports by October”, Alex Mould said in an interview.

    The, current situation, if not addressed, could prove disastrous for the country as this could trigger a domino effect and  even imports of essential commodities could come to a grinding halt.

    As it stands, not only fuel shortage is imminent, but food items such as rice, sugar, protein food (fish, meats) and bakery products; “it could be a bleak Christmas this year”, he added;

    To salvage the situation, Mr Mould proffered that, “Government needs to act decisively and quickly before International Banks’ Credit and Country Risk teams start reviewing downwards their Country-limits to Ghana, if they have not already done so since S&Ps recent downgrade – the last of the three major rating agencies that have down graded Ghana this year.

    Such actions by the local bank’s International partners will cause a FX credit crunch resulting in defaults by Ghanaian importers to their suppliers. This would only trigger a scramble for the scare foreign exchange which could send the cedi spiraling in a free falli!

    “GoG only choice is to accelerate their discussions with IMF to enter into an immediate Bridge-program whilst working on the main Take-Out Program ,which sources suggest will kick in sometime in first quarter of 2023.”

  • Banks unlock credit to private sector

    Banks unlock credit to private sector

    By Elorm Desewu

    Credit to the private sector is recovering to the pre-pandemic levels, reflecting commercial banks’ portfolio rebalancing.

    According to the Bank of Ghana, (BoG), private sector credit increased significantly by 33.7 percent in June 2022, compared with 6.8 percent in the same period of 2021. However, in real terms, the private sector credit recorded a 3.0 percent growth.

    A year ago in June 2021, real private sector credit had contracted by 0.97 percent. The latest credit conditions survey of banks revealed tightened credit stance on loans to enterprises and households. Notwithstanding these tight credit conditions across the industry, banks’ credit extension improved during the review period.

     New advances to the economy broadened across the industry, with 20 out of 23 banks extending new credit. Total new advances as of June 2022 was GH¢24.6 billion representing 54.0 percent year-on-year growth, compared to GH¢15.9 billion which was1.0 percent growth recorded for the same period of 2021.

    Results from the Bank’s latest confidence surveys conducted in June 2022 showed significant softening of business and consumer sentiments. While consumers felt less optimistic about future economic conditions, businesses were concerned about the impact of high cost of raw materials, rising labour costs, exchange rate volatility, and weak consumer demand.

    These conditions adversely impacted business optimism and prospects. At the same time, the Purchasing Managers’ Index (PMI), which provides information on inventory accumulation and new orders at the firm level, also declined.

  • Ghana Mines Workers’ Union threatens industrial action

    Ghana Mines Workers’ Union threatens industrial action

    The Ghana Miners Workers’ Union has threatened to embark on an eminent strike action. This threat comes at a time when the country is experiencing dire economic challenges.

    The General Secretary of the Union, Abdul-Moomin Gbana says government has refused to meet their concerns during stakeholder engagement sessions.

    Among other things on the table, the Union is calling on government to ensure their safety in their line of work.

    In an interview, last week, Abdul-Moomin Gbana said, “The Ghana Miners Union will not hesitate to embark on an indefinite strike action to drive home our demands of paying particular attention to the increasing state of our insecurity in the mining industry.”

    The Union cited an incident in Newmont in the Ahafo Region where a member lost his eye as a result of a fierce confrontation with illegal encroachers who had invaded their mining concession.

    Mr. Gbana maintains that it is time the sector minister and other stakeholders paid attention to their demands.

    “We have signaled government to compel employers within the mining industry to ensure that the safety protocols of workers are standard.”

    The Union says their strike action will take the stakeholders unawares if their calls of security among other things are left unaddressed.

  • Inflation to Peak in Q3, end year at 22% – Fitch

    Inflation to Peak in Q3, end year at 22% – Fitch

    Adnan Adams Mohammed

    Fitch, in it’s latest rating action, expects inflation to peak in 3Q22 before slowing through the end of the year.

    The ratings released last week, projected annual average inflation of 22% in 2022, slowing to 16% in 2023. Fitch’s projection is better than Ghana government’s revised projected end year inflation of 28.5% as presented by the Finance Minister, Ken Ofori-Atta, during the presentation of the mid-year review budget to parliament, fortnight ago.

    Fitch’s projection is grounded on the recent Bank Of Ghana’s Monetary Policy Committee (MPC) decision to raise the main policy rate twice in 2022, by 450bp to 19%. However, Fitch believes that the central bank would raise the policy rate again if inflation does not peak in line with current expectations.

