Business24 ePaper (June10, 2020) by Business24 Online

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WEDNESDAY JUNE 10, 2020

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Cost of printing cedi notes doubles in 2019 International airlines could benefit from 20% landing fee cut MORE ON PG 3

BY DOMINICK ANDOH

Governor of the Bank of Ghana Dr. Ernest Addison says the printing of the new notes doesn’t downplay government’s cash lite agenda

BY NII ANNERQUAYE ABBEY

The central bank’s cost of printing the country’s legal tender went up by 103 percent last year, as bigger denominations of the cedi were introduced and existing notes were upgraded with improved security features. According to the Bank of Ghana’s 2019 annual report released last week, more than GH¢312m was spent on printing notes compared to an amount of GH¢153m in 2018. The cost incurred in printing the cedi is inclusive of fees paid to the agency contracted to undertake the exercise as well as costs the bank describes as “other expenses”.

The year-on-year increase in the cost of printing cedi notes was the largest in at least the past seven years. While the central bank routinely prints new notes to replace worn-out ones, two major projects it undertook in 2019 which could have influenced the sudden hike in costs were the upgrade of existing bank notes and introduction of a GH¢2 coin and new notes in GH¢100 and GH¢200 denominations. Despite the huge cost incurred in the printing of the notes, the BoG’s annual report, however, indicated that other costs associated with the printing of the legal tender declined.

Cost of shipping likely to soar post-Covid-19

MORE ON PG 9

1.78

GOLD $/TROY OUNCE

1,685.06

CORN $/BUSHEL

329.50

COCOA $/METRIC TON

2,384.00

COFFEE $/POUND:

+5.70 ($108.30)

COPPER USD/T OZ.

220.15

SILVER $/TROY OUNCE:

17.07

NEWS/EDITORIAL

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WEDNESDAY JUNE 10, 2020

EDITORIAL

Wash your hands 2

Let’s support COVID-19 survey The COVID-19 pandemic has taught us to prepare for the unexpected. It is for this reason that the Ghana Statistical Service is to embark on a survey to track the socioeconomic impact of COVID-19 on households and jobs. The survey dubbed “Households and Jobs Tracker” runs from June 9-20, 2020. Indeed, it is imperative that we all support this exercise because it would give us insights on how household lives and jobs are impacted by the pandemic and help the country prepare for similar future health emergencies. The Households and Jobs Tracker was one of the three surveys being conducted by the Ghana Statistical

Service and development partners on socioeconomic impacts of the coronavirus disease. Topics covered in this tracker include income loss, access to services, employment, coping strategies among others. The other two surveys, which are Business Tracker and the Local Economy Tracker, are also underway. The Business Tracker seeks to identify and measure the impact of the coronavirus disease on small, medium and large establishments operating in Ghana (profit and growth), innovative actions being taken by businesses to mitigate the impact, and actions being undertaken to prepare for the post coronavirus pandemic.

The Local Economy Tracker will gather data on the preparedness and resilience of the local economy to withstand the shock brought about by the COVID-19 pandemic. The results from the survey would inform policy directions in supporting the extremely poor and vulnerable households and safeguarding progress of the Sustainable Development Goals (SDGs). The GSS has assured the general public that information provided by individuals and households would not be disclosed to anyone or entity in any form.

Cover your cough 3

Cost of printing cedi notes doubles in 2019 (…CONTINUED FROM COVER )

Wear a mask Brought to you by

LIMITED Copyright @ 2019 Business24 Limited. All Rights Reserved. Editorial Team Dominic Andoh: Editor Eugene Kwabena Davis (Head of Parliamentary Business & Commodities) Benson Afful (Head of Energy & Education) Patrick Paintsil (Head of Maritime & Banking) Nii Annerquaye Abbey (Online Editor) Marketing 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)

In 2019, the fees paid to the agency involved in printing the notes was GH¢2m, while last year the amount stood at about GH¢1.9m. Also, other expenses incurred went down from GH¢4.8m in 2018 to GH¢3.9m. Since 2012, the annual cost of printing the legal tender has moved from GH¢8.3m to about GH¢312m, representing a 3,660 percent growth over the period. Cumulatively, between that period, the Bank of Ghana has spent in excess of GH¢1.1bn in printing the cedi. Justification Governor of the central bank Dr. Ernest Addison, explaining the rationale behind the introduction of a new GH¢2 coin as well as GH¢100 and GH¢200 banknotes into circulation, said it was to ensure customer convenience and bring about efficiency in the printing of currency to generate savings for the country. Mr. Addison disclosed that the new coin and notes were decided upon after a review, which began in March 2017, of the structure, acceptability and use of the individual denominations. He said the review exercise revealed the resurgence of deadweight burden issues on the economy due to past significant inflation and perennial depreciation of the currency. It also showed a significant increase in the demand for higher denomination banknotes and increased cost of printing of them. “These new higher-value denominations

will only restore partially the dollar value of the higher denomination GH¢200 to about US$40, not quite close to levels in 2007 but high enough to significantly reduce the deadweight burden and high transaction cost in making highvalued purchases in a cash-based economy like Ghana,” Dr. Addison said. The upgrading of banknotes was also to incorporate enhanced and more durable security features in

the notes, in addition to machinereadable serial numbers. Cost of new notes The Finance Minister, Ken OforiAtta, in March told Parliament that the cost of printing the GH¢100 and GH¢200 notes was US$8.97m. According to him, the amount was made up of US$4.45m and US$4.53m for the GH¢100 and the GH¢200 cedi notes respectively.

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International airlines could benefit from 20% landing fee cut BY DOMINICK ANDO

The country’s aviation sector regulator and airports operator, Ghana Civil Aviation Authority (GCAA) and the Ghana Airports Company Limited (GACL), are in discussions to reduce landing fees by up to 20 percent for all international airlines servicing the Kotoka International Airport (KIA). Any such reduction would support international airlines reduce their cost of operation when the country’s airspace is opened for scheduled international flights. Simon Allotey, the DirectorGeneral of the GCAA, told Business24 exclusively that: “We have not granted any waivers for international airlines yet. We are still in discussions with the GACL to see what could be granted. We are assessing if a percentage of the landing fees could be taken off for a limited period. We could give up to 20 percent to help airlines recover.” Intercontinental flights currently pay between US$7.20 and US$75 per ton depending on the weight of the aircraft. Sub-regional flights also pay between US$4 and US$30 per ton. Any reduction in landing fees would be a big relief for airlines as it forms a major component of

their cost build-up. For an airline that operates a Boeing 777 between Accra and Europe, it costs about GH¢178,534 to operate a single flight. An airline that operates a Boeing 777 that weighs between 247–299 tons pays between US$1,519 and US$1,839 per flight, in addition to lighting fees, navigational fees, government taxes, and parking fees. If the 20 percent reduction is approved, it means the airline would now have to pay between US$300 and US$368 less. As at May 2020, international airlines servicing the KIA had lost an estimated US$400m in potential earnings due to the COVID-19enforced lockdowns in Ghana and around the world. Some international airlines closed their local offices in March and asked staff to take unpaid leave from the end of April until when the situation normalises. It is further estimated that collectively, international airlines servicing the KIA will lose an additional US$100m in potential earnings if the suspension of international flights continues till June 31. Extension of licence renewals The GCAA has granted international airlines a three-month

extension on the validity of their certificates and authorisation, while a similar extension has been granted to domestic airline operators for renewal of their personnel licence. The ongoing discussions on landing fees reduction and extension of certificates form part of measures by the two entities and the supervising ministry, the Aviation Ministry, to ease the pain of operators brought about by the COVID-19 pandemic. The GACL has already waived rent for all airline offices at the KIA and the regional airports for the second

quarter of this year. It has also waived various aeronautical charges—landing, parking, and lighting—for the same period. For concessionaires operating at the KIA and all regional airports, the GACL has waived rent and royalty payments from April-June. For other tenants of the various airports—gift shops, restaurants, forex bureaus and others—who have been severely impacted by the lack of or reduced activities, the GACL has waived rent for quarter-two.

