Business24 Newspaper 27th November, 2020 by Business24 Online

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FRIDAY NOVEMBER 27, 2020

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FRIDAY NOVEMBER 27, 2020

PIAC says US$169m oil money unaccounted for Credit to private sector improves amid recovery in economic activities By Joshua Worlasi Amlanu macjosh1922@gmail.com

redit to the private sector grew at a faster pace in October compared with a year ago, as the economy recovers from the effects of Covid-19. Cont’d on page 3

Terkper disagrees with treatment of exceptional budget items by IMF, gov’t

F In its 2020 semi-annual report, the committee said it was also unable to provide an update on the status of unutilised and unaccounted for ABFA funds, which stood at GH₵1.5bn.

ormer Finance Minister Seth Terkper has questioned the basis on which the Bank of Ghana Governor notes the approval by the International Monetary Fund (IMF) of changes in the basis for calculating the budget deficit differently under the IMF programme started by the Mahama administration and continued by the current government.

Cont’d on page 2

Cont’d on page 3

Noble Wadzah

By Benson AFFUL affulbenson@gmail.com

he Public Interest and Accountability Committee (PIAC), which monitors the use of petroleum revenue, says it is unable to report on the

programmes and activities undertaken with an amount of US$169.51m disbursed to the Annual Budget Funding Amount (ABFA) for the first quarter of 2020. The ABFA is the portion of petroleum revenue used to support government’s budget.

ECONOMIC INDICATORS EXCHANGE RATE (INT. RATE)

INTERNATIONAL MARKET USD$1 =GHC 5.7027

BRENT CRUDE $/BARREL

POLICY RATE

14.5%

NATURAL GAS $/MILLION BTUS

GHANA REFERENCE RATE

15.12%

GOLD $/TROY OUNCE

OVERALL FISCAL DEFICIT

11.4% OF GDP

PROJECTED GDP GROWTH RATE AVERAGE PETROL & DIESEL PRICE:

0.9% GHC 5.13

CORN $/BUSHEL COCOA $/METRIC TON COFFEE $/POUND:

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Editorial / News

FRIDAY NOVEMBER 27, 2020

Editorial

PIAC should not ignored!

efore Ghana produced its first drop of oil, a lot of preparations had gone into making sure that the country does not suffer the same fate of mismanagement as seen in other resource rich countries. A cardinal requirement that had to be fulfilled was transparency in terms of how much money was made from oil production as well as how it was spent. This led to the passage of the Petroleum Revenue Management Act, a law which has been hailed by many as among the best. That law birthed the Public Interest and Accountability Committee (PIAC) which basically monitors the utilisation of petroleum revenue. While PIAC had gone about its duties diligently over the years serving as a watchdog and ensuring fund are

accountable, recent developments are worrying. PIAC in its 2020 half year report says an amount of US$169.51million disbursed to the Annual Budget Funding Amount (ABFA), the portion of petroleum revenue used to support government’s budget, cannot be accounted for. This worrying development comes on the back of another GH¢1.5bn unaccounted for ABFA funds that was a subject of a disagreement between the committee and the Ministry of Finance. For this reason, Mr. Noble Wadzah, chairman of PIAC, repeated his earlier call on Parliament to strengthen the committee’s oversight mandate on the Ministry of Finance. “This is because the ministry’s persistent failure (fourth time)

to provide half-year data on ABFA utilisation is not only adversely affecting the work of the committee, but [is] also eroding gains in the fight for transparency and accountability in the management and use of Ghana’s petroleum revenues for the benefit of citizens,” the chairman said in the report. This paper wants Parliament to call the Finance Ministry to order. Institutions like PIAC serve important functions and we cannot look on as they are made redundant in the discharge of their mandate. We also commend PIAC for continuously waging the war to ensure the Ministry accounts for its utilisation of our oil revenue in fulfilment of its mandate. Now, it is left with Parliament to ensure the right thing is done!

PIAC says US$169m oil money unaccounted for Continued from cover

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For this reason, Mr. Noble Wadzah, chairman of PIAC, repeated his earlier call on Parliament to strengthen the committee’s oversight mandate on the Ministry of Finance. “This is because the ministry’s persistent failure (fourth time) to provide half-year data on ABFA utilisation is not only adversely affecting the work of the committee, but [is] also eroding gains in the fight for transparency and accountability in the management and use of Ghana’s petroleum revenues for the benefit of citizens,” the chairman said in the report. The report also disclosed that the cumulative indebtedness to Ghana National Gas Company (GNGC) continued to increase to US$942.26m. This, the report said, is as a result of the failure of GNGC’s customers to honour their obligations.

