A
M
O
N
T
H
L
Y
M
A
G
A
Z
I
N
E
FEBRUARY 2015 / ISSUE 045 GH¢10.00
Tigo targets number one spot for digital innovation
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
Head Ofce: 3rd Floor Ghana Olympic Committee Building P. O. Box MB 493, Accra, Ghana Phone: 0302 034668, 0302 035027, 0243690520 Facsimile(+233-302) 234664/671725 e-mail:info@edafgh.org Ho Zonal Ofce: EDAIF Ofce 2nd Floor, Atsu Briggars Plaza Muvie Street Ho Tel: 0362027773 Fax: 0362028392
EDAIF Annex: 3rd Floor VALCO Trust Fund Building P.O. Box MB 493 Aaccra,Ghana. TEL: 0302671583/4 FAX: 0302671569
Tamale Zonal Ofce: Gumani New Road, Tamale Tel: 037 28052-4 www.edaifgh.org
Takoradi Zonal Ofce: 1st oor Arccu House 4/10 Lorna Avenue Top Ten Tel: 0312002262 Fax: 0312002263
Kumasi Zonal Ofce: 1st Floor City Style Building Hudson Street Amakom P. O. Box AS 8165 Kumasi Tel;0578594351
CONTENTS ISSUE 045 / FEBRUARY 2015
16 Agriculture Agriculture contributes a lot to Ghana`s GDP. Little-existing large-scale commercial farming is touted for increased production in the sector.
20 Exhibition Ms Roshi Motman, Chief Executive Officer, Tigo Ghana
6
Briefs Highlights of events that trended the business and financial circles in Ghana and the world during the past months.
10 Trade The Cotonou Convention seeks to promote the economic, cultural and social development of the ACP states, with an overarching aim to foster peace and security.
14 Industry Free zones enclaves give opportunity to entities operating within them to enjoy tax holidays. The announced tax increment has not been implemented, and it has led to unfair competition between free zones enterprises and the companies operating outside the enclaves.
A two-day exhibition of Konica Minolta`s office documentation and print production machines was eventful.
22 Science & Technology Ghana is currently suffering a shortage of electricity which has affected every facet of the economy. An expert analyses the need for nuclear energy to be used to solve the energy deficit.
26 Conference The recently held 3rd Ghana Business and Economic Strategy Conference (EOBS2014) lived up to expectations as it was billed. The event assembled the crème de la crème in the public and private sectors, civil society, diplomacy and foreign investment who brainstormed on sustainable export growth.
32 Cover
and for sand winning and sand mining, can be turned into an eco-tourism attraction to fetch foreign exchange.
42 Outlook
In-depth analysis of the informal economy, with Europe as a point of reference, indicates that it is widespread globally, and persistent.
44 Regional Integration
It is often said that when Nigeria sneezes, the whole West Africa catches cold. So the outcome of the sub-regional giant’s 28th March election may affect the rest of the countries. May be not!
52 Events
Know where, when and how to attend conferences of your choice.
53 Stats & Indices
Figures speak louder than words for the economy.
54 Commodities
Check prices of agricultural produce in some local markets, as researched and compiled by Esoko.
Tigo Ghana, under the able leadership of its new CEO, Roshi Motman, has rolled out a series of strategies, programmes and projects to lead the mobile telephony industry as the number one brand in digital innovation.
38 Tourism Industry: Page 14
Ghana`s 550-kilometre long coastline, which is used for garbage- dumping and defecating,
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.