Cost of shipping likely to soar post-Covid-19 BY PATRICK PAINTSIL

Not all shipping lines will be able to withstand the shocks of the coronavirus pandemic and some may have to “go down”—which will lead to consolidation, as is being witnessed in the aviation industry, but at the expense of the Ghanaian shipper. It is feared that the shipping lines that will remain in business might skew the market in their favour, since there will be fewer lines to ship an estimated surge in cargo and that could drive up the cost of freight. “Maybe it’s when things settle; when the havoc of the virus crisis is settled, there will be some consolidation just as is being witnessed in the aviation business. By the time this whole thing is over, we will have some shipping lines collapsing, Adam Imoru Ayarna, Vice President of the Shipowners and Agents Association of Ghana (SOAAG), told Business24 in an exclusive interview.

“But to be honest, as to whether it will affect the cost of freight, that will be a commercial decision that shipping lines will be taking independently and each one will handle it differently. Some will use it as a marketing tool, while others will have to face reality or go down.” Shipping lines are currently reeling from the pandemic, with containers locked up at ports and general cost increases aside other huge investments to keep their vessels moving on the seas as the virus scourge rages. According to Mr. Ayarna, measures including liners putting in place precautions and spending heavily on crew onboard vessels to enable

them load at origins and destinations are huge costs that shipping lines will want to recoup when the situation is brought under control. Another factor that will drive up the cost of shipping is the proposed establishment of a Port Development Fund that will primarily finance the construction of town roads within the Tema Port enclave. Business24 gathers that a law is being sought to enable the fund secure a loan from A.P Moller Capital—a fund management company affiliated to A.P. Moller Holding A/S—to carry out the proposed road projects. The expenditure will subsequently be levied to cargo—even though the construction of those roads was originally captured under the MPS deal. “Once this comes, then we know that there is going to be an increase in shipping costs because it will definitely be passed on; the shipping lines will pass on that cost to the shipper,” Mr. Ayarna noted. Already, most shipping lines have introduced a surcharge to make up

for the cost of acquiring low-sulphur fuel in compliance with the IMO 2020 directive which took effect in January this year. German shipping liner Hapag-Lloyd introduced an IMO 2020 Transition Charge (ITC) for short-term contracts as of December 1, 2019. Danish shipping major Maersk has already decided to increase its bunker surcharge; the tariff increases will be implemented across all trades and will range between US$50-200 per box. As the coronavirus sweeps across Europe and the US, causing widespread disruption and lockdowns, container shipping could see a loss of 17m TEUs of cargo in 2020, according to the latest newsletter from Analyst SeaIntelligence. The report said container shipping could be looking at developments similar to the global financial crisis in 2009—which implies a volume loss of 10 percent—and warned that there was a “realistic risk of bankruptcies”.

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Survey to track impact of COVID-19 on households and jobs begins BY KWASI ANKU

The Ghana Statistical Service (GSS), in collaboration with the United Nations Children’s Fund (UNICEF) and the World Bank, is conducting a survey to track the socioeconomic impact of COVID-19 on households and jobs. The survey dubbed “Households and Jobs Tracker” runs from June 9-20, 2020. Government Statistician, Prof. Samuel Kobina Anim, said the households and jobs tracker will provide insights on how household lives and jobs are impacted by the pandemic. He said the Households and Jobs Tracker was one of the three surveys being conducted by the Ghana Statistical Service and development partners on socioeconomic impacts of the coronavirus disease. Topics covered in this tracker include income loss, access to services, employment, coping strategies among others. The other two surveys, which are Business Tracker and the Local Economy Tracker, are also underway. The Business Tracker seeks to identify and measure the impact of the coronavirus disease on small,

medium and large establishments operating in Ghana (profit and growth), innovative actions being taken by businesses to mitigate the impact, and actions being undertaken to prepare for the post coronavirus pandemic. The Local Economy Tracker will gather data on the preparedness and resilience of the local economy

to withstand the shock brought about by the COVID-19 pandemic. He noted that results from the survey would inform policy directions in supporting the extremely poor and vulnerable households and safeguarding progress of the Sustainable Development Goals (SDGs).

He assured the general public that information provided by individuals and households would not be disclosed to anyone or entity in any form. “The data collection does not require payment of money, and under no circumstance should anyone be required to pay any amount to any person,” he said.

Kasapreko gets US$7.4m StanChart loan to upscale hand sanitizer production Kasapreko Company Limited, the Ghanaian beverage manufacturer which is undertaking mass production of hand sanitizers and alcohol hand rubs to help in the fight against the COVID-19 pandemic, has become the first client to make a drawdown under the Standard Chartered Bank’s US$1 billion financing commitment to help companies in this COVID-19 era. Kasapreko’s US$7.4m loan facility is expected to support the indigenous company purchase the necessary inputs for the production of alcoholbased hand sanitizers for use in Ghana. Kasapreko, a Ghanaian owned company that produces alcoholic beverages, carbonated soft drinks, and bottled water, in March 2020, announced it would commence mass production of hand sanitizers to help curb the spread of COVID-19 as a response to an appeal by the government to local industries to produce affordable hand sanitizers. Standard Chartered launched the program on March 30, 2020, to provide financing at preferential rates to companies making products and services that help the front line fight the virus and its impact. The Bank has received a strong response from clients around

the world and there are several disbursals nearing fruition. Mr. Simon Cooper, CEO of Corporate & Institutional Banking at Standard Chartered, said: “Our fulfillment comes in seeing the much-needed products that help individuals, businesses and communities keep COVID-19 at bay being made accessible and affordable. “We are extremely proud to start rolling out the financing on this programme with Kasapreko Company Limited. Africa is a very important part of our Group strategy and I’m particularly pleased that we’re able to use our network there to make an impact in Ghana’s fight against COVID-19.” Mrs. Mansa Nettey, Chief Executive, Standard Chartered Ghana Limited, said that “the deal signifies the collaborative approach the Bank is taking with its clients in Ghana to fight COVID-19. “Having operated in Ghana for more than 120 years, we must leverage our network to support our clients by providing long term sustainable financing to meet their urgent needs. We remain committed to working with our clients, especially those who have and continue to refocus their business operations, to complement Ghana’s

efforts at tackling the pandemic,” Mrs. Nettey said. Mr. Richard Adjei, Chief Executive Officer, Kasapreko Company Limited, said, “Hand sanitizers are critical in curbing the spread of the coronavirus and the financing provided by Standard Chartered will enable us to respond strongly through optimising our production capacity to over 200,000 bottles a day. There is an urgent need to avail affordable hand sanitizers to the Ghanaian public and we thank Standard Chartered for giving us a

shot in the arm.” Mr. Adjei also lauded the rates provided by Standard Chartered saying, “The rates provided by Standard Chartered will help the company pass on lower costs to consumers and enable us to meet the high demand amid periodic shortage and price hikes of sanitizers.” Kasapreko Company Limited is among the top manufacturers in Ghana whose skills and expertise are now being harnessed to support the fight against COVID-19.