    “A higher policy rate would likely be transmitted to domestic yields, putting further pressure on the government’s domestic borrowing costs”, Fitch Ratings indicated.

    The government revised the end-period inflation from 8% to 28.5%.  

    Mr Ofori-Atta explained that, the revision of the end-period inflation for 2022, as part of the re-jigging of the entire macroeconomic framework, has been necessitated by a significantly-changed macroeconomic environment.

    He said based on the developments for the first six months of 2022 and outlook for the rest of the year, the government has, accordingly, revised the macro-fiscal targets for 2022 as follows.

    Figures released by the Ghana Statistical Service, (GSS), indicate that year on year inflation measured by the Consumer Price Index, (CPI) has increased slightly to 31.7 percent for the 12months period ended July, 2022 from 29.8 percent recorded in June, 2022.

    This means that between June 2022 and July 2022, prices of goods and services have gone up by 31.7% indicating a 1.9% increase.

    Government statistician Prof. Kobina Annim made the announcement when he addressed journalists on August 10, 2022.

    “We composed this from two perspectives, the food and non-food inflation and from a domestic and imported perspective. From the food and non-food inflation we recorded food inflation of 32.3% and 31.3% for non-food inflation.”

    “From the domestic perspective we recorded 29.2% and imported inflation of 31.3%.”

    This has been attributed to the increasing depreciation of the cedi which has led to the increase in the cost of imports.

    Imported goods such as cooking oil and gasoline due to the war in Ukraine, dollar strength and extreme weather caused the rise in the inflation rate from 29.8 percent in June.

    Fitch has downgraded Ghana’s Long-Term Foreign-Currency (LTFC) Issuer Default Rating (IDR) to ‘CCC’ from ‘B-‘.

    The downgrade reflects deterioration of Ghana’s public finances, which has contributed to a prolonged lack of access to Eurobond markets, in turn leading to a significant decline in external liquidity.

    In the absence of new external financing sources, international reserves will fall close to two months of current external payments (debits in the current account) by end-2022. However, Fitch, typically, does not assign Outlooks to sovereigns with a rating of ‘CCC+’ or below.

    “Ghana faces USD2.75 billion of external debt servicing in 2022, including amortisation and interest, and USD2.8 billion in 2023”, Fitch Ratings estimates. “Access to external financing will remain tight, as Ghana is likely to remain locked out of Eurobond markets, which had come to be a regular source of external financing for the government.”

  • Deteriorating Public Finance: Fitch Downgrades Ghana’s IDR to ‘CCC’

    Deteriorating Public Finance: Fitch Downgrades Ghana’s IDR to ‘CCC’

    Adnan Adams Mohammed

    Fitch Ratings has downgraded Ghana’s Long-Term Foreign-Currency (LTFC) Issuer Default Rating (IDR) to ‘CCC’ from ‘B-‘.

    The downgrade reflects deterioration of Ghana’s public finances, which has contributed to a prolonged lack of access to Eurobond markets, in turn leading to a significant decline in external liquidity.

    In the absence of new external financing sources, international reserves will fall close to two months of current external payments (debits in the current account) by end-2022. However, Fitch, typically, does not assign Outlooks to sovereigns with a rating of ‘CCC+’ or below.

    “Ghana faces USD2.75 billion of external debt servicing in 2022, including amortisation and interest, and USD2.8 billion in 2023”, Fitch Ratings estimates. “Access to external financing will remain tight, as Ghana is likely to remain locked out of Eurobond markets, which had come to be a regular source of external financing for the government.”

    “In 2022, we expect that the government will meet its external debt obligations, in part, through a combination of a USD750 million term loan from the African Export-Import Bank (BBB), USD250 million in syndicated loans from international commercial banks, and up to USD200 million from the government’s sinking fund.

    The 2022 mid-year policy review indicates that the government expects to source the rest from the IMF and other multilateral lenders. In the absence of an approved programme by the end of the year, the government would have to draw more heavily on its international reserves, which were USD7.6 billion, including oil funds and encumbered assets, as of June 2022.”

    The latest rating were on the following drivers: Increasing Possibility of Debt Restructuring; Tight External Debt Servicing Schedule; Uncertain Pace of Fiscal Consolidation; Domestic Debt Costs High; Weaker Near-Term Growth; among others.

    Uncertain Pace of Fiscal Consolidation: The government’s high interest costs and low revenue will continue to be impediments to fiscal consolidation efforts. The 2022 Budget’s medium-term fiscal framework had envisaged narrowing the deficit to below the existing deficit ceiling of 5% of GDP by 2024. The expected consolidation was based on the expiry of pandemic-related expenditure items and a significant increase in domestic revenue, driven by new taxes, including a levy on electronic transactions.

