Story: Boahene Asamoah
SOME economists and investment analysts have expressed varied opinions about the 2008 Budget Statement and Economic Policy Statement presented to Parliament yesterday by the Minister of Finance and Economic Planning, Mr Kwadwo Baah-Wiredu.
In an interview shortly after the delivery of the almost two-hour abridged version of the budget statement, the experts were unanimous in their opinion that the budget was comprehensive.
The new World Bank Country Director for Ghana, Mr Ishac Diwan, said the country’s focus on infrastructural development, as outlined in the 2008 budget, was surely the way to go if the country aimed at attaining a middle- income status.
Mr Diwan said “infrastructure is a major contributor to growth and development”, adding that it provided the needed tools to facilitate business and growth.
Mr Diwan, who is also the Country Director for Liberia, Burkina Faso, Sierra Leone and Guinea, said the government’s targets as outlined in the economic policy statement were realistic but he was quick to add that economic growth and developed hinged on good policies and projects.
He said the World Bank would study the budget and offer any suggestion and support that the government needed to achieve its targets.
The main thrust of the 2008 budget is hinged on “growth through massive infrastructure development”.
This year’s budget, as is characteristic of the government, is titled, “A Good and Brighter Future” and it is focused on investments in the road, energy and water infrastructure provision.
For his part, a former Minister for Public Sector Reforms, Dr Paa Kwesi Nduom, warned of potential industrial unrest as a result of what he said was the silence of the 2008 budget statement on pay reforms.
Dr Nduom, who is a presidential aspirant of the Convention People’s Party (CPP) and Member of Parliament (MP), said the budget did not address pay reforms adequately, adding that that could be a source of potential industrial unrest in the country.
Dr Nduom, who was in charge of restructuring pay reforms and the setting up of the Fair Wages Commission, again observed that the government needed to implement its policies concerning the energy situation, especially the expansion of the Osagyefo Power Barge.
He expressed concern about the decline in the performance of the manufacturing sector and said the budget again did not specify what was being done to address the constraints.
Dr Nduom said the government needed to address the issue of the importation of cheap products, a situation which he said was hurting local industries, saying that “no country has been able to develop without its manufacturing sector”.
“The manufacturing sector provides jobs for the people and there is the need to support that sector,” he added.
For his part, Dr Sam Mensah, an investment analyst, said the budget provided good news for the private sector in the area of regulatory framework improvement.
He mentioned, for instance, the government’s policy on capital allowance and stamp duty as some of the initiatives to support the private sector.
On the government’s decision to introduce a 10-year yield bond to stimulate secondary trading activity, Dr Mensah stated that it was critical, since it would provide a local bench mark for investors.
He said that was riding on the back of the government’s successful introduction of two- and three-year bonds on the secondary market and also the foray into the international market to source the $700 million euro bond.
The government has projected a 6.3 per cent Gross Domestic Product (GDP) growth for 2008, with a six to eight per cent inflation target.
Tuesday, November 27, 2007
Government focuses on infrastructural development
Story:Boahene Asamoah & Samuel Doe Ablordeppey
THE government is to embark on aggressive infrastructural projects, mainly on water, roads and energy, to bring real improvements in those sectors.
An estimated GH¢819.71 million will be spent on those three areas alone to facilitate the much needed accelerated growth.
The Minister of Finance and Economic Planning, Mr Kwadwo Baah-Wiredu, announced this in Accra when he presented the 2008 Budget Statement and Economic Policy of the government to Parliament yesterday.
“The focus of the 2008 Budget will be 'Growth through massive Infrastructure Development'. The areas identified are roads, water and energy,” the minister said.
The budget is targeting a real Gross Domestic Product (GDP) growth of at least 7.0 per cent; inflation rate of between 6.0 and 8.0 per cent; an average inflation of 7.0 per cent and an accumulation of international reserves equivalent to at least three months of import cover.
The budget would also achieve an overall budget deficit of 4.0 per cent of GDP.
He said to support the country’s development blueprint, the Growth and Poverty Reduction (GPRS II) steps would be taken to integrate rural and urban economies and ensure lower transport costs through the provision of safe and reliable road infrastructure and services.
In that regard, the Finance Minister said the government had allocated an estimated GH¢199.2 million to fund all 166 districts to construct and tar 15 kilometres of roads in each district next year.
He said the criteria for selection of the roads would be developed by the end of the year to ensure that the project started next year.
Mr Baah-Wiredu said banks and financial institutions would be called upon to intermediate in financing the projects.
An amount of $200 million from the sovereign bond proceeds would be spent in the road sector, including the dualisation of the Accra-Kumasi highway, while $90 million of that proceeds would be devoted to building the western corridor of the railway network.
On the improvement of water infrastructure, the Finance Minister said an estimated GH¢7.47 million would be spent on providing good drinking water for five communities in each of the 166 districts.
Improving the energy sector would also engage the attention of the government next year during which major medium and long-term measures would be adopted to increase the energy generation and distribution with a $460-million funding from the sovereign bond proceeds.
The projects would include the firing of the Osagyefo Power Barge at Effasu, the execution of the Bui Hydro Electric Power project, as well as the Hemang and Awisam Hydro Electricity Power projects on the Pra River, Mr Baah-Wiredu announced.
He added that other hydro-electric power projects to come on stream would include that on Ankobra River; the Tanoso Hydro Electric Power on the Tano River; and the Juale Hydro River on Oti River. An amount of ??????? will be spent in the energy sector with focus on the transmission and distribution network.
He said the government would partner the private sector through Public Private Partnership (PPP) to achieve those goals.
On the whole, the budget estimates total receipts for the country for the 2008 fiscal year at GH¢7.11 billion, equivalent to 43.6 per cent of GDP, with domestic revenue, consisting of tax and non-tax revenue, projected at GH¢4.76 billion.
On the other hand, out of the estimated GH¢7.11 billion of total payments, GH¢1.728 billion or 10.6 per cent of GDP, has been earmarked for statutory payments, while GH¢5.378 billion will be for discretionary payments.
THE government is to embark on aggressive infrastructural projects, mainly on water, roads and energy, to bring real improvements in those sectors.
An estimated GH¢819.71 million will be spent on those three areas alone to facilitate the much needed accelerated growth.
The Minister of Finance and Economic Planning, Mr Kwadwo Baah-Wiredu, announced this in Accra when he presented the 2008 Budget Statement and Economic Policy of the government to Parliament yesterday.
“The focus of the 2008 Budget will be 'Growth through massive Infrastructure Development'. The areas identified are roads, water and energy,” the minister said.
The budget is targeting a real Gross Domestic Product (GDP) growth of at least 7.0 per cent; inflation rate of between 6.0 and 8.0 per cent; an average inflation of 7.0 per cent and an accumulation of international reserves equivalent to at least three months of import cover.
The budget would also achieve an overall budget deficit of 4.0 per cent of GDP.
He said to support the country’s development blueprint, the Growth and Poverty Reduction (GPRS II) steps would be taken to integrate rural and urban economies and ensure lower transport costs through the provision of safe and reliable road infrastructure and services.
In that regard, the Finance Minister said the government had allocated an estimated GH¢199.2 million to fund all 166 districts to construct and tar 15 kilometres of roads in each district next year.
He said the criteria for selection of the roads would be developed by the end of the year to ensure that the project started next year.
Mr Baah-Wiredu said banks and financial institutions would be called upon to intermediate in financing the projects.
An amount of $200 million from the sovereign bond proceeds would be spent in the road sector, including the dualisation of the Accra-Kumasi highway, while $90 million of that proceeds would be devoted to building the western corridor of the railway network.
On the improvement of water infrastructure, the Finance Minister said an estimated GH¢7.47 million would be spent on providing good drinking water for five communities in each of the 166 districts.
Improving the energy sector would also engage the attention of the government next year during which major medium and long-term measures would be adopted to increase the energy generation and distribution with a $460-million funding from the sovereign bond proceeds.
The projects would include the firing of the Osagyefo Power Barge at Effasu, the execution of the Bui Hydro Electric Power project, as well as the Hemang and Awisam Hydro Electricity Power projects on the Pra River, Mr Baah-Wiredu announced.
He added that other hydro-electric power projects to come on stream would include that on Ankobra River; the Tanoso Hydro Electric Power on the Tano River; and the Juale Hydro River on Oti River. An amount of ??????? will be spent in the energy sector with focus on the transmission and distribution network.
He said the government would partner the private sector through Public Private Partnership (PPP) to achieve those goals.
On the whole, the budget estimates total receipts for the country for the 2008 fiscal year at GH¢7.11 billion, equivalent to 43.6 per cent of GDP, with domestic revenue, consisting of tax and non-tax revenue, projected at GH¢4.76 billion.
On the other hand, out of the estimated GH¢7.11 billion of total payments, GH¢1.728 billion or 10.6 per cent of GDP, has been earmarked for statutory payments, while GH¢5.378 billion will be for discretionary payments.
GOIL Lists on the stock market
Story: Boahene Asamoah & Eleanor Gurney
THE Ghana Oil Company Limited (GOIL), a local oil marketing company (OMC), was formally listed on the Ghana Stock Exchange (GSE) after a successful initial public offer (IPO) that was over-subscribed by over 100 per cent.
During the first day of trading, the shares of GOIL traded at GH¢0.2150. The company has thus become the second OMC and the 32nd company to be listed on the market.
At a ceremony to officially list the shares of the company on the first list of the GSE, the Minister of Finance and Economic Planning, Mr Kwadwo Baah-Wiredu, reiterated the government’s commitment to use the stock exchange for the divestiture of state-owned enterprises.
He said GOIL was being listed in order to stimulate secondary market activities and improve the financial leverage of the company, as well as encourage other Ghanaian private companies to also list on the stock market.
The minister also said the government was going to list a 10-year bond on the local market to help to stimulate secondary market activities and deepen the development of the capital market.
Mr Baah-Wiredu called on the management of GOIL to ensure its transparency and observe disclosure obligations that companies listed on the stock market were mandated to do.
The Board Chairman of GOIL, Mr Freddie Blay, said with the discovery of oil in the country, the company was positioning itself to take advantage of the opportunities that the industry presented.
He revealed that the company was looking at areas such as bitumen making and the building of oil refineries so that it could play a strategic role in the country’s oil industry.
Mr Blay, who is the Second Deputy Speaker of Parliament and Member of Parliament, assured shareholders that the company would adhere to the principles of transparency in its business dealings.
The Managing Director of the company, Mr Yaw Agyeman-Duah, said the company had good prospects and was poised to play a key role in the country’s oil industry.
He revealed that the company had already started the refurbishment on its outlets and had replaced the Ghana colours with orange to reflect its new image.
Mr Agyeman-Duah also said the company recently launched its G-Plus product, which has high octane particularly suited to vehicles driving in the Ghanaian environment.
The Managing Director of the GSE, Mr K.S. Yamoah, said the excess demand for the shares of GOIL during its IPO was an indication of how the Ghanaian public was ready to participate in activities on the stock market.
He called on the management of GOIL to position itself to take advantage of the opportunities that the oil find presented to the company, such as lifting oil and the marketing of other profitable products.
GOIL currently controls an 18 per cent market share of the downstream oil marketing business, as well as a 28 per cent market share of the lubricants market.
The company originally offered 42.7 per cent of its shares to the public to raise GH¢17.96 million (¢179.63 billion) to carry out an ambitious reinvigoration, rehabilitation and expansion programme.
The shares were, however, over-subscribed by over 100 per cent, forcing the government to release additional shares to satisfy the investing public.
THE Ghana Oil Company Limited (GOIL), a local oil marketing company (OMC), was formally listed on the Ghana Stock Exchange (GSE) after a successful initial public offer (IPO) that was over-subscribed by over 100 per cent.
During the first day of trading, the shares of GOIL traded at GH¢0.2150. The company has thus become the second OMC and the 32nd company to be listed on the market.
At a ceremony to officially list the shares of the company on the first list of the GSE, the Minister of Finance and Economic Planning, Mr Kwadwo Baah-Wiredu, reiterated the government’s commitment to use the stock exchange for the divestiture of state-owned enterprises.
He said GOIL was being listed in order to stimulate secondary market activities and improve the financial leverage of the company, as well as encourage other Ghanaian private companies to also list on the stock market.
The minister also said the government was going to list a 10-year bond on the local market to help to stimulate secondary market activities and deepen the development of the capital market.
Mr Baah-Wiredu called on the management of GOIL to ensure its transparency and observe disclosure obligations that companies listed on the stock market were mandated to do.
The Board Chairman of GOIL, Mr Freddie Blay, said with the discovery of oil in the country, the company was positioning itself to take advantage of the opportunities that the industry presented.
He revealed that the company was looking at areas such as bitumen making and the building of oil refineries so that it could play a strategic role in the country’s oil industry.
Mr Blay, who is the Second Deputy Speaker of Parliament and Member of Parliament, assured shareholders that the company would adhere to the principles of transparency in its business dealings.
The Managing Director of the company, Mr Yaw Agyeman-Duah, said the company had good prospects and was poised to play a key role in the country’s oil industry.
He revealed that the company had already started the refurbishment on its outlets and had replaced the Ghana colours with orange to reflect its new image.
Mr Agyeman-Duah also said the company recently launched its G-Plus product, which has high octane particularly suited to vehicles driving in the Ghanaian environment.
The Managing Director of the GSE, Mr K.S. Yamoah, said the excess demand for the shares of GOIL during its IPO was an indication of how the Ghanaian public was ready to participate in activities on the stock market.
He called on the management of GOIL to position itself to take advantage of the opportunities that the oil find presented to the company, such as lifting oil and the marketing of other profitable products.
GOIL currently controls an 18 per cent market share of the downstream oil marketing business, as well as a 28 per cent market share of the lubricants market.
The company originally offered 42.7 per cent of its shares to the public to raise GH¢17.96 million (¢179.63 billion) to carry out an ambitious reinvigoration, rehabilitation and expansion programme.
The shares were, however, over-subscribed by over 100 per cent, forcing the government to release additional shares to satisfy the investing public.
