News Guide Africa

Category: Technology

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.

April 3, 2022
Banks record GHC1.3b profit…for 1st two months of 2022

By Elorm Desewu

Banks’ profitability has improved slightly over the first two months of 2022, recording a profit before tax of GH¢1.3 billion, compared to GH¢1.1 billion during the same period last year.

The growth in net interest income dropped marginally recording 10.3 percent to GH¢2.2 billion, compared to 10.9 percent a year ago. Net fees and commissions grew by 11.8 percent to GH¢486.8 million, lower than the growth of 13.7 percent registered during the same period last year.

Other income of the banks stood at GH¢383.2 million, representing 95.5 percent growth, compared with a contraction of 16.5 percent in the same period last year. These developments resulted in a 16.9 percent growth in operating income to GH¢3.1 billion, compared with a growth of 8.7 percent in the corresponding year. However, operating expenses went up by 21.3 percent on account of higher administrative costs and emoluments, relative to a contraction of 0.3 percent in the same period last year.

Developments in the banking sector over the first two months of 2022 show continued strong asset growth. Total assets stood at GH¢187.8 billion in February 2022, representing 23.5 percent annual growth, compared with 18.5 percent growth in the previous year.

The growth in assets was on the back of increased deposits and borrowing. Total deposits recorded a year-on-year growth of 18.2 percent to GH¢123.0 billion. Borrowing increased significantly by 78.8 percent to GH¢25.5 billion, relative to the contraction of 23.4 percent in the previous year.

The rebound in credit growth continued in the first two months of 2022, with a 70.7 percent increase in New Advances to GH¢8.0 billion, compared with 24.6 percent growth in the same period last year. 15. Trends in the financial soundness indicators remained positive, underpinned by strong solvency, liquidity, and profitability.

The Capital Adequacy Ratio of the Industry was 19.6 percent at end-February 2022, well above the current 11.5 percent regulatory minimum threshold. Core liquid assets to short-term liabilities was 24.2 percent in February 2022, compared with 26.5 percent in the previous year.

Improvements in asset quality continued into 2022, with the Non-Performing Loans (NPL) ratio declining to 14.4 percent on average, at end-February 2022, compared with the NPL ratio of 15.3 percent in February 2021.

Credit to the private sector continued to recover, consistent with the rebound in economic activities. In nominal terms, annual growth in private sector credit increased significantly to 17.1 percent in February 2022 compared with 7.4 percent in the same period of 2021.

In real terms, private sector credit grew by 1.2 percent relative to a contraction of 2.7 percent, over the same comparative period. The latest credit conditions survey revealed tightened credit stance on loans to enterprises. However, demand for credit by households and small and medium sized enterprises are projected to increase in the near to medium-term.

April 3, 2022
Economists, MoMo vendors and users respond negatively to E-Levy passage

Adnan Adams Mohammed

Senior economists including a former finance minister, Mobile Money vendors and users have reacted negatively to the passage of the Electronic Transactions Levy bill into law by the current government.

The bill was passed into law last week by one-sided parliament due to a walkout staged by minority NDC members of parliament and subsequently filing court action at the Supreme Court for stay of execution to challenge the ‘lack of quorum’ in the House at the time of passage of the bill into law.

Mobile Money (MoMo) vendors across the country complained that, there were madrush withdrawals at their various mobile money vending outlets causing them to run out of cash which has tendency to collapse their petty business in the circumstances of the current economic hardship. However, it took the president, Nana Akufo Addo two working days to assent to the E-Levy law despite majority of Ghanaians haven openly kicked against the levy, especially taxing MoMo. An economics professor at the University of Ghana Business School shared his disappointment at the government for ignoring a better and progressive tax alternatives to push through the regressive E-Levy.

“There are more efficient, progressive, fairer and equitable means of generating more tax revenue by improving efficiency along with existing tax handles. How much this e-levy can raise is far lower than what we could have gained if we had passed the exemption bill in 2019”, Prof. Godfred Bokpin intuited. “During the 2019 SONA, the President told us that the biggest threat to Ghana’s revenue base is an exemption and told us that in 2018 alone, Ghana lost GHS4.66 billion and assured us that the new bill is being sent to Parliament. After all these years, nothing has been done. But look at the urgency with which we want to pass the e-levy. When you do that, you’re creating some sort of imbalance that says that the economy is set up to favour foreign capital against domestic capital formation and that is unfortunate.”

