News Guide Africa

Category: News

  • Privatise all SOEs to attain profitability as desirable – Economist advises gov’t

    Privatise all SOEs to attain profitability as desirable – Economist advises gov’t

    Adnan Adams Mohammed

    With the current undesirable results posted by the State Owned Enterprises (SOEs), a ‘pillar’ in Ghana’s economist, Kwame Pianim, has called for the outright sale of some State Owned Enterprises (SOEs) to the private sector as part of the measures to mobilise revenue for the government.

    The revered economist believes many of the SOEs, which have become losses making enterprises, needs to be sold to maximize profit in the wake of the economic difficulties faced by the country.

    According to the 2020 State Ownership Report, the SOEs recorded a GH¢2.61 billion loss in 2020, although that was about 50 percent better over the 2019 aggregate loss of ¢5.16 billion. This has pushed the Finance Minister, Ken Ofori-Atta, to call on the managements of the SOEs for more urgent and collective work to address these losses. But, the economist stressed on his advises that, some SOEs over the years have been saddled with debt over issues of mismanagement among others.

    “Many of these SOEs are continually adding to the liabilities stock of the government, Kwame Mpianim indicated. “Others are just liabilities to the state.”

    According to the report, SOEs’ combined revenue increased by 19.30%, from ¢37.912 billion in 2019 to ¢45.23 billion in 2020.

    With the exception of communications and transportation, all other sectors recorded improved revenue in 2020 relative to 2019.

    On the other hand, direct costs incurred by SOEs collectively in 2020 was however ¢32.9 billion, representing a 12.65% increase from ¢29.213 billion in 2019.

    The energy and agricultural sectors were the main contributors, accounting for over 80% of aggregate direct costs of SOEs in FY2020.

    Total assets of the SOEs portfolio however stood at ¢171.632 billion, whilst aggregate liabilities recorded was ¢119.5 billion in 2020.

    In comparison to 2019, the asset base grew by 15.12% with liabilities rising at a higher pace of 22.47%. Non-current assets accounted for approximately 65.81% of total assets.

    For total liabilities, 57.37% was accounted for by short-term liabilities. Aggregate equity of the SOE portfolio went up marginally by 1.18% from ¢51.47 billion in 2019 to ¢52.085 billion in 2020

    JVCs records ¢11.81m profit

    Also, Joint Venture Companies (JVCs) portfolio moved from a loss position of ¢1.05 billion in 2019 to a profit of approximately ¢11.81 million in 2020.

    Total revenue decreased by 5.82%, from ¢13.80 billion in 2019 to ¢13.005 billion in 2020.

    Three out of the 17 JVCs, namely Ghana Rubber Estates Limited, Agricultural Development Bank and GCB, reported consistent increases in total revenue over the 5-year period under review. The energy sector, represented by GOIL, generated the highest total revenue (¢5.578 billion) for JVCs in 2020.

    Contrary to the increasing trend between 2016 to 2019, direct costs of JVCs as a whole fell by 13.86% to ¢8.681 billion in 2020.

    From 2016, it is observed that direct costs rose steadily from ¢7.274 billion to ¢10.079 billion in 2019.

    Other State Entities

    In 2020, Other State Enterprises (OSEs) recorded aggregate revenue of ¢19.361 billion, which is a 29.15% increase from the previous year.

    In general, revenues have risen cumulatively by 27% from 2016 (¢9.153 billion) to 2020.

    The increase in total revenue for 2020 was on account of improved performance from regulatory bodies, from GH¢9.198 billion in 2019 to ¢9.526 billion in 2020.

    Revenue of statutory agencies increased from ¢3.586 billion in 2019 to ¢5.912 billion in 2020, while that of subvented agencies went up from ¢2.033 billion in 2019 to ¢3.805 billion in 2020.

    Only the Public Education/ Research Institutions sub-group recorded a reduction in total revenue from ¢172.79 million in 2019 to ¢117.52 million in 2020.

    Minority Interests

    The Minority Interests portfolio recorded an aggregate net profit of GH¢11.25 billion in 2020 against a net loss of ¢62.17 million in the previous year.

    For revenue, aggregate revenue for Minority Interests entities amounted to ¢53.356 billion in 2020, which is an increase of 29.40%, from 2019 (¢41.234 billion).Over 80% of revenues were from the mining sector.

