News Guide Africa

Category: Technology

  • Gold for Oil policy suffers criticism…described as “zero-sum-game’

    Gold for Oil policy suffers criticism…described as “zero-sum-game’

    Adnan Adams Mohammed

    Government’s touted ‘game changer’ policy, Gold for Oil, intended to stem the exchange rate escalation has been receiving criticism from the energy industry experts as to the viability of the policy.

    The policy, as indicated by government is already receiving attention from global fuel traders and expecting its first consignment in second week of this month, January 2023.

    But the former National Petroleum Authority boss has described the deal as a ‘zero sum game’.

    The energy and finance analyst justified his comment that, from the way Bank of Ghana is redirecting the gold flows from the Small Scale Mining Companies into the banking sector directly, he do not see exports increasing nor imports decreasing and this will add up nothing to the current fuel trade pattern and its effect on the forex reserves.

    “Unless we put some sort of policy to curb under-used imports or increase taxes on non-essential imports”, Alex Mould, who is also a former GNPC Boss and Executive Director with Standard Chartered Bank suggested in an interview last week.

    He explained the ‘zero sum game’ description of the policy as that; “The trader who import products into the market and the main ones who buy gold from the Small Scale Mining Companies (SSMC) (that is, Melcoms and Palaces etc) were using the Cedis obtained from their local sales to buy Gold directly or indirectly and exporting it and obtaining the forex directly and not through the banking system. So the gold exports were going to these traders directly or indirectly and not in the hands of BoG or the Commercial banks.

    So, now that Bank of Ghana is redirecting the gold flows from the small scale mining companies into the banking sector directly through bank of Ghana.

    “The way I see it it’s a Zero-sum game because i do not see the exports going to increase nor do I see  imports decreasing unless we put some sort of policy to curb underused imports or increase taxes on non-essential imports.”

    “What we have told BoG  to do was to allocate some foreign exchange from our exports of gold, timber and oil which passes through Bank of Ghana and some of the commercial banks directly to the essential imports of the country, which include petroleum products building materials for industries and medical equipment and consumables as well as education consumables.

    “BoG never did that fully, although some partially done in the 2010-2016 era.

    The government had been working on the new policy to buy oil products with gold rather than US dollar reserves for the past few weeks. The move, announced earlier by Dr Bawumia, was meant to tackle dwindling foreign currency reserves coupled with demand for dollars by oil importers, which is weakening the local cedi and increasing living costs.

    Ghana’s Gross International Reserves stood at around US$6.6bn at the end of September 2022, equating to less than three months of imports cover. That is down from around US$9.7bn at the end of last year, according to BoG.

    If implemented as planned for the first quarter of 2023, the new policy “will fundamentally change our balance of payments and significantly reduce the persistent depreciation of our currency”, Dr Bawumia said a few weeks ago.

    Using gold would prevent the exchange rate from directly impacting on fuel or utility prices as domestic sellers would no longer need foreign exchange to import oil products, he explained.

    “The barter of gold for oil represents a major structural change,” he added.

    While countries sometimes trade oil for other goods or commodities, such deals typically involve an oil-producing nation receiving non-oil goods rather than the opposite. Ghana produces crude oil, but it has relied on imports for refined oil products since its only refinery was shut down after an explosion in 2017.

    Meanwhile, the Executive Director of African Center for Energy Policy (ACEP) is worried that, the policy might hand over control of gold and oil to politicians.

    “The structure presented as gold-for-oil only seeks to hand control of the gold and oil value chain to politicians. No other value can be deduced. It is obvious that if cheap oil comes to Ghana, other unknown factors will be responsible and not gold”, Benjamin Boakye indicated in a statement issued last week. “The government has still not been forthright about the cost of the structure to justify its competitiveness to the current private sector-led approach.”

    Mr Boakye also said the government agencies involved in the policy, the Bulk Oil Storage and Transportation (BOST), Tema Oil Refinery (TOR) and the Precious Minerals Marketing Company (PMMC), are historically poor performers in oil and gold-trading.

    In his view, “interventions of this magnitude should not leave people in doubt in the interest of good governance and assurance of the international community which has shown significant interest in Ghana’s gold for oil programme.”