Also, Dr. Kwabena Duffuor, a former Finance Minister, reacted sadly to the news of the passage. He described the President Nana Akufo-Addo’s administration and the NPP MPs as not a ‘listening government’.

Lamenting on his Facebook wall the morning after the e-levy was passed, Dr. Duffuor said, “The NPP has progressed in their passage of the unpopular e-levy bill. May it be on record that despite the hardship of the Ghanaian people and disaffection for the e-levy, the NPP ignored these concerns and added to our tax burden.”

Just like many well-meaning and experienced economic specialists, Dr. Kwabena Duffuor has, in the past, offered several suggestions on alternatives to the E-levy.

Dr. Duffuor, in an interview he granted on Starr FM in February this year, had said; “Currently in Ghana, foreign interests are largely the main beneficiaries of our extractive sector at the expense of Ghanaians who benefit from very little revenue from our natural resources”.

“We must start looking at the sector we have ignored over the years – the extractive sector. A well-managed natural resources centre has emerged as the safest route to prosperity in many developed countries such as the USA, UK, and Germany. We must go back and renegotiate our mining agreements for higher revenues rather than stick to colonial agreements to the detriment of our people”.

The levy rate was amended from 1.75 percent to 1.5 percent and will apply to electronic transactions that are more than GH¢100 daily.

Critics of the proposal have warned that this new levy will negatively impact the Fintech space, as well as hurt low-income people and those outside the formal banking sector.

The levy has been the source of tension in Parliament since it was introduced in the 2022 budget. The tensions culminated in a scuffle between lawmakers in Parliament in December 2021.

The government has, however, argued the levy would widen the tax net and that could raise an extra GH¢6.9 billion in 2022.

There are also concerns that the government may securitize proceeds from the e-levy to raise extra revenue.

April 1, 2022
Gofer Delegators Or Economic Managers – Dr Monfant quizzes

Adnan Adams Mohammed

Dr Jerry Monfant, an economist has described the current managers of Ghana’s economy as absolutely clueless about establishing good economic models to forestall the looming economic dangers.

The international economist has noted that, research indicates that Ghana is not amongst well prepared Central Banks to take the hit on inflation as compared to Nigeria.

He expatiated that, Ghana joined 13 worse economic performing countries in the World in November, 2021 and as well ranks fourth with a distressed Sovereign US$ Debt behind Argentina, Venezuela, and Lebanon. Also, Ghana ranks third as a worse performing emerging markets hard currency Sovereign Bonds.

“Meanwhile the government of Ghana is absolutely clueless about establishing good economic models to forestall the looming economic dangers”, Dr Monfant shared his worry about the the Ghanaian economy in his recent post circulated on social media.

Below is the full statement:

From Dr . Monfant’s Desk

Gofer Delegators Or Economic Managers?

United States inflation is up at 7% as at 13th January, 2022. As part of the prudent measures to subdue the inflation, the US government has asked for more oil reserves to be released and has equally implore on China, Japan and South Korea to follow same in order to suppress the global inflation.

Poland recorded 7.8 percent inflation during the same period. The busting measures taken by the Polish government includes cutting the VAT on petrol and diesel to 8 percent, and VAT on food, gas and fertiliser to 0 %. Both US and the Polish government are expected to raise interest rate to prevent excess financial transmission in their economies as a means of containing the global rising inflation.

Our research indicates that Ghana is not amongst well prepared Central Banks to take the hit on inflation as compared to Nigeria.

Of course, Ghana’s economic profile for the last three months leaves more to be desired.

Ghana joined 13 worse economic performing countries in the World in November, 2021.

Ghana ranks fourth with a distressed Sovereign US$ Debt behind Argentina, Venezuela, and Lebanon.

Ghana ranks third as a worse performing emerging markets hard currency Sovereign Bonds.

Ghana is the 5th worse performing emerging economy in the World.

Meanwhile the government of Ghana is absolutely clueless about establishing good economic models to forestall the looming economic dangers.

