News Guide Africa

Category: Technology

  • 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.

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

    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.

  • Ghana Deploys Hardware Wallets for CBDC – ‘eCedi’

    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.

  • Businesses proffer solutions to escalating dollar rate

    Businesses proffer solutions to escalating dollar rate

    Adnan Adams Mohammed

    Ghanaian businesses are ‘up in arms’ against the uncontrollable escalating depreciation of the local currency, the Cedi against the major trading currencies, especially the U.S dollar.

    Currently, the Cedi is trading GHC7.15 to one U.S dollar on the forex market. This is up from about GHS 5.58 in the first quarter of 2021. The Cedi is ranked as the worst performing currency among 15 major currencies in Africa as the Cedi has depreciated 7.6 percent this year.

    To this, the Ghana Union of Traders (GUTA) has called on regulators of the forex market to fast-track the proposal of making the Chinese Yuan as the only trading currency when doing business with China. They believe such a move will reduce pressure on the Cedi because imports will not be done with US dollars as most Ghana’s import currently come from China because of their cheaper products and cost.

    “We can also do a similar clearing system with China where we send our local currency to the local banks, and they have a clearing system with the Chinese banks where they clear with the local currencies”, President of GUTA, Dr. Joseph Obeng, reacting to the current development explained the point that, Ghana could explore a clearing system with China similar to the Pan-African Payment and Settlement System.

    “I think this is the way forward, and central banks in Africa have started thinking in that manner. I think they have to fast track those initiatives that will lessen the pressure on the US dollar,” Dr. Obeng said.

    Apparently, the Association of Ghana Industries’s (AGI) President, Dr. Humphrey Ayim-Darke, thinks otherwise. He believes moves to reduce the import of finished goods will be in the best interest of the Cedi.

    He blamed traders importing finished goods for contributing to the struggles of the cedi.

    “They put pressure on the exchange rate because they demand it for finished products.”

    Mr. Ayim-Darke was responding to a member of the Traders Advocacy Group, Irene Odoom, who had said Ghanaian industries contributed to the struggle of the cedi because they imported raw materials.

    “Most of them don’t have the raw materials here in Ghana to do it,” Mrs. Odoom said on the show.

    “The machines you use, some are obsolete and for the end product, the prices are high,” she added.

    But Mr. Ayim-Darke retorted that the imports of industries still resulted in a net benefit to Ghana.

    “By virtue of their [traders] deeds, bringing only finished products, if you look at the value chain of value addition, it is limited.”

    “They don’t create enough jobs and the turnaround of their funds in the value chain is short. When you bring in raw materials, the value chain is longer,” he added.

    Mr. Ayim-Darke noted further that this “affects the exchange rate in terms of the deficit the BoG [Bank of Ghana] needs to shore up the currency.”

  • Mould backs calls on gov’t to rebuild sinking funds 

    Mould backs calls on gov’t to rebuild sinking funds 

    Adnan Adams Mohammed

    A finance expert has backed the call by a former finance minister, Professor Kwesi Botchwey, on government to rebuild sinking funds to help in repayment of the country’s maturing Eurobond loans.

    The former Executive Director at Standard Chartered Bank, Alex Mould has said, currently the country is practising “cash accounting”, that is, “we pay as we go”. This is ok for steady payments but not good for intermittent large payments like EuroBond principal repayments.

    Ghana’s longest serving Finance Minister during a lecture on the economy at University of Ghana yesterday, March 7, 2022, cautioned current government to desist from collateralizing public revenue schemes among other policies that would further mortgage the future of the young generation. Noting that, for example, whoever takes the reins of government in 2025 will have to shed a whopping $1.5 billion in Eurobond principal payment within months of assuming office.

    “If we don’t rebuild sinking fund and we are unable to access international capital market to refinance our Eurobonds, then this could mean that the next government may default in its maturity Eurobond obligations in 2025”, Professor Botchwey said.

    Consequently, Mr Mould in his reaction to Prof Botchwey’s lecture affirmed that, “most governments don’t worry about the principal repayment because all they do is refinance it in the market that the bonds were originally issued.”

    The finance expert further noted that; in light of the country’s current economic predicament, “the Capital markets will be closed to us for a few years while we restore confidence in the inveators and get our credit rating up to levels that do not exclude some qualified investors from holding junk paper; and also, unless we are prepared to pay 13-14% interest rate,which is absurd and abnormal.

