Business24 Newspaper (June 3, 2020) by Business24 Online

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WEDNESDAY JUNE 3, 2020

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Economists still see hefty pandemic blow despite eased restrictions

Investors seek stake in new airline …Economic Management Team to decide by Q3 BY DOMINICK ANDOH

BY NII ANNERQUAYE ABBEY

Some economists have cast doubts on hopes that the latest partial easing of coronavirusinduced restrictions would help limit the economic havoc caused by the virus. The economists told Business24 that the recent measures announced by the President are not enough to prevent the economy from recording its lowest growth in nearly four decades. President Nana Akufo-Addo, as part of the first phase of plans to lift the remaining coronavirus restrictions, gave approval for educational institutions to be reopened to final-year students and for social gatherings such as conferences and workshops to resume under stringent health protocols.

He also announced that religious services with a maximum number of 100 congregants at a time can take place from June 5, with a mandatory one-metre rule of social distancing between congregants. Responding to whether the measures would help limit the economic damage from the pandemic, Dr. Magnus Ebo Duncan, an economist and statistician, told Business24 that the crash of crude oil prices and the closure of the country’s borders have hurt the economy the most—and these are areas which have barely been affected by the latest easing of restrictions. “Some businesses are still restricted, especially MORE ON PAGE 2

PG 3

Virus won’t disrupt gas imports, analyst says BY BENSON AFFUL

Challenges with UNIPASS …shippers want ICUMS-related costs waived

PG 3

ECONOMIC INDICATORS *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

35.25

NATURAL GAS $/MILLION BTUS

BY PATRICK PAINTSIL

PG 23

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

WEDNESDAY JUNE 3, 2020

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EDITORIAL

Teething hitches with ICUMS must be resolved urgently 1

Wash your hands 2

Cover your cough 3

After series of back and forth regarding the implementation of the new Integrated Customs Management System ICUMS, the new trade facilitation tool was fully deployed at the Tema Port on Monday but not without challenges. Scores of importers were left stranded when they failed to process their documents through the ICUMS causing a pile up of both freighters, clearing agents and shippers alike at the forecourt of the Customs Longroom in Tema. While the affected shippers blamed the mess on challenges with the new system, the Ghana Revenue Authority saw the inability of key users to familiarise themselves with ICUMS as the cause of the problem. Two days into its deployment,

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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)

to ensure real time flow of cargo, reduce the cost of doing business at the ports and ensure that government generates the right level of revenue from the port business, and that is what makes these early signals more disturbing. We acknowledge that they are teething problems peculiar with every change in system and we are very much aware that government has assured that these hitches would be fixed today. We encourage the port community to cooperate on this venture in a manner that will ensure a win-win situation for all as we collectively seek to make the shipping business a more convenient, profitable and conducive venture.

Economists still see hefty pandemic blow despite eased restrictions (…CONTINUED FROM COVER )

Wear a mask

majority of shippers are still unable to process their documents because the system is unable to capture and populate their TIN numbers, which is the first step of action before every other process can continue. Considering that most of these concerns were raised by the shipping stakeholders all through the trials of the system, it is disturbing to find that these technical challenges persist after months of piloting across the country’s seaports, airports and entry points. ICUMS was supposed an endto-end solution and a departure from the previous system where ‘valuation and classification’ and ‘risk management and payment’ were handled by different entities. The crux of its implementation was

those in the tourism sector. The easing is not enough to make the sector flourish. For instance, hotels are closed and large conferences are still not permitted. As such, if there are any benefits to be accrued from the easing, it is more likely to be social rather than economic,” he said. He added that a rise in crude oil prices— which tanked in March—would do a lot more to limit the economic damage caused by the virus, but unfortunately, the country has little control over that situation. Dr. Duncan stated that for the economy to rebound from its current depths, government has to devise a means of investing in the real sector as a way of boosting demand for goods and services, which has declined partly as a result of job losses suffered in the wake of the pandemic. “With the private sector down, it is imperative for government to spend,” he said. Another economist, Courage Martey, who works with investment banking firm Databank, stated that a rebound in crude oil prices could help plug the GHȼ5.7bn hole in the government’s crude oil receipts. However, the easing of restrictions will take a while to yield the right impact, he said. “I am not sure any damage limitation would come as a result of the easing of the restrictions. Easing of domestic restrictions will not have a significant

impact on the economic outlook as long as global supply chains remain disrupted and our borders remain closed.” He further stated that the psychological damage caused by the virus would make people edgy even when the restrictions are lifted, such that it would take time for people to

adjust to the post-COVID-19 era. The Ghanaian economy is projected this year to experience its lowest economic growth since 1983, with real GDP forecast to increase by just 1.5 percent as a result of the coronavirus shock.

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Investors seek stake in new airline BY DOMINICK ANDOH

The Economic Management Team (EMT), headed by the Vice President Dr. Mahamudu Bawumia, is assessing various proposals submitted by investors seeking to partner government in the new home-based carrier project. Plans for establishing a privatelyrun home-based carrier to succeed the erstwhile Ghana International Airlines have been long in the works without a firm decision on the choice of a strategic partner. Initial discussions with two international airlines—Ethiopian Airlines and Air Mauritius—stalled with no agreement on key decisions such as financing arrangement, routes to operate, and fleet size among others. Interest by indigenous companies GOIL and GLICO has also cooled. Aviation Minister Joseph Kofi Adda, in an exclusive interview with Business24, said there are new firm interests and the decision will soon be taken by government’s economic advisory team.

“Most of these unnamed investors are local companies with foreign partners. Some of them have been made to show proof of funds and the Ministry is working with the EMT to sift through the current proposals. We will conclude everything by the end of the third quarter,” Mr. Adda, who is also the MP for Navrongo Central, said. Despite the impact of COVID-19 on the aviation industry, Ghana is keen to complete the processes for a new home-based carrier in readiness for the easing of restrictions, discovery of a vaccine, and revival of the tourism sector. Collectively, international airlines which fly to Ghana have lost an estimated US$400m in potential earnings since the coronavirus pandemic forced the closure of the country’s air, land and sea borders on March 22. The figure is expected the rise by US$100m if the closure extends beyond June 30. The International Air Transport Association (IATA) estimates that the pandemic could cost the global industry about US$250bn this year.

Mr. Adda said mistakes of the past have served as warning signs in this new project, hence the new homebased carrier will be private sectorled with strong local content. “This will be a privately-run entity. Majority of the shares of the airline will be Ghanaian-owned. We have encouraged them [investors] to explore partnership with existing domestic airlines.” Why investor interest in the midst of crisis The COVID-19 pandemic has led to a sharp decline in the prices of airlines stocks across the world. Major airlines saw their stocks plummet and being dumped by experienced investors such as Warren Buffet. For instance, Air France-KLM, whose stocks were trading at €10.94 as at October 29, 2019, saw its fortunes change rapidly when its stock price fell sharply to €4.26 by March 12, before dropping further to €3.77 by May 25. Delta Air Lines’ stock also fell by 52 percent at the height of the pandemic. Despite this grim outlook, the

Africa region remains one of the areas with huge potential, given the poor air connectivity in the region. Ghana’s desire to establish a new flag-carrier is born out of the desire to leverage the facilitating role of aviation for one of the fastestgrowing economies in the world preCOVID-19. The country seeks to become the aviation hub of the sub-region, and this is seen as a key part of that project. With an estimated population of 350m, most of whom are under 30 years, the sub-region is fertile for aviation growth postCOVID-19. Aviation is an enabler and the aviation economy employs millions of people and generates billions in revenue. For a nation seeking to create jobs for hundreds of unemployed tertiary-educated graduates, building a strong aviation sector is imperative. National pride and recapturing the old routes plied by the defunct Ghana Airways are also some of the key motivations.

Virus won’t disrupt gas imports, analyst says BY BENSON AFFUL

Energy sector analyst Paa Kwesi Anamua Sekyi has allayed fears of any gas supply shortage as a result of the coronavirus pandemic, which has seen many countries close their borders, saying the country’s gas importation was not disrupted by the pandemic. The Energy Commission said in its 2020 Energy Outlook report that the country would require 294,000313,000 tonnes of Liquefied Petroleum Gas (LPG) to enable the government attain its 6.8 percent GDP growth estimate (6.7 percent non-oil). Only 25 percent of this requirement was likely to come from the Atuabo Gas processing plant, the Commission said, which would make the country rely on 75 percent imports of gas to complement Atuabo’s production. “Imports could still dominate since Tema Oil Refinery is not likely to operate at full capacity largely due to financial challenges. There is still the growing demand for LPG as cooking fuel in homes and particularly as transport fuel,” the Energy Commission said. In an exclusive interview with Business24 on whether the

pandemic could disrupt the country’s ability to import gas, Mr. Anamua Sekyi, who is the Executive Director of the think tank Institute of Energy Security (IES), said since all the country’s oil producing fields are still working, including the Tweneboah Enyera and Ntomme (TEN) field, and are feeding the gas processing plant, supply of gas will not be interrupted. He said even though the pandemic has affected supply chains, oil

tankers and vessels were readily available to move crude and petroleum products at low freight rates. “The excess supply of crude and petroleum products rather resulted in unprecedented price savings to fuel consumers around the world. The oil glut resulted in low fuel prices on the international market, translating into low fuel prices at domestic pumps since February 2020,” he added.

