91-Day Bill Yield Appreciates

Dr. Kwabena Duffuor, Minister of Finance and Economic Planning

By William Yaw Owusu

Accra, Friday August 17, 2012. 

The Bank of Ghana (BoG) says the yield on its 91-day Bill has risen from 22.80 percent to 22.91 percent since August 9 when the last public sale was effected.

According to BoG, it sold 256.33 million Cedis ($132 million) of the 91-day paper out of a total 324.07 million cedis of bids tendered.

Some financial analysts argued that the rise might be attributed to cost of funds inching higher while others said it is possible the cost of borrowing has gone up.

Increasing interest rate means it is more attractive for people to save in the current climate of a depreciating cedi.

The cedi has been under strain since the beginning of the year as mining and other corporations in the country - a large gold producer and recent oil exporter - incresaed demand for dollar denominated imported goods.

Other experts have blamed the currency weakness on trade with China, as many traders are accumulating actual paper cash in dollars due to the lack of effective transfer channels for the Yuan in Ghana.

Statistics show that the cedi has lost over a third of its value since Ghana began producing oil in November 2010, trading currently at around 1.9115 per dollar.

Renaissance Capital has even predicted depreciation of between 5 to 10 percent by the end of 2012.

The increase in Treasury Bill rate also means that the Central Bank would be able to mop up excess liquidity from the market.

However, businesses cannot borrow, as its too expensive to borrow leading due to the decline in economic activities.

Generally, some analysts believe that the current situation would negatively affect the country’s economy.

Gold Fields' Reopens Mine

By William Yaw Owusu

Accra, Tuesday August 14, 2012

After three weeks of inaction, Gold Fields Ghana Limited has re-opened its Tarkwa gold mine in the Western region.

The mine, where gold is extracted from the ore, was shut down by the Environmental Protection Agency (EPA) on July 16.

It directed that the company’s water discharges be channeled through a treatment plant.

However, bureaucracy at the EPA made it impossible for BUSINESS GUIDE to ascertain whether the regulator had indeed given Gold Fields the green light to re-open the mines.

Gold Fields, the world’s fourth largest bullion producer, said in a statement on Friday that it had commissioned the construction of two water treatment plants to support its operations.

It said it lost around 15,000 ounces or 10 per cent of the mine’s quarterly production as a result of the shutdown known as ‘heap leach facilities.’

Gold Fields currently produces around 850,000 ounces globally each quarter.

“Although Gold Fields believes that Tarkwa was complying with the prescribed conductivity levels in its water discharges, it has nonetheless commissioned the construction of two water treatment plants at the heap leach facilities,” the company said.

Gold Fields, the EPA and the Ministry of Environment, Science and Technology, agreed that Tarkwa would continue diluting and discharging excess water in a controlled manner until the construction of two water treatment plants.

The company, which is expected to complete the construction of the water treatment plants by the end of the year, was required to submit monthly progress reports to the EPA.

It is one of the largest unhedged producers of gold with production of 3.5 million gold equivalent ounces from eight operating mines in Australia, Ghana, Peru and South Africa.

The company was incorporated in Ghana in 1993 as the legal entity holding the Tarkwa concession mining rights.

Gold Fields Ghana Holdings Limited now holds 90 per cent of the issued shares of GFGL after acquiring the indirect 18.9 per cent of the issued shares belonging to IAMGold and its affiliates.

The government of Ghana holds a 10 percent free carried interest, as required under the mining law of Ghana.

The Tarkwa Gold Mine operates under seven mining leases covering a total area of approximately 20,825 hectares.

Mining is currently taking place at six pits, Pepe, Atuabo, Mantraim, Teberebie, Akontansi and Kottraverchy and the mine utilizes a conventional CIL plant as well as a heap leach facility.

In the 12 months ending December 2011, Tarkwa produced 717 koz of gold from the milling and heap leach operations at a cost of US$552/oz.

Biometric Payroll Underway

Dr. Kwabena Duffuor - Minister of Finance & Economic Planning, Ghana. 

By William Yaw Owusu

Accra, Thursday August 9, 2012. 

The government has finally commenced the administration of a new payroll system under which only public servants whose biometric data have been taken would be paid salaries.

In 2010, the government, through the Controller & Accountant General’s Department (CAGD), decided to obtain the biometric information of all public servants as part of process of improving payroll management in Ghana but the gathering of data took effect in April 2012.

So far, biometric information on active workers in the Greater Accra, Ashanti, Central, Eastern, Western and Volta Regions have been concluded.

