Business24 Newspaper (June 5, 2020) by Business24 Online

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FRIDAY JUNE 5, 2020

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SOEs record GH¢3.1bn in losses Energy Commission warns sector debt could hit US$12.5bn without urgent action MORE ON PG 3

BY BENSON AFFUL

Ghana’s utility SOEs are among the perennial loss-making entities presenting a major headache for government

BY NII ANNERQUAYE ABBEY

Government faces an uphill task of turning around the fortunes of state-owned companies (SOEs), as the entities recorded more than GH¢3bn in losses in 2018, a report by the Ministry of Finance has shown. The report, which captured the financial performance of 36 state-owned companies, revealed that the latest financial performance shows a 150.5 percent deterioration over the previous year, when SOEs recorded a net loss of GH¢1.2bn. In a foreword to the 2018 State Ownership Report, published on June 3, Finance Minister Ken Ofori-Atta described the SOEs’ financial

performance as being “persistently abysmal” and a source of worry. “The financial performance of SOEs is a major concern to us, both from the standpoint of the state as an investor, which expects commensurate returns for its investments, and as the bearer of the fiscal risks from SOEs,” he noted. For companies which the state jointly owns with other private interests, there was a marked improvement in their financial performance over the previous year. Out of the registered 42 joint-venture companies ( JVCs), 25 submitted their financial MORE ON PG 2

Regulatory agencies must meet mining companies halfway—Toni Aubynn MORE ON PG 3

BY BENSON AFFUL

ECONOMIC INDICATORS

Message from Ambassador of Denmark to Ghana on Danish Constitution Day

Poultry farmers look to cut losses over egg glut BY NII ANNERQUAYE ABBEY

*EXCHANGE RATE (INT. RATE)

USD$1 =GH¢5.6153*

*POLICY RATE

14.5%*

GHANA REFERENCE RATE

15.12%

OVERALL FISCAL DEFICIT

6.6 % OF GDP

PROJECTED GDP GROWTH RATE PRIMARY BALANCE.

1.5% -1.1% OF GDP

AVERAGE PETROL & DIESEL PRICE:

GHc 5.13*

INTERNATIONAL MARKET BRENT CRUDE $/BARREL

MORE ON PG 5

35.25

NATURAL GAS $/MILLION BTUS

1.73

GOLD $/TROY OUNCE

1,734.68

CORN $/BUSHEL

329.50

COCOA $/METRIC TON

2,399

COFFEE $/POUND:

+5.70 ($108.30)

COPPER USD/T OZ.

220.15

SILVER $/TROY OUNCE:

17.07

NEWS/EDITORIAL

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FRIDAY JUNE 5, 2020

EDITORIAL

Time to deal decisively with energy sector debt 1

Wash your hands 2

Cover your cough 3

The caution by the Energy Commission that the country ran the risk of increasing its energy sector debt to US$12.5bn by the end of 2023 should move duty bearers to act now and spare citizens and businesses another unpleasant experience of a year-long power rationing regime, otherwise known and dumsor. According to the Commission, energy sector arrears and debts was about US$2.7bn as at January 2018, and it was forecast that an additional US$1.3bn would be added to this deficit in 2019. The problems of the sector are wellknow and need not restated here but the solution going forward is the Cash Waterfall Mechanism (CWM) concept instituted in 2016. Business24, like other well-meaning corporate organizations, would like to see the full implementation of the CWM so as to deal decisively with

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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 Alexander Lartey Agyemang (Business Development Manager) Ruth Fosua Tetteh (Dept. Business Development Manager) Gifty Mensah (Marketing Manager) Irene Mottey (Sales Manager) Edna Eyram Swatson (Special Projects Manager ) Events Evelyn Kanyoke (Snr. Events Consultant) Finance/Administration Joseph Ackon Bissue (Accountant)

proceeds from loans, have compounded the country’s debt problems, coming on the back of an expensive financial system rescue that has so far cost the state close to GH₵18bn. Going forward, government need to follow other key measures that the Energy Sector Recovery Program (ESRP) has outlined to improve the financial health of the energy sector. The ESRP is a roadmap of immediate, near-term, and medium-term actions needed to achieve government’s aim to bring the sector into balance by the end of 2023, and a commitment by government to fund the annual sector shortfall (with sector stabilisation payments) from 2020 onwards until the sector is in balance to prevent further accumulation of arrears.

SOEs record GH¢3.1bn in losses (…CONTINUED FROM COVER )

Wear a mask

energy sector debts. The CWM is expected to be operational in 2020 and implemented through the development of a formula for adequate distribution of revenue to all stakeholders in the power sector value chain. President Nana Akufo-Addo and other has bemoaned the situation where the country paid nearly US$1bn for unused power in the last two years due to excess electricity contracted on a take-or-pay basis with independent power producers. Take-or-pay power generation contracts are common in the energy industry and oblige the off-taker (government, in this case) to pay for power supplied by the producer irrespective of available demand. The payments over the last two years, which were financed with

statements, posting an aggregate net profit of GH¢1.4bn in 2018. This represents a 598.4 percent improvement from the combined net loss of GH¢272.2m posted in 2017. SOEs and JVCs posted marginal increases of 7.4 percent and 2.5 percent respectively in revenue, with the report stating that the ability of the JVCs to keep their costs down compared with the SOEs accounted for their contrasting bottom line results. SOEs recorded operational costs of GH¢17.9bn in 2018, an increase of 18.1 percent over the 2017 figure of GH¢15bn. The JVCs, however, increased their costs slightly from GH¢32.1bn in 2017 to GH¢32.3bn in 2018. Policy reforms The Finance Minister in his foreword said government is working with the State Interests and Governance Authority (SIGA), which replaced the State Enterprises Commission, to undertake a raft of reforms to make SOEs profitable. “These policy reforms focus on addressing the key constraints hampering the operational and financial performance of SOEs. Key among these constraints are the poor corporate governance culture and practices of SOEs,” he said. Mr. Ofori-Atta said government will soon implement a corporate governance improvement programme across the 48 SOEs.

“It is expected that the action plans, which would be tailored to the specific circumstances and challenges of the respective entities, would enhance the processes, systems, practices and procedures by which the entities are governed and managed and thereby boost their prospects for improved financial performance,” he added. The Director-General of SIGA, Stephen Asamoah Boateng,

noted that utilising and adapting to modern technology to create smart workplace environments will enhance the efficiency of operations in SOEs. He said there will be real-time performance monitoring and reporting to provide openness, transparency and accountability to assist in decision-making and shareholder value as well as serve stakeholder interests.