Wednesday, November 14, 2007
Government must place its proposal on EPA on the table
Story: Boahene Asamoah
THE Head of Programmes at the Third World Network (TWN), a civil society organisation, Mr Tetteh Hormeko, has called on the government to come clean on its preferred option on the Economic Partnership Agreement (EPA) on the on-going negotiations with the European Commission (EC).
He said it was not enough for the government to state that it would not sign the agreement and that the government ought to put on the negotiating table its proposals of the revised Generalised System of Preferences, also known as GSP+.
West African Ministers meeting on October 5, 2007 in Abidjan, Cote d’Ivoire stated that they would not be able to meet the December 31, 2007 deadline for the signing of the new trade agreement with the European Commission (EC).
The EPAs are reciprocal trade agreements between the European Union (EU) and the African, Caribbean and Pacific (ACP) Countries to replace the trade chapters of the Cotonou Agreement when the non-reciprocal preferential trade agreement expires next year.
Addressing a press conference on the present situation of the EPAs, Mr Homerku, stated that while the EC had made a two-stage proposal, which he described as a modified version of the EPAs, members of the African, Caribbean and Pacific (ACP) countries had not presented any option of their choice to its negotiating counterpart.
He said the GSP+ could also guarantee a World Trade Organisation (WTO) compatible preferential and non-reciprocal trade between the EU and ACP countries, in spite of claims that ACP countries would not be able to access the EU market if they failed to sign the EPAs by the end of the year.
Mr Homerku expressed worry that while the EU had ignored suggestions for the current trade waiver with the ACP countries to be extended, its had nonetheless presented what he termed “a front-loaded EPAs” which it expected African countries to sign up to by the end of November this year.
He said the two-stage proposal was “totally unacceptable to civil society groups,” adding that it amounted to signing the EPAs.
Mr Homerku explained that under the two-stage proposal, the EC was urging all ACP countries to sign the agreement that allowed for the full liberalisation of the goods or products sector, while the ACP committed itself to signing the two remaining agreements which were services and intellectual property rights at a later date.
He said the issues civil society groups raised in the EPAs, such as undermining the competitiveness of African products, the loss of jobs and taxes, specific goods to be liberalised and sensitive products, had still not been resolved, while the EC was pushing for a two-stage proposal.
Mr Homerku stated that the EC was exerting undue pressure on individual countries as well as other regional blocs to sign the EPAs and that there was the need for all ACP countries to present their options.
ACP countries are now on the verge of negotiating new regional trade agreements — called Economic Partnership Agreements — with the European Union (EU) which will diverge radically from past trading relationships.
THE Head of Programmes at the Third World Network (TWN), a civil society organisation, Mr Tetteh Hormeko, has called on the government to come clean on its preferred option on the Economic Partnership Agreement (EPA) on the on-going negotiations with the European Commission (EC).
He said it was not enough for the government to state that it would not sign the agreement and that the government ought to put on the negotiating table its proposals of the revised Generalised System of Preferences, also known as GSP+.
West African Ministers meeting on October 5, 2007 in Abidjan, Cote d’Ivoire stated that they would not be able to meet the December 31, 2007 deadline for the signing of the new trade agreement with the European Commission (EC).
The EPAs are reciprocal trade agreements between the European Union (EU) and the African, Caribbean and Pacific (ACP) Countries to replace the trade chapters of the Cotonou Agreement when the non-reciprocal preferential trade agreement expires next year.
Addressing a press conference on the present situation of the EPAs, Mr Homerku, stated that while the EC had made a two-stage proposal, which he described as a modified version of the EPAs, members of the African, Caribbean and Pacific (ACP) countries had not presented any option of their choice to its negotiating counterpart.
He said the GSP+ could also guarantee a World Trade Organisation (WTO) compatible preferential and non-reciprocal trade between the EU and ACP countries, in spite of claims that ACP countries would not be able to access the EU market if they failed to sign the EPAs by the end of the year.
Mr Homerku expressed worry that while the EU had ignored suggestions for the current trade waiver with the ACP countries to be extended, its had nonetheless presented what he termed “a front-loaded EPAs” which it expected African countries to sign up to by the end of November this year.
He said the two-stage proposal was “totally unacceptable to civil society groups,” adding that it amounted to signing the EPAs.
Mr Homerku explained that under the two-stage proposal, the EC was urging all ACP countries to sign the agreement that allowed for the full liberalisation of the goods or products sector, while the ACP committed itself to signing the two remaining agreements which were services and intellectual property rights at a later date.
He said the issues civil society groups raised in the EPAs, such as undermining the competitiveness of African products, the loss of jobs and taxes, specific goods to be liberalised and sensitive products, had still not been resolved, while the EC was pushing for a two-stage proposal.
Mr Homerku stated that the EC was exerting undue pressure on individual countries as well as other regional blocs to sign the EPAs and that there was the need for all ACP countries to present their options.
ACP countries are now on the verge of negotiating new regional trade agreements — called Economic Partnership Agreements — with the European Union (EU) which will diverge radically from past trading relationships.
Monday, November 12, 2007
Non-traditional exports-Burkina Faso a major destination
Story: Boahene Asamoah
BURKINA FASO has become a major destination for Ghana’s exports of non-traditional within the sub-region.
Figures from the Ghana Export Promotion Council (GEPC) indicate that the country exported a total of $77.1 million worth of goods to Burkina Faso in 2006, as compared to the $63.3 million, representing 21 per cent growth in the market share
Ghana’s exports to Nigeria stood at $67.6 million for 2006 which was 24.9 per cent growth of the 2005 figure of $54.2 million. Before 2005. Nigeria was the leading country in terms of exports of NTEs from Ghana.
Export products to Burkina Faso were primary household utensils, wood, plastics, salt and textile.
However, over the past two years, Nigeria placed a ban on goods from neighbouring countries hurting local exporters from Ghana.
According the Senior Export Development Officer of the GEPC, Mr Alex Dadzawa, who attributed the rise in the country’s exports to Burkina Faso to the observation of the ECOWAS Trade Liberalisation Scheme.
He said this led to free flow of goods into the country without any taxes.
Ghana last year exported non-traditional exports to the tune of $893 million, representing a 14.8 per cent growth over the 2005 figure of $778 million. The target of $1 billion is however yet to be achieved.
According to figures from the GEPC, emerging economies accounted for 11.90 per cent of the country’s exports of NTEs, while other developed countries outside the EU also accounted for 11.07 per cent and other African countries constituted only 2.82 per cent.
The GEPC report indicated that during the periods of 2005 to 2006, all the markets recorded positive growth with the exception of the ECOWAS market that recorded a negative growth of -0.52 per cent.
The decline was as a result of the relative difficulty in accessing the Nigeria market even by companies with approval under the ETLS.
The EU market performance grew by 13.88 per cent while the markets in the other African countries, other developed countries, including emerging markets grew by 34 per cent, 33.55 per cent and 47.22 per cent respectively.
In 2006, Ghana’s single largest market for the NTEs was the United Kingdom which accounted for 12.12 per cent of total NTEs, worth $108.2 million, representing a decline of 4.6 per cent of the previous year’s figure of $113.5 million.
Cocoa paste veneer sheets, prepared tuna cocoa butter, plywood frozen tuna, shea nuts, cut fresh pineapples, other prepared fish and frozen fish, accounted for 51.7 per cent of total exports worth $461.7 million dollars.
Cocoa paste which is the highest earner contributed 10.71 per cent with a value of $95.6 million, representing 226 per cent increase over the 2005 figure of $29.3 million.
This was due to significant increase in the future prices for the product last year on the London futures market. Additionally, the increase was also partly due to expansion of Barry Callebaut Ghana Limited, a major exporter of cocoa paste.
BURKINA FASO has become a major destination for Ghana’s exports of non-traditional within the sub-region.
Figures from the Ghana Export Promotion Council (GEPC) indicate that the country exported a total of $77.1 million worth of goods to Burkina Faso in 2006, as compared to the $63.3 million, representing 21 per cent growth in the market share
Ghana’s exports to Nigeria stood at $67.6 million for 2006 which was 24.9 per cent growth of the 2005 figure of $54.2 million. Before 2005. Nigeria was the leading country in terms of exports of NTEs from Ghana.
Export products to Burkina Faso were primary household utensils, wood, plastics, salt and textile.
However, over the past two years, Nigeria placed a ban on goods from neighbouring countries hurting local exporters from Ghana.
According the Senior Export Development Officer of the GEPC, Mr Alex Dadzawa, who attributed the rise in the country’s exports to Burkina Faso to the observation of the ECOWAS Trade Liberalisation Scheme.
He said this led to free flow of goods into the country without any taxes.
Ghana last year exported non-traditional exports to the tune of $893 million, representing a 14.8 per cent growth over the 2005 figure of $778 million. The target of $1 billion is however yet to be achieved.
According to figures from the GEPC, emerging economies accounted for 11.90 per cent of the country’s exports of NTEs, while other developed countries outside the EU also accounted for 11.07 per cent and other African countries constituted only 2.82 per cent.
The GEPC report indicated that during the periods of 2005 to 2006, all the markets recorded positive growth with the exception of the ECOWAS market that recorded a negative growth of -0.52 per cent.
The decline was as a result of the relative difficulty in accessing the Nigeria market even by companies with approval under the ETLS.
The EU market performance grew by 13.88 per cent while the markets in the other African countries, other developed countries, including emerging markets grew by 34 per cent, 33.55 per cent and 47.22 per cent respectively.
In 2006, Ghana’s single largest market for the NTEs was the United Kingdom which accounted for 12.12 per cent of total NTEs, worth $108.2 million, representing a decline of 4.6 per cent of the previous year’s figure of $113.5 million.
Cocoa paste veneer sheets, prepared tuna cocoa butter, plywood frozen tuna, shea nuts, cut fresh pineapples, other prepared fish and frozen fish, accounted for 51.7 per cent of total exports worth $461.7 million dollars.
Cocoa paste which is the highest earner contributed 10.71 per cent with a value of $95.6 million, representing 226 per cent increase over the 2005 figure of $29.3 million.
This was due to significant increase in the future prices for the product last year on the London futures market. Additionally, the increase was also partly due to expansion of Barry Callebaut Ghana Limited, a major exporter of cocoa paste.
Wednesday, November 07, 2007
2008 Trade fair launched
Story: Boahene Asamoah
THE General Manager of the Ghana Trade Fair Company, Mr Ofori Amanfo, has called on local entrepreneurs to take advantage of trade fairs to exhibit their products and to network with foreign companies to become competitive.
He said in spite of technological advances international fairs still provided an opportunity for exhibitors to market their products and to form partnerships.
Speaking at the launch of the 12th International Trade Fair, scheduled to take place from February 20 to March 9, next year, Mr Amanfo said there was existing evidence that some local companies had been nurtured through such international fairs.
He said the fair would attract about 350 foreign exhibitors and 950 local exhibitors for next year’s international fair.
“The fair will cut across all spheres of business, such as training, research, marketing and product development,” he said, adding that it was also to help position local companies to further attract foreign customers.
The theme for next year’s international fair “Promoting Trade and Investment Opportunities,” is to draw attention to the need for businesses to explore the opportunities that lie in such international fairs.
Mr Amanfo said the Trade Fair Company had provided adequate logistics to ensure that exhibitors went about their businesses without problems.
He urged the exhibitors to take insurance seriously in order to guarantee the safety of their wares and that the company had already instituted measures to guarantee maximum security for goods and property.
THE General Manager of the Ghana Trade Fair Company, Mr Ofori Amanfo, has called on local entrepreneurs to take advantage of trade fairs to exhibit their products and to network with foreign companies to become competitive.
He said in spite of technological advances international fairs still provided an opportunity for exhibitors to market their products and to form partnerships.
Speaking at the launch of the 12th International Trade Fair, scheduled to take place from February 20 to March 9, next year, Mr Amanfo said there was existing evidence that some local companies had been nurtured through such international fairs.
He said the fair would attract about 350 foreign exhibitors and 950 local exhibitors for next year’s international fair.
“The fair will cut across all spheres of business, such as training, research, marketing and product development,” he said, adding that it was also to help position local companies to further attract foreign customers.
The theme for next year’s international fair “Promoting Trade and Investment Opportunities,” is to draw attention to the need for businesses to explore the opportunities that lie in such international fairs.
Mr Amanfo said the Trade Fair Company had provided adequate logistics to ensure that exhibitors went about their businesses without problems.
He urged the exhibitors to take insurance seriously in order to guarantee the safety of their wares and that the company had already instituted measures to guarantee maximum security for goods and property.
Foreign invesment in tradingInvestment centre to raise the bar
GIPC (fin)
Story: Boahene Asamoah
Story: Boahene asamoah
THE Ghana Investment Promotion Centre (GIPC) has presented a proposal to the Ministry of Finance for the upward review of the minimum requirement for investors in the trading sector of the economy from the present $300,000 to $1 million.
The proposal, if approved, would require investors in that category to provide $1 million cash investment.
At a press conference in Accra on Friday, the Chief Executive Officer of the GIPC, Mr Robert Ahomkah-Lindsay, said the direction was to scale up investors with high quality capital into the trading sector.
He said contrary to public perception, the law did not bar any investor from the trading sector, adding that what the law required was investors who had capital of $300,000 in cash or in goods.
Mr Ahomkah-Linsay stated that the law also prohibited such investors from trading on the local markets.
He conceded that the monitoring role of the GIPC had not been efficient as should have been the case but stressed that every effort was being made to enforce the law to the letter.
The GIPC Chief executive said the centre was threading cautiously to ensure that its actions would not send a wrong signal to investors.
Breifing the press on the quartely results of investment coming into the country, the CEO stated that a total of GH¢880 million (¢8.8 trillion) with GH¢851 million (¢8.51 trillion) new re-investments and GH¢29 million (¢290 billion) of initial equity transfer.
That, he said, compared favourably with GH¢561 million new investments for the same period last year.
He said for the third quarter (from July to September, this year), however, a total of GH¢340.7 million (¢3.407 trillion) worth of investment was attracted into the country as compared GH¢110.87 million (¢1.108 trillion) recorded for the same period last year.
Mr Ahomka-Lindsay stated that the investments were made up of 80 new projects, with manufacturing industries accounting for 22 out of the companies, the service sector accounted for nine projects, tourism had eight companies, while building and construction attracted five investments.
