GB&F JANUARY 2016

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JANUARY 2016 / ISSUE 056 GH¢10.00

The uncharitable market of business & financial magazines, and how GB&F beats them all

Ps Are PPcea pana ana’s for Ghtructure infras ficit? de

Ghana:

Time to industrialise, or be doomed 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 056 / JANUARY 2016

article dissects how hidden taxes, rising policy rates and inflation culminate in low investor confidence, and further lead to decline in the value of the Cedi.

38 Industry

As part of GB&F`s series on industrialisation, Anthony Sedzro meets face-to-face with manufacturers and entrepreneurs to find how their activities are helping transform Ghana`s agrarian economy to an industrialised economy.

24 Media

GB&F editor Ayuureyisiya Kapini Atafori microscopically unpacks the publishing business in Ghana, with specific reference to short-lived and infrequent business and financial magazines.

He examines GB&F’s odyssey as a true monthly and how the magazine weathered the storm to survive continuously for five years, and win two awards consecutively.

Front Cover: H. E. John Dramani Mahama President of the Republic of Ghana

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Brief

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

10 Economy

This is Part II of Roselyn Byrne`s article on the new trends in the activities of the Ghanaian churches with regard to their participation in profit-making ventures in almost all the sectors of the economy. This raises the need for them to be taxed.

14 Corporate Progress

Businesses that make conscious efforts to embed customerfriendliness in their mission statements are deemed the best performers. Columnist J. N. Malm discusses the concept of customer-friendliness in mission statements and its implications.

16 Banking

Lack of credit, one of the most serious constraints which affect exporters and importers in Ghana, will soon be a thing of the past. The government seeks to pass a law that will establish the Ghana Export and Import Bank by the first quarter of this year to support the export-import sector.

Ghana`s educational system has been faulted by critics for using models that reinforce the colonial approach of producing literate followers. Instead, it is necessary for a radical change to produce thinkers.

44 SMEs & Microfinance

32 Development

46 Transport

Applying nuclear technology to preserve and protect food ensures safe and secure food supply.

Ghana is advised to adopt the technique for its food security.

Public-Private Partnerships (PPPs) have been globally acknowledged as one of the mixed methods in the development matrix for transforming economies. This article analyses the theoretical concepts of PPPs and how Ghana has fared so far in their implementation.

34 Cover

Ghana`s economy is importdependent, and analysts have stressed that the country would have to industrialise to generate economic growth, or be doomed.

The need to find workable solutions to make industrialisation serve as the impetus for the country’s growth forms the basis of this year`s Ghana Economic Outlook & Business Strategy Conference (EOBS).

A review of the planned Ghana Export and Import Bank, and the possibility that it may not address the problems of SMEs and exporters.

The global aviation industry is currently enjoying massive gains in profitability as a result of sound management practices. GB&F Senior Staff Writer Kweku Darko Ankrah finds out how Ghana can strategise to leverage the international air-flying boom.

52 Automobile

The Korean international automaker, Hyundai Motors, has debuted its new classy, sporty and sleek SUV, Hyundai Creta, in the Ghanaian market. Creta offers the best of driving comfort to customers.

56 Events

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

57 Stats & Indices

Figures speak louder than words for Ghana`s economy.

58 Commodities

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

Industry: page 38

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.

JANUARY 2016

28 Science & Technology

21 Finance

Investor confidence in Ghana`s economy has taken a downward trajectory in recent times as a result of a myriad of reasons. This

42 Business & Management

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

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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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Potpourri of contentious issues to persist in Ghana Before this year started, you need not be a crystal ball gazer to entrance into the womb of time and know that 2016 is a momentous year for the world.

At the global level, the US, the world’s leading economic and military power whose policies make most parts of the international community to catch cold, will choose a President in November. There is no use for GB&F to posit that the elected President’s actions, inactions and ‘mis-actions’ will reverberate positively and/or negatively in the politics, economies and societies of other countries. What will make 2016 more momentous is when Democrat Hillary Clinton is elected the first female President of the US. This year will be monstrously momentous for the world, especially the Islamic Faith and Civilisation, when Republican Donald Trump wins the ballot. Definite disaster will befall the US and the rest of us in this wild, wise, wicked and wide world when, in the unlikely event, Trump becomes President.