Although, the public workers in the above-mentioned regions have been captured there are several complaints from public worker who are yet to be captured under the project in the regions.

A news release issued in Accra titled: ‘Payment of July 2012 Salaries to Public Servants on Controller & Accountant General’s Mechanised Payroll’ and signed by Enoch H. Cobbinah, Chief Director of the Ministry on behalf of the sector Minister, said the CAGD was using biometric data captured as at July 18 for July’s salary.

“The payroll biometric information gathered on public servants on the CAGD’s mechanised payroll as at July 18, 2012  in the above named six regions was used for the payment of salaries for July 2012 public servants on the mechanised payroll from the six regions.”

“We, however, wish to assure genuine public servants who may not have taken part in the biometric registration exercise, and therefore, have not received their salaries for July, that payment will be duly made to them.”

The release said “such public servants are, therefore, encouraged to quickly go to the nearest Regional Office of the Controller & Accountant General’s Department or to the Ministry of Finance and Economic Planning, Annex (FIC Building), Accra where they will be immediately registered and their payment quickly processed.”

It said after registration, public servant should submit the registration form that will be given to him/her by the registration officer to the Regional Director of the Controller & Accountant General’s Department or the Director in charge of Salaries at the Treasury Headquarters for immediate processing and issuing of cheque based on the June, 2012 net salary of the employee.

The release concluded that biometric registration for public servants in Brong Ahafo, Northern, Upper East and Upper West Regions has commenced and information captured would be used for payment of salaries for the month of August.

“Public servants in these four regions are being encouraged to present themselves for registration at venue as advertised in the media.”

Amissah-Arthur Defends Economy

Paa Kwesi Bekoe Amissah-Arthur

By William Yaw Owusu

Accra, Tuesday August 7, 2012.

In spite of widespread complaints that there is high cost of living in the country, the Vice Presidential nominee and Governor of the Bank of Ghana (BoG) Paa Kwesi Bekoe Amissah-Arthur says the general prices of goods and services have not risen.

“For the first time in the history of this country, for 24 months, inflation has been single digit. It means that pensioners and people who rely on fixed income are not as worse off as it would be in a situation where inflation was in double digit. So you can have particular prices but the general level of prices has not risen to the extent that we know in this country.”

Appearing before the Appointments Committee of Parliament in Accra yesterday, the out-going Governor said “the point is that while we are not very happy with some of the developments, the general thrust of economic development is good and I think we have to recognize that.”

Mr. Amissah Arthur whose nomination was made possible following the elevation of the incumbent John Dramani Mahama to the position of President after the death of President John Evans Atta Mills on July 24, defended the government’s economic management style and but admitted that prices were rising albeit at a slower rate.

He admitted that the Cedi depreciates especially during election years and said the currency’s performance in election years was recorded in 2004 and somewhat in 2008 adding “in 2012 we have had substantial depreciation.”

“It’s an election year and the Cedi has depreciated. We have had a growth in import level that is unprecedented in just one year. That has affected us in a way. It hasn’t been worse than this. Despite that we have only had 17% of depreciation during the course of the year.”

“There is a greater danger of fiscal excess so people take pre-emptive measures. We have had a huge increase in import this year so we have had pressure on the cedi. In May we had more than 5%, but in June it was 3%. We are expecting that this will continue to the rest of the year.”

As you may know, the level of imports into Ghana doubled, oil imports tripled and that put immense pressure on the foreign exchange resources and we had to do things in order to stabilize the situation.

Mr. Amissah-Arthur said what has come to be known as the dolarisation of the economy needs frank assessment of the situation to ensure that there is amicable solution to the problem.

“Ghana has one currency called the GH¢. In previous times, in order to create confident in the economy, governments have allowed people to hold deposits in dollars. In many countries you cannot go to the bank and take dollars across the counter.”

He said “we became very liberal and allowed the people to this. What we found was that there were many instances where people went to the banks and sometimes wanted to take as much as a half a million dollars across the counter. For anti-money laundering considerations, we thought that this should not be encouraged.”

He said the central bank as a result put a limit of $10,000 on the amount of foreign exchange that one could take from Ghana adding “We think that we must reverse this situation.”

Mr. Amissah-Arthur, commenting on the common currency (ECO) for the sub-region said Ghana has performed well in especially the last two years, achieving two out of the three main points in attaining the convergence criteria.

He cautioned ECOWAS to be careful in designing the common currency since the Europeans were grappling with how to control their common currency in wake of the Eurozone crisis.

