business survival amidst economic downturn Gov’t should cash in on extractives with active role, IFS recommends Standard Bank affirms commitment to Africa’s devt connectivityformoreacquiresGIFECsitesrural By Eugene Davis By Patrick Paintsil Story on page 2 Story on page 3 Story on page 3 Story on page 4 MONDAY, AUGUST 22, 2022 NEWS FOR BUSINESS LEADERS .COM.GH
Recent statistics put proportions of the youth (15 to 35) that are unemployed and seeking work at 34.2percent. Unemployment is therefore considered by many to be the most critical issue affecting the country. It is trite to say that with the right national and individual orientation, policies, and drive, Ghana’s rich flora and fauna resources could provide millions of jobs to the country’s teeming youth.
“When the last tree dies, the last man dies” they say and truly so because flora and fauna preserve the environment and hence human life, and at a time that economies are grossly feeling the harsh outcomes of climate change, the need to preserve our environment and green resources have become even more critical. Aside the enviro-friendly outcomes, there is proven economic potential in the green economy, specifically the horticultural value chain.
“At this point you will need to be doing this more frequently and also make room for a lot of scenario planning -because now you are seeing trends that you did not anticipate and so the question then will be do you need to scale down one or two functions whiles you manage another, your planning should be more frequent than you anticipated, it does not make for a comfortable job but as it happens managing during a crisis period, is actually what comes with it and at this point you could say that in view of the myriad elements that are flying all over the place ; from our exchange rate situation through to the inflationary trends and cost of capital implication. What it means is that, planning is even more critical because the assumptions keep on changing, once you could have planned for the longer horizon sometime back, now is going to be much shorter, you come back to the table to do another element of scenario planning to see what has changed and how you may want to adjust to fit the change before it actually does you in,” she stated.
By Eugene Davis
Now in is tenth year, the annual Garden and Flower Show challenges and motivates the youth and businesses in the sector to aspire to grow and reach their full potential, in order to improve their livelihoods and impact society.
Horticulture fast becoming the new job-making machine
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Expert gives tips for business survival amidst economic downtown
Stratcomm Africa is leading the charge to green Ghana for the varied purposes of beautification, wealth and job creation as well as a sustainable fight against climate change.
Ghana’s current economic quagmire has been described by some analysts as a result of overly-choked fiscal space and government’s appetite for rolling out revenue-consuming programmes whilst its revenue mobilization efforts yield no better results. With the cedi depreciating bigly against the dollar and prices for commodities soaring as well as inflation for July according to the Ghana Statistical Service inching up to 31.7percent and the central bank raising the policy rate to 300 basic points, in a bid to tame inflation but that notwithstanding businesses have expressed concern about rising prices and difficulty in doing business.
Dr. Fiador who spoke on the topic “Effective Financial Management” indicated that effective financial management was vital for business survival and growth, stressing that it was key for businesses to prioritise financial planning as well as develop risk management framework.
Ghana is in the early stages of negotiating a support deal with the International Monetary Fund after initially saying it would not turn to the fund for help.
This year’s theme “Growth Unleashed” preps the mind of young Ghanaians to burst forth and to grow beyond the norms to achieve a blooming environment.Theglobal horticulture market is estimated to be valued at USD 20.77 Billion as of 2021 and is projected to reach US$40.24bn by 2026 at a compound annual growth of 10.2percent whilst global flower and ornamental plants market was valued at US$475.6m in 2020 and is expected to reach US$725.4m by the end of 2027, growing annually at 6.3percent during 2021-2027.
A senior lecturer at the University of Ghana Business School (UGBS), Dr. Vera Fiador, has urged entrepreneurs and start-up businesses to plan more often than before especially given the volatile economic situation. According to her, it is imperative for businesses to engage in scenario planning more than ever.
Speaking at an SME Business Development webinar under the auspices of Absa Bank last Thursday, Dr. Fiador suggested that businesses should review their activities and plan on quarterly basis.
The Vice-President further mentioned that the government’s digitisation agenda was aimed at building an economy of systems and data upon which the real sector of the economy would have firm grounding.
“Extractive sector revenues should not be allowed to go into private pockets while the government wallows in borrowing,” a senior research fellow of the institute Dr. Said Boakye, said at a press briefing in Accra.Out of the US$22.72billion worth of minerals that were produced in Ghana between the periods of 2015 to 2018, an estimated US$1.48billion, representing some 6.5percent, was paid as revenue to the state, whilst the remaining 93.5percent valued at US$21.24billion went into private pockets. With all costs deducted, IFS projects that mining companies made about US$14.14billion in supernormal profit for same period of which the government received only 10.5percent when all of it should have come to the state per common understanding. Dr. Boakye added: “Government has to think outside the box and find ways to raise more revenue to bring the country in line with its peers, in terms of total revenue to GDP ratio, while ensuring that the private sector is not overburdened.”IFSsaysit supports the digitization drive agenda that are mostly geared towards improving revenue mobilization but reemphasizes that it should pay attention to the extractive space. In its assessment of government’s fiscal consolidation efforts in the face of the rapidly deteriorating macroeconomic environment, the institute also asked the government to reduce compensation of employees and debt costs relative to total revenue and grants and to holistically review its social intervention programmes with the goal of helping to reduce government spending.Itfurther urged handlers of the economy to be frank about the economic malaise to get the buy-in of all stakeholders so as to ensure the success of its fiscal strategies going forward.
The Chief Executive Officer, Business and Commercial Clients at the Standard Bank Group, Bill Blackie, has reiterated the bank’s commitment to the growth and development of the African continent.MrBlackie said this when he led a delegation from the Standard Bank Group to pay a courtesy call on the Vice-President, Dr Mahamudu Bawumia, at the Jubilee House as part of a threeday working visit to Ghana. According to the Standard Bank CEO, the focus on Africa’s development was in keeping with the bank’s purpose and a relentless determination to see Africa“Overthrive.160 years ago the bank had an aspiration of building a global company but after a while, we realised that we needed to focus on our home, which is Africa and channel our resources, capital and expertise into driving its growth. Since then, we have committed to a capital energy that vitalises our African franchise in ways that ensure that we are contributing to the growth of the 20 African countries that we currently operate in,” he said. He also mentioned some of the initiatives that the Group’s franchise in Ghana, Stanbic Bank, has been engaged in as part of its support to the Ghanaian economy.“InGhana, we continue to support government’s industrialisation drive because we appreciate the importance of industrialisation in growing African economies. We have done this by funding key initiatives in the country,” he added. For his part, the Vice-President lauded the decision of the Standard Bank Group to focus on Africa and also shared some government initiatives that would spur growth in the country.
Gov’t should cash in on extractives with active role, IFS recommends
Government must actively participate in the country’s extractive sector to create more fiscal space and successfully consolidate the monetary position of the state, the Institute of Fiscal Studies (IFS) has advised. As the macroeconomy fast deteriorates, the policy thinktank suggests that the handlers of the economy employed outof-the-box solutions to salvage the situation including paying attention to sectors that have room for revenue mobilization.
MONDAY, AUGUST 22, 2022 | FEATURE 3
“Digital transparency is critical if we want to build a strong and robust financial system. What we are doing is building an economy of systems and data through our digitisation agenda. Again, in the financial sector, part of our digitisation agenda is meant to de-risk the financial system so far as lending and borrowing is concerned.”
By Patrick Paintsil
“Previously, people could take loans and disappear without a trace but now with the Ghana Card, which is linked to your bank account and your digital address, banks can locate everyone who takes loans from them. The Ghana Card number is also a tax identification number, which also allows the expansion of the tax net because everyone with the card will now be identified as a taxpayer,” Dr Bawumia said. In his remarks, the Chief Executive of Stanbic Bank Ghana, Kwamina Asomaning, thanked the Vice-President for his efforts towards digitising the economy and assured him of the bank’s support.“Weat Stanbic Bank are very appreciative of your efforts in driving the country towards a digital economy. One of the challenging issues in the banking sector is that it is easy to change identities resulting in high defaults in loan repayments. But now opening accounts with the Ghana Card helps in validating identities.“Stanbic Bank has always been very supportive and responsive to government initiatives and we promise to continue doing that going forward.”
