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SEPTEMBER 2015 / ISSUE 052 GH¢10.00
g Nippind clone es chequ the in d u a r f bud
USA..........................................$5.00 UNITED KINGDOM.....................£3.00 EUROPE....................................€3.50 AUSTRALIA.............................AS5.00 CFA ZONE...........................CFA 2,000 OTHER AFRICAN COUNTRIES.US$4.00
Textiles industry to ride on new AGOA?
AIRTEL PREMIER: Truly defining a “Whole New World of Experience”
THE FIRST BUSINESS READ IN GHANA
Follow us online at www.ghanabizfinance.com
CONTENTS ISSUE 052 / SEPTEMBER 2015
20 SMEs & Microfinance
42 Tourism
24 Science & Technology
46 Energy
28 Cover
50 Automobile Tata Motors’ meteoric growth
Front Cover: ROSY FYNN Marketing Director, Airtel Ghana
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Brief
Summaries of business and financial stories that trended in Ghana, Africa and the rest of the world in August.
10 Economy
The second part of Kennedy Addai Kuffour`s analysis of the recent mid-year review of the 2015 budget which promises misplaced hope.
12 Banking
Ghana`s financial sector faces threats from cyber-criminals and money launderers. There is a prevalence of cloned cheques. Caution: Cheque holders must protect their cheque books.
14 Corporate Progress
Columnist J. M. Halm tackles poor customer service delivery in Ghana, its impact on companies and proffers awesome solutions to stem the canker.
16 Insurance
The insurance industry is bedevilled with a courtroom battle between SIC Insurance Company and Ivory Finance Company. In spite of the legal wrangling, coupled with economic difficulties, insurance companies performed modestly in the half year.
Franchising as business strategy for expanding across corporate geographical borders is still a concept alien to SMEs in Ghana. The need for SMEs to utilise franchising effectively as a strategic instrument for expansion and growth is now paramount.
Global surface temperature is increasing at an alarming rate as a result of climate change; and this is changing the dynamics of human health. Research to determine malaria-risk periods vis-à-vis rainfall and temperature patterns has been carried out. Find out! Telecom Brand of the Year, Airtel Ghana, goes beyond traditional mobile telephony with its Airtel Premier package which offers a delectable array of lifestyle products and services to cater for the needs and preferences of its numerous customers with voice, data and SMS services.
32 Agriculture
Inadequate financing for farming in Ghana is the major problem afflicting small-holder farmers and agricultural growth. The gradual decline of the agriculture sector is partly because of the dearth of credit.
After the bustling and hustling of doing business and making calculations, deductions, assertions and inferences to find solutions, business executives must plan, feel excited and relax.
38 Trade
AGOA has been extended for 10 years. The government and the private sector should utilise the opportunities the new AGOA presents to improve the comatose textiles and garments industry in Ghana.
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.
A continuation of Ayuureyisiya Kapini Atafori`s, GB&F editor’s, article on PIAC’s sterling recommendations to nip the recurrence of spreading the Annual Budget Funding Amount (ABFA) thinly on a wide range of projects that make little impact on development in the bud.
from its enclave in India to churn out a variety of cars to achieve a global status in the automobile industry is quite fascinating. In Ghana, Tata invested over US$5 million in infrastructure to promote various Tata businesses.
54 Perspectives
Everything right has been done about branding/rebranding but it is not yielding the expected results. Branding/rebranding is examined; and the way forwarded is offered.
56 Events
Visit conferences around the world that matter to you and your business.
36 Business & Management
Find us online at www.ghanabizfinance.com
SEPTEMBER 2015
Ghana has vast tourism resources but has not branded them enough to attract more tourists and garner capital. Making destination branding a prime interest and an integral part of national development can be the sector’s elixir.
57 Stats & Indices
Figures speaker louder than words for Ghana`s economy.
58 Commodities
Know the prices of agricultural produce in selected markets, as researched and compiled by Esoko.
