GB&F DECEMBER 2015

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DECEMBER 2015 / ISSUE 055 GH¢10.00

ds n e r t New hurch in c ities activ them obligey tax? to pa

Expedite regulation of real eastate with a law

No budget over-spending in 2016?

USA..........................................$5.00 UNITED KINGDOM.....................£3.00 EUROPE....................................€3.50 AUSTRALIA.............................AS5.00 CFA ZONE...........................CFA 2,000 OTHER AFRICAN COUNTRIES.US$4.00

THE FIRST BUSINESS READ IN GHANA

Follow us online at www.ghanabizfinance.com

CONTENTS ISSUE 055 / DECEMBER 2015

20 Communications

40 Building & Construction

22 Science & Technology

44 Business & Management

Front Cover: Mr Seth Terkper Minister for Finance & Economic Planning

6 Briefs

A summary of business and financial stories which occurred in Ghana, Africa and the rest of the world last month.

10 Economy

The new trend in the activities of Ghanaian churches is their active participation in profit-making trading in almost all sectors of the economy. Strong arguments are being advanced for the churches to pay tax.

14 Banking

Ghana’s banks are taking tough decisions as they are facing challenges in a weak macroeconomic environment.

16 Corporate Progress

The longer customers wait in queues for goods and services, the more frustrated they become and carry a bad impression about the company. But evidence shows that many Ghanaians have the tendency to queue for almost everything.

18 Finance

The growth of mobile money services has been phenomenal, with about 7.17 million clients. A few years, it was almost impossible for non-bank account holders to receive money directly.

The persistent water shortages in Ghana necessitate the harvesting of rainwater to mitigate water scarcity in households, at institutions and farms.

There is a tendency for Ghanaian governments to over-spend in elections years. But President John Mahama has promised several times not to over-spend in 2016 when presidential and parliamentary polls will be held.

Maintaining fiscal discipline is one of the conditionality of the government’s bail-out programme with the International Monetary Fund. Can the government afford not to over-expend in a highstakes election year? Can it win the polls without a budget overrun?

30 Industry

After improving its light manufacturing, Ghana can move into the production of secondary and heavy manufactured goods.

How can Ghana improve its light industrial base?

34 SMEs & Microfinance

Columnist Yaw Ohemeng Kyei continues with his analysis of why microfinance companies collapse, and proffers some recommendations.

The current unregulated real estate industry in Ghana is affecting financial markets as large transactions cannot be executed.

This affects investor confidence in the economy. When a Bill that is before Parliament is passed, the industry may be well regulated and guided to see better days.

“The people who manage the economy are wise, well educated and well-exposed. They are not blind when they travel to advanced countries. They know the current trends in economic development,” writes columnist Yaw Asamoah. He believes what is lacking is the political will to drive Ghana’s economy to prosperity.

46 Diplomacy

Turkey’s humanitarian initiatives in the form of development assistance have bettered the lives of many Africans. In this article, Feridun Hadi Sinirlioglu, Turkey’s Foreign Minister, chronicles his country’s support for Africa in different forms and at various forums.

48 Events

Visit conferences to be held around the world that interest you and your business.

49 Stats & Indices

Figures speaks louder than words for Ghana’s economy.

50 Commodities

Know the prices of agricultural produce in selected markets, as researched and compiled by Esoko.

36 Agriculture

Lack of investments and finance continue to bedevil Ghana’s agricultural sector. Yet agriculture needs to be prioritised and promoted for the country to industrialise and develop socioeconomically.

Find us online at www.ghanabizfinance.com All information contained within this magazine is the property of Ghana Business & Finance and is not to be used without written authorisation from the publishers. Although every effort is made to ensure the correctness of information submitted for publication, the magazine may inadvertently contain technical inaccuracies or typographical errors. Ghana Business & Finance assumes no responsibility for errors or omissions in this publication or other documents that are referenced by or linked to this publication.

