News Guide Africa

Tag: Ghana

  • Deloitte’s West Africa economic outlook, August 2024

    Deloitte

    Full report below…

     

    West Africa’s macroeconomic environment has remained challenging due to several factors, the prominent ones being high inflation, a high interest rate environment, currency weakness, and elevated debt levels.

     

    These challenges are likely to persist for the rest of 2024, driven by ongoing market reforms, weak consumer demand, and low foreign investment. As a result, consumers will likely face further declines in purchasing power, and businesses are likely to experience higher operating costs. Both households and businesses are already implementing belt-tightening measures to survive.

     

    The resulting effect of these macroeconomic headwinds on productivity and overall aggregate demand is likely to stall the region’s economic growth for the year. In July, the International Monetary Fund (IMF) revised its 2024 growth forecast for Nigeria to 3.1% from its April forecast of 3.3%.1 The IMF also reduced sub-Saharan Africa’s growth forecast to 3.7% from 3.8% in April due to the downward revision in Nigeria’s growth outlook.2 Meanwhile, the IMF projects Ghana’s economy will grow 2.8% in 2024 and 4.4% in 2025.3

     

    Economics

    Explore from Deloitte Insights’ economics collection

     

    Around 50 countries across the world are heading to the polls this year—or have already done so—including West African countries.4 Ghanaians are going to the polls this December. The current state of the economy and citizens’ welfare will factor heavily into how voters evaluate campaign promises and determine the next leader of the nation, an economy heavily dependent on cocoa and gold. The election outcome will weigh on policy direction, as well as investor and market sentiment.

     

    West Africa’s economic growth rates to remain tepid in 2024

    West Africa’s economic output has been limited by the rising cost of goods and services, leading to an increase in interest rates as monetary authorities attempt to rein in inflation. Nigeria and Ghana have also been facing currency volatility, which has had a severe impact on their ability to import raw materials and equipment required to boost output. In the first six months of the year, the Nigerian naira has lost over 40% of its value, and the Ghanaian cedi over 20% of its value against the US dollar.5

     

    Nigeria

    Nigeria’s economy grew by 2.98% year on year in the first quarter of 2024. Although faster than the corresponding period in 2023, when the economy grew 2.31% (figure 1), it marked a slowdown from an even faster growth rate of nearly 3.5%, seen in the fourth quarter of 2023. Major growth drivers in the first quarter of 2024 include the finance and insurance sector, which grew 31.24% year on year, and the water supply, sewage, waste management, and remediation sector, which grew by 6.95%. The oil and gas sector—the country’s economic mainstay—grew by 5.7%, after a year of contraction. The agriculture sector, on the other hand, continued to trudge along with a growth rate of 0.18%.6

     

    The sluggish pace of growth is indicative of multiple factors, including reduced spending and investment. Consumer spending has declined significantly due to rising consumer product prices. Investment spending in the country has also dwindled, primarily due to foreign exchange difficulties that have partly contributed to the exit of several multinational corporations.

     

     

    Nigeria will likely experience tepid short-term growth due to ongoing macroeconomic headwinds. Ongoing public protests, targeted against rising cost of living, have been largely predominant in the northern regions of the country, with pockets of unrest in some southern states as well. Further degeneration—especially in the south, the commercial belt of the country—could severely affect the nation’s overall economic output.

     

    The IMF recently reduced its 2024 growth forecast for Nigeria, but there is some good news: It retained its 2025 growth forecast at 3%.7 Ongoing pro-market reforms will likely have positive effects on the economy, contributing to growth in 2025 and onward.

     

    Looking beyond 2025, economic output is expected to accelerate as inflationary pressures start to ease and monetary conditions follow suit. An increase in oil-refining output, driven by Dangote’s refinery, operations resuming at government-owned refineries, and the possible entry of other private sector players will likely boost the country’s net exports. This could significantly propel economic growth in the medium term as fuel imports decline, while fuel exports and domestic crude production both increase.

