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FRIDAY AUGUST 28, 2020

Agyapa deal will maximise value of Ghana’s minerals—Ofori-Atta Airport re-opening: PCR test to take 1215mins, no quarantine for arriving passengers As part of preparations towards the opening of the Kotoka International Airport for the resumption of international airline operations, arriving passengers will be required to take a PCR test at any of the over 70 sampling collection booths set-up at the upper level of the Arrival Hall and results ready between 12-15 minutes. BY DOMINICK ANDOH

By Nii Annerquaye Abbey

inance Minister Ken Ofori-Atta says the Agyapa Royalties deal offers the country a rare opportunity to make the most out of its mineral resources. The Minister, speaking at a press conference in Accra on Thursday, justified the deal, which seeks to monetise the country’s future royalties from some 16 mining concessions via an equity fund raising on the London and Ghana stock exchanges, using Agyapa Royalties, a special purpose vehicle. While the move has drawn the angst of civil society groups and opposition parliamentarians, Mr. Ofori-Atta argued that, historically, the country has not been able to maximise the value of its mineral resources, with the latest move providing an avenue to leverage high gold prices for development. “We are very confident that this is the way to

go,” said Mr. Ofori-Atta of the deal. “We have seen how foreign companies benefit from our resources and we just sit staring at them. I think it is time to reimagine the future and put a stamp on the understanding that these things are ours and we are going to get the best out of them.” Among the concerns raised by some 15 civil society groups earlier this week on the deal was the fact that Agyapa Royalties, which is wholly owned by the state, is registered in Jersey, a tax haven. They argued that government’s action endorses the use of tax havens to avoid taxes. But the Finance Minister responded that the decision to incorporate Agyapa Royalties in Jersey was a strategic move to allow the country reap the most from the transaction. “The world consists of all sorts of structures to be able to generate resources. If I therefore need

Technology is the future; leverage on it to succeed – Vodafone CEO Chief Executive Officer (CEO) of Vodafone Ghana, Patricia Obo-Nai has urged the youth to leverage on technology to stay relevant and succeed in this new age of technology. PAGE 3

MORE PAGE 2

Gov’t targets improved regulatory environment with launch of new portal The country cannot develop without the private sector, as it remains critical in helping to finance the government’s industrialisation drive and its vision of “Ghana Beyond Aid”, especially in the postCovid era, says Alan Kyerematen, Trade and Industry Minister.

PAGE 3

With government’s vision of making the country the most business-friendly nation in Africa, one of the most significant success factors for enhanced private sector performance and growth is the effectiveness of the private sector’s contribution in defining and PAGE 3

ECONOMIC INDICATORS *EXCHANGE RATE (INT. RATE)

USD$1 =GHC 5.6734*

*POLICY RATE

14.5%*

GHANA REFERENCE RATE

15.12%

OVERALL FISCAL DEFICIT

11.4 % OF GDP

PROJECTED GDP GROWTH RATE AVERAGE PETROL & DIESEL PRICE:

0.9% GHc 5.13*

INTERNATIONAL MARKET BRENT CRUDE $/BARREL NATURAL GAS $/MILLION BTUS GOLD $/TROY OUNCE CORN $/BUSHEL

43.22 1.79 1,842.40 329.50

COCOA $/METRIC TON

1,562.00

COFFEE $/POUND:

$109.65

COPPER USD/T OZ.

220.15

SILVER $/TROY OUNCE:

17.07

NEWS/EDITORIAL

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EDITORIAL

Agyapa deal is a good initiative, but full disclosure necessary 1

Wash your hands 2

Cover your cough

Government’s initiative to maximize the country’s mineral royalties through the establishment of Agyapa Royalties Limited by the Minerals Income and Investment Fund (MIIF) is laudable, but concerns remain over the deal that ought to be addressed. The desire by government to issue the gold royalties-backed IPO this year to raise US$500m, is due to the historical performance of the precious mineral on the global market. Gold is now trading at about US$ 2,000 per ounce and is seen as a safe haven for many investors. The upfront capital to be raised from listing of Agyapa Royalties Limited on the London Stock Exchange and Ghana Stock Exchange, as well as regular dividends thereafter will be invested in developing the country’s gold resources, building of gold refineries and world-class gold certification institution. However, fifteen civil society

organisations (CSOs) have called on President Nana Addo Dankwa Akufo-Addo to suspend the Agyapa Royalties agreement until full disclosure on the beneficial owners and directors are made known. Describing the deal as ‘elite capture’ the group wants to ensure that the interest of the state is well protected. “Ours is a struggle against elite capture of resources that commonly belong to all Ghanaians and we call on every one of us, regardless of our political persuasion, to join hands in safeguarding the national interest,” the group said at a press conference in Accra on Tuesday. Convenor for the group, Dr. Steve Manteaw said government must come clean on who the managers and directors of the company (Agyapa Royalties Limited) are and further raised questions about the processes to select such

people; which they fear could be politically exposed persons. The group-- Alliance of CSOs Working on Extractives, Anti-Corruption and Good Governance—added that: “We are deeply worried that if government proceeded to the market amidst the public outcry and threats of future policy reversal from the major opposition party, Ghana may suffer the undesirable consequence of a rather high premium, as investors may be sensitive to the political risks associated with such investment,” Dr. Manteaw added. While the deal is novel and laudable, Business24 calls for full disclosure of all directors and other pertinent information related to the deal to ensure the cooperation of all.