DECEMBER 2015

26 Cover

Gifty Bingley, the Director of Corporate Communications and Responsibility at Tigo Ghana, has been named the 2014 PR Discovery of the Year by the Institute of Public Relations for her immense contributions to communications in the telecommunication industry.

Agriculture: page 38

linkedin.com/GhanaBusiness&Finance facebook.com/GBandF @ghana_business

GHANA BUSINESS & FINANCE

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General Manager Josiah Spio-Garbrah jspiogarbrah@ghanabizfinance.com +233 264 510 396 Editor Ayuureyisiya Kapini Atafori editor@ghanabizfinance.com Senior Staff Writer Kweku Darko Ankrah kdankrah@ghanabizfinance.com Columnists Jerry Halm Yaw Asamoah Dr Nana Ama Browne Klutse Yaw Ohemeng Kyei Contributors Martin Luther C. King Oppong Baah Anthony Sedzro Kennedy Addai Kuffour Adnan Adams Mohammed Design & Production Manager Benjamin Tetteh btetteh@ghanabizfinance.com Circulation & Subscription Ernest Awo subscription@ghanabizfinance.com Editorial Committee Prof. Paul N. Buatsi Prof. Kwame Addo Ms Johanna Awotwi Mr Gaddy Laryea Mr Ray de Bono Mr Nana Robert Mensah Mr Frederick Alipui Ms Dede-Esi Amanor-Wilks Ms Nana Spio-Garbrah Office Location Ghana Business & Finance African Business Media House No. 7 Lamb Street (off Farrar Avenue) Adabraka, Accra, Ghana Mailing Address P. O. Box O 772, Osu, Accra, Ghana Tel: +233 302 240 786 Fax: +233 302 240 783 enquiries@ghanabizfinance.com Brand Advisor Dmax Studios in Malta, EU. (www.dmax.tv) Credits GNA Daily Graphic radioxyzonline.com Mergermarket Group ghanabusinessnews.com

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Prioritise agriculture to leapfrog Ghana’s socio-economic development Historically, agriculture is an all-important sector that some governments have ignored to the detriment of Ghana. The governments only paid lip service to agriculture. Some governments only relied on tokenism, pronouncing great and grand plans, programmes and projects to modernise agriculture. If all governments had prioritised agriculture as the Nkrumah government did from the late 1950s to 1966, and as the Acheampong regime did in the early 1970s with its ‘Operation Feed Yourself ’ programme, the successful implementation of agriculture-related programmes would have led to the industrialisation of Ghana.

After the relative successes of the two governments, the country’s agriculture had been practically neglected, but had theoretically been prioritised with mere policies. At a forum held in Accra last November, Dr Kwadwo Tutu, an agricultural economist at University of Ghana, decried the decrease in allocations to the agricultural sector in the 2016 budget. Dr Tutu stated that the reduction indicated that the government does not view agriculture as a priority. He observed that growth in agriculture as a percentage of GDP had declined from about 70 per cent in the 1980s and 1990s to about 19 per cent at present – a signal that the sector is not a priority.

According to a Pricewaterhouse analysis of the 2016 budget, the agriculture sector is expected to register a growth of 0.04 per cent by the end of 2015, against a targeted growth of 3.6 per cent.

Now, the Medium Term Agriculture Sector Investment Plan (METASIP), Ghana Commercial Agriculture Project (GCAP) and Ghana Agricultural Sector Investment Programme (GASIP) are being implemented by the government to boost agriculture. AGRICULTURE is dear to the editorial content of GB&F, and readers would notice that this magazine published analytical articles on agriculture in almost all its editions. The passion with which GB&F (coincidentally the magazine’s editor believes he is a farmer by ancestral nature and a journalist by training) advocates the prioritisation of agriculture should be understandable when weighty consideration is given to the good that the Green Revolution did to India and other countries which placed emphasis on agriculture to industrialise. We beg your indulgence, therefore, to tease out these posers.

Hitherto, the Food and Agricultural Sector Development Policy (FASDEP) was to push the agriculture agenda forward. What practical results came out of FASDEP? There may have been some good things from FASDEP. But did its implementation transform agriculture significantly?