He also said he was not in favour of taking separating the supervisory and monetary functions of the central bank because events in Europe had shown that consolidating all the functions under one umbrella body had helped to check financial irresponsibility.

Time Wasting Impedes Economic Growth - Insurer

By William Yaw Owusu

Accra, Tuesday August 7, 2012.

The attitude of the Ghanaian towards time, which has brought dire economic consequences, was heavily criticized by an insurance expert at a book launch in Accra last Friday.

George Kojo Addison, Managing Director of Star Life Assurance Company Limited, noted that the cost of time wasting among Ghanaians, both official and unofficial, had led to underdevelopment in the country.

Mr Addison, who launched his book titled: ‘Standing out,’ said “time wasting especially in public institutions has derailed the effort to bring economic growth for the country.”

“There is vast difference when it comes to timekeeping in Ghana and other countries. We have to change our attitude towards time otherwise we can never achieve the development that we so much desire.”

He said “time wasting culture motivated me to write this book because there are many things we do that impact negatively on our economy.”

Mr. Addison said after 55 years of independence, Ghana should have put in place sound economic policies to create wealth for the people but negative work attitude had not made it possible for that to happen.

“We take things for granted in this country and we cannot continue to grow in this situation.”

He said his book is designed to challenge individuals to adopt “positive attitude towards the development of the country.

Albert Ocran, a motivational speaker and Chairman of Legacy & Legacy, challenged the youth to venture into writing, saying “you cannot be too young to be desirous of leaving a legacy.”

He said the book is a legacy for Ghana and Africa and it challenges readers to be “excellent.”

Frank Oppong-Yeboah, Executive Vice Chairman of Star Life Assurance Company Limited, who chaired the function, said the contribution of the author in the insurance sector was immense.

Amissah-Arthur Speaks On Cedi Free-Fall

Paa Kwesi Bekoe Amissah-Arthur, Vice Presidential nominee

By William Yaw Owusu

Accra, Monday August 6, 2012.

The Vice Presidential nominee and current Governor of the Bank of Ghana (BoG), Paa Kwesi Bekoe Amissah-Arthur says the free-fall of the Cedi against major foreign currencies “is not untypical.”

He told an Accra-based radio station that “I think that we have done quite tremendous work in stabilizing the Cedi as it is. As of now we are talking something like 17% depreciation year to date which, in an election year is not untypical.”

Mr. Amissah-Arthur, who is expected to be vetted in parliament vetting today for the post of Vice President, said as governor, his priority had been to stabilise the economy.

He said some of the policies introduced under his supervision had brought the needed economic stabilisation.

The Vice Presidential nominee admitted the depreciation of the Cedi had start “much earlier” this year than in previous election years and also said he was aware that the development was going to be an election debate.

“The problem this year was that it started much earlier than in previous elections years and the political business cycle has been used as an explanation for some of the things that are happening.” 

He said, “I know that the record of the cedi will be an issue in this election but every election year in this country, from 1992 to date, the cedi has destabilized.”

“Really if you look at the data, this is the year where it has been lowest. In other years there has been a 60% depreciation, a 40% depreciation in an election year. So we have learnt lessons from those depreciations and not all of them are economic factors.”

The daily depreciation of the Ghana cedi against major currencies has become a headache for economic managers of the country.

Statistics show that the cedi has lost over a third of its value since Ghana began producing oil in November 2010, trading currently at around 1.95 and 2.0 per dollar.

The cedi, which from January to June 2009 suffered a rapid monthly depreciation of about 3 percent, slowed down considerably to 0.9 percent in July 2009. It bounced back in mid 2010 and remained relatively strong for some time. However, since January 2012, it has continued to depreciate against the major currencies.

While some analysts attributed the decline to the surging demand for the dollar and other currencies by both local and foreign investors, and businesses mainly to cover import bills others have blamed the currency weakness on trade with China, as many traders are accumulating actual paper cash in dollars due to the lack of effective transfer channels for the Yuan in Ghana.

Renaissance Capital has even predicted another 5% to 10% depreciation this year (the end of 2012).

To stem the situation, the central bank raised interest rates by 250 basis points, starting from February, to halt the currency from further weakening but critics of the government said the measures put in place to stem the tide not functional.

Amissah-Arthur Enters Fray

Mr. Paa Kwesi Bekoe Amissah-Arthur, Governor of Bank of Ghana has been nominated to become the Vice President. 

Posted on: www.dailyguideghana.com

By William Yaw Owusu

Accra, Thursday August 2, 2012.