The Ghana Petroleum Fund reserves, according to the report, recorded a 24.1 percent reduction at the end of June 2020 compared with the same period of 2019. This was as a result of the lowered cap and subsequent withdrawals from the Ghana Stabilisation Fund (GSF). “Consequently, the GSF yield reduced by 68.08 percent from that of the same period of 2019,” it added. During the first half of 2020, cumulative raw gas production increased significantly by 65 percent, the highest recorded half-year volume of gas produced

Ken Ofori-Atta, Finance Minister

since 2010. Total petroleum receipts in the Petroleum Holding Fund (PHF) in the same period stood at US$322.57m, indicating a decline of 11.32 percent from a year ago. According to PIAC, GNGC received US$1.78m under the Cash Waterfall Mechanism in order to address its indebtedness to the Ghana National Petroleum Corporation (GNPC) for gas supplied. However, the committee said there was no payment to GNPC. Consistently, the non-payment of gas revenue denies the PHF of its due entitlement, the committee added.

FRIDAY NOVEMBER 27, 2020

Credit to private sector improves amid recovery in economic activities Continued from cover Central bank data show that the year-on-year growth in private sector credit stood at 13.4 percent in October compared with 13.1 percent in October 2019. The total value of outstanding loans to the private sector increased to GH¢42.1bn from GH¢37.1bn within the period, according to the data. Nevertheless, year-on-year credit growth remains below its peak of 19.7 percent in March 2020, when the country began to record cases of the novel coronavirus. Governor of the central bank Dr. Ernest Addison, during the monetary policy committee press briefing on Monday, indicated that the latest credit conditions survey conducted in October show a net easing in overall credit stance on loans to enterprises and households. “The survey results showed that with the recovery in economic activities underway,

Dr. Ernest Addison, Governor, BoG

demand for loans over the next two months is also expected to rise,” he stated. Results during the previous credit conditions survey in August 2020 pointed to a net tightening in overall credit stance on loans to enterprises. This tight credit stance, the central bank indicated, was a reflection of the uncertainty surrounding the duration, scale, and impact of the pandemic on banks’ operations.

Banking sector performance Data on the banking sector show that total assets grew by 23.7 percent year-on-year to GH¢150bn in October, while deposits also recorded an annual growth of 27 percent to GH¢100.2bn. Total advances—to both public and private sector borrowers—also went up by 13.7 percent year-on-year to GH¢47.4bn over the period. The governor said the banking sector remains liquid, profitable

and well-capitalised, with strong buffers to withstand adverse shocks and support the country’s recovery from the pandemic. “The Financial Soundness Indicators and the Banking Sector Stability Index remain in high positive territories. The industry’s capital adequacy requirement (CAR) of 20 percent as at end-October 2020 remains well above the regulatory minimum threshold. Asset quality has also improved,” he said.

Terkper disagrees with treatment of exceptional budget items by IMF, gov’t Continued from cover Mr. Terkper stated in an interview that the Washingtonbased lender insisted that the then government treat the huge cost incurred in the implementation of the Single Spine Salary Structure as an exceptional cost, not a footnote. He thus questioned the rationale behind granting the Akufo-Addo led administration – which had inherited the programme – the apparent permission to compute the fiscal deficit without the financial sector and energy sector debts. “The excuse that these costs had to be separated because we were under an IMF progamme is not tenable. This is because even under the IMF programme, if we were looking at exceptional costs, the most significant cost before the banking bailout cost was the Single Spine, which we had to quantify and add to calculate the deficit. Before 2016—even when we were under the IMF programme— similar to COVID, in terms of

Seth Terkper

effect, we were getting out of the global financial crisis, had gas disruption leading to power crisis and [were] entering the BRIC-induced decline in crude oil price and crisis, the IMF insisted that we do zero financing. This meant that the Bank of Ghana will not extend any facility to us. Yet that was relaxed immediately with Covid, but that was not done for us,” Mr. Terkper added. The Former Minister’s

response comes after BoG Governor Dr. Addison told journalists that Ghanaian authorities had agreed with the Bretton Woods institution to exclude the financial sector bailout and energy sector costs from the computation of the fiscal deficit. “In 2018, when we were under an IMF programme, in order to be able to monitor the budget performance, it was important that we computed the deficit to

exclude the energy and financial sectors, as those were legacy problems that we had inherited. Now that we have finished the programme, given the developments in 2020 in the wake of the pandemic, this is the time to relook at that area— the broader fiscal deficit which includes the energy and the financial sector issues. Over the medium term, we need to redefine the broader fiscal deficit, which gives you a better sense of the burden on the budget,” the governor explained. While the governor, speaking at the recent Monetary Policy Committee press briefing, stated that the practice has outlived its usefulness, Mr. Terkper believes that the Fund’s action at the time was unfair. “Ghana’s fiscal framework since the 1990s allows for the separation of exceptional revenues (e.g., divestiture and HIPC receipts) and expenditures (e.g., single spine, subsidy, road arrears), but not as footnotes,” he said.

