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NO. B24 / 202 | NEWS FOR BUSINESS LEADERS
MONDAY MONDAYMAY MAY3,31, 2021 2021
Analysts predict seventh policy rate stay since pandemic Mining suspension impacts Obuasi mines production By Joshua Worlasi Amlanu macjosh1922@gmail.com
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ngloGold Ashanti has confirmed a reduction in its gold production forecast for 2021 as a result of the suspension of mining activities at the Obuasi Gold Mine, as mine rescue teams continue to work to restore normalcy following a major accident. Cont’d on page 3
Gov’t asked to tackle illicit financial flows to drive economic growth By Eugene Davis ugendavis@gmail.com
A rate stay would mean lending rates are likely to remain unchanged over the next two months
By Joshua Worlasi Amlanu macjosh1922@gmail.com
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ome analysts are forecasting that the Monetary Policy Committee (MPC) of the Bank of Ghana’s, will maintain the policy rate at 14.5 percent, for a record seventh consecutive
time since it was slashed amidst the pandemic last year. The analysts who spoke to Business24 argue that the central bank’s decision is likely to be motivated by the increased possibility of inflation shooting up again despite the sharp decline recorded in April 2021.
April’s Inflation declined by 1.8 percent -- back into the central bank’s medium target of between 8 to 10 percent -- to 8.5 percent from 10.3 percent the previous month. Courage Kingsley Martey, Senior Economist with
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urbing illicit financial flows should be top of the policy agenda as the government seeks to reboot the economy in the post-pandemic era, the immediate past Dean of the University of Ghana Business School, Prof. Joshua Yindenaba Abor, has suggested.
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GHANA BANKING SECTOR REPORT 2021
Inside
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Editorial / News
MONDAY MAY 31, 2021
Editorial
One-stop-shop business registration portal is long overdu
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hana has long remained a leading investor destination in the sub-region due to its stable democracy. The country’s credentials were underlined by its democracy even as many countries of its peers were thrown into turmoil especially in the late 80s to 90s. But that advantage it enjoyed appears blurred due to the fact that the sub-region has become very stable with countries putting in place a framework to compete for foreign direct investments (FDIs). As a country, Ghana may no longer lay claim to that unique selling point and as such may have to explore other equally compelling reasons to ensure investors continue to make it their preferred destination.
Despite all incentives that may be made available to entice investors to set up in the country, if the entry processes remain cumbersome – it may act as a major bottleneck. Initiatives like One District, One Factory have proven to be an investor favorite with many investors making enquiry at the Ghana Investment Promotion Centre (GIPC) – lead business promoter for the country. While the GIPC itself has performed creditably over the past few years, it would be interesting to find out how much more could be made if its registration processes are made simple rather than the convoluted system that exists. Investors seeking to establish in Ghana country have to interact with multiple state-
owned regulatory agencies at various locations with a lot of paperwork and legwork required. Admittedly, GIPC has attempted to make the system less complicated but there is obviously more to be done. This paper believes that a deliberate effort should be made to ensure that at least these business regulatory bodies operate a common platform or operate from a single location, at least, -- sharing relevant database without demanding from these potential companies eg. information already made available to other regulators. This would no doubt reduce the turn-around time for business registration and enhance the ease of doing business.
Analysts predict seventh policy rate stay since pandemic Continued from cover
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Databank Research, stated that: “The good news is that headline inflation dropped sharply to 8.5% in April 2021 and well within the BOG’s target range of 6% to 10%. This has eased the pressure on the committee, if there’s ever the need to consider a hike in the policy rate.” “We expect the policy rate to be maintained at 14.5%,” Martey added. However, noting the possible risk to a rise in inflation, the senior economist said, “there’s an emerging threat to inflation coming from cost factors, reflected in a consistent rise in non-food inflation which hit 10.2% in April. And this is higher than the pre-pandemic level in March-2020.” Also, Chief Executive Officer of Republic Securities, Kow Akyen Sackey told Business24 that given government position on maintaining lower rates, policy rate is most likely to be kept unchanged at 14.5 percent. “The Bank seems bent on maintaining rates at where they were. This evidenced by recent issuances on the primary bonds market,” he said.
Professor of Economics at the Institute of Statistical, Social and Economic Research (ISSER), Professor Peter Quartey, like the other analysts, also projected that the policy rate will most likely remain unchanged since developments within the economy in the last couple of months, do not support a
Dr Ernest Addison, Governor, BoG
reduction in the base lending rate. “Looking at the fundamentals and judging from the way the exchange rate has been relatively stable, inflation is likely to inch up marginally and I don’t see much overheating in the economy. My expectation is that the policy rate will be maintained again”.
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Mining suspension impacts Obuasi mines production Continued from cover The gold mining giant suspended it activities at Obuasi Gold Mine after an incident two weeks ago on May 18, 2021, which resulted in the missing of a miner at the Obuasi Gold Mine. In a release following a meeting with investors last week, the company said, “the current suspension, investigation and review of future mining fronts will result in a delay to the ramp-up of production at the Obuasi Gold Mine and reduced production in 2021 for the Obuasi Gold Mine and, consequently, the Company.” At the beginning of 2021, Obuasi’s estimated contribution to 2021 was production of 300,000oz to 350,000oz, at an estimated total cash cost of US$660/oz to US$710/oz, and an estimated all-in sustaining cost of US$950/oz to US$1,050/oz. The mine produced 46,000oz in the first quarter of 2021 at a total cash
cost of US$968/oz and an all-in sustaining cost of US$1,234/oz. So far, total production in the second quarter, from 1 April 2021 to the suspension of underground mining activities on May 18, 2021, was 34,000oz. AGA noted that early indications were that the geotechnical incident was likely caused by the failure of a horizontal, or sill pillar, in one of the mine’s smaller mining stopes, of which a thorough investigation has been initiated. The company indicates that it will also undertake an in-depth area-by-area assessment of the mine design, mine schedule and ground management plans, before progressively releasing mining areas for a phased resumption in production. “Infrastructure refurbishment and construction linked to Phase 2 of the redevelopment project are continuing, while underground development activities will recommence once
they have been cleared as safe,” the company added. “Our top priorities right now are the search for our missing colleague and to provide support to his family,” Interim Chief Executive Officer Christine Ramon said. “As the investigation progresses and the assessment of working places advances, we will provide additional detail on the estimated impact on this year’s production and ramp-up of the Obuasi
Gold Mine. In the meantime, in light of the above operational interruption at the Obuasi Gold Mine, we are suspending our production and cost guidance for 2021 as it relates to Obuasi,” AGA noted. Obuasi Gold Mine is one of the world’s largest gold ore bodies, with 29.5Moz of Mineral Resource, at an average grade of 7.64 grams per tonne and 8.7Moz of Ore Reserve at an average grade of 8.6 grams per tonne.
Gov’t asked to tackle illicit financial flows to drive economic growth Continued from cover “You have huge tax revenue that would have come into the economy, but it is transferred elsewhere illegally through illicit
Prof. Joshua Yindenaba Abor
flows, misinvoicing, overstating management fees, among others,” said Prof. Abor in an interview. The interview followed a lecture given by Prof. Abor at the SD Dombo University of Business
and Integrated Development Studies in Wa on the topic, “Covid-19 pandemic and Africa’s financial systems: How do we reform the post-Covid-19 financial systems?”