METASIP, GCAP, GASIP and FASDEP may be lofty and grandiose plans, policies, programmes, and projects, but what is or was their drive? Are these plans, policies, programmes and projects leading to increased budgetary allocation to agriculture? Are they geared towards increasing agricultural productivity? Are they leading to agriculture-based industrialisation? Are they modernising agriculture? Are they commercialising agriculture? Are they supporting the majority smallholder to transit from cutlass-and-hoe farming to the use of recent technology? Are they transforming the mainly rain-fed agriculture to irrigation-based agriculture?

As stated in the article, ‘Low investment still bane of agricultural productivity,’ published on page 36, “investment in agriculture in the 2016 budget is not encouraging ... Clearly, the agricultural sector is in dire trouble. Ghana’s current low agricultural investment confirms the Institute of Economic Affairs` (IEA) research findings that the country will soon be infected by the Dutch Disease.”

The 2016 budgetary allocation for the Ministry of Food and Agriculture (MOFA) is GHC501,501,708.00, and that of the Ministry of Fisheries and Aquaculture is over GHC53 million. Last year, MOFA received GHC412 million while the Fisheries Ministry took GHC75 million. The GB&F article points out that all these plans, policies, programmes and projects such as METASIP and GASIP “will not work when the government does not come out with one comprehensive National Agricultural Policy that creates a synergy or interaction with all the other sub-agricultural sectors.”

The pomp and fanfare at the ritualistic Farmers’ Day award-giving durbars really mean little if serious attention is not paid to the revolutionisation of agriculture with practical plans, policies, programmes and projects that are implemented thoroughly. When government truly prioritises agriculture, the presently neglected sector will jet-jump Ghana’s socio-economic development, and thus fast-track its preparation to an industrialising or industrial middle income status. As an agrarian country with majority of the population engaged in agriculture and agric-related activities, Ghana cannot industrialise without the real prioritisation of agriculture by way of technological innovation, modernisation and commercialisation.

Government should begin to underscore the importance of agriculture by constantly sticking to the 10 per cent of total budgetary allocation dedicated to agriculture as prescribed by the African Union’s Comprehensive Africa Agriculture Development Programme (CAADP) which came into being in July 2003.

Ayuureyisiya Kapini Atafori Editor (+233 024 2385374)

DECEMBER 2015

Mail to the Editor

Send your articles, comments and letters to the editor at editor@ghanabizfinance.com

GHANA BUSINESS & FINANCE

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EDITOR’S SUITE

Farmers’ Day fanfare a midst of neglect …

AFRICA BRIEFS

Jet-propel African dev’t with technology – Airtel MD Lucy Quist, Managing Director of Airtel Ghana and CIMG Marketing Woman of the year, has challenged Africans to “harness technology to transform the development of the continent.” Quist made the statement as a keynote speaker at the 23rd Wharton Africa Business Forum (WABF), an annual platform for business leaders across the world to interact and share insights about their areas of expertise and to inspire the next generation of world business leaders. The WABF took place on November 13-15 at the University of Pennsylvania Wharton Business School, Philadelphia, US. The event, organised on the theme ‘My Africa, My Story: Africa on the move,’ attracted over 600 participants. Quist cited specific examples of how the telecoms industry has enabled real innovation to offer solutions to local problems, enabling Africa to leapfrog in communications infrastructure and commerce through the use of technology. “We know that a large percentage of Kenyan’s GDP is moved through mobile money platforms,” she added.

Cocoa Initiative gets US$4.5 million grant to fight Ivorian child labour The International Cocoa Initiative (ICI) has been awarded US$4.5 million to reduce child labour in 50 cocoa-growing communities in Cote d’Ivoire over the next four years. ICI won the United States (US) government’s competitive funding opportunity with its ‘Eliminating Child Labour in Cocoa’ project proposal which is aimed at protecting children and promoting child-centred community development, thereby reducing child labour. The project will directly benefit 5,450 vulnerable children by providing them with access to formal and non-formal educational opportunities. There are currently 1.2 million children engaged in child labour in cocoa-growing areas of the country, according to the Tulane 2013/14 Survey released in July 2015. ICI will also help 1,500 vulnerable households by supporting livelihood services such as income generating activities for women, who are usually responsible for the care of children.