linkedin.com/GhanaBusiness&Finance facebook.com/GBandF @ghana_business
GHANA BUSINESS & FINANCE
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Editor Ayuureyisiya Kapini Atafori editor@ghanabizfinance.com Senior Staff Writer Kweku Darko Ankrah kdankrah@ghanabizfinance.com Columnists Jerry Halm 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
myjoyonline Bloomberg citifmonline Corporate Council on Africa
Ghana Business & Finance magazine is published by
… For business and the poor
The utilities tariffs debate has been on for some years. And it may not end even after proponents of either realistic tariffs or economic tariffs had won the game. Charges for use of electricity and water by customers are the income that the utilities providers make to keep operations going, and investing the excess revenue, if any. At least, for the past three or four years, experts and the public have discussed the burning issue of Ghanaians paying realistic tariffs or economic tariffs. Usually, announcements of increment in tariffs have not been taken kindly by many citizens who say they are unable to foot the new bill. The tariffs are loathed by many. The tariffs are politically-sensitive. The tariffs push-ups are hotly and passionately discussed, even emotionally debated, in the mass media. The ritual has come full circle once again. Why not? The norm: The Public Utility Regulatory Commission (PURC), the regulator and tariff-setting authority, spouts the tariffs increases after public consultations in selected regions by using the automatic tariff adjustment mechanism. The tariffs debate was re-ignited when Kweku Awotwi, a former Chief Executive of the Volta River Authority (VRA), was not amused that the PURC continues to under-price electricity. “How does the Volta River Authority produce sufficient power when…the PURC approves electricity tariffs that are pegged to about a third of what it takes to run VRA’s thermal plants?,” Awortwi pronounced at the 2014 Ghana Journalists Association Awards ceremony held in Accra on August 15. He prepositioned that the VRA would wilt when it continues not to operate efficiently. Cost recovery, he assumed, was the way to go. Awotwi suggested that the PURC okays power tariffs that match with the cost of producing power at the VRA. “I want to add to the debate by asking my fellow ‘former Chief…’ what he means by ‘realistic tariffs’ which is a refrain I heard from VRA staff from as long ago as 1988 when I served as Energy Policy Adviser to the provisional government and whose biggest cheerleader, JOSEPH Ofedie, is also a member of the ‘former Chief Executives of the VRA’ club … As for me, I prefer and would suggest we talk about ‘Economic tariffs’ rather than realistic tariffs. The tern [sic] Economic is well understood, it describes the notion of covering all costs in delivering an outcome, plus a reasonable margin for investing in the venture. Unfortunately, realistic is a form of art, subject to political considerations, such as Kan Dapaah’s Affordability, and the general feeling of entitlement of most Ghanaians who think they should have power to chill their beer for free. Such feelings have dogged our country and been exploited by every government ever since the Akosombo dam was opened 50 years ago,” Dr Ives Charles Wereko-Brobby, another former VRA CEO, wrote in Daily Graphic, August 31, 2015. Awortwi wants tariffs to shoot up; Dr Wereko-Brobby wants same. They, and other persons who support them, differ in ideology and methodology. One is a stance that posits that full cost must be recovered; and profits made, regardless of how many people can afford higher tariffs. This position makes economic sense, going by the spirit of business. His is neo-liberal capitalism which ordains the market and its forces to lord it over the populace, and sometimes run riot. How the affordability question should be addressed, Dr Wereko-Brobbey did not care to prescribe. Paradoxically, he caricatured Kan Dapaah as ‘Mr Affordability.’ How can poorly paid workers pay economic tariffs when they do not have strong purchasing power? The realistic tariffs apologists’ worldview accepts tariffs increment as an urgent imperative, similar to a necessary evil, which must be moderated and not left uncontrolled to disadvantage persons at the lower stump of society. The Awortwis, the Ofedies and the Safos obviously tow the welfarist line which is akin to social democratic economic principle. For GB&F, as aforementioned, realistic and economic tariffs each has its merits and demerits. For us, the merits of both schools of thought should be combined to have a hybrid system that cares for the basic needs of citizens such as water and electricity and for business and industry. In some economically-advanced countries, social tariffs take care of most vulnerable customers with grants and cheaper tariffs to help them cope. Those who qualify for a social tariff are over 60 years old, on means-tested benefits, living in fuel poverty and are on a low income. In the United Kingdom, the social tariffs package includes cheaper gas and electricity prices. There is widespread poverty in Ghana; so a social safety net will cushion the indigent, the unemployed, the aged and the inactively disabled. Much as the VRA, Ghana Water Company (GWC), Electricity Company of Ghana and Ghana Grid Company may be realistic by recently asking for a 100 per cent tariff rise to take effect later this year. PURC must not forget the socioeconomic reality in Ghana today. Besides, the utilities’ services delivery is very poor - dumsor and water shortage being their hallmark. What about the lit street lights in broad-day light? What about the burst GWC pipes with water wasting out dotted all over the country?