    “The government also needs to be cautious and guided by the challenging context of state agencies in the oil and gold business because when these agencies make losses, it is the public that pays, and the energy sector is already inundated with debts because of similar trading abuses. There are no guarantees in the current structure that insulates the public from debt.”

  • Govt likely to achieve 6.6% deficit-BoG

    Govt likely to achieve 6.6% deficit-BoG

    By Elorm Desewu

    The Bank of Ghana, (BoG), has revealed that the government could achieve the revised budget deficit of 6.6 percent of GDP and a primary surplus of 0.1 percent of Gross Domestic Product, (GDP) through aggressive revenue mobilization.

     According BoG, the fiscal data shows that both revenues and expenditure outturns for the first nine months of 2022 fell short of their respective targets. The deviations in revenue stem partly from lower-than expected receipts.

    The expenditures performance on the other hand could be attributed to the build-up of arrears, considering the low statutory transfers.

    “Aggressive revenue mobilization and strengthened commitment controls in the ensuing months of 2022 will contribute immensely to achieving the revised end year budget deficit of 6.6 percent of GDP and primary surplus of 0.1 percent of GDP” it said.

    Government budgetary operations resulted in an overall budget deficit of GH¢44,021.8 million (7.4% of GDP) at the end of the first nine months of 2022. This was higher than the target of GH¢36,684.4 million (6.2% of GDP) by 20.0 percent. The overall fiscal deficit of GH¢44,021.8 million was financed largely from domestic sources with some external support.

    Domestic financing (net) was GH¢36,801.4 million (6.2% of GDP), substantially higher than the target of GH¢26,324.7 million (4.4% of GDP). Foreign financing on the other hand, was a net inflow of GH¢6,531.0 million (1.1% of GDP), far lower than the target of GH¢12,459.4 million (2.1 % of GDP).

    The pace of revenue mobilisation remained below target, reflecting in both tax and non-tax revenue. For the first nine months of 2022, total Revenue & Grants was GH¢65,398.8 million (11.1% of GDP), lower than the target of GH¢67,307.4 million (11.4% of GDP).

    The revenue outturn represented 97.2 percent of the target and recorded a year-on-year growth of 38.5 percent. During the review period, domestic revenue totalled GH¢64,601.4 million (10.9% of GDP), below the target of GH¢66,503.4 million (6.9% of GDP).

    The revenue outcomes reflected mixed performances for both tax and non-tax proceeds.  Tax revenue, comprising taxes on income & property, taxes on domestic goods and services and international trade taxes, was GH¢49,055.3 million (8.3% of GDP), lower than the target of GH¢50,414.8 million (8.5% of GDP).

    This represented a negative deviation of 2.7 percent.  Taxes on income and property, made up of personal income tax (PAYE), self-employed taxes, company taxes (including taxes on oil), royalties from oil and minerals, other revenue, and airport taxes totalled GH¢24,787.2 million (4.2% of GDP).

    This outturn was 3.2 percent below the target of GH¢25,601.9 million (4.3% of GDP).  Taxes on Domestic Goods and Services comprising Domestic VAT, Excise Duty, GET Fund Levy,National Health Insurance Levy (NHIL), Communication Service Tax (CST), ElectronicTransaction Levy (E-Levy) and COVID-19 Health Levy all summed up to GH¢20,889.0 million (3.5% of GDP) and exceeded the target of GH¢20,787.1 million by 0.5 percent.

    On a year-on-year basis, the outturn recorded a growth of 30.2 percent.  Taxes on International trade mainly from import duties was GH¢6,221.6 million (1.1% of GDP),· below the target of GH¢6,133.8 (1.0% of GDP) by 1.4 percent, and represented 26.8 percent yearon-year growth.  

    Tax refunds was GH¢2,842.5 million, higher than the target of GH¢2,107.9 million for the period and registered a year-on-year growth of 39.1 percent Non-Tax revenue for the review period totalled GH¢11,048.9 million, representing 90.8 percent of the target, and a year-on-year growth of 81.7 percent.

    The underperformance of this revenue handle was mainly due to lower collection efforts by some large and medium collectors as well as unrealised dividend payments. Other revenue measures made up of ESLA proceeds, raked in a total of GH¢4,217.3 million and was 19.3 percent above the target of GH¢3,535.3 million.