    Direct Costs however saw a slight increase of 2.58%, from ¢28.781 billion in 2019 to ¢29.525 billion in 2020.

    The 2020 State Ownership Report covered 132 Specified Entities which include SOEs, 17 JVCs, 54 OSEs and 14 minority interests.

    This represents, approximately, a 24% increase in coverage of the report from the 2019 edition which covered 106 entities.

    In terms of the size of the portfolio, this edition of the State Ownership Report has a wider coverage of 74.58% compared to 60.57% in the 2019 edition.

  • Gov’t told to stop the ‘COVID blame game’ to restore economy credibility

    Gov’t told to stop the ‘COVID blame game’ to restore economy credibility

    Adnan Adams Mohammed

    A former staff of the International Monetary Fund and a former finance minister has implored that Ghana’s credibility on the international market is waning due to the continuous attribution of the country’s issues to the COVID-19 pandemic and the Russian–Ukraine War.

    He chided President Nana Akufo-Addo’s comments he made during the recent interview with the BBC, where the President sought to defend the state of the Ghanaian economy as a result of the impact of the COVID-19 pandemic and the Russian – Ukraine War.

    According to the President, the effects of the 2 global developments are being experienced across the globe.

    “I think the world is becoming sceptical about the extent to which Ghana uses COVID [to justify its challenges]. Because we were told recently by the World Bank that Ghana for example had arrears in excess of 5% of GDP, which is significant, if you take our GDP to be GH¢ 350 billion at the time, 5% will be about GH¢ 17 billion, but the budget is showing a deficit of GH¢ 3 billion” Seth Terkper claimed in an interview last week. “So to continue to blame everything on COVID and also to say that everything was solid against the advice of others, opens the credibility gap even more.”

    Meanwhile, Mr. Terkper, has called for a solid domestic program to get the country out of its current situation.

    “You can’t say that the Ukraine war has not affected Ghana, we are not an island. But remember we had about $6 billion to deal with COVID in a year, that’s about GH¢ 36 billion, which is about half of what GRA brought in. So why do we continue to blame COVID for everything? We talk about the cost of COVID and what government has spent money on, what about the revenue that came in? Didn’t the revenue offset the expenditure? Why are we always beating the drum on only expenditures and ignoring the revenue bit.”

    “So the question is; what is fundamentally wrong such that despite all the revenues from stabilization fund, to $6 billion for COVID, we are still in this situation, with our indices being worse than other African countries. We are saying that our story is becoming unbelievable and what we need is a solid program to get us out of this problem we find ourselves in,” he added.

  • Gov’t strives to tame Cedi fall as it tops Africa worst currency table

    Gov’t strives to tame Cedi fall as it tops Africa worst currency table

    Adnan Adams Mohammed

    In spite of government’s recourse to address the loose-break of the local currency exchange rate with the international trading currencies, especially the U.S Dollar, the Cedi ranks the worst currency in Africa.

    According to a Bloomberg report, the Ghana Cedi depreciated by 18.21 percent against the U.S dollar in the first quarter of 2022.  This places the Cedi as the worst-performing currency in Africa while the Angolan Kwanza is the best-performing currency in Africa as it currency appreciated by 24 percent against the dollar.

     According to the Foreign Exchange Forward Auction, a total of US$350 million would be auctioned to authorised dealers by the central bank in the second quarter. Per the auction calendar, the bank will sell $100 million in April, $150 million in May and another $100 million in June.

    “In accordance with the Foreign Exchange Forward Auction Guidelines, bids are invited as per the prescribed format to purchase United States dollars against Ghana cedis, separately on each auction date”, Bank of Ghana has said in a statement that announced the information of all Authorised Foreign Exchange Dealing Banks and the Auction Calendar for Foreign Exchange Auctions for the second quarter of 2022.

    Also, the Central bank has cautioned the business community and persons pricing goods and services in foreign currencies to desist from such practices or have themselves to blame as it breaches the Foreign Exchange Act, 2006 (Act 723), which prohibits companies and institutions from pricing, advertising, receipting, or making payments in foreign currencies in Ghana.

    The central bank in a statement also said the law prohibits individuals or institutions from engaging in foreign exchange business without a licence issued by the Bank of Ghana.