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Top 10 things to know before deciding to go into farming

BY RICHARD NUNEKPEKU

Your conclusions may be varied after reading this article. I may have reinforced your belief in the prospects of your intended investment(s) or may have heightened your fears. Regardless, my intents are clear and simple – to provide practical signposts you cannot avoid making that investment decision – big or small. This list is not conclusive but highly representative of the issues/ opportunities you must consider. 1. Land The complexity of Ghana’s land tenure system is a signpost you cannot ignore in your search for farming land. You must be thorough and diligent. Written or oral assurances are never enough guarantees of legal interest in any land capable of any transaction. Ideally, seek to secure land from stools/skins (as Lands Commission will be involved in the process). Alternatively, engage with government agencies with agriculture mandates as they may have secured lands in anticipation of private sector investments. Your search checklist must anticipate the immediate or future needs of your farm. Closeness to city centres, access to water for irrigation purposes, available social amenities, road infrastructure among others should be a must tick. Land is a valuable asset for any purpose. But farmlands do not generate the same interest for any

funding leverage. The last option should be to offer to buy outright farmlands in large tracks. Financial investments into such acquisitions cannot be leveraged for lending when the business needs it. Negotiate innovative lease agreements with payment terms fixed at intervals over a long period of time. Such agreements must cater for the financial interest of all beneficial interest owners of the land over time. Most lands won’t be vacant so make arrangements for the payment of compensation for crops to those currently in use of it. If in doubt, seek help! 2. Expertise or Technical Capacity Labour is abundantly available. Your ability to engage and retain will be influenced by your wage structure & incentives. If you are unlucky and find yourself in an enclave of other big farms, then you will be required to pay extra to get your required labour. Be warned, mostly this labour is bereft of the science of farming except for the art. Farming is both an art and science. Over the years, we have focused greatly to the detriment of the science on only the art – clearing land, getting any type of inputs, praying for the rains, planting and waiting on the Lord for a good harvest. Quite different, farming involves the science of testing and knowledge of soil type and its nutrient position including acidity level etc, land development protocols dependent

on the type of crop, planting timing, appropriate agrochemicals and fertilisation protocols based on the soil test etc. Even some persons with agriculture-related certificates do not possess this know-how. So do not be too confident it is that type or this type of crop growing area so skilled labour will be available or that you have engaged a certificatebased farm manager. Invest in your own knowledge of the sector, crop etc. Learn by practice, sign up for self-growing programs and develop some capacity. Deliberately engage persons with practical experiences to lead. If possible, bring them from outside the immediate community and develop a plan for technology transfer – they must become the train-the-trainers. If they prove to be beneficial, you run the risk of losing them to other farm projects hence your retention plan must be top-notched – your bottom line depends on this. It is a sad reality but, if you can afford, bring at least a technical lead from outside Ghana. If you do, look towards countries with the same climate conditions as Ghana. 3. Capital or Money Zig Ziglar’s money quote “Expect the Best. Prepare for the Worst. Capitalise on what comes” should never be lost on you. In expecting the best, you must invest wisely. Investment decisions must be driven by functionality & operation optimisation. Aesthetic investments must never be considered during the first 5 years unless you are operating

with deep pocket. Technology & mechanisation must lead in this decision-making process. Either you prepare for it or not, the worse will come. When your production yield expectations are not met, you may be confident the next may be better. However, by the time you institutionalised such improved yield expectations, your losses will have outrun your pocket. Yield performance remains a factor of several issues – mostly things not within your immediate control. Your debt accumulation rate will become high or you will keep funding as equity. At this stage, what source of money you capitalised on will become important. If it is your personal saving or money from friends & family (even that) you may have a breather. In the unlikely event, it is loans or private debt arrangements, then you may just have sold your peace of mind. So be warned. Pursue the use of personal funds, patient capital or partnerships involving a mix of capital and technical investment. Loans from financial institutions should never be the 1st options when deciding on your investment. Remember to limit your liability overreach by using the instrument of a registered company.

Richard Nunekpeku is a Lawyer @ E.L Agbemava Law Office and an Agribusiness Entrepreneur. © Richard Nunekpeku, 2020.

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Efficacy of fiscal and monetary stimulus packages in Ghana under COVID-19 BY DR. RAZIEL OBENG-OKON

Economic And Social Impact Of Covid-19 The economic and social impact of covid-19 on the Ghanaian economy cannot be over emphasized. These include the following: a. Increase in health and its related expenditure b. Short fall in petroleum receipts to Ghana c. Reduction in tax revenue d. Reduction of Hotel occupancy rates e. Unemployment from staff layoffs. f. Slow down of Foreign Direct Investment (FDI) g. Reduction in trade volumes and values (both domestic and international) h. Decline in the international price of crude oil i. Exchange rate volatility and debt service difficulties j. Reduction in GDP growth The Minister of Finance (MoF) indicated that measures are required to close a fiscal gap of GH¢11.4 billion (2.9% of revised GDP). What is a Stimulus Package In an attempt to reduce the negative economic and social impact of covid-19, stimulus packages have been put forward by various governments including the Ghana government. Covid-19 has therefore made stimulus packages very popular in the news but what really does it mean? A stimulus package is a number of economic measures put together by a government to stimulate a struggling economy. The objective of a stimulus package is to revitalize the economy and prevent or reverse a recession by boosting employment and spending. Theoretically, Keynesian economists argue that the impact of a recession can be lessened with increased government spending. The goal is therefore to increase aggregate demand through increased employment, consumer spending and investment. A stimulus package is therefore a coordinated effort to increase government spending and lower taxes and interest rates in order to stimulate an economy out of a recession or depression. It includes a number of incentives and tax rebates offered by a government to boost spending in a bid to pull a country out of a recession or to prevent an economic slowdown. A stimulus package can be in the form of a monetary stimulus or a fiscal stimulus. Fiscal Stimulus vrs Monetary Stimulus When a government opts for a fiscal stimulus, it cuts taxes or increases its spending in a bid to revive the

economy. When taxes are cut, people have more income at their disposal. An increase in disposable income means more spending in the country to boost economic growth. When the government increases its spending, it injects more money into the economy, which decreases the unemployment rate, increases spending, and eventually, counters the impact of a recession. A monetary stimulus involves cutting interest rates to stimulate the economy. When interest rates are reduced, there is more incentive for people to borrow as the cost of borrowing is reduced. This is an expansionary monetary policy because an increase in borrowing means there’ll be more money in circulation, less incentive to save, and more incentive to spend. Quantitative easing is another form of expansionary monetary policy in which the central bank of a country purchases a large number of financial assets, such as bonds, from commercial banks and other financial institutions. The purchase of these assets in large amounts increases the excess reserves held by the financial institutions, facilitates lending, increases the money supply in circulation, drives up the price of bonds, lowers the yield, and lowers interest rates. A government will usually opt for quantitative easing when a conventional monetary stimulus is not very effective. Global response to COVID 19 Several countries have put in place coordinated fiscal and monetary stimulus packages in response to the global coronavirus pandemic. These include cutting interest rates and providing stabilization mechanisms to the financial markets in conjunction with tax breaks, sector bailouts, and emergency unemployment support to displaced workers. Below shows a summary of some stimulus packages by the governments of the United Kingdom (UK), United States of America (USA), European Union (EU),Japan, just to mention a few. United Kingdom (UK) - The Bank of England (BoE) designed a stimulus package to prevent the country from going into a recession. Part of the stimulus package included a quantitative easing plan to purchase £10 billion worth of corporate debt from a pool of £150 billion in order to drive down borrowing costs. Interest rates were also cut to 0.25% from 0.50% and then again to 0.1%. United States of America (USA) The U.S. Senate voted to approve a $2 trillion stimulus bill on March 26, 2020, with a supplementary budget of additional about $1 trillion totaling $3 trillion to backstop the economy from impact of the coronavirus. President Trump also signed the CARES Act into law on March 27 and later the Heroes Act. European Union (EU) - The European Commission approved