Agyapa deal will maximise value of Ghana’s minerals—Ofori-Atta CONTINUED FROM COVER

Wear a mask Brought to you by

LIMITED Copyright @ 2019 Business24 Limited. All Rights Reserved. Editorial Team Dominic Andoh: Editor Eugene Kwabena Davis (Head of Parliamentary Business & Commodities) Benson Afful (Head of Energy & Education) Patrick Paintsil (Head of Maritime & Banking) Nii Annerquaye Abbey (Online Editor) Marketing Ruth Fosua Tetteh Business Development Manager) Gifty Mensah (Marketing Manager) Irene Mottey (Sales Manager) Edna Eyram Swatson (Special Projects Manager ) Finance/Administration Joseph Ackon Bissue (Accountant)

to go to the London Stock Exchange, why [should] my company be taxed twice? It is not an issue of doing something wrong.” The Finance Minister bemoaned the civil society groups’ description of the deal as a case of “elite capture”, describing it as unfortunate. He, nevertheless, said government is still open to engaging stakeholders and ensuring that it sees the deal over the line. Regarding the allegations made by the groups that persons behind the deal may be politically exposed persons with affiliations to key persons at the presidency, the Deputy Finance Minister, Charles Adu Boahen, stated that the stringent listing requirements of the London Stock Exchange make it impossible for such a situation to arise. Agyapa Deal Agyapa Royalties Limited, a special purpose vehicle created by the Minerals Income Investment Fund (MIIF), will offer some of the shares held by the fund to investors in order to raise about US$500m when it lists on the Ghana and London stock exchanges before the end of the year.

Mr. Adu Boahen said the upfront capital to be raised from the listing, as well as regular dividends thereafter, will be invested in

developing the country’s gold resources, and in building gold refineries and a world-class gold certification institution.

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Airport re-opening: PCR test to take 12-15mins, no quarantine for arriving passengers BY DOMINICK ANDOH

A state-of-the-art laboratory, which is being set-up at the upper level of the Arrival Hall to process the samples, will transmit the results electronically to the port health stations in the main arrival hall before a passenger gets there. All passengers with negative PCR tests will then be cleared by Port Health to Proceed to the immigration counter and admitted into Ghana. Passengers with positive PCR tests will be handed over by port health authorities to health professionals stationed at the facility to be transported to treatment or isolation centres. By this arrangement, all arriving passengers who test negative will not bear the additional burden of an expensive 14-day quarantine, as has been the case with the many repatriation flights undertaken within the past few months. Passengers are, however, expected to bear the cost of the

PCR test estimated to be between GH¢200-400. It will be recalled that the President, Nana Addo Dankwa Akufo-Addo, tied the re-opening of Terminal 3 of the Kotoka International Airport (KIA), possibly on September 1, to the country’s ability to test each passenger upon arrival. The Noguchi Memorial Institute for Medical Research of the University of Ghana, therefore, began testing the efficacy of a COVID-19 Polymerase Chain Reaction (PCR) Detection Kit, to be deployed for testing in-bound international passengers when the airport is re-opened next month, days ago. Aviation Minister, Joseph Kofi Adda, speaking after a tour of the facility to ascertain the level of preparedness told Business24 that: “We have done our best, the service providers of GACL have worked throughout the night

and we are hopeful that after the simulation exercise on Friday and Saturday, we will be able to open by September 1.” Departing passengers Passengers travelling from Ghana to other parts of the world, would be required to take a PCR test 72-hours prior to departure and present the negative PCR test to port health officials for verification before they are allowed to

complete departure formalities. Wearing of face mask is compulsory for all passengers except children under six years and for medical reasons-which must be proven. President Akufo-Addo is expected to address the nation on Sunday and will possibly announce the opening of the KIA if the planned simulation exercises are successful.

Technology is the future; leverage on it to succeed – Vodafone CEO According to her, technology is the new way of development, therefore, it’s imperative for the youth of today to take advantage in order to for them to succeed in the future. “A few years from now Artificial Intelligence (AI), robotics, machine learning, 3D printing and augmented reality will all be deeply rooted in our everyday lives just like computers, phones and electricity are necessities today. Many organisations are beginning to leverage technology and require less employees but more tech savvy ones. This means job roles are slowly disappearing and being replaced by skill sets,” she said. Speaking at the 2020 International Youth Empowerment Summit (IYES) Virtual Conference, the CEO of Vodafone stressed on the need why the youth of today need to be knowledgeable in Science, Technology, Engineering, Mathematics (STEM) related courses for a more advanced way of doing things which will create the needed employment opportunities in the future.

“Now more than ever, employers require employees to be familiar with the ever-growing number of technologies they implement. They need critical thinkers, problem solvers, and creative people to make sure they succeed in the future of technology and thus being knowledgeable in STEM related courses helps in that aspect of development”, she added. Also contextualizing her comments with respect to the negative impact of COVID-19 and the new normal, she encouraged the youth to acquire new competencies and new skills.

“The fact that COVID-19 and the measures in place to confine the pandemic have slowed education and you are struggling to keep up, should not be an excuse. Have a mind-set where you have the desire and the confidence that you can learn anything to enrich your work life. Take your education into your own hands by learning something new -coding, behavioural psychology, automation tools, and play with data - be curious. Online and offline courses have never been more readily available or rich in

content, take advantage of them. It is time to build something,” she explained. Patricia Obo-Nai further cautioned the public to desist from positioning STEM subjects as difficult and male related because employers in building a futureready workforce will certainly look out for employees who are well versed in these areas. “According to the 2010 Population and Housing Censuses, Ghana recorded a rapid growth of the adolescent and youth population which women form a significant part of the population. Girls and women should therefore be encouraged to take up these courses. Let us change our minds, stop causing fear of these subjects and challenge ourselves. Technology is the future and it is exciting, be ready!” she concluded. The 2020 International Youth Empowerment Summit (IYES) Virtual Conference was organised under the theme “Breaking Limits” to inform, inspire and empower the youth not only on Christian values but also on real life issues and ways to face them.