Ayuureyisiya Kapini Atafori Editor (+233 024 2385374)
SEPTEMBER 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
General Manager Josiah Spio-Garbrah jspiogarbrah@ghanabizfinance.com +233 264 510 396
Realistic and economic utilities tariffs are imperatives
GHANA BRIEFS
MTN Ghana pays GH¢605 million in taxes MTN Ghana, the leading telecommunication network, has paid in an excess a total of GH¢605.138 million as taxes to the government in 2014. The telecom giant also paid GH¢31.5 million as fees and duties, and GH¢26.6 million as incoming international traffic to the National Communication Authority (NCA). The company made an impressive profit of about GH¢1.9 billion after tax despite experiencing challenges such as high inflation, depreciation of the Cedi, power disruptions and higher utility tariffs in 2014. Addressing editors at Cape Coast, Cynthia Lumor, the Corporate Service Executive of MTN said. MTN’s compliance in filling tax returns earned the company the overall taxpayer award for 2014 by the Ghana Revenue Authority (GRA) and it is poised to implement sustainable projects that would enrich the lives of Ghanaians, adding that “we are committed towards the building of vital infrastructure and services to Ghanaians.”
Adb begins IPO after workers withdrew suit Agricultural Development Bank (adb) will soon resume the sale of its shares to the public following the workers withdrawal of a court case against the issuance of the Initial Public Offer (IPO) in July 2015. The move will see the premier agricultural bank issuing more than 74,000,000 existing ordinary shares and an offer for subscription of 75,000,000 new ordinary shares this month. Adb`s IPO suffered a major snag when the Union of Industry of Commerce and Finance Workers (UNICOF) went to court to block the sale of shares on two occasion because “the bank had not secured parliamentary approval before going ahead with the sale.” But on August 6, the case was dismissed by the Supreme Court.
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KLM unveils class offers, inflight entertainment KLM Royal Dutch Airlines has introduced novel seating offers with a fully renovated cabin interior in both World Business Class and Economy Class of its Boeing 777-200 aircraft which operates on a daily basis between Accra and Amsterdam. There is also a fully renewed sleek inflight entertainment system for the pleasure of their passengers. The Economy Class seats now offer travelers more legroom and a whole new inflight entertainment system, featuring a larger 9-inch, HD-quality touchscreen, interactive 3D cards and a ‘seat chat’ app that allows travelers to communicate with passengers who are seated elsewhere in the cabin. The new World Business Class seats in the cabin with smart design elements ensure maximum privacy and complete comfort while sleeping or working and the bigger soft cushions combined with the luxurious new blankets also ensure a warm and friendly atmosphere. Axel Metselaar, Country Manager in Ghana for Air France-KLM
said two third of KLM’s Boeing 777200 fleet has been refurbished to offer consistent upgraded product on a daily basis and “this once again underlines the importance Ghana plays in the KLM’s worldwide network”.
GhiPSS outdoors E-commerce products Ghana Interbank Payment and Settlements Systems (GhIPSS) has launched two groundbreaking innovations that will enable financial industry players to instantly make bank transfers, as well as the ability to use gh-link local cards for e-commerce transactions. Speaking at the launch, Archie Hesse, Chief Executive of GhIPSS, said the two innovations, gh-link e-commerce and GhIPSS Instant Pay, represent by far some of the greatest strides the country has made in the quest to achieve a cash-lite economy.
Mitsui partners GNPC for gas project
Ghana National Petroleum Corporation (GNPC) has appointed Mitsui & Co Limited, a Japan-based trading company to use its industry expertise to help develop infrastructure for Ghana`s natural gas production. Mitsui will assess how best to construct a second plant to process raw natural gas from the Tano basin, which is expected to produce about 250 million cubic feet of gas daily by 2018 from its main west Tano basins. The Petroleum Ministry said in a statement after a memorandum was signed that two other fields, Tweneboa-Enyenra-Ntomme, operated by the consortium, and Sankofa, operated by Italy’s ENI, are also expected to come on stream next year and 2017 respectively
GHANA BUSINESS & FINANCE
SEPTEMBER 2015
BANKING
Bid to nip money laundering in the bud:
Cloned cheques fraud on the rise? BY ADNAN ADAMS MOHAMMED
As crime is increasingly becoming sophisticated in developing countries as a result of the advent of new technologies, the financial sector is facing threats from cyber-criminals and money launderers. Holders of bank cheque books are now extra vigilant and heedful to precautions to protect their cheque books as revelations show that cloned cheques are on the rise. In Ghana, many cloned cheques have been detected at various banks last year.