4
GHANA BUSINESS & FINANCE
Regional Integration: Page 48
linkedin.com/GhanaBusiness&Finance facebook.com/GBandF @ghana_business
FEBRUARY 2015
General Manager Josiah Spio-Garbrah jspiogarbrah@ghanabizfinance.com adverts@ghanabizfinance.com +233 264 510 396 Acting Editor Ayuureyisiya Kapini Atafori editor@ghanabizfinance.com Staff Writer Kweku Darko Ankrah kdankrah@ghanabizfinance.com Columnists Jerry Halm Yvonne MacCarthy Julius Caesar-Tokoli Contributors Martin Luther C. King Oppong Baah Anthony Sedzro Georgina Adjei Art-Graphics & Design Manager Benjamin Tetteh Photography & Production Daniel Sackey Yobo Circulation & Subscription Jeffrey Dapaah 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 info@ghanabizfinance.com Brand Advisor Dmax Studios in Malta, EU. (www.dmax.tv) Credits
GNA Daily Graphic radioxyzonline.com Mergermarket Group ghanabusinessnews.com
myjoyonline Bloomberg citifmonline Corporate Council on Africa
Ghana Business & Finance magazine is published by
FEBRUARY 2015
For Heaven’s sake, the current shortage of electricity must be solved immediately. Immediately because electricity is the life-blood of every modern economy. Immediately because the power shortfall is making Ghana’s overall productivity to plummet. In fact, immediately because the lack of electricity is monstrously affecting all facets of life today. Power rationing and unscheduled black-outs have constrained hospitals from midwifing pregnant women; so the hapless expectant mothers and their unborn children joined the majority. Businesses under-perform and make less profits due to unavailable or inadequate power. Companies give hard-working employees the sack because there is no electricity to continue production. These anti-economic growth situations must not continue. Given the all-importance of adequate availability of power, it should not take the government so long to solve the shortage. It may well be good news that the government has announced short- and long-term plans to resolve what a good many experts and commentators have termed ‘the energy crisis.’ Actually, what the present challenge should best be described is: ‘the electricity shortage.’ In Ghana, the fact is that there is no dearth of fuels like petrol, diesel, kerosene, premix, Liquefied Petroleum Gas (LPG) and others which, like power, provide energy, or constitute sources of energy. Thus the mechanisms that the government intends to put in place will increase the production and supply of electric power, and not the whole gamut of the sources or types of energy. When some of the planned power projects are completed, it is expected that the country will hit its target of 5,000 megawatts (MW) in 2016. As a stop-gap measure to increase the supply of electricity and reduce the black-outs in the short term, the government is importing emergency power barges from Turkey. The emergency plants will arrive in April. Each power barge will reportedly add 225MW, making a total of 450MW, to the current total installed capacity of about 2,845MW. In the short term, the ongoing expansion works on the Takoradi International Company (TICO) plant in Aboadze; the two-unit Kpone Thermal Power plant; and the Trojan Power project, which will produce 140MW, 220MW and 25MW respectively, are expected to be completed before the end of this year. These projects will increase generation to a total of 3,550MW. Also, power generation by the Sunon-Asogli plant is expected to increase as gas supply would be upped. When the Atuabo gas processing plant fully takes off and provides the gas-powered plants with adequate gas, the current problematic load shedding exercise will be improved. Already, on January 29, the sod had been cut for the construction of a 350MW-plant by Cenpower Generation Company Limited (Cenpower), a special purpose vehicle created to develop the Cenpower Kpone Independent Power Plant in Kpone, near the industrialcum-port city of Tema. The construction of a 360MW-plant by Jacobsen Electro, which will begin soon, together with the Cenpower plant, are slated for completion in 2017. As part of the long-term measures aimed at supplying sufficient electricity, the government is diversifying the country’s generation mix of hydro, thermal and renewables to include the use of coal to power plants. For instance, GENSA-Chirano Mines is building a 30MW coal plant which will be completed soon. Volta River Authority (VRA) and Shenzhen Energy Group, the majority shareholder of Sunon-Asogli, have signed a contract to develop a total of 1,200MW from a coal plant which is expected to be completed in 2018. In its drive to diversify the generation mix, the government should seriously consider increasing the generation of solar power. No matter the apprehension, it should also explore the addition of power from nuclear energy to the mix, in the long term. New power projects should be undertaken under public-private partnerships (PPPs). Independent power producers (IPPs) require an attractive tariff regime, so it is incumbent on the government to provide incentives and create conducive environment for the IPPs to operate. When the planned projects come on board, and some of the above-mentioned suggestions are carried out together with the effective and efficient management of the production, transmission and distribution of electricity under the impending second Millennium Challenge Compact, Ghana will become a net producer of power and a hub in Africa by 2020. Collectively, these projects are destined to make the current electricity shortage a thing of the past which Ghanaians may never experience. Until that occurs, the ‘dumsor’ will continue to wreck serious havoc on many aspects of their lives.