    “Such violations are punishable on summary conviction by a fine of up to seven hundred (700) penalty units or a term of imprisonment of not more than eighteen months(18) or both,” the Bank of Ghana cautioned.

    The bank also cautioned the public to desist from “black market” transactions.

    The central bank further reiterated in the statement signed by its Secretary, Sandra Thompson, that the only legal tender for transactions in the country is the Ghana Cedi.

    “The Public is hereby notified that the sole legal tender in Ghana is the Ghana Cedi. The Bank of Ghana, in collaboration with the National Security and Law Enforcement Agencies, will clamp down on illegal foreign exchange operations. All offenders shall be dealt with in accordance with the law.’

    Below is the currency performance table:

    CURRENCIES WITH “WORST SPOT RETURNS” AT THE END OF QUARTER 1, 2022

    RANKING   CURRENCY YEAR-TO-DATE

    16th  New Sudanese pound   -2.08%

    17th  Ethiopian Birr      -3.89%

    18th  Liberian dollar     -4.94%

    19th  Sierra Leone leone      -5.10%

    20th  Mauritian rupee   -7.05%

    21st  Zambian kwacha -8.02%

    22nd Egypt pound       -14.27%

    23rd  Ghana cedi -18.21%

    CURRENCIES WITH “BEST SPOT RETURNS” AT THE END OF QUARTER 1, 2022

    RANKING   CURRENCY YEAR-TO-DATE

    1st    Angolan kwanza  24.2%

    2nd   South African rand       9.38%

     3rd   Guinean franc     4.40%

    4th    Botswana pula      2.59%     

    5th    Nigerian naira     1.74%

    6th    Kenya shilling      1.59%

    7th    Rwanda franc     0.66%

    8th Mozambique new metica l0.19%

  • E-Levy implementation: Telcos doubt meeting deadline to reconfigure their system before May

    E-Levy implementation: Telcos doubt meeting deadline to reconfigure their system before May

    Adnan Adams Mohammed

    Telecommunication operators in the country are in doubt over meeting the deadline to configure their systems to allow the smooth implementation of the Electronic Transactions Levy (E-Levy).

    The controversial E-Levy passed by parliament and assented into law by President, Nana Akufo Addo, late last month, is scheduled to take effect next month, May 2022. So the telecomm companies have within a period of one month to reconfigure their system to support the deduction of the tax on the transfers of funds in between mobile money wallets.  

    Although the telcos have assured to do their best to ensure the required systems are put in place to collect the E-levy, they say, the right infrastructure must be put in place, and tested to ensure that they are fit for purpose before going live.

    “I can’t say whether one month will be enough time for all of those systems [necessary] because if there are major variations that have been made, we’ll need to see whether all the things we were looking at, at the beginning could be done within months”, the Chief Executive of the Chamber of Telecommunications, Ing. Dr. Kenneth Ashigbey, said in an interview.

    “From our side, we will do whatever is possible. This is about money, and we don’t want a system where there will be a backlash on it. We need to make sure that we can do the integration with the GRA’s systems and do the user acceptance test and validation to make sure everything is well before we go live. We also know that Parliament has passed the law, and we need to work at that, but those considerations of the practicality of all of that have to be done.”

    After President Akufo-Addo assented into the E-levy bill last week, the various stakeholders are under pressure to put in place all the necessary infrastructure to ensure full implementation of the law.

    Dr. Ashigbey in an earlier interview said the full details of the bill are yet to be presented to the Chamber for studies, and it will only be after that, that they will decide and make public how they will implement the tax.

    “It was only preparatory engagements that were being done and not as if anybody is implementing anything. What Parliament passed is what becomes law. In terms of the engagements we had with GRA, that was the spirit of the fact that the Bill was before Parliament. Since we had those initial conversations, there hasn’t been any implementation.”

    “I have not seen the bill that has been passed, so we have not seen the date in there, so it will depend on what the GRA directs for our members to follow and configure their systems. So, there is still a lot to be done, and we are still waiting”, he said.