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he Financial Intelligence Centre (FIC) has revealed that it received. 36 cloned cheques in 2013, amounting to GH¢2,337,907.05, out of which 14 were successfully cashed for GH¢583,101.12. About 40 cloned cheques worth GH¢2,004,729.14 were presented to banks in 2014. Seven of them were successfully cashed, giving the bearers GH¢163,436.00, according to the FIC. In the quarter of 2015, seven illegal cheques amounting to GH¢12,158,84.00 were presented but none were successfully cashed. Banks are alarmed by the figures and are determined to strengthen security measures for immediate detection of cloned cheques presented at the counters of their various branches. The Ghana Bankers Association, in recent times, has collaborated with the Banking Supervision of the Bank of Ghana, the country’s central bank, and other security agencies to ensure early crime detection, arrest and prosecution. Cloned cheques fraud is one of the popular forms of financial crimes all over the world, especially in developing countries where financial crimes are
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increasing. In an interview with GB&F in his office in Accra, Philip Danso, the Deputy Chief Executive Officer of the FIC, noted that cloned cheques have been in existence since the beginning of the use cheques for bank transactions in the country. Danso explained that cloned cheques are prototypes of original cheques of institutions and individuals which are printed and used to withdraw monies from the original bearers of such cheques accounts. They normally get access to the prototype cheques through the printing firms which produce banks’ cheque books or by stealing from the original cheque book of bearers. Danso has cautioned institutions and individuals to put in place mechanisms to protect their cheque books from criminals while arrange with their banks to secure authentication of cheque transactions in their accounts’ names. Use of fictitious documents Danso mentioned hacking into individual and company bank accounts; regular movement of funds from corporate accounts into individual accounts; use of fictitious documents for
GHANA BUSINESS & FINANCE
‘Know Your Customer’ identification; and ATM fraud as financial crimes. He said there is a high incidence of the use of ATMs and other electronic means of payment to perpetuate fraud in the country. Money laundering is the process by which proceeds from criminal activities are disguised to conceal their illicit origins. It is a secondary offence which is committed after the primary economic/financial crime is committed. The offences which proceed from money laundering are called predicate offences. Money launderers use front companies that are engaged in legitimate business but are actually controlled by criminals who commingle the proceeds from illicit activities with legitimate funds to hide the ill-gotten gains. Danso stated that the FIC requires proactive co-operation and collaboration between it and national stakeholder institutions to fight money laundering and financing of terrorism. Section 49 of the Anti-Money Laundering Act, 2008 (Act 749) enjoins officers of public agencies to co-operate with the FIC in combatting money laundering. In this regard, the FIC has
SEPTEMBER 2015
COVER
AIRTEL PREMIER:
Truly defining a “Whole New World of Experience” 28
GHANA BUSINESS & FINANCE
SEPTEMBER 2015
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irtel Premier’s delectable array of lifestyle products and services cater to the basic needs of customers with voice, data and SMS services, but it does not end there! It also provides amazing discounts from benefit partners, including airlines, hotels, restaurants, department stores, etc. These are products and services at amazing discounts from benefit partners. No matter your lifestyle choices and peculiar preferences, Airtel Premier has a service for you, thus offering a whole new world of convenience to customers. Through this differentiated service, Airtel Ghana is going beyond traditional mobile telephony and data services and giving its customers more reason to use their lines and benefit from the Airtel network. The Airtel Premier Service is borne from the company’s commitment to deliver world-class services and
SEPTEMBER 2015
appreciate customer loyalty. In the spirit of its values Alive, Inclusive and Respectful - Airtel Ghana continues to add several tasteful and exciting products, services and partnerships to its portfolio through its Airtel Premier Service and promises to keep more of them coming. To find out more about the operations and offers of Airtel, KWEKU DARKO ANKRAH, GB&F’s Senior Staff Writer, pitched a conversation with Rosy Fynn, the newly-appointed Marketing Director of Airtel. GB&F: Airtel puts a high premium on its Premier service to customers. What exactly does Premier entail and what is the philosophy behind it? Rosy Fynn (RF): Airtel Premier is a sub-brand of Airtel Ghana which offers tailor-made products and services to enhance the social and professional lives of its exclusive customers. It
delivers a bouquet of benefits from partners, including hotels, restaurants, department stores and automobile dealerships. Premier customers also enjoy free access to over 700 VIP airport lounges worldwide as well as access to the Adinkra Lounge at the Kotoka International Airport, Accra. It is a first of its kind in the telecommunication industry and it seeks to reward users of the Airtel network who meet a certain monthly threshold. GB&F: In line with your network`s drive to offer quality services to customers, Airtel recently entered into a joint partnership agreement with Guaranty Trust Bank Limited. How effective and advantageous have the exclusive “Premier Private Banking” services been to Airtel and its customers? RF: The partnership has provided a platform for both Airtel Premier and
GHANA BUSINESS & FINANCE
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COVER
The first of its kind in the competitive telecommunications industry in Ghana, Airtel Premier is Airtel Ghana’s exclusive suite of lifestyle products and services aimed at Recognising, Serving and Engaging its High Value Customers with tailor-made trendy solutions, exclusive access and discount services, loyalty rewards, complimentary gifts and invitations.