Dr Bawumia said: “I appreciate the focus of the Standard Bank Group on the African continent. That focus is not misplaced because of the potential of the continent if we get the right pillars in place to drive growth. In Ghana, there have been many reforms that are targeted at making the economy stronger. The banking sector clean-up in 2017, for instance, was done to protect the sector and the data post the clean-up suggest that the sector is stronger”.
Standard Bank affirms commitment to Africa’s devt
GIFEC acquires more land for rural connectivity
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MONDAY, AUGUST 22, 20224 | NEWS Ghana Investment Fund for Electronic Communications (GIFEC), as part of the Government’s Ghana Rural Telephony and Digital Inclusion Project (GRT&DIP), has embarked on an exercise to acquire another round of Sites Acquisition, for the construction of Telephony Network Sites in about 300 communities across the country, beginning with 82 Sites over the next two weeks. The exercise, led by the Administrator, Mr. Prince Ofosu Sefah, involves Community Engagement activities and the acquisition of a suitable land for the construction of approved Sites, following successful Drive Tests and computer simulations, to confirm Site viability. As part of the exercise, the Administator, along with a communities, and assured them of the commitment of GIFEC and the Ministry of Communications and Digitalisation to ensuring the prompt construction of these Sites, to facilitate development. He highlighted the importance of mobile network connectivity in development, as it enhances education, trade and commerce, to mention a few. He said, that the project, although slightly delayed by the COVID-19 Pandemic, since it commenced in 2020, has chalked some remarkable milestones in its implementation. Sites have been built in 1,084 communities, with 512 integrated to the core network and 417 On Air (activated) and delivering voice and data services to over 120,000 average daily subscribers across various rural communities so far.
Other members of the GEXIM team at the meeting were Hon. Michael Okyere Baafi, the Deputy Minister of Trade and Industry, who is a Board Member of GEXIM, Rosemary Beryl Archer, Deputy Chief Executive Officer – Banking and Jonathan Christopher Koney, Assistant Manager, Corporate Affairs & International Cooperation.DeanMatlack was accompanied by Laurie Kelleher, Commercial Officer, Victoria Afua Agbai, Commercial Specialist and Paa Ekow Quansah, Commercial Specialist.
“In our quest to assist the Government of Ghana’s agenda to reposition the Ghanaian economy to become an exportled one and spearhead the industrialization drive, we need strategic partnerships such as the collaboration with the US Exim Bank. This is very important in helping us to carry out our mandate to help in realising the agenda to make Ghana a pillar in regional and continental trade. Currently, our team is working with officials of US Exim to finalise this and we are certain of great prospects from this partnership”, heOnadded.his part, Dean Matlack expressed his appreciation for the warm reception accorded him and his team by GEXIM and said the US Embassy in Ghana is prepared to assist at all levels to ensure the success of the collaboration between the US Exim Bank and GEXIM. He further indicated the Embassy’s willingness to collaborate with GEXIM on projects aimed at ensuring healthy lives and wellbeing of people.
Mr. Lawrence Agyinsam reiterated the Bank’s commitment to drawing a framework to operationalise an existing agreement for a USD300 million guarantee to be provided by the US Exim Bank after reviewing the existing memorandum of understanding signed by the two banks in 2019.
MONDAY, AUGUST 22, 2022 | NEWS 5
The Chief Executive Officer of the Ghana Export – Import Bank (GEXIM), Lawrence Agyinsam hosted a team from the United States of America Embassy in Ghana, led by the Commercial Counsellor, Dean Matlack. The meeting was held at the head office of GEXIM in Accra and afforded the Bank the opportunity to discuss areas of mutual interest for collaboration and building synergy with the United States of America Embassy. In addition, it was a follow up to a meeting held between GEXIM and the United States of America Exim Bank (US Exim Bank) in May 2022 on the sidelines of the 2022 Spring Meeting of the International Union of Credit and Investment Insurers (Berne Union) held in Istanbul, Turkey.
A District Court in the United States of America has turned down a request to compel the University of Ghana to pay ACE American Insurance Company an amount of US$165 million, writes Joseph Ackah-Blay for MyJoyOnline.Theamount was a judgement debt against the school for allegedly breaching its obligation in respect of a public-private partnership agreement the university entered into with a contractor, CPA, in 2015. The university was required to lease land and grant a concession to CPA to finance, construct, operate and maintain various new infrastructure projects on its campus.In2016, CPA alleged the university had not procured the necessary letters of credit and exercised its right to terminate the agreement and the option of having an independent expert determine the termination value of the contract. The expert in 2018 pegged the value at US$165million.
Ghana Exim Bank CEO hosts US Embassy UniversityTeam of Ghana wins US$165 million judgement debt case
The aim of the Corporate Responsibility & Sustainability Week is to reach out to and encourage staff, customers, and the public to inspire and encourage acts of kindness, not only during the Week, but as a culture. Within the Week, FBNBank will also be supporting selected worthy causes including ones which attract national interest and impact our communities.Theseare aimed at forming enduring partnerships with a view to making a positive impact in the lives of the people in our communities. Over the years, FBNBank has made significant socio-economic contributions including interventions in the communities.ThesetheBank has endeavoured to achieve in line with its main corporate responsibility and sustainability pillars of sustainable finance and investment, people empowerment, community support and environmental sustainability.Commenting on the Bank’s commitment to corporate social responsibility, Mr. Victor Yaw Asante, FBNBank’s Managing Director said, “We take a serious view of the actions we undertake and their impact on our society. This is because we are very committed to ensuring that the FBNBank brand continues to deliver on its promise of putting our stakeholders first. To enable us achieve this, our Corporate Responsibility and Sustainability framework is designed to deliver value in a structured and consistent way. This guarantees success by way of our contributions and delivers impact across our touchpoints. This year our actions, as usual, will be undertaken in line with our brand promise and our CR&S framework. FBNBank aims to remain a force-for-good by being a responsible corporate citizen making modest contributions which we hope will ultimately improve the socio-economic fortunes of this country.”
FBNBank has announced that it is will be celebrating this year’s edition of its annual Corporate Responsibility and Sustainability Week (CR&S) from August 22nd to 26th under the theme, “Making kindness a way of life” with the call for all to “Start Performing Acts of Random Kindness.”
The CR&S Week commemoration has become part of the activities to be undertaken by the Bank and forms part of the celebrations by its parent company, First Bank of Nigeria and across its subsidiaries. Through the platform provided by the CR&S celebrations, FBNBank Ghana expects to deliver benefit to its communities by providing much-needed support.Commenting on the celebrations, Mr. Enoch Vanderpuye, Country Team Lead, Marketing and Corporate Communications of FBNBank Ghana said, “the FBNBank Corporate Responsibility and Sustainability Week is a key event which reflects the ethos of our brand and confirms our commitment to put our stakeholders and our communities first. The week therefore provides the platform to articulate, through our actions, what we mean by putting you first. This year we will be expanding the scope to include how we show kindness to each other. Through the theme for this year, “Making kindness a way of life,” we will encourage people including our staff to start performing acts of random kindness. In all these we are confident that with the support of our staff who are very passionate about giving their time and efforts, we will make a difference in the lives of many people. This is what the FBNBank brand is about.”
FBNBank celebrates 2022 Edition of CR&S Week
MONDAY, AUGUST 22, 2022| NEWS6
FBNBank has in its 26 years of operating in Ghana remained focused on putting its customers and communities first. This, it has sought to do through the rich value and excellence of what the Bank contributes to the relationship with its stakeholders as a whole, particularly the customers.FBNBank Ghana is a member of the First Bank of Nigeria Limited Group which is renowned for its great customer service and general stakeholder engagement garnered over its 128 years of operation.FBNBank Ghana has 22 branches and two agencies across the country with over 500 staff. FBNBank offers universal banking services to individuals and businesses in Ghana.