The agriculture sector saw six investments, export trade attracted four investments and the general trading accounted for 26 projects.
The CEO stated that 60.6 per cent of projects were fully owned by foreign investors with a value of GH¢165 million (¢1.65 trillion), while 39.4 per cent were joint ventures with Ghanaians with a value of GH¢10 million (¢100 billion).
He said the main sources of FDI were from China, India, UK, Germany, India, but South Africa, Cote d’Ivoire and Nigeria and Benin were also making inroads into Ghana’s investment landscape.
Mr Ahomkah-Lindsay stated that the centre was embarking on new reforms to ensure effective monitoring of projects, through a multi agency task force and also to review the quota system as a tool for FDI attraction.
He said the reforms would also include duty exemptions, which was being critically looked at to ensure that companies paid the approriate taxes.
The CEO added that a possible introduction of alternative incentives for re-investments in the area of capital allowance, tax relief for recruitment and staff advancement of Ghanaians.
He called on Ghanaian companies to register with the centre to enable the centre to provide better services for them and also create a database of Ghanaian companies to determine the sectors they operated in and the level of employment.
Story: Boahene Asamoah
Story: Boahene asamoah
THE Ghana Investment Promotion Centre (GIPC) has presented a proposal to the Ministry of Finance for the upward review of the minimum requirement for investors in the trading sector of the economy from the present $300,000 to $1 million.
The proposal, if approved, would require investors in that category to provide $1 million cash investment.
At a press conference in Accra on Friday, the Chief Executive Officer of the GIPC, Mr Robert Ahomkah-Lindsay, said the direction was to scale up investors with high quality capital into the trading sector.
He said contrary to public perception, the law did not bar any investor from the trading sector, adding that what the law required was investors who had capital of $300,000 in cash or in goods.
Mr Ahomkah-Linsay stated that the law also prohibited such investors from trading on the local markets.
He conceded that the monitoring role of the GIPC had not been efficient as should have been the case but stressed that every effort was being made to enforce the law to the letter.
The GIPC Chief executive said the centre was threading cautiously to ensure that its actions would not send a wrong signal to investors.
Breifing the press on the quartely results of investment coming into the country, the CEO stated that a total of GH¢880 million (¢8.8 trillion) with GH¢851 million (¢8.51 trillion) new re-investments and GH¢29 million (¢290 billion) of initial equity transfer.
That, he said, compared favourably with GH¢561 million new investments for the same period last year.
He said for the third quarter (from July to September, this year), however, a total of GH¢340.7 million (¢3.407 trillion) worth of investment was attracted into the country as compared GH¢110.87 million (¢1.108 trillion) recorded for the same period last year.
Mr Ahomka-Lindsay stated that the investments were made up of 80 new projects, with manufacturing industries accounting for 22 out of the companies, the service sector accounted for nine projects, tourism had eight companies, while building and construction attracted five investments.
The agriculture sector saw six investments, export trade attracted four investments and the general trading accounted for 26 projects.
The CEO stated that 60.6 per cent of projects were fully owned by foreign investors with a value of GH¢165 million (¢1.65 trillion), while 39.4 per cent were joint ventures with Ghanaians with a value of GH¢10 million (¢100 billion).
He said the main sources of FDI were from China, India, UK, Germany, India, but South Africa, Cote d’Ivoire and Nigeria and Benin were also making inroads into Ghana’s investment landscape.
Mr Ahomkah-Lindsay stated that the centre was embarking on new reforms to ensure effective monitoring of projects, through a multi agency task force and also to review the quota system as a tool for FDI attraction.
He said the reforms would also include duty exemptions, which was being critically looked at to ensure that companies paid the approriate taxes.
The CEO added that a possible introduction of alternative incentives for re-investments in the area of capital allowance, tax relief for recruitment and staff advancement of Ghanaians.
He called on Ghanaian companies to register with the centre to enable the centre to provide better services for them and also create a database of Ghanaian companies to determine the sectors they operated in and the level of employment.
Create credible regulatory framework, To support the growth of businesses
Story: Boahene Asamoah & Precious Koranteng-Agyei
AN Advisor to the Tanzania President, Dr Ken Kwaku, has called for a transparent and non-discretionary regulatory framework to support the development of African economies.
He said such regulations would create equal opportunities and ensure an enabling environment for businesses to grow and expand.
In an interview, Dr Kwaku emphasised the need for support for small-and medium-scale enterprises (SMEs) on the continent to enable them to grow, since they were the pillar of every economy.
Dr Kwaku is one of the personalities attending the African Consultative Conference, which is on the theme, “Creating better business environments for enterprise development: African and Global Lessons for More Effective Donor Practices.”
He said regulations were key to economic development and stressed that in most cases, there had been too many regulations which were inconsistent with the development agenda and therefore did not encourage investments.
“The fewer regulations existed in developing countries, the higher the private sector rose above the challenges and limitations in the sector,” Dr Kwaku said.
According to him, evidence abounded in Africa which suggested that the continent lacked the regulatory framework necessary to empower businesses and create an enabling environment for them.
In some cases where such regulatory framework existed, they were not clear and needed reforms to attract the necessary investments, he added.
“Regulations must be transparent, clear and accessible,” Dr Kwaku stressed and cautioned that African countries “should not do for foreign investors what they would not do for local investors. There must be a level playing field for all.”
Dr Kwaku stated that there must also be a conscious effort by African governments to translate investment opportunities and regulations into local dialects for the indigenous people to understand.
He also called for the need to equip local investors with the requisite knowledge, explaining that education was not equivalent to knowledge.
The Presidential Advisor stated that knowledge was key if African economies were to make progress and emphasised the empowering of people with the necessary knowledge to enable them to be creative.
The Private Sector Development, in collaboration with the Donor Committee for Enterprise Development, a network of 20 bi-and multilateral development, organised the conference to engage all stakeholders in discussions on the economic pursuit of an enabling business environment to achieve accelerated growth and development.
AN Advisor to the Tanzania President, Dr Ken Kwaku, has called for a transparent and non-discretionary regulatory framework to support the development of African economies.
He said such regulations would create equal opportunities and ensure an enabling environment for businesses to grow and expand.
In an interview, Dr Kwaku emphasised the need for support for small-and medium-scale enterprises (SMEs) on the continent to enable them to grow, since they were the pillar of every economy.
Dr Kwaku is one of the personalities attending the African Consultative Conference, which is on the theme, “Creating better business environments for enterprise development: African and Global Lessons for More Effective Donor Practices.”
He said regulations were key to economic development and stressed that in most cases, there had been too many regulations which were inconsistent with the development agenda and therefore did not encourage investments.
“The fewer regulations existed in developing countries, the higher the private sector rose above the challenges and limitations in the sector,” Dr Kwaku said.
According to him, evidence abounded in Africa which suggested that the continent lacked the regulatory framework necessary to empower businesses and create an enabling environment for them.
In some cases where such regulatory framework existed, they were not clear and needed reforms to attract the necessary investments, he added.
“Regulations must be transparent, clear and accessible,” Dr Kwaku stressed and cautioned that African countries “should not do for foreign investors what they would not do for local investors. There must be a level playing field for all.”
Dr Kwaku stated that there must also be a conscious effort by African governments to translate investment opportunities and regulations into local dialects for the indigenous people to understand.
He also called for the need to equip local investors with the requisite knowledge, explaining that education was not equivalent to knowledge.
The Presidential Advisor stated that knowledge was key if African economies were to make progress and emphasised the empowering of people with the necessary knowledge to enable them to be creative.
The Private Sector Development, in collaboration with the Donor Committee for Enterprise Development, a network of 20 bi-and multilateral development, organised the conference to engage all stakeholders in discussions on the economic pursuit of an enabling business environment to achieve accelerated growth and development.
We will manage economy (centre spread)
Story: Boahene Asamoah & Precious Koranteng-Agyei
PRESIDENT John Agyekum Kufuor has said there will be no room for complacency in the management of the economy in spite of the gains made so far.
He noted that with the citizenry and the country’s development partners having high expectations of the government’s commitment to attaining a middle income status by 2015, there was the need to step up its efforts at accelerated development.
President Kufuor said this in a speech read on his behalf by a Deputy Minister of Finance and Economic Planning, Prof Gyan Baffour, at the opening of the two-day Africa Consultative Conference being held in Accra.
The conference, which is being held in Ghana for the first time, has attracted about 300 prominent personalities from all over the world, including representatives from 30 African countries.
It is on the theme “ Creating Better Business Environments for Enterprise Development: African and Global Lessons for More Effective Donor Practices”. The conference would offer participants the opportunity to take stock of business environment reforms in their respective countries, exchange ideas on good practices and chart a new course that will unleash the full potential of the private sector in Africa.
“People expect us to do more and to make use of resources better,” President Kufuor stated.
He reiterated the government’s commitment to creating a conducive business environment and said the government’s commitment had yielded the necessary recognition as one of the best reforming countries in the world.
President Kufuor said that the government was earnestly working to improve the energy situation in the country to create better business opportunities for investors.
Again, President Kufuor stated that the government had strengthened the Bank of Ghana by ensuring its independence and also positioning it to reform the financial sector of the economy, which, he noted, was critical to the country’s development agenda.
“The government would tackle major issues confronting the economy head-on,” he said and added that Ghana was hoping to attract more businesses to the economy.
The Vice President in charge of Financial and Private Sector Development of the World Bank and Chief Economist of the International Finance Corporation, Mr Michael Klein, stated that over the past years there had been tremendous reforms in Africa, which have attracted some investments to the region.
He said there was the need to pursue reforms and regulations that would transform the economies of African countries.
Mr Klein said that Africa had the opportunity to learn from best practices across the world and to adopt such practices to ensure growth and development.
He said one of the strategies to reduce poverty was to create the enabling environment that would ensure the growth of the private sector and create jobs for the people.
During the conference, development agencies would also come under the spotlight to explore how best they could improve their work in support of business environment reforms in Africa.
Ghana would also give an account of its business environment reforms so far made.
The conference is being organised by the Donor Committee for Enterprise Development, a network of 20 multilateral development agencies in co-operation with the Private Sector Development Sector Group of Ghana.
PRESIDENT John Agyekum Kufuor has said there will be no room for complacency in the management of the economy in spite of the gains made so far.
He noted that with the citizenry and the country’s development partners having high expectations of the government’s commitment to attaining a middle income status by 2015, there was the need to step up its efforts at accelerated development.
President Kufuor said this in a speech read on his behalf by a Deputy Minister of Finance and Economic Planning, Prof Gyan Baffour, at the opening of the two-day Africa Consultative Conference being held in Accra.
The conference, which is being held in Ghana for the first time, has attracted about 300 prominent personalities from all over the world, including representatives from 30 African countries.
It is on the theme “ Creating Better Business Environments for Enterprise Development: African and Global Lessons for More Effective Donor Practices”. The conference would offer participants the opportunity to take stock of business environment reforms in their respective countries, exchange ideas on good practices and chart a new course that will unleash the full potential of the private sector in Africa.
“People expect us to do more and to make use of resources better,” President Kufuor stated.
He reiterated the government’s commitment to creating a conducive business environment and said the government’s commitment had yielded the necessary recognition as one of the best reforming countries in the world.
President Kufuor said that the government was earnestly working to improve the energy situation in the country to create better business opportunities for investors.
Again, President Kufuor stated that the government had strengthened the Bank of Ghana by ensuring its independence and also positioning it to reform the financial sector of the economy, which, he noted, was critical to the country’s development agenda.
“The government would tackle major issues confronting the economy head-on,” he said and added that Ghana was hoping to attract more businesses to the economy.
The Vice President in charge of Financial and Private Sector Development of the World Bank and Chief Economist of the International Finance Corporation, Mr Michael Klein, stated that over the past years there had been tremendous reforms in Africa, which have attracted some investments to the region.
He said there was the need to pursue reforms and regulations that would transform the economies of African countries.
Mr Klein said that Africa had the opportunity to learn from best practices across the world and to adopt such practices to ensure growth and development.
He said one of the strategies to reduce poverty was to create the enabling environment that would ensure the growth of the private sector and create jobs for the people.
During the conference, development agencies would also come under the spotlight to explore how best they could improve their work in support of business environment reforms in Africa.
Ghana would also give an account of its business environment reforms so far made.
The conference is being organised by the Donor Committee for Enterprise Development, a network of 20 multilateral development agencies in co-operation with the Private Sector Development Sector Group of Ghana.
Promotion of private enterprises key
Story: Boahene Asamoah
A DIRECTOR at the African Development Bank, Mr Gabriel Negatu, has called on Development Financial Institutions (DFIs) to promote private entrepreneurship by nurturing them to grow.
He said “this sector is now widely recognised as the main engine of growth”, adding that “DFIs must, therefore, promote its growth more energetically by identifying and nurturing local entrepreneurs”.
Speaking at the annual Association of African Development Finance (AADFI) forum for Chief Executive Officers on the framework for implementation of standards and guidelines in Accra yesterday, Mr Negatu again called on DFIs to also launch studies on industrial structure and financial packaging, and assist borrowers with project formulation.
He said despite financial sector reforms in many African countries, risk-averse private banks were still unable to meet the demand for term loans.
“The ability of African entrepreneurs to harness and take advantage of global market opportunities depends in large part on the availability of affordable and accessible financial instruments and products,” he stated.
He added that despite the potential of DFIs to make significant contributions, many DFIs had failed financially.
“They also appear generally to have failed to achieve their development objectives,” he added, stating that there was no doubt that if DFIs were to contribute to national development, they needed to be empowered, strengthened, and to operate in a transparent manner.
Mr Negatu stated that firm surveys showed that access to finance was one of three biggest constraints on enterprise growth in Africa.
He said it was estimated that increasing the level of credit going to the private sector from 14 per cent of GDP to 25 per cent would provide more than US$70 billion of additional investment resources to African households and firms.
Mr Negatu said the fast globalising financial sector invariably posed a great challenge not only to the growth and efficiency of the African financial system, but also on the system's ability to provide the stimulus for sustainable growth at national and regional levels.
He suggested that African countries and development partners should build stronger and integrated domestic financial systems by ensuring macro-economic stability, strengthening financial institutions, and introducing innovative banking and non-banking instruments and products.