Sam Jonah takes over Liberian iron ore interests Liberian iron ore interests of diversified major BHP Billiton have been acquired by Cavalla Resources, a wholly-owned subsidiary of investment h o l d i n g company, Jonah Capital, a private company with a portfolio of assets primarily in the mineral resource sector in sub-Saharan Africa and owned by business mogul Sam Jonah. A press release stated that Cavalla has been granted the exclusive rights over the four exploration areas of Goe Fantro, Kitoma, St John River South and Toto, as Jonah Capital’s exclusive iron-ore holding company. Work has begun at Goe Fantro and the development of the other assets will follow in a phased approach. Scoping studies indicate that Goe Fantro can be brought into production by 2018 at a cost of between US$160 million and US$230 million to produce five million tonnes a year of 58 per to 62 per iron ore.

World Bank unveils US$16 billion Africa Climate Business Plan

Ethiopia: East and Central Africa’s largest importer of food Ethiopia has the largest economy in East and Central Africa and is one of the fastest growing economies in the world, registering six to ten per cent economic growth between 2004 and 2014 and a forecast of real GDP growth of 8.5 per cent in 2015 and 2016, stated the IMF. The Ethiopian agro-food, plastics and packaging industry attract massive private and public investment. Against the backdrop, the German trade fair specialists Fairtrade launch agro-food plastpack Ethiopia. The 1st International Trade Show on Agriculture, Food, Beverage and Plastics and Packaging Solutions and Technology for Ethiopia is scheduled on October 4-6, 2016 at the Millennium Hall, the most prestigious exhibition and conference hall in Ethiopia. The Heidelberg-based organisers have a wealth of experience in the agro-food and the plastpack sector as Fairtrade also have organised Iran agro-food in Tehran since 1994, with 947 exhibitors and 33,200 visitors in 2015, Plast & Printpack Algier 2014, with 150 exhibitors from 23 countries and 2,500 visitors and recently held Agro-food & Plast & Printpack Nigeria in Lagos in April 2015 featuring 91 exhibitors and 1,349 visitors.

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GHANA BUSINESS & FINANCE

The World Bank Group unveiled a new plan that calls for US$16 billion in funding to help African people and countries adapt to climate change and build up the continent’s resilience to climate shocks. Titled ‘Accelerating Climate-Resilient and Low-Carbon Development, the Africa Climate Business Plan’, it has been presented at COP21, the global climate talks in Paris, France, on November 30. It lays out measures to boost the resilience of Africa, its people, land, water and cities, as well as boosting renewable energy and strengthening early warning systems.

DECEMBER 2015

ECONOMY

ACTIVITY

COMMERCIAL ACTIVITY

Collections, Tithes, Harvests, Dues & Other Donations

NON -TAXABLE

Sales of Religious Tracts, Pamphlets, Icons & Artefacts

NON -TAXABLE (but onus on the church to prove not in competition with business)

Health Services

NON-TAXABLE (but onus on the church to prove not in competition with business)

Educational Services

NON-TAXABLE (but onus on the church to prove not in competition with business)

Trading

TAXABLE (for all trading activities unless proven that they are part of the core aims and objectives of the church and that the activities are not in direct competition with the commercial sector)

Welfare & Social Services for the Needy

ZERO-RATED (activities in this category will usually qualify for zero-rated taxation, that is, the church should be able to claim back tax paid (e.g. VAT) for the delivery of such services)

Hospitality, Education, Conferences, Training, Travel & Tours

See table 2 below

Table 1: Examples of taxable/non-taxable activities of humanitarian organisations in the UK

some churches and these activities need government intervention to ensure a level-playing field for commercial operators and businesses.