Emirates to suspend Nigeria flights over blocked funds
Emirates airline will suspend all flights to Nigeria from September 1. According to the Dubai based airline, the West African country has failed to repatriate millions of dollars of its funds. The airline which has been battling to repatriate its millions of dollars in revenue from Nigeria said it took the “difficult decision” in order to limit further losses, citing circumstances “beyond our control,” in a statement. Emirates announced in July that it has $85 million “awaiting repatriation from Nigeria,” a figure it said was rising by more than $10 million every month. “Emirates has tried every avenue to address our ongoing challenges in repatriating funds from Nigeria, and have made considerable efforts to initiate dialogue with the relevant authorities for their urgent intervention to help find a viable solution,” the airline said on Thursday. “Regrettably there has been no progress.” Other international airlines operating in Nigeria also have revenues trapped in the country which the International Air Transport Association said in June amounted to $450 million. “Emirates are not alone in this issue. All the foreign airlines are in similar predicaments,” said Sindy Foster, a Lagos-based aviation expert, who added that the issue of trapped revenues is “a recurring problem” building up since 2016 when several airlines pulled out of Nigeria over a similar issue. Analysts also expressed worry that Emirates’ planned
The Managing Director (MD) of the bank, Dr John Kofi Mensah, said the bank continued to operate its three-year strategic plan (2019- 2022) which refocused on agricultural value chain businesses.According to him, the bank deepened its financial intermediation in the agricultural sector in 2021 in line with its crop farmers, aggregators, agroprocessors, agro-marketers and input distributors.
“To provide ready market for farmers financed by the bank and those operating under the Planting for Food and Jobs Campaign, the bank in 2021 approved an amount of GH¢160.0 million as working capital to the National Food Buffer Stock Company Limited to procure the produce from farmers for supply to critical national institutions such as Senior Secondary Schools and for storage as food buffer,” he
suspension of flights could scare away investors from Nigeria whose foreign investments dropped by 81% over the last two years, according to government statistics released earlier this year. Nigeria, Africa’s largest economy, is facing a crisis caused by a shortage of foreign exchange, despite being one of Africa’s largest exporters of crude oil. Oil production which is the country’s largest earner of foreign exchange has been far below the government’s projections this year.In July, Emirates informed Nigerian authorities it would reduce its flight operations to the West African nation after trying unsuccessfully “to stem the losses by proposing to pay for fuel in Nigeria in nairas (which continues to weaken against the dollar).”
The MD said the bank in 2021 continued to be an active partner for the implementation of the One District One Factory Programme He said as at year-end 2021, the bank had approved a total of GH¢113.87 million in respect of 18 viable projects to undertake among other things, broiler production and processing, fruit processing, general manufacturing, construction, jute bags production as well as fish farming and processing.
The Agricultural Development Bank PLC (ADB) has recorded a profit after tax of GH¢81.6 million in 2021, up from the GH¢65.4 million the bank posted in 2020. This represents over 24.8 per cent growth, leading a return on equity and return on assets of 12.09 per cent and 1.81 per cent respectively.Addressing the 35th annual general meeting (AGM) of the bank in Accra on August 10, Chairman of the Board of Directors, Daasebre Akuamoah Agyapong II, said the bank was more profitable, although the economy was yet to fully recover from the coronavirus (COVID-19) pandemic.“Esteemed shareholders, I am pleased to note that although the economy was yet to fully recover from the ravages of the pandemic, year on year, the bank was more profitable, posting a profit after tax of GH¢81.6 million. “This represented 24.8 per cent growth in performance in 2021, occasioning a return on equity and return on assets of 12.09 per cent and 1.81 per cent against 7.69 per cent and 1.14 per cent in that order respectively,” he said. According to him, the size of the bank’s balance sheet grew over the year from GH¢5.7 billion in 2020 to GH¢6.5 billion in 2021 representing 12.9 per cent growth. He said the non-performing loan portfolio of the bank witnessed a reduction from 34 per cent in 2020 to 31 per cent in 2021.
Daasebre Agyapong said the bank’s target was to bring the NPL ratio within industry brackets by 2023.Hesaid deposits grew by 15 per Campus, Hatso, Accra, thus, increasing its network from the previous 82 to 84,” he said.
Passengers affected by the planned suspension of flights to Nigeria will be assisted in making alternative travel arrangements, Emirates said, promising to reevaluate the suspension “should there be any positive developments” regarding the trapped funds. More foreign airlines could take similar measures if the government does not act on Emirates’s announcement, said analyst Foster, a principal managing partner at Avaero Capital Partners.
ADB posts GH¢81.6m profit in 2021
MONDAY, AUGUST 22, 2022 | NEWS 7
“Most things are imported in Nigeria, requiring dollars to perform the transaction. This isn’t just an aviation problem. It sends negative signals across the Nigerian economy,” she said.
Understanding the concept of liquidity in banking
A bank run is the term used to describe a situation where large groups of depositors withdraw their money from banks simultaneously due to fears that the bank will become insolvent. Banks have always been prone to runs because one of their principal social purposes is to perform maturity transformation, also known as time intermediation. In other words, they take demand deposits and other short-term funds and lend them out at longer maturities. Maturity transformation is useful because depositors often have a strong preference for liquidity at the shortest possible time, yet much of the useful activity in the economy requires assured funding for longer periods – usually years. Banks square this circle by relying on the assumption that most deposits are “sticky”. Demand deposits can theoretically all be withdrawn in a single day, yet their average balances show remarkable stability in normal times. Therefore, banks can lend out the funds for longer periods with a fair degree of assurance that the deposits will remain available or that equivalent deposits can be obtained from others as needed, perhaps with a modest boost in deposit rates. The problem, however, is that sometimes depositors lose confidence in a bank, or in the banking system, and withdraw their funds in large volumes than normal. This is the classic “bank run” that has caused the demise of many a bank over the centuries. The surest way to counter a bank run is to restore confidence. No bank that engages in a normal level of maturity transformation can survive a bank run without some form of support. There is much that a central bank can do to aid with liquidity crises, but there are limits to what can be accomplished. The risks of deposit runs have been demonstrated often enough that many countries have a system of deposit insurance. These guarantee that bank depositors will not lose their funds, up to certain specified amounts. Sometimes there are limits on what entities are insured. Banks in Ghana, for example, may not have insurance on their deposits in other banks. Deposit insurance is a very important protection against bank runs.However, it is important to note that modern banks often rely, to a significant extent, on short-term borrowings in the financial market. Consequently, it doesn’t have to take simultaneous large numbers of depositors’ withdrawal to become a serious problem. The inability to roll over debt through new securities issuances has a similar effect to deposit withdrawals. Again, the 2008 global financial crisis demonstrated this, since very few banks experienced deposit runs, yet this did not eliminate liquidity problems. To minimise this risk, some banking groups have stringent limits to their reliance on wholesale funding How can banks achieve adequate liquidity? Banks can increase their liquidity in multiple ways, each of which ordinarily has a cost, including shortening asset maturities, improving the average liquidity of assets, lengthening liability maturities, issuing more equity, reducing contingent commitments and obtaining liquidity protection. How much liquidity is enough? Since liquidity comes at a cost, a bank faces a trade-off between the safety of being highly liquid and the expense of obtaining it. This makes it difficult to answer the question of how much liquidity is enough. The complexity of the financial system makes it even more challenging at predicting its future state and for that matter, the probability and severity of future liquidity crunches. Banks try to ensure that they have sufficient liquidity to meet all relevant regulatory requirements, plus a buffer to reduce the likelihood of falling below these thresholds and trigger a regulatory or market response or create constraints on their activities. In a similar way, they try to ensure that they have sufficient liquidity to avoid a downgrade from the credit rating agencies to a level below the bank’s target rating. More sophisticated banks also try to hold the probability of a crippling liquidity crisis to below some fraction of a percent each year, based on their internal modelling. What is the economic value of maturity transformation? Policymakers face a similar tradeoff to the banks when setting the appropriate regulatory requirements for bank liquidity. With very high liquidity requirements, banks will be considerably safer, all things being equal. However, the assumption doesn’t wholly apply in the real world. If maturity transformation is an important source of their profitability, then banks’ business models could become more fragile with excessive liquidity requirements, unless the added costs can be passed through to borrowers and other customers, with its own disadvantages for the economy.Morebroadly, policymakers must consider the question of the social value of maturity transformation to the entire economy. If there is little added value, then the risks of bank run, and similar phenomenon would surely push regulators to set very high liquidity requirements. On the other hand, if the social value of maturity transformation is judged to outweigh the perceived risks – as was the case during the COVID-19 pandemic – policymakers may relax banks’ liquidity requirement as we saw in many jurisdictions including Ghana.Most analysts believe that banks allowing depositors ready access to their money, while at the same time allowing most of that money to be invested in illiquid and long-term assets is a very productive activity. This is because it allows the economy to have its cake and also eat it, providing liquidity without foregoing long-term, illiquid investments. If you were to enforce narrow banking, you would be denying the economy one of the main ways we manage to reconcile these needs. This is one of the most onerous duties of policymakers of modern timesto find the right balance between the risks and benefits of maturity transformation.