For instance, he said LPG, which sold around US$380 per metric tonne in January, fell below US$300 per metric tonne to roughly US$240 per metric tonne in May as a result of excess supply. According to the energy sector analyst, only few refineries across the globe cut back on their production rate, largely because of low margins and, to some extent, storage space unavailability during the pandemic, adding that a chunk of the refiners were still producing at normal run rates for deliveries. Government in its 2020 budget projected a crude oil price of US$62.6 per barrel and petroleum revenues of US$1.6bn for the year. However, following the fall in oil prices, Finance Minister Ken OforiAtta said preliminary analysis shows that at an average crude oil price of US$30 per barrel, the government would register a shortfall in crude oil receipts amounting to US$1bn. He further explained that the shortfall corresponds to a projected shortage in Annual Budget Funding Amount of GHȼ3.5bn, while shortfalls in the Ghana Stabilisation Fund and the Ghana Heritage Fund are GHȼ1bn and GHȼ453m respectively. It also implies transfers to GNPC will experience a shortfall of GHȼ642m.

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Prudential Bank appoints new Board Chairperson, Directors Prudential Bank Limited has appointed Mrs. Muriel Susan Edusei as its new Board Chairperson. Her appointment took effect on April 29, 2020 following an earlier approval by the Bank of Ghana. Mrs. Edusei’s appointment follows the retirement of Mr. Kwaku AgyeiGyamfi after 12 years of outstanding leadership. A statement issued by the Bank in Accra said Mrs Edusei brings extensive banking, finance, business, corporate governance and boardroom experience to the role. Mrs. Edusei worked with National Investment Bank in various positions for eighteen (18) years from 1977, retiring as Head of Foreign Operations in 1995. She subsequently joined Oikocredit International, a development finance institution with its headquarters in the Netherlands, as Regional Manager for Anglophone West Africa, where she established the regional office in Ghana to serve Ghana, Gambia and Sierra Leone. She eventually retired from Oikocredit in December 2010 after a successful fifteen (15)-year tenure. Mrs. Edusei has extensive boardroom experience, having served as board chair of HFC Bank,

now Republic Bank and on other boards including, Fidelity Equity Fund II, Opportunity International Savings and Loans Company Limited, Ghana National Petroleum Corporationand Nestlé Ghana Limited. A product of Wesley Girls’ High School, she obtained a BSc. Administration (Accounting Option) degree in 1975 and an MBA (Finance) degree in1989 from the School of Administration, now University of Ghana Business School. Mrs. Edusei is a Hubert Humphrey Fellow andduring her fellowship program in the United States, she undertook an MBA Finance and Banking non-degree awarding course at Boston University. Additionally, she did attachments in Banking Supervision at the Federal Reserve Bank of Boston and in international trade and finance at Chemical Bank, New York, U.S.A. She is also a Fellow of the Ghana Institute of Directors and previously served as a Council Member. Commenting on the appointment, Mr. John Addo, Managing Director of Prudential Bank said, “We are delighted to have Mrs. Edusei as our new Board Chairperson and we warmly welcome her on

Mrs. Muriel Susan Edusei board. She comes to the role with a wealth of experience in business and in particular, banking and we look forward to working with her to propel the Bank forward in the achievement of our vision of becoming the preferred financial institution in Ghana.” Mr. Addo also thanked the retired Board Chairman, Mr. Agyei-Gyamfi and the retired Directors, namely, Ms. Joana Felicity Dickson, Dr. N.K.

Omaboe, Mr. Nkansah-Boadi and Ms. Aretha Duku for their contribution, commitment and hard work over the years. Four new Directors, namely, Mrs. Juliana Addo-Yobo,Mrs. Victoria Barth,Mr. Yaw Opoku Atuahene and Mr. Daniel Larbi-Tieku have also been appointed to the Prudential Bank Board following approval by the Bank of Ghana.

Ghana Chamber of Telecoms donates to Lepers Aid Committee

The Ghana Chamber of Telecommunications has donated assorted items to the Lepers Aid Committee (LAC) to support Leprosaria in Ho and the group of cured lepers in and around Wa as part of the mobile industry’s effort to support the national fight against the coronavirus disease. LAC is a non-governmental organization chaired by Rev. Fr.

Andrew Campbell of the Society of Divine Word (SVD) has for over three decades championed the plight of cured lepers in Ghana. The intervention of LAC has led to the creation of leprosy units at Weija in the Greater Accra Region, Ho in the Volta Region and Nkanchina in the Northern Region. The items comprising bags of rice, cooking oil, maize, beans, sardines,

sugar, tomato paste, disposable face masks, nitrile gloves, gallons of hand sanitizers and disinfectants were donated to LAC to support residents to observe the hygiene protocols directed by the Ghana Health Service. Ing. Kenneth Ashigbey, Chief Executive Officer of the Chamber, who led the delegation said, “as the nation observes the COVID-19

safety protocols, residents at the leprosaria were in critical need of these relief items to protect and feed themselves.” “As a Chamber, we are committed to also remember those within marginalized groupings. We have considered residents at the leprosaria who suffer from Hansen’s disease (leprosy) or the effects of the disease, and we are here to showcase our commitment with this donation” said Dr. Ing. Ashigbey. Rev. Fr. Campbell expressed his appreciation to the staff and members of the Chamber for coming to the aid of the leprosaria. He also used the opportunity to admonish the general public to treat persons with leprosy as well as the cured lepers with dignity and replicate the gesture shown by the Chamber. According to Rev. Fr Campbell, the restrictions created from the pandemic has dwindled fundraising activities for LAC’s work with cured leprosy patients. “The soup kitchen we organize from the parish for street children in Accra, where children are also counseled and taught skills, are funded from weekday Mass offerings and donations,” said Fr. Campbell. Fr. Campbell expressed his gratitude on behalf of LAC, highlighting that the Chamber’s donation couldn’t have come at a better time as this. He further called on other organizations and wellmeaning Ghanaians to emulate this gesture and support them.

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UK aid -backed drone technology supports Ghana in fight against Coronavirus A partnership between UK aid and Gavi, the Vaccine Alliance, is supporting the Government of Ghana to use Zipline drones to collect coronavirus test samples from across the country. This world-leading technology has increased Ghana’s ability to deliver vaccines for diseases like yellow fever and polio and collect testing kits for coronavirus, particularly in rural areas where access by road is difficult. Together, the UK government and Gavi alongside the Gates Foundation and delivery company UPS Foundation have funded Zipline’s drone stations. Often in hard-to-reach areas, these stations allow health experts to safely collect test samples and deliver these to one of Ghana’s testing laboratories. The stations are also used to load the drones with medical supplies to make sure they reach those most in need, as well as health workers supporting communities in rural areas in small community health centres. Iain Walker, British High Commissioner to Ghana said: “It is only through global collaboration that we will overcome this global pandemic. The partnership between UK aid and Gavi is an example of this collaboration in action.

“By supporting Gavi, UK aid in Ghana is helping to save lives by tracking coronavirus, getting medical equipment to those most in need and ensuring that children across the country have access to vaccines for the diseases that still needlessly devastate communities. “I am proud that the UK government’s recent pledge of the equivalent of £330million a year for the next 5 years will support Gavi’s lifesaving work across the world, protecting lives and allowing developing countries to focus more resources on tackling coronavirus.” Accessibility to transport and poor roads means that it takes days for samples to arrive from rural areas at Ghana’s test centres. This also leaves those transporting the tests open to transmission of coronavirus. With UK aid support through Gavi, Zipline’s drones are transporting test samples in a matter of hours meaning that cases are identified and treated quickly, lessening the spread of infection. Already coronavirus test samples collected from more than 1,000 health centres in rural areas across Ghana have been taken to laboratories in Accra and Kumasi. As well as returning coronavirus tests and medical equipment, Zipline’s drones are also transporting immunisation kits protecting

children from deadly disease such as diphtheria and measles which still impact communities across Ghana every year. Cyril Nogier, Gavi Senior Country Manager for Ghana said: “The government of Ghana has shown incredible commitment to immunisation for many years, working hard to ensure no child goes without protection against deadly, preventable diseases. “Right now Ghana leads the world in its use of drone technology, which has already helped thousands of children in remote areas get access to vaccines. I’m delighted that this technology, with vital support from the UK and other partners, is now playing a role in the country’s fight against coronavirus.” On 4 June, the UK government will

host Global Vaccine Summit – this will support Gavi to gather much needed funding to deliver vaccines against diseases such as measles, polio and cholera around the world and to ensure global access to all new coronavirus vaccines. Globally the UK government has already pledged up to £764 million ($935.6 million) to combat the outbreak of coronavirus, and in April the UK pledged equivalent to £330 million a year over the next five years to Gavi. This vital funding ensures that through Gavi, UK aid will continue to support innovation such as the drone technology used in Ghana, saving lives around the world. In Africa, the UK has pledge to invest up to £20 million in the African Union’s new ‘African Union Covid19 Response Fund’ to tackle coronavirus and save lives.

