Category: News

 

 

Adnan Adams Mohammed

Ghana’s Finance Minister is expected to present a review of the mid-year budget before Parliament on Thursday, July 23, 2020.

 

In accordance with Section 28 of the Public Financial Management Act, 2016 (Act 92), the Finance Minister is mandated to provide Parliament on the strategies and roadmaps as to how government intends to deal with the effects of the coronavirus outbreak in Ghana.

 

The minister in March this year told Parliament that, Ghana’s economy will lose some GH¢9.5 billion as a result of the coronavirus outbreak, which is about 2.5 percent of Ghana’s revised GDP.

 

Also, Ghana’s budget deficit for 2020 is likely to double the legal limit as a result of the adverse impact of Coronavirus on the economy which sees an undoing of the fiscal discipline that was supposed to curb financial bailouts from other countries as the minister indicated in a recent Ken Ofori-Atta in a recent interview with Bloomberg explained Ghana’s fiscal gap is forecasted to widen beyond 10% of Gross Domestic Product (GDP) from an adjusted outlook in March of 7.8%.

 

The minister is expected to provide Parliament with a roadmap as to how government plans to pay a GH¢10 billion loan granted by the Bank of Ghana (BoG) as well as a roadmap for the US$219 million transferred from the Ghana Stabilization Fund to the Contingency Fund to deal with the coronavirus outbreak, during the presentation of mid-year review this week.

 

An economist, Dr. Theo Acheampong has confirmed that, the COVID-19 pandemic’s significant impact on government revenues could push this year’s budget deficit to as much as 10 percent of GDP if no drastic efforts are taken to rein in some expenditure items.

 

According to the Ministry of Finance, the revenue losses occasioned by the virus and other hurriedly assembled initiatives to fight the pandemic could set the government back by about GH¢21bn.

 

Already, official data for the first quarter of the year shows that government’s revenue for the period was more than GH¢3.6bn off-target—an indicator that government’s deepest fears may not be far from reality.

 

Speaking on a webinar hosted by policy think tank IMANI on the topic, “Opportunities and Challenges of Public Financial Management Systems to Respond to COVID-19 in Africa”, Dr. Acheampong stated that expenditure rationalisation holds the key to closing the widening budget deficit gap.

 

“What COVID-19 has done with the loss of the revenue is that it has created a much bigger funding gap and we have to resort to few other sources to plug that gap. Even with the gap that existed [pre-COVID-19], we could still have pursued a few of these rationalisation initiatives to more or less reduce how big this gap would be.

 

“Some of these savings could actually then mean we probably would run under 6 percent to 6.5 percent deficit, which is probably 1.5 percent lower than the deficit estimates now that we are expecting a between 8 to 10 percent budget deficit,” he said.

 

While the Fiscal Responsibility Act caps government’s budget deficit for a fiscal year at 5 percent of GDP, given the massive scale of the pandemic’s shock, Finance Minister Ken Ofori-Atta has already said that the ceiling would have to be set aside for at least this year.

 

According to Dr. Acheampong, despite the act making provision for the cap to be aside in times like this, the legislation fails to indicate how the country would navigate its way out of the wider-than-expected deficit.

 

“In the law, there is a bit of room to trigger some of these emergency provisions, but there is no additional detail on how you actually go about doing this and how far you can go to spend your way out of the crisis,” he added.

 

Dr. Acheampong argued that initiatives like the Nation Builders Corps (NABCO), which provides stopgap employment to about 100,000 graduates, need to be reassessed in order to create more value as well as make more savings to create more fiscal room.

 

“A programme like NABCO can and should be reviewed because it has been implemented for a number of months now, especially in a situation where you are facing significant budget gaps,” he said.

 

He mentioned that other costly initiatives like the Free Senior High School, however, may be difficult to rationalise regardless of the dwindling revenues, as the policy remains one of the flagship government programmes.

 

However, Finance Minister has assured that, the Akufo-Addo Addo-led government is highly optimistic of a victory in the December 7 elections, therefore will not engage in reckless spending and create problems for itself ahead of the elections.

 

He explained that if the government digs a hole in the economy ahead of the elections, it will have to come back to fix it beginning January 21st after , in his view, President Akufo-Addo has been sworn into office again for his second term.

 

Mr Ofori-Atta, in an interview last week, noted that, the projected budget overrun for this year will not be influenced by capturing electoral votes.

 

This follows concerns that the new budget deficit that have been [rejected by the finance minister is aimed at political vote and but actually economic recovery.

 

The Finance Minister insists the current record of government is enough to actually win the Akufo-Addo administration a second term after this year’s elections.

 

“It is amazing when you have millions of people around the world raising the concerns. I think the issue really is the application of resources that we have.