Additionally, he called for the need to develop appropriate and cost-effective mechanism for responding to the credit and service needs of small and medium enterprises and also build a conducive public and private policy environment, and restore investor confidence in domestic banking systems.
He said despite the importance of the financial sector to Africa's economic growth, this potential remained largely untapped, and its contribution to date remained largely marginal.
The Minister of Finance and Economic Planning, Mr Kwadwo Baah-Wiredu, in a speech read on his behalf by the Chief Director of the ministry, Nana Siriboe Juaben Boateng, said the challenge for members of the association would be to tailor standards and guidelines to suit individual countries.
“Though we accept that it is imperative for the association to have a code for the operations of its members, there are different challenges in each country and sub-region,” he stated.
He stated that profit making should not be the only motive of development banks at the expense of the overall development of the nation, adding that “if indeed commercial banking is highly viable, then some of the profits should be channelled into development banking where long-term funding is needed for industrial growth”.
The Managing Director of the National Investment Bank (NIB), Mr Daniel C. Gyimah, stated that research had revealed that the call for the abolishing of DFIs was misplaced.
He said the role of DFIs in the economies of most African countries had been tremendous. He, however, conceded that there had been difficult times.
A DIRECTOR at the African Development Bank, Mr Gabriel Negatu, has called on Development Financial Institutions (DFIs) to promote private entrepreneurship by nurturing them to grow.
He said “this sector is now widely recognised as the main engine of growth”, adding that “DFIs must, therefore, promote its growth more energetically by identifying and nurturing local entrepreneurs”.
Speaking at the annual Association of African Development Finance (AADFI) forum for Chief Executive Officers on the framework for implementation of standards and guidelines in Accra yesterday, Mr Negatu again called on DFIs to also launch studies on industrial structure and financial packaging, and assist borrowers with project formulation.
He said despite financial sector reforms in many African countries, risk-averse private banks were still unable to meet the demand for term loans.
“The ability of African entrepreneurs to harness and take advantage of global market opportunities depends in large part on the availability of affordable and accessible financial instruments and products,” he stated.
He added that despite the potential of DFIs to make significant contributions, many DFIs had failed financially.
“They also appear generally to have failed to achieve their development objectives,” he added, stating that there was no doubt that if DFIs were to contribute to national development, they needed to be empowered, strengthened, and to operate in a transparent manner.
Mr Negatu stated that firm surveys showed that access to finance was one of three biggest constraints on enterprise growth in Africa.
He said it was estimated that increasing the level of credit going to the private sector from 14 per cent of GDP to 25 per cent would provide more than US$70 billion of additional investment resources to African households and firms.
Mr Negatu said the fast globalising financial sector invariably posed a great challenge not only to the growth and efficiency of the African financial system, but also on the system's ability to provide the stimulus for sustainable growth at national and regional levels.
He suggested that African countries and development partners should build stronger and integrated domestic financial systems by ensuring macro-economic stability, strengthening financial institutions, and introducing innovative banking and non-banking instruments and products.
Additionally, he called for the need to develop appropriate and cost-effective mechanism for responding to the credit and service needs of small and medium enterprises and also build a conducive public and private policy environment, and restore investor confidence in domestic banking systems.
He said despite the importance of the financial sector to Africa's economic growth, this potential remained largely untapped, and its contribution to date remained largely marginal.
The Minister of Finance and Economic Planning, Mr Kwadwo Baah-Wiredu, in a speech read on his behalf by the Chief Director of the ministry, Nana Siriboe Juaben Boateng, said the challenge for members of the association would be to tailor standards and guidelines to suit individual countries.
“Though we accept that it is imperative for the association to have a code for the operations of its members, there are different challenges in each country and sub-region,” he stated.
He stated that profit making should not be the only motive of development banks at the expense of the overall development of the nation, adding that “if indeed commercial banking is highly viable, then some of the profits should be channelled into development banking where long-term funding is needed for industrial growth”.
The Managing Director of the National Investment Bank (NIB), Mr Daniel C. Gyimah, stated that research had revealed that the call for the abolishing of DFIs was misplaced.
He said the role of DFIs in the economies of most African countries had been tremendous. He, however, conceded that there had been difficult times.
Monday, November 05, 2007
Elect DCEs- Nduom
Nduom (fin) Read by E. agyeI
Story: Boahene Asamoah
A former Minister of Public Sector Reforms, Dr Paa Kwesi Nduom, has added his voice to calls for the election of district chief executives (DCEs) to deepen the decentralisation process.
“If the people are wise enough to elect a President and Members of Parliament (MPs) for their respective areas, they will be wise enough to elect their leaders in the districts,” he said.
Contributing to the debate on: “Leadership and Poverty Reduction” at the ongoing fifth African Business Leaders Forum in Accra yesterday, Dr Nduom, who is contesting the flag bearer position of the Convention People’s Party (CPP), said it was time “to walk the talk”, adding that there was the need to empower the local people to take their destiny into their own hands.
Touching on poverty reduction, he disagreed with arguments that the tag “poverty reduction” be changed to “wealth creation”.
Dr Nduom, who was charged with the designing of the country’s poverty reduction strategy, the Ghana Poverty Reduction Strategy (GPRS), during the initial stages of the government in 2001, said wealth creation would not be an appropriate term to use for people living in absolute poverty.
“We should not be reluctant to recognise that poverty exists in our country,” he stated.
He said the state had the broad responsibility of creating the enabling environment that would offer opportunities to the people and called for closer collaboration between the public and private sectors to ensure poverty reduction.
In a related development, Dr Nduom said African unity which was proposed by the country’s first President, Dr Kwame Nkrumah, was even more relevant today than ever before.
He said the failure of African leaders to unite had led to the poor state of the African continent.
“The vision for African Unity today means partnership for progress through shared knowledge with full respect for our differences,” he stated.
Dr Nduom said this when addressing 101 young leaders meeting in Accra as part of activities of the African Business Leaders Forum in Accra on Tuesday.
“The vision for the unity of African states remains an active one and is still our hope for the acceleration of the growth and development of Africa in the 21st century,” he said.
Story: Boahene Asamoah
A former Minister of Public Sector Reforms, Dr Paa Kwesi Nduom, has added his voice to calls for the election of district chief executives (DCEs) to deepen the decentralisation process.
“If the people are wise enough to elect a President and Members of Parliament (MPs) for their respective areas, they will be wise enough to elect their leaders in the districts,” he said.
Contributing to the debate on: “Leadership and Poverty Reduction” at the ongoing fifth African Business Leaders Forum in Accra yesterday, Dr Nduom, who is contesting the flag bearer position of the Convention People’s Party (CPP), said it was time “to walk the talk”, adding that there was the need to empower the local people to take their destiny into their own hands.
Touching on poverty reduction, he disagreed with arguments that the tag “poverty reduction” be changed to “wealth creation”.
Dr Nduom, who was charged with the designing of the country’s poverty reduction strategy, the Ghana Poverty Reduction Strategy (GPRS), during the initial stages of the government in 2001, said wealth creation would not be an appropriate term to use for people living in absolute poverty.
“We should not be reluctant to recognise that poverty exists in our country,” he stated.
He said the state had the broad responsibility of creating the enabling environment that would offer opportunities to the people and called for closer collaboration between the public and private sectors to ensure poverty reduction.
In a related development, Dr Nduom said African unity which was proposed by the country’s first President, Dr Kwame Nkrumah, was even more relevant today than ever before.
He said the failure of African leaders to unite had led to the poor state of the African continent.
“The vision for African Unity today means partnership for progress through shared knowledge with full respect for our differences,” he stated.
Dr Nduom said this when addressing 101 young leaders meeting in Accra as part of activities of the African Business Leaders Forum in Accra on Tuesday.
“The vision for the unity of African states remains an active one and is still our hope for the acceleration of the growth and development of Africa in the 21st century,” he said.
Move to make leasing a vibrant sector-Introduce preferential tax treatment-IFC report
Story: Boahene Asamoah
THE International Finance Corporation (IFC), the investment arm of the World Bank, has called for the government to introduce preferential tax treatments in the leasing industry to encourage local investments in the leasing sector.
“The main reason for providing preferential treatment should be to increase domestic investments, not to stimulate the leasing sector,” the report stated.
According to the IFC report on leasing in Ghana, a survey of the leasing market in the country has shown that the introduction of any preferential tax treatment should only be for a limited time period.
“The whole tax system must be considered in making such a policy decision. In many cases, some tax benefits are given to offset other disadvantages and this approach may be pragmatic and effective,” the report stated.
The report observed that to promote the leasing sector and generally to encourage investments in capital equipment, legislation and tax provisions should be amended to encourage cross-border leasing.
“This is even more important, because most capital equipment is imported,” the report stated.
It observed that legislation in the country did not permit cross-border leasing involving non-resident lessors, and even if it permitted, there was a tax provision of 15 per cent withholding tax on rental payments to a non-resident person who made cross-border leasing transactions expensive and unattractive to non-resident lessors.
The report also called for the harmonisation of the Bank of Ghana’s rules and provisions and tax requirements.
It also explained that presently, the Bank of Ghana’s (BoG) guidelines required that lessors make provisions for overdue payments and had given rates based on the period that payments were overdue.
“These guidelines are given by the BoG to protect the integrity of lessors lease portfolios. However, for tax purposes, the tax authorities do not recognise these provisions,” the report indicated.
It further stated that this situation compelled the lessor to pay taxes on an income they might not have received, adding that “this creates a mismatch between income earned and tax expense which may impact adversely on cash flow on the lessor”.
On the calculation of depreciation and capital allowances for operation leases, the report called for a change in computing of allowances from the reducing balance to the straight line method to encourage operating leases.
“These changes would make operating leases more attractive and also increase interests,” the report stated.
In Ghana, all assets are depreciated on reducing balance method for all depreciable assets other than buildings for the purpose of capital allowance. The tax rate for depreciation is between 20 and 40 per cent for all fixed assets, except mining, petroleum operating assets and buildings.
“This implies that it takes a much longer time to be fully depreciated for tax purposes,” the report stated.
The Ghana Leasing Report 2007 is an advisory service offering of the IFC, aimed at enhancing the role of leasing as an alternative financing mechanism and other businesses in the country.
The programme is sponsored by the State Secretariat for Economic Affairs of Switzerland (SECO).
In Ghana, more than 90 per cent of businesses are Small-and Medium-Scale Enterprises (SMEs), and the benefits of leasing as an alternative form of assets financing cannot be overemphasised.
THE International Finance Corporation (IFC), the investment arm of the World Bank, has called for the government to introduce preferential tax treatments in the leasing industry to encourage local investments in the leasing sector.
“The main reason for providing preferential treatment should be to increase domestic investments, not to stimulate the leasing sector,” the report stated.
According to the IFC report on leasing in Ghana, a survey of the leasing market in the country has shown that the introduction of any preferential tax treatment should only be for a limited time period.
“The whole tax system must be considered in making such a policy decision. In many cases, some tax benefits are given to offset other disadvantages and this approach may be pragmatic and effective,” the report stated.
The report observed that to promote the leasing sector and generally to encourage investments in capital equipment, legislation and tax provisions should be amended to encourage cross-border leasing.
“This is even more important, because most capital equipment is imported,” the report stated.
It observed that legislation in the country did not permit cross-border leasing involving non-resident lessors, and even if it permitted, there was a tax provision of 15 per cent withholding tax on rental payments to a non-resident person who made cross-border leasing transactions expensive and unattractive to non-resident lessors.
The report also called for the harmonisation of the Bank of Ghana’s rules and provisions and tax requirements.
It also explained that presently, the Bank of Ghana’s (BoG) guidelines required that lessors make provisions for overdue payments and had given rates based on the period that payments were overdue.
“These guidelines are given by the BoG to protect the integrity of lessors lease portfolios. However, for tax purposes, the tax authorities do not recognise these provisions,” the report indicated.
It further stated that this situation compelled the lessor to pay taxes on an income they might not have received, adding that “this creates a mismatch between income earned and tax expense which may impact adversely on cash flow on the lessor”.
On the calculation of depreciation and capital allowances for operation leases, the report called for a change in computing of allowances from the reducing balance to the straight line method to encourage operating leases.
“These changes would make operating leases more attractive and also increase interests,” the report stated.
In Ghana, all assets are depreciated on reducing balance method for all depreciable assets other than buildings for the purpose of capital allowance. The tax rate for depreciation is between 20 and 40 per cent for all fixed assets, except mining, petroleum operating assets and buildings.
“This implies that it takes a much longer time to be fully depreciated for tax purposes,” the report stated.
The Ghana Leasing Report 2007 is an advisory service offering of the IFC, aimed at enhancing the role of leasing as an alternative financing mechanism and other businesses in the country.
The programme is sponsored by the State Secretariat for Economic Affairs of Switzerland (SECO).
In Ghana, more than 90 per cent of businesses are Small-and Medium-Scale Enterprises (SMEs), and the benefits of leasing as an alternative form of assets financing cannot be overemphasised.
Ghana’s Soverign Bond
Story: Boahene Asamoah
AN Executive Director of Strategic African Securities (SAS), Ms Abena Amoah, has said that the country must make good its financial obligations under the sovereign bond to sustain investor confidence and justify further forays into the international capital market.
In an interview on the implications of the country’s successful sourcing of $750 million eurobond on the international financial market, Ms Amoah stated that “meeting our obligations would enable the country to go for more funds for our development agenda.”
Ghana raised $750 million through an eurobond in London on September 27. The country intends to apply the funds into the energy and transportation sectors as part of its efforts to bridge the infrastructural gap.
The entire loan would be retired with the final interest paid on October 4, 2017.
The Ghana eurobond traded the day after its issue at $101 above the par value of $100 compared to Turkey, which traded below the par value three days after its issue. The Turkish bond was issued three days ahead of the one by Ghana.
Ms Amoah, an astute financial analyst, stated that “it is a good foray”, but cautioned that “it is not all sweet and perfect, but a pure commercial transaction.”
She said since issues of debt forgiveness and cancellation did not apply on the international financial markets, the country needed to show its commitment by rigidly making its payments on time.
She said the overwhelming response to the oversubscription of the sovereign bond was an indication of investor confidence in the country.