41 percent of average Ghanaian household income is used for food consumption alone. In 2019, Ghana imported US $2bn of agricultural and related products across the World, while the citizens were made to believe that the government policy of “planting for food and jobs” was making headway.

With the current Global stance, we anticipate 50 percent of an average household income to be used on food consumption alone, as the economy would be importing external inflation into the country through its agricultural import.

E- levy, which is also billed to cut household incomes to a proportion are all part of the bizarre economic narrative which does not make sense to an economists. It’s clear living conditions could get even more worse, as the country might likely embrace debt default according to our scorecard scenario. This has a potential of raising social tensions.

The productivity of the citizens are expected to decline by 0.017 percent and we project this percentage to increase as the months roll-on.

It’s clear the government of Ghana is no longer in charge of the management of the economy. The questions economic pundits ask, is whether the Country has Gofer Delegators or a real economic management team? Call me if you find an answer.

March 28, 2022
Rating agencies downgrades put ‘badly affected’ the cedi – BoG

The Sovereign credit rating downgrades of Ghana by Fitch and Moody’s led to “widened yield spreads on both cedi-denominated government of Ghana bonds and the country’s Eurobonds”, the Bank of Ghana has said.

“These downgrades reflect market and investor concerns about fiscal and debt sustainability”, Governor Ernest Addison told journalists last week at the Monetary Policy Committee’s 105th meeting.

Consequently, Dr Addison said, “the Ghana cedi has come under severe pressure, as offshore investors exited positions in domestic securities at a time when domestic demand for forex has increased, reflecting both real and speculative demand”.

This, he noted, has caused the exchange rate “to overshoot its long-term trend”.

Dr Addison noted: “The strengthening of the US dollar, liquidity pressures, uncertainties regarding budget implementation, portfolio reversals by nonresidents and some speculative pressures are key contributory factors”.

Moody’s Investors Service downgraded Ghana’s long-term issuer and senior unsecured debt ratings to Caa1 from B3 and changed the outlook to stable from negative.

Moody’s said on Friday, 4 February 2022: “The downgrade to Caa1 reflects the increasingly difficult task the government faces addressing its intertwined liquidity and debt challenges”.

“Weak revenue generation constrains government’s budget flexibility, and tight funding conditions on international markets have forced the government to rely on costly debt with shorter maturity”, Moody’s noted.

Moody’s said its projection shows that more than half of the country’s revenue will go into the payment of interests for the next few years, and proposals by the government to fix the challenge does not seem to be feasible, especially given the fragile post-pandemic environment.

“While Ghana’s external buffers and moderate external debt amortisation schedule in the next few years afford the government a window of opportunity to deliver on its strategy, balance of payments pressures will build up the longer government’s large financing requirements have to rely on domestic sources,” it noted.

Apart from the long-term issuer and senior unsecured debt downgrade, Moody’s also downgraded Ghana’s bond enhanced by a partial guarantee from the International Development Association (IDA, Aaa stable) to B3 from B1, “reflecting a blended expected loss now consistent with a one-notch uplift on the issuer rating.”

It also lowered Ghana’s local currency (LC) and foreign currency (FC) country ceiling to respectively B1 and B2 from Ba3 and B1.

“Non-diversifiable risks are appropriately captured in an LC ceiling three notches above the sovereign rating, taking into account relatively predictable institutions and government actions, low domestic political, and geopolitical risk; balanced against a large government footprint in the economy and the financial system and current account deficits,” Moody’s said in its report.

About a month ago, Fitch also downgraded Ghana’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘B-’ from ‘B’ with a negative outlook.

March 28, 2022
Cedi to gain strength this week… as MPC decisions take full effect – Analyst

Adnan Adams Mohammed

The recent monetary measures announced by the Bank of Ghana is expected to impact on the exchange rate this week, thus, giving the local currency a feet stand against the U.S dollar, an economist has said.

The senior economist with databank indicated that, checks from some forex bureaus and commercial banks show that the cedi is gaining marginal strength against the dollar as at the time of interview, last week, as the local currency was trading averagely at GH¢7.84 to the dollar on the retail market, compared to about ¢8.06 couple of days before the Central bank’s announcement last week. However, the Bank of Ghana pegs the cedi to the dollar at ¢7.112 (mid-rate).