Independence, fairness critical in regulatory environment —Prof. Gatsi BY EUGENE DAVIS

Independence, professionalism and fairness are key requirements in regulatory management, without it public trust in state institutions will erode, Dean of the University Of Cape Coast School Of Business has cautioned. According to him, it is essential for state institutions in the regulatory space to exhibit more commitment and apply rules fairly in order to engender trust. Speaking at the maiden edition of UCC e-seminar series on the topic ‘Coronavirus pandemic, household financial anxiety and wellbeing’ he said: “Requirement for regulatory management is independence, professionalism and fairness [in the sense that those who participate or those you are regulating should not come to the conclusion that when it comes to other group of businesses or individuals you regulate them differently, and when it comes to another group you apply the regulation differently and when that happens, the level of confidence goes down and it affects the entire market”. Explaining further in an interview

Prof. John Gartchie Gatsi, has called for total professionalism among regulators

with Business 24, he indicated that being professional means that you are clear in your mind before you put up a statement in the public. He gave the example of the Securities and Exchange Commission (SEC) publishing a list of fnd management companies in good standing only for them to later

revoke the license of some of these companies. “Once you don’t get punished by any institution because you are the regulator, so the only thing that the victims will do is that they will not trust your regulatory pronouncements and your regulatory pronouncements will not

guide them to invest in companies that they are supposed to invest to protect their money and these issue of adverse selection and moral hazard will become dominant in the market that you are regulating”. Financial sector regulators, including the central bank and SEC, set the rules and laws that companies need to comply in order to ensure good corporate governance as well breed sanity in the system. Speaking on the same platform, a senior lecturer and head of finance at the UCC School of business, Dr. Anokye Mohammed Adam, advised businesses against long-term investment unless they are sure of their stream of income. On his part, Kwabena Gyan Kwakye, an economist at the World Bank Ghana office urged government to do more to support small and medium enterprises through collaboration with the National Board for Small Scale Industries (NBSSI). . The UCC School of Business eSeminar Series was initiated to provide intellectual and practical discussion about the coronavirus pandemic and its effect on corporate and household finances.

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Living with the virus: Fundamental changes required for coexistence BY PROFESSOR DOUGLAS BOATENG Without doubt, our interactions with each other, spiritual nourishment irrespective of denomination, helps to navigate the complex journey of life. It is often a sheer pleasure to attend and observe religious gatherings in Africa: the choir bellowing out wonderful songs of praise, the priest relaying messages of hope, church attendees dancing with some of them going into trance; at funerals, the talking drums hollering cultural songs and attendees twirling and waving their handkerchiefs. Over the past few months these events have however been interrupted by the cunning and elusive novel SARCOV-2 (aka Coronavirus). According to WHO, droplet transmission of the Coronavirus may occur through fomites in the immediate environment around an infected person. Thus, transmission of the microorganism can occur by direct contact with infected people and indirect contact with surfaces in the immediate environment or with objects used on the infected person Between mid-February and March 25th 2020, a gathering at South Korea’s Shincheonji church accounted for over 50% of approximately ten thousand SAR-COV-2 infections present in the country at that time. This spectacular spread over a month supposedly started with an infectant officially identified on February 18th . On May 9 th , President Nana Akufo Addo announced that one person had infected 533 people at a fish factory in Tema. In the United States, Houston’s Holy Ghost Parish suspended masses on the 19 th of May after the death of a priest and the infection of five church members. On May 20 th , the CDC reported that over 30% of ninety two people that attended church events in Arkansas during early March were infected with the Coronavirus. Three parishioners died and an additional 26 cases linked to the church spread into the community. These are some reported examples to prove that it ONLY takes one infected individual to start a major outbreak. Hence the need for some restrictions and adjustments on large public, social, workplace and educational gatherings during these trying times. Various independent authoritative studies have supported the need for amongst others, hygiene enhancements, social distancing and the wearing of face protection masks to minimise the spread of SAR-COV-2. It is looking increasingly likely that the way we group together to revel in our beliefs, mourn and

honour the departed at funerals, entertain, educate, and discharge functional duties within the workplace will have to drastically change. At least until there is herd immunity or a vaccine for SARCOV-2 has been developed. Before the arrival of SAR-COV-2 such gatherings, where people came into close contact with each other and each other’s respiratory droplets, were relatively harmless. Sadly, not anymore. Today, some of these respiratory droplets innocently released and circulating in the often poorly ventilated environments could contain the cunning and elusive novel Coronavirus, which according to the WHO rapidly passes via droplets during close unprotected association between an infector and infectee. There is peer reviewed scientific research that shows that it takes just one SAR-COV-2 carrier and possibly an asymptomatic individual to easily and innocently “super spread” the virus like a bush fire within a congregate and into a community. It is an accepted fact that SAR-COV-2 does not differentiate between the young and old. In an educational setting, it will just take one asymptomatic child/student to innocently infect his/her class mates. Each one of these pals will in turn “unintentionally transport ” the coronavirus home and pass it on to their parents, family members, other friends, grandparents and into the community. For now, experts like University of Massachusetts’ Professor Erin Bromage, George Washington University’ Professor Jonathan Renier and NHS England’ Professor Powys rightly predict that unless humanity (1) adapts to the new forms of interactions plus (2) strictly adhere to the proven WHO guidelines, the coronavirus will continue with its rampant spread within the global community. Yes, of course, the ban and controls on public gatherings at churches, funerals, required adjustments to configurations within the workplace and educational settings and so forth cannot continue indefinitely. However, with so much still unknown about SAR-COV-2, the big dilemma facing all governments is when to lift these restrictions knowing the potential unintended consequences of indiscipline and passive resistance especially on the aged and vulnerable in society, and the relatively weak public healthcare systems. Current data clearly indicates that the majority of “infectants” will fully recover. Some of these infected individuals may even never know that they were infected plus display any symptoms. As at May 28th unfortunate fatalities globally and in Africa as a percentage of

recorded infections remain just below just 7% and 3% respectively. In Ghana it below 0.50%. Despite these very encouraging trends, the latest facts from WHO has further confirmed the adverse implications of SAR-COV-2 infections on the elderly and vulnerable (especially those with comorbid conditions) in society. Within this population subgroup, the impact of the associated COVID-19 disease has proved to be relatively more severe resulting in higher fatality rates. Data from John Hopkins University, Harvard, and many more experts illustrate the almost defencelessness of the elderly and people with comorbidities to the Coronavirus. WHO data indicates that as of April 2020 more than 95% of COVID-19 global deaths were among people over 60 years of age. In Sweden, over 90% of all deaths, according to WHO, were people over 70 years of age. In Ghana, the majority of the over thirty unfortunate fatalities were over 50 years of age. Based on these statistics, experts including Epidemiologist Professor Salim Abdool Karim, Dr. Hans Kluge, WHO regional director Europe, US Presidential advisor on COVID-19 and director of NIAID, Dr Anthony Fauci, Dr Sarkodie from the Ghana health Service UK’ Secretary of state for health and social welfare Matt Hancock and others have opined that the older generation are the most vulnerable to the worst effects of the COVID-19 disease and should therefore be particularly protected from the virus. It is also important to remain cognisant of the fact that our relatively fragile public healthcare system is currently not in a position to cope with any sudden major upsurge in COVID-19 cases. It is for these reasons why, even once current social gathering restrictions have been relaxed, until such time that decision makers for social and religious gatherings, educational and organizational leaders (1) accept full responsibility to improve ventilation in their respective environs, (2) undertake to regularly clean and disinfect their