The government on Tuesday confirmed that Paa Kwesi Bekoe Amissah-Arthur had been nominated by new President John Dramani Mahama to become his Vice subject to the approval of Parliament.

The nomination of the current Governor of the Bank of Ghana (BoG) was made possible following the sudden death of President John Evans Atta Mills on July 24.

Opinions continue to vary over his nomination and before he assumes the hot seat, expectations are already high.

He comes on board as a technocrat whose quest to ensure economic stability might not be in doubt.

The nomination of Mr. Amissah-Arthur comes at a time when the Cedi continues to depreciate against major foreign currencies.

The situation would not be new to him as he has been at the helm of affairs at the Central Bank since October 2009 taking decisions to control foreign currencies in relation to the Cedi.

The daily depreciation of the Ghana cedi against major currencies has become a headache for economic managers of the country. The cedi, which from January to June 2009 suffered a rapid monthly depreciation of about 3 percent, slowed down considerably to 0.9 percent in July 2009. It bounced back in mid 2010 and remained relatively strong for some time. However, since January 2012, the cedi has continued to depreciate against the major currencies.

Some analysts attributed the decline to the surging demand for the dollar and other currencies by both local and foreign investors, and businesses mainly to cover import bills and that compelled the government to set up an economic management team and economic advisory committee to address the situation but the measures do not seem to work and Renaissance Capital has even predicted another 5% to 10% depreciation is likely by (the end of 2012).

In fact, the Governor has been part of the country’s economic management dating back to the 1980s when he served as PNDC Deputy Secretary for the Ministry of Finance and Economic Planning and later as Deputy Minister in the 1990s at the same Ministry following Ghana’s return to constitutional rule.

However, IMANI Centre for Policy & Education has welcomed the nomination of Mr. Amissah-Arthur, describing the move as ‘fantastic’.

Kofi Bentil, vice president of the think tank, in a statement yesterday, said the Governor has the potential to reach out to the middle-class and the intellectual community which the ruling NDC has in its recent life greatly distanced itself when he becomes Vice President.

He recalled how the Governor impressed them with his conduct of the affairs of the Monetary Policy Committee (MPC) in particular, saying “though there is evidence that other aspects of the Bank’s work, such as banking inspection, have also improved.”

IMANI is of the view that Mr. Amissah-Arthur has the capacity to work under pressure for political forces, stating that as governor he was able to go beyond moral suasion in compelling the banks to reduce interest rates in spite of pressure from politicians.

They said he was also able to rebuke the government in a diplomatic way in paying contractors since hesitation in payment has an effect on non-performing loans in the system, and by extension lending rates.

The Vice Presidential nominee has supervised an era of stable inflation as Governor. Until the President’s death, inflation rate stood at 9.40 per cent (June 2012).

Historically, from 1998 until 2012, Ghana Inflation Rate averaged 17.9200 percent reaching an all time high of 63.0000 percent in March of 2001 and a record low of 0.4000 per cent ( May of 1999).

However, critics of the government say the effort was not enough as it did not reflect realities on the ground. They argue that a country with single digit inflation should encounter high prices of goods and services which have resulted in high cost of living but the President’s economic management team have always insisted Ghanaians are better off under them.

Cedi Still Struggling

President John Dramani Mahama has to stem free-fall of the Cedi.

Posted on: www.dailyguideghana.com


By William Yaw Owusu

Accra, Wednesday August 1, 2012.


A week after the sudden death of President John Evans Atta Mills, the Cedi, which has depreciated in value in recent months, continues to struggle against major foreign currencies.

Reuters said analysts had expressed worry about a weakening cedi due to rising imports for the oil industry and added that inflation had trended upwards, making life difficult for the locals even though economic growth is on the rise due to oil production.

Statistics show that the cedi has lost over a third of its value since Ghana began producing oil in November 2010, trading currently at around 1.95 per dollar.

Reuters said locals blamed the currency weakness on trade with China, as many traders are accumulating actual paper cash in dollars due to the lack of effective transfer channels for the Yuan in Ghana.

To stem the situation, the central bank raised interest rates by 250 basis points starting from February to halt the currency from further weakening.

But Reuters quotes Lisa Lewin, head of sub-Saharan research at Business Monitor International as saying the central bank’s stop-gap measure was to the detriment of growth.

It said the government had asked Parliament to increase the fiscal deficit target in 2012 to 6.7 percent of GDP to finance an 18 percent pay rise offered to public sector workers this year and to reform wage structures for state employees.

According to Bright Simons, president of Mpedigree and lead researcher at IMANI Centre for Policy & Education, the cedi’s fall is a supply management rather than a demand management problem.