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Covid-19: Education, tourism worst-hit sectors—WTO BY PATRICK PAINTSIL

The effect of the coronavirusinduced border closures and travel restrictions was grossly felt by services trade, with education and tourism being the hardest-hit sectors across the globe, according to the latest trade report on the virus pandemic issued by the World Trade Organisation (WTO). The report said international tourism in 2020 is expected to register its worst performance since 1950, while some higher educational institutions are facing a potential drop in international student enrolment of 50 to 75 percent. “Covid-19 has triggered an unprecedented crisis for the tourism sector. The situation is similar, albeit less extreme, for education services: universities and other higher education institutions have traditionally relied on the physical presence of international students to export their services, though online courses have been growing,” said the report. Globally, tourism accounts for one in four of the net jobs created over the past five years and an estimated 10 percent of economic output. In the education sector, tuition fees account for the largest share of most universities’ revenue, with the current number of over 5m international students typically paying higher fees than their domestic counterparts, according

to the WTO. The report, titled “Cross-border mobility, Covid-19 and global trade”, was released on Tuesday. It explained the harm that has been done to trade in goods and services arising from the temporary border closures and travel restrictions linked to the pandemic.

“International trade and investment have always relied on the cross-border mobility of individuals. Mobility barriers significantly affect trade in goods, through their impact on transport services and on information and transaction costs,” the report said. To contain the spread of Covid-19, many WTO members imposed

temporary border closures and travel restrictions. Ghana’s borders currently remain closed to human traffic as part of measures to control the spread of the virus, but preparations are ongoing to get them reopened for business by September 1, 2020.

First National Bank Ghana donates to Danfa and Shai Osudoku District hospital First National Bank Ghana has donated some PPEs and cleaning materials to the Danfa and Shai Osudoku District hospitals, two health facilities in the Greater Accra Region. The donations form part of the bank’s interventions under its ASPIRE (Accelerated Support for Pandemic Intervention Relief Effort) initiative to support frontline health workers and entrepreneurs in the fight against COVID-19. The donation to Danfa hospital was in response to the hospital’s call for support, reported on national television, while the Shai Osudoku district hospital wrote to the bank for support. Both hospitals received a set of PPEs (including locally manufactured face shields, surgical masks and hand gloves) as well as gallons of liquid soap and sanitizers with automatic dispensers and disposable hand towels. Receiving the items on behalf of the Shai Osudoku district hospital, the Medical Superintendent, Dr

Kennedy T.C Brightson, happily thanked First National Bank for their immense support. He indicated that this is the first private donation they have received since the pandemic began. “We have recorded close to a hundred cases. Forty-three out of this number are our staff,” he said. “This is why we are highly appreciative of this donation. It will help us complement all the safety measures we are taking to protect

ourselves while giving care to affected patients who come to our hospital for treatment.” The Head of Marketing and Corporate Affairs at First National Bank Ghana, Delali Dzidzienyo reiterated that in recognition of the hard work and sacrifices of health workers in Ghana it is imperative to lend a helping hand to all frontliners, especially those on the health side of the battle against the pandemic.

“We appreciate all the sacrifices you continue to make to ensure that every call to give medical attention is heeded without hesitation,” Mr. Dzidzienyo said. “Some of you are even affected in the process of discharging your duties. We cannot overlook all of those, that is why we are joining you, with our donations, to minimise the spread of COVID-19 and provide you with the necessary cover while at it.”

FRIDAY AUGUST 28, 2020

Feature

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Chartered Institute of Bankers’ perspectives on the mid-year budget review and supplementary estimate for 2020 financial year Introduction: “In a crisis, be aware of the danger; but recognize the opportunity.” ― John F. Kennedy. Covid-19 is re-writing the way Banks are operated and how now and, in the future, Bank Executives will need a plan that increases velocity of digitalization and the automation of many activities, relies less on third parties and creates operational, financial and human management resilience that builds a crisis-ready organization. This report discusses the perspectives of the Chartered Institute of Bankers, Ghana of the Mid-Year Review of the Budget Statement and its impact on the banking sector in the remaining months and days ahead till the close of the year 2020 and beyond. It must first be stated that, based on data from the December 2019 prudential returns of the twentythree (23) banks and from the MidYear Review of the Budget, the Institute constructed this report for the banking sector players and stakeholders. The existing data provided that the financial performance of the banking industry improved significantly in December 2019, exactly a year after completion of the reforms in the sector. This reflected in the growth of banks’ balance sheet size and profitability, as well as improvement in key financial soundness indicators. In the year, the sector recorded a strong growth in total assets funded mainly by deposits, which signaled renewed confidence in the banking sector. The pickup in deposits together with increased capital levels, gave impetus to strong credit growth during the close of the year 2019. Profitability also improved relative to last year with banks posting a stronger profit outturn in December 2019. Furthermore, key Financial Soundness Indicators (FSIs) of the industry significantly improved underscoring a more stable and resilient banking sector. Under a more stringent capital adequacy regime, the banking sector remained solvent with the Capital Adequacy Ratio (CAR) well above the regulatory 13 percent prudential limit under the Basel II/III framework. Asset quality also improved significantly with the sharp decline in Non-Performing Loans (NPL) ratio due to recoveries, writeoffs, and pickup in credit growth. Broadly, the recapitalization and