grounds, (3) accept and enforce the significant reduction of group sizes at their congregations, (4) enforce the strict wearing of face protection masks even while talking, singing, chanting, wailing, working, educating etc., (5) maintain social distancing of at least 1.5 meters in massed areas, and (6) provide hand sanitizers, it may be worth the aged and vulnerable in our society seriously considering limiting their presence at such public gatherings. Our ability to outsmart and coexist this highly infectious virus largely depends on our individual actions, citizenry responsibility and vigilance . As governments look for ways to: (1) balance lives versus livelihoods; (2) strengthen public health infrastructure and interventions to cope with living with the virus; and (3) anticipate a possible “round two” of this complicated battle, the onus is on each one of us to ensure that we protect one another by respecting the clearly laid down WHO guidelines and adapting to the rapidly evolving new reality. On May 25th, Dr Ryan executive director of WHO rightly pointed out that although infection cases are declining there could be a second peak during this phase if countries let up restrictions too soon. Therefore, if we ignore the need to respect containment guidelines, various red alerts for patience, mindset and behavioural change from leaders including President Nana Akufo Addo, Germany’ Chancellor Angela Merkel, New Zealand’ Prime Minister Jacinda Ardern, UN Secretary General António Guterres, Singapore’ Prime Minister Lee Hsien Loong, South Africa’ President Ramaphosa,South Korea’ Prime minister Chung Sye-kyun, WHO Director General Tedros Adhanom Ghebreyesus, some local and international experts and policy makers including, Epidemiologist Professor Quarraisha Abdool Karim, Information minister Hon Kojo Oppong Nkrumah, South Africa’ Health minister Dr Zweli Mkhize, US Presidential advisor on COVID-19 Dr. Deborah Birx, Presidential health advisor Dr Nsiah Asare, UK Medical Director and Director of Health Protection for Public Health; Professor Doyle, Ghana’ Health minister Hon. Agyeman Manu, Director general-Ghana Health Service Dr Kuma-Aboagye, the local and global medical fraternity, some interfaith leaders and the scientific fraternity, it will be at our own peril.

Professor Douglas Boateng is an international chartered director and Africa’s first ever appointed Professor Extraordinaire for Industrialisation and Supply Chain Governance. www.panavest.com

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Reversal of BOG’s stance on budget deficit-financing BY SETH E. TERKPER During the decade-long Global Financial and other crisis from 2008, BOG did not apply any of its fiscal powers under the Act 612. On the contrary, the BOG and IMF curtailed access to Banks funding under Act 612 during Phase I of the IMF ECF Program, even as the economic plight worsened. The causes were (a) the Global Financial (2008); (b) disruption in gas supply from WAGPI (Nigeria) that created a major power (“dumsor”) crisis; and (c) aggravating the adverse budget overruns from implementing the 2008 Single-Spine Pay Policy (SSPP) (2010 to 2014). The economy declined further with the fall in crude oil prices from late-2014 to 2016, with a slump in Ghana’s GDP growth rate but not recession as other SSA states. The recovery under ECF Phase II came in 2017, under the current government, with crude oil exports from two (2) new oilfields (Sankofa and TEN) and recovery in its price. Throughout these problems, BOG cautioned against “fiscal dominance” of monetary policy and was key enforcer of the “zero-financing” rule under the ECF Program. It prepared the Memorandum of Understanding (MOU) with MOF (ECF Prior Action or PC) to ensured that BoG will not extend a hand during the economic and fiscal crisis—not even use the 5 percent liquidity support under Act 612 to pay the one-time single-spine arrears. IMF missions also insisted on accessing equally harsh domestic and external financial markets to pay for the deficit (ECF Prior Action or Performance Criteria). Ironically, this was required for the IMF to release the next tranche for BOG balance of payment (BOP) support, under market conditions that had to do with the OPEC crude oil price pressures and second BRIC-led crisis (2014-16), when Brazil, China and India (and most SSA states) went into recession. It was then that Ghana floated its 2015 Sovereign Bond at the highest interest rate of 10.75 percent. Reversing BOG’s fiscal stance Hence, the reversal of BOG fiscal stance beyond COVID-19 fiscal needs defies IMF and BOG caution on “fiscal dominance” and “zerofinancing”. In fact, under ECF Phase 1, MOF did not bow to intense pressure to “sweep” the Sinking Fund to lower the budget deficit. Between 2015 and 2017, Ghana used the Fund to redeem US$550 million of the 2007 (US$750) Sovereign Bond to avoid default and expensive rollover. The current Government used US$200 million of the US$550 million to redeem the final balance on October 4, 2017. It also drew down US$250 million in May 2020 from the Stabilization Fund for

COVID-19 support, a quarter of the IMF’s RCF US$1 billion loan. Therefore, the current government becomes the main beneficiary of the petroleum (PFMA) fiscal buffers and stabilizers—to which it did not add much despite inhering three (3) from 2017, compared one (1) oil field between 2011 and 2016. Will BOG’s fiscal stance also be permanent? The issue is not about measures that respond to the COVID-19 crisis; the concern is the government’s poor record of making temporary measures permanent—and adhering to the PRMA. The following are concrete examples: Petroleum buffers and stabilizers Since 2017, GOG has failed to use two (2) additional oil fields to improve the PRMA buffers. It has (a) not accounted well for the stabilization fund; (b) spent the budget funds (ABFA) mainly on consumption; (c) not retired a single external bond from the sinking fund—despite a low cap that brought in significant flows; (d) not replenished the contingency fund; and (e ) not paid anything into the Ghana Infrastructure Investment Fund (GIIF). Temporary “nuisance” taxes GOG did not make the temporary levies lapse, despite calling them “nuisance” taxes and promising to end them from 2017. Since the Rawlings era, past governments use the Budget process for the temporary import duty and fiscal (corporate income tax [CIT]) stabilization levy. As austerity measures, they imposed them during “hard” times and used discretion to return to Parliament to remove them during recovery or in “good” times. The current levies became effective in 2013, with gradual removal before the 2014 to 2016 global crisis—with certainty to make them lapse in 2017 with new fiscal flows from the TEN and Sankofa oil fields. Despite taking over these fields and Jubilee as well as a recovery in crude oil prices, the current government did not let the taxes lapse. Further, on taxes, it has blocked most VAT Input Tax Credit (ITC) that is due to registered VAT businesses and raised personal income taxes (PIT) on households, resulting in higher consumer prices and tax burden. ESLA extended to 15 years and beyond Parliament passed the Energy Sector Levies Act (ESLA) in November 2015, with the energy and enhanced road levies, to resolve high levels of arrears that affect the banking sector. ESLA was to lapse

within 3-to-5 years, which was the repayment period for the first ESLA restructuring loans with 15 domestic banks. Since 2018, the duration for the levy depends on the refinancing of some ESLA Bonds for about 15 years. Given this background, the large fiscal gap could keep BOG’s funding over a long period. The Minister’s Statement is vague on the period of deferral for MOF’s interest payment obligations to BOG, as “… 2022 and beyond”. Parliament could should set a “renewable sunset date” for proper monitoring and repayment as economic conditions improve—a recovery in crude oil prices from the below US$20 pbl to US$30 pbl (plus) in the last three (3) weeks. BOG’s Balance Sheet “strong” The fiscal support will weigh on BOG’s balance sheet, deprive it off valuable incomes, and add to domestic debt without servicing. The BOG facility of Ghc5.5 billion (possibly Ghc10 billion) to GOG has a moratorium of two (2) years, during which period, there will be no servicing of interest and principal. This will add to the deferral of interest payments on BoG debt of Ghc1.22 million approved by Parliament at the request of the Minister. These two significant (existing and new) domestic debt will add to the Public Debt (estimated to exceed 70 percent at end-2020) with annual cumulative effect, as the deferred amounts increase the principal. Hence, it is important to keep proper accounts of these accrued liabilities. BOG’s engagement implies that it has a healthy balance sheet to withstand the weight of fiscal intervention and monetary intervention would have been a more useful mandate. It important to be cautious since the bulk of liability to depositors during the banking sector restructuring fell on the fiscal as loans, including the ESLA Bond. The redemption period for some bonds to customers of defunct banks for 3-to-5 years at zero (0) interest rate. Further, some state banks have not fully met their recapitalization. It seems BOG did not get immediate and full foreign exchange flows and reserves benefits from recent MOF external loans. The MPC Statement notes: “GOG’s decision to access

the Eurobond market earlier in the year and Rapid Credit Facility (RCF) financing from the IMF resulted in a build-up in reserves of US$1.5 billion (2.2 % of GDP)”—from a gross inflow of US$4.5 billion made up of Sovereign Bond (US$3 billion) and RCF (US$1.0 billion). This may be due to refinancing (backed by hard currency) and repayment of previous loans. Conclusion The post-COVID expectation is that BOG’s stance and measures will remain expedient and not bring back the ghost of “deficit” or “budget” financing. Ghana has experience of deficit-financing in the pre-SAP/ ERP era in the 1970/80s which may seem a long time but still worth remembering. On occasions, BoG’s balance sheet has been impaired in the process and needed to fixing by the government. The frontloading of Public Debt that includes the full use of its IMF quota, early in the COVID-19 era, is worrisome since there is no prediction yet about when it will end. Ghana economic performance under the ECF Program was exceptional by African standards but the rush with which applied for the RCF loan not being followed by most “weaker” African states. Given the varied experiences under the ECF Phases I and II, the IMF must develop “crisis” intervention guidelines—along the lines of mild, medium, and exceptional—for monetary and other interventions. COVID-19 is unique, with measures such as lockdowns, border closures, face masks, strain on health facilities, and social distancing rules that exacerbate its health and economic effects. The call for “crisis guidelines” is due to virtually conventional impact (though different in significance) of financial and non-financial crisis on developing countries: fall in aggregate demand in advanced economies [and elevated supplychain disruptions]; consequential fall in demand for commodities and fall in their prices; fall in foreign currency flows and reserves; loss of fiscal revenues; and loss of production and employment. (The writer is a Former Minister for Finance)