According to the Thabo Mbeki High Level Panel report on illicit financial flows from Africa, the continent loses in excess of US$50bn a year to illicit flows. The report further stated that over the past 50 years, Africa has lost more than US$1tn to illicit flows, equivalent to all the official development assistance received during the same period. Prof. Abor underscored the need for foreign capital to complement domestic resources, adding that government should broaden the tax net, minimise tax exemptions, and focus on more strategic sectors. He also recommended encouraging financial market development by ensuring the existence of effective market infrastructure, encouraging institutional investors, attracting private capital flows as well as encouraging international remittance flows. He further called for an improvement in institutional quality and the integration of stock markets. He added that encouraging natural resource revenue retention in the domestic economy to improve financial market activity would also help to boost the economy.
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Robust economic activity continues amidst pandemic – BoG data shows By Joshua Worlasi Amlanu macjosh1922@gmail.com
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he latest data from the Bank of Ghana (BoG) has revealed that the Ghanaian economy is continuing its strong growth momentum, pointing to a significant recovery of the key drivers of growth from the effects of the Covid-19 pandemic. The Composite Index of Economic Activity (CIEA), which the BoG relies on in gauging the strength of economic activity, recorded an annual growth of 26.8 percent at the end of the first quarter of 2021 -- the highest since December 2019 -- compared to a growth of -1.9 percent in the corresponding period of 2020. According to the Bank’s May 2021 Summary of Economic and Financial data, high-frequency indicators have continued to pick up, reflecting a robust rebound in economic activity in construction, industrial consumption of
electricity, among others. However, business sentiments softened in April 2021 to 96.9 from 97.9 in February 2021, indicating a dip in the sentiments of businesses. That notwithstanding, the level of optimism among business owners is higher than during the height of the pandemic era. Similarly, the consumer
confidence softened to 93.2 in April 2021 from 97.1 in February 2021, reflecting heightened concerns among consumers particularly on recently introduced taxes. Some economists have pointed out that the decline in both consumer and business confidence was most likely due to the adverse effect of the new
taxes, higher petroleum prices, and expected upward review of utility tariffs. Nonetheless, with the commencement of the second round of covid-19 vaccinations and expected gradual lifting of remaining restrictions, analysts believe that both business and consumer confidence will rebound.
ENI, Springfield impasse: …PIAC calls for independent reassessment of fields By Benson Afful Affulbenson@gmail.com
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he Technical Director of the Public Interest and Accountability Committee (PIAC), Mark Agyemang, has asked the parties involved in the Eni and Springfield unitisation directive to come to the negotiation table and appoint an independent assessor to reassess the two hydrocarbon communication fields, the Sankofa and Afina, and present the data to the parties. In April 2020, then Energy Minister John Peter Amewu wrote to ENI and Springfield, directing them to execute a Unitisation and Unit Operating Agreement (UUOA), with respect to the Afina discovery in the West Cape Three Points (WCTP2) and the Sankofa field in the offshore Cape Three Points (OCTP) contract areas. The purpose of executing the UUOA is to give full effect to government’s directive to unitise the Afina and Sankofa fields, and the subsequent imposition of terms and conditions for the unitisation of the Afina discovery and the Sankofa field. The directive follows previous
Mark Agyemang
engagements and analysis of the post-drill data by the Petroleum Commission (PC) and the Ghana National Petroleum Corporation (GNPC), which confirmed that the Afina discovery in the WCTP-2 and the Sankofa field in the OCTP contract areas were one and the same. That is to say, the Sankofa Cenomanian Reservoir extended into the WCTP-2 contract area. In an interview with Business24, Mr. Agyemang said unitisation is not a bad thing as it’s a strategy to save cost through facility and development cost. “Parts of the Jubilee Fields have
been unitised. The good thing is that there are already existing infrastructure there – that’s the Eni facilities; so we can just tap into that and then use them to develop the fields,” Mr. Agyemang noted. “Eni is asking that they should be granted permission to go to Springfield data room but Springfield is refusing that that,” he said. He said government in the scheme of all these happenings decided to let GNPC to do the assessment and establish the interconnectivity of the two
reservoirs. “In my opinion, I think that there should have been an independent assessor. It should not have been government carrying out the assessment. They should have appointed an independent assessor, who will make the data available to all parties, especially Eni.” He said Eni has more experience, financial muscles and technical capacity as they are already producing on the field, so they should come to the negotiation table and resolve the issue amicably. For their part Energy analysts, Institute for Energy Security (IES) said it is certain that Eni Ghana Exploration and Production Limited (ENI), and Springfield Exploration and Production Limited (Springfield) have disregarded the Energy Minister’s directive to unitise the Afina discovery and the Sankofa field. The institute said urgent action is required from government given that time is of the essence in maximising the exploitation of the country’s hydrocarbon resources for the benefits of the citizenry.
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Feature
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The Future of Work Capsules: Making Africa resilient to create more jobs post Covid-19 By Baptista Sarah Gebu (Mrs.)
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s we celebrate this day, I use this opportunity to encourage all to support telling the Africa story the African way. We all need to make a conscious and purposive effort also to supporting grow Africa by eating, wearing, traveling and living African. Africa can and must be seen built by Africans deploying solutions that work locally and fit into the global change agenda as well. We need to act local but think global. We can make Africa resilient and create more jobs post covid-19 in support of the AU agenda 2063. Measuring Africa’s economic, social and institutional performance in light of the targets set by the African Union’s Agenda 2063, it is worth noting digital transformation can create quality jobs and contributes to achieving Agenda 2063. African economies can become more resilient to the global recession triggered by the COVID-19 pandemic. Policy, strategies and action plans can support this drive. The African Union’s Agenda 2063 talks about the Africa we want. We realize this blueprint and master plan document will support the transformation agenda for Africa, making it the global powerhouse of the future. The continent’s strategic framework aims at delivering on its goal for inclusive and sustainable development as well as serve as a concrete manifestation of the pan-African drive for unity, selfdetermination, freedom, progress and collective prosperity pursued under Pan-Africanism and African Renaissance. Focusing then on the complete Africanization of the body, soul and mind of the African continent, some of its African leaders came to the realization; there was a need to refocus. Powerful as focus is, it yields commitment and creates results. The genesis of Agenda 2063 was the recognition by African leaders that there was a need to refocus and reprioritize Africa’s agenda from the struggle against apartheid and the attainment of political independence for the continent which had been the focus of “The Organisation of African Unity” - (OAU), the precursor of the African Union; and instead to prioritize inclusive social and economic
Happy Africa Union (AU) day!