    Government received project grants in the sum of GH¢797.4 million lower than the envisaged target of GH¢804.0 million by 0.8 percent. This outturn was also lower than the GH¢847.4 million recorded in the corresponding period of 2021, thus reflecting a yearon-year decline of 6.0 percent.

    Government spending and arrears clearance was broadly within target, however, some key expenditure lines recorded overruns. Total expenditures & arrears clearance, for the first nine months of 2022, summed up to GH¢99,570.1 million (16.8% of GDP), below the target of GH¢102,566.8 million (17.3% of GDP).

    This outturn represented a year-on-year growth of 30.1 percent. The outturn was also 97.1 percent of the target. Of the expenditures,  Compensation of Employees (including wages and salaries, pensions & gratuities, and other wage related expenditure) was GH¢27,146.3 million, lower than the target of GH¢27,947.0 million.

    This outturn represented 97.1 percent of the target. In terms of fiscal flexibility, compensation of employees constituted 42.0 percent of domestic revenue mobilized, better than the 50.4 percent recorded in the corresponding period of 2021.  

    Use of Goods and Services totalled GH¢4,233.9 million, lower than the expected target of GH¢5,117.2 million. The outturn was 17.3 percent below the target, but recorded a year-on-year growth of 25.9 percent.  

    Total interest payments of GH¢32,101.1 million was higher than the projected target of GH¢30,890.5 million by 3.9 percent, and accounted for 32.2 percent of total expenditure. It also constituted 49.7 percent of domestic revenue, compared with 54.7 percent recorded in the corresponding period of 2021.

    Domestic interest payments accounted for 78.0 percent of the total interest payments during the period under review.  Grants to other Government units consisting of National Health Fund, Education Trust Fund (GETFund), Road Fund, Energy Fund, District Assemblies Common Fund (DACF), Retention of IGFs, transfer to GNPC and other earmarked funds all summed up to GH¢17,562.0 million, above the envisioned target of GH¢16,820.1 million by 4.4 percent.

    It also recorded a year-on-year growth of 57.7 percent. Other Expenditure made up of ESLA Transfers, Covid-19 related expenditure, and Other critical spending, for the first nine months of 2022 was GH¢7,093.9 million.

    ESLA transfers of GH¢3,816.3 million was above the projected target of GH¢3,319.8 million by 15.0 percent. Acquisition of Non-Financial Assets for the period under review was GH¢10,891.7 million (1.8% of GDP), lower than the programmed target of GH¢12,028.3 million (2.0% of GDP) by 9.5 percent. This outturn represented a year-on-year increase of 20.0 percent.

  • Debt-to-GDP to be reversed to 55% by 2028 – Gov’t hopeful

    Debt-to-GDP to be reversed to 55% by 2028 – Gov’t hopeful

    Adnan Adams Mohammed

    The government is targeting to achieve a debt-to-Gross Domestic Product, (GDP), ratio of 55% by 2028 despite the exemption of pension funds from the debt exchange programme.

    According to a senior government official, all stakeholders are committed to ensuring a programme from the International Monetary Fund is secured on time to bring back live into the Ghanaian economy.

    Commenting after government and organised labour reached an agreement to exempt pension funds from the debt exchange programme, the Finance Minister said though exempting pension funds comes as a cost to government, government and organsied labour will work together to close the fiscal gap.

    “Obviously, the issue of exempting pension funds from it [debt exchange programme] is at a cost and we have committed – government  and organise labour – to work together to ensure that we find means of plugging a hole that would ensure that we would return to the 55% thresh hold (debt-to-GDP)”, Ken Ofori-Atta, has expressed optimism. “I think that we are all committed to it because we know it is important to lead us to a board agreement [with the IMF] so that we continue with this success that we have.”

    “We are all in the spirit of Christmas and with the partnership that we have, I want to thank everyone who participated in the way forward”, he pointed out.

    Mr. Ofori-Atta also said the 2023 Budget which the appropriation was passed by parliament last week further brings confidence to the economy.

    “Yesterday, as you know, at 4:30 pm, parliament passed the appropriation and the budget [2023] further bring confidence as to where we are going. So of course,  the strength have been renewed to the spirit of the direction of where the nation is going.

  • BoG suspends budget financing beginning 2023

    BoG suspends budget financing beginning 2023

    By Elorm Desewu

    The Bank of Ghana, (BoG) has disclosed that it would no longer finance government’s large budget overrun from next year 2023.