Alhassan Treasurer,Musah,Stanbic Bank Ghana.
MONDAY, AUGUST 22, 20228 | BANKING
Banks play a central role in all modern financial systems. To perform effectively, banks must not only be safe but also be perceived as such. The single most important assurance of safety is capital, which can be defined technically as the excess of the economic value of a bank’s assets over its liabilities. Capital represents a cushion that is available to cover losses of any kind. However, lessons from past experiences, more recently that of the 2008 global financial crisis, show that a second type of buffer is critical – the “liquidity” that banks have, to cover unexpected cash outflows. A bank can be solvent, holding assets exceeding its liabilities on an economic and accounting basis, and still die a sudden death if its depositors and other significant providers of funding lose confidence in the Liquidityinstitution.is,therefore critical and fundamental to the effective running of a bank. This write up breaks down the concept of liquidity and why it is of such crucial importance to banks. The article also discusses how banks can achieve adequate liquidity and the economic value of maturity transformation. What is liquidity at a bank? Liquidity at a bank is a measure of its ability to readily find the cash it may need to meet its due obligations. Liquidity can come from direct cash holdings in currency or on account at the Reserve/Central Bank. More commonly, it comes from holding securities that can be sold quickly with minimal loss. This typically means highly creditworthy securities, including government bills, which have short-term maturities. Indeed, if their maturity is short enough, the bank may simply wait till maturity. Such short-term, very safe securities also tend to trade in liquid markets where large volumes can be sold without moving prices too much and with low transaction costs (usually based on a bid/ask spread). However, a bank’s liquidity situation, particularly in a crisis, will be affected by much more than just this reserve of cash and highly liquid securities. The maturity of the bank’s illiquid assets will also matter, since some of them could mature or be sold - mostly at substantial losses - during the cash crunch, thereby providing an additional source of funds. On the other side of the balance sheet, banks often have contingent commitments that require payments of cash, particularly through lines of credit offered to some of their customers. Of course, the biggest contingent commitment in most cases is the requirement to pay back demand deposits at any time that the depositor wants. Why do we care about banks’ liquidity? We care about banks’ liquidity levels because banks are important to the financial system and they are inherently fragile if they do not have sufficient safety margins. The recent global financial crisis in 2008 demonstrated the harm that an economy can suffer when credit dries up in a crisis. Another clear example locally was the 2016/2017 financial sector challenges in Ghana, resulting in the banking sector cleanup costing billions of Cedis. Liquidity difficulties were undoubtedly some of the key challenges with several of the affected banks in Ghana. Capital is arguably the most important safety buffer. It provides the resources to recover from substantial losses of any nature and gives those dealing with the bank confidence in its safety. However, the typical cause of a bank’s failures is usually a liquidity problem that makes it impossible to survive a classic “bank run” or, a modern equivalent, such as an inability to access the debt markets for new funding. It is entirely possible for the economic value of a bank’s assets to be more than sufficient to cover all of its claims and yet for that bank to crumble because its assets are illiquid and its liabilities have short-term maturities. Why are banks prone to runs?
MONDAY, AUGUST 22, 2022 | FEATURE 9 EnergyCommissionGhanaEnergyCommissionGhana www.energycom.gov.ghLIVE ON SPONSORS
This performance succeeds an inaugural week where the Mzansi NPO performed to soldout houses as part of William Kentridge’s “Oh to Believe in Another World”, which celebrated Wits University’s 100thUnderAnniversary.thebaton of Mzansi NPO’s associate conductor, Kutlwano Masote, the orchestra accompanied some of South Africa’s finest artists. This stellar line-up featured PJ Powers, Msaki, Thandi Ntuli, Neill Solomon, Rock Steady Dub, Lebo Mashile, Bienvenue Nseka, Pops Mohamed and Sipho “Hotstix” Mabuse. The Mzansi NPO demonstrated that an orchestra can be at the base of an idea that represents good neighbourliness, tolerance, togetherness, and beauty when we come together.
The Mzansi National Philharmonic Orchestra (Mzansi NPO) was proud to partner with the Turquoise Harmony Institute (THI) at a recent performance in Johannesburg aimed at highlighting the plight of asylum seekers and refugees, who are among the world’s most disenfranchised people. The intention was to reframe the refugee experience, shifting the debate away from refugee statistics and refocusing on the attitudes of those who may not be sure who refugees even are, creating connections through common experiences and increased understanding.
This is commendable and to be encouraged, the Mzansi National Philharmonic Orchestra remains an integral part of South Africa’s development and advancement of the arts, music in particular”.
MONDAY, AUGUST 22, 202210 | NEWS
Ayhan Cetin, Executive Director of Turquoise Harmony Institute, said, “We are delighted to have collaborated with Mzansi National Philharmonic Orchestra for this concert and we look forward to a long and fruitful partnership.”SamsonDiamond, lecturer and leader of the Odeion String Quartet at the University of the Free State and associate concertmaster of the Mzansi NPO, led the Mzansi NPO through a range of songs from PJ Powers – from the ever-popular and embracing song, Jabulani, to Neil Solomon’s new song, Homeland, which was publicly launched at thisThisconcert.wasthe 3rd concert that the Turquoise Harmony Institute (THI) presented with the aim of bringing hope, awareness and advocacy to our country’s and continent’s refugees. Other partner organisations that contributed to making this concert possible, include: the Nelson Mandela Foundation, Amnesty International, Department of Sports, Arts and Culture, Universal Rights Association, Wits University, Flame Studios, Horizon Educational Trust, Mail and Guardian, Time to Care, Scalabrini Centre, JT Communication, Music in Africa, SAMRO, Concerts SA and Refugee Social Services. All monies raised from this concert will be used to help refugees in South Africa through respected charities such as Gift of the Givers, Three to Six schools, and various other programs at the Turquoise Harmony Institute.
Two new arrangements for the concert, namely Refugee (Come Home) performed by Sipho Mabuse and Women of Africa performed by PJ Powers, were newly arranged and written by the associate conductor, Kutlwano Masote. Sipho “Hotstix” Mabuse commented that “the Refugees Concert was another milestone in creating awareness of the plight of displaced people. Participation by all the musicians, including the Mzansi NPO, forges a united front against the plight of refugees.
The concert also premiered Don Laka’s “Like the Moon”, commissioned by Mzansi NPO, which was a homage to the victims of the recent KwaZuluNatal floods and the Covid-19 pandemic. This was performed by the Ijadu Chorus and accompanied by the Mzansi NPO.