a proposed €750 billion (about $826 billion) stimulus package to help the European Union recover from a recession brought on by the coronavirus pandemic. Japan - The Cabinet of Japan approved a 117 trillion yen ($1.1 trillion) plus another supplementary budget of $1.08 trillion totaling $2.18 trillion (40% of GDP) to deal with a set of measures that includes financing help for struggling companies, subsidies to help firms pay rent and several trillion yen for health care assistance and support for local economies. Ghana’s Fiscal Stimulus Package Against Covid-19 The Ministry of Finance is leading the implementation of the proposed fiscal stimulus on behalf of the government of Ghana, and these include the following measures: a) The establishment of a Coronavirus Alleviation Programme (CAP) with to protect job losses and livelihoods as well as support small businesses. The Ministry of Finance immediately released an amount of One Billion Ghana Cedis (GHc1.0 billion) upon approval by Parliament. The Ministry also proposed to use the equivalent of USD219 Million from the Stabilization Fund. b) The Government launched the COVID-19 National Trust Fund with the former Chief Justice (Rtd) Sophia Akuffo as the Chair to the Board of Trustees to manage the Fund on behalf of government to help alleviate the negative impact of COVID-19 on individuals and institutions. Since the launch of the Fund, many private sector players have donated significant cash and other assets into the Fund. c) GH¢600 Million Stimulus Package to SMEs for businesses (estimated 200,000 SMEs) to sustain affected industries and address disruption in economic activities caused by the COVID-19 pandemic. d)Government Distributed Food Items to Needy Individuals and Households affected by Lockdown through the Ministries of Finance and Gender, Children and Social

Protection in collaboration with faith based organizations. e) Lower the cap on the Ghana Stabilization Fund (GSF) from the current US$300 million to US$100 million in accordance with Section 23 (3) of the Petroleum Revenue Management Act (PRMA). This measure was to enable the excess amount in the GSF account over the US$100 million cap to be transferred into the Contingency Fund for use. This was expected to provide an estimated GH¢1,250 million for the Coronavirus Alleviation Programme; f ) Arrange with BOG to defer interest payments on nonmarketable instruments estimated at GH¢1,222.8 million to 2022 and beyond; g) Adjust expenditures on Goods & Services and Capex downwards by GH¢1,248 million; h) Secure World Bank DPO of GH¢1,716 million and IMF Rapid Credit Facility of GH¢3,145 million; i) Reduce the proportion of Net Carried and Participating Interest due GNPC from 30% to 15%; j) Amend the PRMA to allow a withdrawal from the Ghana Heritage Fund to undertake urgent expenditures in relation to the Coronavirus pandemic. There is an estimated US$591.1 million in the Ghana Heritage Fund but this was unacceptable by a section of the populace; k) A syndication facility of GH¢3.0 billion to support industry especially in the pharmaceutical, hospitality, service and manufacturing sectors; l) A call on the pension funds and other assets managers and investors to follow the lead of the Banks to support by accepting a 200 bps reduction on short term instruments including T-bills and 364-day paper. This should reduce government expenditure on interest expense by over GHS300 million to help close the fiscal gap. m) Engaging the Telcos to reduce the cost of data and telecommunication services to households and small businesses;

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ICUMS Deployment - The new normal? BY GHANA INSTITUTE OF FREIGHT FORWARDERS (GIFF) INTRODUCTION From the days of the Single Administrative Document (SAD) through the Automated System for Customs Data (ASYCUDA), Ghana has never hidden or let go the appetite to digitize the eco-system of its supply chain, pursuing the most efficient path for its international trade and optimizing revenue mobilization whilst ensuring trade facilitation is not encumbered in any way. Ghana, in 2002 joined the League of Nations that have braced the odds to properly automate their customs processes by employing the services of Ghana Community Networks (GCNET) to set us on this course. This journey we have since progressively updated and extended in line with international best practices. In 2015, the Government of Ghana phased out the Destination Inspection Companies whose services had been engaged since the year 2000 to replace the preshipment inspection system which involved the inspection of imports before shipment from the country of supply. Customs thus took over their core mandate of Classification, Valuation and Risk Management with Westblue Consulting as the Consulting and Technical Partner for the Division; this ushered in the second phase of the development of the Ghana National Single Window. BACKGROUND In 2017, the Vice President of the Republic of Ghana, made an audacious move to intervene in the port processes with what he termed the Paperless Port Processes. This was in apparent response to our clarion call for a Governance Structure which had been missing in the effort at digitizing our clearance process. This was to cure the turf wars and bridge the gaps between the ICT network operators and also amongst the State Regulatory Agencies. His Excellency, the Vice President succeeded to a very large extent in curing the turf wars and bridging most of the gaps through a 3-pronged policy initiative (the removal of Customs barriers within the country; Mandatory joint inspections and a Paperless Port) A high point in this arrangement was the removal of Customs Compliance as a Seat in all Collections at the seaports and get them embedded with the Customs Technical Services Bureau (CTSB) except that there was a slight variation during implementation. UNIPASS The argument has been that in the absence of a single vendor a Single

Window environment cannot be achieved. So irrespective of the huge gains made by the Paperless Port Policy initiative by His Excellency the Vice President (which has effectively been thrown away with the introduction of UNIPASS), which saw the bridging of the gaps amongst the regulatory agencies culminating in the 3 member inspection team (CUSTOMS, FDA AND GSA) and also the seamless integration between the ICT network operators, the UNIPASS deal came to pass. An earlier attempt at launching this New Customs clearance system on the 1st of January 2019, was aborted upon a directive from the Economic Management Team (EMT) which came up with a DECISION NOTE dated 20th December, 2018 which in part asked for ● a demonstration of a fully developed end to end technology Solution system, successfully tested, with the independent Stress Report ● Provide a comprehensive implementation plan to the EMT by end January 2019 On the 25th of February, 2020 we had an invite from the EMT to a meeting and on the Agenda was “Update on the Transition of the Port System: UNIPASS of Korea Customs, GcNET, West Blue in response to the EMT Decision Note of December 20,2018”. Also invited to this meeting were GcNet, West Blue, GPHA, Ghana Revenue Authority(Customs), and Freight forwarders. This meeting was called off at the last minute. This means we never got to explore the demands of the Decision Note. On the 26th of February 2020 we received a letter in copy from the Senior Minister Hon. Yaw OsafoMaafo, announcing the deployment of the New Customs Management System in 49 designated land frontiers from the 1st of March 2020, chief among which were Paga, Elubo and Aflao. The Takoradi deployment was officially rolled out on the 1st of April, 2020 and by the 27th day of April when I (President of the Association) visited Takoradi upon numerous complaints, the following (report attached) was observed and appropriately reported to the Honourable Minister of Trade. It should be noted that it is this report and other interventions that caused a shift in the deployment date of the new system in Tema and KIA from 28th April to 15th May and subsequently to the 1st of June, 2020. On Monday the 1st of June, 2020 the system was finally deployed in Tema and KIA after a supposed simulation exercise the previous weekend. ISSUES Having deployed on the land frontiers it must be noted however that before 1st of June there was laxity of choice between the usage of the existing platform and the New System. Declarants who attempted