    According to the governor of the BoG, Dr Ernest Addison, “the country has fundamental issues that we have to address such as fiscal problems, very large deficits which is not getting the adequate financing and therefore central bank was providing the financing on a temporary basis. Hopefully by the end of this year, that would not be there to complicate the inflation management issue”.

    He said the financing of government’s deficit was just a temporary accommodation till the end of this year adding till the IMF’s program is successfully completed and implemented there will be no need for Bank of Ghana’s accommodation going into 2023. “In fact we do not expect the central bank to finance the budget into 2023 that should be a thing of the past” he stressed.

    Provisional data on fiscal operations for January to September 2022 resulted in an overall budget deficit of GH¢41.7 billion (7.0 percent of GDP), against a programmed deficit target of GH¢36.7 billion (6.2 percent of GDP). The corresponding primary balance was a deficit of 1.6 percent of GDP, against a deficit target of 1.0 percent of GDP.

    The higher-than-projected deficit was on account of revenue shortfalls alongside expenditure overruns. Total Revenue and Grants amounted to GH¢65.4 billion (11.0 percent of GDP), compared with a target of GH¢67.3 billion (11.4 percent of GDP), representing a shortfall of 2.8 percent compared to target and year-on-year growth of 33.2 percent.

    Total Expenditure (including arrears clearance and discrepancy) for the period amounted to GH¢109.4 billion (18.5 percent of GDP), above the target of GH¢103.99 billion (17.6 percent of GDP) by 5.2 percent. The resulting overall fiscal deficit of GH¢41.7 billion was financed mainly from domestic sources.

    But for 2023 fiscal year, the government is projecting a fiscal deficit of GH¢61,475 million, equivalent to 7.7 percent of Gross Domestic Product (GDP) and a corresponding Primary balance deficit of GH¢8,925 million, equivalent to 1.1 percent of GDP.

    Total Revenue and Grants is projected at GH¢143,956 million or 18.0% of GDP and is underpinned by permanent revenue measures – largely Tax revenue measures – amounting to 1.35 percent of GDP.

    Total Expenditure including clearance of arrears is projected at GH¢205,431 million or 25.6% of GDP.

    This estimate shows a contraction of 0.3 percentage points of GDP in primary expenditures (commitment basis) compared to the projected outturn in 2022 and a demonstration of Government’s resolve to consolidate its public finances.

  • Job scarcity increases for 1st 10 months of 2022

    Job scarcity increases for 1st 10 months of 2022

    By Elorm Desewu

    The non-availability of jobs in the country has continued to rise, according to figures from the Bank of Ghana, (BoG).

    For the first ten months of 2022, the total number of advertised jobs declined by 9.5 percent to 26,595 from 29,380 recorded during the same period in 2021.

    The number of jobs advertised in the media, which partially gauges labour demand in the economy, increased in October 2022 relative to what was observed in the corresponding period a year ago.

    In total, 3,055 job adverts were recorded as compared with 2,734 for the same period in 2021, indicating an increase of 11.7 percent year-on-year. On a month-on-month basis, the number of job vacancies in October 2022 went up by 17.0 percent from the 2,611 jobs advertised in September 2022.

    Consumer spending, proxied by domestic VAT collections and retail sales, posted a positive performance in September 2022, compared with the corresponding period in 2021.

    Domestic VAT collections increased by 19.9 percent on a year-on-year basis to GH¢755.53 million, from GH¢630.34 million. Cumulatively, total domestic VAT for the first three quarters of 2022 went up by 20.3 percent to GH¢6,073.00 million compared with GH¢5,049.61 million for the corresponding period of last year.

    Retail sales increased by 8.9 percent year-on-year to GH¢118.78 million in September 2022, up from the GH¢109.10 million recorded in the same period in 2021. On a month-on-month basis, retail sales declined marginally by 1.1 percent in September 2022 from GH¢120.10 million in the preceding month.

    In cumulative terms, retail sales for the first three quarters of 2022 went up by 4.9 percent.

    Activities in the manufacturing sub-sector, gauged by trends in the collection of direct taxes and private sector workers’ contributions to the Social Security and National Insurance Trust (SSNIT) Pension Scheme (Tier-1), improved in September 2022.