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News

FRIDAY NOVEMBER 27, 2020

Robotics and ICT center will impact the youth positively – Ursula Owusu-Ekuful

he MTN Ghana Foundation has commissioned a multipurpose ICT library and robotics lab at Ebenezer Senior High School which will also serve the Dansoman community. The Dansoman Community Library is the first Secondary School library in Ghana to have a modern integrated ICT Center and a Robotics lab. The robotics and ICT lab will be a learning resource center for training students and young people in robotics. The multipurpose facility was constructed at cost of GHC 770,000 and comprised of a 100-seater conventional library area, a 20-seater ICT center, a world class Robotics lab and washrooms. Speaking at the commissioning, the CEO of MTN Ghana Selorm Adadevoh said: “When the idea of a modern integrated ICT library and robotics lab in Dansoman was brought to us at MTN Foundation, I was personally very inspired by it. We gladly accepted to embark on this project at the Ebenezer Senior High School because we

A student from the Ghana Robotics Academy Foundation doing a demonstrating for Mrs Ursula Owusu-Ekuful, Minister of Communications and other dignitaries -7

understand the life changing opportunities such a facility would bring to the people of Dansoman”. “One of our core mandates is to improve the quality of life of people through appropriate and sustainable interventions in communities where MTN operates,” he added. On his part, The MTN Foundation Board Chairman Prof. Franklyn Manu urged the management and beneficiaries to adopt good maintenance culture to preserve the facility.

He said: “Such a facility will require constant upkeep, maintenance, and replacement of to ensure its longevity”. The special guest of honor Ursula Owusu-Ekuful, Minister of Communications and Member of Parliament for Ablekuma West Constituency commended MTN Ghana Foundation for supporting the school and community with such a modern facility. She said: “I am excited about this project: It is clear from all the success our young people have

chalked that they do not lack talents and ability to succeed. What our young people need, are the tools and the platforms to showcase what they have. When given the right tools and the right skills, our young people can compete and be the best in the world.” The ceremony was attended by Samuel Koranteng, Corporate Services Executive of MTN Ghana, Mrs Nabila Williams, a Board Member of MTN Ghana Foundation, Dr. Yaw OkrakuYirenkyi, a Co-Founder of the Ghana Robotics Academy Foundation (GRAF), George Cyril Bray, MCE of Ablekuma West Constituency, Hayford Siaw, Director of Ghana Library Authority, District Director of Education and the Headmistress of Ebenezer Secondary School. Since the inception of the MTN Ghana Foundation in 2007, the Foundation has implemented over 150 major projects in areas of health, education and economic empowerment at a total cost of USD 15million. These projects are estimated to have impacted over 4 million people.

Italian Embassy hosts ‘Aperitivo in Giardino’ to mark 5th Italian Cuisine Week in Ghana

he Embassy of Italy and the Italian Trade Agency (ITA) in Accra have organised a wine tasting event dubbed ‘Aperitivo in Giardino’— Aperitif in the Garden’—to mark the 5th Italian Cuisine Week in Ghana. The event was held in partnership with Italian wine importers Imexco, Say Cheers and Pomona Restaurant at Osu, ‘Aperitivo in Giardino’ was to celebrate the rich culinary and wine culture of Italy and to create an opportunity for Ghanaians to savor the rich and quality taste of Italian wines. Due to strict implementation of Covid-19 protocols, the event at Pomona’s terrace was limited to only 50 guests, among which there were major representatives of the Ghanaian business and financial sector, heads of government agencies, captains of industry, corporate heads and business operatives, as well as representatives of the Italian business community, among others. Speaking during the event, the

Italian Ambassador to Ghana, Her Excellency Danielad’Orlandi welcomed the guests to the celebrations of the Italian cuisine: “This week, all the Italian Embassies, Consulates, Cultural Institutes and Trade Offices around the world celebrate the Italian cuisine and traditions and our high quality agrifood products, as well as the Mediterranean Diet”. She also highlighted the tradition of the Italian Aperitivo: our cultural ritual aiming at whetting the appetite and meeting friends. We will thus offer you traditional Italian delicacies and offer you a taste of some of the best and iconic Italian wines”. Ambassador D’Orlandi also invited all guests to follow the Embassy’s social accounts on Facebook (Italy in Ghana and Togo) and Twitter (ItalyinGhana), as this week many videos and contents devoted to Italian cuisine traditions will be available, including video recipes and free masterclasses in English on the most iconic Italian products.

On his part, Alessandro Gerbino, the Director of the Italian Trade Agency (ITA) emphasized the need to boost trade relations with Ghana. According to him, Italy as a leader in fashion, design, food and many other creative sectors has a lot to offer Ghana. “We believe in using trade to boost our relations with Ghana and as a country that has developed extensively in the areas of agriculture, fashion and

technology among others, there is a lot we can offer to help Ghana on its development drive” he intimated. On display during the event were some of the top quality and best-known wine brands from Italy including Prosecco Vintage Brut from the Italian region of Veneto, Gattinara Travaglini from Piedmont, Brunello di Montalcino from Tuscany and Sauvignon Suade IGT from Friuli Venezia Giulia.