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Regulatory agencies must meet mining companies half-way—Toni Aubynn BY DOMINICK ANDOH

Mining sector regulators should consider extending the period for licence renewals by some few months to give operators, many of whose key personnel are presently locked out of the country, time to renew their licences, Dr. Toni Aubynn, president of the Africa Institute of Extractives Industry (AIEI), a think-tank, has proposed. The Minerals and Mining Act 2006 enjoins mining lease holders who wish to renew their leases to do so not later than three months before the expiration of the initial term of the lease—or within a shorter period that the sector minister may allow. However, the outbreak of the COVID-19 pandemic, and the subsequent imposition of movement restrictions and border closures in March, has seen some core managers of mining companies whose renewals may be due unable to handle the renewal process from their holiday homes abroad. Dr. Aubynn, a former CEO of the Minerals Commission, told Business24 that a compromise is needed.

“In terms of the licence renewal— the regulatory documents that are required—government can allow some extension, say 3-4 months,

so the mining companies don’t break the law. If mining companies [whose license renewals are due in this COVID-19 period] do not renew,

technically, they have broken the law. “Expertise in the mining sector is currently constrained because of the inability to travel in or out of the country freely,” he said. The mining sector has remained resilient and is a key contributor to the country’s GDP. The Ghana Chamber of Mines’ 2019 Annual Report shows that the largescale mining sector’s gold output increased from 2.807m ounces in 2018 to 2.989m ounces in 2019, a 6 percent increase from the previous year’s output. Consequently, the large-scale sector improved on its contribution to national gold production, from 59 percent in 2018 to 65 percent in 2019, whereas the small-scale sector accounted for 35 percent of national gold production in 2019, a decline from 41 percent in 2018. Ghana Revenue Authority (GRA) data show that the mining sector’s total fiscal contribution, at 7.7 percent of domestic revenue in 2019, was the second highest after the financial and insurance sector.

Energy Commission warns sector debt could hit US$12.5bn without urgent action BY BENSON AFFUL

The Energy Commission says without urgent steps to address the chronic debt in the energy sector, overall sector liabilities could hit US$12.5bn by the end of 2023. The size of energy sector arrears and debts was about US$2.7bn as at January 2018, and it was forecast that an additional US$1.3bn would be added to this deficit in 2019, the commission said in its 2020 Energy Outlook report. The sector debt has been due to short-term loans contracted by the power producers, take-or-pay arrangements, and the distribution utilities’ inability to collect adequate revenue to cover their operations, the report said. It added that persistent untimely and insufficient payments for gas delivered also contributes to the huge debt burdens of the gas offtakers, most of them public entities. “The power subsector debt alone

is increasing by about $300m every quarter,” it revealed, adding that in order to address the chronic debt challenges and to facilitate equitable distribution of all cash collected in the power sector value chain using the end-user tariff as a basis, the Cash Waterfall Mechanism (CWM) concept was instituted in 2016. It is expected to be operational in 2020 and implemented through the development of a formula for adequate distribution of revenue to all stakeholders in the power sector value chain. President Nana Akufo-Addo has bemoaned the situation where the country paid nearly US$1bn for unused power in the last two years due to excess electricity contracted on a take-or-pay basis with independent power producers. Take-or-pay power generation contracts are common in the energy industry and oblige the off-taker (government, in this case) to pay for power supplied by the producer irrespective of available demand. The payments over the last

John Peter Amewu, Energy Minister

two years, which were financed with proceeds from loans, have compounded the country’s debt problems, coming on the back of an expensive financial system rescue that has so far cost the state close to GH₵18bn. The government has consequently been holding talks with the IPPs to renegotiate or restructure the expensive power purchase contracts, hoping that a successful outcome would ease the debt burden in the energy sector. The 2020 Energy Outlook report

said the Energy Sector Recovery Program (ESRP) has outlined more actions that the government must take to improve the financial health of the energy sector. The ESRP is a roadmap of immediate, near-term, and mediumterm actions needed to achieve government’s aim to bring the sector into balance by the end of 2023, and a commitment by government to fund the annual sector shortfall (with sector stabilisation payments) from 2020 onwards until the sector is in balance to prevent further accumulation of arrears.

FRIDAY JUNE 5, 2020

News

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Conference Centre gradually rots away….AfCFTA events at risk BY EUGENE DAVIS

Conferences and programmes that have been earmarked to take place at the Accra International Conference Centre (AICC) when the Africa Continental Free Trade Area (AfCFTA) agreement finally takes off may be unfeasible as a result of the poor state of the facility. The AICC, the country’s flagship event venue that has hosted major local and international events over the years, is gradually rotting away just six years after it underwent a major rehabilitation. This came to light when the Foreign Affairs Committee of Parliament, led by its chairman Frank AnnohDompreh, toured the facility and two other places on Wednesday. The centre, founded in 1991, was built in modern style with six halls and a total seating capacity of 6,000. The largest hall seats 1,600 people. Addressing the media after the tour, Mr. Annoh-Dompreh said: “All of us were shocked at the structural challenges of this national asset. This committee is surprised, but we are not in any way pointing accusing fingers. We think it is a genuine challenge we all need to resolve.” He said the committee had learnt during the tour that right from the inception of the building, there had been structural challenges which were not resolved. “We are going to make sure something is done, not just for the sake of it but for the fact that it will protect lives, it will save the economy a lot of money, coupled with the

Committee members touring the AICC

fact that we are playing host to the continental free trade agreement— which means that Ghana is going to be a beehive of conferences and all that.” He indicated that the committee will schedule a meeting with the sector minister as soon as possible to get her to report on the short- to medium-term plans for the building. A member of the committee, Dr. Francis Bawaana Dakura, stated that government should consider an alternate facility given that the AICC has been “overused”. “I will also call for a national consensus for us to have a befitting

alternative international conference centre. The current place is not fit for purpose,” he said. On what has occasioned the deterioration of the facility, Mark Addo, the principal engineer at AICC assigned to Foreign Affairs, said the basement has been engulfed by moisture. “The first report I saw on this was in 2014 and it was almost like this. It means that way before then this had already started. In 1991, when the building was commissioned, there was water on the floor—as in ground water—which means it did not have adequate sub-structural drainage.”

He added that the maintenance regime has not been adequate throughout the years, with the columns and piles peeling off. The committee also made stops at the new Passport Office building, which is about 70 percent complete. According to engineers at the site, it is likely to be ready by August. The final stop was the Foreign Affairs Institute, which will be used to train diplomats and Foreign Service officers. It is expected to be ready for use by November.