WEDNESDAY JUNE 3, 2020

Tourism

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Kenya turns to virtual Safari campaign to showcase wildlife offering Cabinet Secretary for Tourism and Wildlife, Najib Balala, has today officially launched a virtual Safari live stream campaign to showcase game safaris in some of the parks and reserves across the country. The six-week expedition across the country will be part of the ongoing #MagicAwaits campaign led by the Kenya Tourism Board (KTB) that is aimed at ensuring that the world and travelers remain connected to destination Kenya even during the current Covid-19 lock down period when there is restricted movement globally. Speaking while launching the virtual safari at Nairobi National Park, CS Balala noted that the Covid-19 pandemic has taught players in different sectors to be more innovative to keep their businesses afloat during these difficult moments. “Our international tourism business is completely cut off and we have to still share destination memories with travelers and that is why we are unveiling a virtual tour safari to connect visitors with the destination”, said the CS. Kenya’s safari, he pointed out, has been named the best in the world adding that the sector will endeavor

Kenya’s Cabinet Secretary Najib Balala at the Nairobi National Park

to liven up this brand positioning by ensuring that the country remains top of mind among visitors and investors alike. “This venture which begins here at the Nairobi National Park will allow us to document our diverse wildlife in the National Parks and game reserves, thrilling adventures, beautiful lodges and unique cultures and conservation projects that Kenya has become world famous for. We shall be live streaming and

Italy opens doors to British travellers The Italian Tourist Board has announced that British visitors will be able to travel to the country with no quarantine restrictions from June 3rd. Flavio Zappacosta, manager for the board in UK & Ireland, said: “The tourism industry is one of Italy’s key economy drivers, so it is with utmost importance that we open for business as soon as it is safe to do so. “We know how popular Italy is for Brits and hope we can inspire them to start to plan and book an Italian holiday this year.” As of May 18th, the country started to significantly open up to members of the public. Museums, attractions, parks, as well as bars, restaurants and ice cream shops have all now opened up and comply with a strict set of new guidelines and protocols respecting social distancing at all times. Importantly for the British visitor, beach resorts have also opened and are following the new guidelines to ensure the safety of everyone able to enjoy the beautiful Italian coastline. From the late May, gyms, swimming pools and sports centres also opened. As of June 15th, Brits will be able to soak up some Italian culture as theatres, concert halls, cinemas and

other outdoor spaces will also open their doors. Performances must be held with pre-assigned and spaced seats, on condition that both staff and spectators respect social distancing measures. Outdoor shows will allow a maximum of 1,000 spectators and for indoor performances, 200 people will be allowed. Visitors to Italy are advised that it is mandatory to wear a mask in enclosed spaces including public transport or anywhere where they may not be able to exercise social distancing.

sharing this content every week to bring Kenya to Kenyans and to the world at large” said the CS. With travelers now confined to their respective homes due to the Covid-19 crisis, demand for indoor activities and exploration is on the rise. Countries and tourism organizations are coming up with online tours of their offerings, experiences, and properties so that the quest for discovery remains unhindered, shifting only from the

physical to the virtual. KTB Chief Executive Officer Dr. Betty Radier on her part said that the board was working to ensure that people across the world are connected to the destination during this period when many are not travelling. She added that tourism is going to change going forward and that Kenya should also be ready to embrace and maneuver. “Our marketing strategies will continue to adjust with the currently evolving scenarios. We are currently running campaigns to ensure that Kenya remains an option for the domestic and international traveler now and post Covid-19. Through this venture we aim to remind the world that we are one of a kind and that we are magical and taking care of the destination” said Dr. Radier “Keep an eye on the Magical Kenya social media sites for ways to interact with the expedition: ask questions, send them, this will be your chance to explore Kenya virtually from home” she added The virtual tour will also be showcasing the various Covid-19 and safety protocols undertaken in the parks and facilities to ensure that visitors remain safe.

Cabo Verde opens to international tourists in July

The West African Island country of Cabo Verde will from next July, open its borders to international visitors and tourists. The country depends heavily on tourism as a catalyst for economic growth and has been badly hit as it has had to close its borders to visitors in the wake of the ongoing Coronavirus pandemic. A statement issued by the country’s Ministry of Transport added that Cabo Verde is currently

preparing to safely receive visitors. This is however contingent on Europe and other countries lifting their travel restrictions. “Indeed, the work of preparing the country, as a tourism destination is underway, in order to receive tourists with security and peacefully. Cabo Verde joins the likes of Seychelles and Tanzania who have already opened their doors to international arrivals.

WEDNESDAY JUNE 3, 2020

Feature

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What the G20 should do now

BY NGOZI OKONJOIWEALA, ERIK BERGLÖF, HELEN CLARK, GORDON BROWN Without further G20 action, the pandemic-induced recession will only deepen, hurting the world’s poorest and most marginalized people the most. Because the group represents 85% of global GDP, it has the capacity to mobilize resources on the scale required – and its leaders must do so immediately. The time is right for G20 leaders to hold a second meeting to discuss measures to advance the implementation of the G20 Action Plan, and agree to a more strongly coordinated global response to the health, economic, and social emergencies we face. The G20 has demonstrated that it can bring people together around a common set of actions. What it decides next on the COVID-19 response will have a direct bearing on the future of the world economy. Our world is at a critical moment. On May 30, the highest daily figure was recorded for new cases of COVID-19 worldwide. On every continent, countries are attempting to stop the transmission of the virus. Compared to pre-crisis levels, the International Labor Organization estimates a 10.5% decline in the number of hours worked, equivalent to the loss of more than 300 million full-time jobs. For the first time this century, global poverty is on the rise. Therefore, as we did a month ago, to emphasize the urgency of delivering immediate relief to

countries facing the effects of an unprecedented, global crisis. The problems faced by the poorest countries in Africa, Asia, and Latin America demand immediate action, as do those confronting diverse middle-income economies. Taken together, these countries represent nearly 70% of the world’s population and approximately onethird of global GDP. The United Nations predicts that a worldwide recession would reverse three decades of improving living standards and plunge upwards of 420 million more people into extreme poverty. The World Food Program has estimated that 265 million of our fellow citizens are likely to suffer from crisis levels of hunger – an increase of 130 million over pre-pandemic levels. We are also hearing reports of the pressure on all health and other social services on which girls and women depend. Moreover, COVID-19 has caused the greatest education emergency of our lifetime: 1.5 billion children – 80% of all children – have been out of school. The majority are denied distance learning. Many may never return – many, we fear, may enter child labor. Millions who no longer receive school meals are going hungry, while at the same time education aid is being reduced. Health The global economic and social emergency cannot end until we can bring the global health emergency to an end. And we cannot bring the health emergency to an end in any of our countries until we end it in all countries. We welcome the $8 billion pledged

on May 4 for vaccines, diagnostics, and therapeutic development as recommended by the Global Preparedness Monitoring Board, and urge that these contributions be paid immediately and be fully monitored and reported. But much more needs to be done: We need global coordination of the development, mass manufacture, and equitable distribution of a vaccine or vaccines to ensure that they are universally and freely available as quickly as possible. We urge every G20 member to support in full the $7.4 billion replenishment on June 4 of Gavi, the Vaccine Alliance, which between 2021-25 will immunize 300 million children, saving up to eight million lives. While we fight COVID-19 we must not allow the resurgence of other infectious diseases. Closer cross-border collaboration is essential to increase now and for the future the limited global supply of vital medical equipment, and to make testing accessible in every country. Developing countries need immediate support from the World Health Organization and others to build up their health systems and capacities, as well as to improve their social safety nets. G20 countries should support the UN’s appeal for support for refugees, displaced persons, and others who rely on humanitarian aid. The Economy We note not only the multiple obstacles faced by developed countries in returning to growth, but also the deteriorating economic

and fiscal conditions faced by many emerging, middle- income, and developing economies. More than 100 countries have now approached the International Monetary Fund for help, and more are expected to do so. The IMF has said emerging markets and developing countries need $2.5 trillion to overcome the crisis, but only a fraction of that $2.5 trillion has so far been allocated. While we welcome the good intentions at the heart of the G20 Action Plan, concrete measures must urgently be agreed and be implemented in full: Debt relief for the 76 International Development Association countries needs to be scaled up radically to include relief by bilateral, multilateral, and private creditors until the end of 2021, and operationalized with urgency. Multilateral creditors must demonstrate that they are providing net new lending in response to the COVID-19 crisis. Time is running out for the voluntary process for private creditors coordinated by the Institute of International Finance, and a new binding approach now needs to be considered. A dozen or more emerging-market countries may well run into debtservicing problems in the coming year. The IMF should be mandated to convene relevant players and, through its debt-sustainability and policy analysis, to set broad parameters for resolution. The G20 should agree that the $2.5 trillion in support will now be provided. This requires the IMF, the World Bank, and regional development banks to raise