usage of the new system quickly reverted to the old system due to the challenges encountered. On the 1st June however, because of the National mandatory rollout there was no other choice than to contend with the Integrated Customs Management System (ICUMS) as it has come to be known. Big systems deployment of this sort or even those of lesser magnitude, are bound to suffer initial hiccups or what is universally accepted as ‘teething problems’. ICUMS has effectively deployed for well over 3 months on the land frontiers and over 60 days on the seafront. Seeing that Takoradi mirrors a perfect image of Tema and considering the fact that Takoradi issues had been on the front burner all this while, one really wonders what the objective of the “SIMULATION” exercise was all about when Takoradi had presented an accurate basis for piloting and troubleshooting. Post 1st June Deployment On the 1st of June 2020 ICUMS was effectively deployed, GcNet and West Blue were shut down. We were given the marching orders and the directives for what was to become the deployment of a superior system, operated by a single vendor and with an end-to-end seamless delivery. What happened? 1. INACCESSIBLE SYSTEM For a few hours after deployment the system was generally inaccessible (screen shots available) Remarks: This situation was remedied on Day 1 2. IMPORTER TAX IDENTIFICATION NUMBER (TIN) CHALLENGES Information about the importer at the entry of his or her TIN should automatically populate for continual process of clearance. This is the basis for which one begins a declaration but unfortunately it has been fraught with challenges till this day.. Remarks: Though solutions have been attempted, this has become a recurring challenge of the ICUMS since its inception (Refer No. 16 of Takoradi report attached) leading to a manual solution of importer TIN recapture. It must be noted that this cannot be a solution for a digitized system. 3. NO BENCHMARK DELIVERY TIME

FOR

ICUMS per the ‘Trade Facilitation Agreement with Ghana Link’ has no SLA (Service Level Agreement) indicating process delivery times with which every other stakeholder can plan. Thus declarations can get locked up in the system for weeks with no benchmark for redress. Remarks: Solutions have generally been on a ‘piecemeal’ approach. Declarants have had to approach the technical teams at the command center for solutions.

4. RESORT TO MANUAL PROCESSING ICUMS as we speak has not been fully integrated with other players in the chain ie. Terminals, Shipping Lines, Ground Handlers and some Courier stations. This has led to the re-emergence of manual processes of release to our chagrin. 5. SECURITY Consolidators (Break Bulk) The back-end operations of one consolidator exposes the transactions of other consolidators in form and substance. Consolidator ‘A’, when he or she logs in is able to see the operations of other consolidators in real time. Remarks: This is an anomaly because releases can intentionally or unintentionally done for whatever effect. For a superior system of this sort, confidentiality is key to trust. Absence of Administrators Control There are no administrative controls. The systems log-in architecture stops the administrator from having any oversight controls once a log-in credential has been created for the Assigns. (Refer No.12 of Takoradi report attached) Remarks: This is a serious anomaly. The administrator must necessarily be able to view and effect audits of every single declaration done. 6. SYSTEM CALCULATOR CHALLENGES There seems to be a huge problem with the computation of figures in ICUMS, and of particular interest is that of vehicle declarations. We also have noticed a trend of Customs Validated Duty Declaration Documents with figures which defy reason. Below are a few examples: ●Wrong application of Exchange Rate. Forex conversion for duty purposes requires a simple multiplication of the exchange rate by the figure in question. The product of this calculation should never be in dispute, but we have situations of botched calculations. Evidence abound. ●Non application of required Taxes In several instances the 1% inspection fee (which is subject for discussion) has not been charged. This is not to say it is not being charged at all because in other cases this fee has been charged. Certainty must be brought to bear. ●Wrong application of Taxes Taxes (1% Inspection Fees) have been erroneously applied together with Vehicle Examination Fee in vehicle duty computation. ●Bizarre computation of Taxes We have seen bizarre situations of declarations with tax bills which double at the time of payment at the banks only to be told that these are system errors. Also in this

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(…CONTINUED FROM PAGE 11) bizarre category is a declaration with a mysteriously increased tax base and a corresponding hike in IRS fee with no relation to the declared or assessed CIF (cost+insurance+freight). 7. CALL CENTRE We have forever indicated that at the epicentre of this whole ecosystem is the presence of a top notch Call Centre. (Refer no. 25 of Takoradi report attached). It is evident that this has not materialized. The constant trooping of our members to the command center in search of solutions betrays the non responsiveness of a functional call center as we must have it. 8. INFORMATION MANAGEMENT

The flurry of letters (some of which immediately come to cancel earlier ones), process instruction diagrams, instructions just popping up on our social media platforms does not suggest a coherent project delivery. This is raising a lot of anxiety and a nightmare for change management in the whole chain. 9.TRAINING Training (Refer no. 24 of Takoradi report attached) has been poorly managed leading to fatigue amongst declarants. Follow up training sessions are popping up only a week after full deployment which only underscores our earlier observation of a not-so-well packaged delivery. 10.FRONTIERS For the first 4 days of June, no import declaration had gone through at most of the frontier

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stations. For now a lot of manual interventions have been resorted to. There are reports of ICUMS inability to issue the Temporary Vehicle Importation (TVI) certificate. We have had reports of sudden restrictions on some Customs Procedure Codes even though the Schedules remain unchanged. The effect of this is the application of statutory levies whereas in recent past those levies were not applicable. The introduction of Manifest creation and Bill of Lading at the road frontiers comes as a strange requirement and this is having a toll on the operations of declarants. We have had to contend with so many issues with this change; cost is escalating because all time related fees (Demurrage, Terminal rent, State Warehouse Rent, Ground Handlers Rent at the Airport, Truck Demurrage at land frontiers), have not been held in check as we

contend with massive delays and as a result of the change in processes. If this is the new normal, the scope of the whole delivery chain will have to be redefined. Not too long ago, when PAARS was deployed it reduced the delivery time of CCVRs to a publicised 48 hours as per their Service Level Agreement (SLA). The ground handlers at the Airport took a cue and slashed down the free allowable days from 8 to 4 days. This request to redefine the scope should be treated with all seriousness. Operators within the chain must not benefit undeservedly from a situation which has arisen through no fault of the Trader . Government will have to carefully appraise this dire situation and advise itself on the choices to make going forward in this matter. BY GHANA INSTITUTE OF FREIGHT FORWARDERS (GIFF)

Colombia hosts World Environment Day 2020

Colombia is the proud host of this year’s World Environment Day (WED), which is celebrated on 5th June. This year’s celebration which is bringing together 193 UN member countries, is a primary vehicle of the United Nations Environment Programme for encouraging awareness and action for the protection of our environment. As host of this year’ celebration, Colombia, described as a ‘haven’; for biodiversity is one of the largest

“Megadiverse” nations in the world and holds 10% of the planet’s biodiversity. As part of the Amazon rain forest, Colombia ranks first in bird and orchid species diversity and second in plants, butterflies, freshwater fish, and amphibians. The Ministry of Foreign Affairs of Colombia, will through its diplomatic missions and delegations, carry out various virtual cultural activities during the month of June which will highlight the biodiversity of the

country. The Embassy of Colombia in Accra, Ghana together with the Embassies of Colombia in Egypt, United Arab Emirates, Kenya, Lebanon and South Africa, will on 25th June 2020, hold a virtual conversation with seasoned Ghanaian and international experts and policy makers on biodiversity and environmental protection. A special guest will represent each country’s vision of biodiversity, programs and commitments, as

well as their own richness in nature. A wide-ranging series of events which will feature experts on biodiversity issues from across the globe, have been put together for the celebration will be organized, as per the program attached. In his address to open the celebrations in Bogota on 5th June 2020, President Ivan Duque Marquez, noted that: “From here, we must all go out to protect even more, our air, our wealth”.