 

“I don’t know but it has been three and half years of seeing how government has operated, there has to be trust and we the using the money well.

 

“At least from the Ministry of Finance, I can assure you that the presidency will ensure that the resources that we have are used judiciously. We are confident that by God’s grace the people of Ghana will reelect us.

 

“If you are doing that, then you don’t want to dig a hole for yourself. You truly want to make sure that you stand well in January 2021,” he said.

 

 

Adnan Adams Mohammed

 

The State Owned Enterprise representing the nation in the in the petroleum sector exploration and production, Ghana National Petroleum Corporation (GNPC) this week was featured in major news headlines on its operations and the impact of the Coronavirus pandemic.

 

Parliament, last week, gave approval to the 2020 work plan of the GNPC which sought to expend about US$500 million for the year with a call on the Corporation to better position itself to be more financially prudent.

 

The Emmanuel Akwasi Gyamfi chaired the Committee on Energy and Mines, whose report on the 2020 schedule of the GNPC was approved and adopted by the plenary,

 

But, the Minority in Parliament is not enthused with however the present government is borrowing form the GNPC as though it is a financial institution. The minority has therefore cautioned that, GNPC must not be treated as a financial institution where the government keeps borrowing from.

 

“The government owes GNPC over $300 million. They [GNPC] need $500 million to finance their activities for the year 2020”, Deputy Ranking Member for the Committee on Mines and Energy, Dela Sowah has, adding that, “What the government owes them [GNPC] is equivalent to 66% of GNPC’s estimated budget so if you look at it, it doesn’t make sense. Why is it that the government owes them so much and yet they need money to do their own activities and they don’t have.”

 

The Parliament Select Committee on Energy and Mines chaired by Emmanuel Akwasi Gyamfi, whose report on the 2020 schedule of the GNPC was approved and adopted by the plenary recommended to the GNPC to look for potential investors to take over the Prestea Sankofa Gold Limited (PSGL) to make it financially prudent.

 

The PSGL reportedly ceased operations in 2016, but the GNPC continued to allocate funds from its petroleum operations in unsuccessful efforts to revamp it. Again, an amount of US$5.00 million has been earmarked for the activities for the PSGL in 2020.

 

However, “the Corporation explained that all efforts to revamp the company in view of its socio-economic importance-job creation and possible revenue to the State, has not been successful”.

 

The Committee was of the view that the continuous expenditure on such non-revenue generation venture was financially not prudent; and accordingly urged the Corporation to look for potential investors as, a matter of urgency and priority, to take over the company.

 

As part of the report, Mr Gyamfi, who is also the Member of Parliament for Odotobri Constituency, announced that

 

It was disclosed that, Cabinet has taken a decision to cede the midstream gas operations to the Ghana National Gas Company, but the Corporation would continue to play its role as Aggregator of the Gas in the upstream sub-sector. However, the midstream operations involving the processing, transportation, distribution and sale of the gas to the end-use, are being transferred to the Ghana National Gas Company.

 

The Chairman of the Committee informed the plenary that the Deputy Minister of Energy, during the Committee’s interaction with him, explained that inflows from the GNPC from the gas business was just about 2.5 per cent of its total budget, and assured that, relinquishing the gas management business to the Ghana National Gas Company will not significantly affect the Corporation’s finances, and therefore suggested unbundling the gas business by allowing the Ghana National Gas Company to assume the role of operator to maximize the benefits of gas resources to the country.

 

In 2020, scheduled activities of the GNPC, both midstream and other projects, are made up of the construction of oil and gas enclave roads, with a budgetary allocation of US$30million; a revamping of the Prestea Sankofa Gold Limited, whose initial budget of US$11.26 was downsized to US$5million.

 

“An interim re-organisation committee has been established to revamp the company’s operations,” Mr Gyamfi announced.

 

Other planned projects are investment in the petroleum hub, marine patrol vessels, and fertilizer and biotechnology projects.

 

The non-petroleum capital projects would involve the Accra Head Office, the Corporate Operational Head Office in Takoradi, Research and Technology, Works and Landed Project, refurbishment of the Petroleum House in Tema, completion of works on Chapel Hill and works on redevelopment of the Takoradi Beach Road.

 

The Energy and Mines Committee Report noted that the price war between Saudi Arabia and Russia and the impact of the Corona Virus pandemic led to a crash in oil prices in the first quarter of 2020.

 

Consequently, GNPC’s Chief Operating Officer has indicated that, new oil exploration activities which had been planned for this year are suspended, blaming the COVID-19 pandemic, which it says has negatively impacted on the oil and gas industry in Ghana and the world at large necessitating international oil companies (IOCs) to take business decisions to safeguard their investments which are mostly the nation’s interest.