WEDNESDAY JUNE 3, 2020

Mining

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Newmont to set up US$20m fund for communities affected by Covid-19 Newmont Gold Company have set its sights on establishing a US$20 million fund to support communities to help manage the impacts of the COVID-19 pandemic. This was contained in the company’s 2019 sustainability report titled: ‘Beyond the Mine’, a transparent and comprehensive disclosure of the company’s environmental, social and governance (ESG) performance. According to the President and CEO of the company, Tom Palmer, the report is expected to shed more light for investors “Our sustainability report provides investors and other stakeholders a transparent and detailed look at look at our safety, environmental and social performance. “In 2019, we completed two transformative transactions whilst enhancing our ESG performance to align with our position as the world’s leading gold company.” he added. Other highlights in Newmont’s 2019 sustainability report include: Achieving no workplace fatalities and conducting a global safety culture review, which identified several opportunities to enhance Newmont’s Fatality Risk Management program and improve the way fatality risks are managed.

Tom Palmer – President and CEO of Newmont

Further strengthening management of tailings, whilst enhancing transparency through a new tailings website with details on all 104 tailings dam facilities at Newmont’s operating sites, joint ventures, subsidiaries and legacy sites Reducing greenhouse gas emissions intensity by 13.7 percent, compared to the 2013 baseline, which achieves approximately 83 percent of Newmont’s target to reduce GHG emissions intensity by 16.5 percent by the end of 2020

Mining companies bemoan delays in permit issuance–report Registered mining companies under the Ghana Chamber of Mines have expressed concern about the delay in issuing environmental permits by the Environment Protection Agency (EPA). According to the 2019 Chamber of Mines Annual report, the perennial challenges with the issuance of environmental permits for mine operations is affecting the operations of companies. A Committee set up by the Chamber also lamented the undue delays in the issuance of permits by the regulator and the lack of transparency in the process of issuing permits. The report shows that banks increasingly view many mining companies who could not show proof of environmental permits due to the delays as risky businesses. The EPA, among its statutory functions, is to issue environmental permits and pollution abatement notices for controlling the volume, types, constituents and effects of waste discourages, emissions, deposits or other source of pollutants and of substances which are hazardous or potentially dangerous to the quality of the environment or any segment of the

environment. The Agency also issues notice in the form of directives, procedures or warning to such bodies as it may determine for the purpose of controlling the volume, intensity and quality of noise in e environment. The mining sector has been an important part of Ghana’s economy, with gold accounting for over 95% of the sector. Ghana is a significant gold producer in Africa (second after South Africa) and globally, being the 9th largest producer in the world.

Engaging with government, community and contractors to resolve a dispute at the Peñasquito operation in Mexico, which resulted in reaching a 30-year water agreement with the San Juan de Cedros community and signing a memorandum of understanding for an Investment and Social Development Plan that details Newmont’s commitments to the community Creating the Global Center for Indigenous Community Relations and the Advisory Council of

Canadian and Indigenous Affairs to further enhance Newmont’s global approach to indigenous relations and ensure all commitments to First Nations in Canada and elsewhere are honored Newmont’s sustainability efforts have been recognized by several independent organizations, for the fifth year in a row, the company was named the top gold miner in the Dow Jones Sustainability World Index (DJSI). Newmont earned a “B” score from CDP for its 2019 Climate Change and Water Security performance Newmont was added to the Corporate Human Rights Benchmark’s (CHRB) 2019 evaluation and was ranked 12 th out of more than 200 companies that were assessed against the CHRB’s human rights performance criteria. For the second consecutive year, Newmont was included in Bloomberg’s Gender-Equality Index (GEI) for its efforts to advance qualified women in the workplace Newmont was the top mining company in CR Magazine’s 100 Best Corporate Citizens list and FORTUNE’s 2020 list of the World’s Most Admired Companies.

Copper edges to 11-week high on China recovery Copper prices climbed to their highest in 2-1/2 months on Tuesday as more signs emerged that the economy in China, the world’s biggest metals consumer, is extending its recovery from the coronavirus outbreak. Sales of vehicles, a key demand driver for metals, in China are estimated to have risen 11.7% on the year in May, while the Chinese city of Wuhan found no new cases of COVID-19. Strong physical demand for copper in China, plus tight scrap supplies, are spurring bearish speculators to close out positions and supporting its rebound in recent weeks, said analyst Nicholas Snowdon at Deutsche Bank in London. “You can understand the price path so far, reflecting a forced liquidation of shorts in the market, but I think that’s broadly complete now,” he said. “The key question for further upside is whether Chinese physical demand can remain as strong going into mid-year as it has been in the past three months. Realistically, there are seasonal headwinds that are likely to moderate the strength of that demand, at least in the near term.”

Three-month copper on the London Metal Exchange (LME) rose 0.1% to $5,487.50 a tonne in official trading after touching $5,505, the highest since March 13. Copper, widely used in construction, transport and power sectors, has gained 26% on the LME since hitting a 45-month low of $4,371 on March 19. The most-traded July copper contract on the Shanghai Futures Exchange (ShFE) hit its highest since March 6 at 44,800 Yuan. More gains in stocks are expected as copper output resumes in Peru following coronavirus-linked closures, Commerzbank said in a note. “Supply in China is therefore likely to increase in view of the greater availability of concentrate and copper scrap, plus rising imports.” (Reuters)

WEDNESDAY JUNE 3, 2020

Feature

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Equity investors must pay more attention to climate change physical risk BY FELIX SUNTHEIM AND JÉRÔME VANDENBUSSCHE

he damage from the 2011 floods in Thailand amounted to around 10 percent of Thailand’s GDP, not even considering all the indirect costs through a loss in economic activity in the country and abroad. By some estimates, the total costs of the 2018 wildfires in California were up to $350 billion, or 1.7 percent of U.S. GDP. Every year, climatic disasters cause human suffering as well as large economic and ecological damage. Over the past decade, direct damages of such disasters are estimated to add up to around US$ 1.3 trillion (or around 0.2% of world GDP) on average, per year. As scientists warn that global warming will increase the frequency and severity of such extreme weather events, the IMF’s latest Global Financial Stability Report examines the impact of climate change physical risk (loss of life and property as well as disruptions to economic activity) on financial stability, and finds that equity investors might not be pricing these risks adequately. The COVID-19 pandemic has shown how fast and extensive disruption of economic activity can be (even for well-known types of risks), underscoring the importance of preparedness and adequate risk assessment. Some lessons from the past Because of their central role in financial systems, equity markets provide a good setting for analyzing the financial stability implications of climate change physical risk, by gauging the impact on aggregate market indexes as well as on the financial sector specifically. Looking back at around 350 large climatic disasters over the past 50 years (in a sample of 68 economies, representing 95 percent of global GDP), our team finds that the average impact has been modest: a drop of 2 percent for banking stocks and 1 percent for the whole market. In ten percent of cases, the impact on the aggregate market has been greater than 14 percent, indicating that some climatic disasters can have a meaningful effect on financial stability. For example, Hurricane Katrina, in 2005, with the largest damage in absolute terms in our sample (1 percent of U.S. GDP), had no discernible impact on the U.S. stock market index. The 2011 Thai floods, by contrast, with the largest damage relative to the economy’s size, caused a 30 percent drop in the stock market over 40 days. Individual country characteristics matter. Countries with more fiscal space will be able to deploy a swift

response to the disaster in the form of financial relief and reconstruction efforts. Also, well-developed risksharing mechanisms such as insurance reduce or redistribute the disasters’ losses and limit the impact on domestic equity prices. Future risk and current valuations Climate change is expected to increase the probability and severity of many climatic hazards such as floods, heatwaves and droughts, subjecting economies and financial markets to greater shocks. Pricing this increase in physical risk is a daunting challenge for equity investors, who need to estimate the likelihood of various climate scenarios and their implications for physical risk at the firm level based on climate science, and expected mitigation and adaptation actions. In addition, the time horizon for these changes may be longer than even what long-term institutional investors are used to contemplating. Looking retrospectively to 2019 equity valuations across countries,

our study finds that they did not reflect any of the commonly discussed global warming scenarios and associated projected changes in hazard occurrence or incidence of physical risk. This apparent lack of attention could be a significant source of market risk looking forward. What policymakers can do The current COVID-19 pandemic is a reminder that crisis preparedness and resilience are essential to manage risks from highly uncertain events that can have extreme economic and human costs. As mentioned above, expanding the availability of insurance and strengthening the sovereign’s overall financial strength can lessen the impact of climatic disasters and hence reduce financial stability risks. Developing global mandatory climate change physical risk disclosure standards could be an important step to preserve financial stability too. Granular, firm-specific

information on current and future exposures and vulnerabilities to climate shocks would help lenders, insurers, and investors to better grasp this risk. Climate-change stress testing can provide financial firms and their supervisors with a better understanding of the size of their exposures and the associated physical risk. Over the past decade, one in five of the IMF’s own Financial Sector Assessment Programs considered physical risks related to climatic disasters. A recent example is the assessment published last year for the Bahamas. Without a doubt, the most effective remedy will be strong global policy action to reduce greenhouse gas emissions, addressing the cause of global warming in a sustainable way, and conferring benefits that extend well beyond the realm of financial stability. (IMF.org)

WEDNESDAY JUNE 3, 2020

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Rising from a crisis â&#x20AC;&#x201C; A more self-reliant Africa after coronavirus?