What type of President will a Muslim-and -Latinos hater be for America? Can a President Trump-led US be an honest broker in the conflicts in the Arab world, especially the IsraeliPalestine debacle? Your answers are as good as ours.

At the African level, 10 countries will be heading for heady electoral contests this year.

Benin, Chad, Djibouti, Democratic Republic of Congo (DRC), Ghana, Niger, South Africa and Uganda will hold elections during this year. We know the deaths, doom and gloom that elections have wrecked on Africans. In the past, botched polls have caused conflicts, sending many citizens fleeing to seek refuge in other African countries. And there is reason to believe that the coming elections will not lead to civil wars and strife when not orderly and properly conducted. GB&F implores the stakeholders involved in the various elections in Africa to conduct free, fair, transparent and peaceful polls. Only that can guarantee peaceful co-existence and socio-economic development for the African people whose power the elected leaders hold in trust, but lord it over them.

Third term-ism is another existential risk to peace and security in Africa. Already, Burundian President Pierre Nkurunziza has changed the national constitution to allow him compete in polls which he won, and is doing a third term. The conflict-prone Great Lakes country is steadily descending into anarchy and mayhem, leaving in their wake a flow of refugees into neighbouring countries. Ugandan President Yoweri Museveni has also amended the Constitution to enable him run in elections, and do a third term in office. President Paul Kagame, the Rwandan President, has manipulated and succeeded in tinkering with the Constitution to permit him put in a third bid for the presidency in 2017.

Nearby in DRC and Republic of Congo, Presidents Joseph Kabila and Denis Sassou Nguesso are also trying to tamper with their constitutions to go for third terms. These selfserving political posturing and manoeuvres do not augur well for the security, safety and stability of the respective countries. The African Union, United Nations and the Western godfathers of democracy and good governance must stand up and be counted among the strong voices that shouted against, and brought down, third term-ism in Africa. The socalled international community must act now before it is too late to reverse the conflicts and concomitant painful abyss that third term-ism will plunge the continent into.

At the national level, this month begun with the emergence of a potpourri of contentious issues. The catalogue of controversies seems countless. Utility tariffs and petrol prices increases amidst falling world oil prices; increment of transport fares; added and increased taxes; an agitated Organised Labour front; and the New Patriotic Party’s (NPP) rejection of the Electoral Commission’s (EC) report on the party’s call for a new voters’ register. More disputations: the advent of the Content Standards Regulations 2015 (LI 2224) and the Supreme Court case against part of the law; the permission for two Yemeni Guantanamo ex-detainees to stay in Ghana for two years; and the acceptance of Syrian refugees to live with resident relatives in the country. Some of these contestable affairs are likely to persist throughout 2016.

Of all the controversial matters that stare at us this year, the one that all eyes must be on is how the November elections will be run by the EC, particularly so when EC boss Charlotte Osei is going to have her first baptism of fire. New electoral register or no new voters’ roll, Ghanaians expect the EC to conduct free, fair, transparent, clean and peaceful elections.

To conclude, GB&F wishes all readers, advertisers, subscribers, African Business Media (ABM) Management and staff, a Happy, Blissful, Peaceful and Prosperous New Year.

Ayuureyisiya Kapini Atafori Editor (+233 024 2385374)

JANUARY 2016

Mail to the Editor

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

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EDITOR’S SUITE

What does 2016 bring to the world?...