“The central bank is treating it like a demand problem by trying to regulate how actors in the economy access forex. Businesses are noticing an increasing level of regulatory interference in their ability to access forex at the banks and elsewhere.”

Touching on the challenges to be face by President Mahama, he said given that the central bank is empowered to deal with monetary affairs independent of the government, there is not much the new President could do to alter what he called “this largely futile exercise.”

“However, since the real problem is supply-related, it behoves the administration to put a brake on signals that weaken investor confidence and encourage forex hoarding and speculative activities because these disrupt the flow of forex into the economy to balance against natural growing demand.” 

“The truth of the matter is that actual Foreign Direct Investment (as opposed to pledges) flows have slowed. The expected CDB facility will be disbursed later than anticipated.” 

Mr. Simons said oil revenues are way short of what was budgeted and all such developments had affected the supply of forex in the economy, adding “activities that interfere with availability of forex merely compounds the problem.”

“Government must in the short term rein in expenditure and in the long term boost non-traditional exports. These are the only ways to stem acute spikes in forex imbalances.”

He urged the new President to persuade the Central Bank to coordinate with his government to fix the supply side of things.

Mills' Death Dazes Economy

  President John Evans Atta Mills

By William Yaw Owusu
Accra, Tuesday July 31, 2012

The passing away of President John Evan Atta Mills on Tuesday, July 24 is posing yet another challenge to the economic management of the country.

According to Africa Risk Consulting, the heightened uncertainty following the death of the President “will result in some foreign investors taking a wait-and-see stance.” 

Azim Datardina, Ghana analyst at the firm, said the current situation would imply “a slowdown in foreign exchange inflows which in turn would be negative for the already troubled cedi.” 

But global ratings agency Standard & Poor’s noted that the death of President Mills “will have no immediate impact on its ratings and outlook on the Republic of Ghana (B/Stable/B).”

The S&P said the ratings on Ghana would continue to be constrained by the country’s fiscal management, which it noted “has contributed to large fiscal deficits as well as supplier arrears.”

It noted that the ratings are supported by “strong GDP growth, strengthening oil production volumes and a track record of political stability.”

John Dramani Mahama, who was sworn in as President, promised to pursue economic policies adopted by the late Prof Mills. 

However, Ghanaian experts have varied opinions on the transitional process.

The Ministry of Finance and Economic Planning expressed its commitment to ensure that the progress made so far is not undermined as a result of the President’s death. 

Bright Simons, president of Mpedigree Network and a lead researcher at IMANI Center for Policy & Education, believes senior government functionaries might be distracted from pursuing critical and urgent programmes in order to concentrate on consolidating their standing within the ruling party or the government itself.

This, according to him, could lead to what he called “severe postponement of urgently needed activities.”

He said the extent of the impact of the President’s death would depend on the signals sent by the new President and officials of the ruling party. 

“If there is any hint of a lack of fresh policy direction and vigour to embark on new and exciting programmes with the backing of the ruling party, the default attitude of investors will be somewhat negative.”

Mr. Simons said there is a ‘nagging’ question about the economic policy direction of the new President who has been central to policy formulation under the late President, saying “he needs to set his own vision. For it to excite the government and the country, it needs to be different without betraying the essence of what President Mills was striving to achieve.”

He said for President Mahama to stimulate investor appetite, he would have to make changes at the helm of some key ministries and departments and reset the direction of a number of policies.

“Firstly, he needs to reorient the policy agenda away from some of the confusions that have so far dogged the government’s program. Number one on the agenda should be to signal a radical focus on ministerial and departmental competence. Number two is to investigate the oil revenue shortfall matter.”

He urged the new President to admit that the CDB facility will play a key role in the capitalization of major infrastructure activities next year and not this year in order to manage expectations in the Finance Ministry and lead to a clearer-eyed approach to managing national finances. 

“Government discourse should become more policy-focused. The constant squabbling on radio, the print media and on TV by key government functionaries reduces the stature of the government. A radical shift away from this type of discourse should signal a radical new era of focused, delivery-centred government.”

Mills’ Legacy for the Economy

 President John Evan Atta Mills

TuesdayJuly 31, 2012

By William Yaw Owusu

President John Evans Atta Mills on Thursday, July 24 died in Accra. His death shook the nation and left the business community and foreign investors trying to revise their notes and await what his successor would bring onboard.

His Vice, John Dramani Mahama was immediately sworn in as President according to the 1992 Constitution and he has since assured that he will continue to pursue the legacy of the late professor of law whose specialty was in taxation.