 

Mr James D. Yamoah, speaking at a virtual conference by the Africa Centre for Energy Policy (ACEP), said, “some of the companies have decided to suspend their operations in the country, while others have deferred their operations to the second and third quarters of 2021”.

 

The current disruptions created by COVID-19 across all sectors of the economy, have enabled the GNPC to emphasize the need to be supported to build the corporation’s operatorship capabilities to tackle the impacts of the pandemic.

 

Mr Yamoah said the low oil price on the global market, which have adversely affected GNPC’s revenues and cash flows, have also affected the share of state revenues that government leaves to the Corporation to meet its operational expenses.

 

Consequently, the GNPC has had to renew its emphasis on diversification of energy sources and maintaining revenue streams that, going forward, would help the national oil company.

 

Yamoah admitted that the GNPC needs to consolidate its gains in the upstream segment and that it has to pursue an aggressive change in strategy from being just a facilitator to a full operator in the upstream business.

 

“There must be a continuous and increased investment in GNPC operated blocks. The Corporation would have to leverage its commercial subsidiaries like the GNPC Exploration and Production Company Limited for commercial participation” he noted.

 

With regards to some of the strategic responses and risk mitigations that the Corporation had taken, Mr Yamoah said it had embraced a safety mind-set and every staff of the GNPC had to take a proactive approach in response to the COVID-19 outbreak.

 

He said as part of efforts to contain the spread of the COVID-19, staff were ab

iding by the protocols drawn by the World Health Organisation and the Ghana Health Service.

 

“We are working from home and it is very lonely, our job is such that without a physical presence at our work, all what we do is hampered, and then also the stress and the mental health (problems) that come with it.”

 

 

Adnan Adams Mohammed

 

As local and international advocacies mount pressure on governments to diversify significantly their energy sources, Ghana Government is gradually putting in place measures to attract investments in renewable energies. 

 

Last week, aSwiss based engineering firm, NEK, announced that it was set to construct 1,000 megawatts of wind power for the Country as part of efforts to implement the Renewable Energy Act (Act 832).

 

The Project which is only waiting for the government’s greenlight to commence is to be executed in two phases. The first phase will see 150 megawatts of wind power constructed and the second phase bringing about 850 megawatts onto the national grid.

 

It is believed that, NEK’s Wind Farms project will produce electricity on a much cheaper level in a sustainable manner. The Ayitepa Wind Farm, for instance will offer ECG an amount of 8.9 cent per kilowatt per hour which is much less than any other electricity Producers can offer.

 

“NEK has supported the renewable energy plan by the government of Ghana”, Jasmine Kappiah, the Project Manager of NEK has said.

 

In supporting the planned project and the energy source diversification, the Institute of Energy Security (IES) agrees that, “Renewable Energy is the way to go.”

 

“We think that renewables are the way to go. The best way for the global economy to recover is through green recovery,” the Executive Director of IES, Paa Kwesi Anamoah Sekyi has said in an interview.

 

A recently published article by the Institute for Energy Security (IES) made a case for the strong consideration of Solar and Wind energy sources in Ghana and Africa’s post-COVID recovery plan.

 

In the article authored by IES Research and policy Analyst Raymond Nuworkpor citing multiple authorities, the IES said not only does the adoption reduce pressure on the national grid because of “its unreliability in terms of power supply”, but “provides cheaper sources of energy at more stable generation and use levels, that enable businesses to adequately plan and grow.”

 

The institute added further: “The green energy sources are rapidly becoming cheaper than fossil fuel powered plants. 56 percent of capacity additions for utility-scale renewable power in 2019 achieved lower electricity costs than cheapest coal plants. There will also be 23 billion annual potential savings if the costliest 500 GW of existing coal were replaced by solar and wind. Also, 1.8 gigatons of carbon dioxide reduction annually possible, equalling to 5 percent of the total global carbon dioxide emissions last year. And lastly, a cumulative global GDP will grow by US$98 trillion, according to IRENA.”

 

The full article as captured and reproduced in this article made very compelling and revelation and recommendations that needs critical attention by Ghana government and others.

 

It said; during the first quarter of 2020, the world recorded slumps in prices of crude oil, exposing its vulnerability and volatility. Due to the coronavirus (COVID-19), crude oil prices plunged by 54.18 percent on average terms, starting the year on a high of US$66.74 to close the first quarter of 2020 at US$30.58 per barrel. The price plummet was so precipitous that at a point, a barrel of crude cost less than a meal at any fast food restaurant. The suspension of exploratory works, slashing of projected crude oil receipts, job losses, diversification of investment from fossil fuel, withholding of shareholders’ returns, filing of bankruptcy et cetera were the dominant features of the crude market in the first and second quarter of year 2020.