GHANA BRIEFS

Kasapreko welcomes Harvard students A team from Harvard University in the United States recently visited Kasapreko Company Limited, a Ghanaian-owned total beverage maker, as part of a field tour in Ghana. The tour enabled them to familiarise themselves with the company’s operations and how a world-class brand like Kasapreko has grown to greater heights. Dina Pomeranz, an Assistant Professor of Business Administration of the Harvard Business School (HBS), who led the team of 60 students, said HBS chose to visit Kasapreko based on the global presence the company has built for itself over the past 26 years as well as its success story. The students were taken round the factory and the new US$70 million bottling plant, and later met with Dr Kwabena Adjei, Kasapreko’s Group Chairman and Founder, Richard Adjei, the CEO, and the other senior management.

MTN invests GH¢21 million in health care MTN Ghana Foundation, the Corporate Social Investment (CSI) arm of MTN Ghana, has invested over GH¢21.5 million to improve health care, education and living conditions for approximately three million people.

MTN has provided potable water for 22 communities by funding the drilling of boreholes. MTN partnered Ghana Cleft Foundation to assist 74 patients with cleft disorders to receive free surgeries. MTN also sponsored 116 health professionals to be trained in the management of cleft lip and palate disorders, and invested more than GH¢6 million in 32 major health projects that impact on approximately one million Ghanaians directly. Since its establishment in 2007, the foundation has executed 102 major projects, as well as numerous smaller initiatives in diverse communities to brighten lives in all 10 regions of Ghana.

‘2016 will be tough for Ghana’- Expert Ghana has been predicted to face a very difficult year due to the influence of the government`s tough measures which are expected to stabilise the economy this year. Some of the measures that the government is expected to implement like cutting expenditure aggressively will rather bring hardship to Ghanaians. “It is certainly going to be a very tough year for Ghana…we don’t know if the fiscal consolidation being suggested can actually be achieved. For a country that not so long ago was running a deficit in double digit of GDP to almost half that level it is a big task,” Razia Khan, Head of Research at Standard Chartered Bank for Africa. stated.

IMANI demands disclosure on US$7 billion ENI gas project

IMANI Ghana, local policy think tank, has demanded that the government should make full disclosure on the US$7 billion oil and gas deal with energy firm ENI. This, according to Franklin Cudjoe, IMANI’s founding president, is a clarion call on the government to ensure transparence in Eni`s deal and to prevent the US$7 billion project from suffering similar fate that entangled the suspicion-riddled power purchase AMERI Energy deal.

BoG revokes license of 70 microfinance companies US$1billion Tema Port expansion project starts this year The first phase of the US$1.5 billion project to expand Tema Port, which is expected to be done in about three years, will start this month. This will see the port handling three times its current traffic of about one million Twenty-foot Equivalent Units (TEUs) when completed. Paul Asare Ansah, the Marketing and Public Relations Manager of the Ghana Ports and Harbours Authority (GPHA), said the investment “is going to expand the capacity of the port to handle even 3.5 million TEUs, far in excess of the projections that we have made. As part of the project, he said the GPHA intends to “reclaim about 120 hectares of land and the port will become efficient “up to about 2040 to 2050,” after the expansion works.

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GHANA BUSINESS & FINANCE

The Bank of Ghana (BoG) has revoked the temporary licence of 70 microfinance companies and a money lending company for failing to meet conditions precedent to the issuance of a final licence. The action was taken after several reminders, including BoG’s last notice on July 15, 2015 to microfinance companies and money lenders. The companies affected are Cedar House, Ezi Access, KB Stars, Money Link, Xpress Link, Quick Loans, Vanliz, Glow, Sufficiency, Apex, Atwiman, Genesis Seed, Look-Ahead and several others.

JANUARY 2016

FINANCE

Hidden taxes, rising policy rate & inflation dampen investor confidence … further weakening a wobbly Cedi

BY MASHOOD A. KUNATEH

The difficult economic situation in Ghana persists as some taxes that have been quietly introduced in the 2016 budget will dampen investor and consumer confidence in the economy. Analysts believe the new taxes, about which the government is reticent, will discourage investors from investing in the country which is already facing external trade imbalances and shocks from low commodities prices, particularly falling crude oil prices.