AGRICULTURE
The headaches of financing farming (I) BY KWEKU DARKO ANKRAH
In these times, the quest to achieve global food security by reconciling the fallout demands from the exploitation of the environment with nature sustainably is the greatest challenge facing mankind. Agricultural experts predict that by 2050, at least 9.1 billion people will need food as increasing incomes and urbanisation inevitably lead to dietary change.
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he food security challenge will encompass the triple burden of malnutrition (or under-nutrition), obesity and micronutrient deficiencies. The challenge has been blamed on constraints in the development of commercial agriculture by using scientific research in developing countries, especially in Sub-Saharan Africa (SSA). In Ghana, out of a total agricultural land area of about 14,038,224 hectares, 7,847,300 32
hectares were cultivated in 2012. The United States Agency for International Development (USAID) avers that more than three million Ghanaians, mostly ironically living in rural agricultural communities in the North, are vulnerable to food insecurity. Despite this glaring danger, the farming sector, a vehicle for sustainable food security, continues to be hindered particularly by the absence of finance, not to mention lack of technical support and training. Financial institutions are reluctant to
GHANA BUSINESS & FINANCE
provide adequate funds to the majority small-holder farmers in Ghana. And this has significantly affected the role that small-scale farmers play in the overall macro-economic performance of the economy. The gradual decline of the agriculture sector is partly because of the paucity of credit facilities for farmers. The dire situation of agricultural financing caused the USAID to initiate a five-year plan, ‘Financing Ghanaian Agriculture SEPTEMBER 2015
BUSINESS & MANAGEMENT
Top Executives’ all-workwithout-play:
Take a chill pill BY YAW ASAMOAH
Doing business, I am sure you know by now, is not a race; it is a long marathon which ends probably on your death-bed. Every business executive has a mind of a warrior, he / she continues to make calculations, deductions, assertions and inferences from his/ her surroundings. The excitement about business, and I am sure most other professions, is the constant search for solutions.
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hat is to say, humans ‘love’ problems and cannot stop looking out for same. The very things we say that cause us pain, we run to. We run to love, hate, family, health, prosperity and to almighty business. So, let us conclude that we will have our fair share of problems, or for want of a much more sublime word, challenges. As they come, just have the right attitude to confront
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them and solve them. Challenges are not evil; they come to strengthen us and make us have an impact on fellow human beings. This year, confront your challenges. In confronting your challenges, you do not just pray and wish them away. Face them head on. Interrogate the challenge; seek advice, knowing your expected outcome and act on the best options available. Just like driving in a fog, you can only see
GHANA BUSINESS & FINANCE
as far as nature allows you, but with caution and intelligence you can get a safe passage. Two things I want us to do this year. The first is, let us read. I know this has been over-beaten, but trust me, reading and listening to wellthought out and researched books and articles hold the key to our challenges. CNN has a segment in its business programme, ‘Quest means Business,’
SEPTEMBER 2015
ENERGY
PIAC seeks accountability from government:
Optimise spending of petroleum revenues (II) BY AYUUREYISIYA KAPINI ATAFORI
Suspicion may not be the right word. But which other word is more appropriate? Channelling data timely to PIAC is the elixir that will invigorate the statutory creature to disaggregate, re-aggregate and report on the disbursement of the petroleum revenues and publish the information for public consumption. In this matter, many of the state agencies which are compelled by law to provide such information have fallen foul. Some of the key state institutions indicted include the MoF, Bank of Ghana (BoG) and Ghana Revenue Authority (GRA).
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o PIAC plies a plea in its newest report, ‘Semi-annual Report on Management of Petroleum Revenues for the Period January to June, 2014’: “Key stakeholders in the upstream petroleum sector are encouraged to release reports
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and data (especially on the utilisation of the ABFA) in a timeous manner.” According to the 2014 semi-annual report, though “PIAC at the time of writing the report did not have the precise details of how the ABFA disbursed to each of the priority areas during the period under review was
GHANA BUSINESS & FINANCE
utilised, there are indications that the largest share of the earmarked funds was allocated to the Roads and Other Infrastructure priority area during the first half of 2014.” “PIAC is however unable to comment on how compliant the actual allocation and utilisation of the
SEPTEMBER 2015