Poultry farmers look to cut losses over egg glut BY NII ANNERQUAYE ABBEY

More than 3,000 poultry farmers across the country are looking to cut their losses as a collapse in demand for eggs has left them searching for buyers for more than half a billion crates of eggs. A member of the national executive of the Ghana National Poultry Farmers Association, Kofi Brobbey Kyei told the Business24 that over the past one month, farm gate prices of eggs have dropped by more than 30 percent. “Previously I was selling an average tray of egg for about 16 cedis but now the price has fallen to about 12 or 13 cedis depending on the quantity purchased. We have gotten to a stage where we don’t pay so much attention to the price because we risk the eggs going bad altogether,” he said. Mr. Kyei who is also the Managing Director of Aglow Farms in Accra blamed the coronavirus pandemic which has eroded demand for the eggs produced across the country. Prior to the outbreak of the COVID-19 disease, the poultry farmers had hoteliers and

educational institutions among their lead customers. But following the subsequent restrictions imposed on these institutions, demand for eggs has struggled. “We have been talking to the National Food Buffer Stock Company. Unfortunately for them, with their way of marketing their

produce through the school feeding programme, the shut down of schools means they cannot sell their stock not to mention taking more from us,” he stated. With final year students in first and second cycle institutions set to resume school later this month, Mr. Kyei urged government to consider

purchasing more eggs from local farmers as a way of bailing out the sector from the distress situation it finds itself. At the moment, the poultry farmers are desperate to find buyers for their produce urging corporate and individuals as well to reach out to the farmers for eggs at slashed prices. “We are trying to reduce prices to enable people who find price as an issue not to eat eggs to be able to buy. Sometimes even if you slashed down the price by about 50 percent, you hardly get market for your produce. It is a very disturbing situation and we are only hoping that demand for the produce will improve, otherwise farmers may be compelled their birds to cut down on egg production,” he said. According to him, the dire predicament of poultry farmers is taking a toll on poultry feed producers as they are unable to procure feed due to poor sales. He added that the survival of the poultry farmers is crucial for the poultry value chain.

FRIDAY JUNE 5, 2020

Feature

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Bank Digitization: The new era for criminals

BY RICHIESON GYENI-BOATENG, CAMS

n this fast growing technological world, every company is trying to invest part of their capital into technology so as to remain relevant in the industry they operate in. Banks in general are trying their possible best to delight their customers and enhance customer satisfaction and retention. Banks are investing millions of cedis to cope with the competition of technology in the banking industry. Every bank is now going digital to satisfy their customers by bringing banking to their (customer) door steps and/ or even “washrooms”. When we talk about bank digitization, we mean a bank running or doing more business via technology. It is the conversion of data into a digital format with the adoption of technology. By embracing digitalization, banks can provide enhanced customer services. This provides convenience to customers and helps in saving time. Digitalization reduces human error and thus builds customer loyalty. The use of automation can speed up both external and internal processes, both of which can improve customer satisfaction. Criminals are now also thinking

outside the box to use these technologies to their advantage to further deepen their money laundering activities. Everybody in the banking industry thinks the emergence of digital banking will reduce the risk of money laundering and terrorist financing, but it has made it rather easy for criminals to launder their ill-gotten funds. The Commonwealth Bank of Australia money laundering case is a clear example of how criminals are washing their money through digital banking.1 This article seeks to create the awareness on how criminals can use the various digital products and/or service of banks to further launder their ill-gotten funds. This is how digital banking is or can help criminals launder their ill-gotten money. As we all know, the first stage in money laundering is the placement stage, where the criminal tries to put the money gotten from the criminal activities into the financial system. The criminal opens bank accounts in the names of cronies, business associates and/ or trust companies. In this era of intense competition within the banking industry where every bank is trying its best to attract and retain customers through promotional campaigns and other customer acquisition strategies, the criminal takes advantage of this to

open the bank account. It should be noted that some banks allow the opening of bank account online by submitting the necessary required document(s) online. Others even have digital sections located at vantage points that allow customers to walk in at any time to transact business (open an account). Once the account has been opened and operational, the customer request for all the digital services the bank renders as time goes on (which is the normal thing to do to make life easy and comfortable), which include internet banking (online banking), Automated Teller Machine (ATM) card, Mobile banking, Unstructured Supplementary Service Data (USSD), Credit card, Prepaid card, Self cheque scanning, web acquiring platform, etc. All these services and/ or products take the customer away from the bank, making face-to-face interactions difficult or even impossible; an avenue for fraud and increased risk of money laundering activities. Every bank in Ghana is literally “forcing” customers to request for ATM card (either VISA, MASTER, GH-Link) so that traffic could be directed from the banking hall to the ATM. Some banks even issue these cards to customers free of charge just to attract more customers to patronize the ATM. This is a very good strategy as it reduces the

pressure in the banking halls and facilitates effective queue system. But criminals are taking advantage of this to launder ill-gotten funds by sending third parties to make deposit, which are normally below the statutory reporting threshold, into their accounts. The criminals then use the ATM cards to make withdrawals at any POS terminal and/or ATM. The international cards such as VISA, MASTER even make matters worse by allowing customer to make withdrawals from ATM and POS terminal in other countries with easy. These same cards are used to make payment for transactions online from any part of the world. Other bank digital products or services which criminals are using to launder money are Online or Internet Banking, mobile banking, and USSD. These are made possible through the layering stage of money laundering where the criminal disguise the source of the money by creating a series of layers. That is carrying out complex financial transactions to camouflage the illegal source of the cash. The criminal achieves this by using these digital products or services to transfer money from his or her accounts to other accounts within and/ or outside the country. The criminal then creates a complex web of transactions with these