Diagram 1: World Economic Outlook (WEO)

regulatory reforms have enhanced performance of the banking industry. By the close of 2019, the sector was well positioned to undertake efficient financial intermediation to support growth in the Ghanaian economy. The situation however looks very different today and it is a concern to all including the Minister of Finance who delivered the 2020 Mid-Year Budget Review. This massive change in position can be largely blamed on the advent of COVID-19. Review of Global Economies COVID-19 pandemic has slowed down global growth, impacting negatively on governments, households, and businesses, and plunged bank customers into financial difficulties. In response to the economic fallout of the pandemic, policymakers have embarked on extensive measures to support health institutions, households, and businesses. Fiscal and monetary policy frameworks have been recalibrated to support growth and minimize the impact of Covid-19 on job losses and poverty as global growth continued to contract in 2020 due to a more negative impact than anticipated, and the recovery projected to be more gradual than previously projected. It is however refreshing to know that in general, globally, banks are in much better position to contain the effects of the

pandemic relative to the 2007/08 global financial crisis, given reforms that have taken place in several countries to strengthen their banking systems. It is however said that “Extraordinary Times demands extraordinary Leadership”. It is also true to say that the global economy has, in the past century or more, experienced some negative shocks which were deemed unprecedented at the time of their occurrence. Indeed, as events unfold, it is becoming increasingly evident that the COVID-19 pandemic and its crippling economic effects would end up in the annals of economic history as, perhaps, the singular event that decimated the global economy in ways never imagined. It is time for global leaders to rise up to the challenge that the Pandemic has brought. Despite the strong performance of the global banking sector, initial assessments of the potential impact of the COVID-19 pandemic indicates that banks’ operations may face challenges with credit extension, loan repayment, and correspondent banking relationships. To help mitigate such effects on banks and the wider economy, the Central Banks and Regulators have announced various policy measures to boost financial intermediation while minimizing the risk of deterioration in asset quality.

There is no gain saying that the COVID-19 Pandemic has wreaked havoc on human health, economic activities, created uncertainty, and weakened global growth conditions. No one single nation has been spared. The Pandemic invented bad economic situation, like loss of jobs and incomes, disruptions in global supply chains, widespread supply shortages of food, pharmaceuticals and manufactured goods and consequent price hikes; decline in foreign direct investments; significant job losses; volatility and collapse of stock markets due to high uncertainty. There was also a decline in tourism and international travel resulting in revenue losses, unanticipated increases in health and other pandemic containment expenditure with significant implications for fiscal and debt sustainability; decline in remittances; and tightened global financing conditions despite monetary interventions to cut interest rates. and the impact is the same in other countries all across the world. Forecasts by major international economic institutions including the World Bank, the International Monetary Fund (IMF) and the Organization for Economic Cooperation and Development (OECD) paint a miserable picture CONTINUED ON PAGE 9

FRIDAY AUGUST 28, 2020

Feature

CONTINUED FROM PAGE 7

of global recession. This is evidenced by the recently revised growth forecasts published by these institutions. For example, between January 2019 and June 2020, the World Bank reduced its global growth forecast for 2020 from 2.9 percent to -5.2 percent. Similarly, the IMF lowered its forecast from 3.4 percent in October 2019 to -4.9 percent in June 2020. Review of African Economies According to IMF World Economic Outlook June 2020 data, the SubSaharan Africa (SSA) economy, which grew at 3.1 percent in 2019 is expected to contract by 3.2 percent in 2020. Further, the World Bank predicts that due to the pandemic, between 26 million and 58 million people in SSA may fall into extreme poverty (defined by the international poverty line of US$1.90 a day). This would likely increase the poverty rate of the region by more than two (2) percentage points whilst setting it five (5) years back, in its efforts to reduce poverty in the region. The 2020 Global Report on Food Crisis suggests that an estimated 73 million people in Africa are acutely food insecure. Given the adverse impact of the pandemic on food security, this number is expected to be even greater with the rising cases of COVID-19. 1st July, 2020, was scheduled for the operations of the African Continental Free Trade Area (AfCFTA) to start operations in Accra. This was postponed till January 2021 but has recently being launched to kick start operations. Our President sees this crisis also as an opportunity for Africa to significantly boost its self-reliance agenda. Review of the Financial and Banking Sector in Ghana The Banking sector have always relied heavily on the allied sectors of the economy to survive. The banks in Ghana has always depended on the customers and clients from the hotel and hospitality industry, foreign direct investment, trade and industry, agriculture, health, transportation, manufacturing, real estates, other services provision and education. Just as the Ghanaian economy was beginning to consolidate recent gains for growth and jobs, the COVID-19 outbreak hit the country leading to the initial severe movement restrictions. Although the restrictions are gradually being eased, the pandemic continues to pose significant challenges to the Ghanaian economy. These global developments have significant implications for the socioeconomic life here in Ghana. The imposition of restrictions and ban on social gathering, closure of schools, colleges, universities,