FRIDAY NOVEMBER 27, 2020

News

FRIDAY NOVEMBER 27, 2020

MTN’s mobile money furthers financial inclusion

riven to secure financial inclusion across its markets, MTN Group continues to grow the number of MTN Mobile Money (MoMo) users on its network, a trend that has accelerated during the COVID-19 pandemic. By the end of September 2020, nearly 42 million people were regularly transacting on MTN MoMo across 16 markets. This compares to 38 million active users at the end of the first half of 2020, and 35 million at the end of 2019 – ten years after MTN launched MoMo. Initially designed to facilitate the transfer of cash between mobile users, MTN’s MoMo offering is now much broader. The group works with numerous partners to offer services including loans, insurance, remittances and MoMo Pay, enabling customers to store money in their mobile wallets with which they can then pay for goods or services at registered merchants. Mobile money services have grown faster in Africa than anywhere else in the world. In 2020, the trend has quickened,

and the value of transactions has increased, partly supported by MTN’s reduction in MoMo transaction fees in many operations to assist customers battling the impacts of the pandemic. In the first half of 2020, for example, the value of MTN MoMo transactions was US$61.2 billion, and the group processed 11,752 MoMo transactions a minute across its markets, up 28% from

9,193 transactions a minute in 2019. In Ghana, there has been a steady growth in driving financial inclusion through MoMo. MoMo subscribers grew to a total of 11.66m (RGS 90 days) with 1.8bn transactions by end of September 2020. MTN MoMo implemented some measures in March 2020 as part of efforts to support Government’s intervention to control the

India Business Forum Ghana launched

he Indian High Commissioner to Ghana, Sugandh Rajaram has launched the India-Business Forum (IBF) in an event organized at Kempinski Gold Coast Hotel, Accra. The event was attended by captains of industry from prominent Indian and Ghanaian

businesses, dignitaries from the Government of Ghana and representatives from trade bodies among others. Addressing the gathering, High Commissioner stated that the IBF would be a platform for businesses in Ghana dealing with India to come together and interact to strengthen business

development in Ghana. According to the High Commissioner, the IBF would be an informal set up where interested Indian and Ghanaian businessmen can become its members. The IBF will discuss various policy initiatives taken by the Government of India and also the

spread of the COVID-19 and also minimize the risk posed by cash handling. Some of the measures included the waiver on transaction charges for on-net and off net transactions as well as the revision of limits on daily transactions and wallet balances. The intervention has since been extended to December 31, 2020 to allow more people to experience the benefits of mobile financial services. issues faced by the businesses. Through this forum, businesses will be better informed of the parameters in which the policy frameworks have been created as many of the policy initiatives taken by the Government of India have not been clearly put through the business eco-system. Addressing the participants, the Deputy Minister for Trade and Industry of Ghana, Robert Ahomka-Lindsay, said the size of the Africa Continental Free Trade Area in population is like that of India and this presents a huge opportunity and market size for the investors from India to explore business opportunities in Ghana. He added that the Indian businesses in partnership with Ghanaian businesses present opportunities to thrive in AfCFTA. Speaking on the occasion, the Chief Director, Ministry for Business Development of Ghana, Alhaji Hafiz Adams said that hundreds of Indian merchants have made Ghana their second home and have built and managed successful businesses in Ghana. He added that India has an impressive economic footprint in Ghana creating many jobs for the youths in Ghana like Melcom Group, Mahindra & Mahendra, Airtel-Tigo among others.

FRIDAY NOVEMBER 27, 2020

Feature

FRIDAY NOVEMBER 27, 2020

Keeping the global focus on low-income countries

By Kristalina Georgieva and Sigrid Kaag

wing to the COVID-19 pandemic, the global economy is suffering its sharpest decline since the Great Depression. But while everybody is hurting, it is the world’s poorest countries that will pay the highest price unless they receive more help. Some 1.5 billion people live in low-income developing countries, struggling to overcome weak public health systems, limited institutional capacity, and, in many cases, high debt levels. All these countries entered the crisis with a limited capability to fight it. They faced a dramatic increase in spending needs just when the pandemic caused a decline in revenues from tourism, remittances, and commodity prices. While actions to protect advanced-economy businesses and workers amounted to some 20% of GDP, this support in lowincome countries was only about 2%. With as many as 115 million additional people at risk of falling into extreme poverty this year, today’s deep economic decline is threatening to reverse two decades of gains in living standards. The current damage will last for many years to come, as children – especially girls – drop out of school, the quality of health services deteriorates, and employment levels remain depressed. This matters for all of us. Insecurity in poor countries translates to instability for the rest of the world. And, more importantly, the COVID-19 crisis will never truly be over until it is defeated everywhere.