FRIDAY JUNE 5, 2020

Feature/News

(…CONTINUED FROM PAGE 9) products or services. The rollout of Intelligent Deposit Machines (IDMs) by banks to promote bank digitization is another way criminals are using to launder ill-gotten money. These machines create convenience for bank’s customers and also build customer loyalty. With this machine the criminal and/ or associates don’t need to come to the banking hall during the day time to make cash or cheque deposit. They will normally come at night to make these deposits which are below the reporting threshold. The machine counts the cash and instantly credit the nominated recipient bank account. Numerous transactions can be made on any given day without any stress. Mention can also be made of Credit card, which is just a loan facility granted to a customer on a card, as one of the digital product of banks which criminals are using to launder money. Loan request is made to the bank; the criminal spends the bank’s money (loan facility) and repays the loan with ill-gotten money. The criminals deliberately default in repayment, which causes agitation among the managers of the bank forcing them to demand repayment. The criminal then pays off the loan with the dirty money. I want to point out that banks are not the only place which issue out credit cards to their customers. Some major retail shops in the world (including Ghana) issue credit cards to their loyal and dedicated customers. International Prepaid and debit cards are other growing digital bank products which are gaining grounds in Ghana. It operates the same way as the credit card. The

only difference is that, with prepaid and debit cards, the customer uses his or her own funds which have been loaded unto the card. Prepaid cards can also be issue by other businesses aside the banks. From the banks perspective, criminals deposit ill-gotten money onto the cards using third parties. They now use the prepaid and debit cards to purchase things online from anywhere in the world. The deposit can be done in Ghana but usage of the card can take place in another country. From the other businesses perspective, the use of the prepaid cards to launder money is on the rise as it is very easy and these businesses, unregulated. Most of the big retail shops and filling stations in the world are now issuing prepaid cards to their customer. The criminal takes advantage to make deposits onto the card and use it to make payment for goods and/ or service rendered. The latest addition to banks’ digital products and services is mobile money transactions. Banks are partnering with the Telecommunications companies (Telcos) to enable customers of the bank to link their mobile money accounts to their bank accounts for easy movement of funds between the accounts. This service or product is creating convenience for both customers of the bank and telcos. Customers can deposit cash into their account via their mobile money wallet without necessary going to the banking hall or through the IDMs. Criminals who fear being asked about their source of funds will get associates to deposit money unto their mobile money wallet. The money is then transferred to the bank account using the USSD and/ or mobile banking (Mobile App) platform. The fight against money laundering

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and terrorist financing can be achieved through the following means: Putting in place a robust Know Your Customer (KYC) system will help fight money laundering and terrorist financing. That is, the banks should be able to verify the identity of their customers; know their source of funds; what these customers do. Banks can also employ “know your customers’ customers” (KYCC) and “know your customers’ suppliers” (KYCS) systems to further their knowledge about their customers. Enhanced Due Diligence (EDD) can also be performed on customers perceive to be high risk to gather more information. Due diligence (KYC) on customers should not be an event but rather a process. That is, the KYC should not only be done and filed at account opening stage but should be performed and updated any time the need be. Another way banks can fight against money laundering and terrorist financing is investing in anti-money laundering solution which will help the bank officials to monitor and analyze customer transactions. The AML solution will be able to alert bank officials of any suspicious transactions performed on any of the bank’s platform. Patterned and/ or large transactions will be exposed by the solution and further investigations carried out. Constant training of bank staff on how to identify suspicious transactions and behavior will go a long way in the fight against money laundering through digital banking products and/ or service. Another way for banks to fight against money laundering and terrorist financing is for Internet Service Providers (ISPs) to establish log files with traffic data that produces internet protocol

numbers of subscribers and telephone numbers used for server connections. This will help law enforcement agencies to locate where the criminal transactions are emanating from. Also information collected through the servers should be shared with law enforcement agencies. Storage of the information collected should be at least for a year. The banks should also ensure that prepaid and credit cards are linked to bank account to ensure full KYC compliance. Also there should be transaction limit placed on card withdrawals and transfers done through any of the digital banking products (eg. Internet banking, USSD, Mobile banking). Banks should put in place measures on how to validate the identity of any third party who makes a deposit. That is, any third party who makes deposit into a bank account should provide his or her identity card as stated in the section 23(7) of the Anti-Money Laundering (Amendment) Act, 2014. Even though criminals are using the digital banking products and/ or services to disguise the original ownership and control of the proceeds of criminal conduct by making such proceeds appear to have been derived from a legitimate source, banks need to continue with their promotion of digital banking by investing in a more secured and robust technological infrastructure. Would you mind doing me a favor? Share this article with someone so that the awareness of money laundering and terrorist financing could be spread to avoid being use as a conduit by criminals. If you require further information on this article, please contact Richieson @ richieson. gyeniboateng@gmail.com

Trade Minister: Komenda sugar factory agreement will come to Parliament soon BY EUGENE DAVIS

The Trade and Industry Minister, Alan Kyerematen, says the Komenda Sugar Factory will be fully operational once an agreement between government and the selected strategic investor, Park Agrotech, has been submitted to Parliament for approval. “It will be our pleasure to do this as soon as possible, hopefully within the next month and half,” he told lawmakers when he appeared before them on Wednesday to answer a question by the Member for Chereponi, Samuel A. Jabanyite, on the current status of the factory and efforts being made to operationalise it. Mr. Kyerematen said Park Agrotech will begin a comprehensive programme of action to bring the factory to life as soon as restrictions on foreign travels have been lifted and all relevant approvals have been secured.

Park Agrotech was selected after a bid evaluation process to identify a strategic investor with the requisite technical and financial capacity to operate the factory efficiently and profitably, he stressed. He said the company will be working in partnership with STM Projects Limited, an Indian-based company with extensive experience in the management and operation of sugar mills and plantations in India and other parts of the world. Under the agreement, Park Agrotech will invest US$28m over the first three years in capital expenditure and working capital, and also pay an annual concession fee of US$3.3m for a period of 15 years. The Minister said the strategic policy framework for the implementation of the project is a National Sugar Policy which was approved by Cabinet in October 2019.

Alan Kyerematen is hopeful an agreement to operationalise the factory would be submitted soon to Parliament.

FRIDAY JUNE 5, 2020

Agribusiness

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Let’s encourage cashew consumption among GhanaiansFormer MoFA boss The former Ashanti Regional Director for the Ministry of Food and Agriculture MoFA, Mr. Kwaku Minka Fordjour, has called for increased cashew consumption among Ghanaians. He explained that cashew has so many nutritional and medicinal value for human health and encouraged its use. Ghana earned US$378 million from the sale of 110 tonnes of raw cashew nuts in 2018, but many Ghanaians are yet to know the medicinal value associated with its consumption. Ghana is among the few countries that, produce cashew in the subregion but do not consume them. Ghana mostly exports raw cashew for foreign exchange. Mr. Fordjour, who was speaking on Kumasi-based radio station, said: “It is high time we put a premium on cashew consumption among our people to reduce the spread of a variety of diseases in the country. He revealed that in spite of its importance, it is quite expensive and appealed to cashew processors to relax the price in order to encourage more local consumption. He believes by doing so, demand for

the cashew nuts will increase. “This will empower the local processors to compete favorably with their peers in the developed countries,” he said. Regulation Over the years, cashew farmers have been complaining about low

markets and low prices for cashew nuts due to lack of a regulatory body to regulate cashew – related operations in the country. “The industry has experienced price fluctuations for decades, simply because there is no regulating authority to oversee its operations like we are witnessing