The Central bank, last week, announced a significant increase in the policy rate by 2.5 percent to 17% from a previous 14.5%. This is expected to entice investors to acquire cedi denominated instruments because of the attractive yields. Though cost of borrowing will go up, increasing cost of living and doing business, the Bank will in the interim mop up excess liquidity in order to control inflation and reduce interest in the dollar denominated assets. But, the economist said, its early days to predict the fortunes of the cedi, the market will definitely react to the policy decisions by the Central Bank.

“In the interim, we’ll say its early days yet. In addition to that, the cedi also has a history about its performance so from the weeks ahead, we’ll start to analyse the foreign exchange market to see how the cedi will respond to some of these announcements”, Senior Economic and Currency Analyst at Databank Research, Courage Martey said.

“But on the face of it, this appeared to be good measures; aggressive and decisive measures from the Central Bank which we expect to be backed by the fiscal measures, so that going forward, the market – at least sentiments – should start to improve. Once it’s starts to improve, we should start to see it reflecting in the pricing behavior of participants on the market”, he added.

The MPC’s decision in the interim is expected to mop up excess liquidity in order to control inflation and reduce interest in the dollar denominated assets.

“When Cedi liquidity finally tightens, what you might see is that, those hoarding dollars in their accounts will not want to go and borrow expensive cedi. They will rather have to sell their dollar holdings to buy cedis and that could increase the supply of dollars on the market and slow down the pace of depreciation”, Mr. Martey stated.

Beyond the policy rate, the Bank of Ghana announced measures which will take effective from April 1st, 2022,

The measures in relation to universal banks include an increase in the Cash Reserve Ratio to 12%; the Capital Conservation Buffer reset to the pre-pandemic level of 3%, making the Capital Adequacy Ratio a total of 13% and the provisioning rate for loans in the Other Loans Exceptionally Mentioned (OLEM) category reset to the pre-pandemic level of 10%.

March 28, 2022
Using net reserves to solve economic crisis will be disasterous – Ato Forson warns gov’t

Dr. Cassiel Ato Forson, Ranking Member on the Finance Committee in Parliament, has cautioned the Bank of Ghana (BoG) against using the country’s net reserves to salvage the current economic crisis.

According to him, this would be a “disaster staring in the face of the country”.

Speaking to some decision taking by the government to hault the cedi depreciation yesterday, Dr. Ato Forson explained that any attempt by the central bank to use the net reserves would lead to a cascading drop in the country’s currency.

“When the investors are to see that the reserves keep going down, then they would be rushing to exit and if they exit and obviously the currency is going to drop and drop and drop until it falls. That is what I’m worried about,” he said.

The Monetary Policy Committee of the Bank of Ghana after a meeting on Monday increased the policy rate – the rate at which it lends to commercial banks – by 2.5% per cent to 17%.

This is the first time since November, 2018 that the rate has gone up so high.

The decision is due to the current pressures on the economy, the uncertainty about the economic outlook and developments in Russia – Ukraine, which has pushed fuel prices up astronomically.

The move to adjust the base lending rate of the Central Bank is expected to control the rising inflation and check the rapid depreciation of the cedi.

This comes in the face of the raging economic challenges which compelled government to hold a crunch cabinet meeting to find solutions to the economic crisis.

Reacting to the recent intervention by the central bank, Dr. Ato Forson said the BoG’s effort is a bit late.

Referencing a reduction in the international reserves in December last year by approximately $700 million and another $600million loss in January this year, the former Deputy Finance Minister noted that the central bank should have instituted these interventions earlier.

“They could have given some hope to investors. Today, we are losing reserves at a very alarming rate. My only concern is that the package that the central bank has actually provided will not be enough in the sense that the problem, the concerns of the investors who are actually repatriating and taking their money away, are actually because of the fiscal situation. So I want to see what the fiscal authorities will do and as to whether that information would be enough for the market to respond appropriately or not,” he added.

Meanwhile, the Finance Minister, Ken Ofori-Atta, is expected to address the nation this week to communicate key measures taken by the government amid the current challenges.

A statement issued by the Information Ministry hinted that the update will include the reopening of land borders, the easing of Covid-19 restrictions, and measures to arrest the depreciating cedi.