 

COVID-19 has changed the world as we know it. The pandemic has changed among others, the way we eat, the way we work, the way we communicate. In International Energy Agency’s report, “World Energy Investment” published in May 2020, the agency describes drastic changes in the energy markets in the wake of the pandemic. The report reveals the largest fall in energy sector investment ever and uncovers historic shift along the way. It shows that for the first time ever, there will be more spending on electricity than on oil. Most importantly, the report asserts that it is in the power sector where the possibilities of transition to a low-carbon energy sector are most apparent.

 

Although a separate report from the IEA noted that, newly installed renewable power capacity was expected to decline by 13 percent this year, the renewable (green) energy sector was proven to be disproportionately resilient to the impacts of the pandemic.

 

Damilola Ogunbiyi, Chief Executive Officer (CEO) and Special Representative of the United Nation (UN) Secretary-General for Sustainable Energy for All (SE4ALL) and Co-Chair of UN-Energy, has noted that, “as countries rebuild economies from the impacts of the pandemic, they are faced with a unique once-in-a-generation opportunity to recover better with sustainable energy.”

 

It will therefore not be shocking that the post-COVID-19 era will be jam-packed with sustainable energy related programmes, and laggard governments that are slow to adopt and advance their renewable energy resources, risk being left behind – or worse, will completely be shut out. They will suffer consequences such as slow social and economic development, augmented environmental problems resulting from continued reliance on fossil fuel energy resources.

 

Energy related matters, particularly the production of electricity from renewable sources, are critical on the agendas of most governments around the world today. The United Nations’ Millennium Development Goals (MDGs), the Sustainable Development Goals (SDG 7- Access to affordable, reliable, sustainable and modern energy for all by 2030) and the Paris Agreement, emphasize the importance of energy sustainability, healthy ecosystem and decarbonisation.

 

The UN Secretary-General’s SE4ALL initiative, clearly shows how clean, affordable and safe energy can enable countries recuperate better and leverage renewable energy to not only close the energy gap but also reset their economies. The SE4ALL guide shows that African countries, through a widespread, ambitious and genuine commitment to advancing comprehensive renewable energy can achieve resilient economies with long-term growth, new jobs, cleaner and healthier environments, increased Gross Domestic Product (GDP), improved agriculture yields, and affordable and sustainable energy for all in the long term.

 

It is an important fact that developing renewable energy is a must-have, a make-or-break commodity. Hence, most governments have already planned and are deploying strategies to achieve sustainable energy supply. Many countries around the world have instituted objectives to adopt and utilize renewable energy resources to shore up their power generation and consumption. By the adoption of policies and pursuance of targets, countries like China, United States (USA), Germany, United Kingdom (UK), Saudi Arabia, and the United Arab Emirates (UAE) have become world leaders in renewable ene

rgy, and are investing heavily into renewable energy technologies (RETs).

 

Germany for instance, continue to play a key role in the energy transition conversation, investing heavily in technology, education and research.

Germany has set for itself a 65 percent target by 2030, requiring an increase in wind and solar generation capacity to between 215 and 237 gigawatts (GW) from 120 GW presently. Wind, solar and other clean energy sources currently account for more about 40 percent of the country’s energy production, having more than doubled over the past 8 years, according to Reuters. The International Renewable Energy Agency (IRENA) figures for 2018 show around 284,000 people working in Germany’s renewable energy sector, the vast majority in wind energy.

 

The story in Africa, especially sub-Saharan Africa looks different, yet promising. A crucial source of concern is the worrying trend of lack of access to affordable electricity and the unsteady nature of electricity supply; factors which have been impediments to continental development and energy security.

 

Isn’t it mind boggling that till date Africa, a continent with the richest solar resources in the world, has installed only 5 gigawatts (GW) of solar photovoltaic (PV), which is less than 1 percent of the global total, as noted by the International Energy Agency (IEA). Meanwhile, the agency projects that Sub-Saharan African countries are to witness the fastest growth from 2020 to 2040, with demand for electricity doubling to over 1,600 terawatts-hour (TWh).

 

Morocco remains the leading country playing an important role in Africa’s energy transition with the Noor Ouarzazate solar complex, according to a June report by the African Development Bank (AfDB) Group. The country is making strides to address Africa’s energy infrastructure deficit challenge. The June 2020 Climate Action Tracker statistics, founds Morocco and the Gambia as the only countries in the world on track to curb emissions to the 1.5°C limit urged by Paris Agreement and the UN’s Intergovernmental Panel on Climate Change (IPCC).