    “So we won’t go to refinance the chunk of debt maturing in 2025 in the Capital markets, and that’s why we have no other alternative than to rely on our bilateral and other financing from local banks, and also the reason we need to allocate some of our forex earnings from exports and remittances.”

    Mr Mould explained, “What this means is that, the forex available to market players will be reduced as we have we have to put some aside for the repayment of the principal that will become due especially in 2025.

    “And remember we shall have to buy this forex using cedis so government will be borrowing more cedis in the local capital markets and this will increase interest rates and also the exchange rate for Forex.”

    Meanwhile, Prof Botchwey, who proposed a number of wide-ranging measures to address the economic challenges confronting the country, said the current macro economic indicators, including the country’s debt to GDP ratio, inflation rate, drop in creditworthiness rankings, fast depreciation of the cedi against the US dollar, the rising cost of fuel among other indicators pointed to the fact that the nation was in economic crisis.

    “The crisis is here and if it is not resolved, it will lead to a catastrophe.” Prof. Botchwey, who served as Finance Secretary in the Military led Provisional National Defence Council (PNDC) Era as well as the Finance Minister during the National Democratic Congress civilian rule, all under late Jerry John Rawlings, said.

  • Understanding mismanagement of an economy in context: No excuses for Ghana’s “broke” economy

    Understanding mismanagement of an economy in context: No excuses for Ghana’s “broke” economy

    By Professor John Gatsi

    Economic management outcomes depend on many factors including leadership.

    It is unfortunate to think that putting together highly educated citizens or members of the political party in government means expected outcomes are certain.

    If that is the only factor in economic management, then throughout history the American, Russian, Japanese, Canadian, German, French economies for example would not have recorded recession ,depression, debt distress, financial distress and sectoral crises.

    Touting is not equivalent to expected delivery. When the economy was showing deep signs of vulnerability in the areas of huge debt and exchange rate volatility , the response was aggravated touting by mentioning names of people in government.

    Another sign before Covid -19 was that instead of deploying policies to support the efforts of the Bank of Ghana to manage the currency, the government usurped the constitutional mandate of the Bank of Ghana by establishing exchange rate management committee which could not deliver.

    It is time for government to publicly accept the fact that in currency management, there are internal and external factors which should be addressed with different strategies.

    Ghanaians are expressing disappointments in economic management outcomes in recent times. The government has joined the queue by saying the economy is broke without providing what makes the economy broke. The discussion has assumed some comparisons that should be corrected.

    There are some who think that if you are dealing with a global pandemic, issues relating to mismanagement do not arise. Some described the energy crises and the problems under the NDC as mismanagement because it was not caused by Covid-19 and the deep micro and macro level distress of the economy under the NPP is not mismanagement and that it is just because of Covid-19. This perspective is incorrect. It is possible that funds provided to tackle the pandemic have been managed in a manner that is not reflective of what should have been the case. Borrowing excessively in the name of Covid -19 without the willingness to conduct Covid-19 expenditure audit to ensure transparency, disclosures and accountability is a colossal fiscal mistake that will continue to strengthen the believe by people that mismanagement contributed to the crisis Ghanaians are experiencing now. The principles of accountability and confidence are not waived in the management of the economy during a pandemic. We all know that the pandemic has increased global fiscal deficit, public debt , cost structure of businesses among others including Ghana but does not in any way means zero corruption , responsible expenditure and accounting for funds disbursed are no longer requirements in public financial management.
    the
    Economic management during the pandemic has generally been expected to be difficult but it also came with faster access to funds to manage the economy. This easy access to available funds from national and international sources such as the IMF and World Bank was not available to the economic mangers under NDC when crude oil prices went down to the floor including gold and cocoa prices. Under Covid-19 economic management , on average gold, cocoa and crude oil prices are performing well and apart from 2020 , revenue has been encouraging. In the face of these facts, inability to convince Ghanaians that the results we are seeing is the best , means mismanagement is part of the financial distress of the country.
    Therefore , the argument that the financial distress is justified because it is the outcome of a global pandemic is not acceptable.