  • Inflation returns to target band in March 2023

    Inflation returns to target band in March 2023

    By Elorm Desewu

    Inflation is likely to return to the target band of 8+/-2 percent in March 2023, according to the Bank of Ghana, (BoG). The risks in the outlook for inflation are on the upside and include petroleum price adjustments and transportation costs, and exchange rate depreciation.

    The Bank of Ghana’s latest forecast still depicts an elevated inflation profile in the near term, with inflation falling within the medium-term target band within a year.

    Notwithstanding the sustained growth momentum, rising food prices, upward adjustments in petroleum prices and its effect on transport fares, and exchange rate depreciation pass-through have pushed up inflation to 15.7 percent at the end of February 2022, 5.7 percentage points outside the medium-term target band. Food inflation jumped sharply from 12.8 percent in December 2021 to 17.4 percent in February 2022, while non-food inflation jumped from 12.5 percent to 14.5 percent over the same period.

    According to the BoG, the combination of tighter global financing conditions, sharp pressures on the exchange rate, and elevated inflation pose some policy challenges. Headline inflation has risen sharply to 15.7 percent in February 2022, and both headline and core inflation are significantly above the upper limit of medium-term target band. The uncertainty surrounding price developments and its impact on economic activity is weighing down business and consumer confidence.

    Also, underlying inflationary pressures have increased, signalling broad-based price pressures. The Bank’s core inflation measure defined to exclude energy and utility prices, increased from 11.8 percent in December 2021 to 13.6 percent in January 2022 and further up to 15.4 percent in February 2022. Similarly, weighted inflation expectations comprising consumers, businesses, and financial sector, also picked up significantly over the period.

    Fiscal policy implementation has come under strain, reflecting embedded rigidities in the fiscal framework which requires extensive structural reforms to free fiscal space to restore both fiscal and debt sustainability. Revenue performance has been slow to align with projections, while expenditure remains rigid downwards despite the strong efforts to cut expenditure by 20 percent as announced by the Government.

  • Implementation of E-levy: List of transactions to be affected

    Implementation of E-levy: List of transactions to be affected

    As part of efforts to expand the country’s tax base, raise Ghana’s tax to GDP ratio and support government’s efforts at building an entrepreneurial country, government in the 2022 Budget, announced the introduction of the Electronic Transfer Levy (E-levy).

    The E-levy is a tax imposed on electronic transfers charged at the time of transfer.

    The levy, which was amended from 1.75 percent to 1.5 percent, will be a tax on electronic transactions, which includes mobile-money payments.

    The charge will apply to electronic transactions that are more than GH¢100 on a daily basis.

    Though the introduction of the Levy has received a lot of controversies, Parliament on March 29, 2022, passed the Electronic Transfer Levy Bill.

    Below are a number of electronic transactions that will be affected and those that will be exempted when the implementation kicks in later in May 2022.

    Transactions to be covered by E-Levy

    According to the Finance Ministry, E-Levy transactions will cover:

    Mobile money transfers between accounts on the same electronic money issuer (EMI),

    Mobile money transfers from an account on one EMI to a recipient on another EMI,

    Transfers from bank accounts to mobile money accounts,

    Transfer from mobile money accounts to bank accounts,

    Bank transfers on a digital platform which originate from a bank account belonging to an individual to another individual.

    Transactions to be exempted:

    The Ministry noted that the E-Levy will not apply to:

    Cumulative transfers of GHC100 per day made by the same person,

    Transfers between accounts owned by the same person

    Transfers for the payment of taxes, fees and charges on the Ghana.gov platform,

    Electronic clearing of cheques and Specified merchant payments (that is, payments to commercial establishments registered with the GRA for income tax and VAT purposes).

     ATM withdrawals are also excluded from the E-levy tax.

    The levy shall be administered by the Ghana Revenue Authority, GRA in accordance with the Revenue Administration Act 2016 (ACT 915).

    The levy shall be collected by the Ghana Revenue Authority, GRA through licensed Banks, Specialised Deposit-Taking Institutions, Payment Service Providers (PSPS), and Electronic Money Issuers (EMIS).

    After collection, the Commissioner-General of the Authority shall pay all amounts collected into the Consolidated Fund.

    According to the Ministry of Finance, Government is projecting to get about ¢6.9 billion from the tax on electronic transactions by the end of 2022.