 

In Ghana, businesses production and outputs over the years have been affected in one way or the other, due to inadequate power supply or power fluctuations. It is reported by the Institute of Statistical, Social and Economic Research (ISSER) of the University of Ghana that Ghana’s power crisis of 2012-2015 had a huge negative effect on manufacturing firms, which includes the fold up of businesses and job loss. It is for such reasons that a push for the utilization of renewable sources of energy is in the right direction. Not only does this take pressure off the national grid with its unreliable power supply, but also provides cheaper sources of energy at more stable generation and use levels, that enable businesses to adequately plan and grow. Africa and for that matter Ghana, stands to potentially benefit immensely with its small and medium scale enterprises, households et cetera, as they explore and utilize available sources of renewable energy to cut down on their energy expenditure.

 

According to International Renewable Energy Agency (IRENA), jobs in renewables would reach 42 million globally by 2050; additional 21 million jobs through energy efficiency measures and 15 million jobs through system flexibility. The green energy sources are rapidly becoming cheaper than fossil fuel powered plants. 56 percent of capacity additions for utility-scale renewable power in 2019 achieved lower electricity costs than cheapest coal plants. There will also be 23 billion annual potential savings if the costliest 500 GW of existing coal were replaced by solar and wind. Also, 1.8 gigatons of carbon dioxide reduction annually possible, equalling to 5 percent of the total global carbon dioxide emissions last year. And lastly, a cumulative global GDP will grow by US$98 trillion, according to IRENA.

 

Power generation cost by wind energy for instance continue to rapidly plummet over the last decade per data gathered by IRENA. Onshore and offshore wind declined by 39 percent and 29 percent respectively. The declining cost of wind energy makes it cost effective and prudent investment, with the same amount of money, investment value increases i.e. US$1 million invested 2010 yields 514 kilowatts (Kw), the value however increases to 679 kW in 2019 for onshore wind.

 

With the lowering cost of renewable energy sources, renewable has demonstrated its robustness, stability, sustainability, and cost effectiveness over this malignant Covid-19 period unlike the crude oil market. The shift from a hydrocarbon based energy production to renewable energy sources is pushing lot of investors, fund managers, and oil majors to diversifying capital into renewable energy sources.

 

The sustainable recovery strategy by countries around the world especially Africa must be to protect existing renewables project while erecting the needed enablers to upscale infrastructure related to energy transition.

Securing strategic funding for local industries and institutions for a smooth transition from hydrocarbon based sources to renewables for an inclusive growth and development, is something that cannot be overlooked.

 

The energy transition conversation must be a global dialogue, with Africa as an active participant because of the enormous job opportunities associated with renewable energy production, i.e. drastic reduction in electricity tariffs, decarbonisation and minimization of climate change related disasters. The renewable energy conversation does not mean pulling the plug on fossil fuel overnight but rather providing the needed catalyst to ensure adequate energy mix especially in Africa with it attended electricity challenges.

 

It is the resilience of renewable to the COVID-19 pandemic, combined with the falling cost of power generation from renewable energy resources that has led many to forecast a significant increase in green investment post-COVID-19, and Africa cannot miss out of this opportunity. There is a strong consensus that renewable energy is the future emerging segment for the energy industry, an opportunity for also green investors to acquire shares at cheaper prices.

 

Adnan Adams Mohammed

Parliament, last week, approved a €56,153,500.00 credit facility from Deutsche Bank AG and Global Services (UK) Limited for the construction of health facilities in some parts of the country.

 

Two Trauma Hospitals will be constructed in Obuasi in the Ashanti Region and Anyinam in the Eastern region. The facility will also see an Accident and Emergency Centre put up at Enyiresi Hospital and the rehabilitation of Obuasi Health Centre.

 

The project forms part of the approved list of priority projects for implementation captured in the 2020 Budget and Financial Policy Statement presented by finance minister Ken Ofori-Atta and are expected to be completed within three years after commencement.

 

The facility agreement between Ghana and the lending Bank Deutsche Bank AG with TMF Global Services of the United Kingdom as the facility arranger to finance the projects was presented to the House on Wednesday, July 1, 2020, by Charles Adu Boahen, a Deputy Minister of Finance on behalf of the substantive Minister Ken Ofori and referred to the Finance Committee for consideration and approval.

 

In presenting report of the finance committee on the agreement, Chairman of the Committee Mark Assibey-Yeboah said the country is committed to ensuring the provision of health infrastructure to ensure quality health services delivery and also to promote universal access to health care services nationwide.

 

According to the New Juaben South MP the introduction of the National Health Insurance Scheme (NHIS) has enhanced financial access to healthcare services with increasing utilization of Out-Patient-Department services nationwide, yet the development of health infrastructure has not kept pace with the continuous increase in demand for OPD services in all regions of the country.