BUSINESS GUIDE assesses what President Mills stood for on the economic front, his economic management style and the legacy he left behind. Professor Mills was the first President in Ghana under whose tenure Ghana began to export oil in commercial quantities.

Inflation
Until the President’s death, inflation rate stood at 9.40 per cent (June 2012). Historically, from 1998 until 2012, Ghana Inflation Rate averaged 17.9200 percent reaching an all time high of 63.0000 percent in March of 2001 and a record low of 0.4000 per cent ( May of 1999).

According to the ruling National Democratic Congress (NDC), the late President supervised a healthy economy and was able to reduce inflation from double-digit hovering around (18%) to single digit (now around 9%). They said inflation continued to drop consistently for a period of 18 and has remained in single digit from June 2010.

However, critics of the government say the effort was not enough as it did not reflect realities on the ground. They argue that a country with single digit inflation should encounter high prices of goods and services which have resulted in high cost of living but the President’s economic management team have always insisted Ghanaians are better off under them.

Cedi Management
The daily depreciation of the Ghana cedi against major currencies has become a headache for economic managers of the country. The cedi, which from January to June 2009 suffered a rapid monthly depreciation of about 3 percent, slowed down considerably to 0.9 percent in July 2009. It bounced back in mid 2010 and remained relatively strong for some time. However, since January 2012, the cedi has continued to depreciate against the major currencies.

Some analysts attributed the decline to the surging demand for the dollar and other currencies by both local and foreign investors, and businesses mainly to cover import bills and that compelled the government to set up an economic management team and economic advisory committee to address the situation but the measures do not seem to work and Renaissance Capital has even predicted another 5% to 10% depreciation is likely by (the end of 2012).

GDP
According to Index Mundi, Ghana's economy has been strengthened by a quarter century of relatively sound management, a competitive business environment, and sustained reductions in poverty levels. Ghana is well endowed with natural resources and agriculture accounts for roughly one-quarter of Gross Domestic Product (GDP) and employs more than half of the workforce, mainly small landholders. The services sector accounts for 50% of GDP. Gold and cocoa production and individual remittances are major sources of foreign exchange. Oil production at Ghana's offshore Jubilee field is expected to inject some capital into the economy.

GDP (purchasing power parity), $74.77 billion (2011 est.), GDP (official exchange rate), $38.6 billion (2011 est.), GDP - real growth rate13.5% (2011 est.), GDP - per capita (PPP), $3,100 (2011 est.), GDP - composition by sector, agriculture: 28.3%, industry: 21%, services: 50.7% (2011 est.), Labor force: 11.44 million (2011 est.)
Investment (gross fixed) 19.9% of GDP (2011 est.), Budget: revenues: $8.796 billion, expenditures: $10.38 billion (2011 est.), Taxes and other revenues: 19.1% of GDP (2011 est.), Budget surplus (+) or deficit (-), -5.4% of GDP (2011 est.), Public debt: 38.7% of GDP (2011 est.).

Africa Economic Outlook (2010) projected that the GDP growth for 2011 was to increase sharply from 7.7 % in 2010 to 13.7 % (7.5 % non-oil) aided by oil revenues and strong export performance of cocoa and gold and said future growth prospects remain strongly positive with projections of 8.3 % and 7.7 % for 2012 and 2013 respectively.

They said key risk to the fiscal outlook for 2012 is the possibility of higher public spending pressure due to the elections and wage pressures from the implementation of the new pay policy.

In the government’s supplementary budget for 2012 financial year, total expenditure including payments of arrears and commitments in 2011, amounted to GH¢ 15,367.4 million, equivalent to 27.3 per cent of GDP. The outrun was 6.7 per cent higher than the budget estimates of GH¢14, 397.4 million.

Wage Bill
Government's wage bill for the first time in the first half of 2011 almost doubled. The difference was attributed to pensions, gratuities and other wage related expenditure which shot up to GH¢2.1 billion (3.9 percent of GDP) in June 2011 as against GH¢1.4 billion (3.2 percent of GDP) recorded during the same period in 2011. The government said that following the implementation of the Single Spine Salary Structure (SSSS), it spends over GH¢4 billion every month on the scheme.

Loans
The government since 2009 has been contracting loans from Europe, Americas and Asia. In August 2011, parliament for instance approved a 3 billion dollars (USD) loan from the China Development Bank (CDB). This facility is the largest ever secured by Ghana and will be used to finance the infrastructure gap identified in the national development strategy, the Ghana Shared Growth and Development Agenda (GSGDA).