restaurants and churches as well as the 3-week partial lockdown in Greater Accra Metropolitan and Greater Kumasi Metropolitan areas had some unintended implications for the banking sector. From the first confirmed case of COVID-19 on 12th March, 2020, Ghana has recorded over 43,260 cases, with 41,276 recoveries and 261 deaths as at 21st August, 2020. The death rate of 0.50 percent is among the lowest in the world. Government was fairly swift and proactive in its response to the pandemic. There was the Imposition of Restrictions Act, 2020, (Act 1012) which was enacted to enforce social and physical distancing protocols. Under Act 1012, Government imposed restrictions on movement of persons in the Greater Accra Metropolitan Area (GAMA) and Kumasi Metropolitan Area and contiguous districts, for a period of three weeks. Only essential movements such as going out for food, water, medicine, banking transactions, or visits to public toilet facilities were permitted under these restrictions. Prior to the passage of the Act 1012, the President had directed the Minister for Health to activate section 169 of the Public Health Act, 2012 (Act 851) to take necessary measures to protect public health and lives. Similarly, by 16th March, all public gatherings such as conferences, workshops, funerals, festivals, political rallies, sporting events, and religious activities were suspended, while formal educational institutions at all levels were closed. Our national borders were also closed to international travellers, except for cargo transportation. Disruptions in the supply chain, reduction in demand, low productivity, high recurrent expenditure, and low revenue turnover have combined to impact the operations of almost all sectors of the economy. To this end, entire workforce has either been asked to stay home or downsized to accommodate social distancing protocols. In other instances, salary cuts have been instituted to enable businesses survive. The combined effect of these developments is that, Ghana’s overall economic growth and revenue are expected to fall sharply while expenditures are expected to rise. The economic shock of the pandemic has manifested through external trade disruptions, decline in commodity prices particularly oil whose prices have fallen by more than half, and tightening of global financial markets. The Ghana cedi, after appreciating strongly against the three major currencies in the first quarter of 2020, came under pressure, depreciating against the US dollar in April and May.

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The cedi further depreciated by 2.4 percent against the dollar and the euro in June 2020. Inflation also inched up by 2.8 percentage points to 10.6 percent in April and further to 11.3 percent in May and moderated to 11.2 percent in June while the BoG’s Composite Index of Economic Activity (CIEA), a key indicator of economic performance contracted by 2.2 percent in March. COVID-19 has also led to disruption in corporate and general business confidence, with threats to projected revenues, profitability, liquidity and corporate growth. So far 19 out of the 28 State-owned Enterprises (SOEs) are projecting losses up to GH¢1.55 billion for 2020. Collectively, 1,531 job losses were recorded between April to June, 2020 from eight companies within the Ceramics, Timber, Food and Agro-processing industries in the manufacturing sub-sector. An important ally to the banking sector in recent times is the Creative Arts industry, which largely employs informal and vulnerable persons with mostly no social protection, has been severely affected. The restriction on social gatherings, travel and border closures have manifested in worker redundancies due to low or non-patronage of services. The Agriculture sector has mainly been impacted through sudden changes in price and labour shortages. Due to export bans, rising international market prices and freight costs (which increased more than 100 percent from $1.10/kg to $3.00/kg), prices of agricultural inputs and imported staples such as rice, wheat, soya, poultry, and cooking oil increased. Within the same period, prices of key agricultural export commodities also fell drastically. For instance, while the price of imported rice increased about 20 percent between March and April 2020, the export price of cashew declined by 60 percent between January and April 2020. The non-traditional export sector suffered mostly due to the lockdown and suspension of flights to and from foreign markets, leading to significant post-harvest losses. Furthermore, in addition to limited provision of technical extension services to farmers during the lockdown, the imposition of restriction on movement resulted in drastic decreases in labour for agriculture. In the Energy sector, the significant impact is on exploration, appraisal and production of oil and gas activities, including delays in implementing the 2020 work programmes of operators. The National Petroleum Commission has estimated that projects valued at US$324 million across the petroleum upstream sub sector have stalled due to

the pandemic. Aker Energy, for instance, has notified the Ministry of Energy of the postponement of the Pecan field development. This has impacted the delivery of first oil from the Pecan project, thereby postponing projected revenues to Government. These postponements could weaken the critical role of oil and gas sector in propelling economic growth. The operations of Metro-Mass Transport experienced a decline in monthly revenue from GH¢5.5 million to GH¢2.1 million. The Intercity STC Company witnessed decline in bus services and luggage revenue from average of GH¢5.0 million in previous months to average of GH¢3.0 million since March 2020. The Driver and Vehicle Licensing Authority also experienced losses as revenue fell drastically from GH¢3.5 million to about GH¢1 million between March and April 2020. The projected revenue from the PSC-Tema Shipyard and Drydock of GH¢41 million for 2020 would decline to about GH¢16 million. Faced with the prospects of mass lay-offs of staff, several of these companies have resorted to seeking support from financial institutions to honour their pay roll obligations. Review of Debt sustainability and impact on the Financial Sector Following the COVID-19 expenditures and the expansionary fiscal policy stance of the government the debt sustainability of the country has push the public debt to higher risk level. According to 2020 mid-year budget the provisional debt stock as at June 2020 stood at GH¢258,372.8 million (US$45,566.81 million), representing 67.0 percent of Gross Domestic Product (GDP) and with Covid-19 unexpected expenditures have resulted in an overall fiscal deficit of 6.3 percent of GDP compared to a projected deficit target of 3.1 percent of GDP. The fiscal deficit for the period more than doubled the projected target because government increased its financing activities to address the shortfall in revenue mobilization. The resultant primary balance for the period was also a deficit of 3.3 percent of GDP, compared with a projected deficit target of 0.9 percent of GDP put the country at heightened risk of debt distress. Table 1 indicates the summary of fiscal performance. The debtto-GDP ratio at December 2019 was 62.4 percent, up from 57.6 percent at December 2018. This ratio reflects the impact of the financial and the energy sector bailouts. Excluding these bailouts, the provisional public debt-toGDP ratio at December 2019 was 59.4 percent, below Government’s target threshold of 60.0 percent of GDP. The share of external and