Ghana, which went on the international market for the first market time, saw its sovereign bond denominated in the dollar, oversubscribed by over 400 per cent, amounting to $3.7 billion.
Ms Amoah stated that many factors also contributed to the oversubscription which included the strong macroeconomic performance of the economy and the general favourable outlook for the economy.
Cocoa and gold prices, the two main foreign exchange earners for the country, have seen considerable price appreciation on the international market, hitting almost all time record. Cocoa and gold prices are now $942 and $772 respectively as of today.
Additionally, she mentioned investors appetite for new instruments following the falling of the United States interest rates on a 10-year government bonds to 4.61 per cent as of September 29.
Ms Amoah said offering investors an investment instruments with an interest yield of 8.5 per cent on a 10-year eurobond was also a very attractive offer, adding that the country’s B+ rating and the recently announced oil discovery were both contributory factors.
She added that the implications of the oversubscription were that private fund managers were increasingly looking at emerging markets such as Ghana to invest their funds.
Ms Amoah commended the team that went on the road show for selling Ghana and its performance over the past years.
The government has indicated its intention to use the funds in two major areas of the economy.
The energy and transportation ministries have begun the process of using up to $375 million from the $750 million eurobond proceeds this year for expansion and upgrade of infrastructure.
The energy sector will use about $200 million for rehabilitation and upgrade of generation, transmission and distribution, while the transportation ministry will also utilise the rest for road construction, particularly the 200-kilometre stretch of the Ofankor-Kumasi Highway, a dual carriageway.
Analysts say the country needs over $300 million annually over the next few years to finance its infrastructural gap in the areas of energy, water and transportation, and that funds from development partners were woefully inadequate if such infrastructural challenges must be overcome.
AN Executive Director of Strategic African Securities (SAS), Ms Abena Amoah, has said that the country must make good its financial obligations under the sovereign bond to sustain investor confidence and justify further forays into the international capital market.
In an interview on the implications of the country’s successful sourcing of $750 million eurobond on the international financial market, Ms Amoah stated that “meeting our obligations would enable the country to go for more funds for our development agenda.”
Ghana raised $750 million through an eurobond in London on September 27. The country intends to apply the funds into the energy and transportation sectors as part of its efforts to bridge the infrastructural gap.
The entire loan would be retired with the final interest paid on October 4, 2017.
The Ghana eurobond traded the day after its issue at $101 above the par value of $100 compared to Turkey, which traded below the par value three days after its issue. The Turkish bond was issued three days ahead of the one by Ghana.
Ms Amoah, an astute financial analyst, stated that “it is a good foray”, but cautioned that “it is not all sweet and perfect, but a pure commercial transaction.”
She said since issues of debt forgiveness and cancellation did not apply on the international financial markets, the country needed to show its commitment by rigidly making its payments on time.
She said the overwhelming response to the oversubscription of the sovereign bond was an indication of investor confidence in the country.
Ghana, which went on the international market for the first market time, saw its sovereign bond denominated in the dollar, oversubscribed by over 400 per cent, amounting to $3.7 billion.
Ms Amoah stated that many factors also contributed to the oversubscription which included the strong macroeconomic performance of the economy and the general favourable outlook for the economy.
Cocoa and gold prices, the two main foreign exchange earners for the country, have seen considerable price appreciation on the international market, hitting almost all time record. Cocoa and gold prices are now $942 and $772 respectively as of today.
Additionally, she mentioned investors appetite for new instruments following the falling of the United States interest rates on a 10-year government bonds to 4.61 per cent as of September 29.
Ms Amoah said offering investors an investment instruments with an interest yield of 8.5 per cent on a 10-year eurobond was also a very attractive offer, adding that the country’s B+ rating and the recently announced oil discovery were both contributory factors.
She added that the implications of the oversubscription were that private fund managers were increasingly looking at emerging markets such as Ghana to invest their funds.
Ms Amoah commended the team that went on the road show for selling Ghana and its performance over the past years.
The government has indicated its intention to use the funds in two major areas of the economy.
The energy and transportation ministries have begun the process of using up to $375 million from the $750 million eurobond proceeds this year for expansion and upgrade of infrastructure.
The energy sector will use about $200 million for rehabilitation and upgrade of generation, transmission and distribution, while the transportation ministry will also utilise the rest for road construction, particularly the 200-kilometre stretch of the Ofankor-Kumasi Highway, a dual carriageway.
Analysts say the country needs over $300 million annually over the next few years to finance its infrastructural gap in the areas of energy, water and transportation, and that funds from development partners were woefully inadequate if such infrastructural challenges must be overcome.
Shoprite opens in Accra
Story: Boahene Asamoah
SHOPRITE, one of Africa’s largest food retailers, says it will source 20 per cent of its products from the local market to stimulate demand and the development of local products.
The company said its policy was to support local suppliers, nurture enterprises in Africa and offer products with the best quality at the lowest prices.
Speaking to a cross section of journalists at the weekend, the General Manager of Shoprite Ghana, Mr Johann Koegelenberg, said the company had responded to President Kufuor’s call for international business operators to invest in the country.
The company is expected to open its doors to the Ghanaian public on November 1, 2007.
Currently operating in 16 countries outside its South African base, Shoprite is located at the Accra shopping mall, a supermarket which offers over 13,000 products.
Mr Koegelenberg said the company was an African business firm, saying it was important for Africans to spearhead investments on the continent to ensure accelerated growth and job opportunities.
“We are part of the African renaissance that is why we are here,” he stated.
He said the company had plans to open more outlets in Accra, Kumasi and Takoradi to ensure a wide presence in the country.
The general manager stated that the country needed a convenient environment suited for family shopping and also to offer the normal Ghanaian family quality good prices.
The company, which according to him employed 114 people including two expatriates, could increase its employee intake to about 160 people when operating at full capacity.
Conducting journalists round the premises of the company, Mr Koegelenberg said the 1,760 square metre supermarket had rooms for bakery, delicatessen and butchery with specialised fresh quality products and could stock about 8,000 groceries.
“One of the special features in the store is the fish counter which will offer a wide range of fresh fish and seafood sourced from the local industry,” Mr Koegelenberg stated.
Shoprite first entered the Ghanaian market in 2003 when it opened its first Usave Outlet in Accra. Since then, it was only a matter of time before the company would significantly increase its investments in the country.
Fire gutted parts of the premises of Shoprite in April this year, slowing down the opening of the shop.
SHOPRITE, one of Africa’s largest food retailers, says it will source 20 per cent of its products from the local market to stimulate demand and the development of local products.
The company said its policy was to support local suppliers, nurture enterprises in Africa and offer products with the best quality at the lowest prices.
Speaking to a cross section of journalists at the weekend, the General Manager of Shoprite Ghana, Mr Johann Koegelenberg, said the company had responded to President Kufuor’s call for international business operators to invest in the country.
The company is expected to open its doors to the Ghanaian public on November 1, 2007.
Currently operating in 16 countries outside its South African base, Shoprite is located at the Accra shopping mall, a supermarket which offers over 13,000 products.
Mr Koegelenberg said the company was an African business firm, saying it was important for Africans to spearhead investments on the continent to ensure accelerated growth and job opportunities.
“We are part of the African renaissance that is why we are here,” he stated.
He said the company had plans to open more outlets in Accra, Kumasi and Takoradi to ensure a wide presence in the country.
The general manager stated that the country needed a convenient environment suited for family shopping and also to offer the normal Ghanaian family quality good prices.
The company, which according to him employed 114 people including two expatriates, could increase its employee intake to about 160 people when operating at full capacity.
Conducting journalists round the premises of the company, Mr Koegelenberg said the 1,760 square metre supermarket had rooms for bakery, delicatessen and butchery with specialised fresh quality products and could stock about 8,000 groceries.
“One of the special features in the store is the fish counter which will offer a wide range of fresh fish and seafood sourced from the local industry,” Mr Koegelenberg stated.
Shoprite first entered the Ghanaian market in 2003 when it opened its first Usave Outlet in Accra. Since then, it was only a matter of time before the company would significantly increase its investments in the country.
Fire gutted parts of the premises of Shoprite in April this year, slowing down the opening of the shop.
Shell, dealers at cross-road
Story: Boahene Asamoah
RETAILERS of Shell products in the Accra-Tema area have appealed to the management of Shell Ghana Ltd. to extend the deadline for the termination of their dealership agreement.
According to the retailers, the December deadline set for them was too short as they would not be able to close their books.
The retailers made it clear that they had made huge capital investments in their respective businesses, and that some of them had commitments with their bankers which could not be redeemed within the stated period.
Shell Ghana Limited, in a letter to its dealers dated October 12, 2007, requested dealers to fill out an application form in respect of its new Operating Platform Change (OPC) which comes into effect on January 1, 2008.
This follows a deadlock meeting held at the head office of Shell in Accra in which management of the multi-national oil giant refused to back down on its demands for dealers to apply for a new retailer business agreement contract by the end of the year, or it would not renew its contract with the dealers.
The letters further asked the dealers to fill out the application forms and submit them by the end of October 19, 2008
In an interview, the Chairperson of the Ghana Shell Retailers Association, Ms Esther Mullings, said much as members of the association agreed to the management of Shell’s decision to switch to a new retailer agreement, the timing was too short for members to fully comply and to round off their business.
She said the new contract had also not be fully discussed with dealers and that efforts made by the dealers to get management of Shell to discuss the details of the new contract had fallen on death ears.
The members, clad in red attire, went to the Shell Head Office in an attempt to persuade management of the company to extend the deadline for the renewal of the dealership agreement to about six months to enable the members to comply.
Ms Mullings stated that information gathered indicated that the management of Shell intended to operate a cluster system where one dealer would be in charge of about three filling stations.
She said the association also intended to boycott the sale of the V-Power petrol, which was recently introduced by the company to put pressure on the management of the company to negotiate with them.
Ms Mullings said employees engaged by members could not be discharged so abruptly, while some of them had made credit commitments, particularly to industrial customers with whom they had agreements which could not be determined within the stipulated time.
“Outstanding debts owed by the afore-mentioned debtors will also require some time to recover,” she stated.
A letter from Shell Ghana Limited dated October 19, 2007 to the association, through its lawyers, stated that “Shell Ghana Limited is not terminating the contract of any of her dealers. Shell Ghana Limited will simply not renew the existing agreements when they expire.”
Some members of the association alleged that OPC would seek to reduce margins, increase the rent charges and disadvantage the dealers.
RETAILERS of Shell products in the Accra-Tema area have appealed to the management of Shell Ghana Ltd. to extend the deadline for the termination of their dealership agreement.
According to the retailers, the December deadline set for them was too short as they would not be able to close their books.
The retailers made it clear that they had made huge capital investments in their respective businesses, and that some of them had commitments with their bankers which could not be redeemed within the stated period.
Shell Ghana Limited, in a letter to its dealers dated October 12, 2007, requested dealers to fill out an application form in respect of its new Operating Platform Change (OPC) which comes into effect on January 1, 2008.
This follows a deadlock meeting held at the head office of Shell in Accra in which management of the multi-national oil giant refused to back down on its demands for dealers to apply for a new retailer business agreement contract by the end of the year, or it would not renew its contract with the dealers.
The letters further asked the dealers to fill out the application forms and submit them by the end of October 19, 2008
In an interview, the Chairperson of the Ghana Shell Retailers Association, Ms Esther Mullings, said much as members of the association agreed to the management of Shell’s decision to switch to a new retailer agreement, the timing was too short for members to fully comply and to round off their business.
She said the new contract had also not be fully discussed with dealers and that efforts made by the dealers to get management of Shell to discuss the details of the new contract had fallen on death ears.
The members, clad in red attire, went to the Shell Head Office in an attempt to persuade management of the company to extend the deadline for the renewal of the dealership agreement to about six months to enable the members to comply.
Ms Mullings stated that information gathered indicated that the management of Shell intended to operate a cluster system where one dealer would be in charge of about three filling stations.
She said the association also intended to boycott the sale of the V-Power petrol, which was recently introduced by the company to put pressure on the management of the company to negotiate with them.
Ms Mullings said employees engaged by members could not be discharged so abruptly, while some of them had made credit commitments, particularly to industrial customers with whom they had agreements which could not be determined within the stipulated time.
“Outstanding debts owed by the afore-mentioned debtors will also require some time to recover,” she stated.
A letter from Shell Ghana Limited dated October 19, 2007 to the association, through its lawyers, stated that “Shell Ghana Limited is not terminating the contract of any of her dealers. Shell Ghana Limited will simply not renew the existing agreements when they expire.”
Some members of the association alleged that OPC would seek to reduce margins, increase the rent charges and disadvantage the dealers.
"We will be prudent with the economy"- government has said
Story: Boahene Asamoah
THE government has said that it is going to ensure prudent management of the economy next year in order not to throw away the gains so far made.
Speaking at a forum on Budget Submission and Input in Accra yesterday, a Minister of State at the Ministry of Finance and Economic Planning, Dr Anthony Akoto Osei, said “in an election year, the government is not going to be populist or conservative”, adding that it was going to pursue prudent economic management of the economy.
He, however, said while pursuing prudent economic management, the government was not going to ignore its commitment to provide the requisite infrastructure in the country’s quest to attain a middle-income status.
Dr Osei said the country, for instance, needed about $4.5 billion to support the energy sector and said support from the country’s development partners was not adequate, hence the government’s intention to borrow from the international financial markets.
Focusing on the upcoming budget, the minister said there was not going to be any radical changes in the budget statement but stated that the government would focus on pursuing policies that had not been addressed in the previous budget statements.
“It is not prudent to add on to existing policies. We should rather take stock of the previous policies and pursue them,” he said.
Touching on the much talked about sale of the Agricultural Development Bank (ADB), Dr Osei said the government had not yet taken a position on the sale and assured the gathering that it would make its decision known at the appropriate time.
In her contribution, the Executive Secretary of the Ghana Employers Association (GEA), Mrs Rose Karikari Anang, commended the government for taking the initiative to take stock of its policies since 2001.
She said the association had proposed that the government take immediate steps to check what she termed “counterfeit trade”, since it hurt local industries, as well as deprived the country of the needed revenue for development.
On the energy sector, she stated that the government needed to provide its medium and long-term plan to enable the private sector to plan.