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xperts say Ghanaians will have to pay more taxes this year, following the revision of the income tax law which takes effect on January 1. The Income Tax Act, 2015 (Act 896), which was recently passed by Parliament, seeks to simplify the income tax regime and improve tax compliance. Act 896 replaces the Internal Revenue Act, 2000 (Act 592). The law is expected 20

to yield additional revenue equivalent to 0.3 per cent of GDP, Seth Terkper, Minister for Finance, stated. Although, Terkper referred to the revised tax law during his presentation in Parliament last November, he did not provide details.

Shattering Terkper’s silence on the new taxes, Abeku GyanQuansah, a Senior Manager of Tax Services at PricewaterhouseCoopers

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(PwC), a global economic and financial consultancy firm, maintains that regardless of where incomes are generated, once a person becomes a Ghanaian resident, he/she must be taxed under the new law. “Now for resident persons, if you earn income, your worldwide income will be taxed.

Let’s say I’m a resident in Ghana, and stay in the USA and I came home on holidays and sent some money into JANUARY 2016

MEDIA

Travails of publishing business & financial magazines … how GB&F has won two awards consecutively

BY AYUUREYISIYA KAPINI ATAFORI

Poor reading culture, now worsening as social media-mania is gripping the youth, insufficient advertising revenue and high cost of production and unaffordable cover-price make publishing magazines in Ghana not a very sustainable, viable venture. Since 1989, many intelligent, insightful and intrepid magazines popped up and dived deep down to death in Ghana.

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ome magazines persisted relentlessly and irregularly in frequency for years, but were finally embalmed in the morgue by the allpowerful market forces (or are they readership forces?). Remember ‘Uhuru’ - the magazine published in 1989 by Uhuru Communications Ltd. The General/Managing Editor was Dr Kwesi Yankah. The Yankah brothers’ (Kojo, Kwesi and Kofi) superbly erudite and well-researched articles enamoured them to many readers. The articles of

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the magazine’s editor and the editorial staff, columnists and contributors also interested many a reader. ‘Uhuru’ was supposed to be a monthly but it could not be published as such, and struggled on till the mid-1990s when its knell was sounded. My experiences with writing for, and editing, several magazines (‘Ghana Education Magazine,’ ‘Legon Digest,’ ‘The Diplomat,’ ‘The Storm,’ etc.) that have been published in Ghana confirm my belief that in the unfriendly magazine market, business and financial magazines fare better than

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social and political ones.

The magazine market in Ghana seems peculiar. Kofi Badu, a veteran journalist who practised his profession from the period of the independence of Ghana to the early 2002s, knows it all about the fare of magazines in Ghana. “Many people have found it puzzling that Ghana has not had a good sustainable magazine.

It cannot be because Ghanaians have an aversion for magazines because the international newsmagazines have always done well here. From the days of

JANUARY 2016

SCIENCE & TECHNOLOGY

The significance of irradiation‌

Best method for preservation & protection for food security

BY NANA AMA BROWNE KLUTSE (Ph.D) & CHARLES KOFI KLUTSE (Ph.D)

One of the aims of national food security is to provide safe and nutritious food for society throughout the year. To achieve this aim, developing countries like Ghana have to contend with two major problems of food supply: food spoilage, which causes post-harvest losses, and food contamination, which leads to illness and death. It has been shown that nuclear technology can be applied to protect and preserve food, thereby ensuring safe and secured food supply.

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ood is an essential need of humankind. For this reason, humankind has always used various ways to secure food by increasing the shelf-life. Food processing and preservation, as ways of ensuring food security, are as old as the history of mankind. It is believed that the discovery of food processing and preservation helped humans to change from the wandering and hunting culture to the first settlements 28

where agriculture was practiced. A wide range of food exists in an equally wide range of environmental and cultural settings, making food processing and preservation a complex issue. In effect, there is no golden method of preserving food. The important requirements of food preservation are shelf-life prolongation and natural quality preservation, which are two qualities that are not easily achieved in a single method of food preservation. Therefore,

GHANA BUSINESS & FINANCE

various techniques of food processing and preservation exist which date back from antiquity. Five main traditional methods include heat treatment, chemical treatment, freezing, drying and fermentation.