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BY PUNIT RENJEN

domestic debt in the public debt portfolio was 51.7 percent and 48.3 percent respectively. These differences in the role financial sector has contributed to the debt profile of the country as demonstrated in Table 2 below. Although the outcome of the 2020 COVID-19 Debt Sustainability Analysis (DSA) shows that Ghana’s debt distress from external and domestic sources remains unchanged from the results of the previous 2019 DSA which showed a sustainable but high debt profile but a critical assessment of the 2019 DSA results presented in 2020 fiscal strategy document indicates that all liquidity ratios breached the expected thresholds, external financing increasing more than exports, government borrowing to repay debt and debt service export ratios breached over the projected period. Hence with the widening expenditure–revenue gap in Covid-19 era the most extreme shocks should be expected. Increase in external borrowing, external financing increasing more than exports which suggest that foreign exchange availability could be a challenge in the repayment of loans and interest payments. Huge breaches to baseline and historical thresholds signify liquidity challenges expected in post Covid-19 era to affect the financial sector ecosystem which will intend create unexpected levels of contingent liabilities which may affect the operations of the banks and Specialized Deposit institutions. The Covid-19 debt sustainability analysis as summarized in the budget suggest that Ghana is at high risk of debt distress and have directly and indirectly slowed down the growth of the economy from projected 6.5 to estimated 0.9 percent in 2020. It further has increased fiscal stance and the debt sustainability risk of the country and led to the revision of the 2020 fiscal framework in accordance with the law section 28(2)(d) of the Public Financial Management Act, 2016 (Act 921) and the suspension of the Fiscal Responsibility Act 2018 Act (982). The key thing to watch is the increase in government consumption expenditure with reduction in the capital expenditure-(Capex) to make room for reprioritization of Coronavirus Alleviation Programme expense. Review of the Impact of the Budget on Ghana’s Macroeconomics and Gross Domestic Product (GDP): Diagram 2: 2020 Mid-Year Budget Review Diagram 1 depicts the highlights of the revised budgets of the various key sectors of the economy of Ghana under the COVID-19 Pandemic including the revised growth rate in Ghana’s Gross

Table 1: Summary of Jan-June 2020 Fiscal Performance

Table 2: Financial Sector Invention 2017-2019 (GH¢ Billion)

Domestic Product (GDP). Ghana’s Historical GDP The monetary value of all final goods and services produced in a country in a given period of time (say a quarter or a year) is the country’s GDP. Ghana’s GDP has experienced steady growth rate over the last one and half decades (2005-2019). However, during the global financial crisis from 20082009, Ghana’s GDP growth rate recorded a dip in growth (that is from 9.15 percent to 4.84 percent). This represents a 47.1 percent decrease in growth (see Table 1). Now juxtaposing this (from Table 1) to the current global novel COVID-19 disease, Ghana’s GDP growth rate should dip from 6.48 percent in 2019 to 3.43 percent in 2020 which represents an increase of 3.44 percent in real GDP figures. Furthermore, since government is pursing expansionary monetary policy (expanding our road network, increasing infrastructure, giving tax rebates etc) whiles maintaining fiscal discipline, the economy is expected to grow by 3.43 percent in 2020. Deducing this from Table 1, the real GDP value for 2020 should be $59.29Billion. The nominal GDP figure for 2020 is expected to be $60.99Billion which represents a dip of 8.94 percent from the 2019 nominal GDP figure of $66.98Billion (see World Development Indicators – WDI - 2019 Ghana figures for GDP at current prices). This was in comparison with the 2008-2009 nominal GDP figures. Table 1: Ghana’s Real GDP, Growth rate and Per capita Historical Data from 2005 to 2019 In line with Government’s strong commitment to address the damage being caused by the COVID-19 pandemic,

and to protect lives, protect livelihoods, save jobs, and return the economy to a sustainable growth and fiscal path, the 2020 macroeconomic framework has been revised to reflect the impact of the COVID-19 pandemic and developments in the first half of 2020. More specifically, the following developments, among others, have informed the revised 2020 macro-fiscal framework: slowdown in economic activities as a result of the impact of the COVID-19 pandemic, resulting in a downward revision in the growth of real GDP from 6.8 percent to 0.9 percent growth; shortfalls in domestic direct and indirect taxes, as well as custom taxes, as a result of the impact of the COVID-19 pandemic, estimated at GH¢5,089 million (1.3% of GDP); shortfall in petroleum revenue mainly due to decline in crude oil prices (from US$62.6 per barrel used in the 2020 budget to US$39.1 per barrel) as a result of the pandemic, estimated at GH¢5,257 million (1.4% of GDP); shortfall in Non-Tax Revenue (Non-Oil) estimated at GH¢3,286 million (0.85% of GDP); increase in expenditures to contain the COVID-19 pandemic estimated at GH¢11,660 million (3.0% of GDP);

reduction in selected programmed expenditures to make room for additional unprogrammed expenditures induced by the impact of the pandemic; and adjustments to both domestic and external financing as part of measures to close the financing gap resulting from the shortfalls in revenue and the increased spending in the wake of the COVID-19 pandemic. The Institute is of the view that there are still enough grounds to have Economic hope for the future. This can be best understood when we make the dynamics in the macroeconomics and the GDP revisions in the MidYear budget an innovative tool for development. GDP at purchaser’s prices is the sum of gross value added by all resident producers in the economy plus any product taxes and minus any subsidies not included in the value of the products. It is calculated without making deductions for depreciation of fabricated assets or for depletion and degradation of natural resources.