Dawiri community gets gari processing factory Non-Governmental Organisation (NGO) BOK Africa Concern, based at Berekum in the Bono Region, has built and inaugurated a gari processing factory for Dawiri, a farming community in the Jaman North District of Bono Region. The project is meant to create employment opportunities for the youth, particularly returnees from abroad and the youth. Jointly funded by the NGO and its collaborating partners International Organisation for Migration (IOM), GhanaianGerman Centre for Jobs, Migration and Reintegration (GGC) and Gesellschaft fur Internationale Zusammenarbeit (GIZ), the project aims at reducing the incidence of irregular migration and reintegrating migrants into local communities. The set-up of the factory comprise a processing structure (office/ store, wet area, washing troughs), housing grating machine and four straining machines, mechanised borehole with water tower, a frying shed, a peeling shed, 12 pieces of sieves, four aluminium fryers, two weighing scales, a simple dual bathhouse and a corner mill. Speaking at the inaugural ceremony on Tuesday, Mr Benson Obeng-Savio Boateng, the Executive Director of the NGO, said the Dawiri community was selected due to its record of high number of irregular migrants, huge socio-economic prospects as well as the tenacity to manage and sustain development projects. He said the decision to settle on

building a gari processing factory followed discussions between major stakeholders including the community leaders during a community entry to determine and assess the needs of the area. He said the initiative was to complement government’s efforts in providing development for the citizenry and therefore stressed the need for the managers to employ efficient and best management practices for the viability and sustainability of the facility. He said BOK would delegate its representative as a management committee member to monitor the factory’s progress for the next two years and expressed appreciation to the partners for supporting a cause to reintegrate returnees and retain potential migrants. Mr Adane Ankomah, the District Chief Executive (DCE), said the establishment of the factory would

benefit surrounding communities as well. He said the Assembly was planning in collaboration with health authorities to upgrade the local Community-based Health Planning and Services (CHPS) Compound to a health centre to render quality health care delivery services to residents in the community. Nana Mariwah Ababio, the Odikro of Dawiri, expressed appreciation to the NGO and its partners and added that the presence of the factory would help reduce social vices among the youth because of the provision employment. He appealed for the rehabilitation of roads linking Mayira to Dawiri and other surrounding communities which would be feeding the factory with cassava, the basic raw material needed for the gari processing. GNA

in the cocoa sector” he lamented and appreciated the decision by Government to set up the Tree Crop Authority which will guide the sector with clear cut policies and ensure all value chain players reap fair benefits. It is envisaged that the coming into force of the Tree Crop Authority will also help improve the production and income base for rural folks and then the country as a whole. Mr. Fordjour has therefore challenged the yet to be inaugurated Tree Crop Authority to change the industry within the next 3 years. He entreated them to focus more on local processing, instead of exportdriven agenda, which, in the end, will not favor the farmers and their living income. Cashew grows well in most parts of Ghana, as the ideal soils and climatic conditions for its cultivation are present in the country. In Ghana Cashew processing is manually performed; a practice that affects the volume of production. Gardja.org

Agribusinesses heavily impacted by Covid-19 —CAG The operations of about 80 percent of agribusiness firms in the country have been negatively impacted due to the novel coronavirus pandemic, according to the latest Agribusiness Sector Survey Report 2020 published by the Chamber of Agribusiness Ghana (CAG). The Chamber in its report said many businesses complained about the cut in production and supply, difficulty in meeting monthly revenue targets, payment of salaries and wages as a result in the disruptions of the sector. Additionally, the survey noted disruptions in normal business operations had also increased their monthly business expenditure of agribusiness firms. “One of the major challenges in the agriculture sector included rampant land litigation issues which threaten the investments of businessmen and eventually, lead them to abandon the land, resulting in huge losses,” the report noted. The report further revealed, smallscale agribusiness firms were the hardest hit with a revenue shortfall of about 77.4 percent. Large scale firms, on the other hand, suffered a 55.4 percent revenue loss, with medium-scale agribusinesses remaining in the middle with a recorded 75.2 percent monthly loss in revenues.

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Courage under Fire: Policy responses in emerging market and developing economies to the Covid-19 Pandemic BY MARTIN MÜHLEISEN, VLADIMIR KLYUEV, SARAH SANYA The coronavirus crisis is a crisis like no other, and for emerging market and developing economies (EMDE), it has triggered a policy response like no other, both in scope and magnitude. Despite their diversity, and in some cases, strained resources, this large group of countries—consisting of emerging markets and low-income countries—have bolstered the provision of health services and extended unprecedented support to households, firms, and financial markets. While limited policy space has kept the response at a smaller magnitude than in advanced economies, some even managed to help other countries. A whole new world Economic activity in EMDEs has decelerated at a pace unseen in at least 50 years as the impact of the COVID-19 pandemic ravages the global economy. Several countries are experiencing a sharp decline in trade and capital flows, and the impact of an unprecedented decline in oil and other commodity prices. A spate of sovereign downgrades has occurred. The IMF’s Policy Tracker summarizes key policy responses to the COVID-19 pandemic, and within these responses, there are some common threads. Fiscal policy to save lives and protect livelihoods Fiscal policy has been at the forefront of the EMDE response. Within EMDEs, the health crisis is necessitating massive health spending, though this increase has been dwarfed by the resources needed to support the broad economy. Countries have provided loans, guarantees, and tax breaks to corporations and SMEs, and extended support to vulnerable households with higher unemployment benefits and subsidies on utility prices. Financing for these new measures emerged from a variety of sources, including borrowing, drawing down buffers, reprioritizing within existing budgets, and multilateral support. Some economies entered this crisis in a vulnerable state with already sluggish growth, high debt levels and limited fiscal space to support the health sector and the flagging economy. About half of all lowincome countries were considered in debt distress or at a high risk of debt distress even before the crisis, as assessed by the IMF’s Debt Sustainability Framework. Partly reflecting these constraints, the total discretionary fiscal response to the shock has been lower (although still sizeable) in both emerging market and low-income

economies at 2.8 and 1.4 percent of GDP respectively in extra spending and tax reductions, compared with 8.6 percent of GDP in advanced economies. Monetary and financial sector

support—an anchor for stability EMDE central banks cushioned the impact of the shock on credit conditions through policy rate cuts and liquidity injections. Unlike previous episodes of capital outflow pressures—including the early stage of the Global Financial Crisis—most emerging market economies lowered policy rates (most of them by 50 basis points or more) rather than raising them. This could be attributed to lower inflation pressures and generally more credible monetary policy frameworks.