Fermentation: Fermentation preserves foods by the selective removal of the fermentable substrate. This process has end-product like beer, wine, leavened bread, cheese and many JANUARY 2016

DEVELOPMENT

Public-Private Partnerships:

How has Ghana benefited so far? (I)

BY KWEKU DARKO ANKRAH

At this stage of Ghana`s economic agenda for ensuring sustainable development through transformational growth, Public-Private Partnership (PPP or 3Ps) has become the new blueprint for the government. The decision in making PPP a cornerstone has been as result of a confluence of factors, forces and change drivers that continue to shape global development.

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ndeed, donor agencies, development partners as well as private companies are of the firm belief that they stand to accomplish tremendously by working together than they can independently, thus a critical reason why development partnerships has gained and still continue to gain momentum.

Last year, PPP policies and programmes formed major part of United Nations (UN) SecretaryGeneral Ban Ki-moon’s high-level global development framework signed in September 2015. Martin Sajdik, the president of the UN Economic and Social Council sums it up: “You cannot only rely on state actors. Our economic life, our social life is not only determined by state actors, so if we want to have a development agenda that is for all countries of the world both developed and developing, we cannot ignore the fact that there are many more actors.”Clearly, the world body has accepted the role of PPPs for ensuring sustainable development to include the state, private sector and other non-state actors such as Civil Society Organisations (CSOs) which are visibly missing in most PPP programmes, and projects executed in some countries such as Ghana.

Despite lack of CSOs’ involvement in important PPP projects, PPPs have been used to execute projects such as the Tema Thermal Power Complex, SunonAsogli Kpone Power Plant, failed Aqua Vitens Rand Ltd. (AVRL) management of Ghana Water Company Limited (GWCL), as well as various e-platforms (automation) for Ghana Community Network (GCNet), 32

Ghana Revenue Authority (GRA), and other state agencies and departments.

With the growing popularity of PPPs as integral part of the development matrix for both the state and private entities, the concerns many development theorists, practitioners and experts continue to raise are: (1) How can both the state, private sector and other non-state actors ensure that PPP serves its role in sustainable development agenda?

What and why PPPs? Despite the blitz and buzz about PPPs, the concept is not a novel thing at all.

Development theorists, economists, policy-makers and other experts in the field of development have written a lot about it. However, the global financial crisis of 2008 onwards brought about renewed interest in PPP in both developed and developing countries.

With countries facing constraints on public resources and fiscal space, while recognising the importance of investment in infrastructure to help their economies grow, governments turned to the private sector as an alternative source of funding to meet the funding gap. Thus PPPs represent the shift to investment-driven development agenda as one of the right panacea for development, especially the developing countries.

As a popular concept in the development matrix, PPPs, has no ironclad definition. Many attempts have been made to define it to suit a particular context. The Word Bank Group, per its PPP Knowledge Lab, defines PPP as “a long-term contract between a private party and a government entity, for

GHANA BUSINESS & FINANCE

providing a public asset or service, in which the private party bears significant risk and management responsibility, and remuneration is linked to performance.” The United States Agency for International Development (USAID), which is spending over US$20 billion in 91 countries for PPP programmes and projects, prefers the definition in the global development context, and it defines PPPs broadly as “arrangements in which the public and private sectors combine resources and expertise to achieve development objectives.” The PPPs, as noticed from its definition, typically do not include service contracts or turnkey construction contracts, which are categorised as public procurement projects, or the privatisation of utilities where there is a limited ongoing role for the public sector.

In recent times, a number of countries are enshrining a definition of PPPs in their laws, each tailoring the definition to their collective institutional and legal particularities.