development, continental and regional integration, democratic governance and peace and security amongst other issues aimed at repositioning Africa to becoming a dominant player in the global arena the document mentions. As an affirmation of their commitment to support Africa’s new path for attaining inclusive and sustainable economic growth and development, African heads of state and government signed the 50th Anniversary Solemn Declaration during the Golden Jubilee celebrations of the formation of the OAU /AU in May 2013. The declaration marked the re-dedication of Africa towards the attainment of the Pan African Vision of “An integrated, prosperous and peaceful Africa, driven by its own citizens, representing a dynamic force in the international arena”. Agenda 2063 is the concrete manifestation of how the continent intends to achieve this vision within a 50 year period from 2013 to 2063. Struck by the COVID-19 pandemic, the global economy will contract by at least 4.5% as put forward by the Africa Development Dynamics report. The African continent, which is highly exposed to external shocks, will experience its first recession in 25 years, with a decline in gross domestic product (GDP) of between 2.1% and 4.9% according to scenarios mapped out by the African Union in July 2020 in collaboration with the OECD Development Centre. African governments
have responded to this massive shock with lockdowns, social protection, economic support and recovery measures. To support make Africa resilient, the continent must focus on digital transformation strategies to creating quality jobs and contribute to achieving Agenda 2063. For Africa to be more innovative, inclusive and attain sustainable growth, the agenda on digital transformation must be seriously looked at, identifies four priorities for implementing this ambitious action plan: Africa must ensure universal access to the digital solutions best suited to local contexts. This will involve reducing inequalities, especially between women and men, and between megacities and rural areas, as well as the cost of accessing data, which is often higher than in other regions of the world. African must make digital technology a device for productivity, especially for small and medium sized enterprises (SMEs). A number of African countries are leading the way in protecting intellectual property rights and digital security. Africa countries must develop skills tailored to the fourth industrial revolution so that the expertise of the African workforce is aligned with 21st century markets, while facilitating the adoption of digital innovations by the informal sector. Africa must co-ordinate the multiplicity of digital strategies at the continental, regional,
national and local levels to better prioritize, implement, monitor and evaluate progress as well as implement establishing a single digital market in Africa. Moving forward, governments can drive Africa’s digital transformation and trigger large-scale job creation, including outside the digital sector, through four complementary actions: • African governments must promote the dissemination of digital innovations beyond large cities through place based policies. • Prepare Africa’s workforce to embrace digital transformation and guarantee social protection. • Remove barriers to innovation that prevent smaller firms from competing in the digital age. • Deepen regional and continental co-operation for digital transformation. Solution provision then must look at addressing issues arising from digital taxation for instance. How security of our digital technologies can be looked at as well as addressing privacy, personal data protection and cross-border data flows. About the author Baptista is the C.E.O of FoReal HR Services and the Ghana Country Representative of the Egyptian African Business Association. She is a human resource professional with a broad generalist background. Building a team of efficient & effective workforce is her business. Affecting lives is her calling! She is a Hybrid Professional, HR Generalist, strategic planner, innovative, professional connector and a motivator. You can reach her via e-mail on forealhrservices@gmail. com Follow this conversation on our social media pages Facebook / LinkedIn/ Twitter / Instagram: FoReal HR Services. Call or WhatsApp: +233(0)262213313. Follow the hashtag # t h e Fu t u r e o f W o r k C a p s u l e s #FoWC #forealhrservices
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Business without borders – SMEs expanding under the AfCFTA
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t’s a busy day at the GIDDINS shoe factory, a machine whirls softly as it knits clean stiches in a beautiful pair of brown sandals. The small factory is quite new, recently acquired by the owner Gideon Denzo as a step to expanding his business and increasing production in anticipation of capturing new markets through the African Continental Free Trade Area (AfCFTA) agreement. Gideon’s excitement mimics that of a colony of other small-scale local businesses hopeful of a bigger market with the implementation of the AfCFTA. News of the implementation of the Free Trade Agreement has dominated the headlines for several months now for all the good reasons. Aside it being touted as the world’s largest trade bloc by number of participating countries, the AfCFTA holds huge prospects for lifting 30 million people out of extreme poverty. Even more stirring is that, the pact will connect 1.3 billion people across 55 African countries with a market size of $3 trillion- significantly boosting intra Africa Trade, and that’s the part that intrigues Gideon and other small local businesses that form the chunk of African economies. These Small and Medium scale Enterprises (SMEs) according to the World bank represent about 90 percent of businesses worldwide and in Africa creates around 80 percent of the region’s employment, while fueling demand for goods and services. The sectors expansion when it comes to trade has however been stifled by numerous constraints including tariff and non-tariff barriers that hinder their growth
into newer markets and in some cases increase the prices of their inputs. But with a Free Trade Agreement of such magnitude as the AfCFTA, SMEs like GIDDINS may now look forward to more easy access to external markets. Benefits for SMEs With the elimination of up to 90 percent of tariff lines and nontariff barriers under the AfCFTA, SMEs belonging to member states can now produce and sell in other markets aside their home countries much easily. This access will mean an increase in sales and hence improved profitability. In fact, the World Bank puts it that, the AfCFTA will see intra Africa export to some member states including Ghana rise exponentially, with exports doubling or tripling with the full implementation of the pact. Other than an increase in intraAfrica exports, Local SMEs could stand a chance of venturing into markets beyond Africa. This owes to the fact that the AfCFTA would make room for better trade deals and negotiations with other trade blocs and countries. Quoting analysis from previous examples, when the Free Trade Agreement (FTA) between Colombia, Peru and the European Union (EU) entered into force, preferential conditions in that market were equaled for Mexico and Chile (that already had an FTA with the EU). Similarly, as the AfCFTA begins to negotiate new deals with developing countries and trade blocs, whatever benefits and preferential gains that will be arrived at, will accrue to our local SMEs due to Ghana’s affiliation with the AfCFTA.
Of other issues bedeviling the local SMEs and their participation in international trade, the lack of harmonized rules was also identified as one that kills the interest of many. “When I try to send my shoes to neighboring Togo or Nigeria, its often less cumbersome but when you go further east or even to the central parts like Congo, the rule changes so I’m unable to send my stuff there” lamented Gideon. But luckily for these SMEs, the nature of the AfCFTA is such that, all rules regarding trade among member states will be harmonized across board. This will guarantee the SMEs some predictability and comfort with regards to trade laws to enable proper planning for growth and expansion. Meanwhile, as the various clauses under the Free Trade pact such as the rules of origin and rules regarding investments etc. continue to be fine-tuned and implemented, other benefits such as a reduction in the cost of inputs, skill sharing and technology transfers will be part of gains made by local SMEs within Ghana and other member states. The GIPC’s Role in helping SMEs scale up Generally speaking, it has been proven that SMEs that scale up to export to other countries have obtained more benefits from the implementation of Free Trade Agreements than other sectors engaging in trade. As such it is imperative that local and small-scale businesses prepare while government provides the necessary policy support to harness the full benefits of this
African Continental Free Trade Area agreement. For this purpose, the Ghana Investment Promotion Center as the lead Investment Promotion body in the country will play diverse roles in equipping SMEs to become more competitive in the continent-wide market. The Centre’s hands-on efforts will include the sensitization of SMEs through conferences and webinar sessions, Business to Business pairings, exposing the SMEs to Investors as well as assisting SMEs and entrepreneurs to identify viable and worthwhile investment opportunities. “As an Investment Promotion Agency, we are looking at how to get foreign investors to partner our local businesses to enable them scale up and improve their productivity so that they can take advantage of the wider market under the AfCFTA” said the CEO of the Ghana Investment Promotion Center. Other government agencies such as the Ministry of Trade, the Ghana Export Promotion Authority and the National Board for Small Scale Industries will be playing diverse roles in terms of financing and sensitization of local businesses and SMEs to empower them to participate effectively in the continent’s liberalized market. There’s no denying the liberalization of Trade across the continent will transform the local business and SME landscape in many favourable ways. However, trade analysts are quick to point out that completely harnessing the benefits of the agreement will take a dint of hard work and effective collaboration among member states to efficiently implement the AfCFTA.