  • Ghana losses US$923mn investment expenditure to inactive oil blocks awarded – ACEP

    Ghana losses US$923mn investment expenditure to inactive oil blocks awarded – ACEP

    Adnan Adams Mohammed

    The African Center for Energy Policy (ACEP) has reported that, inactive oil blocks which numbers more than 10 have denied Ghana of about US$923 million as at 2019.

    Ghana since 2007 has awarded 18 oil blocks to various oil exploration and production companies. Out this, only three blocks have been developed and producing, that include the Jubilee field, TEN fields and the SGN field.

    Although, according a report from the Petroleum Commission has indicated that, four inactive oil blocks have been canceled so far, which includes the Shallow Water Cape Three Point, Onshore/Offshore Keta Delta blocks among others.

    “Inactivity by oil block holders is causing the country to losses huge revenues as well as denying the country of potential investors”, Samuel Bokoe, an energy consultant has said during a training session organised for media persons and CSOs in Accra, last week. “The Petroleum Commission and relevant stakeholders must up their game to cancel all inactive oil block contracts so they can be available for the next bid rounds.”

    The training organised by the Natural Resorce Governance Institute (NRGI) to help enhance the capacity of CSOs and media to use publicly available contracts in the Petroleum Register to demand accountability brought together officials from the Petroleum Commission, selected media persons anti-corruption and energy focused CSOs for a day training.  

    The training sought to create awareness about the petroleum register and, provide skills required for CSOs and journalists to understand how to navigate the petroleum register.

    Some participants who spoke to the Economy Times after the training testified that, they have acquired skills needed to analyze and understand petroleum contracts including other publicly disclosed contracts to complement the efforts of oversight actors and regulators in monitoring these contracts.

  • Mobile Money Industry processes record $1 trillion in 2021

    Mobile Money Industry processes record $1 trillion in 2021

    The GSMA has today published its 10th annual ‘State of the Industry Report on Mobile Money’. It reveals that mobile money adoption and use saw continued growth in 2021, processing a record $1 trillion annually.

    The industry enjoyed a substantial increase in the number of registered accounts, up 18% since 2020 reaching 1.35 billion globally. The volume of person-to-person transactions were up to more than 1.5 million every hour.

    The report reveals that one of the most significant drivers of growth was merchant payments, which almost doubled year on year.

    It also highlights how mobile money continues to act as a core pillar of financial and economic inclusion, particularly for women.

    Mobile money diversified its value proposition beyond person-to-persontransfers and cash-in/cash-out transactions in 2021.

    It is now playing an important role in the daily lives of people and businesses, especially in low and middle-income countries (LMICs).

    The growth of ecosystem transactions such as merchant payments, international remittances, bill payments and bulk disbursements, together with interoperable transactions, are accounting for a more significant share of the global mobile money transaction mix.

    Merchant payments were instrumental in the growth of the mobile money industry in 2021. The value of merchant payments almost doubled, reaching an average of $5.5 billion in transactions per month.

    Providers are demonstrating that they can attract businesses to their platform with better incentives, such as efficient remote onboarding processes.

    For example, since Safaricom’s M-PESA began allowing companies to register for an account online in Kenya, more than 18% of new merchants are self-onboarding.

    “2021 was the year mobile money started to really diversify to B2B services. Beyond traditional person-to-person transactions, such as transferring money to family or friends, the industry is now central in helping small businesses operate more efficiently, and serve their customers better” said Max Cuvellier, Head of Mobile for Development, GSMA.

    Mobile money has also been a driving force for financial inclusion for the world’s most vulnerable, particularly women. Mobile money is empowering women to take more control over their finances and purchase goods that they urgently need.

    Additionally, 44% of providers responding to the GSMA Global Adoption Survey now offer credit, savings or insurance products, creating opportunities for underserved individuals to invest in their livelihoods and futures.

    With the gender gap in mobile money account ownership raging from 7% in Kenya to 71% in Pakistan – there remain some barriers to vulnerable people benefitting from mobile money.

    Owning a mobile phone is an obvious prerequisite to using mobile money, and women across LMIC’s are 7% less likely than men to own a mobile phone.

    Overall, 143 million fewer women own a mobile than men. Additional barriers to mobile money access include a lack of awareness of mobile money and a deficit in perceived relevance, knowledge and skills.