Debt Servicing
As Ghana starts accessing non-concessional financing to meet its development needs, the government will need to ensure the preservation of the country’s debt sustainability and the development of a strong institutional framework for public investment decisions.

Oil production and mining activities led industrial sector growth at 36.2 %. This was followed by the services sector (5.8 %) and the agricultural sector (5.2 %). According to Africa Economic Outlook Ghana’s middle-income status and oil receipts have provided the country with the fiscal space to seek non-concessional sources of finance.

STC Folds Up August

Posted on: www.businessguideghana.com

By William Yaw Owusu

Accra, Tuesday  July 24, 2012

Barring any last minute financial intervention, the state-owned Intercity STC will cease operations in August.

The company needs about GH¢7 million to remain solvent until December 2012.

Social Security and National Insurance Trust (SSNIT), which owns equity shares of about 80 per cent in Inter City STC, has declared its intention to pull out of the beleaguered company.

In the past, SSNIT intermittently helped Intercity STC to offset its debt, but according to Cyrus De Graft Johnson, Communications Manager of Intercity STC, management presented a proposal to Cabinet for Government to support the company with GH¢7 million until December, but no response has been given.

He told BUSINESS GUIDE that the amount would be used for the payment of salaries of staff and settlement of debt it owes other institutions.

“If the government supports us with the amount, we can stand on our feet up until December. We are capable of making a projected GH¢400,000 profit within that period,” he said.

Mr. De Graft Johnson said for the past three months, salaries of staff of the company had not been paid, noting that the development had affected output since morale and motivation was low.

He said the once vibrant company currently owes banks and other suppliers over GH¢4 million, adding “there is a longstanding debt and the situation is not getting any better.”

The Communications Manager said certain aspects of the company’s operations including parcel services and vehicle valuation as well as maintenance had helped to keep the company on its feet in recent times.

Currently, Intercity STC has a fleet of 47 buses on its normal routes but there is uncertainty about the fate of the 557 workers of the company.

The company pays GH¢7,500 weekly to JA Plantpool which recently supplied it with buses. 

The company was forced to make weekly payment under the agreement because it failed to honour its purchasing agreement with JA Plantpool, which seized 10 of its buses following a court order.

SSNIT’s decision to discontinue its support to Intercity STC would adversely affect Ghana’s transport sector.

“We are no more interested in STC. The agreement that established the shares said if we want to offload, the first option should go to Government of Ghana. 

And since we are no more interested, we’ve written to government that we are no more interested so we want to offload our shares. So if it is interested, we wouldn’t mind repaying the money by installment. We are awaiting its response,” Corporate Affairs Director of SSNIT, Eva Amegashie, told an Accra-based radio station recently.

While some experts believe public-private partnership could help rescue Intercity STC, others are of the opinion that if the government decides to put the company on sale, it should solely be private.

The Minister of Transportation, Collins Dauda recently put the final nail in the coffin of Intercity STC when he said that he would recommend to the government to stop running the company.

“One thing that must be very clear is that in making my recommendation to Cabinet, I’ll not recommend to government that it should continue to run STC. 

I’ll certainly not. I’ll ask for private sector participation in the management of STC because several companies run transport businesses in Ghana...and they are doing very well. So one wonders why that of government is not performing,” Mr Dauda said.

“Anything owned by government lacks supervision and in doing business, if your ability to supervise is not good enough you better don’t venture. If you find that the private sector is better placed to do it, get the private sector to do it for you. 

 
“This ministry has a history. We used to have Ghana Airways, where is it? We used to have Black Star Line, where is it? STC is the next on line. Railways is gone. And you know the attitude of Ghanaians towards state-owned businesses.”

Insurance Penetration Low

Rev. Dr. Fred Deegbe (Left) with George Kojo Addison, Managing Director of Star Life Assurance Company Limited at the forum.

Posted on: www.dailyguideghana.com

By William Yaw Owusu


Accra, Thursday July 19, 2012.


 Insurance penetration in the country continues to record low rates due to lack of appreciation for the product and service.


According to George Kojo Addison, Managing Director of Star Life Assurance Company Limited, insurance penetration is less than one per cent.


Opening the first ever welfare seminar targeted at churches and the Christian community to get them to strengthen their welfare schemes through insurance, Mr. Addison said the insurance companies were capable of mobilizing capital for economic development internally.


“We always contract loans and seek donor support outside the country but these long term funds are available here in the country. We have to strengthen our insurance system to be able to mobilize these funds and not always depend on external funds.”