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GHANA BANKING SECTOR REPORT 2021
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Banks’ story of resilience in 2020 Industry financial review in this review posted a net Although this growth is 580 2020 as against 14.6 percent in This 2020 financial performance review of the banking sector covers 21 out of the 23 licensed commercial banks. Not included in the review are National Investment Bank (NIB) and OmniBSIC, whose 2020 financial statements were not available at the time of preparing this report. Pre- and Post-Tax Profits Despite the pandemic, banks made more money in 2020 compared to 2019. Pre-tax profit increased by GH¢1.1bn (23.1 percent) to GH¢6.1bn last year. The growth was fuelled by a strong increase in total income and moderate growth in total expense, despite a spike in provisions for credit losses. After paying an effective income tax rate of 29.5 percent, the industry’s post-tax profit stood at GH¢4.3bn, GH¢0.8bn above the GH¢3.5bn it earned in 2019. Each of the 21 banks covered
profit after tax in 2020, with the net profit margins ranging from 0.5 percent to 48.1 percent. The industry net profit margin stood at 29.1 percent, an improvement on the 2018 outturn of 28 percent. Return on Equity and Assets
Return on equity, which shows how well banks produce profits from employing shareholders’ funds, improved marginally in 2020, rising by 20 basis points from the prior year to 19 percent. In 2018 return on equity was 17.1 percent. Return on assets, which compares net profit to the stock of assets, also improved by 20 basis points, as it increased from 2.8 percent in 2019 to 3 percent in 2020. In 2018 return on assets stood at 2.6 percent. Total Revenue Banks grew revenue by 17.9 percent to GH¢14.8bn in 2020.
Other revenues GHc0.3m
Trading revenue GHc1.95bn
Fees and commissions GHc1.90bn
Total revenue GHc14.76bn
Net interest revenue GHc10.62bn
basis points below the growth of 23.7 percent in 2019, it is a remarkable figure given the pandemic. It is also significantly better than the 8 percent growth recorded in 2018 amid the shake-up of the sector by the regulator. Net interest revenue—the money banks earn from investments and loans less the interest they pay on deposits and borrowings—is traditionally the biggest source of industry revenue. As such, its growth tends to drive the growth of total revenue. Twenty-twenty was no different, as net interest revenue grew by 22.3 percent to GH¢10.6bn, while non-interest revenue grew by 8 percent to approximately GH¢4.1bn. Although total revenue was resilient to the rough operating environment which the pandemic precipitated, there was a marked effect of the pandemic situation on fees and commissions revenue, which grew at a considerably lower rate of 5.1 percent (to GH¢1.9bn) in
2019. This can be explained by weak growth in the volumes of loans and fee-based transactions, as well as some fee waivers which the industry granted to customers—like that for mobile money transactions in the initial months of the pandemic. Trading revenue—the other key non-interest revenue stream—grew by 12.2 percent (to approximately GH¢2bn), underperforming its growth of 34 percent the year before. Trading revenue is the money banks make from trading financial instruments like currencies, bonds, and derivatives. Other operating revenue— which comprises incomes from miscellaneous sources including rent, sale of property, and dividends—increased by 1 percent to GH¢296.1m. This virtually flat outturn cannot be pinned on any specific factor as this element of total income is usually unpredictable from year to year.
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Total Non-Interest Expense The components of non-interest expense are personnel costs, provision for loan losses, depreciation and amortization, and other operating expenses. Usually, in an economic downturn— such as the one experienced in 2020—when business activity slows, banks see a rise in credit defaults and bad loans, which they partially offset through charges, known as provisions, on their revenue. This development was the key driver of non-interest expense last year, as banks increased provisions for credit losses by 33.4 percent (to GH¢1.3bn), reflecting an expected growth in problem loans. In sharp contrast, loan loss provisions increased by just 2 percent to approximately GH¢1bn in 2019. Despite the spike in credit loss
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provisions, total non-interest expense grew at a slower rate in 2020 (14.6 percent) compared to 2019 (17.4 percent). This reflected tight control of the other components of expense, which rose by 11.7 percent in 2020 compared to 20.1 percent in 2019. Thanks to this, the industry efficiency ratio—which measures the cost incurred (apart from interest expense) to produce a cedi of revenue—improved to 58.8 percent from 60.5 percent in 2019. Total Assets The stock of assets as at December 2020 was GH¢144.8bn, up GH¢21.5bn or 17.5 percent from the previous year. Of the GH¢21.5bn added to assets, GH¢14.6 billion—that is, twothirds—was added to debt secu-
rities, reflecting a flight to safety as banks adopted a cautious stance on lending given the elevated credit risks linked to the economic slowdown. By the end of December 2020, banks held GH¢64bn worth of debt securities—mostly government instruments—approximately 30 percent more than they held at the end of 2019. Banks enjoyed strong deposit inflows, with growth in deposits of 21.6 percent (to GH¢102.8bn) in 2020. These inflows were channelled largely into debt securities, driving the rise in assets. From the balance-sheet perspective, the impact of the pandemic-induced economic disruption was most significantly felt in the sharp fall in the growth rate of loans and advances to 7.9 percent in 2020 from 37.3 percent in 2019. As at
December 2020, the value of outstanding loans and advances was GH¢41.4bn, up by GH¢3bn from the previous year. On the contrary, in 2019, loans and advances increased by GH¢10.4bn to GH¢38.4bn. The factors behind the subdued growth of loans and advances were weaker demand owing to the economic slowdown and restricted supply as credit risks heightened. Shareholders’ Equity On the back of the robust earnings, banks added GH¢3.9bn to shareholders’ equity, equivalent to an improvement of 20.7 percent over the prior year. This growth lifted shareholders’ equity to GH¢22.6bn in December 2020.
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Interview Banking consultant Nana Otuo Acheampong on why banks weathered the pandemic crisis well The banking sector – like the rest of the economy – has come out of a very difficult year. What is your assessment of how the Covid-19 shock impacted the sector, and what explains banks' apparent resilience to the crisis? Every sector and industry in the world has had to bear the carnage of COVID-19, and both Ghana and its banking sector have not been immune to the effects. Several lives have been lost, and people have faced unemployment due to a lack of demand. For the Ghanaian banking sector in particular, the work from home options have worked wonders as the crisis has brought to the fore the possibilities of digital banking. The regulator’s proactive stance has had a positive impact on the sector. Firstly, the pre-pandemic decision to strengthen the minimum capital base of the universal banks has borne fruits. Secondly, the regulatory decisions and directives from the
onset of the pandemic have also contributed to the resilience of the sector—including restrictions on dividend payment for capital preservation, reduction in the Basel III capital buffer, and the lowering of cash reserve ratios. The loan repayment moratorium directive from the regulator has also contributed to the resilience of the sector. Is there any silver lining in the pandemic for the sector, and what lessons should banks draw generally from the crisis? The global vaccination programmes posit an unseen benefit for global economies, including Ghana’s economy and banking sector. The rapid digitisation of banking services provides hope for the better, albeit without discounting the concomitant cyber security risks. At the onset of the crisis, banks invoked their Business Continuity Plans (BCPs), and once the crisis is over, there will be a need to reevaluate such BCPs to tighten any loose ends
that were identified. The risk management architecture of banks will also need to be vigorously reexamined to tauten the credit analysis variables. How much and in what ways will banking change after the pandemic? In many ways, banking services delivery will change for better or worse. The advent of digitisation of service delivery comes at an unplanned cost, resulting in higher cost to the ultimate consumers of banking services. The new working-from-home culture also requires higher remuneration packages for staff as, in the words of US President Biden, there are expected to be “bumps in the road” to recovery. Banks will need to explore alternate uses to the excess office accommodation constructed at very high cost during the pre-pandemic era.