“President Akufo-Addo approved a number of far-reaching measures aimed at mitigating the depreciation of the cedi, ensuring expenditure discipline and providing relief in the face of the global fuel price hikes and inflation as well as ensuring that priority programmes meant to grow the economy are protected.

“Government appreciates the efforts of all who contributed to a successful retreat and looks forward to the support of all Ghanaians in implementing the agreed measures,” the statement added.

March 22, 2022
StanChart okays policy rate tightening amidst resentment for ‘No IMF’ stands

Adnan Adams Mohammed

Standard Chartered Bank (StanChart) has said the Monetary Policy Committee of Bank of Ghana acted decisively to front-load its tightening in defence of the local currency (Ghana Cedi).

The Bank believes that, the combined package of tightening, a policy rate hike that will raise the real policy rate despite accelerating inflation, along with the withdrawal of significant Cedi liquidity from the domestic market, should have a significant impact on the currency, providing a near-term reprieve from Cedi depreciation. A simultaneous announcement that Ghana plans to borrow US$2 billion through the syndicated loan market in order to replenish its foreign exchange (FX) reserves, should further boost sentiment, helping to stabilise the currency.

Despite the Bank’s hope for better results of MPC’s decision on the economy, it expressed worry and resentment over the economic management team decision that failed investor expectations that Ghana might opt for the external anchor of an IMF programme to boost fiscal consolidation plans proved to be unfounded.

“Nonetheless, markets will await the announcement of additional fiscal measures, expected later this week. These could yet shore up confidence, despite disappointment over Ghana’s plans not to seek an IMF programme”, StanChart said in a policy response circular it should and sighted on scoail media. “Investor expectations were disappointed, diverting some of the focus from the BoG’s forceful monetary policy response.”

While these monetary policy measures are welcome and demonstrate the BoG’s resolve to achieve macroeconomic stabilisation, other issues loom as markets await the announcement of additional fiscal measures, expected later this week. These could yet shore up confidence, despite disappointment over Ghana’s plans not to seek an IMF programme.

“Moreover, today’s tightening will – out of necessity – add to domestic debt service costs, further pressuring the fiscal outlook. Failure to pass a much-touted 175bps e-levy to date, as well as the partial reversal of some planned revenue reforms addressing benchmark values for imports, have taken a toll on investor confidence” StanChart noted.

The MPC yesterday increased the policy rate by 250 basis points to 17 percent. This is the first time the Central Bank has increased the key rate since November 2021.

At a press briefing on Monday, March 21, 2022, the Governor of the Bank of Ghana, Dr. Ernest Addison said all is being done to check inflation. He attributed the upward review of the rate to the sharp rise in inflation as well as the upsurge in prices of goods and services as well as petroleum products.

“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 the medium-term target band. The uncertainty surrounding price developments and its impact on economic activity is weighing down business and consumer confidence. The risks in the outlook for inflation are on the upside and include petroleum price adjustments and transportation costs, and exchange rate depreciation.”

“Under these circumstances, the committee has decided to increase the policy rate by 250 basis points to 17 percent. The Bank’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”, he revealed.

At this MPC meeting, the combination of tighter global financing conditions, sharp pressures on the exchange rate, and elevated inflation pose some policy challenges.

“The Bank of Ghana will, effective, 1st April 2022, enforce the following measures in relation to universal banks: The cash reserve ratio has been increased to 12%, the capital conversation buffer has been reset to the pre-pandemic level of 3% making the capital adequacy ratio a total of 13% and the provisional rate for loans in the other loans exceptionally mentioned category, has been reset to the pre-pandemic level of 3%,” Dr. Addison added.

March 22, 2022
Growing Ghana’s E-commerce; a catalyst for economic development

By: Stanbic Bank

The fourth industrial revolution, which is wholly anchored on technological advancement and innovation opened up vast opportunities in different areas of economies around the world.

Social, economic, and commercial lives have seen remarkable developments with the rise of the internet, technology, and digitization. In Ghana, the pioneering of mobile money in 2009 has been revolutionary in this regard.

The World Bank has recognized Ghana as the fastest growing mobile money market in Africa over the last 5 years. This growing trend of mobile money penetration has been a catalyst for the booming e-commerce industry in the country. The industry has been growing steadily over the past decade and has evolved over time to become the mainstay for many small and medium scale enterprises (SMEs) in Ghana.