Mzansi National Philharmonic Orchestra collaborates with top SA artists to highlight the plight of refugees
Further commenting on working with the Mzansi NPO, singer, songwriter and composer Maski said, “I was honoured to have collaborated with Mzansi National Philharmonic Orchestra and I loved working with these musicians across various settings. I respect the fact that this Orchestra is a moving entity, is inclusive and has musicians that are excellent and who hail from many of our provinces.”
MONDAY, AUGUST 22, 2022 11| NEWS
Clamp down on smuggled wheat flour into Ghana – IAEAG to govt Awarded for excellence in corporate practices
The Executive Secretary of the association, Mr Samson AsakiAwingobit, who disclosed this at a press conference in Accra, said the influx of foreign wheat flour into the markets was destroying the Ghanaian markets. He, therefore, called on FDA and the other agencies to as a matter of urgency go to the aid of Ghanaian wheat flour producers by banning or clamping down on these smuggled flour to save the local flour milling companies in the“Thosecountry.wheat flour comes with cheap prices making it easily accessible in all the markets, hence was one of the common commodities consumed in every Ghanaian household on an average day, whether as bread, pastries and pancakes,” he said.
Mr Awingobit explained that as much as they headed the IAEAG, it was also their duty to look out for the safety of Ghanaians and draw the attention of other agencies to check products that came to the country through unapproved entry points. According to him, the country did more of imports than exports and that was causing most of the illegal activities in the country which was why there was the need for more surveillance at the markets.“Theimported wheat flours which are smuggled through unapproved routes into the country from neighbouring African countries also come with foreign languages inscribed on the bag or jute sack, making it difficult to even identify their expiration date,” he said.
GRIDCo Awarded for excellence in Corporate Practices at 2022 Internal Audit Conference - “Best ERM Compliant Institution” - GRIDCo CEO “Best Head of Entity”The awards were presented at the 2022 Internal Audit Conference held at UPSA.
The Importers and Exporters Association of Ghana (IAEAG) yesterday revealed that there was an influx of smuggled wheat flour into the Ghanaian markets.
GRIDCo
Mr Awingobit expressed concern that majority of those foreign wheat flours in the Ghanaian market space did not have either the Food and Drugs Authority (FDA) or the Ghana Standards Authority (GSA) seal onRevealingthem. that Cote d’Ivoire flour millers have been granted exemption from payment of duty or taxes on imports for 90 days, with a ban on the exportation of the flour produced under the exemption to other countries. However, the flour has found its way into the Ghanaian market and was sold less than almost 50 per cent of the Ghanaian produced flour in the market, making the Ghanaian market have low patronage. Mr Awingobit highlighted that because the country’s boarders were porous, those who imported the wheat flour through dubious ways did not pay any taxes, fees, levies, and other charges on their products.“Thisinflux of wheat flour is affecting the flour milling industry in Ghana especially the local currency’s sharp depreciation against the US dollar and other major trading currencies,” he stated.“Government must also create an enabling environment for the local flour milling industry to work at ease and stand a better chance to compete with neighbouring countries,” he appealed.
For a second year in a row, GRIDCo won the “Best Enterprise Risk Management (ERM) Compliant Institution” award while GRIDCo’s Chief Executive, Ing. Ebenezer Essienyi also won the “Best Head of Entity” of the SOE category award. This year’s Conference had the theme, “Injecting Fiscal Discipline in the Mobilisation and Utilisation of Revenues for Sustainable Development: The Role of Internal Auditors.” The Internal Audit Agency is a key stakeholder in Ghana’s Public Financial Management System, established by an Act of Parliament.TheInternal Audit Agency Act, 2003 (Act 658) has the objective of coordinating, facilitating, and providing quality assurance for internal audit activities in all Public Institutions.
MONDAY, AUGUST 22, 202212 | FEATURE
Cocoa farmers in Ghana use Mist blowers for various purposes on their farms and these include spraying pests and diseases as well as application of liquid fertilizers. The blowers operate on fuels and this makes the cost of using them relatively higher. Availability, accessibility and affordability of fuels are major challenges cocoa farmers have faced over the years. Mostly, the fuels (thus, if they are able to fill the blowers at home before setting off to farm) add to the weight of the blowers and carrying them over long distances as well as keeping them at the back for a longer period poses potential health hazard to farmers. This is a potential area solar application could be explored. Solar powered blowers will therefore be economical and user-friendly.
Closely related to point (d) is how solar-driven household gadgets such as televisions, fridges and radio sets and likes could be made available to farmers under flexible payment terms to enable them live decently in the villages. Again, farmer cooperatives could act as guarantors in this regard and assist in the repayment efforts of their members to avoid default.
Solar energy: Exploring potential areas for application in Ghana’s cocoa sector
Conclusion One other dicey area for consideration is the possibility of introducing solar-enabled dryers in Ghana’s cocoa sector. Several countries have, over the years, adopted solar dryers in the production cycle of certain crops including cocoa. However, in the case of Ghana, a proposal to consider solar dryers would obviously raise questions. Over the past 75 years (since COCOBOD was set up to regulate the sector), Ghana’s niche position as the producer of premium quality cocoa globally is mainly as a result of good fermentation practices and sun drying. So, the questions come in then. Does the climatic condition (rainfall pattern) in Ghana warrant the adoption of solar drying as an alternative to sun drying? Will the quality of the beans remain top-notch using solar drying? Will the process of drying cocoa using solar dryers be properly regulated to reflect how natural drying works? Answers to these questions among others are key considerations first and foremost before any proposal for investment into this novel area in the cocoa sector could be welcomed.However, with the spate scientific innovations today, every phenomenon can be explored and findings will provide a new path for policy reformation and transformation. Maybe, the Cocoa Research Institute of Ghana must investigate first the potential of this novelty to determine the degree of receptiveness to Ghana’s cocoa sector. In our next episode, we shall delve into the plausibility or otherwise of introducing solar dryers in mainstream cocoa farming.Regardless, renewable energy is the way to go now and enormous opportunities exist for private sector participation in exploring the afore-stated potential areas to boost production and better the lots of cocoa farmers across the country.
c. Solar Slashers and Pruners Until recently, weedicides and machetes were used to control weeds and prune cocoa farms. Apart from the weedicides leaving chemical residue in the beans to raise food quality concerns, the weedicides eventually leached into water bodies and caused destructions to the ecosystem.
a. Solar-enabled Cocoa Farm Irrigation
The effects of climate change on especially agriculture production have put a necessity on countries to consider the use of renewal energy to reduce the over-reliance on the use of fossil fuels and their concomitant impact on the environment and ecosystem.
‘The Ghana Cocoa Board (COCOBOD) is set to roll out an irrigation programme for farmers in cocoa growing areas to ensure all-year round water supply for their farmlands to increase yield,’ said Hon Aidoo. With an estimated 1.5 million cocoa farmers in Ghana, opportunity exists for massive introduction of solar initiative and this means, the private sector’s role is indispensable. Cocoa farmer cooperatives could serve as conduits and act as guarantors for beneficiary farmers under very flexible terms with service providers.
Article by David Asare Oduro, Public Affairs davidoduro29@gmail.comDepartment
Quoting further from an IEA report, Elstad (2022) indicated that a huge growth potential exists for solar energy to become a key source of power, which will provide more than 27% of global electricity by 2050.Although the rate of solar energy adoption in countries could be potentially hampered by economic, technical, awareness and information, financial, regulatory and policy, institutional and administrative, social and environmental, and end-use/ demand-side barriers, and novelty factors (Painuly & Wohlgemuth, 2021), the prospects of introducing solar energy in Ghana’s cocoa sector will not only break the longstanding dependence on traditional practices associated with cultivating the crop but also, it will trigger a paradigm shift that will inject impetus into some core operational activities in the sector and accelerate cocoa production in a sustainable manner.