     

    Ghana

    Ghana, compared to Nigeria, appears to have stronger growth prospects. Its economy grew by 4.7% year on year in the first quarter of 2024, driven by rapid 6.8% year-on-year growth in the industrial sector (figure 2). The agriculture and services sectors grew at a slower pace of 4.1% and 3.3% year on year, respectively. The country is recovering from a debt-induced crisis, following the government’s ongoing restructuring of its US$30 million debt. The implementation of monetary policy measures by the Bank of Ghana has also helped reduce inflation. Ghana has been able to secure approval for two tranches of IMF disbursements so far this year, bringing cumulative disbursements from the IMF to US$1.56 billion since 2023.8

     

     

    The outlook for the Ghanaian economy is favorable in the short to medium term. However, there are downside risks emanating from the forthcoming general elections in December, high inflation, and elevated interest rates, all of which are weighing on private consumption and investment spending in 2024. However, a faster pace of recovery is expected from 2025 onward, driven by an anticipated decline in consumer prices, which will trigger a further cut in interest rates. In addition, mining output is estimated to rise, supported by increased output from the recommissioned Bibiani gold mine and production from the Ahafo North gold mine.9 The country’s cocoa output—one of the main drivers of the economy—will encounter volatility as a result of climatic conditions, smuggling, diseases (cacao swollen shoot virus and the black pod, for instance), and global commodity price fluctuations.

     

    Inflation: Upside risks persist in the region

    Rising consumer prices have been one of the major macroeconomic challenges plaguing developing countries, especially in West Africa. While inflation in Ghana now seems to be on a downward slope, it rages on in Nigeria.

     

    Nigeria

    Inflationary pressures in Nigeria are a result of structural issues, as well as external imbalances. A food crisis, heightened insecurity, a misaligned exchange rate and dollar illiquidity, and supply chain disruptions are some key domestic contributors. At the mid-year mark, Nigeria’s inflation rate was 34.19%, year on year. Food inflation, the major driver of the uptick, is trending above 40% year on year, while core inflation was up 27.4%, year on year, in June (figure 3).10 Government reforms implemented have exacerbated the pressure on consumer prices and the cost of doing business due to the inflationary impact. Purchasing power has been severely eroded, and this has led to reduced consumer spending. Business profit margins have also thinned significantly, with many companies struggling to stay afloat.

     

     

    President Bola Tinubu has approved a new minimum wage of 70,000 naira per month,11 which is over 130% higher than the current level of 30,000 naira. While this is a welcome development, the more pertinent question is how the state government will afford the new wage level, especially since most states are currently struggling to pay their workers. This implies that state governments will have to either borrow more or increase their revenue generation to bridge the fiscal gap. The senate has approved a supplementary budget of 6.2 trillion naira, of which three trillion naira would be used to finance the minimum wage. This has increased the FGN 2024 Appropriation Bill to 34.98 trillion naira and will further widen the fiscal deficit beyond the 3.4% of gross domestic product projected in the 2024 budget.12

     

    The upward trend in the cost of goods and services is estimated to continue for the rest of the year. The government has a year-end inflation target of 21.4%. This is highly optimistic and may not be achieved, especially if policy implementation lags are considered. In addition, for a country that is highly import-dependent, the role of the exchange rate cannot be overemphasized.

     

    The naira witnessed severe volatility in the early part of 2024 before stabilizing at around 1,500 per US dollar. The local currency touched a high of 1,050 per US dollar and a low of 1,800 per US dollar at the parallel market in the first six months of the year. In the official market, the local currency experienced similar volatility, closing at 1,510.10 per US dollar at the mid-year mark.13

     

    The Central Bank of Nigeria’s foreign exchange measures, which include introducing a “willing buyer, willing seller” market, clearing of foreign exchange demand backlog, and releasing new regulations guiding the operations of the bureau de change’s foreign exchange subsegment, are restoring investor confidence in the economy. If the pace of reform is sustained, it should provide some stability in the market. More importantly, new dollar supply sources will be needed to augment the policies and whittle down speculative demand. Nigeria’s oil production level is also projected to increase marginally to 1.3 million barrels per day in 2024 and 1.35 million barrels per day in 2025,14 from 1.23 million barrels per day in 2023.15 This is expected to boost the country’s export proceeds and dollar supply.

     

    A more stable naira will play a major role in dampening inflationary pressures in Nigeria. An average inflation rate above 30% is expected in 2024.16 However, this is likely to taper toward an average of 23.8% in 2025 due to base effects, and the impact of ongoing monetary tightening.17 Upside risks to this forecast will arise from a possible increase in taxes and tariffs as the government intensifies its revenue mobilization efforts. The government has recently suspended tariffs, duties, and taxes on some imported grains for 150 days to ameliorate the effects of the food crisis on consumer welfare.18 The implementation of other major reforms may also be put on hold in the short term to reduce the contracting effect on consumer pockets.