What impact will the new financial sector clean-up levy have on the sector? The levy met a mixed reaction from industry players, but on balance, if it’s a short term measure to remedy an externality, then it is most welcome. If it is prolonged, as has been the case in earlier interventions, then the long-term impact will be passed on to the ultimate consumer to render consumption of banking services expensive. How can banks support the post-Covid economic recovery? The pivotal role of the banking sector in Ghana’s US$100 billion COVID-19 Alleviation and Revitalisation of Enterprise Support (CARES) initiative provides ample evidence of the supportive role in the economic recovery. Coupled with the expected role to be played in the soon-tocommence Development Bank of Ghana (DBG) project, the sector is poised to assist in the economic recovery of the state.
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Financial services and products personalisation crucial for building trust and financial inclusion Victor Yaw Asante, MD/CEO of FBNBank Ghana
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inancial inclusion across developing countries, especially those in sub-Saharan Africa including Ghana remain low even though much progress has been made in the last decade. According to the Global Financial Inclusion Data of the World Bank, the proportion of adult population in Ghana with financial account increased from 41 percent in 2014 to 58 percent in 2017. The data also showed that the adult population with accounts with financial institutions increased from 35 percent to 42 percent between within the same period. This implies that not all the accounts of the adult population are on the platforms of financial institutions as the disparity largely explains the role of mobile money and the telecommunication companies in the financial inclusion process. This notwithstanding, Ghana’s performance is low compared to some other African countries like South Africa, Botswana, Mauritius and Kenya. For instance, in Kenya 82 percent of the adult population have accounts while 56 percent of the adult popula-
tion had accounts that are with financial institutions as at 2017. According to Mr. Victor Yaw Asante, the Managing Director of FBNBank Ghana Limited, the rate of financial inclusion depends on a number of factors both from the side of the banks and the customers and as banks find ways to bridge the gap, the situation in Ghana will improve. He mentioned that: “factors such as customer due diligence requirements, eligibility requirements, documentation, information asymmetry, inadequate ICT infrastructure, affordability and trust affect the extension of the financial services and products to the underserved groups and also their willingness and ability to patronize them.” Although these factors are multi-facetted, he believes that the current situation can change significantly “if banks intensify efforts in product development and service delivery which are tailor made to satisfy the needs of individual customers, businesses or groups within the underserved population.” According to him, once banks understand clients, the environ-
ment, the regulations, and the institutional capabilities, it is time to step up product and services design taking into account all these variables especially the clients. He added that “the digital age is linked with tailor-made offerings that deliver personalised services, products and pricing to clients and leveraging technology and big data should help banks to reach the unbanked segment of the population especially through the trust built by customers being served.” Mr. Asante explained that personalsaation in banking is to provide a valuable service or product to clients based on their personal experiences and historical data. This helps to directly satisfy the customer’s needs and help to build trust which has large implications for the financial inclusion process in Ghana given our past. By building trust, “happy customers can assist in educating family and friends about the importance of being an account holder and using certain financial products and services,” Mr. Asante added. To this end he envisaged that
customer satisfaction and experience objectives and the need for banks to differentiate themselves from competition will drive personalization through which financial inclusion will be impacted. High financial inclusion is very high on government’s agenda as it works towards a cash - lite economy leveraging on technology. Last year, government launched three policy initiatives aimed at deepening financial inclusion and increase the shift to digital payments. They were the Digital Financial Services Policy, the Cash-Lite Roadmap and the National Financial Inclusion and Development Strategy. Specifically, the aim of the National Financial Inclusion and Development Strategy is “increasing financial inclusion from the current 58 percent to 85 percent by 2023 thus helping to create economic opportunities and reducing poverty.” Mr. Asante is hopeful that banks and other financial institutions in the country will contribute immensely to achieving this goal.
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UBA Connect -- Facilitating trade within Africa MD & CEO UBA GHANA, OLALEKAN BALOGUN
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nited Bank of Africa Ghana, Africa’s Global Bank’s introduction of the UBA Connect Service has helped to facilitate trade in the payments for goods and services for cross-border transactions within Africa in line with the objectives of the AfCFTA. The product is an inter-entity service that allows customers to have instant access to their funds over-the counter at any branch within the UBA network, enabling customers to seamlessly transact from any of the 20 countries other than the country where the account is held. With the UBA Connect Ser-
vice, customers can withdraw, deposit and transfer money from their account across the twenty African countries where UBA has presence. Deposits can also be done by third party customers. However, the service does not allow third party withdrawals. This service is to drive innovation in retail and trade banking to ensure seamless transactions across African countries. The UBA Connect Service allows for instant transmission of data and significantly fast processing with transactions being consummated and source account impacted within minutes.
The novel UBA USD Prepaid Card for seamless international transactions
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igital transactions are efficient since they are time-saving, convenient and, in most cases, less costly than using cash. Globally, the use of cards has become the solution to cashlite economies with digital payments providing transparency and accountability to financial transactions making it possible to prevent the hemorrhage of funds. One of the many options available for cardless transactions are through debit, credit and prepaid cards. Prepaid cards are very convenient and secure to use especially for online purchases as they are not
linked directly to an account, reducing the chances of loss of funds. Reason why Africa’s Global Bank, United Bank of Africa has provided the USD Prepaid cards to facilitate international transactions for their customers. The card is to enable individuals to seamlessly carry out international transactions when outside the country or simply, when making a purchase on a website. The UBA USD Visa Prepaid card is EMV Chip certified and offers power, convenience, security and prestige of Visa. It comes with a one-time financial obligation of issuance
A non-restrictive account, hence accounts can be operated from any UBA office in Africa outside customer’s home country of account domiciliation, which allows business men, entrepreneurs’ and travellers to take advantage of the product. In Ghana, transaction currency is in cedis and in the local currency of the country where transaction is taking place. The transaction limit of the account does not exceed a US$10,000 (equivalent) per day for withdrawals and US$10,000 annually for deposits. This product is also providing cross border payment with ease fee and a recurring loading and maintenance fee. Prepaid Card is a variant of a payment card that is independent of a bank account and requires to be pre-loaded with funds before its usage. The UBA USD Prepaid card which is embedded with an array of fraud detection and prevention capabilities is able to mitigate fraud to a certain level. The card is embedded with a chip and requires pin prior to every transaction. The card has a transaction velocity limit set on it which prevents the user from exceeding the spend limit and also doing excessive transactions within a short period of time. The USD Prepaid card can only function outside the country and does not work on any local terminal (Web, ATM and POS) in Ghana. The card, currently, has
and serving as payment and settlement system for members of the Africa Continental Free Trade Area (AfCFTA). With 42 currencies on the continent, this system provides a platform for movement of funds with ease. The UBA Connect product also supports the realisation of the Sustainable Development Goals (Goal 17), as the service is significantly providing the financial platform to increase exports among developing countries to strengthen the means of implementation and revitalise the global partnership for sustainable development.
been designed to serve two entities; individuals and corporate. Under corporate, there are two offerings that are provided; Corporate Expense and Co-Branding. Companies that wish to have prepaid cards issued them have to communicate to the bank via a resolution letter and clearly state their intents. If the request is for corporate expense, the details of the officer whom the card will be in his or her possession, will be needed to meet the Know Your Customer (KYC) requirement before issuance. If the request is for a co-branding programme, other information including the logo, colours, pictures of employees/students etc. will be required. The UBA USD Prepaid card is your solution to secured international transactions.