South Africa has the greatest cumulative experience of PPPs in Africa, with over 50 partnerships in development JANUARY 2016

COVER

Ghana:

Time to industrialise, or be doomed

BY AYUUREYISIYA KAPINI ATAFORI

Industrialisation has made many countries great and economically strong since the advent of the Industrial Revolution. “A number of regions in the world, including this country [the United States], have developed their industries on the basis of commodities. So we have to be much more sophisticated in the way we deal with commodity-based industrialization than in the past,” states Carlos Lopes, Executive Secretary of the Economic Commission for Africa (ECA) in an interview with ‘Africa Renewal’ magazine in 2013. In the same publication, Dr Nkosazana DlaminiZuma, President of the African Union (AU), is quoted as saying: “Industrialization cannot be considered a luxury but a necessity for the continent’s development.”

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ccording to Kwame Pianim, a renowned economist, “Industrialisation began in Europe and came to maturity in USA. It involved the systematic application of skilled manpower, money, and machinery to process materials from primary activities centred on agriculture, fishing and logging. These methods initially involved the use of energy and mechanical processes to lengthen the shelf life and/or transform the nature of primary products for a growing consumer market both domestic and international.” Pianim views industrialisation as the application of tools, science and technology to produce goods and services. He says that in industrialising, a country uses equipment and plant to produce capital goods, some of which are needed for manufacturing plants and machinery.

In a paper, ‘Transforming Industry in Ghana,’ delivered at a forum organised by the Ghana Academy of Arts and Sciences in Accra in 2001, Pianim 34

observes that the transformation of agriculture into science and technologyintensive commercial activities with high-yielding inputs and productivity, including infrastructure and supporting institutional network, is critical for modernisation and the acceleration of industrialisation. He concludes: “Ghana has a unique opportunity now to initiate a radical change in our industrialisation process and policy, based on an integrated and focused approach, and anchored on new dynamic partnership arrangements. If the opportunity is not to be lost, as has invariably happened to us in our history …, then it is important that we do not lose the momentum for change.”

The all-importance of industrialisation The all-importance of industrialisation is underlined by past and recent several attempts by various governments to drive Ghana on the road of industrialisation without substantial success. Now, the ideal development paradigm is to transform Ghana’s economy to that of

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a fully-fledged middle income one via industrialisation. Yet figures released by the Ghana Statistical Service last year show that the revised GDP estimates for 2014 indicated that the industry sector recorded 0.8 per cent growth.

Industry, the least growing sector with a share of 26.6 per cent, however, grew at 6.6 per cent in 2013.

Indeed, industry’s share of manufacturing has been declining consistently since 2011. Industry’s decline is partly attributable to the threeyear energy challenges which impacted negatively on business, manufacturing and the Ghana Cedi. Many industries import their inputs and raw materials.

May be to worsen matters, Ghana signed the Economic Partnership Agreement (EPA) with the European Union (EU) which many experts believe will further weaken the country’s

JANUARY 2016

SMEs & MICROFINANCE

Establishing EXIM Bank won’t salvage SMEs and exporters

BY YAW OHEMENG KYEI

In the 2016 budget, Finance Minister Seth Terkper raised some key issues which have attracted mixed feelings by researchers and business watchers. One of the issues is the proposed establishment of the Export and Import (EXIM) Bank which, as Terkper put it, was “part of our transformational agenda to achieve an export led economy, the Ghana Export and Import Bank (EXIM) Bill has been laid before Parliament. The primary purpose is to finance export (notably high industrial and agricultural products); guarantee loans; provide export insurance, support SMEs and other businesses, and strengthen economic cooperation.”

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hilst the formation of an EXIM Bank is not a bad idea, researchers are perplexed as to whether the bank can solve the main problems facing exporters and SMEs and make Ghana an export-oriented country. The wonder whether Ghana is ready for an EXIM Bank because almost all its functions that the Minister listed are being performed by other institutions.

So why an EXIM Bank? Besides, it is believed that unless all the fundamental problems confronting the export sector are curtailed, the country cannot be export-oriented.