     

    Ghana

    Inflation in Ghana has been on a steady decline since August 2023, with one or two months standing out from the trend. The deceleration has been driven by a tight monetary policy stance, ongoing fiscal consolidation of the government, and relatively stable transportation fares. Ghana’s annual inflation rate has fallen from a record high of 54.1% in December 2022 to a 26-month low of 22.8% in June 2024 (figure 3).19

     

    The disinflationary trend in Ghana is expected to continue over the second half of the year. The Bank of Ghana has a year-end inflation target of 15% (plus or minus 2%). While this appears probable to achieve, there are upside risks, which largely arise from election spending and bouts of local currency volatility. In the first half of 2024, the Ghanaian cedi lost over 20% of its value against the US dollar, due to a mismatch in foreign exchange demand and supply.20 Demand has been growing for US dollars to purchase petroleum products, fuel, and other consumer goods.

     

    On the other hand, cocoa earnings—one of the country’s major sources of foreign exchange—have declined by about 49% in the first four months of the year, due to poor harvests and challenges like smuggling.21 The good news is that the government has made significant progress with its debt-restructuring deal with official creditors, which should fast-track the disbursement of another tranche of funds from the IMF.

     

    The anticipated inflow should shore up external buffers and provide support to the Ghana cedi. This will, in turn, have a positive impact on imported inflation. As of the end of June, Ghana’s gross external reserves were at US$6.9 billion, providing coverage for 3.1 months of imports.22

     

    The anticipated increase in election-related spending will increase the level of money supply in the system, which could spur demand-pull inflation.

     

    Policy environment in West African economies

    Monetary policy

    The monetary policy environment in West Africa has been contractionary for the last two years, owing to rising inflationary pressures. The Central Bank of Nigeria has raised its benchmark interest rates by a cumulative 15.25% since it commenced its tightening stance in May 2022. As of July 2024, the monetary policy rate in Nigeria was 26.75%.23 The Bank of Ghana, on the other hand, raised its rate by an aggregate of 13% between May 2022 and December 2023, before implementing its first rate cut of 100 basis points in January 2024—Ghana’s monetary policy rate stands at 29% as of July 2024.24

     

    Nigeria

    Monetary policy will remain contractionary in Nigeria as long as inflationary pressures persist. The Central Bank of Nigeria has indicated that interest rates will remain elevated as long as inflation continues to rise.25 However, the pace of increase may slow to allow for the impact of previous hikes to take effect on the market.

     

    Higher interest rates have negative implications for these markets in the short run, such as a higher cost of funds and reduced credit to the private sector, which will hinder the growth of the overall economy. We also expect to see a continued shift away from equities toward interest-bearing securities. The effectiveness of raising interest rates to curb inflation in Nigeria will require fiscal policy support, as the main driver of inflation is food inflation.

     

    Ghana

    Ghana, on the other hand, may cut interest rates further in the second half of 2024. The rate cuts are likely to be tapered to limit the risk of a resurgence in inflationary pressures. This is because a higher level of money supply is expected as a result of election spending. Beyond 2024, we expect more aggressive rate cuts as inflation falls towards single digits. This will spur an increase in domestic demand and the overall aggregate output of the Ghanaian economy.

     

    Fiscal policy

    Fiscal policy in West Africa revolves around two main themes, revenue mobilization and debt restructuring/sustainability. Nigeria and Ghana both have high debt profiles.

     

    Ghana has an ongoing debt-restructuring plan that has helped it secure an IMF package and disbursements alongside securing agreements with its lenders.

     

    Nigeria, on the other hand, is facing rising debt levels amid low revenue generation. The widening fiscal gap caused by the new minimum wage will have to be bridged by either new borrowings or an increase in revenue. Generating more revenue implies higher taxes and tariffs, which has an inflationary effect.

     

     

  • Macroeconomic indicators to worsen in Ghana, Nigeria through 2024 – Audit firm

    IMF

     

    Adnan Adams Mohammed

     

    An international accounting and auditing firm, Deloitte, has indicated that, macroeconomic indicators (inflation, exchange rate, interest rate, and debt to GDP) to remain high throughout the rest of 2024 in Ghana and Nigeria.