In the instance of pruning with machetes, climbing tall cocoa trees to prune in most cases resulted in exposure to dangerous reptiles (snakes) and sometimes falling down from the trees and hurting. Motorized slashers and pruners were therefore introduced a few years ago in an effort to improve upon farm sanitary methods, beans quality and address other challenges on the field. Unfortunately, the engines are fuel powered and the rising costs of fuels and other inconveniences call for a shift to the use of solar-powered slashers and pruners to optimize their full usage. This is another potential area for exploration by the private sector.
f. Community Water Supply Solar-enabled water facilities present another area for private sector participation. Most farming community do not have good sources of obtaining safe drinking water. The situation has been exacerbated by the activities of alluvial illegal miners which have destroyed water bodies leaving no choice than relying on boreholes for good drinking water.
The shift to the use of solar energy has become an obvious choice as the amount of energy from the sun each day is enormous, readily available and cheap to support the generation of electricity to enhance various activities within the agricultural valueAccordingchain. to Elstad (2022) solar energy is an important renewable energy technology that is emission-free, versatile and capable of generating electricity, heat water, and even power vehicles and other implements that are used to support the production of crops.
Unstable weather occasioned by climate change has made rain-fed agriculture unreliable in recent times. Irrigation farming has therefore become the obvious choice to ensure not only improved yields but also allyear-round production. Already, COCOBOD has committed to establishing solar-powered irrigation set-ups on cocoa farms as a concrete step against the vagaries of the weather pattern and its effect on cocoa.
Over the years, efforts at making solar energy an integral part of the production of cocoa have not been bad. Solar torch and street lights were donated to farmers and cocoa communities free of charge. But it appeared that Ghana Cocoa Board (COCOBOD) alone could not touch the lives of millions of cocoa farmers and their villages Ghana with massive donation of solar gadgets thereby leaving significant gaps which definitely requires the involvement of the private sector in the provision of solar-enabled set ups. This article therefore puts in perspective, some potential areas that solar energy application could be explored to stimulate cocoa production and improve the living conditions of farmers.
b. Solar-powered Mist Blowers
e. Household Gadgets/ Appliances
d. Rural Electrification Most cocoa growing communities are cut off the national electrification grid. They basically do not have electricity to enable them enjoy good standard of living. However, investments into solar street and domestic lighting will help them significantly. In the first instance, children of cocoa farmers can use the lights to study at night. Cocoa farmers can also use the lights to perform some minor tasks associated with drying of their beans. Finally, the practice of losing cocoa beans to miscreants through theft will be minimized. The private sector could enter into some kind of agreement with beneficiary communities through farmer cooperatives or community leaders for the adoption of solar for improved living condition.
MONDAY, AUGUST 22, 2022 13| ENERGY
By Sampson Manu
Groups petition Prez, Otumfuo over illegal miners’ invasion of Anglogold Ashanti
MONDAY, AUGUST 22, 202214 | FEATURE
At a joint press briefing which followed a float through the principal streets of Obuasi to drum home their concerns, the Secretary of the AppianinBonsec Fun club appealed to the President His Excellency Nana Addo Dankwa Akufo-Addo and the Asantehene Otumfuo Osei Tutu II to intervene to bring the activities of these illegal miners threatening the survival of AngloGold Ashanti to a halt. He added that the invasion of illegal miners into AGA’s concessions has the potential of collapsing the Mine if not stopped. It will be recalled that some illegal miners were captured in a viral video running away with their booty after invading underground sites of AngloGold Ashanti in Obuasi. Again some 30 illegal miners were recently arrested in Obuasi by soldiers while allegedly mining on a concession belonging to AngloGold Ashanti. This prompted the Municipal Chief Executive for Obuasi who is also the Chairman of the Municipal Security Taskforce, Hon ElijahAdansi-Bonah to speak against the activities of these unscrupulous people. However, the Appianin- Bonsec Fun club insist what is currently happening mimics events of 2015/2016 when activities of illegal miners resulted in the death of the Communications Director of AngloGold Ashanti John Owusu with investors of the company threatening to leave the country. Reminiscing the state of Obuasi during the shutdown of the Obuasi Mine, the Secretary of the Group said “ we are all witnesses to events preceding the redevelopment of the Obuasi Mine when the closure of the Mine partially due to the activities of illegal miners resulted in untold economic hardship in Obuasi and accompanying social vices like armed robbery and prostitution. We can’t revisit those dark days so we appeal to the President and Otumfuo to intervene to save the Obuasi Mine”
There have been growing concerns on the part of residents of Obuasi and officials of AngloGold Ashanti on the impact of recent invasion of AngloGold Ashanti’s concessions by some illegal miners in Obuasi. Latest to add their voice to the worrying situation are Obuasi based Pressure group AppianinBonsec Fun club and Local Contractors Association.
The Chairman of the group Appianin Ennin in an interview with the media appealed to the Government to beef up security at the Obuasi Mine to protect the Mine and save it from further intrusions by illegal miners. He also called on well-meaning Ghanaians including Members of Parliament to speak against the intrusion of the concessions of AngloGold Ashanti by illegal miners.TheSecretary of the Obuasi Local Contractors Association Solomon Acheampong called on stakeholders in Obuasi to rally behind the operations of AngloGold Ashanti. He said the redevelopment of the Obuasi Mine has brought hope to businesses and residents of Obuasi.
IV. By choosing to use roads as the basis for borrowing, Ghana has guaranteed longer due diligence intervals between disbursements. Each disbursement will require ESG sign-off, which tends to be more onerous for physical infrastructure compared to traditional trade finance. The erroneous impression that all the $750 million will come at once amounts to an unnecessary inflation of hopes. It should normally take years to disburse road project funds. Even if fast-tracked, it is hard to see how the entire $750 million can be disbursed within three months. Meanwhile, Ghana literally needs money tomorrow, and in much larger quantities than $750 million.
As previously explained, Ghana has not really entered into a loan agreement with Afreximbank. Unless the government signed a secret agreement and only sent the term-sheet to Parliament for approval (a patent illegality), the only documents that were placed before the full Parliament were term sheets opening the door for the negotiation of substantive loan Thereagreements.aremajor factors acting against the swift injection of Afreximbank funds, for which reason it ought not to be treated as an emergency support facility but a complementary bolster for another, true, emergency liquidity injection scenario.
• The Syndicated Cocoa Loan Facility It is historically true that the annual syndicated cocoa loan facility has been a major booster for the Ghana Cedi in its usual cycles of lows and not-so-lows. This time however there are formidable obstacles. Ghana’s cocoa crop continues to fail due to disease and poor supplies of subsidised inputs farmers have come to depend upon. Liquidity challenges have led to many of the country’s licensed buyers struggling to deliver the right quantities on time for export. Ghanaian deliveries have become unreliable in the international market leading to some frustrated contracts. All these factors are constraining disbursements even from the continued on page 17
• The Bank of Ghana forex liquidity support to commercial banks Here also, as with the BDCs, our inquiries in the industry point to massive undersupply.
• AfrieximbankUSD750,000,000LoanFacility
II. The Ukraine Crisis Adjustment Trade Financing Program (UKAFPA), which is the specific Afreximbank program Ghana aims to draw on, was designed to fund simple purchases of commodities meant to be resold so that Afreximbank can get its money back relatively quickly. It is primarily an export and tourism stimulant facility. It was not originally intended for balance of payments support in the traditional way. The UKAFPA is still in fund raising mode and as at last checks was yet to appoint a Fund Manager. Ghana’s request for $750 million for road projects are somewhat misaligned with the program’s objectives and as such may require further work to secure all the necessary approvals and ensure successful matchmaking with ultimate lenders.
Because the government has also chosen at this time to infuse sentiment-dampeners, like the poorly designed e-Levy, into the economy at this sensitive moment, a true “stagflation spiral” has been triggered, throwing all crisis management out of gear. Raising rates will crush ground growth further, but doing nothing will make the inflation hawks scent blood. What a bind! Where we cannot so easily pardon the BoG is its seeming enthusiasm to reinforce wrongheaded government narratives that are all about PR signaling and very little about reality. By applying a veneer of “technocratic credibility” on the government’s strategy of sheer spin over substance, it has become an enabler of the continued postponement of hard decisions in the hopes of a miracle. Our main charge-sheet is the latest BoG release urging calm because it is at work steadying the Cedi. Let us tackle each of the seven remedies it claims it is applying to the Cedi’s woes.