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Interview with
Michael Gyabaah,
Chief Finance Officer – Access Bank (Ghana) Plc
Question: The banking sector-like the rest of the economy--has come out of a very difficult year caused by the pandemic. How did your bank respond to the challenge to maintain its growth trajectory? Answer: The main issues that came up centred on our own internal response and then as part of a coordinated or composite response by the industry spearheaded by the regulator. Our Business Continuity Plan (BCP) as a bank, as part of the general governance structure of any bank, simulates a difficult time as a pandemic. Our BCP is clear and it speaks about our staffing arrangements, physical engagements; for instance if there was a pandemic or any natural disaster, it spells out clearly the salient issues we should be looking out for. First of all, what we sought to do was to just kick it into motion; take critical decisions and roll out our response. Our response was about our staff because if the staff are not available then we can’t serve the customer. We started with our staffing arrangement, people working from home, working in shifts -- giving staff working tools to be able to make
sure that all those arrangements were relevant. When the president announced only essential service workers were to go to the office, what we did was to split staff into two groups. We had one team at home and the other in the office. So, should there be a breakout or infection, we would have had another safe place which can then kick in. This arrangement meant that we initially had to incur some costs, because we needed to buy some PPEs, buy sanitisers etc., to make sure all the protocols were in place. On the part of our customers, as we all know, the structure of Ghana’s economy is more of import and export trade-related and we quickly realised that because a lot of these customers are into trade and there were a lot of restrictions, so they were unable to travel. Because these customers have liquidity, we rolled out some products that gave some level of improved earnings on the cash, which typically would have been kept in the current account or any other activity but that is no longer immediately available. So, we gave a little higher percentages to serve as motivation
to customers to bring their money to us, at least till when things are eased out and the economy opens up. This ensured that the customers would have gotten at least some bit of yield that is able to shore up their business. The business relationship is one that thrives on trust, so we also extended moratorium to some customers. We have some very significant customers in the hotel and hospitality industry and occupancy level was less than 5%, how are they going to service their credit facilities? Because customers were not visiting these locations, they were not generating enough revenue to service their facilities. Our plan considered all the challenges and depending on the need, moratorium were a minimum six months to a maximum two years to some of these customers just to make sure that even though we will lose out of the liquidity we are needing, in the long term we will see them having more trust in our offering and services. On the other hand, because of the challenges being faced by our customers, liquidity was one area we needed to be cautious of since customers could not service their facilities. Our plan, therefore,
took into consideration investment that are not running into long-term deals, and we could have access to liquidity at any time. We were also able to survive because the Bank of Ghana did some interventions. What the BoG did was to reduce the primary reserve requirement from 10 to 8 percent. For instance, for every cedi of customer deposit we receive as a bank, we keep 10 percent with the central bank so that should anything happen or the system goes down, BoG can fall on that to bail out any of the member bank who has the issue. This meant that they left two percent that could be given out as loans to some customers to make sure that there is less stress on the financial system. Then they also came up with some interventions like reducing the monetary policy rate by 150 basis points. That also meant that if we borrowed previously from the central bank at 15 or 16 percent and they drop the rate to 14.5 percent, we could extend that relaxed terms to some customers.
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CONTINUED FROM PAGE 11 And then, the last bit of response we took on our own was that we also have some multilateral partners who provide some funds to Access Bank. What happened was that, a lot of our customers in our SMEs space needed to be brought up to speed in terms of their digital readiness, and how they interact with their customers, etc. So, we had series of webinar sessions trying to bring a lot of these SME customers up to speed with new tech trends they can utilise. Q. What lessons has your bank learned from the pandemic? Answer: What comes up strongly is that no condition is permanent. And what we see is that traditional brick and mortar will never be what banking is about because the bank has moved on to digital. After Covid, there’s not going to be any reversal of what we used to do again. There is a new normal, and we are not going to depart from the digital engagement but we are going to deepen them. Lessons from the Covid is that digital is the way and we will not go to what it was before. Q. How much and in what ways do you expect banking to change after the pandemic? Answer: What I see typically is a collaborative new norm. Currently, a lot of the emphasis is on telcos and fintechs because they are the enablers for a lot of the convenience that banks offer to the customers. Previously, banks’ customers were expected to fill a ledger in order to complete their transactions. This then moved on to network banking where customers had access to the accounts from any their bank’s branches. Now we have even progressed beyond the network banking to where customers do not necessarily need have bank accounts with a particular bank in order to complete a transaction. With these changes, we see a lot more emphasis and more role play by Fintechs and the Telcos -- unless may be banks decide to collaborate and probably bring their own platform. But I believe telcos and fintechs are here to stay – they are increasingly becoming more important to the banking business and I see lot partnerships between them and the banks. Q. What impact do you think the
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new financial sector clean-up levy will have on the sector? Answer: From where I sit, I don’t see any adverse impact of the levy on the performance of the banks. Banks live in an ecosystem that have customers from the communities and the environment they operate. We know government taxation is used to equalise opportunities for players in the economic system so I see banks doing better even with the taxes because government need taxes for development and as the economic environment improves then banks can also do well in terms of profit. Q. As the economy begins to rebound from the slowdown in 2020, what in your view is the outlook for the banking sector? Answer: I see the banking sector growing very astronomically. From year 2000 to date, if we were looking for any era that banks are expected to record leaps and bounds performance, we can point to 2020-2022. We are going to see an era of quantum leap in performance, none like any other period from 2000. From simple Economics, we have had a situation where everything goes down and it’s starting to go up again. Banks are going to go up because the economy went to sleep and it just woke up again. It woke up again because of the ease in restrictions. So, all of a sudden, the economy is going to expand. I see the out-
Michael Gyabaah
look to be very bright and very bullish. So, if I have to predict, I would say that it would probably be the best we would see in the last 3 or 4 years. Q: The African Continental Free Trade Area (AfCFTA) is the latest big economic project in Africa. What opportunities does your bank see in the AfCFTA for the growth of its business Answer: As I have already mentioned, the economic environment is an ecosystem and it’s based on a whole lot of relationships and inter-relationships. Currently, Access Bank is more like a Pan African Project where we are looking forward to expand to a lot of African countries. Currently, we are in the SADC regions, South and Central Africa. Recently, we open up in Kenya and South Africa and we are already in West Africa scattered all over Gambia, Liberia. Sierra Leone, Ghana and Nigeria. Trade really is about the having a hub and having the enabling platform where trade interactions between trade parties can happen. Now with the AfCFTA coming on board, what that means is that our customers who were probably incurring a lot of cost in terms of corresponding bank charges to link up with exporters, importers in the various markets, it gives us opportunities since we are there already. So, for instance, if I have Access Bank in South Africa and Access Bank in Ghana, I am able to
tap into a lot of imports coming from South Africa to Ghana or moving from Ghana to South Africa. The good news for the customer is that it reduces the cost of doing business because he may not have to go through a city bank or another corresponding bank because I have footprints in those areas so that’s clearly a collaborative opportunity that benefits both the bank and the customer at the end of the day which I think it’s a step in the right direction. Closing remarks. What I would say is that, as a bank in the post-pandemic era, things will never be back to where they were before. I think that, some things would remain the same, and that is about how the customer feels and what they see as convenient for them -- that wouldn’t change. That has nothing to do with technology but rather has to do with the customers’ sentiments. It is about continued commitment to our customers and continued commitment to our own values. If we say more than banking, then the customer should really feel and live tangibly and that this is really more than banking -that’s going beyond the ordinary to deliver the perceived impossible and that will make the customer feel like they are getting the output they are making out there.