 

The object of the loan is to finance the construction of the required infrastructure and the provision of medical equipment and ancillary services to ensure that the beneficiary hospitals are fully operational and befitting their status to provide the enabling condition for attracting the needed healthcare professionals.

 

Mark Assibey-Yeboah added the Committee observed that Obuasi in Ashanti Region and Anyinam in the Eastern Region presently do not have any major government hospitals while the existing Obuasi Health Centre is presently ill-equipped and inadequate to meet the health needs of the burgeoning population of the catchment area.

 

The Committee, he said, was also informed that the Enyiresi Hospital though strategically located along the Accra-Kumasi highway does not have a modern Accident or Emergency Centre, hence the project is intended to provide the required infrastructure, medical equipment, ancillary facilities and services to ensure that the beneficiary hospitals are fully operational and befitting the status of modern hospitals with an emphasis on trauma.

 

 

Adnan Adams Mohammed

 

The Public Interest and Accountability Committee (PIAC) wants the PRMA amended to remove the ministerial discretion in the determination of placing a cap on excess revenue accruing to the Stabilisation Fund (SF).

 

PIAC believes that the removal of the discretionary powers would ensure that there was enough money in the Contingency Fund to address national emergencies. Per the current law, the Minister has the power to determine how much of the excess funds go into the Contingency and Sinking Funds.

 

This comes after several stakeholders register their dismay with some provisions in the petroleum sector legal framework including the Minister’s discretionary power provided in the Petroleum Revenue Management Act (PRMA). This, some of the stakeholders in the energy sector think exposes the management of the petroleum sector revenue and management to political abuse of the system to the disadvantage of prudent management of state resources.

 

The 2019 PIAC annual report from its findings observed that, an amount of US$189.13 million was withdrawn as excess over the cap (ceiling) of US$300 million placed at the discretion of the Minister of Finance on the GSF for which the excess, was withdrawn into the Sinking Fund.

 

This did not sit well with the committee thereby prompting Mr Noble Wadzah, Chairman of PIAC to make the proposal for the removal of the minister’s discretionary powers provided in the PRMA when he spoke at a public forum on the management and use of Ghana’s petroleum revenues in Cape Coast last week.

 

The Committee further noted in its report that the accumulated net profit on the investment of the GPFs since November 2011 to the end of 2019 amounted to $65.92 million, adding that, investments were mainly in low-risk instruments with low returns.

 

In this regard, Mr Wadzah reiterated the Committee’s recommendation to the government to invest petroleum revenues in high yielding capital projects for maximum returns.

 

“After reviewing GIIF’ s investment of $30 million in KIA Terminal 3, and the subsequent returns of $5.5 million of the initial investment in three (3) years, the Committee recommends more of such investments in high-yielding capital projects. This aligns with the spending aspirations of the ABFA with respect to capital expenditure,” he said.

 

PIAC expressed worry about the cumulative indebtedness of Ghana National Gas Company (GNGC) and called on the Government to as a matter of urgency address its unsustainable debts.

 

It further urged the government to expedite action on the infrastructure requirement for gas evacuation and utilisation to avoid the huge backlog of make-up gas volumes and eventual resource waste.

 

PIAC is a constitutionally mandated body with oversight responsibility on the prudent use and accountability of oil revenues.

By Elorm Desewu

The recent price hike in transport fare by 15 percent would exert some pressure on the country’s inflation rate for the next couple of months and most likely put some key macroeconomic indicators off gear.

The government last week announced 15 percent increase of transport fare after the transport operators have mounted pressure.

But this current hike would also affect the Bank of Ghana’s inflation target of  8±2 percent . According to the BoG, the baseline projection for headline inflation would remain at the upper end of the medium-term target band of 8±2 percent to end of 2020.

Year on year inflation measured by the Consumer Price Index, (CPI), for May 2020 was 11.3 percent up from 10.6 percent recorded in April 2020.

At the end of the first quarter of 2020, headline inflation was on target, averaging 7.8 percent for the quarter.

This was mainly driven by relatively tight monetary conditions (positive real interest rate gap), lower inflation expectations, low imported inflation, and low real marginal costs. The low real marginal costs came on the back of widening under-capacity utilization of the economy, resulting from negative demand shocks and the relatively tight monetary conditions.

Although headline inflation rose significantly in April, driven by panic food buying ahead of the partial lockdown as part of the Covid-19 containment measures, inflation is expected to gradually decline in the second quarter, barring unanticipated shocks.

Output gap (the measure of the level of capacity utilization) is projected to remain negative in the medium-term, driven by real sector expectations of weak economic activity, persistence of the current negative demand shocks, and relatively tight monetary conditions in the forecast horizon.