BY JEAN SENAHOUN

hen the African Continental Free Trade Area (AfCFTA) Agreement was launched on 21 March 2018, African leaders did not imagine that the tenets of the agreement could possibly save the continent from a pandemic-fueled food and economic crisis. The world has been grappling with the crippling economic effects of the COVID-19 pandemic since February 2020. The crisis persists, threatening to affect the entire food system, especially in Africa. The pandemic has created shocks globally with negative impacts on intra-African trade, with GDP expected to drop precipitously from 2.4 percent in 2019 to -2.1 to -5.1 percent in 2020 according to the World Bank, marking the first recession in the region in 25 years. Most African economies, especially those of commodity exporting countries, will be the hardest hit. However, there is a lifeline for Africa. One of the principal objectives of the AfCFTA is to expand intraAfrican trade, improving the flow of goods and services across countries and boosting economic growth

through increased agro-processing and a strategy of diversification and industrialisation. Since its signing by 54 states, few tangible results of AfCFTA can be identified and most states are still in the ratification process. The process has been slow, with the bureaucracies of countries and existing economic blocs churning to make it a reality. Africa is a net importer of food, with staple foods such as wheat, rice and maize being some of the largest imports. With current lockdowns leading to delays in ports and critical connection points for trade, Africa faces the risk of disruption to its critical supply chains. If this happens, the most vulnerable 200 million people in Sub-Saharan Africa, identified by FAO as already food insecure, will be the ones to bear the brunt of this shortage. There is also the potential disruption in the supply of crucial agricultural inputs (fertilizers, pesticides, livestock feed, etc.), crippling local production. COVID-19: an opportunity to expedite the launch of the AfCFTA COVID-19 presents an opportunity for African countries to accelerate the shift towards a single market and for the continent to make a paradigm shift to be able to fend for itself and reduce its dependence on food imports. This will open

up continental trade routes and economic opportunities in the longterm, but presents an even greater short-term advantage: it allows African countries to keep their food systems alive to avert what could be one for the worst food crises in its history. The question is, how can countries do this? Lowering intraregional import tariffs facilitates the movement of agricultural products that will help address the immediate concern around the possibility of low food supplies and general food insecurity, while laying the foundation for longterm policies. Africaâ&#x20AC;&#x2122;s agricultural exports comprise mostly cash crops like cocoa, coffee and spices, which have relatively limited markets in Africa, while basic food products are imported, indicating the need to prioritise a more diverse trade basket of goods. Governments must also build buyer-supplier networks, connecting small and medium scale producers, including smallholder farmers, to buyers locally and regionally. A large part of this step is the removal of discretionary constraints such as import and export restrictions that distort trade, to connect these producers to their markets. It is essential to remove non-tariff barriers like transport and logistics bottlenecks,

which have long been a deterrent for the efficient movement of goods and services between African countries. Finally, governments must implement policies to support local production. These policies must seek to develop regional value chains, strengthening national food production capacities and linkages to regional markets, which in turn provide a strong basis for countries to export and boost inter- and intraregional trade in the long-term. AfCFTA provides a viable platform for import substitution, promotion of regional agricultural value chains and more diversified supply chains, and local production and consumption of goods and services. This is a golden opportunity to expedite the launch of the AfCFTA in phases to mitigate the food-system and economic effects of the COVID-19 pandemic. Regulatory bodies must ensure that governments do not use trade-related measures such as import and export restrictions irresponsibly, keeping the spirit of the agreement at the forefront of its implementation. The circumstances are unfortunate and the stakes are high, but if handled properly, Africa could emerge from the shadow of COVID-19 a stronger, more selfreliant continent. The writer is a Senior Economist at FAOâ&#x20AC;&#x2122;s Regional Office for Africa

WEDNESDAY JUNE 3, 2020

MINISTRY OF FINANCE PETROLEUM RECEIPTS AND DISTRIBUTION REPORT FOR THE FIRST QUARTER OF 2020 Pursuant to Section 8 of the Petroleum Revenue Management Act, 2011 (Act 815). as amended (Act 893), the Minister is required to publish petroleum receipts (defined in Section 6 of the Act), namely, total output lifted and reference price, among others, on quarterly basis. This publication covers petroleum receipts for the first quarter of 2020.

TEN ITEM

UNIT

SANKOFA

14TH

TOTAL

4TH

QTR 1 2020 Barrels

4.834,184

3,756,842

8,591,026

o/w Ghana Group GOG/GNPC

bbls

345,931

550,045

1,395,977

o/w Partners

bbls

3,888,253

2,806,796

6,695,049

Date of Lift

d/m/y

15th December 2019

14th February, 2020

Reference Price per barrel

US$

63.925

6306

Price Option Fee

US$

0.00

Differential (Premium)

US$

(0.850

(0.900

Market Price Per Barrel

US$

63,125

62.26

Volume Lifted

Gross Receipt from Ghana s Group Lift

US$

59,153,664.14

118,865,558.52

o/w Royalties

US$

15,509,582.95

59,1 53,664.14

74,663,247.09

o/w Carried and Participating Interest

US$

44,202,311.42

N/A

44,202.311 42

US$

25,637,340.63

N/A

25,637.340.63

o/w Equity Financing Cost

US$

17,680,924.57

N/A

17,680,924.57

o/w Met Carried & Participating Interest (30%)

US$

795641606

N/A

7,95641606

US$

34,074,553.75

59,153,664.14

93,228,217.89

o/w Royalties

US$

15,509,582.95

59.153,664.14

74,663,247.09

o/w Net Carried & Participating Interest (70%)

US$

18,564,970.80

N/A

18,564,970.80

Other Petroleum Receipts

US$

50,836.898 38

640,439.12

51,477,337.50

o/w PHF Income

US$

204,325.24

98,783.33

303,108.57

o/w Corporate Income Tax (Anadarko)

US$

14,322,801.00

OOC

14,322,801.00

o/w Corporate Income Tax (Cosmos Energy)

US$

24,736427.00

0.00

24.736.427.00

o/w Corporate Income Tax (Tullow Ghana Ltd)

US$

4,469,076.00

0.00

4,469,076.00

o/w Corporate Income Tax (Petro SA)

US$

7,012,430.50

0.00

7,012,430.50

o/w Surface Rental (Tullow Ghana Ltd)

US$

77,725.23

0.00

77,725.23

o/w Surface Rental (Petro SA)

US$

14.113.41

0.00

14,113.41

o/w Surface Rental (Aker)

US$

0.00

150,750.00

150750.00

o/w Surface Rental (GNPC Operating Sen/ices)

US$

0.00

8,725.00

8,725 00

o/w Surface Rental (AGM Ghana Ltd)

US$

0.00

204,527.00

204.527.00

o/w Interest-Late Payment (GEMCORP commodities Trading)

US$

0.00

67,483 79

67,483.79

o/w Interest-Late Payment (GEMCORP commodities Trading)

US$

0.00

US$

84,911,452.13

Transfer to GNPC

GOG Net Receipts from Lifting

(Net GOG Receipts

Hon, Keil Ofori-Atta Minister

110,17000 59,794,103.26

110,170.00 144,705,555 39

WEDNESDAY JUNE 3, 2020

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Challenges with UNIPASS…shippers want ICUMS-related costs waived BY PATRICK PAINTSIL Shippers whose goods are locked at the Tema Port owing to their inability to access the newly deployed Integrated Customs Management System (ICUMS) have called on government to urgently engage shipping lines, terminal operators and Customs to consider waiving all costs that will be incurred as a result of the inconvenience. Specifically, they want charges such as demurrage to shipping lines, rent to terminal operators and warehouse rent and interest charges payable to Customs all waived. “The major challenge here is that our job comes with cost anytime there is a delay; this situation is not the fault of the importer but as a result of a system that has been introduced as a new way of trade facilitation,” a visibly worried Philip Badu Mensah, an executive member of the Association of Customs House Agents (ACHAG), told Business24. He added: “This is a new system to improve the flow of trade so if we are experiencing a challenge then we can only plead with these entities to waive these charges so the cost of doing business does not go up.” Two days after the deployment of the ICUMS at the Tema Port, majority of shippers are still unable to process their documents because the system is unable to capture and populate their TIN numbers, which is the first step of action before every other process can continue.