To that end, international institutions and bilateral donors must help poor countries as they work to create the right economic conditions for recovery at home. The International Monetary Fund continues to provide hands-on technical assistance and training to its members, helping governments handle debt, raise revenues, and manage public finances to ensure effective delivery of vital services, including health. The Netherlands has supported these efforts by contributing to dedicated IMF thematic funds and the Fund’s network of regional capacity-development centers in Sub-Saharan Africa, the Middle East, and the Caribbean. The critical task now is to help low-income developing countries overcome the current crisis and strengthen resilience for the future. Bilateral donors like the Netherlands supplement IMF lending programs with targeted interventions for health, education, and job creation, as well as through programs that address climate change and greening the economy. We also need to do more to help countries with unsustainable debt burdens. Even before the pandemic, around half of lowincome countries were in, or at high risk of, debt distress. Now that many countries have only limited, if any, access to new market financing, they are confronting a terrible tradeoff between supporting their people during the pandemic and servicing their debt. The international community has taken some important steps to address this problem. With the support of 13 bilateral donors, including the Netherlands, the

IMF has provided one year of debt-service relief of about $500 million to 29 of its poorest members, and is now seeking additional resources to extend this relief beyond April 2022. We have welcomed the extension of the G20’s Debt Service Suspension Initiative, which has already provided the poorest countries with about $5 billion in temporary debt-service relief. The IMF also supports the G20 and Paris Club’s establishment of an ambitious new Common Framework for debt resolution, which combines a standard approach to decision-making among creditors with a case-bycase approach to debt relief. Beyond addressing debt, lowincome developing countries need strong international financial support. Since the onset of the pandemic, the IMF has doubled access to emergency financing facilities and provided $11 billion in emergency financing to 47 countries in this group. The IMF remains committed to ensuring sufficient access to such credit in the years to come. To do so, the IMF counts on its wealthiest member countries to support this effort by providing new loan resources for financing concessional lending programs. Since the beginning of the pandemic, the Fund has secured an additional $22 billion, and is now working to mobilize grants to ensure zero-interest lending at these levels, to which the Netherlands will be contributing as well. Many bilateral donors have also bolstered their own programs to support low-income countries. The Netherlands, for example, recently pulled together €500 million ($595 million) to keep

existing development efforts afloat, and to fund new ones to help poor countries fight the pandemic. Finally, low-income countries need trade now more than ever. Over the past two decades, global poverty levels fell dramatically as these countries ramped up their participation in international markets. But the pandemic and ongoing trade tensions have jeopardized that progress. An open, stable, and transparent rules-based trading system remains absolutely critical for ensuring global economic stability, inclusive and sustainable growth, and long-term prosperity. The IMF continues to promote the recovery of global trade by working to maintain open markets and advocating for further policy reform. Within the European Union, the Netherlands and France have pushed for trade policies that put more emphasis on sustainability and responsible business conduct. Meeting the many unmet needs of low-income countries will require further joint efforts by bilateral donors, including national public development banks and multilateral institutions. Together, we can help the most vulnerable countries and communities recover from the pandemic. In doing so, we will build a more resilient, inclusive world for everyone. About the authors Kristalina Georgieva is Managing Director of the International Monetary Fund and Sigrid Kaag is Minister for Foreign Trade and Development Cooperation for the Netherlands.

FRIDAY NOVEMBER 27, 2020

Feature

FRIDAY NOVEMBER 27, 2020

The true economic impact of the world’s lockdowns In this piece we examine the link between the length of time countries across the world have spent in lockdown and the economic damage. Are lockdowns completely to blame for the contraction of GDP around the globe? In times of crisis, the economy is usually the first port of call for disaster—and the impact can be felt for many years after. The Bank of England says that history has proven there are two certain things when it comes to financial crises: another one will follow, and it will be different from the last one. Our world has changed dramatically over the best part of a year. A rare disaster of a global pandemic never before seen in our lifetime has resulted in countries introducing necessary quarantines and social distancing measures in a bid to curb the spread of the virus. This has had a negative but necessary effect on our economies. A crisis bringing great uncertainty, governments are providing support to workers, businesses, and financial markets to guide us towards a strong recovery. However, there is doubt about what our global economic landscape will look like when things return to normal. Lockdown across the world Policymakers have had the difficult decision of when to implement lockdown, the severity of restrictions, and how long to keep measures in place for. Lockdown restrictions have been met with both open arms and criticism in places all over the world. For example, in South Africa, the strictest measures were put in place to combat some of the highest levels of the virus. The country banned the sale of alcohol and tobacco. Although saving lives, there are devastating effects for global economies, with spending plummeting to all-time lows. Research by financial firm Jefferies in the United States has shown that in states such as Arizona, Texas, and Utah, where the number of COVID-19 cases was rising dramatically, spending starts to contract. When comparing state data on Google which looks into retail and recreation establishments, states with high numbers of the virus are performing considerably worse than others. Denmark and Sweden approached lockdown quite

differently, with Sweden choosing to trust its people to behave responsibly rather than enforce a lockdown. Meanwhile, Denmark introduced one of the earliest and strictest lockdowns. Although Sweden’s death rate was five times higher than Denmark’s, the economic impact was similar. The reason for that, Dhaval Joshi, of BCA research says, is that people change their behaviour whether there is a lockdown or not. They avoid public transport, stay away from shops, and refuse to send their children to school. Joshi argued that this is because people change their behaviour whether there is a lockdown or not, avoiding public transport, staying home where possible, and refusing to send their children to school. Here, we take a look at how long countries were in lockdown for to see if there is a link between economic damage and lockdowns. Global GDP change QuickBooks, online accounting software firm, conducted research looking at dates where lockdown was first introduced in a country and ending on the date they were gradually lifted. 2019’s GDP for each country and 2020 forecast figures from Trading Economics were explored. The countries explored in this data that have experienced the highest contraction of GDP are:

1. 2. 3. 4. 5.