Zimbabwe recently abandoned this same bullion-reserves approach, despite at one point hoarding the world’s second largest stash of gold reserves, to focus on getting its citizens to shift from forex to gold coins as a store of value, a somewhat less fraught but equally dubious proposition. Whilst there are channels through which such a policy can impact positively on small-scale mining as a separate objective, research suggests considerable obstacles.
Is the Bank of Ghana losing the plot?
As I write this, members of the Bank of Ghana’s Monetary Policy Committee (MPC) are huddled together poring over the dire numbers of Ghana’s ongoing economic tragedy. Five of the seven members of the committee are basically just senior executives of the Bank of Ghana: the Governor, his two deputies, and two key management lieutenants. The other two are appointed by the BoG’s government-dominated Board. Essentially the same people who have been running the day to day and two friendly economists favoured by the ruling government are having an “emergency meeting” on matters already in their purview, hardly the stuff of disruption. But there is a quality of the surreal about this whole panic. Ordinarily, the Governor of the Bank of Ghana (BoG) and his MPC deserve our sympathy. Even though we analysts frequently criticise the MPC for its continued refusal to publish minutes of its meetings and disclose the exact positions of members. And though we cannot easily forgive its failure to make public the actual forecasting and evaluatory models it relies on to guide its rate-setting, we always cut it some slack.We are moderate in our expectation of the BoG’s success in maintaining inflation between its 6% to 10% target band (with a preferred median of 8%) because we agree with the economists who attribute the country’s inflationary and exchange rate problems to something called, “fiscalFiscaldominance”.dominance crudely means that whenever the government is hard up it is unable to rely on increasing tax revenue. It then resorts to measures that forces the monetary authorities (eg. the central bank) to give up on its targets and strictures. Historically, high government debt in a context of low capacity to increase tax revenue quickly, as is the case in Ghana, has been associated with increased money printing (some of which is then lent to the government by the central bank), financial repression, and various ways of gaming the government securities markets (such as the recent revelations of sweetheart repo deals by the BoG to incentivise some banks to hold on to government securities).
III. The UKAFPA is currently oversubscribed, with African countries having requested $16 billion from a total package of $4 billion. Ghana is thus in stiff competition for disbursements.
I. A final agreement needs to be completed and approved by the Board of Afreximbank. This usually takes time.
• Special Foreign Exchange Auction for the Bulk Distribution Company’s (BDCs) to help with the importation of petroleum products. Our inquiries in the downstream fuel market indicate that the BoG has been steadily reducing its supply of forex to the BDCs. Some respondents report a sharp decline from about 30% of forex demand being met in the official BoG window in May of this year to roughly 10% today. It is totally disingenuous for the BoG to create the impression that it is meeting the demand of the BDCs.
• Gold Purchase Program to increase foreign exchange reserves. So far all we have is an opaque program in which the government has without any merit-based competition selected a so-called “gold aggregator” from which it intends to buy crude gold, have it refined and stored as a reserve asset. No information as to which company exactly this is, what price indexing formula exactly is at play or the volume Itcommitments.isimportantto emphasise that the BoG does not intend to back any portion of the Cedi supply with gold. This is not a partial replay of the gold standard. So, effectively, it will simply seek to convert printed Cedis for gold. This will hedge the BoG’s own holdings against Cedi inflation but it does nothing to actually address demand for forex or the market’s jitteriness about holding Cedis. In fact, gold producers will seek a counterhedge against the Cedis they are provided, limiting the exchange volumes involved, seizing up liquidity over the long haul, and bringing everything back to square one. Unless, the BoG intends to become a major active speculative trader in gold to build its dollar reserves, there is virtually no significance to this policy at all as far as the Cedi’s stability is concerned.
In the current circumstances of fiscal dominance and attempts at financial repression in Ghana, it is not surprising at all if inflation hits 32% instead of the central bank’s targeted 8%. The tools available to the BoG are being used to favour inflation rather than to bring it down because of the central bank’s weak operational independence.
MONDAY, AUGUST 22, 2022 15| FEATURE
• Bank of Ghana gold buying cooperation agreement with mining companies. It is not clear how this should differ in effect from the shady/ opaque “gold aggregator” approach to bolstering bullion reserves discussed above.
MONDAY, AUGUST 22, 202216 | NEWS
• IMF Programme As everyone now agrees, Ghana’s current fiscal challenges are worse than they were in 2014 when Ghana applied for its last IMF facility (the 2020 general disbursement was not a real programme). Even so, it took 8 months for the country to jump through all the necessary hoops to close a programme. Considering that Ghana is yet to even submit its Letter of Intent, much less complete an updated debt sustainability analysis, and agree on the shape of a program, there is really no way for an IMF program to commence in less than three months. Even if a substantial amount of the money is frontloaded, IMF programmes are milestonedriven. Worse, Ghana is focused on PR signalling and spin rather than doing the substantive work. For example, it has failed to explain why it believes it deserves double ($3 billion) of what its quota should entitle it to and why increasing the amount it intends to obtain at one go should do anything to speed things up. That is of course not to say that $3 billion is an unrealistic ask, but to emphasise that the more IMF funds are at risk, the stricter the scrutiny of the IMF
delusional and dangerous. As a matter of urgency, the government needs to explore a truly short-term forex commercial loan that is NOT project-tied and one which could be disbursed within the next three months. It should rework the Afreximbank facility as well as the one with the three commercial banks to ensure that they are consistent with an emergency funding scenario.
MONDAY, AUGUST 22, 2022 17| NEWS existing receivables-backed facility. At any rate, it would be many months before Ghana can expect any forex influx from the new facility.
continued from page 15
Above all, the government should stop the PR signalling and take substantive decisions on true cuts to discretionary spending since no short-term forex facility at this point will be of a decent enough size to make a real dent in the $4 billion forex shortfall facing the country. This means an independent spending review by a credible team of external auditors. It also means selective defaults on government obligations tied to programs delivering low or no value such as the various Kelni GVG related contracts, the wasteful IT projects at the Electoral Commission and the discredited flagship program expenditures related to IPEP, 1V1D, and the various so-called “special initiatives” at the Presidency. It betrays a serious lack of sincerity and seriousness about addressing the ongoing crisis when the only spending areas the government can conclusively point to for cuts are travel and meetings. Areas barely amounting to $15 million even assuming 100% successful execution of claimed cuts.In fact, the total spending adjustments in the government’s mid-year budget amount to just about $220 million on net when the nation is confronted with a $5 billion fiscal hole. If the Bank of Ghana is unable to join the rest of us to ramp up the pressure on government to take the crisis seriously and embark on credible short-term remedial strategies, it can at least do all of us a favour and just stop bloviating.
Ghana is past that stage.
Credit: brightsimons.com
termBoGstrategy.atheprovisions,willalosescrucialwhichwithininaddresstheIn**************************Board.short,noneofthemeasuresBoGistrumpetingcantheCedi’sseriouswoestheshort-term,whichistosaythenextthreemonths,mostanalystsbelieveisthehorizon.Whenacurrencyroughlyhalfitsvaluewithincoupleofmonths,prudencecallforrealemergencynotspin.Yet,sofar,governmenthasnotdisclosedcredibleshort-termremedialThustheposturingoftheasifthereisindeedashort-responseunderwayisboth
The Cedi also weakened against the GBP for the week. It traded at GH¢9.7841/£, compared with GH¢9.6341/£ at week open, reflecting w/w and YTD loss of 1.53% and 16.94% respectively. This compares with YTD depreciation of 2.39% a year ago. The Cedi also lost against the Euro for the week. It traded at GH¢8.2170/€, compared with GH¢8.1243/€ at week open, reflecting w/w and YTD depreciations of 1.77% and 17.44% respectively. This compares with YTD appreciation of 2.85% a year ago.