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GRIB wants loans to rice farmers capped at 10 percent By Reuben Quainoo
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resident of the Ghana Rice Interprofessional Body (GRIB), Nana Kwabena Adjei Ayeh II, has entreated government to get commercial banks to reduce the interest on borrowing to 10 percent for rice farmers across the country. According to him, the current lending rates of between 26 to 32 percent per annum is too high and frightening for rice farmers in dire need of capital to expand their businesses and upgrade in-
frastructure. “Rice deserves special attention because of its unique role in Ghana’s food value chain. Soft loans can help boost our farms’ value, make our business more efficient, and improve our products,” Nana Ayeh said at GRIB's national value chain engagement and general meeting in Accra. “Rice is one of the staple foods in Ghana and it used to prepare different kind of dishes. It is usually the dominant food on the menu of most restaurants and
roadside eateries in the county,” he underscored the relevance of the commodity to the nation's food security. GRIB is a national umbrella organisation of rice stakeholders with the goal of working towards a competitive local rice sector which puts producers in the best position to derive benefits from their harvest. The association’s membership includes rice farmers, aggregators, marketers, and consumers. Nana Ayeh II was re-elected
unopposed after winning all 39 valid votes cast in the presidential election. Mr. Dennis Obeng Adjei was elected Vice President, whiles Mr. David Yaw Mensah was elected as GRIB’s Financial Secretary in the polls which was supervised by the Electoral Commission. The elected executives will steer affairs of the association for the next three years. Nana Ayeh II urged the newly elected executives to work hard for the benefit of rice farmers.
GCB Bank leveraging technology to deliver customer expectations
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CB Bank says it has adjusted to the new normal precipitated by the COVID-19 pandemic and reconstructed business models by leveraging technology to safely meet customer expectations. “It is a matter of record that this Board has right from the onset set digitalisation as the key to driving shareholder value,” Mr. Jude Kofi Arthur, the Board Chairman of GCB, said at the Bank’s Annual General Meeting. Mr Arthur said accelerating digital capabilities as a key driver of future growth and transformation was imperative and that the situation from the current pandemic made it even more critical to accelerate the Bank’s digitalisation programme. The Board Chairman said the Bank continued to make progress in its transformation strategy and was on course to
create a resilient, agile and efficient organisation across digital platforms to make banking more convenient to customers. He explained that G-Money; the Bank’s flagship mobile money wallet platform continued to grow and also, their GCB Mobile App that customers could download on Apple and Google Playstore had been deployed for the first time, to provide customers access to banking services at their convenience. He said going into the future, G-Money would be critical in leading the Bank’s digitisation agenda, providing an expanded payment channel and convenient banking services for individual and corporate customers. He said in playing an additional role as a national bank, GCB had supported the government's efforts on the financial sector bailout programme.
The Managing Director said the Bank was a key stakeholder in the GCB Real Estate Investment Trust, which constructed 204 townhouses in Tema for sale to public sector workers under a mortgage scheme. As part of the scheme, the Bank will provide mortgage financing facilities to potential purchasers of the housing units. “GCB is committed to being a good corporate citizen in the communities where the Bank
serves with the focus on giving back to society in the areas of health, education, sports, financial inclusion and the environment,” he added. Mr Arthur said during the year, notwithstanding the difficult operating environment, the Bank invested a total of GH¢8.04 million in Corporate Social Responsibility, compared to GH¢10.43 million in 2019. GNA
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Energy
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Where is the electricity to power our Next Generation Vehicles (Part 1)?
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fter years of driving, I see no reason why cars should not be powered by electricity. After all, there is a battery and cable system available in cars. One may describe it as a mini thermal power plant on wheels. Having the gas, a combustion chamber, a turbine (rotor) and the generated electricity. Thinking about this setup, one will replace the gas, modify the combustion chamber and utilize the generated electricity. Is that all that is needed to power our Next Generation Vehicles (NGV)? Power an automobile industry gradually moving to the phase of the “Jetsons”. A few times people have debated on the sustainability of Electric Vehicles (EV) and how the cost can be reduced significantly. Cost is always a factor and always a devil to innovation. Bill Gates and his selected few have come together to put together some funds to support innovations in clean tech, and emobility is a massive sector for consideration going forward. The world seeks to move to clean mobility with the ultimate aim of improving air quality, reduce fossil fuel dependency and gradually reduce the huge emissions of carbon. Moving to Net Zero is the bigger umbrella. EV will have massive acceptance with the support and efforts to government making investments towards achieving their individual climate change goals and analyzing their route towards achieving them. Aside the 2020 corona virus pandemic, there were 10 million electric cars on roads globally. This saw an
increase in EV registration by 41% in the same 2020. I sit and look at these numbers and feel there is still a lot to do to push this innovation. Aside the availability of the vehicles itself, many have complained about cost, quality of battery and availability of charging points. Will Government come in to provide policies to support the sector? Yes, Government will have to come in because; • There needs to be a regulatory framework and roadmap for guidance • Incentives to investors • Support in infrastructure (manufacturing and charging) • Action by cities • Tax • Driver’s licensing • Insurance According to the International Energy Agency (IEA), EV has had steady growth across all transport modes over the last decade.