Themed “Financial Management in the Kingdom of God,” he said apart from using insurance for economic development the churches could use insurance schemes to improve the welfare of their members.


 “As inspired by our vision to be pacesetters in creating wealth and a fulfilling life through personal relationships with our partners, we would like to reach out to the Christian community in our bid to help find lasting solution to the old age problem of welfare management in our churches.”


Mr. Addison said the company was committed to forging a lasting and beneficial partnership between the insurance industry and the churches to build what he called “sustainable and reliable” welfare schemes for the churches.


Rev. Dr. Fred Deegbe, General Secretary of the Christian Council speaking on the topic ‘The role of leadership in financial management in the Kingdom of God,’ noted that the time has come for churches to strengthen their financial management and bring positive dividends to members.



He said the churches have no excuse not to embark on investments that would be beneficial to their members.

Woyome Strikes Again!

Alfred Abgesi Woyome  

By William Yaw Owusu

 Accra, Thursday July 19, 2012.

 Barely 24 hours after an Accra High Court rejected his writ to join other respondents in his contempt suit, David Annan, a member of the NDC legal team filed fresh suit citing some political and media personalities for commenting on the never-ending Woyome judgement debt saga.

 Woyome through his lawyer is asking the court to commit the respondents to contempt in a further attempt to gag people from speaking about the alleged fraudulent payments made to him.

The current suit filed on July 13, 2012 is citing leading members of the Alliance for Accountable Governance (AFAG) including Abu Ramadan and Henry Asante of People’s National Convention (PNC), Bright Acheampong, Davis Opoku of the NPP and Daniel Nii Kwartei Titus-Glover of the Young Patriots.

The media personalities cited are Multimedia Group Limited and its proprietor, Kwesi Twum, Kojo Oppong Nkrumah of Joy FM and Abdul Malik Kweku Baako Managing Editor of the News Crusading Guide.

 David Annan who is also a member of the legal team defending Alfred Agbesi Woyome, self styled NDC financier who is on trial over GH¢51.2 million judgement debt wants the court to commit the defendants for contempt for “the deliberate interference in the administration of justice.”

In his 51-point affidavit, Mr. Annan avers on behalf of Woyome that he is the additional counsel for Woyome and Chris Akummey, another member of the NDC legal team in the suits of “The Attorney-General versus Alfred Agbesi Woyome” and “Chris Achmann Akummey versus Mr. J.A. Kufuor and two others.”

According to Woyome; Ramadan, Asante, Acheampong and Opoku “have consistently and persistently been intruding in the court cases, making unsavoury and prejudicial comments.”

He said that “the statements connote that it is wrong to pay judgment debt or to prioritise their payment and therefore a government that is paying court mandated debts is wantonly abusing state loans grants and tax payers’ monies.”

He said the AFAG leaders held a news conference on July 10, 2012 and “brazenly and blatantly passed judgement in pending or filed court cases with deliberate or careless abandon and notified the public of their rulings and judgements.”

The applicant said “the clear and open invitation to the general public is that valid binding court judgements findings and orders should be defied and cast aside on the instructions of the respondents because they have decreed the court orders and judgement debts are tainted with corruption.”

In the case of Multimedia, Kwasi Twum and Oppong Nkrumah, the applicant says they published on their website (Joy FM) the statement read at the news conference and also published a police caution statement of Woyome.

Mr. Annan averred on behalf of Woyome that Oppong Nkrumah aided and abetted Kweku Baako by reading aloud extracts of the police caution statement of Woyome and therefore they “actively facilitated the commission of the interference with legal proceedings.”

He said Multimedia and Nkrumah “actively and intentionally” facilitated the commission of the interference with legal proceedings by Baako when he (Baako) allegedly read out the police caution statement even before it was used in the Woyome’s criminal trial.

He says Baako should be committed for publishing and reading aloud the extract of the police caution statement of Woyome. “That not content with this contumacious conduct the 8th respondent flippantly passed comments on the statement of accused he had read.” On Titus-Glover, Woyome says he presented a petition to the Ghana High Commissioner in London, UK titled “Retrieval of unlawful judgement debt paid.”

 “Without any criminal finding against Alfred Woyome of fraud or unprecedented corruption, the 9th respondent made statements in the petition.”

He says that “all respondents have made statement or caused or permitted statements that by their construction meaning, purpose and intent have or are likely to interfere with the course of justice.”

 “By inciting public opinion against a party so as to affect his conduct of his case or the assertion of his rights the respondents have put at risk the accused right to fail trial.”