MTN dominated volume of trades, accounting for 50.82% of shares traded for the week whiles New Gold dominated value of trades for the week, accounting for 53.80% of volumes traded. The market ended the week with 4 advancers and 2 decliners as indicated on the table below.
The Cedi depreciated against the USD for the week. It traded at GH¢8.0571/$, compared with GH¢8.0001/$ at week open, reflecting w/w and YTD depreciations of 0.71% and 25.46% respectively. This compares with YTD depreciation of 1.06% a year ago.
MONDAY, AUGUST 22, 202218 | MARKET REVIEW WEEKLY MARKET REVIEW FOR WEEK ENDING - AUGUST 12, 2022 MACROECONOMIC INDICATORS STOCK MARKET REVIEW THE CURRENCY MARKET Q3, 2021 GDP Growth 3.3% Average GDP Growth for 2021 3.3% 2022 Projected GDP Growth 3.7% BoG Policy Rate 19.0% Weekly Interbank Interest Rate 21.92% Inflation for February, 2022 31.7% End Period Inflation Target – 2022 28.5% Budget Deficit (% GDP) – Dec, 2021 5.0% 2022 Budget Deficit Target (%GDP) 6.6% Public Debt (billion GH¢) – Dec, 2021 393.4% Debt to GDP Ratio – Dec, 2021 78.3%
The Ghana Stock Exchange strengthened for the week on the back of price gains by 4 counters. The GSE Composite Index (GSE CI) gained 163.96 points (+6.84%) to close at 2,560.49 points, reflecting year-to-date (YTD) loss of 8.20%. The GSE Financial Stocks Index (GSE FI) however lost 7.50 points (-0.36%) to close at 2,085.40 points, reflecting YTD loss of 3.09%.
Market capitalization inched up by 3.14% to close the week at GH¢64,802.35 million, from GH¢62,827.57 million at the close of the previous week. This reflects YTD increase of 0.48%. Trading activity recorded a total of 4,660,329 shares valued at GH¢14,758,112.92 changing hands, compared with 66,164,780 shares, valued at GH¢50,649,299.41 in the preceding week.
The Cedi again weakened against the Canadian Dollar for the week. It opened at GH¢6.1811/C$ but closed at GH¢6.3063/C$, reflecting w/w and YTD depreciations of 1.99% and 24.81% respectively. This compares with YTD depreciation of 2.67% a year ago.
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MONDAY, AUGUST 22, 2022 19| MARKET REVIEW
PRICES Government raised a sum of GH¢1,860.97 million for the week across the 91-Day, 182-Day and 364-Day Treasury Bills. This compared with GH¢1,301.71 million raised in the previous week. The 91-Day Bill settled at 27.34% p.a from 27.04% p.a. last week whilst the 182-Day Bill settled at 28.73% p.a from 28.51% p.a. last week. The 364-Day Bill settled at 28.83% from 28.40% at last issue. The table and graph below highlight primary market yields at close of the week.
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Commission (SEC) and the National Pensions Regulatory Authority (NPRA). Name: Ernest Tel:+233Email:aaudrey@cidaninvestments.comName:Tel:+233Email:etannor@cidaninvestments.comTannor(0)208818957AudreyAsieduaWiafe(0)578402700 Name: Moses Nana Osei-Yeboah Tel:+233Email:moyeboah@cidaninvestments.com(0)244990069 CIDAN Investments Limited CIDAN House Plot No. 169 Block 6 Haatso, North Legon – Accra Tel: +233 (0) 26171 7001/ 26 300 3917 Fax: +233 (0)30 254 4351 Email: Website:info@cidaninvestmens.comwww.cidaninvestments.com Disclaimer The contents of this report have been prepared to provide you with general information only. Information provided on and available from this report does not constitute any investment recommendation. The information contained herein has been obtained from sources that we believe to be reliable, but its accuracy and completeness are not guaranteed. Your subscription along with the support of businesses that advertise in Business24 -- makes an investment in journalism that is essential to keep the business community in Ghana wellWeinformed.value your support and loyalty. +233AdvertisingNewsroom:editor@business24.com.ghContact:0302965315/Sales:242122742 Copyright @ 2019 Business24 Limited. All Rights Reserved. Limited BUSINESS TERM OF THE WEEK Bank Run: A bank run occurs when a large number of customers of a bank or other financial institution withdraw their deposits simultaneously over concerns of the bank’s solvency. Source: cyclical-stocks/https://www.wallstreetprep.com/knowledge/
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Crude Oil prices settled up more than 3% after the International Energy Agency raised its oil demand growth forecast for this year, as soaring natural gas prices had some consumers switching to oil. Brent futures traded at US$98.15 a barrel on Friday, compared to US$94.92 at week open. This reflects a w/w and YTD gain of 3.40% and 26.19% respectively. Gold prices drifted higher on the back of a drop in U.S. Treasury yields. Gold settled at US$1,815.50, from US$1,791.20 last week, reflecting w/w gain and YTD loss of 1.36% and 0.72% respectively. Prices of Cocoa declined for the week. The commodity traded at US$2,352.00 per tonne on Friday, from US$2,305.00 last week, reflecting w/w gain and YTD loss of 2.04% and 6.67% respectively. Securities Exchange
Ghana Link Network Services (Ghana Link), the technical operator of trade facilitation tool, the Integrated Customs Management System (ICUMS) picked five awards at the fifth edition of the Ghana Shippers Awards held on Friday, August 19, 2022 demonstrating its leadership position in the trade facilitation space.The awards included Excellence in Innovation and Technology, Trade Facilitation Organization of the Year and a special recognition award for its outstanding industry leadership.TheExecutive Chairman of Ghana Link Mr. Nick Danso Adjei won the ultimate award of the night which is the Entrepreneur of the Year whiles the Deputy Managing Director of company, Mr. Clyde Panyin Adjei also won the Chief Operating Officer of the year award.
In an interview, the Director of Operations at Ghana Link Network Services Ltd Mr. Raymond Amaglo, expressed gratitude to the stakeholders across the supply chain for their collaboration and efforts towards the successes achieved in the clearance chain.
“They have helped us to identify which areas which should make improvements to, they have brought suggestions on how we should streamline the processes. Because of that collaboration, it us helped for us to overcome all the challenges that have come across the period that we have implemented our solutions,” he said.He added that Ghana Link will continuously improve its processes to achieve the desired results.“Our goal is to ensure that on a very constant basis, we are improving our processes at the ports just to ensure that when it comes to trade facilitation in the sub region there is no country comparable to us.”
According to Mr. Amaglo, as operators of the ICUMS, Ghana Link will continue to ensure that its processes are efficient to bring about reduction in cost at the various ports of entry and also see it that there is reduction in time of doing business.
The awards programme which is in its 5th year running is to reward those who have played defining roles in moving the shipping industry in Ghana forward and have demonstrated achievement across a wide variety of domains including sustainability, operational excellence and innovation.
Ghana Link picks five awards at 5th Ghana Shippers Awards
“It is my fervent hope that consensus would be built to deal with these matters as quickly as possible to help not only support your operations but also accelerate economic growth,” he said.
According to the organizers of the awards, the activities of Ghana Link Network Services Ltd have led to improvement in the clearance of goods and increased government revenue at the ports through digital technology.
PUBLISHED BY BUSINESS24 LTD. TEL: 030 296 5297, 030 296 5315. EDITOR: BENSON AFFUL editor@business24.com.gh | +233 545 516 133.
Speaking at the awards the CEO, Ghana Shippers Authority, Benonita Bismarck said her outfit will continue to promote and protect the interest of shippers. Minister of Transport, the Deputy Minister of Transport, Kweku Ofori Asiamah, in a speech read on his behalf, revealed that government has taken action to find lasting solutions to shipper complaints including arbitrary charges and exchange rates used by some service providers.
WWW.BUSINESS24.COM.GH | NO. B24/317 | NEWS FOR BUSINESS LEADERS MONDAY, AUGUST 22, 2022