    Total Direct Taxes collected increased by 30.0 percent (year-on-year) to GH¢4,004.27 million in September 2022, relative to GH¢3,080.55 million recorded in a similar period in 2021.

    Cumulatively, total Direct Taxes collected for the first three quarters of 2022 went up by 25.2 percent to GH¢23,058.72 million, from GH¢18,418.30 million for the same period in 2021.

    In terms of contributions of the various sub-tax categories, Corporate tax accounted for 57.1 percent, Income tax (PAYE and self-employed) accounted for 28.6 percent, while “Other Tax Sources” contributed 14.3 percent. Total private sector workers’ contribution to the SSNIT Pension Scheme (Tier-1) increased by 14.0 percent (year-on-year) to GH¢245.89 million in September 2022, from GH¢215.67 million collected during the corresponding period in 2021.

    Cumulatively, for the first three quarters of 2022, the contribution grew by 20.8 percent to GH¢2,293.11 million, relative to GH¢1,898.96 million recorded in the same period in 2021.

  • T-Bills, individual bondholders free from debt restructuring

    T-Bills, individual bondholders free from debt restructuring

    Adnan Adams Mohammed

    Individual bondholders, Treasury Bills investors are exempted from the government’s debt restructuring programme, Finance Minister Ken Ofori-Atta has announced.

    Last week, government invited holders of domestic debt to voluntarily exchange approximately GHC137 billion of the domestic notes and bonds of the Republic, including E.S.L.A. and Daakye bonds, for a package of New Bonds to be issued by the Republic.

    To this effect, bondholders like pension funds, banks and insurance firms will have to exchange their bonds for one that will earn zero interest next year. The government is currently negotiating a programme with the International Monetary Fund for a $3-billion credit facility programme, thus, necessitating the debt restructuring exercise. However, individual bondholders are excluded from the arrangement.

    “Under the programme, domestic bondholders will be asked to exchange their instruments for new ones”, Mr Ofori-Atta announced Sunday evening (4 December 2022), adding: “Existing domestic bonds as of 1st December 2022 will be exchanged for a set of four new bonds maturing in 2027, 2029, 2032 and 2037”.

    Also, “the annual coupon on all of these new bonds will be set at 0% in 2023, 5% in 2024 and 10% from 2025 until maturity. Coupon payments will be semi-annual”.

    However, Director of Business Operations of Dalex Finance and Leasing Company has called upon bondholders to tell the government to reduce its expenditure before they sign on to the debt exchange programme.

    According to Joe Jackson, institutional bondholders can sign a deal with the government that requires the latter to also reduce its size.

    “…as much as I think they can’t do much about it and they have to accept it, this is also a unique opportunity to bring the government to the table and say, if I’m going to accept it, then you need to reduce your expenditure. You need to reduce the size of government, reduce the number of ministers, hangers on and appointees who sit all over the place.” he said.

    He stated that the programme is a golden opportunity to get the government to listen to some of the things citizens have been asking for.

    As a result, Mr Jackson called on the unions who are considering the offer to make something out of the opportunity presented by ensuring government cuts down on its expenditure.

    “If we are going to take this amount of pain, I want to see you sharing in the pain and I don’t care that it may not necessarily change the bottom line that much, but the optics matter, the sharing matters,” he said.

    It would be recalled that government on December 5, 2022, announced a debt restructuring measure.

    According to the Finance Minister, the objective is “to invite holders of domestic debt voluntarily exchange approximately GHC137 billion of the domestic notes and bonds of the Republic, including E.S.L.A. and Daakye bonds, for a package of New Bonds to be issued by the Republic.”

    Bondholders like pension funds, banks and insurance firms will have to exchange their bonds for one that will earn zero interest next year.

    However, some of the institutions such as the Trade Union Congress, Ghana Medical Association, the Chamber of Corporate Trustees of Ghana among others have already rejected the offer.

    Meanwhile, the Deputy Finance Minister, Dr John Kumah has stated that institutional bondholders who reject the programme will have themselves to blame since they will not enjoy the benefits that comes with it.

    According to him, interested bondholders have a 10-day period starting from Monday, December 5, 2022, to sign on to the programme.