From the above, is it clear the major emitters of carbon are taking responsibility in moving towards a Net Zero economy or it is another step in the wrong director where their processes of manufacturing these vehicles have emitted massively? Many will say industrialization is a key cause to carbon emission not forgetting cement production, aviation, animal husbandry and urbanization. Others will strongly debate that climate change is a natural occurrence. Who is right and who is wrong? Will we have to wait to see or will we have to fight Climate Change based on science? Countries have started making efforts to draw national policy on e-mobility with the aim of increasing urban resiliency and create new green business opportunities to its citizens and foreign investors. Accra, the capital city of Ghana has 4% population growth rate and one of the fastest urbanization cities in the Sub-Saharan Africa, hosts more than 50% of total registered
vehicles nationwide. According to the Environmental Protection Agency (EPA), 1,134,599 of registered cars are based in Accra. Moreover, all these cars are gas fueled. Can we calculated the amount of tons of carbon these cars have emitted over the years? One thing we know is 51 billion tons of greenhouse gases are added to the atmosphere each year. That is a lot of gas. I sit here and think. What if these gases are turned into electricity. Will we still be paying for electricity or we will be paid for using it? Globally, power generation is becoming a problem looking at the pressure gradually being mounted on nations to go carbon free. Coal, HF, Gas, LNG powered plants may have to be replaced or decommissioned. That is a problem looking at the over dependence on this old technology to produce electricity. Many will ask, the EV coming on board, how different are they from the traditional gas vehicles? Sarcastically, very different. It will create a market where Europe can overtake China. According to IEA, electric cars had a record year in 2020, with Europe overtaking China as the biggest market. In all these discussions and push for EV, let us not forget about where the electricity to power these vehicles will have to come from. Writer: Donald Marshall Company: Mframadan Energy Management & Research Institute (M.E.M.R.I). Contact: 00233-24-4550854 Email: donaldamus@yahoo.com
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Before you say yes to an MLM business (Part 2)
By Kennedy Amoako
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n part A, we looked at two key important risk areas to consider prior to starting an MLM business and these were the Product/Services offered and the profile of the company. In this part B, we will be looking at some other critical areas to consider. • Compensation Plan The next most important factor to consider is the compensation plan of the company in view. You must ask; is the mode of wealth generation fair? Is it easily achievable? Is it hard-work rewarding? Is it sustainable? When you take a look into the Compensation plans of some MLM companies, you realize its either almost impossible to achieve or its too feasible to achieve. This should not be so. An authentic and genuine MLM platform should present a compensation plan that is neither too easy to attain nor too difficult to achieve. It must be fair but must be on the basis that you work hard to achieve. Let’s take again, the Longrich compensation plan for example.
The payment or compensation plan depends on how hard you promote your business and network. The more activities/ purchases/partnerships are happening under your network, the more your payments/ commissions. • Testimonies More into the factors to consider before joining an MLM is the testimonies people have shared on the products or services rendered by the company. If the testimonies coming in are more and consistent, it shows that the products or services rendered are genuine and authentic. And this also builds the confidence in doing the business. • Self-motivation Last but not least, is for you as the partner coming on board to become self-motivated, after considering all these factors above and getting the confidence and confirmation needed. Once you are physically and mentally motivated, taking off and making a good amount of wealth will be very easy a journey for you.
1. What is required to joining? To join an MLM, all you need is your initial start-up capital, which is usually used to purchase the products or service. Sometimes the company may have standard amounts (entry packages) which may come with special levels of point values for growing and qualifying for incentives as you build. Every company has its own start up packages so you must inquire from the company what their entry packages are and their respective costs before you take off. 2. How long does it take to come on board? Under the normal circumstance, immediately the entry package is purchased, and the registration is done, you have already become an authorized business partner with the company.
experience with them and share your testimonies with others to get them to also sign up to consume the product or service. For those who are in to do serious business, then after joining, using the products/service and sharing the testimonies, you also need to bring on board potential business partners of your sort to also join and do the business. Then you are assured that your wealth creation journey through the MLM platform is set for success. Conclusion In conclusion, MLMs are here to stay with us, in fact it is gradually and will soon be the business of the future. Therefore, it is best for everyone to consider it now either as their main business, or as their financial plan B, to secure a better future for themselves and that of their future generation.
3. What is required of a partner after joining? The responsibility of a partner after joining is to use the products/service, have an
The author
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How to fix the Gates Foundation
By Alex Friedman and Julie Sunderland
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ill and Melinda Gates are getting divorced, and the world can’t stop talking about it. Ever since the news broke, the press and social media have been abuzz with speculation about what ended their 27-year marriage. Could it have something to do with Bill Gates’s relationship with Jeffrey Epstein or the personal behavior of Gates’s money manager? And what will happen to their immense fortune, including their Lake Washington mansion? Given the Gates’s wealth and status, such tittle-tattle is understandable. But it distracts from the very real risk the couple’s split poses to the lives of millions of people around the world. The Bill & Melinda Gates Foundation has a far-reaching, positive global impact. But the way the Gates family has chosen to construct and manage their organization’s $50 billion endowment is far from ideal, with direct implications for planning and investing in programs that take years to implement. As living donors, Bill and Melinda Gates make all of the foundation’s critical strategic decisions, and the organization’s impact depends as much on its co-chairs’ reputations and moral authority as it does on their money. This conflation of the personal and the institutional is a serious problem for all private
foundations with living donors. As the Gates family and Foundation pass through the wringer of intense public scrutiny, it is worth considering how to improve founder-controlled philanthropy. Three reforms are needed. First, resilient governance mechanisms must be introduced. The Gates Foundation has three trustees: Bill, Melinda, and Warren Buffett. This would not be appropriate in most organizations, let alone the world’s second-largest charitable foundation. After all, it means that a fracture between any of the trustees – such as a divorce – could render any semblance of good governance impossible. Charitable organizations should emulate the best-run public companies. They should establish a board of directors that is large enough to minimize their vulnerability to personal fissures and ensure that most members are making independent decisions on strategic matters. This also means appointing a chair who is not the foundation’s CEO, founder, or a founder’s family member. And given that founders receive a substantial tax benefit for their donations, the assets the board oversees should be regarded as belonging to the public, with the board being held accountable to a fiduciary standard of care. Second, foundations must embrace genuine transparency. As it stands, foundations’ annual reporting centers on IRS disclosure forms, which require
few specifics about spending. This undermines discipline in charitable giving, with foundations often measuring their performance by how much money is pushed out the door and whether the founders have been embarrassed, rather than clear impact assessments. Foundations should be required to file detailed annual reports analogous to those filed by public companies. These reports should specify not only how the organization spent its money, but also why it made the choices it did, what results it has achieved (good or bad), and what risks it foresees. Over time, such transparent and comprehensive reporting could help to create a market-like mechanism of public accountability for a foundation’s effectiveness. Third, foundations should be required to double the amount they give away each year. Since 1969, the United States tax code has required all foundations to donate 5% of their assets, on average, each year, in order to preserve their nonprofit status. The rationale is that this enables properly managed foundation endowments to produce returns similar to those offered by financial markets. The foundation could exist in perpetuity, with the donors (and their family) exerting permanent control. In reality, financial returns have far exceeded 5% – the S&P 500 has risen more than 10% annually since 1969 – and foundation endowments have
grown by even more than that. Doubling the amount foundations must give away each year would create a powerful incentive for donors to focus on active charitable investment, rather than building eternal monuments to themselves. This would also spur foundations to provide more resources to nonprofits, which often struggle to acquire the overhead funding they need to implement their programs. A major problem here is that foundations tend to restrict their funding to highly specific program grants, often shaped by the donor’s priorities, rather than the recipient’s needs. This starves nonprofits of effective leadership and institutional capabilities, undermining their impact. If foundations were forced to give away 10% of their assets annually, the most innovative nonprofits would be far more likely to receive the resources they need. We expect our heroes to be perfect. So, when they turn out to be mere human beings, we are fascinated, disappointed, and perhaps even feel some schadenfreude. But, while Bill and Melinda Gates have done enormous good, the true heroes are the thousands of talented, creative, and caring people they have empowered through the Gates Foundation. We would all benefit from focusing less on salacious gossip about their personal lives and more on how to take a good foundation model and make it better.
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