     

    The the two giants and the entire West African macroeconomic environment remain challenging due to several factors, prominent ones being high inflation, a high interest rate environment, currency weakness, and elevated debt levels.

     

    The worsening economic conditions erodes the purchasing power of consumers while deteriorating standard of living and also increasing cost of doing business in the sub-region. As remarked by Deloitte, both households and businesses are already implementing belt-tightening measures to survive.

     

    “The resulting effect of these macroeconomic headwinds on productivity and overall aggregate demand is likely to stall the region’s economic growth for the year”, Deloitte said in its West Africa economic outlook, August 2024 report.

     

    “In July, the International Monetary Fund (IMF) revised its 2024 growth forecast for Nigeria to 3.1% from its April forecast of 3.3%. The IMF also reduced sub-Saharan Africa’s growth forecast to 3.7% from 3.8% in April due to the downward revision in Nigeria’s growth outlook. Meanwhile, the IMF projects Ghana’s economy will grow 2.8% in 2024 and 4.4% in 2025.”

     

    The report indicated that around 50 countries across the world are heading to the polls this year—or have already done so—including West African countries.

     

    As Ghanaians gears towards the December polls, the current state of the economy and citizens’ welfare will factor heavily into how voters evaluate campaign promises and determine the next leader of the nation, an economy heavily dependent on cocoa and gold. The election outcome will weigh on policy direction, as well as investor and market sentiment.

     

    “West Africa’s economic output has been limited by the rising cost of goods and services, leading to an increase in interest rates as monetary authorities attempt to rein in inflation. Nigeria and Ghana have also been facing currency volatility, which has had a severe impact on their ability to import raw materials and equipment required to boost output. In the first six months of the year, the Nigerian naira has lost over 40% of its value, and the Ghanaian cedi over 20% of its value against the US dollar,” it said.

     

    In the case of Nigeria, it said the oil-rich country’s economy grew by 2.98% year on year in the first quarter of 2024. Although faster than the corresponding period in 2023, when the economy grew 2.31%, it marked a slowdown from an even faster growth rate of nearly 3.5%, seen in the fourth quarter of 2023.

     

    Major growth drivers in the first quarter of 2024 include the finance and insurance sector, which grew 31.24% year on year, and the water supply, sewage, waste management, and remediation sector, which grew by 6.95%. The oil and gas sector—the country’s economic mainstay—grew by 5.7%, after a year of contraction. The agriculture sector, on the other hand, continued to trudge along with a growth rate of 0.18%.

     

    The sluggish pace of growth is indicative of multiple factors, including reduced spending and investment. Consumer spending has declined significantly due to rising consumer product prices. Investment spending in the country has also dwindled, primarily due to foreign exchange difficulties that have partly contributed to the exit of several multinational corporations.

     

    Ghana, compared to Nigeria, appears to have stronger growth prospects, the report said.

     

    Its economy grew by 4.7% year on year in the first quarter of 2024, driven by rapid 6.8% year-on-year growth in the industrial sector. The agriculture and services sectors grew at a slower pace of 4.1% and 3.3% year on year, respectively. The country is recovering from a debt-induced crisis, following the government’s ongoing restructuring of its US$30 million debt. The implementation of monetary policy measures by the Bank of Ghana has also helped reduce inflation. Ghana has been able to secure approval for two tranches of IMF disbursements so far this year, bringing cumulative disbursements from the IMF to US$1.56 billion since 2023.

     

  • A GHS8.2bn SME growth and opportunity programme unveiled.

     

     

     

    President Nana Akufo-Addo has unveiled the SME Growth and Opportunity (GO) Programme at the SME Growth and Opportunity Summit held at the Kempinski Hotel, Accra.

     

    The initiative is aimed at boosting Ghana’s economic landscape.

     

    The comprehensive programme is backed by a substantial GHS 8.2 billion funding package and aims to support small and medium-sized enterprises (SMEs), which are pivotal to the nation’s economic prosperity.

     

    President Akufo-Addo emphasized the critical role SMEs play in Ghana’s economy, highlighting that they constitute 92% of businesses and contribute 70% to the GDP. Despite their significant contributions, SMEs face numerous challenges, particularly in accessing finance, which hinders their potential for growth and innovation.