  • Inflation expectations high- BoG

    Inflation expectations high- BoG

    By Elorm Desewu

    The Bank of Ghana, (BoG) has expressed some potential risks to inflation due to the increase in the Value Added Tax (VAT) by 2.5 percent by the government.

    The inflation forecast shows that in the outlook, inflation will likely peak in the first quarter of 2023 and settle at around 25 percent by the end of 2023.

    According to the governor of the BoG, Dr Ernest Addison, “there are however some risks to this forecast that would have to be monitored, including additional pressures from the proposed VAT increase, and exchange rate pressures. Continued vigilance to the evolution of these potential price pressures in the outlook will be key”.

    This forecast is conditioned on the continued maintenance of tight monetary policy stance and the deployment of tools to contain excess liquidity in the economy.

    Inflation has remained elevated, with strong underlying inflationary pressures. Price developments suggest that the upturn of headline inflation in October 2022 was driven largely by food price pressures and to some extent additional pressures from the currency depreciation.

    The headline inflation has increased further to 40.4 percent in October 2022, from 37.5 percent in September. Food inflation increased by 4.9 percentage points to 43.7 percent in October 2022 from 38.8 percent in September, while non-food inflation increased by 1.3 percentage points to 37.8 percent from 36.5 percent. Underlying inflationary pressures have also heightened further.

    The Bank’s measure of core inflation, defined to exclude energy and utility prices, increased from 36.2 percent in September 2022 to 39.7 percent in October 2022, an indication of broad-based inflationary pressures. At the same time, consumer, business, and financial sector inflation expectations went up.

    Interest rates on the money markets trended upwards across the spectrum of the yield curve, in line with the tightening of monetary policy stance. At the short-end of the market, the 91-day and 182-day Treasury bill rates increased to 31.53 percent and 32.61 percent respectively, in October 2022, from 12.46 percent and 13.16 percent respectively, in the same period of 2021. Similarly, the rate on the 364-day bill increased to 32.32 percent from 16.24 percent over the review period.

    On the secondary market, rates on all bonds, from 2-year through to 20-years, almost doubled over the one-year review period.

    The interbank weighted average rate increased to 23.98 percent in October 2022 from 12.66 percent in October 2021, consistent with the increases in the policy rate and the incremental hikes in the Cash Reserve Ratio from 12 percent in August 2022 to 14 percent in October. In tandem, the average lending rates of banks rose to 31.40 percent in October 2022 from 20.34 percent in the same period of 2021.

  • UBA among World’s Safest Banks – Global Finance

    UBA among World’s Safest Banks – Global Finance

    Adnan Adams Mohammed

    United Bank for Africa (UBA) Ghana has been rated one of the World’s safest banks  in the 2022 rankings.

    According to the international financial magazine, Global Finance, UBA placed 4th position in Africa and the only bank in Ghana to make it into the prestigious list provided by three rating Agencies-Moody’s, Standard & Poor’s and Fitch.

    A statement issued by the magazine says, “As banking systems in most regions of the world struggle with widespread economic stress and the lingering effects of the pandemic, our Safest Bank rankings recognize country winners that demonstrated resilience in preserving their franchises to earn this important designation.”

    Commenting on this honour by Global Finance, Chris Ofikulu, Managing Director of UBA Ghana says, “This recognition is the outcome of UBA’s vision to be the leading financial institution and diligent management of our assets which have placed the bank among the safest banks in the world. We are really delighted that our desire to offer first-rate banking solutions to our valued clients has been globally recognised.”

    “We remain committed to upholding the trust of our customers and continue to seamlessly meet their banking needs and expectations.”

    According to Global Finance, “To be eligible for inclusion among the Safest Banks by Country, entities must be among the world’s largest 1,000 banks by assets and carry at least one long-term foreign currency deposit or debt rating from one of the three major rating agencies.”

  • BoG to review Cyber and Information Security Directive to ensure secured banking environment

    BoG to review Cyber and Information Security Directive to ensure secured banking environment

    The Bank of Ghana is currently in the process of reviewing the Cyber and Information Security Directive (CISD), 2018 to ensure that risk management practices is adhered to by all Regulated Financial Institutions (RFIs), whilst a secured environment is created within the “cyberspace”.

    It is therefore admonishing all RFIs to pay particular attention to the increased cyber security risks and Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) issues associated with digitalization.