Ayuureyisiya Kapini Atafori
Letters to the Editor
Acting Editor (+233 024 2385374)
editor@ghanabizfinance.com
send your letters to the editor at
GHANA BUSINESS & FINANCE
5
EDITOR’S SUITE
Should solving the electricity shortage take that long?
BRIEFS
I&P opens new office, and celebrates 2nd investment
Investisseurs & Partenaires (I&P), a leading private equity investor in African Small and Business Enterprises (SMEs), has opened a new office in Ghana and announced its second investment in Ghana. This is to demonstrate I&P’s commitment to strengthening its footprint in Anglophone Africa. Ghana is the first English-speaking country where I&P has opened an office. The new local office is headed by Baafour Otu-Boateng. Speaking at the launch, JeanMichel Severino, a former Vice President at the World Bank and former Chief Executive Officer (CEO) of Agence Française de Développement, remarked that Ghana has been chosen as the first place to enter the Anglophone market because it is a major West African country with
a solid track record of growth. “As it is the case across all of Africa, SMEs need more support to emerge and thrive and I&P can bring to the Ghanaian market its successful experience of investing in 60 SMEs across the continent, but we can also learn a lot in this dynamic market that will benefit our network of portfolio companies,” he stated. Mr Severino, who is the global CEO of I&P, said over the past 13 years, I&P has invested in close to 60 businesses in Africa, including agribusiness, construction, microfinance, pharmaceuticals and services, and with 65 million euros under management in its two investment funds (IPDEV and IPAE). I&P invests and works in partnership with SMEs to fulfill its mission of promoting a new generation of African entrepreneurs. “Currently, I&P’s portfolio in Ghana include two investee companies: Voltacars Rental Services (VRS) and Eden Tree Limited. VRS is a longterm rental service company. The
company was founded in 2003 and now manages a fleet of 120 vehicles as a highly-competitive partner for multinational firms such as Total and Tigo. For over 15 years, Eden Tree has been the leading independent provider of fresh fruits, vegetables and herbs in Ghana, relying on a network of over 375 out-grower farming families. This investment has been approved by I&P Investment Committee and is currently being closed. Said Severino: “IPAE is a private equity fund whose investments range from 300 000 euros to 1.5 million euros as an active, minority shareholder and is impact investor seeking to partner with talented Ghanaian entrepreneurs to drive the strong, sustainable and responsible growth of their businesses,” said I&P is a family of investment funds created in 2002 by Patrice Hoppenot and it has so far funded three companies in Anglophone Africa, namely in Namibia, Kenya and Uganda.