In the budget, Terkper indicated that the Export Development and Agricultural Investment Fund (EDAIF) would establish its presence in the 10 regions to ensure that its supports businesses. He indicated that the establishment of an EXIM Bank would enable the country take advantage of international trade initiatives such as the African Growth and Opportunity Act (AGOA) and Economic Partnership Agreement (EPA). He said Cabinet has approved the use of 50 per cent of EDAIF funds to set up the bank. According to him, an EXIM Bank would be a vehicle for the consolidation of the current export finance activities of the EDAIF, Eximguaranty Company and Export Finance Company. In this regard, Cabinet also approved the setting up of a Presidential Committee to implement 44

the establishment of the Ghana EXIM Bank.

A novelty gets adulterated Firstly, the expansion of EDAIF in the regions is a novelty that ought to be applauded but such a novelty gets adulterated when EDAIF is expanded and made inefficient because 50 per cent of its funds are going to be used to set the EXIM Bank. Technically, you are expanding EDAIF and weakening EDAIF at the same time. History tells us that government is not a good manager of banks, considering the collapse of the Bank for Housing and Construction and the poor performance of some state-owned financial institutions.

Besides, the expansion of EDAIF and establishment of the EXIM Bank will eventually lead to duplication of functions and unnecessary competition between the two institutions.

Secondly, the expansion of EDAIF in the regions, in addition to the employment of staff, will be a drain on the resources of EDAIF. So if the remaining funds are going to be used for establishing a bank, then we will have a big problem with funding.

Thirdly, the National Investment Bank (NIB) was established in 1963 as a joint state– private development finance company. The objectives of NIB are: tyo provide loanable funds for investment, particularly in industry, agro-industry and large scale farming; assist in the establishment, expansion and modernisation of enterprises; identify

GHANA BUSINESS & FINANCE

emerging investment opportunities; counsel and encourage Ghanaian business concerns; and bring together capital, capable management and technical expertise to establish viable new enterprises. The question one should ask is: Have all these objectives of NIB been achieved? If the answer is yes, then why have more agencies been established to perform similar functions performed by NIB? If the answer is no, then why an EXIM Bank?

Lastly, government set up Agricultural Development Bank (ADB) in 1967 with the aims of identifying and promoting agricultural enterprises either individually or jointly; and

JANUARY 2016

TRANSPORT

Global aviation boom:

Is Ghana prepared to make gains?

BY KWEKU DARKO ANKRAH

Come October 2016, Ghana will host the first ever ‘all inclusive’ Africa Air Expo and Conference which will attract more than 200 international exhibitors, experts, aircraft producers and policy makers from the aviation industries across the world.

This important event is intended to project Ghana as Africa`s aviation hub, help solicit investment to improve airport infrastructural development, stimulate job creation and tourism growth, and position players to network.

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he event was originally scheduled for take-off in October 2014, but was cancelled due to the ravages of the fearful Ebola epidemic which struck neighbouring West African countries in the last quarter of 2014. Despite the crippling effect of the Ebola outbreak on air transport, the aviation sector statistics released by 46

the Ghana Airports Company Limited (GACL) in last December reveals a passenger throughput (traffic) of 2,369,538 in Ghana. This impressive record resulted in the country being ranked the 19th busiest airport in Africa

by Airports Council International (ACI). In the same year, the country recorded a cargo throughput (traffic) of 54,383, registering a position of

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seventh in Africa by ACI. Tony Lithur, the Board Chairman of GACL who disclosed this in his review of 2014 at the third Annual General Meeting of the GACL in Accra, said the industry was growing in revenue and managing costs in the face of a highly competitive business environment. “In 2014, we deepened our commitment to the enrichment of the customer experience at the Kotoka International Airport and other airports in the country, with the introduction of development projects and improved services, which provided for competitive options in today’s contemporary business environment.

GACL’s financial performance improved from GH¢19.1million in 2013, to a net profit of GH¢184.1 million in 2014,” Lithur said.

Global performance Though the 2015 Ghanaian industry performance data is not yet in, watchers are optimistic that, with the world oil prices still low, strategic business planning and targeted infrastructural JANUARY 2016