Besides mobile money, several factors have contributed to the emergence of e-commerce in Ghana chief among which is the level of internet penetration. According to Kepois, a social media research organization, internet penetration in Ghana is among the highest in the West African sub-region.

Out of a population of 32.06 million people, 16.99 million (53.0%) are active internet users, meaning that well over half of Ghanaians are on the internet at one point or the other. This is a huge opportunity and many users have taken advantage of this to either start businesses or expanded their businesses to include online channels.

From Instagram to WhatsApp, Snapchat to TikTok, there are millions of Ghanaians, both young and old, using the opportunity to trade in goods and services on these platforms with payments enabled mainly through mobile money and other electronic payment mediums. Online retail outfits have become a core part of the modern Ghanaian lifestyle.

Furthermore, the Ghana Interbank Payment and Settlement Systems (GhIPSS) launched an internet payment gateway to enable holders of domestic Automated Teller Machine (ATM) cards to make payments and purchases online. Subsequently, the launch of the ‘gh-link E-commerce will promote e-commerce and enhance the services needed in the e-commerce value chain.

The benefits of this new trend of doing business are enormous. Digitization and e-commerce have unlocked the entrepreneurial spirits of many Ghanaians, making it a major source of employment and revenue generation avenue for them. Many of Ghana’s young population have found stable employment leveraging the benefits of the internet, mobile money, and apps to unlock new opportunities to connect demand and supply sides of the economy through e-commerce.

E-commerce has also allowed businesses to diversify their offerings and expand their business operations from hitherto fixed operating times to 24/7 operations with increasing productivity and value extraction.

Traditional businesses that hitherto used to conduct business physically have expanded their portfolios of services and products in response to evolving consumer demands through e-commerce. Today, banks, insurance companies, restaurants, and grocery shops have online options that deliver the same, if not better, services to customers and clients with less stress.

In terms of public revenue generation, government becomes a beneficiary through the widening of the tax net to capture businesses operating within this segment. The Ghana Revenue Authority (GRA) has announced that it intends to introduce an e-commerce tax in April this year to rake in some GHS 2.4 billion. When done effectively, this could possibly have a huge positive impact on domestic tax mobilization by the government to bring us closer to the desired tax to GDP ratio of our peers.

To fully realize the benefits of e-commerce in Ghana, however, the government must dialogue with other stakeholders, to shape e-commerce and the digital economy by defining the rules that shape and govern the sector. This is a huge challenge that will involve adapting existing policies, laws, and regulations to cater to this emerging and growing trend of e-commerce in Ghana.

March 20, 2022
Ghana Deploys Hardware Wallets for CBDC – ‘eCedi’

By: Sujha Sundararajan

Ghana’s central bank is deploying hardware wallets and other devices for CBDC.

Notably, around 43% of Ghana’s population does not have access to a bank account. The bank is looking to improve financial inclusion with the use of eCedi.

Bank of Ghana (BoG) has proposed using hardware wallets for its central bank digital currency (CBDC) dubbed ‘eCedi.’ The bank intends to make eCedi available for those who do not have a bank account or even internet access.

In a design paper released on Tuesday, Africa’s largest gold producer said that the digital currency should “compliment” mobile money. According to the central bank, eCedi needs to be as intuitive as possible and seeks to improve financial inclusion.

“eCedi usage has to be as easy and intuitive as possible. Consumers should be able to make a payment in the minimum number of steps, with a minimum required level of technical literacy.”

The release noted that the BoG had designed two types of wallets for its CBDC. Hosted wallets managed by financial institutions will require access to the internet.

According to World Bank data, these hardware wallets work in offline mode, given only 53% of Ghana’s individuals were internet users as of 2019. In January 2021, only 15.7 million individuals had access to the internet from Ghana’s total population of 31.40 million. Around 43% of Ghanaians do not hold a bank account.

Additionally, the banking regulator said that eCedi transactions would be free of additional costs, unlike mobile-money transfers that come with a transactional fee.

Offline eCedi was first introduced in October 2021 through smart cards – physical cards embedded with a chip, similar to debit/credit cards.