Manufacturing records -8 per cent growth in 2014
The worsened perennial energy crisis has seriously hit the manufacturing sector, leading to negative 8 per cent growth. The alarming situation has resulted in the Association of Ghana Industries (AGI) pressurising the managers of the power sector to come up with a “short term, time bound action plan” to resolve the energy crisis to save industries from collapsing. Lack of power came up tops among the major challenges facing
8
businesses in the 2014 fourth quarter results of AGI’s business barometer report. The situation, it said, led to the manufacturing sector registering an “unprecedented minus eight percent” growth in 2014. At AGI’s National Council’s Strategic Workshop held on January 29 to February 1, the association took a critical look at the situation and issued a communiqué which called for strong efforts to bring about relief. “As a matter
GHANA BUSINESS & FINANCE
of urgency, the Ministry of Energy and the Energy Commission should make available the strategic national energy plan – 2015 to 2030 – and also the five-year energy sector strategic development plan covering 2015 to 2020, should be released alongside for purposes of effective implementation and monitoring,” AGI President, James Asare-Adjei, said. As a result of the current power rationing, the AGI advised its members to re-arrange their operations. “For example, if you work a straight-day shift and you know that you will get power in the night why don’t you arrange so that you can work in the night?” Asare-Adjei said. “If you are not used to doing what we call the 21/10 system, why won’t you just learn to do that such that any time power is available you produce? … Because of the ‘dumsor-dumsor’, prices of generators have risen remarkably. The ones that typically sold at GH¢400 now sell at GH¢450, and the issue is since most businesses rely on power it makes sense for people to come in for the generators,” he said.
FEBRUARY 2015
INDUSTRY
Why has reviewed tax for free zones enterprises not been implemented? BY ADNAN ADAMS MOHAMMED
Since the creation of free zones enclaves, enterprises operating in the enclaves enjoy a ten-year tax holiday as an incentive. After the holiday, the free zones companies are limited to a tax rate of not more than eight per cent of chargeable income in line with the rate applicable to income from non-traditional exports of domestic companies. The free zones enterprises are permitted to offload 30 per cent of their goods or services onto the domestic market. The income from the transactions also attracts the eight per cent tax rate whilst their local counterparts which have a mix of exports and domestic transactions pay tax at a higher rate. This gives goods brought into the domestic market by free zones enterprises an unfair advantage over those produced by the non-free zones enterprises.
told GB&F that the Board has not received any official communication from the Ministry of Finance on the implementation of the tax policy. The source said, “In my personal view, I do not see anything wrong with the policy directive captured in the 2014 budget statement. But as to the implementation, I have not heard anything yet.” A careful examination of the 2015 Budget Statement and Economic Policy showed that no policy to that effect was captured. This creates room for some critical questions. Is the government committed to implementing the policy it has spent resources on? The President of the Ghana Chamber of Commerce and Industry, Dr Seth Adjei Baah, in an interview with GB&F, recalled that the policy has been in existence for some time but it was not implemented. “It is not a new policy. It has been there long ago just that the implementation has not been effected. So may be the government now wants to ensure that the policy becomes effective,” Dr Baah expressed.
Local industries have complained of the competitive edge given to free zones enterprises which has strongly impacted negatively on local industries not registered as operators in the free zones. Since the free zones enterprises pay fewer taxes comparative to the local industries, it makes them more costeffective and they place their goods or services at a lower price to make the local producers uncompetitive. To even the playing field, the government in 2014 proposed “an increase in corporate
He said the implementation of the policy was long overdue in order to ensure a fair playing field for all players. He explained that the challenge to the implementation of the policy has been that the free zones enterprises are not found at a particular place. They are scattered and it is difficult for the Customs Division of the GRA to identify them to ensure that the 30 per cent products that the free zones enterprises are allowed to offload unto the domestic market are taxed. The
14
income tax rate of free zones companies selling on the local market from 8 to 25 per cent – to prevent discrimination against firms marketing all their output on the domestic market." How did the policy actually play out? Follow-ups on the status of the implementation of the policy revealed that it has not yet been implemented by the Ministry of Finance, Ghana Revenue Authority (GRA) and the Ghana Free Zones Board (GFZB). A very reliable source at the GFZB
GHANA BUSINESS & FINANCE
FEBRUARY 2015
AGRICULTURE
Large-scale commercial farming suffers amidst abundant land BY OPPONG BAAH
16
GHANA BUSINESS & FINANCE
FEBRUARY 2015
SCIENCE & TECHNOLOGY
Adding nuclear power to Ghana’s energy mix BY NANA AMA BROWNE KLUTSE (Ph.D)