In the UK, to qualify for exemptions from taxation as a charitable/humanitarian organisation, there is a need to demonstrate beyond all doubts that the organisation’s activities are humanitarian; the main aim is not to make profit; the work is not in direct competition with commercial companies; and all profits made are used for the beneficiaries.

Churches in Ghana have taken a step further by engaging in direct trading and other ‘for-profit’ or ‘COMMERCIAL’ activities. It is, therefore, only fair and equitable to other commercial concerns that the churches that are engaged in these commercial activities are made to pay taxes on their ‘commercial activities.’

To define what constitutes charitable purpose is complex. This means there are considerable gaps between the public view of what is charitable and what the law recognises as charitable. Although Ghanaian laws may not be specific in defining what constitutes charitable purpose, 12

Are selfadvertisements of some of the prophets and church leaders endangering the image of religious personages and the church?

GHANA BUSINESS & FINANCE

the public perception on this is very strong and plays a major role on how the sector is supported locally. The behaviour of churches in Ghana is, and should be, a great influence in forming public opinion on charitable support and charitable giving. Definitions do matter because the position of the church as a charitable organisation within the charity sector is not expected to be static, for, it can change from one position to the other. There are two main definitions for the actions of the church within the charity sector because charities are seen as alternatives for the provision of social services to the statutory provision of these services; and extensions to what the state provides.

With the dramatic increase of charitable organisations in the developing world, it becomes all the more important to identify several broad areas within the so-called ‘third sector’ for the church to operate. An attempt to define the church as strictly ‘not-for-profit’ may be confusing because even charities are expected to re-invest any surplus funds as a means to achieving some sort of self-financing.

What distinguishes a ‘notfor-profit, activity from the business or commercial sector is that its income, that is profit, is wholly used for the benefit of its clients. Table 2 shows some of the popular activities undertaken by the churches in Ghana. There is the need to know whether they qualify for charitable status, and therefore, should pay taxes on profits or be exempt from taxation. The public agenda for churches in the developed world is almost the same as in the developing world. But there is an element of concern for the excesses displayed by the lifestyles of the leaders of the new

DECEMBER 2015

BANKING

Banks resilient despite macro-economic challenges

BY ADNAN ADAMS MOHAMMED

Players in the Ghanaian banking industry are taking tough decisions as the banks are facing challenges at a time when the overall economy of Ghana is weak in the macro-economic fundamentals. The effects of inflation, Cedi depreciation, rising public debt and increasing policy rate are wilting banks, yet many are persevering and doing well.

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ccording to the Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) recent report, the current economic conditions show that though monetary policy remains tight, some additional tightening is required to re-anchor the displaced inflation expectations. This, together with the on-going fiscal consolidation of the government, is expected to break the high inflation. The MPC indicated that current forecasts show that without any additional policy adjustment, inflation is likely to drift farther away from the target band and lengthen the forecast horizon into late 2017. Prior to the presentation of the 2016 budget, players in the banking industry joined their counterparts in other sectors to demand that government refrains from imposing additional taxes on the sectors in that budget. Yet the banking industry is one of the few doing well despite the current economic challenges.

Most banks operating in the country have been performing well, posting impressive profits for some time now. Their performance has led to calls for them to be taxed more for government to accrue more cash for the national kitty. The MPC increased its policy rate a 100 basis points. This means the central bank increased the rate at which it lends to commercial banks in the country from 25 per cent to 26 per cent. Speaking at a news conference recently, Dr Kofi Wampah, Governor of the Bank of Ghana, said the move was influenced by attempts to control increasing inflation. But financial analysts have argued that the 14

action by the central bank is likely to influence the cost of lending which may lead to hikes in the lending rates of the commercial banks.