A visit by Business24 on Tuesday to the Customs Long Room and banks, which were bustling with activities a week ago when GCNet and WestBlue’s systems were live, were virtually deserted because most agents and shippers were unable to process their documents and subsequently effect the necessary payments. A few of them were successful though; for instance, if they put in 20 TINs, one TIN was able to pop up for them to continue processing their document. On the whole, a total of 213 declarations had been able to go through the ICUMS successfully as at yesterday. “These are people who have made payment and are either with the shipping lines or proceeding to the inland container depots (ICDs) to take delivery of their cargo. What it means is that 213 people have successfully paid their duties,” Johnny Mantey, Vice Chair of the Ghana Institute of Freight Forwarders, told Business24. But he went further to say that: “Be it pre-manifest, post-manifest or whatever, we need this system to work. We need the TIN numbers, which is the first point of call, to work. Of course, there will be challenges here and there but we hope it will turn out good.” An unlucky freight forwarder working with the Free Zones regime also shared his experience: “I have not been able to process my documents; they are still with

The aggrieved shippers are worried about their locked up goods at the Tema Port much as they rue the costs associated to the melee.

them [ICUMS]. They have not been able to clear me to go and ship my consignments. Everything is currently at a standstill as you can see.” ICUMS is touted as an end-to-end solution and a departure from the previous system where ‘valuation and classification’ and ‘risk management and payment’ were handled by different entities. “The decision to discontinue the services of GCNet and West Blue was informed by the need to replace the multiplicity of vendors with a single service provider deploying an end-to-end system,” according to a statement issued by GRA in announcing the plan. But its full deployment at the country’s seaports of Tema and Takoradi has been met with stiff resistance from various stakeholders with varied concerns.

The shipping community are now waiting on government’s assurance to get the problems fixed by Wednesday [today], but they are equally worried about the cost burden associated with the whole situation. Plan B or manual to the rescue? The shippers have further indicated that if the ICUMS was not going to work efficiently, then Customs might have to come up with a Plan B; be it manual or any other system; that can facilitate the clearing of goods because the goods cannot stay at the port, much as government needs the revenue. Mr. Badu Mensah of ACHAG said: “If the Plan B involves the manual process that is where we have put ourselves and there’s nothing that we can do about it. We cannot wait any longer because the cost will to too much to bear and the port will get congested.”

(…CONTINUED FROM PAGE 15) their lending and grant ceilings. The multilateral development banks (MDBs) will likely increase their outstanding loan portfolio from the current $500 billion to $650-700 billion over the next 18 months. Without further increasing the resources available to the international financial institutions and allowing them to be more ambitious in deploying their capital, their ability to respond to the crisis will be severely constrained. The consequences of not acting now would be felt for the rest of the decade. This is a time when countries should be willing to go beyond their normal fiscal deficit ceilings. The poorest, whose fiscal capacity is limited, need additional financial support from rich countries and multilateral organizations. Social safety nets, regular health services, education, and climatechange initiatives – and for the 2030 timetable for the Sustainable Development Goals – must not suffer because of the fight to mitigate COVID-19 transmission. Thus: We need to ensure that the MDBs have sufficient resources for at least the next five years, which will require an additional $1 trillion in their combined portfolios. The

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individual institutions should be asked to provide plans for how they are to achieve these objectives. It will require them both to use existing capital more efficiently and to secure new sources of finance from borrowing, further capital increases, and the creation of new guarantee-based facilities like the International Finance Facility for Education (IFFEd). We reassert our commitment to the issuing of Special Drawing Rights (the IMF’s reserve asset), and to the transfer of existing, unused SDR allocations and new ones to countries most in need of support. Without requiring a reference to national parliaments, a decision on SDRs would release nearly $600 billion immediately, and more than $1 trillion by 2022. We call on the G20 to build political support for an SDR allocation while engaging simultaneously in the necessary technical work, so that the measure can be implemented as soon as agreement is achieved. A Coordinated Response In the first stage of the crisis, the emphasis was on the provision of liquidity, employment protection, and emergency investments in health. Now, as we seek to return the world economy to pre-crisis levels of growth, enhanced fiscal, monetary, and central-bank coordination is vital.

“Green” investment must be at the heart of the stimulus, with spending focused on infrastructure and other projects beneficial to sustainable development and employment. This will make recovery from this crisis truly transformative, accelerating progress in delivering on climatechange agreements. Consideration should be given to a global growth target, which can sit side by side with national inflation targets, and to rebuilding global trade. To raise vitally needed revenues for national governments, a coordinated strategy to recover money lost to tax havens should be agreed. Countries should automatically exchange tax information and remove secrecy surrounding beneficial owners and trusts, as well as agreeing to sanction non-compliant countries that refuse to implement the agreed rules. Without action from the G20, the recession caused by the pandemic will only deepen, hurting all economies – and the world’s most marginalized and poorest peoples and nations the most. Representing 85% of the world’s nominal GDP, the G20 has the capacity to lead the mobilization of resources on the scale required. We urge leaders to do so immediately. COVID-19 is a wake-up call to the global community. The global

health and financial architecture must be strengthened, and in parts redesigned, to enhance our preparedness and capacity to act with speed and at scale to fight future crises. We should send a message of hope for the future: that the UN, G20 governments, and all interested partners can turn this crisis into an opportunity to build a new and more effective multilateralism, which more appropriately reflects current economic and political realities and is better equipped to address the challenges of the twenty-first century. COVID-19 is a wake-up call to the global community. The global health and financial architecture must be strengthened, and in parts redesigned, to enhance our preparedness and capacity to act with speed and at scale to fight future crises. We should send a message of hope for the future: that the UN, G20 governments, and all interested partners can turn this crisis into an opportunity to build a new and more effective multilateralism, which more appropriately reflects current economic and political realities and is better equipped to address the challenges of the twenty-first century. www.project-syndicate.org.

First National Bank Ghana supports Biomedical Engineers, Ghana Armed Forces irst National Bank Ghana has activated its Accelerated Support for Pandemic Intervention and Relief Effort (ASPIRE) programme, to assist the Government and people of Ghana in the fight against Covid-19. With the initiative, First National Bank Ghana is supporting local entrepreneurs to produce high quality Personal Protective Equipment (PPE) to augment supplies to medical facilities. The first donation under the ASPIRE programme was a cash donation to Dr. Elsie Effah-Kaufmann and her team at the Ghana Society of Biomedical Engineers (GSBE), to produce 500 face shields for frontline health workers. The face shields will be presented to the 1st Medical Reception Station, a medical facility for the First Infantry Battalion at Michel Camp, near Tema. The facility will also be presented with automated refillable soap dispensers, hand sanitizers and disposable head covers. “This is the first in the series of interventions under our ASPIRE Fund intended to address critical and immediate health care needs by supporting local medical innovators and entrepreneurs in Ghana,” Richard Hudson, CEO of First National Bank Ghana said. The team from Ghana Society of Biomedical Engineers (GSBE), led by Dr. Elsie Effah Kaufmann expressed

their gratitude to First National Bank Ghana for leading the way for corporate Ghana not only in the fight against the Covid-19 outbreak but also in supporting Ghanaian ingenuity. “We appreciate the fact that First National Bank Ghana recognizes that there is the need for us to join hands, to minimize the spread of Covid-19,” Dr. Effah-Kaufmann said. “There is so much we are doing locally in terms of PPEs that are even scarce

globally. I take this opportunity to encourage Ghanaians to patronize and support these innovations so that we can scale up and maximize our own capabilities to fight this disease.” For his part, Captain Kevin Delase Amedor thanked First National Bank Ghana for choosing the medical facility of the 1st Infantry Battalion as one of the initial beneficiaries of the ASPIRE programme. “With the help of First National Bank Ghana, we are

well positioned to cater for all within the barracks, Ashaiman, Golf City, Gbetsile, Mataheko and Afienya,” he said. The Accelerated Support for Pandemic Intervention and Relief Effort (ASPIRE) was recently launched, as Ghana’s version of the special initiative rolled out by First National Bank’s parent company, the FirstRand Group in South Africa – SPIRE (South African Pandemic Intervention and Relief Effort).