Like many advanced economies, some emerging markets possess little room to cut interest rates further and implemented “unconventional monetary policy” responses—such as purchases of government and corporate bonds. Regulatory restrictions including on liquidity and loan classification have been loosened to help banks play a more supportive role during the pandemic. In addition, some countries including China and Colombia have relaxed select macroprudential measures—constraints on lending

and borrowing introduced to contain excessive loan growth, and the build-up of systemic risk in the financial sector that can occur in good times. Now, a relaxation can support the supply of credit to hardest-hit individuals and economic sectors. Staying flexible Currencies of EMDEs with flexible exchange rates have depreciated in response to outflow pressures and heightened risk aversion—over 25 percent in a few cases. Many economies took advantage of their buffers to offset some of the pressure by intervening in the foreign exchange market and drawing down their international reserves. A few countries eased existing capital controls on inflows, while recourse to measures to curb capital outflows has been very limited. Digitization—a lifeline to protect the vulnerable Countries such as Bolivia and Indonesia are using digital technology to counteract the sudden economic distress on households and small and mediumsized enterprises, and to limit the spread of the disease by encouraging cashless payments. Others, such as Colombia and Kenya, are ensuring affordable access to digital (easing restrictions on internet access) and financial services (mobile money and electronic payments charges). Zambia provided subsidies to smallscale farmers through the digital platform. Managing supply disruptions As the pandemic and prolonged lockdown hampered global supply chains, many countries took steps to ensure food security and continued access to medical supplies, mostly on a temporary basis. For example, several countries introduced price controls and issued regulations against price gouging for basic food items and medical supplies. Some eased

import controls. Unfortunately, in several cases restrictions were introduced on the exports of food and pharmaceuticals. International solidarity—helping countries reach further In response to the COVID-19 shock, the global financial safety net has been activated and strengthened. The U.S. Federal Reserve has established new swap lines with central banks in several major advanced and emerging economies. The G-20-led debt moratorium initiative, and financial assistance from the IMF and other institutions are helping EMDEs cope with the challenges. The IMF has quickly provided emergency assistance to more than 60 countries. Further, as demand for liquidity increased, the IMF recently established a new Short-term Liquidity Line as part of its COVID-19 response to augment its lending toolkit. In addition, massive liquidity provision by major advanced economy central banks, while directed primarily at domestic financial conditions, has also alleviated pressures on emerging market and developing economies. At the same time, EMDEs are also extending assistance to each other and other countries in need. In particular, Regional Development Banks are providing support for private sector enterprises, trade finance and continued access to medical supplies. Examples of bilateral assistance include Albania, which dispatched a team of doctors to Italy, and Vietnam, which donated medical supplies to neighboring countries as well as advanced economies. EMDEs have been heavily affected by the COVID-19 shock and market reaction that it triggered. The analysis of the IMF Policy tracker shows an extraordinary policy response, bolstered by innovation and international cooperation. In this unprecedented and fast-moving situation, countries can benefit from learning from their peers, and the Fund is committed to collecting and sharing best practices and incorporating this data into its own analysis to continue to assist our membership.

Martin Mühleisen

Sarah Sanya Martin Mühleisen is Director of the Strategy, Policy, and Review Department (SPR) of the IMF

Vladimir Klyuev

Sarah Sanya is an economist in the IMF’s Strategy, Policy, and Review Department.

Vladimir Klyuev is Deputy Chief in the Macro Policy Division in the IMF’s Strategy, Policy, and Review Department.

FRIDAY JUNE 5, 2020

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Emirates offers flights for passengers to 29 cities and resumes transits through its Dubai hub Following the UAE Federal Government’s announcement to lift restrictions on transit passengers services, from 15th June Emirates will offer passenger services to 16 more cities on its Boeing 777-300ER aircraft. With travel restrictions remaining in place in most countries, customers are reminded to check entry and exit requirements before their journeys. Flights to the following cities will be available for booking on emirates. com or via travel agents: Bahrain, Manchester, Zurich, Vienna, Amsterdam, Copenhagen, Dublin, New York JFK, Seoul, Kuala Lumpur, Singapore, Jakarta, Taipei, Hong Kong, Perth and Brisbane. In addition, from 8th June Emirates will offer flights from Karachi, Lahore and Islamabad for travellers from Pakistan who wish to connect onwards to other Emirates destinations. With this latest announcement, Emirates will be offering flights for passengers on the back of its scheduled cargo operations from Dubai to 29 cities, including existing flights to London Heathrow,

Frankfurt, Paris, Milan, Madrid, Chicago, Toronto, Sydney, Melbourne and Manila (from 11th June). Customers can book to fly between destinations in the Asia Pacific and Europe or the Americas, with a convenient connection in Dubai, as long as they meet travel and

immigration entry requirements of their destination country. Working closely with the UAE authorities, Emirates continues to take a measured and phased approach to flight resumption and rebuilding connections between Dubai and the world. Emirates has implemented

a comprehensive set of measures at every step of the customer journey to ensure the safety of its customers and employees on the ground and in the air, including the distribution of complimentary hygiene kits containing masks, gloves, hand sanitiser and antibacterial wipes to all customers. (Source: Emirates)

Toyota Ghana’s two new vehicles and how they compare with the rest Toyota Agya, one of the recently launched Toyota Ghana range of cars, is an automatic vehicle and powered by a 1.0L engine. The car is lauded for its agility, spacious interior and stylish nature. It is now one of the sought-after cars in the small car segment in Ghana. The new Toyota Corolla outdoored by company also comes in two variants, 1.8L and 1.6L engines. This is a trusted and reliable car that has gained popularity worldwide. Managing Director of Toyota Ghana, Takuya Kajiura, noted that the two cars are well suited to the Ghanaian market. Mr. Jerry Mensah, the National Sales and Marketing Manager, Toyota Ghana noted that the new design came out of intensive customer survey built on the Toyota’s new global architecture fitted with modern technology with focus to improve on performance, safety, beauty and style. He indicated that the manufacturers of both vehicles considered the environmental factors, the type of fuel and road conditions. Making them suitable for the Ghanaian market. He further added that, there are special arrangements for anyone who is interested in purchasing any of the cars.