She said there was the need for the country to pursue vigorous commercial agricultural activities that were linked to the industry.
On the National Youth Employment Programme (NYEP), she said there was the need to ensure that it was sustainable and would not necessary lead to the bloating of government’s expenditure.
The Executive Director of the Centre for Policy Analysis (CEPA), Dr Joe Abbey, said the government had to keep a tight budget to ensure that progress made in macro-economic stability was not derailed.
He said last year’s budget indicated that “there were ballooning financial gaps” as a result of government borrowing from the domestic market.
Dr Abbey stated that there was pressure on government budget on expenditure and cautioned that the country needed to tread cautiously.
A Senior Economist at the Private Enterprises Foundation (PEF), Mr Moses Agyeman, said there was the need for a special fund that would support the sector.
He underscored the importance of the agricultural sector in the country’s economy and said the current structure of the banking system did not support the agricultural sector.
THE government has said that it is going to ensure prudent management of the economy next year in order not to throw away the gains so far made.
Speaking at a forum on Budget Submission and Input in Accra yesterday, a Minister of State at the Ministry of Finance and Economic Planning, Dr Anthony Akoto Osei, said “in an election year, the government is not going to be populist or conservative”, adding that it was going to pursue prudent economic management of the economy.
He, however, said while pursuing prudent economic management, the government was not going to ignore its commitment to provide the requisite infrastructure in the country’s quest to attain a middle-income status.
Dr Osei said the country, for instance, needed about $4.5 billion to support the energy sector and said support from the country’s development partners was not adequate, hence the government’s intention to borrow from the international financial markets.
Focusing on the upcoming budget, the minister said there was not going to be any radical changes in the budget statement but stated that the government would focus on pursuing policies that had not been addressed in the previous budget statements.
“It is not prudent to add on to existing policies. We should rather take stock of the previous policies and pursue them,” he said.
Touching on the much talked about sale of the Agricultural Development Bank (ADB), Dr Osei said the government had not yet taken a position on the sale and assured the gathering that it would make its decision known at the appropriate time.
In her contribution, the Executive Secretary of the Ghana Employers Association (GEA), Mrs Rose Karikari Anang, commended the government for taking the initiative to take stock of its policies since 2001.
She said the association had proposed that the government take immediate steps to check what she termed “counterfeit trade”, since it hurt local industries, as well as deprived the country of the needed revenue for development.
On the energy sector, she stated that the government needed to provide its medium and long-term plan to enable the private sector to plan.
She said there was the need for the country to pursue vigorous commercial agricultural activities that were linked to the industry.
On the National Youth Employment Programme (NYEP), she said there was the need to ensure that it was sustainable and would not necessary lead to the bloating of government’s expenditure.
The Executive Director of the Centre for Policy Analysis (CEPA), Dr Joe Abbey, said the government had to keep a tight budget to ensure that progress made in macro-economic stability was not derailed.
He said last year’s budget indicated that “there were ballooning financial gaps” as a result of government borrowing from the domestic market.
Dr Abbey stated that there was pressure on government budget on expenditure and cautioned that the country needed to tread cautiously.
A Senior Economist at the Private Enterprises Foundation (PEF), Mr Moses Agyeman, said there was the need for a special fund that would support the sector.
He underscored the importance of the agricultural sector in the country’s economy and said the current structure of the banking system did not support the agricultural sector.
BoG raises minimum capital requirement
Story: Lloyd Evans & Boahene Asamoah
THE BANK of Ghana has presented proposals to all banks for their re-capitalisation from the present level of GH¢7 million (¢70 billion) to between GH¢50 to GH¢60 million (¢500 billion to ¢600 billion)
The porposal also seeks to increase the minimum capital requirements for deposit taking and non bank financial institutions and finance houses from GH¢1 million and GH¢1.5 million (¢10 billion and ¢15 billion) to between GH¢5 and GH¢8 million (¢50 and ¢80 billion).
The Bank of Ghana has therefore called on banks and deposit taking non- bank financial institutions to submit capitalisation plans by the end of June 2008.
This means that banks and deposit taking financial institutions will now have either to merge or raise more funds through equity participation.
The Bank of Ghana said the existing capital base of most of the banks constrained them in taking advantage of new opportunities in the banking industry and were not strong enough to syndicate for major international contracts being undertaken in the counry.
“Syndication has not proved to be successful in providing the needed capital cover for these new businesses, in part because each of the banks does not have adequate financial strength to support such syndication”, the proposal stated.
The proposal under the Bank of Ghana Consultation Paper which is posted on the website of the central bank is titled “Building a Financial Sector for an Emerging Market Economy-Implications for the capitalisation of Banks and Non-Bank Financial Institutions”
The Bank of Ghana said with all the reforms and the liberalisation of the banking industry, a cluster of banks had emerged with relatively low capital base and depth that are inadequate to support significant levels of lending and therefore could be more vulnerable to minor swings in macroeconomic fundamentals.
According to the bank the Ghanaian economy was growing very fast and becoming increasingly complex with high value financial transactions which were likely to result in high risk cost in the near future and this called for very robust and strong banks.
“The economy is also getting increasingly integrated with the global economy. While these developments are opening up opportunities for banks, they also expose banks to more risks”. the Bank of Ghana added.
The proposal said the integration of the Ghanaian financial system with the global economy suggests that the new Foreign Exchange Act will provide opportunities for banks and non bank financial institutions and this was likely to bring in their wake higher risks which have to be cushioned by banks.
It added that the review of the Non-Bank Financial Intermediary Law will also provide a wider scope of activities for deposit -taking non- bank financial institutions and finance houses, as these opportunities will expose them to higher risks which have to be covered by adequate capital.
As part of the process of liberalisation, the Bank of Ghana introduced “universal banking” in the first quarter of 2003 which allowed banks to undertake, commercial, development, investment or merchant banking without the need for separate licences. This development, however, is related to one’s capital resources as one would be assuming more risks with the expected expansion and so the need to be well resourced to do so.
As a further step to the liberalisation process the Bank of Ghana rationalised the minimum reserve requirements for banks, introduced new financial instruments, and opened market operations for liquidity management.
The Banking Act empowered the central bank to complement these policies by improving the soundness of the banking system, the regulatory framework, and strengthening banking supervision, and improving the efficiency and profitability of banks, including the replacement of their non-performing assets all in a bid to ensure a very strong and vibrant banking industry in the country.
THE BANK of Ghana has presented proposals to all banks for their re-capitalisation from the present level of GH¢7 million (¢70 billion) to between GH¢50 to GH¢60 million (¢500 billion to ¢600 billion)
The porposal also seeks to increase the minimum capital requirements for deposit taking and non bank financial institutions and finance houses from GH¢1 million and GH¢1.5 million (¢10 billion and ¢15 billion) to between GH¢5 and GH¢8 million (¢50 and ¢80 billion).
The Bank of Ghana has therefore called on banks and deposit taking non- bank financial institutions to submit capitalisation plans by the end of June 2008.
This means that banks and deposit taking financial institutions will now have either to merge or raise more funds through equity participation.
The Bank of Ghana said the existing capital base of most of the banks constrained them in taking advantage of new opportunities in the banking industry and were not strong enough to syndicate for major international contracts being undertaken in the counry.
“Syndication has not proved to be successful in providing the needed capital cover for these new businesses, in part because each of the banks does not have adequate financial strength to support such syndication”, the proposal stated.
The proposal under the Bank of Ghana Consultation Paper which is posted on the website of the central bank is titled “Building a Financial Sector for an Emerging Market Economy-Implications for the capitalisation of Banks and Non-Bank Financial Institutions”
The Bank of Ghana said with all the reforms and the liberalisation of the banking industry, a cluster of banks had emerged with relatively low capital base and depth that are inadequate to support significant levels of lending and therefore could be more vulnerable to minor swings in macroeconomic fundamentals.
According to the bank the Ghanaian economy was growing very fast and becoming increasingly complex with high value financial transactions which were likely to result in high risk cost in the near future and this called for very robust and strong banks.
“The economy is also getting increasingly integrated with the global economy. While these developments are opening up opportunities for banks, they also expose banks to more risks”. the Bank of Ghana added.
The proposal said the integration of the Ghanaian financial system with the global economy suggests that the new Foreign Exchange Act will provide opportunities for banks and non bank financial institutions and this was likely to bring in their wake higher risks which have to be cushioned by banks.
It added that the review of the Non-Bank Financial Intermediary Law will also provide a wider scope of activities for deposit -taking non- bank financial institutions and finance houses, as these opportunities will expose them to higher risks which have to be covered by adequate capital.
As part of the process of liberalisation, the Bank of Ghana introduced “universal banking” in the first quarter of 2003 which allowed banks to undertake, commercial, development, investment or merchant banking without the need for separate licences. This development, however, is related to one’s capital resources as one would be assuming more risks with the expected expansion and so the need to be well resourced to do so.
As a further step to the liberalisation process the Bank of Ghana rationalised the minimum reserve requirements for banks, introduced new financial instruments, and opened market operations for liquidity management.
The Banking Act empowered the central bank to complement these policies by improving the soundness of the banking system, the regulatory framework, and strengthening banking supervision, and improving the efficiency and profitability of banks, including the replacement of their non-performing assets all in a bid to ensure a very strong and vibrant banking industry in the country.
Create a Level Playing Field-GPPCA urges government
GUTA (fin)
Story: Boahene Asamoah
THE Ghana Printers and Paper Converters Association (GPPCA) has called on the government to create a level playing field for locally printed books to compete on favourable terms with imported ones.
The association said the present situation where textbooks imported into the country were exempted from all taxes, locally printed ones attracted 32.5 per cent tax on inputs for the production of the books, which according to the association was discouraging and could kill the local industry.
Presenting its input to the 2008 Budget statement at a forum in Accra yesterday, the Executive Secretary of the association, Mr William E. Turkson, stated that the government’s offering of protection to imported books was making it impossible for local printers to compete, a situation which was adversely affecting the industry.
Mr Turkson stated that aside the uncompetitive nature of the local printing companies, revenue from taxes was lost to the country as a result of this policy.
The association therefore called on the government to revisit its obligations under the UNESCO convention that gives the government the mandate to suspend an agreement if importation of books was causing dislocation of the local industry which dealt in the production of similar products.
He said “the government should treat the imported books and textbooks the same way as the locally produced books as stipulated in the UNESCO agreement.
He said foreign printers must also be made to pay customs duties and Value Added Tax (VAT).
Mr Turkson also called for the strict enforcement of the policy on the production and distribution of textbooks, which states that 60 per cent of all books should be produced locally.
For their part the Ghana Union of Traders Association (GUTA) has called on the government to amend the Export Development and Investment Fund (EDIF) to include support for local industries in order for them to produce for the local market.
The acting President of the association, Mr George Kwaku Ofori, said the EDIF fund should be extended to traders who imported foreign goods to encourage them to produce for the local market.
“This will not only encourage traders to venture into manufacturing but will also enable most of them to easily graduate to the manufacturing sector”, he stated.
Mr Ofori also called for the effective campaign on made-in-Ghana goods to generate a lot of support and encouragement for locally made goods.
He said “we believe that if the government sets up a special credit scheme for only traders who deal in goods manufactured in the country, it will attract more people into the local production sector of the economy.’’
Mr Ofori suggested the establishment of trading centres in the country to market made-in-Ghana goods, adding that “ this will not only attract tourists, but will also showcase the capabilities of Ghana’s industrial sector to project the country and also increase the sale of locally produced goods.’’
Story: Boahene Asamoah
THE Ghana Printers and Paper Converters Association (GPPCA) has called on the government to create a level playing field for locally printed books to compete on favourable terms with imported ones.
The association said the present situation where textbooks imported into the country were exempted from all taxes, locally printed ones attracted 32.5 per cent tax on inputs for the production of the books, which according to the association was discouraging and could kill the local industry.
Presenting its input to the 2008 Budget statement at a forum in Accra yesterday, the Executive Secretary of the association, Mr William E. Turkson, stated that the government’s offering of protection to imported books was making it impossible for local printers to compete, a situation which was adversely affecting the industry.
Mr Turkson stated that aside the uncompetitive nature of the local printing companies, revenue from taxes was lost to the country as a result of this policy.
The association therefore called on the government to revisit its obligations under the UNESCO convention that gives the government the mandate to suspend an agreement if importation of books was causing dislocation of the local industry which dealt in the production of similar products.
He said “the government should treat the imported books and textbooks the same way as the locally produced books as stipulated in the UNESCO agreement.
He said foreign printers must also be made to pay customs duties and Value Added Tax (VAT).
Mr Turkson also called for the strict enforcement of the policy on the production and distribution of textbooks, which states that 60 per cent of all books should be produced locally.
For their part the Ghana Union of Traders Association (GUTA) has called on the government to amend the Export Development and Investment Fund (EDIF) to include support for local industries in order for them to produce for the local market.
The acting President of the association, Mr George Kwaku Ofori, said the EDIF fund should be extended to traders who imported foreign goods to encourage them to produce for the local market.
“This will not only encourage traders to venture into manufacturing but will also enable most of them to easily graduate to the manufacturing sector”, he stated.
Mr Ofori also called for the effective campaign on made-in-Ghana goods to generate a lot of support and encouragement for locally made goods.
He said “we believe that if the government sets up a special credit scheme for only traders who deal in goods manufactured in the country, it will attract more people into the local production sector of the economy.’’
Mr Ofori suggested the establishment of trading centres in the country to market made-in-Ghana goods, adding that “ this will not only attract tourists, but will also showcase the capabilities of Ghana’s industrial sector to project the country and also increase the sale of locally produced goods.’’
Integrate your trading platformsAfrica stock exchanges urged
Story: Boahene Asamoah
THE Chairman of the Ghana Stock Exchange (GSE), Mr Frank Adu Jnr, has challenged stock exchanges across Africa to integrate and automate their trading platforms to attract the much needed foreign investments into the continent.
He said without integration and automation of stock exchanges in Africa, the continent would be limiting her ability to reach out to foreign capital.
“Unless we make significant changes in our stock markets, we cannot make progress as the next investment frontier,” he said in Accra yesterday at the opening of a three-day international conference of the African Securities Exchange Association (ASEA).