     

    “The entrepreneurial spirit of Ghanaians has always been a driving force behind our economic transformation. Our SMEs are the backbone of our economy, and it is imperative that we support them to overcome the barriers they face,” President Akufo-Addo stated.

     

    The SME GO Programme, coordinated by the Ministries of Finance and Trade and Industry, seeks to address these challenges through targeted financing solutions and technical assistance. The programme’s key components include substantial funding allocations and the establishment of supportive infrastructure to bolster SME growth.

     

    Ghana Exim Bank: Supported with GHS 700 million, the Ghana Exim Bank will offer highly subsidized financial support for both capital and operating expenditures. A dedicated window for the 1-District-1-Factory initiative will also be set up to ensure optimal synergies with this structural project.

     

    Ghana Enterprises Agency (GEA): Allocated GHS 230 million, the GEA will target high-growth SMEs employing 100 or more people, providing small-scale grants and loans of up to two years at highly subsidized rates. This initiative aims to support businesses with strong potential for expansion and job creation.

     

    Development Bank Ghana (DBG): Utilizing GHS 1.4 billion, the DBG will provide loans with tailored repayment conditions through financial institutions. These loans, with terms of up to five years, will support SMEs with robust growth prospects.

     

    Additionally, the programme will see the establishment of a Food Innovation Hub on the University of Ghana campus. This hub will support food industry SMEs with modern processing equipment, warehousing, testing labs, and regulatory assistance. The hub aims to help SMEs that lack sufficient capital to access state-of-the-art processing facilities, thus enabling them to scale up production and meet export standards.

     

    “The Akufo-Addo Government is being intentional about supporting SMEs that are too large for small business finance yet too small to attract substantial commercial lending. This initiative aims to create ‘SME champions’ capable of taking Ghanaian products and innovations global,” the President said.

     

    The programme reflects the government’s broader strategy to foster a competitive, innovative, and globally oriented SME sector, which is crucial for Ghana’s long-term economic prosperity. The SME GO Programme is a continuation of the government’s commitment to economic transformation, following previous policies under the post-COVID plan for Economic Growth (PC-PEG).

     

    President Akufo-Addo reiterated the importance of a collaborative approach involving the government, private sector, and international partners to create a conducive environment for SMEs to thrive. The programme will be coordinated jointly by the Ministry of Finance and the Ministry of Trade and Industry, with the Ghana Enterprises Agency, Ghana EXIM Bank, and Development Bank Ghana serving as the principal implementing agencies.

     

    The Ministry of Finance has successfully mobilized GHS 8.2 billion from both public and private sector sources, earmarked for disbursement to eligible SMEs under the SME GO Programme. This funding will be disbursed through participating financial institutions, ensuring that SMEs with high-growth potential receive the support they need to expand and create impact across their communities.

     

    With this bold step, Ghana aims to enhance its long-term competitiveness and ensure sustainable growth by empowering SMEs, which are the backbone of the nation’s economy. President Akufo-Addo concluded his address by emphasizing the need for collective effort to break the barriers hindering SME growth and unleash their full potential for the benefit of all Ghanaians.

     

    By creating an enabling environment that supports innovation, entrepreneurship, and resilience, the SME GO Programme is set to transform the economic landscape of Ghana, driving inclusive and sustainable growth for years to come.

     

     

     

     

  • Ghana’s credit rating to be upgraded after Eurobond exchange – Moody’s hint.

    Moody

     

     

     

    Adnan Adams Mohammed

     

    Ghana’s economy is likely to witness credit ratings upgrade after it successfully restructured its Eurobonds, Moody’s has hinted.

     

    Currently, Ghana’s rating stands at Caa3 for local currency and Ca for foreign currency. These ratings reflect the government’s ongoing debt restructuring efforts under the G20 common framework, initiated in December 2022.

     

    Moody’s, in a recent report stated that, once the restructuring is complete, all ratings are likely to be aligned at a higher level, though still within the Caa-rating category due to liquidity constraints typically following a default event. The IMF program supports fiscal consolidation and funding access, benefiting from Ghana’s relatively robust institutional capacity.

     

    “..However, high inflation and tight monetary conditions remain key credit challenges”, New York-based ratings agency has said.