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Ghana’s Domestic Revenue: State of play and policy options after COVID–19

BY EMMANUEL K. ZEWU

here are signs of imminent global recession as the COVID– 19 pandemic causes serious economic damage across the world. Ghana is expected to grow 1.5 percent in 2020 according to the government and the International Monitoring Fund (IMF). Fitch, a rating agency however expected the economy to do slightly better with a growth rate of 2 percent in 2020. This means that, Ghana may record her lowest growth in more than three decades. In addition, the COVID – 19 pandemic will have significant implication for employment, poverty and inequality and importantly, government revenue to do the necessary investments to ensure economic growth. This year government has projected a revenue shortfall of about GH¢9.5 billion as a result of the pandemic. In the last five years, that is, between 2015 and 2019, government total revenue grew cumulatively by 65%, while its expenditure grew by 75%, causing the deficit finance requirement and the country’s debt to increase. Within the same period, Ghana’s domestic and tax revenue grew cumulatively by 77% and 75% respectively, while interest expenditure increased by 118%. But, grant from development partners declined by 63%, partially due

to Ghana’s lower middle income country status. The situation with grants could worsen as the rest of the world is expected to focus on building their economies after the COVID – 19 pandemic. Also, many countries are expected to have their debts increased. According to the IMF, global debt is expected to increase from 83.3% to 96.4% of global GDP. The United State of America’s debt is projected to go up from 109% to 131% of GDP and from 134.8% to 155.5% for Italy as the Fund projects fiscal deficit to widen in major economies of the world. This could limit their ability to give grants and other supporting finances to countries like Ghana. Government fiscal space will further be shrunk by capital market and debt sustainability challenges. Many countries with better bond risk ratings than Ghana are expected to increase borrowing from the capital market. This will limit the ability of developing countries like Ghana to raise the needed funds at reasonable interest rates to support their development. Ghana’s public debt stock stood at GH¢236.1 billion (59.3% of GDP) at the end of March 2020 with external debt component of about GH¢124.8 billion (31.4% of GDP) according to the latest Bank of Ghana’s Summary of Economic and Financial Data. Last month, Fitch projected Ghana’s Debt to GDP ratio to be about 77% at the end of this

year as a result of revenue shortfall due to the COVID – 19 pandemic. Meanwhile, Ghana is expected to save about US$350 million in debt servicing payments this year as G - 20 countries suspend debt servicing payments due them this year from the 76 poorest countries in the world (the IMF’s April 2019 World Economic Outlook ranked Ghana 59th poorest country in the world). Commercial debts and debt owed to export credit agencies are not eligible for debt relief under this policy. However, multilateral debt, owed to institutions like the World Bank and the IMF, as well as bilateral debt owed to development partner countries qualify. In 2018 (date for which latest debt comprehensive data is available), total debt servicing on bilateral debt and multilateral debt amounted to US$327.1 million, while debt servicing on commercial debt was about US$2.2 billion. This implies that, in 2018, debt servicing on bilateral debt and multilateral debt represented about 13% of total debt servicing obligation. Given that the debt stock had increased form the 2018 figure and given the rate of growth of servicing requirements at least between 2017 and 2018, debt servicing on bilateral and multilateral debts should exceed US$350 relief government may get. This situation means that, Ghana will have to focus seriously on

domestic revenue mobilization, which was made up of 81% tax revenue, 15% non – tax revenue and 4% other revenue at the end of 2019. Domestic revenue recorded an average annual growth of 17% in the last five years and was projected to growth by 27% this year before the outbreak of COVID – 19 (50% of this growth was expected from tax revenues). We however know that this cannot be achieved given government’s impact analysis of the COVID – 19 pandemic. This notwithstanding, it is the only real hope of revenue for government to enable expenditures that will support the growth of the economic. Tax revenue remain the most reliable source of domestic revenue and it constitutes the bulk of the country’s domestic revenue (81%) as earlier stated. However, tax revenue to GDP ratio for Ghana remain low compare to other countries in Sub Sahara Africa and the regional average despite efforts of governments to change this narrative. According to the Revenue Statistics in Africa 2019 published by the Organisation for Economic Co-operation and Development (OECD), in 2017, Ghana’s tax revenue to GDP ratio was 14.1% relative to the ‘regional’ average of 17.2%. also Ghana recorded a lower ratio compared to its peers and neighbours (Côte d’Ivoire 17.9%; Kenya 18.2%; Burkina Faso 19.3%, South Africa 28.4%).

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(…CONTINUED FROM PAGE 17) Given the current situation and its implication for the global economy, in addition to the potential and the financial resources needed to achieve national development aspirations, there cannot be any ‘tokenism’ or half-heartedness in efforts to mobilize domestic revenue. A recent publication by Prince Aboagye and Ellen Hillboll (available at: https://academic.oup.com/afraf/ article/119/475/177/5803425), stated that “the Ghanaian state’s fiscal capacity has been consistently limited by its inability to secure political support for its revenue mobilization efforts”. They further stated that, the “history of misappropriation of tax revenues, overt corruption and profligacy diminished citizens’ support for governments’ tax efforts. Hence, tax reforms were often met with violent protests, strikes and demonstrations by various interest groups and social classes, weakening governments’ tax capacity”. I believe these statements signal where we should be looking at to resolve tax revenue and domestic revenue issues. Policy Options Following government’s outline for presenting revenue, domestic revenue can be classified into three categories; tax revenue, non – tax revenue and other revenues. Studies on Ghana’s revenue potential have shown that all these categories have unexploited potentials. For example, the United Nations Economic Commission for Africa (UNECA) in 2018 estimated that, the tax gap for the Value Added Tax (the shortfall between potential and actual VAT collections) in Ghana was about 67%. This means, Ghana collects only 33% of potential VAT revenue. This is certainly good news since there is a huge potential to collect more. But as a country, we need to assess comprehensively the available policy options as we want to growth our domestic revenue. Tax revenue Improving Compliance Improving tax compliance requires a taxpayer compliance program, with focus on retooling the Ghana Revenue Authority (GRA), deploying robust collection systems and increasing capacity in core tax administration functions such as registration, debt collection, audit, taxpayer services, filing and payment enforcement and education. On the hand, there must be strategies to build strong links between revenues and public benefits, to promote trust and tax morale among taxpayers. This could be reinforced with effective and efficient collaboration between the GRA and Metropolitan, Municipal and District Assemblies (MMDAs) to better tailor reforms to local contexts and needs. In recent years, the Ghana Revenue Authority (GRA) have tried to build citizen’s confidence in the tax system and to promote voluntary compliance. However, it is near impossible for taxpayers to comply with full disclosure required to achieve this outcome. Therefore, there is the need to