 

 

Dr Jurgen Bode, a Professor of International Business and Deputy Vice-Chancellor for International Affairs & Diversity at the University of Applied Sciences, Bonn, Germany, has explained that COVID-19 has led to deglobalisation in which many countries are focusing on their strategies within.

 

He said in some cases, businesses are diversifying and innovating with 100% raw materials and inputs from within their respective countries.

 

Prof Bode said though the coronavirus pandemic has disrupted global marketing, logistics and supply chain, it has led to massive reduction in air pollution from the aviation and automobile industries.

 

He also explained that in Germany, COVID-19 stimulus packages are targeted to promote electric vehicles to sustain a reduction in air pollution and meet climate change expectations.

 

Prof Bode said COVID-19 has taught the whole world that countries, multinational companies, and other businesses can cut down on travel cost and still be productive and relevant.

 

He emphasised that COIVD-19 has saved a lot of expenditure budgeted for business, conference and other related travels by organisations. Prof Bode challenged countries and organisations not to forget the core lessons when Coronavirus Pandemic is finally defeated.

 

He was speaking during the University of Cape Coast School of Business 6th and final session of the e-seminar series on the topic ‘Coronavirus Pandemic: Global Marketing, Logistics and Supply Chain’.

 

The seminar was held on 1 July 2020 and was chaired by Prof Francis Amanquandoh, the Provost of the College of Humanities and Legal Studies.

 

He was happy to be part of the seminar series and praised the School of Business for organising the event and inviting experienced discussants to be part of it.

 

Prof Amanquandoh was particularly satisfied with the topics chosen for each session.

 

The Dean of the School of Business, Professor John Gatsi, in his brief remarks, thanked all the discussants, especially those from other universities in Ghana, Germany, United States of America and South Africa as well as professional bodies, for being part of the programme.

 

He said the blend of international and national academics on the one hand; and industry and professional bodies’ representation on the other, demonstrates the strength of the School of Business in ensuring diversity and closer affinity with professional bodies in accounting, taxation, marketing, human resource, banking, corporate governance, procurement and supply chain.

 

Prof Gatsi called on businesses and employers to support the school in delivering its programmes through online learning platforms to be as effective as face-to-face delivering.

 

He said online teaching and learning require maximum discipline and a congenial learning environment for students, even though they are not congregating at a physical learning centre.

 

Prof Gatsi, therefore, appealed to institutions and employers not to deny their workers leave during this sandwich session merely because the programmes are delivered online.

 

He said granting leave to employees to participate in the online delivery mode or creating virtual learning spaces in offices to be used during scheduled lecture times, is a great contribution to the efforts of the Business School as this will allow the students to fully participate.

 

Prof Gatsi also appealed to businesses to create innovative engagement with students by creating virtual internship opportunities for those interested, to have their internship experience with them.

 

 

Adnan Adams Mohammed

The Ghana Stock Exchange (GSE) Financial Index, last week, recorded no gains or losses, closing at 1,706.66 with a -15.50% year-to-date return while the SAS Manufacturing Index remained unchanged at 2,599.53 with a year-to-date return of -25.33%.

 

Trading activity strengthened as 85,632 shares valued at GH¢53,668 changed hands from 18,815 shares valued at GH¢18,954 in the previous session. With CAL Bank dominated trades by volume and value, accounting for 58.39% of the total volume traded and 60.56% of the total value traded.

 

MTN Ghana (-1.72%), the sole decliner at the session, moderated the benchmark index by 11.84 points (-0.63%) to close at 1,865.69 with a year-to-date return of -17.34% while the market capitalization decreased by 0.23% to settle at 52.60 billion.

 

“We expect activity levels to increase as investors take advantage of bargain stocks”, SAS Ghana has said.

 

Also, the Exchange recorded a total of more than 262.2 million traded shares valued at GH¢194 million in the first six months of 2020 amid the uncertainty of the novel COVID-19.

 

The performance, from January to June 2020, represents 107.9 percent growth in volumes and 87.7 percent in value traded over the same period in 2019.

 

On a month-on-month basis, trading volumes recorded a dip of 16 percent at the end of June after an impressive run in May 2020.

 

60.74 million shares were traded in June compared with 72.61 million shares in May.

 

This resulted in a total value of GHc46.983 million recorded in June as against GHc47.825 million recorded in May, representing a slight fall of 1.76 percent.

 

Daily average value recorded in June was GHc2.174 million compared to GHc2.517 million recorded in May 2020.

 

The GSE Composite index as at the end of June 2020 had continued the downward trend to record a decline of 15.83 percent (YTD) compared to the 14.01 percent (YTD) fall as at the end of May 2020.

 

On the bonds market, trade volume for the first six months of 2020 was up 49.7 percent over the same period in 2019.