Russia (-26%) UK (-19%) South Africa (-16%) Spain (-14%) Hungary (-14%)

The countries explored in this data that have experienced the lowest contraction of GDP are: 1. Australia (-5%) 2. Switzerland (-8%) 3. Canada (-8%) 4. Italy (-10%) 5. Norway (-11%) From the data, only two of these countries featured in the top five for lockdown length too. The UK experienced the longest lockdown at 95 days and Spain second with 98 days. Three of the five countries that have spent the least amount of time in lockdown have experienced the lowest contraction in GDP. Switzerland experienced 42 days in lockdown, and Australia and Canada experienced 49 days. Is it worth it? It seems from the data that there isn’t a pattern reflecting the idea that more days in lockdown has a stronger negative effect on GDP. Despite having locked down for 28 days longer, Spain and Hungary are both projected to take a -14% hit to their overall GDP, for example. Similarly, despite France locking down for 26 more days, both it and Germany are expected to see a -12% drop to their GDP in 2020. It is possible that there are

other contributing factors then, including what was demonstrated and discussed previously with Sweden and Denmark. Regardless of the length of time, it doesn’t seem like a long lockdown has impacted GDP more in comparison to a short lockdown. It is possible that people’s overall behaviours have more of an influence, with populations behaving differently in a pandemic regardless of a lockdown. Research by McKinsey reported that while the uncertainty from COVID-19 continues, its impact is felt differently across different countries. There is a significant difference in how consumers are responding to the crisis and adapt to the next normal, and in turn, having an impact on the economy. The United States was unique in that they didn’t introduce a nationwide lockdown, and instead allowed states to set their own rules. For example, California was the first state to order lockdown on March 20. Looking at 2020’s forecast, their GDP is set to grow—did smaller, state-wide lockdown based on regional numbers help? We’re currently in the second wave of the virus, with many countries undergoing a second lockdown. A second lockdown could have further unprecedented negative effects, especially in economies that have already been struggling such as Spain and South Africa. Is it possible that lockdowns themselves aren’t always to blame for the falling GDP? While lockdown is necessary to save lives, it has been a controversial topic globally. Utilising lockdowns wisely and effectively is integral to protect both lives and countries, but it’s important we understand the impact socially and financially. Bio: Lucy Desai is a content writer at QuickBooks, a global company offering the world’s leading accountancy software.

FRIDAY NOVEMBER 27, 2020

Feature

FRIDAY NOVEMBER 27, 2020

Who Will Win Ghana’s Election 2020?: Come Along with me to Predict Easily!

n December 7, 2020, Ghana will be holding its eighth general election under the Fourth Republic. The election will elect a President and 275 parliamentarians. The New Patriotic Party (NPP) has been in government since January 7, 2017 and is fielding its leader and the current president, Nana Addo- Dankwa Akufo-Addo, as its candidate, while the biggest opposition party, the National Democratic Party (NDC), is fielding Mr. John Dramani Mahama, who was President during 2013-2016. There are nine other presidential candidates representing fringe parties and one independent candidate. This year’s election is taking place amidst the Covid-19 pandemic that has ravaged the entire world, with Ghana not being an exception, though having less severe experience. The election campaign has been based largely on issues in the parties’ manifestoes, which, unsurprisingly, contain loads of promises intended to woe the electorate. Despite a few skirmishes between party supporters, the campaign, so far, has been quite peaceful. History tells us that the contest is actually between the two key parties, NPP and NDC, as the small parties invariably fare poorly in elections. Unfortunately, polling is not normally conducted ahead of Ghanaian elections to provide more certainty about the outcomes. Moreover, we know that polls do not always get it right. It is to assist in predicting the outcome of the 2020 election and to reduce the elements of uncertainty and speculation that I decided to put this piece together. I do this by analyzing results of the previous elections and factors that I consider to be key to determining Ghanaian election results. I invite you to come along for me to equip you with the information for you to predict the outcome of the election easily. History and ideology An important element in Ghanaian elections is the historical context. Historically, two main political traditions have dominated Ghanaian politics. These traditions were originally the CPP tradition with Kwame Nkrumah as its patriarch and the UP tradition with Danquah as its patriarch. The overthrow of Nkrumah in 1966 and its aftermath virtually led to the annihilation of the CPP and its tradition. The UP tradition in turn was uprooted in 1972 when Busia was overthrown. The CPP regrouped and staged a brief comeback during 1979-81, but was again uprooted when the then President, Limann, was overthrown in 1981. In the following decade of military rule, Rawlings laid the foundations that essentially led to assimilation of the CPP into his parallel NDC tradition. In 1992, when the country returned to constitutional rule, most of the former CPP adherents sought refuge under the NDC umbrella. Meanwhile,