    Delays in implementing the new revenue measures have resulted in lower revenue and a larger nominal deficit in 1H22 relative to budget forecasts. However, the 2022 mid-year fiscal policy review presented in July contains an updated fiscal deficit forecast of 6.6% of GDP compared with the original deficit forecast of 7.4%, owing to an upward revision in nominal GDP. We forecast the 2022 fiscal deficit at 8.1% of GDP; this is inclusive of energy-sector clean-up costs not contained in the government’s figure. The possibility of new revenue measures could lead to a further shrinkage of deficit in 2023, but the government’s slim majority in parliament could frustrate attempts to raise tax rates or implement new taxes.

    Government interest costs reached 47.5% of revenue in 2021, considerably above the current ‘B’ median of 10.7%. We expect interest costs to remain at or above 45% through 2024.

    Interest costs largely reflect high yields on domestic debt. Yields have climbed higher in 2022, following inflation spikes and monetary tightening by the Bank of Ghana (BOG). Yields on the 91-day treasury bill reached 26% in July 2022, up from 12.6% in July 2021. Moreover, the government has reported under-subscribed yields, necessitating the tapping of existing medium-term issuance. The government has increased its outstanding advances with the BOG, providing some additional domestic financing and could conduct another private debt placement with the central bank as it did in 2020, but such a measure would necessitate parliamentary approval.

    The government has requested support from the IMF, which is likely to lead to additional financing from the IMF and other multilateral lenders. However, the government’s high interest costs and structurally low revenue as a percentage of GDP have increased the likelihood that IMF support would necessitate some form of debt treatment, although this is not our main scenario. The high interest burden on local-currency debt also means that the inclusion of a domestic debt treatment cannot be ruled out.

    In July 2022, the authorities reversed a long-standing position against seeking IMF support. Fitch believes that a deal with the IMF is likely within the next six months. We estimate that a programme could disburse as much as USD3 billion and unlock budget support from other multilateral lenders. However, the timing of such a deal is uncertain and would be dependent on the government’s ability to present a credible fiscal reform plan in line with increasing government revenue and improving debt affordability metrics. The most recent IMF debt sustainability analysis, conducted in 2021, found Ghana at a high risk of debt distress and vulnerable to shocks from market access and high debt servicing costs.

  • Omanhene Of New Juaben Commends The Chief And People Of Koforidua Zango For Promoting Development

    Omanhene Of New Juaben Commends The Chief And People Of Koforidua Zango For Promoting Development

    By Abubakar Garba Osuman

    The Omanhene of New Juaben Traditional Area, Nana Kweku Boateng III, has lauded the residents of Koforidua Zango for bringing development to the traditional area.

    He made this comment when the Eastern Regional Zango Chief, Alhaji Mohammed

    Hashiru Issah IV, presented to him more than fifty (50) oxygen concentrators for

    distribution to health facilities in and around Koforidua.

    Welcoming the Zango chief and his entourage to his palace, Nana Kweku Boateng III said it is important to initiate self-help programmes to add up to what the government is rolling

    out for the people of New Juaben “and this exactly what the people of Koforidua Zango are

    doing”.

    These works, according to the Omanhene cannot be achieved without harmony among the

    people. “It is therefore key for all of us to promote peaceful coexistence in order to benefit from the progress that is coming to our cherished community.”

    The Omanhene commended the children of Koforidua Zango living abroad for not

    forgetting home, and the thought to provide the oxygen concentrators.

    The Sarkin Zango together with the Gyasehene of New Juaben Traditional Area, Nana

    Twumasi Dankwa, presented twenty pieces of the equipment, on behalf of the Omanhene,

    to the Eastern Regional Hospital in Koforidua.

    Nana Twumasi Dankwa said, he hopes the hospital would serve patients who are in dire

    need.

    Receiving the items, the Administrator of the hospital, Madam Mary Amponsah Kotia, was

    extremely happy because, according to her, the oxygen concentrators have come at a time

    when they are most needed. “And may God compensate, in abundant measure, those who

    made this donation possible.” She prayed.

    Other health centres which benefited from the donation are Jumapo Clinic, Koforidua

    Zongo Health Centre, Koforidua Polyclinic and St. Joseph Hospital.

  • Dr Bawumia: The Digitally Confused Veep

    Dr Bawumia: The Digitally Confused Veep

    Hadji Mustaphar writes…

    The rate at which the dollar is flying and economic hardship all over the place is leading to the fact that the dollar will hit GHC140 to a dollar even before Ghanaians go to the polls in 2024.