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(…CONTINUED FROM PAGE 9) n)Tax, grants and loans, the Ghana Revenue Authority (GRA) to provide some reliefs to businesses and households. According to the MoF, the implementation of the above measures is expected to create a fiscal deficit of 6.6% of revised GDP still higher than the 5% limit imposed by the fiscal responsibility act. GHANA’s MONETARY STIMULUS PACKAGE AGAINST COVID-19 The Bank of Ghana on behalf of the Government of Ghana has carried out a number of monetary policy initiatives aimed at reducing the negative economic impact of covid-19. These measures include the following: a) Reduction of the Monetary Policy Rate by 150 basis points to 14.5%. b) The Primary Reserve Requirement has been reduced from 10% to 8% to provide more liquidity to banks to support critical sectors of the economy. c) To further boost foreign exchange liquidity, the Bank of Ghana (BOG) concluded a US$1 billion Repurchase Agreement (Repo) facility with the U.S. Federal Reserve under its Repo facility for Foreign and International Monetary Authorities (FIMA Repo Facility). d)In line with section 30 of the Bank of Ghana Act, 2002 (Act 612) as amended, the Bank of Ghana triggered the emergency financing provisions, which permits the Bank to increase the limit of BOG’s purchases of government securities in the event of any emergency to help finance the residual financing gap

e) The BoG purchased a Government of Ghana COVID-19 Relief Bond with a face value of GH¢5.5 billion at the Monetary Policy Rate with a 10-year tenor and a moratorium of two (2) years (principal and interest). The BoG stands ready to continue with its Asset Purchase Programme up to GH¢10 billion in line with the current estimates of the financing gap from the COVID-19 pandemic. f ) Activated section 46A of the Bank of Ghana Act 2002 (Act 612) as amended, to provide liquidity support to savings and loans and finance house companies facing temporary liquidity challenges. g) Strengthen the capacity of the ARB Apex Bank to provide liquidity support for rural and community banks as well as microfinance institutions facing temporary liquidity challenges. h) Extended the deadline for SDIs (MFIs and RCBs) to meet new capital requirements to December 2021. This is expected to provide temporary relief to SDIs, given current economic conditions. i) Reduced the 8 percent primary reserve ratio for savings and loans companies, finance house companies, and rural and community banks to 6 percent, and the 10 percent primary reserve ratio for micro finance companies to 8 percent j) The Capital Conservation Buffer (CCB) for banks of 3.0% is reduced to 1.5%. This is to enable banks provide the needed financial support to the economy. This effectively reduces the Capital Adequacy Requirement from 13% to 11.5% k) Provisioning for Loans in the “Other Loans Especially Mentioned” (OLEM) category is reduced from 10% to 5% for all banks and Specialised Deposit-Taking

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Institutions (SDIs). This should provide capital relief to banks and SDIs in these uncertain times. l) Loan repayments that are past due for Microfinance Institutions for up to 30 days shall be considered as “Current” as in the case for all other SDIs. m)BoG has indicated that Ghanaian banks are not allowed to pay dividends--CONCLUSION Fiscal Stimulus The Ministry of Finance on behalf of the government of Ghana has done well in putting together the fiscal stimulus package outlined above. It is important that the whole program is well coordinated and it must be implemented not only to ensure proper accountability but also only needy companies and individuals should receive the stimulus packages. Government should also be mindful of the downside risk of fiscal stimulus which include a higher debt-to-GDP ratio and the risk that consumers will hoard any cash given to them instead of spending it, which could render the stimulus package ineffective. Monetary Policy Given the large informal sector of the economy, monetary stimulus may not be as effective as fiscal stimulus. To this end, BoG must be credited with its quantitative easing measures outlined above. The downside of lowering interest rates could also weaken the exchange rate of Ghana with its negative consequences on the economy. For the reduction in interest rate to be effective, it must complement an export led economy which looks only feasible in the

medium to long term. The FIMA Repo Facility by BoG is however expected to provide an important foreign exchange buffer to boost dollar liquidity amid the COVID-19 global pandemic, and will further enhance the BOG’s dollar liquidity. Bank of Ghana formulates and implements monetary policy to achieve price stability, contribute to the promotion and maintenance of financial stability and ensure a sound payment system. To this end, BoG must be concerned with the activities of all players within the financial services space. The collapse of 7 banks, 386 microfinance institutions, 23 savings and loans, and the 53 Fund Management firms, have created loss of trust and confidence, fear and panic within the financial systems. It is a known fact that some of the existing BoG regulated institutions are suffering from liquidity crises and thus impacting negatively on the whole financial system. BoG’s intended liquidity support under section 46A Act 612 must be extended to cover fund management firms and not only savings and loans/finance houses because the former is also a critical component of the financial system. Solving the liquidity problem in the financial space must be holistic and all embracing. To improve liquidity within the Fund Management sector, BoG should be encouraged by MoF as part of the quantitative easing measure to purchase the current 5-Year zerocoupon bond to ensure that clients of financial services including fund management companies get 100% payment of their deposits and/or investments.

WEDNESDAY JUNE 10, 2020

News

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Devtraco Foundation donates nose masks to fight Covid-19 The Devtraco Foundation, the not-for-profit arm of the Devtraco Group, has presented 644 face masks to the executives of the 37 Bus Station Drivers’ Association for onward distribution to members. This is the fourth donation in the Devtraco’s COVID-19 fight dubbed #MaskUp Campaign. Other institutions who have been supported in the COVID-19 fight by the real estate company are: Donation of GH¢ 60,000 to the Ghana COVID-19 Private Sector Fund, thus becoming a Silver Donor to this Fund; donation of face masks to GHOne and MetroTV, to be distributed by these TV stations to the less privileged; and distribution on face masks by the company’s staff to those who need them in Accra. The executive body of the Drivers’ Association, represented by the

Vice Chairman Mr. James Addo, thanked the Devtraco Foundation for their support and providing them with quality reusable locally made nose masks to enable their drivers, passengers and all related parties protect themselves against COVID-19. He further entreated Devtraco Foundation to keep visiting them and to provide them with other items such as hand-sanitizers. The executive body of the 37 Bus Station Drivers’ Association then embarked on a distribution exercise where drivers and traders, amongst others, were given the nose masks. Some of the recipients of the nose masks, expressed their gratitude to the Devtraco Foundation and asked for other organisations to emulate their good example and reach out to help others in these unusual times.

IFAD supports projects that increase agricultural productivity and incomes in Madagascar Rural development projects financed and supported by the International Fund for Agricultural Development (IFAD) have helped to reduce rural poverty and increase rural entrepreneurship in Madagascar, according to a new report. The report, prepared by IFAD’s Independent Office of Evaluation (IOE), reviews the joint work of IFAD and the Government of Madagascar over the past seven years (2013-2019. It covered six projects with a total project cost of US$510 million, of which 59 per cent was financed by IFAD. IFAD- supported projects aim to raise the incomes and improve livelihoods, food security and living conditions of the world’s poorest people, who live in rural areas of developing countries. In the years after the 2009-2012 political crisis, IFAD-supported projects helped rural poor by providing them with the abilities and skills to improve their productivity and better capitalize on economic opportunities. Several projects introduced innovations into Madagascar, leading to positive results. For instance, IFAD was successful in integrating a large number of microenterprises and small businesses into high-value sectors by pairing farmers’ organizations with market operators, which improved farmers’ access to the markets. According to the report, the creation of nearly 400 of these pairs attracted over US$5.4 million in private sector investments. “We are quite proud of our gains in Madagascar in terms of