    It is sad that we seem to be attacking the credibility of individuals who were part of the NDC government as though they are not permitted to talk about the hardships and erosion of confidence in pandemic economic management and leadership of the country. It is most annoying that people who are holding juicy positions in government, sometimes in institutions that benefited from prudent and value for money application of public debts by the past government, are the ones doing this. Government should be encouraged that in times of widespread hardships, freedom of speech and expression provide reliable data as to how the people rate the government and perhaps areas around which new policies should be developed to address the needs of the people. Insulting and using vulgar words against people is an abuse of the privilege to serve Ghana in government.

    The economic management outcomes today are not merely pandemic outcomes but also a reflection of some level of mismanagement.

    Now, key government officials believe the economy is broke. Citizens are asking questions as to why “the economy is broke”?. Some genuinely do not believe Ghana is broke because a broke person who is not minded to stop or drastically cut down on offensive expenditure is mismanaging his life. The unwillingness to demonstrate real commitment to prioritizing necessary expenditure mirrors mismanagement. When these issues are addressed, then citizens will agree with government and reduce the degree of mismanagement tag.

    Insulting and threatening citizens who express their frustration about the hardships and erosion of incomes and economic opportunities is mismanagement of the privilege to serve.

  • Gov’t direct banks to delay February salaries 

    Gov’t direct banks to delay February salaries 

    News Desk Report

    Information gathered by www.newsguideafrica.com can confirm that, banks have been directed to delay crediting the salary accounts of ‘some government workers’ for the month of February. 

    As at 15:40 GMT on March 1 2022, some nurses and interior ministry workers confirmed this news portal that, though they have been paid on their payslip, but their banks accounts are empty. 

    This confirms a notice being circulated on social media and sighted by this news portal. The notice did not indicate the writer’s institution or authority but copied to the Controller and Accountant General’s Department indicated that, banks have been directed to suspend payment of salaries until further notice.

    “Salary payment for all public sector workers is suspended until further notice”, part of the notice captured. 

    “CAGD has made payment already for the month of february since 25th february 2022 but in response to the directives all banks were asked to suspend disbursment until futher notice.”

    Attempts to speak to Ghana Association of Bankers was not successful as the senior official called on phone told our reporter that he is busy and cannot talk now after the reporter introduced himself as a news editor of this portal. 

    Also, a call to absa bank toll free line to check why the delay in payment of salaries as at yesterday, February 28 2022, the customer representative answered that, her checks reveals the bank has revealed the salaries and processing them . partai togel

    Read full statement below:

    ATTENTION! ATTENTION! ATTENTION! 

    Kindly note that, with orders from the government of the Republic of ghana all salary payment for all public sector workers is suspended until further notice. CAGD has made payment already for the month of february since 25th february 2022 but in response to the directives all banks were asked to suspend disbursment until futher notice.

    We apologise for any inconvenience.

    Cc

    Controller and Accountants General Department.CAGD

    Republic of ghana

  • Rising NPLS: Real estate players share causes antidotes 

    Rising NPLS: Real estate players share causes antidotes 

    Adnan Adams Mohammed

    Players in the real estate sector has shared their concerns leading to the rising Non-Performing Loans (NPLs) in the construction sector attributing the phenomenon to the lack of attractive mortgages in the country.

    Bank of Ghana recent data has revealed that, a total of GHC2.086 billion was written off as bad debt by banks operating in Ghana. Of this, the construction sector performed worst, with NPLs for the sector increasing by 13.6 percentage points to 35 percent during the review period.

    The inability to pay back loans by borrowers within the period of review was attributed with COVID-19. The NPL ratio in the banking sector increasing from 15.5 percent in August 2020 to 17.3 percent in August 2021. This was disclosed by the central bank’s Domestic Money Bank’s Income Statement.

    “When we build the houses, we use loans and other types of finances. We invest in acquiring land banks, and yet we can’t sell the houses, and this is what causes the issue of unpaid loans in our sector”, Patrick Ebo Bonful, President of the Ghana Real Estate Developers’ Association (GREDA) shared. “So the issue has to do with the lack of a mortgage, a mortgage that can serve the purpose. The tenures of the mortgages given here in this country are too short.”

    “We are hoping to get mortgages with tenures as high as 15 years, 20 years, and 25 years. When the tenures are long, it means the monthly payments will be bearable and affordable for most people. So we need to have a serious conversation on the way forward with mortgages once and for all,” he added.