Measured by the BoG Growth in bank lending to the economy, measured by the BoG on a year on year to basis, slowed sharply in July. The slow-down applied to both the private sector and public sector institutions. Annual growth in total advances over the 12 month up to last July, measured in nominal terms (using current prices), was 23.6 per cent down from 35.1 per cent in June and less than half of the loan book growth rate of 51 per cent recorded during the one year period up to November 2014. Even more instructively, annual growth in bank lending, measured in real terms (using constant 2012 prices), was 4.5 per cent during the 12 months up to July this year, down from a high of 26.8 per cent during the one year up to November 2014. Indeed, in volume terms, the total outstanding loans of the banking industry as at July were estimated at GHc27.4 billion. This was actually smaller than at any time since March when total loans outstanding amounted to GHc26.9 billion. The size of the banking industry’s loan book peaked at GHc29.8 billion in June before declining sharply over the next month.

Interestingly, the banking industry’s sudden sharp fall in enthusiasm to lend is not particularly because of the relatively high yields on short- term government Treasury bills which have offered interest rates of over

GHANA BUSINESS & FINANCE

25 per cent for well over the past year.

Loan quality, however, is falling again in the wake of the difficult operating environment for businesses. This appears to be a major reason for the banks’ current reluctance with regard to lending. The banking industry’s non-performing loans (NPL) ratio as at July was 13.1 per cent, up from 11.2 per cent for both May and June.

This is the highest NPL ratio in the past couple of years and it illustrates the increasing difficulties the banks are facing with regard to their lending activities. Nevertheless, the banks have also resisted the temptation to raise their lending rates in response to rising loan repayment defaults.

The banking industry’s average lending rate for both July and August was 27.9 per cent, and this is actually lower than the 29.0 per cent which prevailed between December 2014 and June 2015. However, it is instructive that the spread between the average lending rate and the benchmark 91-day Treasury bill rate has widened from just 0.7 per cent as at October and November 2014 to 2.7 DECEMBER 2015

FINANCE

Mobile money moots financial inclusion in new terrain

BY MASHOOD KUNATEH

The recent growth of mobile money services is transforming the lives of millions of Ghanaians previously excluded from the country’s financial sector. The services are a fast, simple, convenient, secure and affordable way of transferring money, making payments and doing other transactions using a mobile phone. They have grown significantly since their advent four years ago.

They now have about 7.17 million clients. Previously, it was almost impossible for non-bank account holders to receive money from anywhere.

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ow, there are four mobile money service providers: MTN Mobile Money, Tigo Cash, Airtel Money, and lately, Vodafone Cash. Elly Ohene-Adu, Head of Banking Services and Payment Systems Oversight at the Bank of Ghana, says the mobile money service has helped to boost the number of financial account holders in the country to 35 per cent up from 29 per cent in 2011. Furthermore, active usage by subscribers increased from 23 per cent in 2013 to 35 per cent in 2014. According to World Bank’s Global Findex 2015 report, 13 per cent of Ghanaians, of a total population of 25.9 million, now use a mobile money account, compared to 12 per cent in Sub-Saharan Africa. The Findex indicators show that while two per cent of adults globally use a mobile bank account, more than 12 per cent of adults do so in 13 African countries.

In five of the countries – Côte d’Ivoire, Somalia, Tanzania, Uganda and Zimbabwe – more adults have a mobile account than an account at a financial institution.

Putting “clients at the centre” of thinking by financial service providers will accelerate financial inclusion in the years ahead. It will allow hundreds of millions of people to save, transfer and borrow money without fear. It will lead to improvements in their livelihoods and those of their communities. In an 18

effort to bring mobile money services to the doorsteps of subscribers, the four mobile operators have partnered a number of local banks, including Access Bank, Agricultural Development Bank, Cal Bank, Ecobank, Fidelity, GT Bank, Universal Merchant Bank, Stanbic, United Bank of Africa and Zenith.

The services are available across all Metropolitan, Municipal and District Assemblies (MMDAs) and key villages and towns in the country. They are also available in over 100 telecom network service centres and over 20, 500 mobile money merchants doted across Ghana.

To add up, the mobile money services enable customers with the help of partners like Lyca, WorldRemit, Xpress Money and several others to receive money from abroad instantly on their phones. In addition, Ghanaians abroad are able to send money to their relatives and friends via the service.