     

    The restructuring of local currency debt, excluding Treasury Bills, was completed in 2023. Regarding foreign currency debt, which constitutes nearly half of Ghana’s total debt, significant progress has been made.

     

    Last month, Ghana’s Ministry of Finance announced an agreement in principle with bondholders to restructure $13.1 billion of Eurobond debt, which accounted for 21% of Ghana’s total debt in 2023. Under this agreement, bondholders would forgo around $4.7 billion in principal without state-contingent triggers. This followed a June 12 MoU between the Finance Ministry and the Official Creditor Committee (OCC) to restructure $5.4 billion of official sector external debt. The IMF confirmed on June 28 that both restructurings are consistent with its program parameters, though the OCC has yet to confirm that the bondholder agreement is comparable in debt treatment to the MoU.

     

    Moody’s assesses Ghana’s economic strength at ‘ba2’, balancing the country’s growth potential in the oil and non-oil sectors against its small size and low wealth levels. The ‘caa2’ rating for institutions and governance strength reflects very weak fiscal and monetary policy effectiveness, which led to unsustainable government debt and the need for restructuring.

     

    Ghana’s fiscal strength is rated ‘ca’, indicating very weak debt affordability and a very high debt burden. The ongoing debt restructuring is expected to improve these metrics. Moody’s also highlighted Ghana’s susceptibility to event risk at ‘ca’, driven by elevated government liquidity risk due to high gross borrowing requirements and limited borrowing options.

     

    The outlook for Ghana remains stable, reflecting the ongoing foreign currency debt restructuring. Expected losses for bondholders align with the current ratings’ loss-given-default range. Moody’s indicated that a rating downgrade is unlikely, given the recent progress on foreign currency debt restructuring and the agreement’s terms with bondholders.

     

    However, if the agreement does not proceed, it could derail the debt restructuring process, potentially leading to downward pressure on both local and foreign currency ratings. Moody’s emphasized that they will likely upgrade the local and foreign currency ratings following the exchange of the Eurobonds.

     

    The June 24 agreement provides substantial debt relief to the government, complementing earlier local currency debt restructuring. The restructuring of official sector debt will bring additional, yet unknown, liquidity relief. Post-restructuring, Ghana’s ratings are likely to be higher, though still reflecting liquidity constraints.

     

     

  • Withdraw 5% excise tax on plastic manufacturing companies – GUTA to gov’t.

    GUTA

     

     

     

    The Ghana Union of Traders’ Association (GUTA) has expressed strong disapproval over the imposition of a 5 percent excise tax on plastic manufacturing companies, calling for its immediate withdrawal to prevent the collapse of local businesses.

     

    In a statement issued by the association and signed by its General Secretary, Alpha Shaban, GUTA questioned the “economic sense” of imposing such a tax during a time when the government is promoting industrialisation and import substitution.

     

    The statement described the tax as an “obnoxious” measure that threatens to collapse businesses already “suffocating as a result of unbearable taxes in the system.”

     

    The association emphasised: “The business community can no longer accept any additional layer of cost to doing business.”

     

    GUTA therefore appealed to the government to urgently halt the implementation of the 5 per cent excise tax on plastic manufacturing companies to alleviate economic hardship in the country.

     

  • Gov’t to maintain fiscal discipline and stability amidst Dec. elections.

     

    IMF

     

     

    Adnan Adams Mohammed

     

    The Ghana government has assured its steadfast commitment to fiscal discipline and responsible spending inspite of pending elections on December 7, 2024.

     

    The government through the Finance Ministry has underscored the importance of maintaining economic stability and pursuing sustainable growth amid the upcoming political season.

     

    Ghana has a track record of managing budget overrun with huge deficits in every electioneering year. This phenomenon has become a cyclical event under every government thereby plunging the country into financial and macro and micro economic constraints. But, addressing journalists at a joint International Monetary Fund (IMF) and MoF press conference, the finance minister is optimistic of breaking the jinx.

     

     

    “Despite the fact that 2024 is an election year, we are committed to enhancing domestic revenue mobilisation and tightening expenditure commitment controls to avoid policy slippages,” Dr Mohammed Amin Adam asserted.

     

    The IMF Board’s has approved the second review of Ghana’s US$3 billion programme, which has led to the immediate release of US$360 million, bringing total disbursements to US$1.56 billion.