    While some progress has been made, the report makes clear that more must be done to address the mobile money gender gap across LMICs.

    Concerted action is required from policymakers, the private sector, donors and other stakeholders to learn from success stories, address the issue and ensure that existing gender inequalities are not further entrenched, especially in light of the COVID-19 pandemic.

    As highlighted in the report, in 2022, the number of people needing humanitarian assistance is predicted to soar to 274 million.

    Mobile money is expected to play an increasingly important role in both donations – where it makes delivery systems more efficient and transparent for humanitarian actors and donors – and the receipt of aid.

    The UN Refugee Agency sent $700 million in cash and value assistance (CVA) to 8.5 million recipients in 100 countries in 2020.

    They have set up digital payment programmes in 47 countries,15 of which use mobile money. In many humanitarian settings, the digitisation of CVA via mobile money has the potential to promote agency and dignity and foster financial inclusion.

    Mobile money also helps to enable access to basic utility services and agricultural solutions in LMICs. And to ensure this work continues, the mobile industry and humanitarian sector must keep working together to advance inclusive digital and financial inclusion even further for those who need it most.

  • Ghana’s bonds rally as investors react positively to passage of E-Levy

    Ghana’s bonds rally as investors react positively to passage of E-Levy

    Government’s tight fiscal measures targeted at closing the budget-deficit to 7.4% of Gross Domestic Product (GDP) by the end of 2022 is fuelling the longest bond rally in two months.

    According to Bloomberg, the yield on the country’s $1 billion bond maturing in 2026 declined for the sixth consecutive day, as President Nana Akufo-Addo reiterated government’s commitment to get the economy back on track.

    Previously, investors were concerned about the credibility of the country meeting its fiscal targets. They therefore demanded more interest for the nation’s dollar bonds, as a result of the country’s rising debt.

    However, the austerity measures announced by the Finance Minister, Ken Ofori-Atta, coupled with the Electronic Transaction Levy (E-Levy) have reassured investors that the government is bent on reviving the fiscal economy.

    Investors believe the recent bond rally may reflect some of the measures the government has recently put in place.

    In actual fact, Ghana’s dollar bonds sold-off from 85-90 cents on the dollar to around 60 cents.

    Kevin Daly, an investment director at Aberdeen Standard said, “the recent Ghana bond rally may reflect some of the measures the government put in place recently but Ghana risk premiums are also benefiting from the broader risk rally on the back of better headlines on the Russia-Ukraine conflict”.

    The E-Levy is projected to boost revenue to about 15.4% of GDP by the end of 2022, from a forecast of about 13% last year.

    Importantly, the reduction in the yield of the country’s international bonds is a good omen for the Ghanaian economy.

    The foreign exchange market is also expected to benefit immensely, as investors will hold firmly onto their investments.

    This will help reduce the pressure on the cedi as its rate of depreciation continues to slow.

  • BoG surveys reveal business confidence declining

    BoG surveys reveal business confidence declining

    By Elorm Desewu

    The Bank of Ghana’s (BoG) business and consumer confidence surveys, conducted in February 2022, revealed a softening of sentiments with business confidence declining by a greater extent.

    While consumer confidence dipped by 0.7 percentage points, business confidence declined by 9.6 percentage points. Consumers were mainly concerned about the persistent increases in fuel prices, increases in transportation fares and rising inflation. Businesses, in addition to these factors, were also concerned about the impact of these on macroeconomic conditions and on their short-term targets and profitability for 2022.

    These survey findings were broadly in line with observed trends in the February 2022 Ghana Purchasing Managers Index (PMI). The Ghana PMI, which is a measure of the rate of inventory accumulation by managers of private sector companies, declined below the 50.0 benchmark on the back of weak output and purchasing activity amidst rising inflation.

    The rebound in economic activity continued, as reflected in some improvements in the Bank’s updated Composite Index of Economic Activity (CIEA), although at a slower pace than in 2021.

    The index recorded an annual growth of 4.2 percent in January 2022 compared to 13.9 and 3.4 percent in the corresponding periods of 2021 and 2020. The key drivers of the index during the period were industrial production, exports, credit to the private sector and airpassenger arrivals.

    Consumption of goods and services, and construction activity, however, slowed down, acting as a drag on the index.