The 11th ASEA conference is being hosted by the Ghana Stock Exchange (GSE) on the theme: The African Capital Market: The Next Investment Frontier.
It attracted many stakeholders on the African capital market.
Mr Adu, who is also the Managing Director of CAL Bank, underscored the importance of regional integration of stock markets to the development of the continent and called for innovative ideas to enable stock exchanges on the continent to facilitate the much needed economic development in Africa.
He, however, acknowledged that emerging markets did not have to re-invent the wheel or resist innovation, but to symbolise it, without which stock exchanges could not grow.
Mr Adu questioned why it was not possible in the near future for governments to use the African Stock markets as vehicles to reach out to the international financial markets.
He said this in reference to the government of Ghana’s sourcing of $750 million through eurobond from the international markets.
“It should be possible for the government to source funds in its next foray unto the financial market from the African capital markets.”
Touching on regulation of stock exchanges, Mr Adu called for rules and regulations enacted not only to be compatible, but also conform to international standards.
The President of ASEA, who is also the Chief Executive Officer of the Cairo and Alexandria Stock Exchanges in Egypt, Mr Maged Shawky Sourial, said the 20-member association accounted for $1.5 trillion capitalisation last year.
He said “the market can do a lot for the continent and has a pivotal role to play in the economic development of the African continent.”
Mr Sourial called for the sharing of knowledge and experiences that would make the African stock markets strong and impact on the continent’s development.
ASEA was established in 1993 with the principal objective of creating a mutual platform for assistance and co-operation among African capital markets in areas of technology, corporate governance, economic growth and general market development.
This year’s conference, which is to be hosted for the first time in Ghana, aims at focusing on important issues affecting African capital markets and how various countries’ experiences could be harnessed to assist in accelerating economic growth.
Apart from the Cairo and Johannesburg stock exchanges, which are more than 100 years, most of the African markets are less than 50 years, and the number of listings are nothing to write home about. The liquidity of these stock exchanges are equally poor.
The conference will, therefore, provide opportunities for delegates to make new contacts and exchange new ideas, while providing and enabling environment for business opportunities.
Major topics lined up for the conference include Globalisation and African Capital Markets; Key Drivers for Development of African Capital Markets; African Capital Markets – The Next Decade. Within these broad thematic topics, issues such as recent developments in African capital markets, performance of African capital markets, cross- border investment and securitisation in financial markets development will be discussed.
Other issues that will be tackled at the conference include sovereign participation in international debt markets — The Ghana case.
THE Chairman of the Ghana Stock Exchange (GSE), Mr Frank Adu Jnr, has challenged stock exchanges across Africa to integrate and automate their trading platforms to attract the much needed foreign investments into the continent.
He said without integration and automation of stock exchanges in Africa, the continent would be limiting her ability to reach out to foreign capital.
“Unless we make significant changes in our stock markets, we cannot make progress as the next investment frontier,” he said in Accra yesterday at the opening of a three-day international conference of the African Securities Exchange Association (ASEA).
The 11th ASEA conference is being hosted by the Ghana Stock Exchange (GSE) on the theme: The African Capital Market: The Next Investment Frontier.
It attracted many stakeholders on the African capital market.
Mr Adu, who is also the Managing Director of CAL Bank, underscored the importance of regional integration of stock markets to the development of the continent and called for innovative ideas to enable stock exchanges on the continent to facilitate the much needed economic development in Africa.
He, however, acknowledged that emerging markets did not have to re-invent the wheel or resist innovation, but to symbolise it, without which stock exchanges could not grow.
Mr Adu questioned why it was not possible in the near future for governments to use the African Stock markets as vehicles to reach out to the international financial markets.
He said this in reference to the government of Ghana’s sourcing of $750 million through eurobond from the international markets.
“It should be possible for the government to source funds in its next foray unto the financial market from the African capital markets.”
Touching on regulation of stock exchanges, Mr Adu called for rules and regulations enacted not only to be compatible, but also conform to international standards.
The President of ASEA, who is also the Chief Executive Officer of the Cairo and Alexandria Stock Exchanges in Egypt, Mr Maged Shawky Sourial, said the 20-member association accounted for $1.5 trillion capitalisation last year.
He said “the market can do a lot for the continent and has a pivotal role to play in the economic development of the African continent.”
Mr Sourial called for the sharing of knowledge and experiences that would make the African stock markets strong and impact on the continent’s development.
ASEA was established in 1993 with the principal objective of creating a mutual platform for assistance and co-operation among African capital markets in areas of technology, corporate governance, economic growth and general market development.
This year’s conference, which is to be hosted for the first time in Ghana, aims at focusing on important issues affecting African capital markets and how various countries’ experiences could be harnessed to assist in accelerating economic growth.
Apart from the Cairo and Johannesburg stock exchanges, which are more than 100 years, most of the African markets are less than 50 years, and the number of listings are nothing to write home about. The liquidity of these stock exchanges are equally poor.
The conference will, therefore, provide opportunities for delegates to make new contacts and exchange new ideas, while providing and enabling environment for business opportunities.
Major topics lined up for the conference include Globalisation and African Capital Markets; Key Drivers for Development of African Capital Markets; African Capital Markets – The Next Decade. Within these broad thematic topics, issues such as recent developments in African capital markets, performance of African capital markets, cross- border investment and securitisation in financial markets development will be discussed.
Other issues that will be tackled at the conference include sovereign participation in international debt markets — The Ghana case.
Let’s have a single stock exchange for Africa
Story: Boahene Asamoah
THE Chief Advisor to the President, Dr (Mrs) Mary Chinery-Hesse, has advocated a single African stock market to attract increased investments to the continent.
Dr Chinery-Hesse said the benefits of such a single stock market were enormous, adding that it would enable Africa to tap the needed capital for its development agenda.
“This should be the ultimate objective; we must accelerate the action,” the Chief Adviser to the President stated in Accra on Monday at the ongoing international conference of the African Stock Exchanges Association (ASEA).
The 11th ASEA conference is being hosted by the Ghana Stock Exchange (GSE) on the theme: “The African Capital Market: The Next Investment Frontier”.
It has attracted many stakeholders within the African capital market.
She called on African stock exchanges to complement efforts by African governments to provide the requisite infrastructure for the development of the continent.
“African governments expect stock exchanges to be at the forefront of massive development on the continent,” she said.
Dr Chinery-Hesse said Africa could no longer be ignored as an investment destination and that the stock exchanges on the continent should lead the way in attracting such investments.
She said African stock exchanges had, over the past few years, been described as emerging and were attractive because they offered higher returns to investors.
She called for the need to embark on education to bring on board small and medium-scale enterprises (SMEs) to source for funds from the stock market.
She urged the delegates attending the conference to come up with proposals that would ensure the deepening of stock markets across Africa to position them to attract increased investments.
A Minister of State at the Ministry of Finance and Economic Planning, Dr Anthony Akoto Osei, reiterated the government’s commitment to use the stock exchange as exit strategy for state-owned enterprises (SOEs).
He acknowledged the many challenges that confronted the development of African stock exchanges, such as the legal and regulatory framework, and called for steps to address the concerns.
He said over the past years, the macro-economic environment had improved and stated that the Ghana government was committed to pursuing policies that would further deepen the role of the capital market in the country.
ASEA was established in 1993 with the principal objective of creating a mutual platform for assistance and co-operation among African capital markets in the areas of technology, corporate governance, economic growth and general market development.
This year’s conference, which is being hosted for the first time in Ghana, aims at focusing on important issues affecting African capital markets and how the experiences of various countries could be harnessed to assist in accelerating economic growth.
Apart from the Cairo and Johannesburg stock exchanges which are more than 100 years, most African markets are less than 50 years and the number of listings is nothing to write home about. The liquidity of these stock exchanges is equally poor.
Major topics lined up for the conference include Globalisation and African Capital Markets; Key Drivers for the Development of African Capital Markets, and African Capital Markets – The Next Decade.
Within these broad thematic topics, issues such as recent developments on African capital markets, the performance of African capital markets and cross-border investment and securitisation in financial markets development will be discussed.
THE Chief Advisor to the President, Dr (Mrs) Mary Chinery-Hesse, has advocated a single African stock market to attract increased investments to the continent.
Dr Chinery-Hesse said the benefits of such a single stock market were enormous, adding that it would enable Africa to tap the needed capital for its development agenda.
“This should be the ultimate objective; we must accelerate the action,” the Chief Adviser to the President stated in Accra on Monday at the ongoing international conference of the African Stock Exchanges Association (ASEA).
The 11th ASEA conference is being hosted by the Ghana Stock Exchange (GSE) on the theme: “The African Capital Market: The Next Investment Frontier”.
It has attracted many stakeholders within the African capital market.
She called on African stock exchanges to complement efforts by African governments to provide the requisite infrastructure for the development of the continent.
“African governments expect stock exchanges to be at the forefront of massive development on the continent,” she said.
Dr Chinery-Hesse said Africa could no longer be ignored as an investment destination and that the stock exchanges on the continent should lead the way in attracting such investments.
She said African stock exchanges had, over the past few years, been described as emerging and were attractive because they offered higher returns to investors.
She called for the need to embark on education to bring on board small and medium-scale enterprises (SMEs) to source for funds from the stock market.
She urged the delegates attending the conference to come up with proposals that would ensure the deepening of stock markets across Africa to position them to attract increased investments.
A Minister of State at the Ministry of Finance and Economic Planning, Dr Anthony Akoto Osei, reiterated the government’s commitment to use the stock exchange as exit strategy for state-owned enterprises (SOEs).
He acknowledged the many challenges that confronted the development of African stock exchanges, such as the legal and regulatory framework, and called for steps to address the concerns.
He said over the past years, the macro-economic environment had improved and stated that the Ghana government was committed to pursuing policies that would further deepen the role of the capital market in the country.
ASEA was established in 1993 with the principal objective of creating a mutual platform for assistance and co-operation among African capital markets in the areas of technology, corporate governance, economic growth and general market development.
This year’s conference, which is being hosted for the first time in Ghana, aims at focusing on important issues affecting African capital markets and how the experiences of various countries could be harnessed to assist in accelerating economic growth.
Apart from the Cairo and Johannesburg stock exchanges which are more than 100 years, most African markets are less than 50 years and the number of listings is nothing to write home about. The liquidity of these stock exchanges is equally poor.
Major topics lined up for the conference include Globalisation and African Capital Markets; Key Drivers for the Development of African Capital Markets, and African Capital Markets – The Next Decade.
Within these broad thematic topics, issues such as recent developments on African capital markets, the performance of African capital markets and cross-border investment and securitisation in financial markets development will be discussed.
African Stock exchanges can be catalysts for dev
Story: Boahene Asamoah
TWO investment analysts have said that African stock markets have the potential to become the next investment frontier but stated that there is need for some radical changes.
The two, Messrs Maged Skawky Sourial, the President of the African Securities Exchange Commission (ASEA) and Neil Harvey, Deputy Chief Executive Officer of the international investment group, Renaissance Capital, made the assertions in two separate interviews.
Mr Harvey said the investment yield from the continent made Africa attractive to foreign investments and fund managers from across the world.
He said over the past years, Renaissance Capital had invested over $500 million and was convinced that more international investment firms were looking at the continent.
“Africa is going to be the next investment frontier in the next 10 to 20 years,” he stated.
He said there was the need to ensure good corporate governance that to foster investor confidence and the development of the African market.
For his part, Mr Sourial, who is also the Chairman of the Cairo and Alexandria Stock Exchanges in Egypt, said the continent offered tremendous opportunities for investors, adding that “the African stock markets is at its early growth stages.”
“This means investors who come to the market early stand a good chance of huge returns in the long run,” he added.
He acknowledged that there were a few challenges such as the need to upgrade systems and communications infrastructure to facilitate trade and settlement.
Mr Sourial said communication was key in the stock market to ensure that investors were armed with all the information to enable them to take decisions.
He said assertions that stock exchanges in Africa were small was not a serious concern, explaining that “all stock markets started small and developed along.”
The way forward, Mr Sourial said, was to ensure the integration of the trading platforms of the exchanges by first facilitating the integration policies across the continent to bring in the much needed capital flows.
ASEA was established in 1993 with the principal objective of creating a mutual platform for assistance and co-operation among African capital markets in the areas of technology, corporate governance, economic growth and general market development.
This year’s conference, which is being hosted for the first time in Ghana, aims at focusing on important issues affecting African capital markets and how the experiences of various countries could be harnessed to assist in accelerating economic growth.
Apart from the Cairo and Johannesburg stock exchanges which are more than 100 years, most African markets are less than 50 years with small listings hence the liquidity is relatively small.
TWO investment analysts have said that African stock markets have the potential to become the next investment frontier but stated that there is need for some radical changes.
The two, Messrs Maged Skawky Sourial, the President of the African Securities Exchange Commission (ASEA) and Neil Harvey, Deputy Chief Executive Officer of the international investment group, Renaissance Capital, made the assertions in two separate interviews.
Mr Harvey said the investment yield from the continent made Africa attractive to foreign investments and fund managers from across the world.
He said over the past years, Renaissance Capital had invested over $500 million and was convinced that more international investment firms were looking at the continent.
“Africa is going to be the next investment frontier in the next 10 to 20 years,” he stated.
He said there was the need to ensure good corporate governance that to foster investor confidence and the development of the African market.
For his part, Mr Sourial, who is also the Chairman of the Cairo and Alexandria Stock Exchanges in Egypt, said the continent offered tremendous opportunities for investors, adding that “the African stock markets is at its early growth stages.”
“This means investors who come to the market early stand a good chance of huge returns in the long run,” he added.
He acknowledged that there were a few challenges such as the need to upgrade systems and communications infrastructure to facilitate trade and settlement.
Mr Sourial said communication was key in the stock market to ensure that investors were armed with all the information to enable them to take decisions.
He said assertions that stock exchanges in Africa were small was not a serious concern, explaining that “all stock markets started small and developed along.”
The way forward, Mr Sourial said, was to ensure the integration of the trading platforms of the exchanges by first facilitating the integration policies across the continent to bring in the much needed capital flows.
ASEA was established in 1993 with the principal objective of creating a mutual platform for assistance and co-operation among African capital markets in the areas of technology, corporate governance, economic growth and general market development.