    Before assuming power both candidates, Nana Addo and Dr. Bawumia heavily made noise about the continues halting depreciation of the Cedi as against some major trading currencies in the world , which to some extent weakened investor confidence in the country.

    Though some financial analyst at the period between 2012 and 2016 disagreed with the NPP party at the time and alluded challenges and difficulties to doing business in world. The NPP and their appendages rejected such explanations and chastise former Finance Minister Seth Terkpe and former President John Dramami Mahama, and his cabinet for masterminding managerial inefficiency in the governance structure of the country resulting in the depleting strength in the local currency and exchange rate at the forex.

    It is sad to see how a rather potent system is currently gasping for breath under this incompetent and morally weak administration by the NPP and President Nana Addo.

    After 6 years in power the dollar to cedi strength is nothing to write home about.

    The much touted economic management team, has some how been expose and the finance Minister Ken Ofori Atta seem to be living in oblivion.

    Prices of goods and services have shot up by a thousand percentage (1000%) with fuel products being the most hit in record time in the country.

    Vice President Dr Alhaji Mahmoud Bawumia, who claimed to have the magic wand and could even lock the dollar and hand over the keys to the Inspector General of Police (IGP) is no long in charge of the falling and ailing economy due to the unnecessary ecesary projections he revealed through the numerous Public Lectures he had prior and in government.

    Recently the Vice President, has assumed the role of an IT specialist and galavanting at some premium tertiary institutions and engaging students on digital presentation about the economy.

    For me this is the most clueless and satiric Government that I have ever seen as a person in the country.

    It has become very obvious that, the vice President has lost touch on the ground and allies of President has expose his weaknesses to the NPP members and  gradually portraying himself as the most incompetent public personality ever.

    Dr. Mahmoud Bawumia has set out to lead a drive on digitization and digitalization agenda to rebrand the country’s competitive mover advantage in ICT, and ease if doing business in the digital market.

    He recently stated that, he is not shying away from Economic pursuit contrary to what, his detractors want others to believe.

    The economic indicators is not showing a  positive outlook going into the 3rd and 4th Quarters of 2022.

    I will like to call on the Veep President eat humble pie and call on stakeholders within the economic front to brainstorm on the  falling state and poor methodologies required to turn the fortune of the country around before the country sinks deeper and results in the coming days if care is not taken could be disastrous.

    ✍Hon Hadji Mustaphar

    Member NDC Communication Office, Dome Kwabenya Constituency.

    0248003664/0505759315

    Communication Director Hopeful.

  • New utility tariffs to take effect Sept 1

    New utility tariffs to take effect Sept 1

    Adnan Adams Mohammed

    Effective September 1, 2022, Ghanaians would be paying the approved adjusted tariffs for all electricity and water usage.

    According sources at the Public Utilities Regulatory Commission (PURC),the nationwide consultations on proposals it received from the utility companies, Electricity Company of Ghana (ECG) and Ghana Water Company Limited (GWCL) and others, was wrapping up to announce new tariffs this week.

    The PURC stakeholders’ consultation team reveals that, aside from the public a across the 16 regions, the PURC also engaged identifiable groups and relevant sections of the public and had considered all sides of the arguments in arriving at appropriate tariffs.

    A Daily Graphic publication last week indicated that, the new tariffs will not be across the board, which means the rates will depend on the reasons and proofs adduced by the utilities and the verification the commission has done. Also, the tariffs to be announced would exclude taxes and levies already imposed by the state.

    It said micro, small and medium enterprises (MSMEs), such as food joints and salons, would be protected from paying “punitive” tariffs.

    The utility companies presented proposals to the PURC in May this year, based on the regulator’s guidelines.

    While the Ghana Water Company Limited (GWCL) proposed a 300 per cent increment over its existing tariffs, the Electricity Company of Ghana (ECG) proposed 148 per cent, the Volta River Authority (VRA) proposed 37 per cent, with the Ghana Grid Company Ltd (GRIDCo) proposing 48 per cent.

    Other proposals were 38 per cent from the only private power distributor, Enclave Power, and 113 per cent increase over the existing tariffs of the Northern Electricity Distribution Company (NEDCo).

    The tariff proposals were in line with policy directions to progressively eliminate what has been described as “punitive tariff bands” that discouraged consumption.

    This included industry being made to pay higher to cushion residential consumers, a situation which was adding to the cost of doing business and making operations in the industrial sector costly.