rural productivity, incomes and entrepreneurship. Linking farmers with market operators was key for improving economic opportunities in rural areas”, said Ms. Sara MbagoBhunu, Regional Director of IFAD’s East and Southern Africa Division. IFAD played a key role in improving access of rural entrepreneurs to productive assets, support services and financial services. The report states that IFAD helped create networks of service providers, and collaboration and support platforms, thus contributing to the development of rural entrepreneurship. Capacity development and training for young farmers helped them set up and develop their own

businesses. “Approximately 70,000 people benefited from training and outreach activities, which are essential for the development of our beneficiaries’ capacities and the dissemination of improved production techniques”, said Mr Fabrizio Felloni, Interim Officer-in-Charge, IOE. “The report shows that there is a need to enhance the efficiency and sustainability of the operations, by better engaging key actors such as microfinance institutions, better defining the geographical reach of operations and further strengthening capacity development and skills,” Mr Felloni said. He said additional efforts are

also needed to integrate the most vulnerable into the country strategy and programme. He said the evaluation recommends to fine tune targeting, providing more subsidies for incomegenerating activities and credit to help the most vulnerable people participate fully in these activities.” According to the evaluation report, the management of natural resources and adaptation to climate change impacts needs to become a key objective in IFAD’s next country strategy for Madagascar. IFAD is looking at how it can improve work in this area in order to ensure sustainability and improve the livelihoods of the rural poor.

WEDNESDAY JUNE 10, 2020

Mining

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Experts say artisanal mining is here to stay and helps sustain global markets Formalising artisanal mining is a challenge for the mining industry, especially in remote locations and many organisations are stepping in to help. This was mentioned during a June 9 webinar about formalising artisanal and small-scale mining (ASM) in the Democratic Republic of the Congo (DRC), in the lead-up to the DRC Mining Week conference. The conference is set to be hosted from October 7 to 9, should Covid-19 restrictions permit. Many organisations are focused on making ASM safer and more productive, since it is here to stay and is sustaining many communities, particularly in African countries with many mining operations. The experts on the webinar agree that ASM accounts for about 20% of metal production globally and, therefore, will continue to play an important role in the supply chain. More responsible practices need to be developed. Commodity trading company Trafigura corporate responsibility head James Nicholson says the company aims to advance trade responsibly, which means responsible sourcing is essential. In turn, he explains that responsible sourcing involves considering risks to people and to the environment, rigorous operating practices and helping to develop supply chains. He mentions that two-thirds of global cobalt production comes from the DRC, with ASM accounting for between 20% and 40% of this production. Artisanal mining in the DRC employs as many as 200 000 people. “Artisanal mining is a tough and often dangerous occupation, but it is a fact of life in many developing countries. Some have decided

to exclude and even publicly undermine artisanal mining production, but we believe this is illogical and counter-productive,” Nicholson states. He adds that the market has never been more aware of the contribution of the ASM industry to mining sectors and trade. However, market requirements are changing, for example with financing becoming more focused on “clean” projects, metal exchanges enforcing mandatory due diligence, and consumer and investor awareness around risks, responsibility of source and impact of operations becoming more evident. Trafigura has helped to transform ASM mining sites to safer and more productive operations in the DRC, by, for example, working with local implementing partners and stakeholders to fence sites and implement access controls, make safety inspections and personal protective equipment mandatory, and not permitting deep pits and tunnels to be mined. Nonprofit international development organisation PACT Mines to Markets Great Lakes Region technical manager Stephanie Shumsky points out that ASM produces between 15% to 25% of all gold, 80% of all coloured gemstones, 50% of all tantalum, at least 30% of all tin and 25% of all mica. She believes ASM miners are the world’s hidden suppliers. PACT works with governments, industry and miners themselves to make ASM formal, safer and more productive. US Agency for International Development implementing partner company Global Communities DRC country director Lazarre Potier says the organisation aims to establish a commercially-viable conflict-free

ASM gold supply chain originating from the eastern DRC. Global Communities is currently piloting a variety of responsible supply chain models in the country to see what will work in the country. The organisation is looking at how to address the legalities related to ASM mining and the trade and export of these minerals. The organisation is profiling miners and engaging with downstream players around their concerns to build due diligence processes. “There are a number of ways in which the market can be stimulated to get the attention of downstream players to engage in the DRC and we are helping to address the most pressing challenges. “Some of these ASM sites can be best realised for value when they are scaled, but others can be linked with larger commercial operations in the area. We keep in mind the best fit and context of projects in the country,” says Potier. Further, commodity research company CRU Group lithium, cobalt and battery markets senior analyst George Heppel notes that there is great difficulty in reporting ASM output, since it is often individual miners who sell to local cooperatives, local merchants and traders, or ship product to China.

Heppel explains that, traditionally, most artisanal cobalt ore in the DRC was shipped directly to China, making it easier to track through trade statistics, but since 2016 most artisanal ore is blended and processed into cobalt hydroxide in the DRC, making it harder to track and audit supply chains. He points out that artisanal supply made up around 10% of global supply of cobalt in 2019. Heppel states that ASM mining balances the cobalt market in times of shortage. “In times of cobalt shortage, ASM is vital in keeping the world wellsupplied with units for industry. The world would have been in a gigantic deficit had ASM not increased in 2018. “Artisanal miners are also able to react to prices much quicker than mining companies.” Heppel further points out that the ASM industry has evolved to processing in-country over the last few years, compared with exports of concentrate previously. “This has made it more important than ever to have traceability within the supply chain, especially considering that ASM will never go away,” he concludes. Source : miningweekly.com

Gold gains as stock market rally fizzles Gold prices rose on Tuesday as a pullback in equities increased the appeal of the safe-haven metal while investors awaited the U.S. Federal Reserve’s two-day monetary policy meeting starting later in the day. Spot gold gained 0.7% to $1,705.77 an ounce, climbing for a second straight session. U.S. gold futures rose 0.6% to $1,715.50. “Stock markets aren’t rising any further, or at least not meaningfully, and that is taking pressure away from gold,” said Commerzbank analyst Daniel Briesemann. European shares eased as declines in British American Tobacco and banking stocks halted a rally driven by hopes of economic recovery. “We are seeing a temporary return of risk-off ... gold is gaining strength as liquidity flows back into bullion

markets despite the recovery of the greenback,” ActivTrades chief analyst Carlo Alberto De Casa said in a note. As gold has broken through the resistance level of $1,700, recovery seems likely to continue if there are further declines on stocks, De Casa added. Gold prices fell last Friday to $1,670.14, their weakest in more than a month after an unexpected jump in U.S. employment numbers signalled that an economic recovery was under way. Traders have stopped pricing in the possibility of negative interest rates in the United States and are now focused on the Fed’s monetary policy meeting for guidance on how the world’s biggest economy can recover after the coronavirus.