     

    The Finance Minister highlighting government’s approach to change the status quo indicated: “We are committed to sustaining our macroeconomic policy adjustment and reforms to fully restore macroeconomic stability and debt sustainability while fostering a sustainable increase in economic growth and poverty reduction.”

     

    Dr. Amin Adam outlined government’s strategic focus on enhancing domestic revenue sources and implementing stringent controls on public expenditure.

     

    This strategy aims to prevent any policy deviations and ensure that economic policies are effectively maintained through the election year.

     

    “This approach is crucial to maintaining economic stability,” Dr. Amin Adam asserted. “We must ensure that our policies are not derailed by the political calendar and that we continue to work towards achieving comprehensive macroeconomic stability and sustainable growth.”

     

     

  • Plastic manufacturers threaten one- week shut down over GRA’s 5% excise tax.

     

    Ghana revenue authority

     

     

    The Ghana Plastic Manufacturers Association (GPMA) has voiced strong opposition to the government’s new 5% Excise Tax on all locally manufactured plastic products, calling for its immediate suspension and for a broader stakeholder consultation.

     

    At a press conference held last week, the President of GPMA, Mr Ebo Botchwey, expressed frustration over the lack of response from the Ministry of Finance.

     

    The GPMA had previously requested a delay in the tax’s implementation to allow for better consultation, but no feedback has been received since their formal letter on April 24, 2024.

     

    Despite the pending request, the Ghana Revenue Authority (GRA) has begun issuing demand notices to plastic manufacturers, compelling them to comply with the new tax from June 21, 2024, or face penalties and potential shutdowns.

     

    The GPMA has called on the GRA to halt these actions until the tax’s ambiguities are clarified.

     

    The GPMA highlighted the concurrent burden of an existing 10% Environmental Excise Tax on selected plastic materials at entry ports, emphasizing that the new tax would be “obnoxious and retrogressive” for the manufacturing sector.

     

    The Association warned that this tax would significantly impact various industries reliant on plastic products, including food and beverage, retail, water, and pharmaceuticals, ultimately leading to higher consumer prices.

     

    The GPMA also underscored the significant contributions of the plastic industry to Ghana’s economy, including direct employment to over 39,260 people, generating millions of jobs in plastic waste recycling and the sachet and bottled water industry.

     

     

    He noted that the industry’s substantial payments in import duties, electricity bills, and corporate taxes were highlighted, along with concerns about illegal sales of plastic raw materials by Free Zones Companies.

     

    The Association reiterated its position, calling for the suspension of the 5% Excise Tax, comprehensive stakeholder consultation, and a clear definition of locally manufactured plastic products to avoid ambiguity.

     

    The GPMA also appealed to Vice President Dr. Mahamudu Bawumia to intervene, warning that the tax would lead to severe hardships for ordinary Ghanaians.

     

     

    In conclusion, the GPMA issued an ultimatum, demanding a response from the government within one week, failing which they would consider a week-long shutdown of all plastic manufacturing operations, potentially sending over 30,000 workers home.

     

  • World Bank Supports Ghana to Strengthen its Financial Sector.

     

     

     

    The World Bank today approved a $250 million International Development Association (IDA)* credit for a five-year Ghana Financial Stability Project. The project will support Ghana’s Financial Sector Strengthening Strategy (FSSS) by contributing to financial stability through the recapitalization of viable Banks and Specialized Deposit-taking Institutions (SDIs) impacted by Ghana’s Domestic Debt Exchange Program (DDEP).

     

    The financial system is critical to the functioning of the Ghanaian economy, providing critical services to households, firms, government, and supporting economic growth. To address the severe impact of the DDEP on financial institutions, the Government established the Ghana Financial Sector Stability Fund (GFSF) to provide solvency support to banks, pension funds, insurance companies fund managers and collective investment schemes.

     

    “This project will contribute to Ghana’s financial stability, by providing solvency support to banks and SDIs impacted by the DDEP through the GFSF.” said Robert R. Taliercio, World Bank Country Director for Ghana, Liberia, and Sierra Leone. “Through direct support to banks and SDIs, the project will benefit Ghana’s financial sector and the economy by supporting the access of depositors and other financial consumers to savings, payments, and other core financial services provided by adequately capitalized banks and SDIs.“

     

    The Ghana Financial Stability project is expected to immediately benefit eligible undercapitalized but viable banks and SDIs and become accessible to other banks and SDIs that may need support in the future due to potential new losses and providing a backstop against unexpected losses.