the UP tradition continued to largely hold sway and regrouped under a new party, the NPP. Therefore, essentially, in 1992, the CPP-UP traditions metamorphosed into the NDC-NPP traditions. Other parties, whether they claim to take their origins from the former CPP or UP traditions, or represent some third force in Ghanaian politics, have remained fringe parties. Like the Republican- Democratic and Conservative-Labour traditions in the US and UK respectively, the two Ghanaian traditions differ in political ideology. In the main, the CPP/NDC and UP/NPP traditions project respectively the “socialist” and “capitalist” ideologies of their founding fathers. In terms of economic policies, however, there is probably not much to choose between the NDC and NPP. As is to be expected, the two Ghanaian traditions have their core supporters based partly on ideology. On that basis, the CPP/NDC tradition draws its support predominantly from the “broad masses” of the population and the rural areas. These are people who, ideologically, believe in social commonality and the responsibility of the state to cater for the welfare of the citizenry. The UP/NPP tradition, on the other hand, draws its support mostly from professionals and urbanite sections of the population. These are people who, ideologically, believe in developing themselves freely with the state acting as a facilitator. In practice, both parties involve the state extensively in providing wide-ranging social needs. The mottos of the NDC (“Unity, Stability, and Development”) and the NPP (“Development in Freedom”) more or less depict these ideologies.

that voter turnout for the 1992 and 1996 results were extremely low. Further, these two elections marked the beginning of the return to constitutional rule during which Rawlings, who had ruled Ghana as a military leader for ten years and contested as a civilian candidate, am using the old 10-region map for this article. PERCENT loomed large over the elections. For these reasons, we will set aside those two elections for being “outliers.” For the rest of the elections, consistently, each of the two parties has won at least 43% of the votes. As a result, we can safely conclude that each of the parties commands core support of at least 43% based on history/ideology and ethnicity/regionality. The total core support for the parties then amounts to at least 86%. This implies that floating or independent voters, who actually determine the results of elections, account for about 14% of the votes. These are the voters who are influenced by other factors that may be defined broadly as “issues.”

maintained eight-year election cycles. Each of them has been able to secure a second four-year term each time they are in power, including even the 1992 and 1996 elections. NDC kept two terms during 1993-2000; NPP (2001-2008); and NDC (20092016). The logical conclusion from these trends is that NPP would also be able to maintain two consecutive terms spanning 2017-2024. However, we cannot completely preclude the possibility of this cycle being broken for the first. Incumbency In elections all over the world, incumbency plays a big role in the outcomes—and Ghana is not an exception. Incumbency has enormous power to influence an election. This power is exercised through the control of state funds, state institutions and the media, among others. As is said, he who pays the piper calls the tune. Because the incumbent government controls state resources, it can use its control to gain influence and visibility that the opposition cannot avail itself of.

Ethnicity/regionality

Issues

Conclusion

The two political traditions derive strong support ethnically or regionally. This support emanates from historical affiliations based on differences and rivalries between various ethnic groups and regions, some of which go back to colonial times. The CPP/NDC tradition derives its support mostly from a conglomerate of smaller ethnic groups predominantly in the Northern Regions and Volta Region. The UP/NPP tradition, on the other hand, derives its support largely from the Ashanti and Eastern Regions. The Greater Accra, Western, Central, and Brong-Ahafo regions tend to split their loyalties between the Core support If you put together support from history/ideology and ethnicity/ regionality, you can derive core support for the two leading political parties.

Floating/independent voters are influenced by issues that include: the economy, infrastructure, corruption, health, education, security, sanitation, etc. The 2020 election is unique in the sense that it is the first time a previous President is contesting the incumbent. As such, the election has been dubbed “election of the records” of the two candidates and their respective parties. For this election, I am prepared to surmise that the three overwhelming issues, in no particular order of importance, are: education, infrastructure and corruption. Whichever of the candidates is judged to have the better record with these issues stands a better chance of winning the election. Here, I leave the decision to the judgement of the reader. Also, Covid-19 is a new element in this year’s election and its management will be a referendum on the incumbent party and its candidate.

For the 2020 election, both NPP and NDC can count on core support of at least 43%. This means even that the losing party will gain at least 43% of the total vote. This support is based on historical/ideological and ethnic/regional ties. Floating voters who account for about 14% of the electorate will judge the candidates based on issues of which the key ones for this election are education, infrastructure and corruption. Whoever comes on top based on these issues would gain more votes from the independent/floating voters. Covid-19 is a new element of this election and its management will be a referendum on the incumbent government. The incumbent government has the advantage of having control over state resources and assets that it can leverage to its advantage. I invite readers to try and judge the relative strengths of the factors adduced above in order to easily predict the outcome of the 2020 election. Good luck! Author: Dr. J. K. Kwakye, Director of Research, IEA, j_kwakye@yahoo. com.