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News

Gov’t targets improved regulatory environment with launch of new portal improving the policy and regulatory environment within which it operates. It is in this regard that the Ghana Business Regulatory Reforms (BRR) portal, which will enable policy makers easily consult businesses and individuals affected by regulations in an efficient, transparent and timely way, has been launched in Accra.Speaking at the launch, the

Trade Minister explained that the development of the portal is part of efforts by the government to attract private capital. “Private capital moves to destinations where they are pampered and where their value is recognised. All this points to the fact that we have to place the private sector at the centre of what we do. And in doing that, we have to create an environment to attract them,” he said. The purpose of the BRR portal is to provide open and transparent access to users of the portal to enable them to regularly engage in policy and regulatory reforms. It is made up of two components, comprising the Ghana business consultations portal and e-registry of business laws and regulations in Ghana. The Deputy Minister for Trade and Industry, Robert Ahomka-Lindsay,

Alan Kyerematen says government is creating a friendly investment climate to boost business.

indicated that government will grant targeted regulatory relief to SMEs and gradually phase in standard rules as the firms begin to grow. This will be used to promote subcontracting linkages between SMEs and large businesses in strategic anchor industries, he added. The BRR programme is expected to establish a permanent mechanism for structured public-

private dialogue, which will involve regular consultations between government and the private sector. It is also expected to provide an ex-post assessment of the impacts of proposed or existing policies or regulations, and to consider other alternatives to achieve policy objectives. The programme will establish regulatory reform units (RRUs) in 12 selected MDAs, for now, as an institutional mechanism

for conducting regulatory reforms. The portal will enable government, working in consultation with the private sector, to anchor its business environment reforms on a permanent and sustainable basis, in line with the vision of a Ghana Beyond Aid. Ministries, Department and Agencies (MDAs), Metropolitan, Municipal and District Assemblies (MMDAs), and regulatory bodies will use the portal to gather information and evidence to assist in formulating policy and drafting or revising business regulations. Other benefits of the portal are that it will help elicit public feedback on the likely costs and benefits of new business regulations and reduce the cost of stakeholder consultation activities. Representatives from the Association of Ghana Industries (AGI), Private Enterprise Federation (PEF), Association of Small Scale Industries (ASSI), Ghana National Chamber of Commerce, and Department for International Development (DFID) all welcomed the portal, stressing that it will support the creation of a sound investment climate in the country.

Ericsson and UNICEF launch global partnership to map internet connectivity in schools Three-year initiative to identify connectivity gaps in 35 countries is a critical first step in connecting every school to the internet Ericsson and UNICEF announced today a global partnership to help map school connectivity in 35 countries by the end of 2023. Mapping the internet connectivity landscape for schools and their surrounding communities is a critical first step towards providing every child with access to digital learning opportunities. This joint effort is part of the Giga initiative. Launched last year and led by UNICEF and the International Telecommunication Union (ITU), Giga aims to connect every school to the internet. Ericsson is the first private sector partner to make a multimillion-dollar commitment to the initiative and does so as a Global UNICEF Partner for School Connectivity Mapping. According to the ITU, 360 million young people currently do not have access to the internet. This results in exclusion, fewer resources to learn, and limited opportunities for the most vulnerable children and youth to fulfill their potential. Improved connectivity will increase

access to information, opportunity, and choice, enabling generations of school children to take part in shaping their own futures. “The deepening digital divide is one of the many inequalities that the COVID-19 pandemic has underscored,” said Charlotte Petri Gornitzka, Deputy Executive Director, Partnerships, UNICEF. “School closures, coupled with limited or non-existent opportunities for remote learning, have upended children’s education worldwide. Our partnership with Ericsson will bring us closer to giving every child and young person access to digital learning opportunities.” In addition to funding, Ericsson will commit resources for data engineering and data science capacity to accelerate school connectivity mapping. Specifically, Ericsson will assist with the collection, validation, analysis, monitoring and visual representation of real-time school connectivity data. The data generated through the mapping will enable governments and the private sector to design and deploy digital solutions that enable learning for

children and young people. Ericsson will also engage its extensive customer base to further advance the goals of the Giga initiative. “Ericsson is uniquely positioned to be a key partner in helping address this important issue due to our technology expertise, global scale, decades of experience in public/ private partnerships, and proven results connecting students and educators,” said Heather Johnson, Vice President of Sustainability and Corporate Responsibility, Ericsson. “Working together with partners, like UNICEF and the ITU, amplifies the potential impact of school connectivity and is a concrete first step in helping bridge the digital divide globally.” “ITU brings a history of technology policy advocacy and regulatory expertise to the vital mission of connecting every school in the world,” said Doreen Bogdan-Martin, Director, ITU Telecommunication Development Bureau. “We are thrilled that Ericsson will join Giga and help build the mapping tools necessary to make connecting every school a reality.” The UNICEF-Ericsson partnership also contributes to the Generation

Unlimited Global Breakthrough on Digital Connectivity that aims to give young people digital skills so they can fully and meaningfully participate in the digital economy. Generation Unlimited is a global multi-sector partnership to meet the urgent need for expanded education, training and employment opportunities for young people. Additionally, the partnership supports UNICEF’s recent COVID-19 Agenda for Action in which the organization called for global action to keep children learning, thereby requiring the prioritization of internet connectivity in rural and remote areas.