The concern for Ghana deciding to go for nuclear energy has been in the news headlines for some months now. Few questions raised from these concerns include how prepared is Ghana and how will the Ghana Atomic Energy Commission (GAEC) and the government deal with the waste from the nuclear plant in order not to cause harm to the people. Almost all enterprises ranging from space exploration to a banal activity like feeding an infant have their associated risks. Risks exist in the safety, health, environmental, security, quality and economic aspects. The generation of nuclear power is no different. In most cases, concerns regarding nuclear power risks are misconceptions and exaggerations which are largely fuelled by international politics. Never have such risks prevented the developed countries from developing nuclear technology. In Africa, however, discussions about generating power from nuclear energy invoke so much fear that most countries, including
22
Ghana, have abandoned nuclear power projects (not excluding the idea of undertaking such a project) irrespective of the advantages. Imagine that one kilogramme of uranium, the main fuel for nuclear energy, can illuminate fourteen 100watt light bulbs for 10 years. Compare this to the same amount of natural gas and coal which can light the same number of bulbs for just 10 and 6 hours respectively. This means, in terms of electricity production, nuclear energy is more efficient, powerful, reliable and cheap. Additionally, it is more environmentally clean in the sense that production of electricity from nuclear
GHANA BUSINESS & FINANCE
energy does not result in the release of Greenhouse gases, which are known to cause global warming and ozone layer depletion. More so, nuclear waste is a well-managed material. At present, Ghana is facing a serious energy deficit with its negative consequential implications on various sectors of the society. In order to reduce the energy deficit and possibly develop the capability of generating additional capacity to meet future national energy requirement, various energy sources are being considered. Among the energy generation sources, nuclear-powered energy source appears to be the Holy Grail. Unfortunately, nuclear-sourced energy is less appealing to Ghanaians due to various concerns. For this reasons, efforts are being made to generate public interest in nuclear power production. This will lead to its eventual addition to Ghana’s future energy mix. This presentation attempts to give a brief overview of the production of electricity from nuclear energy as part of efforts toward the promotion of nuclear energy in Ghana. The concerns regarding safety and nuclear waste management will also be highlighted.
FEBRUARY 2015
CONFERENCE
Brainstorming sustainable exports at 3rd EOBS conference BY AYUUREYISIYA KAPINI ATAFORI
The Third Economic Outlook and Business Strategy (3rd EOBS 2014) Conference was well patronised, as anticipated by the organisers of the premier annual economic and investment event in Ghana. People from many afield as economic management, export, industry, agriculture, commerce, banking and finance, investment, technocracy, diplomacy, academia, youth empowerment, politics, the media and civil society converged at the de luxe Best Western Premier Hotel in Accra on January 21.
L
ocal attendees and the delegates from about 34 countries relished the discourse which was generated by the crème de la crème of the public and private sectors in Ghana. The topics for discussion were memorable not only for their contemporary aptness and urgency but also for their linkage to the theme of the conference: ‘Diversifying Ghana’s Economy through Sustained Export Trade.’ EOBS 2014 came off at a time that the government has inaugurated a committee to pursue the promotion of the production and patronage of made-in-Ghana goods and services, and the exportation of 26
surplus local products. Any exportoriented business person who was not at EOBS 2014 really missed a lot of good speeches, strategies and suggestions that would bolster his or her operations. The seasoned speakers were on point in terms of the current relevance of each topic. Kick-started with an address by Mr Kwadwo Ohemeng Asumaning, Chairman of Africa Business Media (ABM), organisers of EOBS 2014 and publishers of GB&F, all the presentations at the full-day conference were superbly delivered. Mr Asumaning noted that the structure and foundation of Ghana’s economy were vulnerable since they were influenced
GHANA BUSINESS & FINANCE
and controlled by changes in global commodity prices. He proceeded to inquire: “Can Ghana meet its social and economic needs and wants, now and in future, with the way our economy is structured? Can we still accept the practice of massive importation to drive Ghana’s economy?” He explicated that it was in essaying to discover answers to these question that ABM decided to organise the 3rd EOBS to provide a platform “for honest and rigorous debate on the way forward for sustaining the Ghanaian economy.” Ascending the podium, Hon. Dr Ekwow Spio-Garbrah, Minister for FEBRUARY 2015
COVER
WINNING THROUGH QUALITY AND EXCELLENCE BY KWEKU DARKO ANKRAH
Tigo, Ghana`s oldest mobile operator and a pacesetting universal mobile telecommunications giant, has embarked on an ambitious drive to roll out a series of programmes, strategies and projects to recapture the mobile telephony industry as the number one brand for digital innovation. This ambitious programme has seen Tigo recently releasing world-class quality services in the form of: • Infrastructural development in area of huge capital investments to improve their network quality and resilience • Innovative product and marketing campaigns including Tigo Music • A robust corporate social
32
responsibility (CSR) couched in youth entrepreneurship programmes for Ghanaians. All these services and more will see Tigo customers enjoy high quality and stress-free services unprecedented in the country.