Mobile money users Mobile money users can pay their satellite television and electricity bills, school fees, purchase airline tickets, as well as pay for goods purchased at Melcom Plus, Max Mart and on online shops, among others, in the country. Thousands of unemployed Ghanaians are now in work, thanks to the technological advancement. Tigo Cash provides employment for over 7,000 Ghanaians across the country, according to officials of Tigo Ghana,

GHANA BUSINESS & FINANCE

operators of the mobile money service.

Seth Gideon Attisogubi, owner of Seth Ventures and a Tigo Cash agent at the Kwame Nkrumah Circle in Accra, says after sending several applications for job placement and getting nothing, he signs on to Tigo Cash in September 2011. Attisogubi narrates how he starts the business with a paltry capital of about GHC200. “But God being so good and wonderful, I have become a business man now,” he beams with a smile. He recollects that the initial days were very difficult because the business was moving at a snail pace. The 29-yearold graduate of Accra Polytechnic also attributes the slow nature of the mobile money business to the fact that the customers did not understand how the Tigo Cash platform was operated.

No confidence and trust “My brother, I can tell you some customers did not have confidence and trust of doing large transactions. Trust was a big concern to my customers, DECEMBER 2015

COVER

No budget over-spending in 2016?

BY AYUUREYISIYA KAPINI ATAFORI

“Despite being an election year [2016], let me also reiterate President [John] Mahama’s assurance of sustaining fiscal discipline whilst investing prudently in infrastructure and social development. We will resist the temptation of election year overspending,” Finance Minister Seth Emmanuel Terkper told Parliament on November 13 when he presented the Budget Statement and Economic Policy of the National Democratic Congress (NDC) government for 2016.

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erkper stated that the vision and commitment of the government over the medium term is to build a sustainable, prosperous and equitable society in line with its social democratic agenda. “This vision is anchored on the thematic areas of the Ghana Shared Growth and Development Agenda (GSGDA) II, 2014-2017 and, particularly, on the Government’s priority of:

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Putting People First; Building a Strong and Resilient Economy; Expanding Infrastructure; and Ensuring Transparent and Accountable Governance,” he said. He said the recent setbacks from commodity price shocks did not reverse the government’s course on fiscal consolidation. “We are returning to another growth path and our fiscal performance so far clearly shows that we can plan to manage and reverse periodic setbacks as and when

GHANA BUSINESS & FINANCE

they occur,” he added.

The fiscal deficit conundrum has defied solution as all governments in election years since 1992 when multiparty democratic governance took sway in Ghana with the advent of the Fourth Republic supervised budgetary over-runs. A fiscal deficit occurred in 2012, and its impact is still being felt today. “We have also remained resolute in our commitment to correcting the major budget overruns which occurred

DECEMBER 2015

INDUSTRY

Improving light manufacturing

BY ANTHONY SEDZRO

Manufacturing is widely considered as the ideal subsector that will drive Africa’s development. Africa’s share of global manufacturing output is about 10 per cent despite the continent being endowed with many natural resources. Thus Africa has become an import-dependent continent. In 2013, Africa imported US$240 billion worth of manufactured goods compared to US$66 billion worth such products that were exported from the continent, the KPMG 2014 Manufacturing report shows.

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hana imports majority of its products and inputs in almost all sectors. The country imports US$500 million worth of rice annually, encouraging a profitable enterprise for the importers. This constantly puts pressure on the Ghana Cedi. The Cedi has depreciated about 17 per cent to the dollar this year. The Cedi fell some 30 per cent against the dollar last year, compelling the Bank of Ghana (BoG) to take drastic

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foreign exchange measures to stem the fall. Ghana, in particular, and Africa as a whole, needs to industrialise to transform its economy.

Before Ghana can become an industrialised economy, it needs to start gradually - from a light manufacturing base into a heavy manufacturing one.