     

    The World bank

    The project promotes financial stability, a key requirement to protect people and preserve jobs,” said Carlos Leonardo Vicente, Senior Financial Specialist and Team Lead.

     

    The project complements the World Bank’s Development Program Financing series and the IMF-Extended Credit Facility, which support reforms to improve the macroeconomic environment and enable financial institutions to operate profitably and generate internal capital. It also complements other World Bank funded projects aimed at economic recovery and job creation in Ghana, such as the Ghana Development Financing Project which supported the establishment of the Development Bank of Ghana and provides long-term financing to small and medium enterprises and small corporates.

  • 24-hour economy: economist and unionists say ‘could be the game-changer’   

    John Mahama’s 24-hour economy

     

    Adnan Adams Mohammed

     

    Trade Unions and economist have hailed the proposed 24-hour economy for Ghana by former President John Mahama.

     

    They believe it ‘could be the game-changer’ and asked to know a lot more about this ‘great idea’.

     

    The Ex President Mahama during his engagement with Trades Union Congress (TUC) as part of his Building a Better Ghana Tour, last week, proposed the idea of 24-hour economy to help in expanding the economy whiles creating jobs. 

     

    “I think, this one, Comrade [referring to Mr Mahama], you have to take your time, because I can imagine the amount of jobs that this kind of thing will create”, Secretary-General of TUC, Yaw Baah, affirmed idea. 

     

    “Such an economy “could be the game-changer”, explaining: “…You have an opportunity in this country, to work 24 hours: three shifts. So, if you don’t get a job in the morning, you can get it in the afternoon or in the night”.

     

    “So, where are the young people? Get ready for jobs”, Dr Baah charged.

     

    Consequently, in a statement released last week, a US-based economist, Dr Sa-ad Iddrisu, expressed his enthusiasm for Mahama’s policy, stating that it has the potential to be a game-changer for the Ghanaian economy.

     

    Dr Iddrisu highlighted the advantages of such an economic model, stating, “The concept of a 24-hour economy, common in most developed nations, involves three working shifts and offers many advantages.”

     

    Dr Iddrisu highlighted the advantages of such an economic model, stating, “The concept of a 24-hour economy, common in most developed nations, involves three working shifts and offers many advantages.”

     

    He explained that extending business operating hours beyond the conventional 8 am to 5 pm would substantially reduce Ghana’s high unemployment levels.

     

    The need for additional shifts would create job opportunities and offer workers flexible working hours, promoting a sustainable and productive workforce, the statement said.

     

    Dr Iddrisu noted that implementing a 24-hour economy would require enhanced security measures, leading to a reduction in urban crime rates and generating additional employment opportunities within the security forces, particularly benefiting the youth.

     

    He emphasised that a 24-hour economy would drive improvements in essential services like electricity and water supply, which are vital for the economy’s uninterrupted functioning.

     

    “Addressing these services would significantly benefit citizens, as consistent power and water supply are essential for sustaining a 24-hour economy,” he added.

     

    Dr Iddrisu also highlighted the potential for nightlife tourism as a significant benefit of a 24-hour economy.

     

    “Major cities like Accra, Kumasi, Tamale, Takoradi, and Ho could stimulate nightlife tourism, attracting youth and travelers seeking unique experiences and generating additional revenue for local businesses and the overall economy,” he projected.

     

    Among other advantages, he mentioned traffic reduction and increased foreign competitiveness, stating that a 24-hour economy has the potential to alleviate traffic congestion during peak hours and enable Ghanaian youth to compete globally without relocating.

     

    Information technology companies, for instance, could cater to foreign clients around the clock, leading to increased revenue and employment opportunities, he stated.

     

    While acknowledging the numerous benefits of a 24-hour economy, Dr Iddrisu also cautioned about potential challenges, such as an increase in night crimes.

     

    He stressed the importance of vigilant support and engagement from citizens, community leaders, religious figures, and chiefs, as well as careful consideration when identifying sectors within the Ghanaian economy suitable for 24-hour operation.

     

    This balanced approach would avoid overwhelming specific industries.