Kwame Oppong, head of fintech and innovation at the BoG, emphasized that the offline functionality will enable Ghanaians, who lack reliable access to electricity and internet connectivity, to embrace the country’s CBDC.

Ghana has positioned itself at the forefront of exploring and adopting a CBDC, cryptocurrencies such as BTC, and other digital assets in the West African region.

It quickly follows south-central African nation Zambia in looking into the merits of a CBDC to promote financial inclusion. Zambia said that it is close to finishing research and implementing a CBDC by the end of the fourth quarter.

Nkatya Kabwe, Assistant Director at the Bank of Zambia, told Bloomberg in February,

“The research results will form part of the input in the policy considerations on whether to introduce a central bank digital currency in Zambia”

Besides, eNaira marks the first African CBDC in circulation, issued back on October 25, 2021, regulated by the Central Bank of Nigeria. Digital currency serves as both a medium of exchange and a store of value.

It offers better payment prospects in retail transactions when compared to cash.

Growing Ghana’s E-commerce; a catalyst for economic development

By : Stanbic Bank

The fourth industrial revolution, which is wholly anchored on technological advancement and innovation opened up vast opportunities in different areas of economies around the world.

Social, economic, and commercial lives have seen remarkable developments with the rise of the internet, technology, and digitization. In Ghana, the pioneering of mobile money in 2009 has been revolutionary in this regard.

The World Bank has recognized Ghana as the fastest growing mobile money market in Africa over the last 5 years. This growing trend of mobile money penetration has been a catalyst for the booming e-commerce industry in the country. The industry has been growing steadily over the past decade and has evolved over time to become the mainstay for many small and medium scale enterprises (SMEs) in Ghana.

Besides mobile money, several factors have contributed to the emergence of e-commerce in Ghana chief among which is the level of internet penetration. According to Kepois, a social media research organization, internet penetration in Ghana is among the highest in the West African sub-region.

Out of a population of 32.06 million people, 16.99 million (53.0%) are active internet users, meaning that well over half of Ghanaians are on the internet at one point or the other. This is a huge opportunity and many users have taken advantage of this to either start businesses or expanded their businesses to include online channels.

From Instagram to WhatsApp, Snapchat to TikTok, there are millions of Ghanaians, both young and old, using the opportunity to trade in goods and services on these platforms with payments enabled mainly through mobile money and other electronic payment mediums. Online retail outfits have become a core part of the modern Ghanaian lifestyle.

Furthermore, the Ghana Interbank Payment and Settlement Systems (GhIPSS) launched an internet payment gateway to enable holders of domestic Automated Teller Machine (ATM) cards to make payments and purchases online. Subsequently, the launch of the ‘gh-link E-commerce will promote e-commerce and enhance the services needed in the e-commerce value chain.

The benefits of this new trend of doing business are enormous. Digitization and e-commerce have unlocked the entrepreneurial spirits of many Ghanaians, making it a major source of employment and revenue generation avenue for them. Many of Ghana’s young population have found stable employment leveraging the benefits of the internet, mobile money, and apps to unlock new opportunities to connect demand and supply sides of the economy through e-commerce.

E-commerce has also allowed businesses to diversify their offerings and expand their business operations from hitherto fixed operating times to 24/7 operations with increasing productivity and value extraction.

Traditional businesses that hitherto used to conduct business physically have expanded their portfolios of services and products in response to evolving consumer demands through e-commerce. Today, banks, insurance companies, restaurants, and grocery shops have online options that deliver the same, if not better, services to customers and clients with less stress.

In terms of public revenue generation, government becomes a beneficiary through the widening of the tax net to capture businesses operating within this segment. The Ghana Revenue Authority (GRA) has announced that it intends to introduce an e-commerce tax in April this year to rake in some GHS 2.4 billion. When done effectively, this could possibly have a huge positive impact on domestic tax mobilization by the government to bring us closer to the desired tax to GDP ratio of our peers.

To fully realize the benefits of e-commerce in Ghana, however, the government must dialogue with other stakeholders, to shape e-commerce and the digital economy by defining the rules that shape and govern the sector. This is a huge challenge that will involve adapting existing policies, laws, and regulations to cater to this emerging and growing trend of e-commerce in Ghana.

March 20, 2022