In other precious metals, silver dropped 1.6% to $17.58 an ounce while platinum slipped 0.9% to $824.87. Palladium fell 3.1% to $1,961.10, with prices of the metal used in autocatalysts now down more than 30% from a record peak in late

February. “The (palladium) market could be more or less balanced due to the very low demand from the automotive industry, and that is probably keeping a check on prices,” Commerzbank’s Briesemann said. Source : Reuters

WEDNESDAY JUNE 10, 2020

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Rage against the pandemic

BY BARRY EICHENGREEN

Two weeks of massive, nationwide demonstrations against police violence and racial bias have raised concerns about a second wave of COVID-19 infections in the United States. It’s hard to engage in a collective display of righteous anger over George Floyd’s killing at the hands of the Minneapolis police and remain two meters apart from one’s fellow protesters. And mask wearing is less than universal among the demonstrators, just as it is among the US public generally. This doesn’t bode well for public health or the economy. But while it has been widely noted that the social turmoil unfolding in the wake of Floyd’s death may worsen the already-acute COVID-19 crisis, the connection running in the other direction – from the pandemic to the demonstrations – has received far less attention. Without diminishing for a moment the horror of Floyd’s death, the question is: why now? After all, before Floyd, there was the police killing of Michael Brown in Ferguson, Missouri, in August 2014. The previous month, there was Eric Garner in New York City, who died in a police chokehold, despite pleading, like Floyd, “I can’t breathe.” A recent National Public Radio segment was fronted by the names of nearly 100 AfricanAmericans who died in police custody over the past six years. One explanation for why Floyd’s killing triggered a national uprising is that an especially horrific recording quickly dominated social media and traditional news outlets alike. But this answer will satisfy only those who have forgotten the equally horrific recording of

Garner’s killing. A more convincing explanation must include the pandemic. It is not incidental that African-Americans work disproportionately in the service sector, where employment has been decimated. It is not incidental that the share of the nonelderly US population lacking health insurance is 1.5 times higher among blacks than among whites. And it is not incidental that the COVID-19 mortality rate is 2.4 times as high among black Americans as white Americans. Even without more images of police brutality, the situation facing many AfricanAmericans, disproportionately affected by the pandemic, was already approaching the unbearable. That is because of America’s threadbare social safety net. Unemployment insurance benefits are typically limited to 26 weeks in the US. Certain states in the South provide fewer. Indeed, some, such as Florida, have intentionally designed their bureaucracies to make applying for unemployment benefits as difficult as possible. Other states, again mainly in the South, have not extended Medicaid eligibility to low-income people, as permitted by the Affordable Care Act. Likewise, Senate Majority Leader Mitch McConnell (from the Southern state of Kentucky) is leading the fight against another round of pandemic-related emergency support for the poor and unemployed. Notice the regional pattern. The dominant explanation, developed in part by the late economist Alberto Alesina, for America’s lack of a social-welfare state along European lines is its history of racism. Alesina showed

that race is the single most important predictor of support for welfare in the US, and that opponents of welfare-state policies have long used race-based rhetoric to mobilize their supporters. Alesina also demonstrated that redistributive policies that disproportionately benefit members of minorities are unappealing to members of the majority, who lack a sense of solidarity with the poor. The South, with its history of slavery and Jim Crow, is where this cleavage runs deepest. Some will question an argument linking twenty-first-century social problems to this “ancient history.” But researchers have shown that US counties with more lynchings between 1882 and 1930 have more black-white inequality and higher mortality rates today. The difference in mortality rates reflects not just poverty and inequality, but also a lack of trust in the public health system on the part of African-American men. For older African-American men, in particular, mortality rates have been affected by the revelation in 1972 of the pathological experiment conducted by the US Public Health Service in Tuskegee, Alabama. Since 1932, some 400 African-American men suffering from syphilis had been left untreated, supposedly in the name of medical science. Countries with different histories from the US have more extensive welfare states. For this reason, they are less at risk, it would seem, of a social explosion. So argued European Commission Vice President Margaritis Schinas earlier this month. Schinas’s assertion, of course, skips lightly over racial grievances in Europe, such as in France’s banlieues. It ignores widespread

hostility toward immigrants and refugees, especially those from Africa. No matter, Schinas presumably would reply. The welfare state was created before race became a major issue in Europe. It is a fact on the ground. It is not going away. But recall the British exception. First, in 1942, came the Beveridge Report, the founding document on which the British welfare was erected. But then came successive waves of immigration from the Caribbean and South Asia, which created the perception, if not also the fact, of ethnic fractionalization. And then came Margaret Thatcher, the dismantler of the welfare state. Europe can do better, perhaps, but its leaders should not fool themselves that they won’t have to work at it.

Barry Eichengreen is Professor of Economics at the University of California, Berkeley. His latest book is The Populist Temptation: Economic Grievance and Political Reaction in the Modern Era. Copyright: Project Syndicate, 2020. www.project-syndicate.org

WEDNESDAY JUNE 10, 2020

The Interview

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Yofi Grant, CEO of Ghana Investment Promotion Centre (GIPC) shares his thoughts on local production to weather the COVID-19 pandemic

What is your assessment of how Ghana has handled the Covid-19 pandemic? YOFI GRANT: Ghana was one of the first countries in Africa to move swiftly and impose tough restrictions at the start of the outbreak. The country has handled the situation fairly well, imposing the lockdown at the right time. We also had a policy of tracking and treating cases very early in the game. When it comes to tracing, technology has enabled us to identify the patient’s contacts and test them, regardless if they are symptomatic. As such, we are able to identify existing and potential hotspots. The country has used drones to deliver test samples and find people by triangulating with the help of service providers, and a number of software programmes have been used to trace and track. Technology has been an imperative aspect of the response. How has Ghana’s private sector responded to the pandemic? GRANT: Across the continent the business community has played an important role in the response to the pandemic, and moves by the private sector in Ghana have been impressive. The private sector responded to the government’s call for assistance, and many donated

materials that were needed by frontline workers in the fight against Covid-19, such as body suits, goggles and face masks. Importantly, a number of CEOs established the Ghana Covid-19 Private Sector Fund, whose first project was to build a 100-bed isolation and treatment facility just outside Accra, which as of late May 2020 was nearing completion. The centre will have been built in just six weeks. Ghana is facing two major challenges: the pandemic and the drop in oil prices. In what ways do you expect the economy to be affected in the medium term? GRANT: Because the oil industry has been heavily affected by falling prices, we are certainly going to see a decrease in government revenue. However, oil is just one commodity and not necessarily the driver of the economy. While the future would have been brighter had prices remained high, the most significant issue we are seeing is disruptions in the value chains of agriculture and industry, as production is affected by factories being closed. It is not only factories that are shut, but borders as well. Because we cannot import and export as before, trade has been affected. However, Ghana has continued to export traditional goods such as fruits, so it is possible that the situation will

stabilise in the medium term. Before Covid-19, the economy was projected to grow by 6.9% in 2020, but that figure has been amended to 1.9% because of the economic ramifications of the pandemic. A committee composed of different ministries and the GIPC has been formed to identify measures to reset the economy, recover and move forward. To what extent will the crisis help to develop local production capabilities in sectors such as agriculture and industry? GRANT: We quickly saw how global trade and logistics were negatively impacted by the pandemic, and realised that our local players had to step in. As such, we encouraged many companies in the beverage and textile industries to manufacture goods that were needed, such as hand sanitiser, alcohol, masks and body suits for frontline medical workers. For instance, masks made from Ghanaian fabric are being produced and used extensively, and have even become fashionable. We ensure that these coverings comply with international standards, which reduces the need to import masks. In some instances the private sector has purchased these products and donated them to the government. While this has been a challenging situation, it has led to

great opportunity for local industry and we believe the manufacturing momentum will continue beyond the pandemic. Looking to the future, what are some of the major changes that you expect to result from the pandemic? GRANT: The disruption in international trade will drive many African countries to start looking inwards; trade will continue, but the value will likely decrease. I foresee the continent tapping its potential and renegotiating its position after the crisis. Africa is home to some 60% of arable land in the world, and as such, the continent is an important agricultural resource internationally, as many countries do not have enough land to grow food despite increasing demand. Moreover, the continent will continue to be one of the most attractive investment destinations in the world, with over 30% of the global mineral resources required by other countries to grow. Still, what Africa requires is diversification and a focus on education, as it will be home to one-third of the world’s population by 2050. There has been tacit acknowledgement by many leaders on the continent that this is the moment for us to rethink our strategy going forward. (Source: oxfordbusinessgroup.com)

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WEDNESDAY JUNE 10, 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