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Feature

Dreams Come True BY: DR. SUZU AKU PUPLAMPU

“If wishes were horses, beggars would ride”. How many times have we not heard this English proverb re-echoed in our ears? Most often, it is repeated to our dismay when we are unable to attain certain heights. Occasionally, it is a tease for dreaming too big, I guess. Hooking onto a girlfriend’s waist and whispering into her ears, ‘Girl, I want to own a Bentley’. ‘Saa, she laughed, hehehe, if dreams were horses, Suzy, beggars will ride’. However, the fact remains. That our dreams will come true if we take action (Roy Bennet). So, I can own my dream Bentley, you know. This is the story of Aku Sika who admired a female facilitator at the Ghana Stock Exchange (GSE). Back in 1998, 22years ago precisely, she whispered to herself, ‘I will teach at the GSE one day’. At the time, Aku had great admiration for Mrs. Elsie Addo Awadzi (currently, the 2nd Deputy Governor of the Bank of Ghana) for many reasons. Mrs. Awadzi came across as a selfassured facilitator for the ‘Legal & Regulatory Framework’ course on the capital market. Her signature scarf, ‘OMG’ could not be missed around her neck. Again, she carried herself with so much grace during her lectures and to say she was on ‘point’ with her outfits – mostly in trouser suits – would, perhaps, be an understatement. With this far-reaching dream of Aku Sika, 22years ago, she put in action, just as Roy Bennet recommended, to make her dream come true. It may not be as obvious it is now as a point of reflection, but successive educational and career engagements firmed up the desire to become and now it has been actualized. Yes, it has! A Professor’s Advice One admonishment I vividly remembered shared by a Professor two years ago - that, if you ever dream about ever becoming a Vice-Chancellor in any of the Universities in Ghana, you must become a Professor first. True, as we have it in Ghana now, if you ever dream of being part of faculty with any highly recognized University in Ghana, you need a terminal degree – PhD. The principle is equally applicable in other disciplines– if you ever want to defend anyone in court one day, you have to become a Lawyer. So simple yet that’s the truth. And if you want to save lives and care for the sick, you must have what it takes - become a Doctor or a Nurse. So, my dear friends, some things are not negotiable in this world. Never! We must wake up from our slumbers and know that

it is not enough to just dream. Those dreams must move out of mere wishes and a plan of action must be immediately put in place. The surest way to have our ‘dreams come true’ is for us to live out the dream (goodreads.com). We must believe in ourselves; we must not wait or hold on too long on our dreams; and we must know that, where there is a will, there is a way. As the inspired Aku Sika observed, the in-depth knowledge required to stand in front of potential experts; and to prepare them to participate in the financial services sector of the Ghanaian economy; she knew she needed to upgrade her knowledge. Not even a first degree in Economics & Sociology could get her close to her dreams. She needed additional relevant knowledge in Accounting, Finance and Investment coupled with extensive practice in the investment banking space, to bring to life the lessons to be taught in class. Hmmmm, a tall order. How Long? It took 22years. Yeah! That long. Aku Sika is now a facilitator with the Ghana Investment and Securities Institute – GISI. GISI is a collaboration between the industry Regulator – Securities and Exchange Commission (SEC), the capital market - Ghana Stock Exchange (GSE), the depository for financial assets - Central Securities Depository (CSD), and the Association of licensee companies within the investments and securities industry – Ghana Security Industries Association (GSIA). As of August 2020, if you have the desire of becoming an expert in the financial markets in Ghana and beyond, the route is through GISI, for certification. GISI has collaborated with CISI-UK (Chartered Institute of Securities and Investment) to roll out two major paths to investments and

securities certification in Ghana. These are revised versions of the GSE securities courses. The first cohort is being onboarded. I urge you to be part of history. Let it be said, that you read this article and took a bold decision to acquire additional knowledge and become an investment expert. (Check GISI out at http://www.gisinstitute. org/). Was it Greek? To accomplish great things, we must dream, believe, and act (Anatole France). When we dream, as Peter F. Drucker admonished, we must remain committed to our plans. Aku Sika was at sea in 1998. The whole concept of money and capital market, primary and secondary market, derivatives, stock trading, etc. all sounded like Greek to her ears. She was at war with her intellect just trying to understand the legal rights of the buyer and the seller as concepts in business law, insider trading, initial public offering (IPO), market manipulation, memorandum of understanding, etc., eish. To please her conscience, sometime in the lectures, she just stopped trying hard and simply focused on Mrs. Awadzi’s outfit, especially her scarf. This is to say that achieving this dream took some hard work of studying and examinations. As a national service person at the time with GUNSA, located at the Workers College – Adabraka, Aku Sika will walk in her red high heels shoes through Total House to 6th Floor, Cedi House. Nevertheless, the pain paid off and the ‘dream came true’ after 22years. Question. At what point are you, in actualizing your dream? Are you sure you have followed that single dream for up to 22 years? Need I say, you have no excuse, if your answer is No? Dear friend, as I did, keep trying. On the other

hand, if you have done more than 22 years, you have come too far, don’t give up. Because some ‘dreams do come true’. For how long? That I may not be able to tell. Ten Thousand Hours The common rule of thumb, as explained by Malcolm Gladwell in his bestseller - ‘Outliers: The Story of Success’ says, “it takes 10,000 hours to practice and become an expert or master in a given field”. Did I make my 10,000 hours in investment banking? Maybe I did with ease, as I had an end in mind. 20 hours a week over 10years, seems unattainable. I missed the first decade but I made it by the second decade. One thing I have realized over the years is that anything you work at persistently and consistently you will definitely succeed at it. The most important lesson on this journey to acquire knowledge and skills and transfer the same at some point is that - we should not abandon any journey we start to transform our lives. That’s the key. “If you can’t fly, then run; if you can’t run, then walk; if you can’t walk, then crawl; but whatever you do you have to keep moving forward.” Certainly, Martin Luther Jr was right. Let us stay the course once it is our dream, because some ‘dreams come true’. As I made it, so can you too!

Dr. Suzy Aku Puplampu is the CEO of OctaneDC Limited – a Fund Management and Investment Advisory firm regulated by the Securities and Exchange Commission (SEC). As a finance and investment professional, Suzy has an in-depth knowledge and experience working in the finance industry in Ghana spanning two decades. Fifteen (15) years of her work experience have been dedicated to investment banking and fund management and five years, to accounting, financial reporting and management consulting.

FRIDAY AUGUST 28, 2020

Investment Update

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FRIDAY AUGUST 28, 2020

Investment Update

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FRIDAY AUGUST 28, 2020