    The multi-year tariff adjustment, which will come with different rates of increment over a five-year period, is also expected to enable the PURC and the utilities to commit to the quarterly “automatic” adjustment system, support industrial development and improve utility efficiency.

    Another source familiar with the consultations and computations told the Daily Graphic that in arriving at the various tariffs, the regulator took into consideration external and internal economic conditions, as well as the need to keep the utilities in operation, enabling them to do routine maintenance, finance developments, among others.

    The PURC also subjected all the costs proposed by the utilities to strict assessment and validation, including visiting some of the investments on the ground.

    It accepted servicing costs on loans for approved investments, while the state-owned utilities were asked to suspend all discretionary investment this year.

    The regulator also requested for and critically assessed proposed investments by utilities, among other things.

    Customer expectation survey The PURC also conducted a survey in which 851 respondents across all 16 regions completed the questionnaire.

    The survey indicated that 44 per cent of respondentsthought the current electricity tariffs were not commensurate with quality of service received from the electricity utilities due to frequent voltage fluctuations, poor customer service delivery, among other reasons.

    On electricity tariffs, 42 per cent of the respondents rated prevailing tariffs as fair, while 55 per cent rated them as high.

    Again, half of the respondents indicated that current water tariffs were not justified, given the poor service delivery in the form of frequent water supply interruptions. Consequently, 41 per cent of respondents rated prevailing water tariffs as fair, while 57 per cent rated them as high.

    The PURC, the source said, would also set efficiency benchmarks by which the utilities would abide, so that their inefficiencies would not be passed on to consumers.

    “The PURC sets loss benchmarks which mostly cover technical losses to ensure that the inefficiencies are not passed on. For instance, if the benchmark is 4.2 per cent and you incur 10 per cent, the PURC will deduct the benchmark and the utility will pay for the rest,”it explained. Fact sheet

    a) The utility companies are proposing new tariff adjustments mainly due to their inability to finance capital investments, inadequacy of the last PURC-approved tariffs, the depreciation of their assets, exchange rate fluctuations,payment of government-guaranteed loans, among others.

  • 5years ban on construction of new gas filling stations lifted

    5years ban on construction of new gas filling stations lifted

    Adnan Adams Mohammed

    The five years old ban on construction of new Liquefied Petroleum Gas (LPG) stations in the country since 2017, has been lifted last week.

    The National Petroleum Authority announced the lifting of ban as an emergency solution to end a strike action by Gas tanker drivers and LPG Marketing Companies which led to the scarcity of gas for domestic and commercial use across the country.

    The striking drivers and LPG marketers, apart from their poor working conditions, they also cited the ban on the construction of gas stations across the country as a major reason for their strike.They threatened not to return to work until their grievances were addressed.

    “Cabinet has granted a special dispensation to allow the completion of the construction of stranded LPG stations across the country”, the NPA stated in a press statement last week.

    The NPA has asked all Oil Marketing Companies and LPG companies to begin processes for approval to continue their construction works.

    “We are, therefore, requesting all OMCs/LPGMCs who were affected by this directive to resubmit their applications to the Authority”, the statement added.

    Following the Atomic Gas Explosion that killed at least 7 people and injured 132 in Accra, Government after a crucial cabinet meeting, announced a number of directives, about ten of them, geared towards sanitizing the fuel distribution and retail sector, to improve safety and save more lives.

    One of the decisions, as approved by the President, was an immediate cessation of the construction of new fuel stations, to allow the NPA and its allied agencies, to carry out a proper audit of all the facilities.

    The President also ordered the implementation of the Cylinder Re-circulation Model of Liquefied Petroleum Gas distribution within a year.

    The module, proposed by NPA, will ensure that LPG filling points are sited out of densely populated areas and commercial centres.

    According to the statement signed by the Chief Executive of the NPA, Dr. Mustapha Abdul-Hamid, “We are pleased to inform you that Cabinet at its 35th Sitting, held on August 3rd 2022, has granted a special dispensation to allow the completion of the construction of stranded LPG stations across the country, that were affected by the ban on the construction and operation of new LPG facilities in 2017.”

    Mr Hamid urged all entities affected by the ban to resubmit their applications to the NPA.

    The Tanker Drivers and LPG Marketing Companies have consequently called of their strike.

    The Ghana National Tanker Drivers Association had complained about its working conditions and treatment from the authority and the Bulk Oil Storage and Transportation Company.

    The drivers also raised concerns with the seals and tracking devices that check the integrity of the fuel in the transportation process.