This year’s conference, which is being hosted for the first time in Ghana, aims at focusing on important issues affecting African capital markets and how the experiences of various countries could be harnessed to assist in accelerating economic growth.
Apart from the Cairo and Johannesburg stock exchanges which are more than 100 years, most African markets are less than 50 years with small listings hence the liquidity is relatively small.
ECG to merge with Northern Electrification Development
Story: Boahene Asamoah
THE government has said it will merge the Electricity Company of Ghana (ECG) and the Northern Electrification Development (NED) as part of reforms in the energy sector.
The merged company would also be re-organised into four strategic business units under a holding company.
The four business units would be constituted as Northern, Central, Western and Capital Electric companies and would be spun into fully fledged companies within the ambit of the Holding Company.
At the annual National Energy Symposium in Accra, the Deputy Minister of Energy, Mr Kwame Ampofo Twumasi, said these measures would position the distribution sector to meet the current challenges and complexities and ensure quality service delivery.
The three-day symposium is being organised by the Energy Commission and the Energy Resource Group and is on the theme “ Energy Sector Reforms: Removal of Policy Implementation Barriers”.
The minister said implementation reform in the energy sector was critical and stated that it had been characterised by contradictions and stagnation.
He said the ministry was undertaking five critical reforms in the sector, which were increasing private sector participation in the electricity supply industry, restructuring of the VRA, improvement within the distribution sector, implementation of economic and full-cost tariffs and the development of competitive wholesale electricity supply market.
“A key expectation of the reform programme is to bring about the improvement in the operations of the electricity distribution companies,” the minister stated.
He stated that the government would support the implementation of the policy of full cost recovery in electricity pricing as envisaged under the reform programme.
“We will, however, pursue this objective in a gradual manner in order not to introduce any unnecessary difficulties for consumers,” Mr Twumasi added.
The minister stressed that the business of electricity generation, transmission and distribution was an expensive venture, adding that escalating prices of crude oil and petroleum products, which were the primary fuels for thermal power generation, was a source of concern.
He said “the implication is that the proportion of the more expensive thermal generation sources will grow resulting in higher cost of electricity supply”, adding that “we must brace ourselves against this situation”.
Mr Twumasi stated that the government would promote the concept of the Wholesale Electricity market to bring out the full benefit of competition in electricity supply in the country.
He added that a number of regulations which set the framework and defined the environment for operations had been prepared and were currently under consideration.
The acting Executive Secretary of the Energy Commission, Dr Alfred Ofosu-Ahenkorah, said the symposium was aimed at providing a forum for discussing barriers to the implementation of the reform in the power sector and identifying concrete measures for assuring adequate power security.
THE government has said it will merge the Electricity Company of Ghana (ECG) and the Northern Electrification Development (NED) as part of reforms in the energy sector.
The merged company would also be re-organised into four strategic business units under a holding company.
The four business units would be constituted as Northern, Central, Western and Capital Electric companies and would be spun into fully fledged companies within the ambit of the Holding Company.
At the annual National Energy Symposium in Accra, the Deputy Minister of Energy, Mr Kwame Ampofo Twumasi, said these measures would position the distribution sector to meet the current challenges and complexities and ensure quality service delivery.
The three-day symposium is being organised by the Energy Commission and the Energy Resource Group and is on the theme “ Energy Sector Reforms: Removal of Policy Implementation Barriers”.
The minister said implementation reform in the energy sector was critical and stated that it had been characterised by contradictions and stagnation.
He said the ministry was undertaking five critical reforms in the sector, which were increasing private sector participation in the electricity supply industry, restructuring of the VRA, improvement within the distribution sector, implementation of economic and full-cost tariffs and the development of competitive wholesale electricity supply market.
“A key expectation of the reform programme is to bring about the improvement in the operations of the electricity distribution companies,” the minister stated.
He stated that the government would support the implementation of the policy of full cost recovery in electricity pricing as envisaged under the reform programme.
“We will, however, pursue this objective in a gradual manner in order not to introduce any unnecessary difficulties for consumers,” Mr Twumasi added.
The minister stressed that the business of electricity generation, transmission and distribution was an expensive venture, adding that escalating prices of crude oil and petroleum products, which were the primary fuels for thermal power generation, was a source of concern.
He said “the implication is that the proportion of the more expensive thermal generation sources will grow resulting in higher cost of electricity supply”, adding that “we must brace ourselves against this situation”.
Mr Twumasi stated that the government would promote the concept of the Wholesale Electricity market to bring out the full benefit of competition in electricity supply in the country.
He added that a number of regulations which set the framework and defined the environment for operations had been prepared and were currently under consideration.
The acting Executive Secretary of the Energy Commission, Dr Alfred Ofosu-Ahenkorah, said the symposium was aimed at providing a forum for discussing barriers to the implementation of the reform in the power sector and identifying concrete measures for assuring adequate power security.
New company to manage electricity company
Story: Boahene Asamoah
A New company to manage and operate the national electricity grid system is to be operationalised soon, a senior government official has disclosed.
The company, to be named Ghana Grid Company (GRIGCO), is part of the government’s effort to restructure the Volta River Authority.
The Deputy Minister of Energy, Mr Kwame Ampofo Twumasi, who made this known at the National Energy Symposium, said a Chief Executive Officer of the company had been appointed, adding that “it is hoped that this development will speed up the restructuring programme in VRA”.
The minister did not, however, explain what would become of the VRA after the reforms.
He said “the attainment of reliable electricity supply in Ghana has been as illusive as the full implementation of the power sector reform programme”, adding that “old habits are difficult to die”.
Mr Twumasi underscored the importance of change and reforms in the energy sector, admitting however, that “it is very difficult to embrace reform or change even though change provides the vehicle to development”.
The minister stated that the decision to reform the energy sector was taken about 10 years ago, but stressed that the implementation had been delayed, adding that the process of putting in place and implementing the requisite standard and regulations had been constrained.
He mentioned that the government was stepping up the development of renewable energy especially solar by integrating solar power into the construction industry, and stressed its commitment to reform the power sector.
The Minister of Finance and Economic Planning, Mr Kwadwo Baah-Wiredu, in an address read on his behalf by the Director of Legal Affairs at the ministry, Mr Paul Asimenu, said government policy in the energy sector was to ensure a reliable supply for high quality energy services.
He said the government had this year spent GH¢349.4 million (¢3.5 trillion), representing a 100 per cent increase over the 2006 figure.
“The high expenditure in 2007 is mainly attributed to the implementation of short to medium-term measures to address the energy crisis and expand the energy generation capacity of the country to forestall the recurrence of the situation in future,” the minister said.
Mr Baah-Wiredu called for pragmatic programmes to address the energy shortfalls in the country and said the government had adopted strategies such as encouraging competition in the energy markets to achieve efficiency, attracting investments to the sector, and ensuring energy supply and reliability and productive uses of electricity in rural areas.
The minister said the restructuring of the power grid to a shared system would allow individuals and companies to contribute to the national power generating system and could move the country further in its development agenda.
“The blend of solar, marine, nuclear, hydro and biogas can be an effective approach to the attainment of sustainable energy supply,”, the minister stated.
A New company to manage and operate the national electricity grid system is to be operationalised soon, a senior government official has disclosed.
The company, to be named Ghana Grid Company (GRIGCO), is part of the government’s effort to restructure the Volta River Authority.
The Deputy Minister of Energy, Mr Kwame Ampofo Twumasi, who made this known at the National Energy Symposium, said a Chief Executive Officer of the company had been appointed, adding that “it is hoped that this development will speed up the restructuring programme in VRA”.
The minister did not, however, explain what would become of the VRA after the reforms.
He said “the attainment of reliable electricity supply in Ghana has been as illusive as the full implementation of the power sector reform programme”, adding that “old habits are difficult to die”.
Mr Twumasi underscored the importance of change and reforms in the energy sector, admitting however, that “it is very difficult to embrace reform or change even though change provides the vehicle to development”.
The minister stated that the decision to reform the energy sector was taken about 10 years ago, but stressed that the implementation had been delayed, adding that the process of putting in place and implementing the requisite standard and regulations had been constrained.
He mentioned that the government was stepping up the development of renewable energy especially solar by integrating solar power into the construction industry, and stressed its commitment to reform the power sector.
The Minister of Finance and Economic Planning, Mr Kwadwo Baah-Wiredu, in an address read on his behalf by the Director of Legal Affairs at the ministry, Mr Paul Asimenu, said government policy in the energy sector was to ensure a reliable supply for high quality energy services.
He said the government had this year spent GH¢349.4 million (¢3.5 trillion), representing a 100 per cent increase over the 2006 figure.
“The high expenditure in 2007 is mainly attributed to the implementation of short to medium-term measures to address the energy crisis and expand the energy generation capacity of the country to forestall the recurrence of the situation in future,” the minister said.
Mr Baah-Wiredu called for pragmatic programmes to address the energy shortfalls in the country and said the government had adopted strategies such as encouraging competition in the energy markets to achieve efficiency, attracting investments to the sector, and ensuring energy supply and reliability and productive uses of electricity in rural areas.
The minister said the restructuring of the power grid to a shared system would allow individuals and companies to contribute to the national power generating system and could move the country further in its development agenda.
“The blend of solar, marine, nuclear, hydro and biogas can be an effective approach to the attainment of sustainable energy supply,”, the minister stated.
Ecobank would welcom other banks
Story: Boahene Asamoah
THE Chief Executive Officer of Ecobank Transnational Incorporated (ETI), Mr Arnold Ekpe, has said the bank will welcome any local bank willing to partner it to build a major African bank.
Mr Ekpe was reacting to a question as to whether Ecobank Ghana would take over some local banks in response to the Bank of Ghana’s proposal to raise the minimum capital requirement for banks from the present GH¢7 million (¢70 billion) to between GH¢50 million and GH¢60 million (¢500 billion and ¢600 billion).
In an interview, Mr Ekpe stated that there were bound to be consolidations in the banking sector as a result of the central bank’s proposal, adding that “we will welcome any bank that wants to partner us.”
Mr Akpe said the decision by the Bank of Ghana “was in the right direction and good for the Ghanaian economy.”
He said the decision to raise the minimum capital requirement would position the banks to support the government’s economic development, and expressed Ecobank’s full support to the Bank of Ghana in that direction.
The Bank of Ghana (BoG) last week presented proposals to all banks for their re-capitalisation from the present level of GH¢7 million (¢70 billion) to between GH¢50 million to GH¢60 million (¢500 billion to ¢600 billion).
The proposal also seeks to increase the minimum capital requirements for deposit taking non bank financial institutions and finance houses from GH¢1 million (¢10 billion) and GH¢1.5 million (¢15 billion) to between GH¢5 (¢50 billion) and GH¢8 million (¢80 billion).
The BoG, therefore, called on banks and deposit taking non-bank financial institutions to submit capitalisation plans by the end of June 2008.
This means that banks and deposit taking non-bank financial institutions that cannot meet the requirement to merge or raise more funds through equity participation.
The Bank of Ghana said the existing capital base of most of the banks constrained them in taking advantage of new opportunities in the banking industry and were not strong enough to syndicate for major international contracts being undertaken in the country.
“Syndication has not proved to be successful in providing the needed capital cover for these new businesses, in part because each of the banks does not have adequate financial strength to support such syndication,” the proposal stated.
Mr Ekpe said it should be possible for local banks to take the lead in the vast majority of projects in the country such as the housing infrastructure, and many other projects.
He said the proposal by the central bank would help bring about bigger banks and build capacity of the banks in the country.
He stated that while it was important to raise the minimum capital requirement, there were risks that the central bank must guard against.
“There should be regulation against foreign investment that will seek to take over the whole banking system,” the CEO of the pan-African bank stated and expressed absolute trust in the central bank’s ability to regulate the industry.
THE Chief Executive Officer of Ecobank Transnational Incorporated (ETI), Mr Arnold Ekpe, has said the bank will welcome any local bank willing to partner it to build a major African bank.
Mr Ekpe was reacting to a question as to whether Ecobank Ghana would take over some local banks in response to the Bank of Ghana’s proposal to raise the minimum capital requirement for banks from the present GH¢7 million (¢70 billion) to between GH¢50 million and GH¢60 million (¢500 billion and ¢600 billion).
In an interview, Mr Ekpe stated that there were bound to be consolidations in the banking sector as a result of the central bank’s proposal, adding that “we will welcome any bank that wants to partner us.”
Mr Akpe said the decision by the Bank of Ghana “was in the right direction and good for the Ghanaian economy.”
He said the decision to raise the minimum capital requirement would position the banks to support the government’s economic development, and expressed Ecobank’s full support to the Bank of Ghana in that direction.
The Bank of Ghana (BoG) last week presented proposals to all banks for their re-capitalisation from the present level of GH¢7 million (¢70 billion) to between GH¢50 million to GH¢60 million (¢500 billion to ¢600 billion).
The proposal also seeks to increase the minimum capital requirements for deposit taking non bank financial institutions and finance houses from GH¢1 million (¢10 billion) and GH¢1.5 million (¢15 billion) to between GH¢5 (¢50 billion) and GH¢8 million (¢80 billion).
The BoG, therefore, called on banks and deposit taking non-bank financial institutions to submit capitalisation plans by the end of June 2008.
This means that banks and deposit taking non-bank financial institutions that cannot meet the requirement to merge or raise more funds through equity participation.
The Bank of Ghana said the existing capital base of most of the banks constrained them in taking advantage of new opportunities in the banking industry and were not strong enough to syndicate for major international contracts being undertaken in the country.
“Syndication has not proved to be successful in providing the needed capital cover for these new businesses, in part because each of the banks does not have adequate financial strength to support such syndication,” the proposal stated.
Mr Ekpe said it should be possible for local banks to take the lead in the vast majority of projects in the country such as the housing infrastructure, and many other projects.
He said the proposal by the central bank would help bring about bigger banks and build capacity of the banks in the country.
He stated that while it was important to raise the minimum capital requirement, there were risks that the central bank must guard against.
“There should be regulation against foreign investment that will seek to take over the whole banking system,” the CEO of the pan-African bank stated and expressed absolute trust in the central bank’s ability to regulate the industry.
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