 

Again the half-year trade volume of 49,519 million is 89 percent of the total trade volume in 2019, the Ghana Stock Exchange said.

 

The volume of securities traded for the month of June 2020 increased by 145 million over the May 2020 figure of more than 8.8 billion while the liquidity of the market went up to 54 percent at the end of June from 32 percent in May, 2020.

 

 

Adnan Adams Mohammed

 

PZ Cussons has successfully been delisted from the Ghana Stock Exchange (GSE) bourse following the review of offer documents to initiate the process.

 

PZ Cussons earlier announced its tender offer to existing Qualifying Shareholders of the company to purchase fully the entire shareholding of each Qualifying Shareholder.

 

The Offer is priced at GHc 0.45 per PZ Cussons Share representing a 15.4 percent premium above the market price of GHS 0.39, which is the higher of the average 12-week market price and the market price on the annual general meeting date.

 

The process began with the opening of offer on July 6, 2020, and will close on August 17, 2020. Settlement would be made on September 4, 2020.

 

Currently, PZ Cussons has a total of 168 million shares issued on the bourse, with a total market capitalization of GHc 63.84 million.

 

In October 2019, PZ Cussons announced its intention to delist from the stock market following the unanimous approval of a resolution seeking to undertake the Offer and to De-List the Company from the Ghana Stock Exchange. Subsequently, shareholders of PZ Cussons also approved a resolution to undertake the Offer at the Company’s Annual General Meeting (“AGM”) held on 11 November 2019.

 

IC Securities (Ghana) Limited, is acting as sole financial adviser and sole sponsoring broker to PZ Cussons in respect of this Offer.

 

According to PZ Cussons Ghana, the proposed de-Listing is in line with the company’s plans to achieve operational efficiency, by providing management of the company more time and resources to focus on running and expanding the business, its distribution network and reach, thereby ensuring consumer satisfaction.

 

This brings the total number of companies delisted from the bourse to six over the past three years – some voluntary, some enforced. This will reduce the number of companies listed on the bourse to 31.

 

 

Adnan Adams Mohammed 

 

At least five Rural and Community Banks (RCBs) out of the over 140 RCBs in the country have successfully begun integrating onto the Warehouse Receipt Financing (WRF) Programme of the Ghana Commodity Exchange (GCX).

 

GCX is hopefully the process will soon integrate most of RCBs into the programme which began eight months ago. About 15 RCBs have been engaged already across the country so far, which means, about 10 more RCBs are already getting set to join the five now fully incorporated – a major step towards developing an efficient and effective agricultural finance channel for the agriculture sector.

 

According to the Exchange, the Sissala Rural Bank in Tumu of the Upper West Region is the latest financial institution to join the WRF scheme.

 

Others include the Nsoatreman Rural Bank which joined in October 2019, Builsa Community Bank in February 2020 as well as Success for People in May 2020 and Juaben Rural Bank in July 2020.

 

The Warehouse Receipt Financing Programme is an innovative way of providing access to finance using the GCX warehouse receipt as sole collateral for accessing loans.

 

Through this financing scheme, farmers who hitherto would have been required to provide landed property or any other fixed asset as collateral, are no longer required to provide them because the receipt provides collateral under receivables backed financing model.

 

This is similar to the model COCOBOD uses to secure an international syndicated loan every year, to the tune of at least US$1.3 billion, to pay farmers for the cocoa produce.

 

Importantly, because the borrowers would sell their produce on the GCX – which provides a ready market – lending risk is seen as relatively low which means that credit terms are better than those insisted on through traditional agricultural financing, where it is even available at all.

 

The RCBs are currently financing GCX receipts and providing access to financing to smallholder farmers, across their areas of operations.

 

Late last year, the Warehouse Receipt Financing (WRF) Programme was rolled out by the Exchange in partnership with ARB Apex Bank. As part of the arrangement, the ARB Apex Bank set aside over GH¢50 million to commence the programme.

 

In the pursuit of developing agriculture sector, the Exchange is creating avenues that would encourage more banks to expand into commodity backed lending.

 

Currently, the Exchange offers the opportunity to minimize the risk of loss of value of the collateral by monitoring movements in its market value and using margining and price risk management instruments with up to date market data analysis and notifications.

 

The integrated RCBs can now provide farmers with loans with the farmers using their deposited commodities as sole collateral.

 

Undoubtedly, through the WRF scheme, the livelihoods of farmers as well as depositors of agricultural commodities will be significantly improved.

 

At the moment, the GCX has indicated that through its Warehouse Receipt Financing scheme, over 150 smallholder farmers have received support to access working capital across the country.

 

Gradually, as all the RCB s are integrated into the system, smallholder farmers nationwide will have relatively easy access to financing, even as the Exchange also offers a ready market for produce sales as well.