pursue more aggressively, “quasivoluntary” tax compliance. In this case, citizens comply out of strategic considerations; like the possibility of being caught and the penalty implications. Studies have also shown that, a sense of equitable distribution of the tax burden among taxpayers improve their willingness to comply with tax regulations. In addition, leveraging on information technology could increase compliance and lower administrative costs. Increasing the tax net/base The central challenges for the country’s domestic revenue generation post COVID – 19 pandemic are probably going to be the identification of potential taxpayers (individuals and groups) and taxing them appropriately. This could probably be a standalone project looking at the various efforts in the past and their outcomes. We have all wondered why increasing the tax net is such a herculean task for finance ministers and governments especially in Sub Sahara Africa. The obvious reason is the difficulty in identification due to the informal nature of the economies on the continent. This is true for Ghana as well. According to a report by the Institute for Fiscal Studies (IFS) in Octobor 2017 (available at: http://ifsghana.org/wp-content/ uploads/2017/10/Prof-Speech.pdf ), less than 50% 0f potential taxpayers in the country actually pay their taxes. Another study by Danquah and Osei – Assibey (availableat:http:// ugspace.ug.edu.gh/ bitstream/ h a n d l e/1 2 3 45 6 78 9/3 1 143/ The%20Extent%20and%20 Determinants%20of%20Tax%20 Gap%20in%20the%20Informal%20 Sector%20Evidence%20from%20 Ghana.pdf? sequence=1) estimated that only 31% of the potential government revenue in the informal sector is being collected. However, the sector contributes about 70% of the country’s GDP. Hence, identifying and tracking the economic activities of the sector players and finding the appropriate tax type and rate will contribute significantly to tax revenue. Currently, government is hoping the Ghana Card, the digital address system and the street naming programs will significantly solve the identification problem. Even though solving the identification challenge will be a great step towards taxing the informal sector, it is not enough to increase the tax net to the desired level. It must be accompanied by the right tax type and rate. The former seems more complex as it involves a lot more technicalities. This is not to say that determining the appropriate tax rate is not important, but this becomes relatively easy with identifying the economic agent, the nature of their businesses and the tax type to implement. Both the tax type and the rate can broadly be categorized into two; direct and indirect; specific and ad valorem respectively. Ghana’s tax revenue was dominated by indirect tax revenue partially due to the inability to increase the tax net to effectively cover the informal

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sector. This improved significantly as the contribution of both direct and indirect tax to total tax revenue was almost at par at the end of 2019. But, a further analysis of the data showed that, the improved performance of direct tax revenue was mainly due to significant growth in company taxes on oil and royalties from oil. Oil companies are presumably in the formal sector, therefore, the direct taxation of the informal sector remains a challenge. To ensure equitable distribution of in the tax burden and improve compliance especially from the few who are shouldering the direct tax burden, the informal sector needs to brace itself for tax reforms. The other alternative for government will be to adopt the easier and usual approach of indirect taxation with the burden on everyone including those in the formal sector who are currently over burden by the direct tax incidence. Tackling tax evasion, avoidance and exemptions Tax avoidance and evasion are done mostly by taking advantage of gaps or exceptions in the tax regulations and also falsifying documents. Tax evasion is an illegal practice; it is an unlawful attempt to minimize tax liability. Tax avoidance on the other hand usually takes place when companies and individuals use areas where the tax regulation is ambiguous to avoid paying tax. But, identifying and understanding of the reasons underlying these problems will help develop means and the tool for fighting them. In doing so, attention should be paid to reasons for noncompliance with tax legislation, the transfer pricing regime and reasons for the low ability of tax authorities to enforce tax obligations. Tax exemptions have increased in recent years and it is estimated at about GH¢10 billion annually. This is about 19% of domestic revenue or 24% of tax revenue in 2019. Given the expected revenue difficulties after COVID -19, government may want to do a comprehensive review of the tax exemption regime. Non-tax revenue Improving the performance of non – tax revenue policy instruments/ tools and reducing non-tax revenue volatility According to the Economic Commission for Africa (ECA), African countries relay on a small set of non-tax instruments which in most cases brings little revenue to governments. Ghana’s set of non-tax revenue instruments include, retentions; fees, license and charges; dividend/interest and profits; rentals; property income; business permits; penalties and forfeitures. Due to the nature of some of these instruments, non – tax revenue growth showed a volatile trend which makes it highly unpredictable. However, it is possible to smoothening the trend by increasing the performance of these tools, especially property rate; fees, license and charges; penalties and forfeitures. Increasing revenue collection in the areas of fees, license and charges; penalties and forfeitures depends on law enforcement. While this will

increase government revenue, it will also help to reduce crime and disregard for the law. Perhaps, this is the time to impose fees, fines, charges and penalties in certain cases instead of prison sentence. Although these revenue sources may begin to fall as crime falls, its short to medium term relevance to domestic revenue generation is crucial. The “big fish” here is property rate. This is one of the best sources of income for local governments and if properly harnessed some local assemblies may not have to depend on central government finances. A report titled “Residential Occupancy and Property Tax Arrears in Accra” by a team of researchers from the Durham University Business School revealed that 80% of property tax are in arrears with some up to 10yrs. This means that only 20% 0f property owners in Accra pay their property tax regularly. Given the expected limited fiscal space after COVID – 19, collection of property rates should improve across all assemblies in the country. The primary focus should be on resolving the challenges with the property rate regime. Some of the problems are; poor property data systems, lack of political will, non-enforcement of the law and insufficient technical capacity. Finally, while intensifying efforts to increase domestic revenue, it is important to recognize that its size also depends on the level of economic activity. Therefore, returning businesses a to growth path versus collecting more money from them should be a big dilemma for government. Should government tax to growth or growth to tax? This old debated should dominate post COVID -19 strategies. This notwithstanding, the COVID – 19 pandemic could be the catalyst to compel us to undertake the necessarily reforms in domestic revenue mobilization to give life to the “Ghana Beyond Aid” agenda.

ACCORDING TO THE ECONOMIC COMMISSION FOR AFRICA (ECA), AFRICAN COUNTRIES RELAY ON A SMALL SET OF NON-TAX INSTRUMENTS WHICH IN MOST CASES BRINGS LITTLE REVENUE TO GOVERNMENTS.

The author can be reached via ekzewu@ gmail.com

FRIDAY JUNE 5, 2020

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