    Speaking at the 2022 Ghana Credit Excellence Awards organised by the Chartered Institute of Credit Management, Freitas Donatus, Assistant Director, Banking Supervision Department of Bank of Ghana who spoke on behalf of the Governor of Bank of Ghana, said RFIs should be guided by this directive in order to minimise risks in their digital operations.

    “Remaining competitive will largely require RFIs to continue investing in technologies that will not only enhance online and mobile banking capabilities, but also the overall customer experience. To this end financial institutions have various solutions at their disposal including”.

    Most financial institutions are digitising their risk functions at a relatively slow pace, taking modular approaches to targeted areas; and the banking sector is no exception. Mr. Donatus said the Bank of Ghana’s Risk Management Directive, 2021 (RMD) offers guidance to RFIs to develop robust Risk Management Frameworks (RMFs) to aid in identifying, measuring, evaluating, controlling, mitigating and reporting material risks within their institutions.

    Again, credit delivery is hampered by manual processes for data collection, underwriting, and documentation, as well as data issues affecting risk assessment and the slow cycle times affecting the customer experience.

    The Deputy Director of the Banking Supervision urged RFIS to employ Digital Credit Risk Management since it employs automation, connectivity, and digital delivery as well as decision making to alleviate these bottlenecks.

    In this regard, he explained that value is created in three ways by protecting revenue, improving risk assessments, and reducing operational costs.

    Going forward, he said the Bank of Ghana would continue to ensure collaboration with other financial sector regulators to focus their attention on business model viability, Governance, Risk Management, Consumer Protection, Cyber Security and Regulatory Sandboxes on Market Development and Innovation to build the necessary safeguards against emerging risks.

    The potential of the banking and financial services sector to advance digitalisation has been demonstrated on the continent.

    The Bank of Ghana added that it has adopted a forward-looking approach to regulation and will continue to encourage the sector players to follow suit in pursuit of the advancement and development of the financial services sector.

    The 2022 Ghana Credit Excellence Awards which was under the “Accelerating Digital Transformation in the Banking and Financial Services Industry: From Crisis to Growth” aimed at ensuring robust risk management practices by RFIs and pay particular attention to increase cyber security risk and AML/CFT issues associated with digitalization.

    The ceremony also provided an opportunity for networking among players and open dialogue between stakeholders in the banking and specialised deposit-taking institutions sectors that focus on integrating cyber and information security process and leveraging on third-party Payment Services Providers and Electronic Money Issuers to provide value added service to their customers.

    Access Bank PLC was the SME Bank of the Year, whilst Ghana Import – Export Bank was the Agribusiness Bank of the Year. Bank of Africa was the Best Bank in Trade Finance whereas Atwima Kwanwoma Rural Bank PLC was the Rural Bank of the Year.

  • SEC not informed on possible debt restructuring and ‘haircut’

    SEC not informed on possible debt restructuring and ‘haircut’

    Adnan Adams Mohammed

    The Director General of Securities and Exchange Commission (SEC) says he  does not have details regarding the potential debt restructuring.

    SEC boss, however, has dismissed the perception that the ‘mark-to market’ valuation method in the valuation of investment assets or securities is a ‘haircut’.

    The ‘haircut’ policy may be implemented if the country embarks on a debt restructuring as a result of a condition by the International Monetary Fund before Ghana can secure a programme.

    “There is a lot of speculation as to what government will do or what government will agree with the IMF regarding its debt to ensure sustainability. We don’t have the details but there is a speculation in the system about the haircut”,  Rev. Daniel Ogbarmey-Tetteh disclosed on a radio programme last week.

    “But when we talk about that ‘mark-to-market’, it has nothing to do with the haircut. We just say that it is a valuation approach or methodology that we want the fund managers to use to indicate to the investing public that looking at the current market price of the securities you have invested in, this is what the value will be…it is nothing about haircut at all”, he explained.

    Furthermore, Rev. Ogbamey-Tetteh said there is a concept of unrealised gain and unrealised loss, noting, “When it comes to investment, when there is a decline in your investment and you sell or you exit, then you locked in that loss”.

    “But because of the fact that market prices can move up and down overtime, it is  possible for whatever decline you would have relaised will be erased”, he added.

    He however urged fund managers to be transparent with investors who are seeking to know the true value of their investments.