GHANA BUSINESS & FINANCE
FEBRUARY 2015
TOURISM
Developing Ghana`s filthy coast for tourists BY KWEKU DARKO ANKRAH
38
Globally, coastal tourism is currently one of the fastest growing sub-sectors in the tourism industry. In Ghana, this is evidenced in the rapid pace of the development of resorts and vacation homes along the country’s 550-kilometre long coastline. The development of infrastructure, coupled with availability of beaches and great tidal waves, has offered Ghana a rare opportunity to host the Africa Surf Series 2015. The event will attract surfers from Africa and dispersed surf communities across the globe to enjoy the thrill Ghana`s beautiful, expansive and wavy coast offers.
GHANA BUSINESS & FINANCE
FEBRUARY 2015
REGIONAL INTEGRATION
Will the outcome of Nigeria’s polls affect economic growth? BY MARTIN-LUTHER C. KING
Nigeria’s March 28 presidential election offers the country’s main opposition political party the first realistic chance of wresting power from the governing People’s Democratic Party (PDP). Whichever party wins the election, it is uncertain whether the Nigerian economy will continue its path of growth. The PDP has been in power since 1999 when the military government of Major-General Abdulsalami Abubakar handed over power to the party’s elected presidential candidate, General Olusegun Obasanjo, a former Head of State. The coming poll is the West African country’s fifth successive general elections in the last sixteen years. At issue in the poll are the fault lines of ethnicity, region and religion which run deep in the former British colony. Though the three socio-political variables are prominent in the scheme of the politics of this country of 170 million people, the state of the economy is not left out. It is real that virtually every part of the country has an institutionalised memory of injury or sense of injustice they feel will best be addressed only if one of their own wields power as the president. There is also a pervasive fear that whoever emerges president will abuse the office to privilege his/her region, ethnic group or religion at the disadvantage of other interested regional and ethno-religious groups.
44
The election is a two-horse race between the PDP and the main opposition party, All Progressive Congress (APC), the political party formed in February 2013 from a merger of three ethnically- and regionally-based parties. Before the emergence of the APC, opposition parties were mostly fragmented along regional and ethnic lines, making it impossible for them to mount a credible challenge to the PDP. General Muhammadu Buhari, a
GHANA BUSINESS & FINANCE
Muslim and former military Head of State with a cult following in the north of Nigeria who is the APC’s presidential candidate, is squaring it off against incumbent President Goodluck Ebele Azikiwe Jonathan. Each presidential contender promises to make Nigeria an El-Dorado, but without much details about how he will achieve this goldendowed place. The APC promises to pay unemployment benefit of between US$25 and US$50 per month to the poorest 25 million Nigerians - a total of between US$5 billion and US$10 billion; provide free primary education plus a free meal; create 720, 000 jobs per annum; and construct millions of public housing. PDP’s President
FEBRUARY 2015