Source: Electoral Commission Table 1 shows presidential election results for the NDC and NPP for the period, 1992-2016. In analysing the background data, it was realised

Eight-year political cycle The data in Table 1 above reveals that the NDC and NPP have

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Feature

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New aircraft spy opportunities amid aerospace woes

ichael Cervenka traces his interest in engineering back to his grandfather’s influence. “He was an organ builder and had me sorting out screws on his workshop floor when I was 18 months old,” he says. That interest literally took off. He is now the boss of Bristolbased Vertical Aerospace, and has progressed to electric vertical take-off and landing (eVTOL) machines. With the potential to be quiet and economical, these aircraft have been touted as the next big thing in passenger aircraft. Vertical is working on the VA1X, an aircraft intended to fly between regions. That regional emphasis matters as eVTOL machines have often been promoted as air taxis, whizzing around our cities under the banner of “urban air mobility” (UAM). Some even suggest these vehicles could scoop up passengers and whisk them along pre-arranged flight corridors without a pilot. Vertical dismisses this as a fantasy. “Our aircraft will be heavily automated,” says Mr Cervenka. “But both regulations and the public will require a pilot for years to come.” An automatic response to an obstruction on a landing pad below will pull VA-1X up and away from a collision, but people still want to see a highly trained aviator in charge of their flight. Using multiple propellers that point skywards for take-off and then rotate to tilt forward to fly horizontally, the VA-1X aims to carry four passengers and a pilot over short distances more cheaply than a helicopter.

Airlines operate within a framework of strict regulation, so how will this entirely new category of machine pass the scrutiny of international safety bodies? Mr Cervenka says he is working closely with UK and European regulators. The technology behind VA1X has been tested at a remote airfield in Wales using a prototype called Seraph. This is a piloted black box surrounded by six arms mounting rotor blades. Seraph’s chunky appearance belies its role in proving the systems that should keep VA-1X’s eight electric motors pointing in the right direction. And if a motor fails Seraph can still hover and land. The company claims its aircraft will be 30 times quieter than a helicopter. So in theory it should be able to make more use of existing heliports where the frequency of landings is restricted by noise regulations. It spies a market for travel between locations not served by high-speed rail networks and regional airlines. Regional connectivity is the name of this game. “We will offer an ability to connect places that are not well connected today,” says Mr Cervenka, who is eyeing up a London-to-Brighton service, a route notorious for rail delays and traffic jams. Covid has slashed airline passenger numbers. So Mr Cervenka reckons new purchases of large airliners are off the menu. But airlines might use eVTOL flights from a major airport into the centre of a city to attract business or first-class flyers as part of their fare. The 150mph (240km/h) VA-1X

will need a full battery recharge every 100 miles, but a 25-mile short hop from an airport to city centre would allow for a fast recharge and quick turnaround. David Tait, a lawyer studying emerging technologies for the UK’s Civil Aviation Authority, says he expects eVTOL craft to gain regulatory approval for certain services - but he also pours cold water on the wilder promises of flying taxis. “Consumer on-demand services are a long way away,” he says, citing the air traffic management challenges of putting too many machines into the air above a major city. Designs such as the octoengined VA-1X have no single point of failure, unlike a helicopter where the loss of rotor blades or power can be catastrophic. “Our view is that eVTOL should be at least as safe as existing vehicles,” Mr Tait says. “Our expectation is that these will be quieter, cleaner and safer.” Approximately 300 eVTOL projects are under way around the globe and Germany’s Lilium is one of the most advanced, attracting engineers from Boeing and Airbus. Its distinctive eVTOL machine has 36 electric engines buried inside slender white wings and tail planes. These are ducted fans, sucking in air and blowing it out in the manner of a jet engine but without mixing it up with fuel. This mass of fans creates a strong current that will push the little five-seater jet to 300km/h (186mph) and give the pilot control over direction. Remo Gerber, its operational chief, says that despite this radical design Lilium is “following a classic aviation approach”, with

safety dictating design features such as the Kevlar shell around the fan blades, ensuring that if a blade flies off it will be contained within the tough material. A technology demonstrator flew at its base outside Munich in 2019 and the larger production machine is intended to carry four passengers and a pilot like the VA1X. These light passenger loads reflect the power limitations of electric motors. Mr Gerber shares the view that UAM has been oversold: “We struggle with UAM. We don’t see the benefits.” He argues that very short distances make no sense for eVTOL because the final section of the trip still has to be made by road - Lilium is also focussing on the regional transport market. Lilium plans a regional network based around Dusseldorf and Cologne airports in Germany’s densely populated North RhineWestphalia area. The idea is to connect smaller cities such as Aachen and Munster to the airports via Lilium aircraft by 2025. It is also designing eVTOL airports what it calls “vertiports”. With a relatively small footprint these present an affordable alternative to airports and railway stations. These could link up a region with hundreds of daily flights, and multiple highfrequency flights from different locations would carry more passengers than rival first-class rail services at equivalent fares. Back at Vertical, manufacturing will see components such as the VA-1X’s cockpit displays arriving to be integrated in a final assembly. So Mr Cervenka’s very early experience putting many parts of a machine together may still pay dividends.

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Markets

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