Majority of African manufacturing enterprises are focused on final product assembly, according to the African Economic Outlook, rather than primary processing or intermediate

KEY MANUFACTURER

PRODUCT CATEGORY

COMPANY ORIGIN

Unilever, Nestle, PZ Cussons, Fan Milk

Fast moving consumer goods

Anglo/Dutch, Denmark

Guinness Ghana, Accra Brewery, Coca Cola Bottling Co., Kasapreko Co. Ltd., Voltic Ghana

Beverages and bottled water

Ireland, Ghana and various

DanAdams Ltd., KAMA Industries, Kinapharma

Pharmaceuticals

Ghana

Ghacem, Diamond Cement

Cement

Ghana & India

Blue Skies, Olam Ghana

Agribusiness

Ghana & Singapore

Interplast, Duraplast, Blowplast

Plastics

India

Mahindra Ghana, JA Plant Pool

Vehicle assembling

India, Ghana

GHANA BUSINESS & FINANCE

input production. World Bank Economist Hinh Dinh claims: “… the history of economic development is such that any country would need to start producing basic household goods.

Over time they moved to higher value goods. No country in the world has developed without producing light manufacturing. And no country can skip it.”

Light manufacturing is the first stage to industrialisation. Light manufacturing involves the production of basic goods and value addition to primary products. After that, Ghana can move into producing secondary and heavy manufactured goods. So how can Ghana build a light industrial base?

There are many blueprints from African countries that Ghana can copy. Ghana has gold, diamond, bauxite, timber and hydrocarbons. Ghana has to attract foreign direct investment to add value to its natural resources.

Credible gold refinery The country has been mining gold

DECEMBER 2015

DIPLOMACY

Turkish humanitarian initiatives improves African lives

BY FERIDUN HADI SINIRLIOGLU

Souleiman is a Darfuri young man who had to leave his province for Khartoum, the capital of Sudan, in 2004. Sheltering in the outskirts of Khartoum, he did not have the chance to receive proper schooling.

Lacking a vocational skill, he was unemployed for most of the time, and most of his life. In the spring 2013, Souleiman came to know that there was a vocational training centre established by the Turkish Cooperation and Co-ordination Agency (TIKA) which is run in collaboration with the Governorate of Khartoum.

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ouleiman attended a climatisation course for six months. Upon completing the training programme, Souleiman started working at one of the largest air conditioning firms in the city. He now makes a living for himself and supports his extended family. He is one of over 1,500 young men who received vocational training at the TİKA centre.

Chagina, widowed with three children in early 2008, had to take over the business of selling fish in the local market in Kisumu County on the shores of Lake Victoria from her late husband.

Lacking the means to pay for the fish, her family had a scanty livelihood.

Later, she participated in the project of ‘Empowerment of Fisher-women in Lake Victoria’ initiated by TİKA. In collaboration with the Governorate of Homa Bay in furthering the good practices, TİKA delivered 15 boats and the necessary equipment, leading to the employment of 45 local women in fishing in the lake. Chagina was one of them. She now supports her children and has become an alternative wholesaler for fellow women who buy fish and sell in the local markets.

These are two examples of many humanitarian initiatives which Turkish development assistance has drastically improved the lives of many Africans. The humanitarian approach, one of the fundamental components

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of Turkey’s foreign policy, has been pursued with determination and success in Africa. Fully conscious of collective global responsibilities such as fighting extreme poverty, providing education for all, improving the lives of women and the youth and alleviating the challenges in conflictaffected areas, Turkey upholds a holistic approach based on a combination of humanitarian and development assistance, without prioritising either of the two. In this regard, and in line with the needs of the African peoples themselves, health, education, capacity building, contribution to peace and stability in Africa by participating in

GHANA BUSINESS & FINANCE

United Nations (UN) missions and organising training programmes in the field of security have been designated as priority areas for Turkey.

African doctors and nurses In the health sector, Turkey not only organises vocational training programmes for African doctors and nurses; it also provides medical screening and treatment on the ground in addition to free treatment for thousands of patients who cannot get medical treatment under local conditions. In addition, Turkey built two large state-of-the-art hospitals in Nyala (Sudan) and Mogadishu

DECEMBER 2015