Tuesday, July 31, 2012

President Mahama has chosen Governor of the Bank of Ghana as as his Vice-President.- IMANI's View

President Mahama has chosen Governor of the Bank of Ghana as as his Vice-President.

This is what IMANI thought about him and still thinks of him.  In 2010,IMANI voted Mr. Kwesi Bekoe Amissah-Arthur, Governor of the Bank of Ghana as the most inspirational public sector leader with the following citation.

"The Governor impressed us with his conduct of the affairs of the Monetary Policy Committee in particular, though there is evidence that other aspects of the Bank’s work, such as banking inspection, have also improved.

  Despite pressure from political forces to go beyond moral suasion in compelling the banks to reduce interest rates, the Governor has been unwavering in going where the evidence leads.

Diplomatically, he has rebuked the government to pay the contractors and stop dithering, since this has an effect on non-performing loans in the system, and by extension lending rates.

  In the words of Friedman, “inflation everywhere is a monetary phenomenon”. What this quip means in this context is that the Governor’s conduct of monetary policy has more than contributed to the era of stable inflation and the stable national currency.

His attitude to his duties has helped stem the loss of investor confidence that marked the early months of 2009. He may be dour, but only in a manner quite becoming of a guy who has his fingers on the nation’s purse strings".

Mr. Kofi Bentil, IMANI's Vice-President says "Amissah-Arthur is fantastic choice, 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. He has what it takes to mend the broken bridges within the ruling party".

We also remember vividly the Governor's invitation to IMANI to discuss the viability of E-zwich payment system which was introduced under the previous government, but for which we thought was not going to make the impact promised.

It was a very respectful and cordial meeting with all his deputies.We do hope that the current Communication and Legal Teams will see significant changes in form and substance in accordance with what is looking like the character of a befitting duo (President Mahama and Vice-President Kwesi Bekoe Amissah-Arthur.) in readiness for electoral battle with Nana Akufo-Addo and Dr. Bawumia of the leading opposition party.

MANI Center for Policy & Education is a Think Tank of considerable local and international repute and significance. We have carved a niche in Ghana’s policy environment for putting out objective, independent analysis and critique on many issues, using tried and tested techniques that apply across different disciplines.

Bui dam needs extra US$168m

The Bui Power Authority says it will require an additional US$168million to ensure successful execution of the Bui Dam project, its Chief Executive Officer Mr. Jabesh Amissah-Arthur has disclosed.

The Bui Hydroelectric Project was initially estimated to cost US$622million. The short-fall of US$168million is arising primarily from the unanticipated effects of the recent global upheavals as well as unforeseen essential works.

The Project, which is collaboration between the government and Sino Hydro -- a Chinese construction company, was funded with a concessional loan of US$263.5million and a buyer’s credit of US$295.5 from the government of China and EXIM Bank respectively with government’s contribution being US$60million.

The Authority is confident of generating its first power in the last quarter of 2012, barring any further adverse or unforeseen circumstances.

Mr. Amissah-Arthur told B&FT in an interview that the Bui Hydroelectrical Project (BHP) is scheduled to be fully completed in mid-2013.

The Bui power project is a 400-megawatt hydroelectric facility that has been under construction since 2007.  It will be the third major dam in the country after the Akosombo and Kpong hydroelectric dams.

Mr. Gabriel Apatu, External Relations Manager of Bui Power Authority, explained that work on the Dam is progressing -- with 85 percent of total work completed as the hydroelectric project enters the final phase of construction.

“Civil works on the main dam is 95 percent complete. The main focus of activities currently is completion of the intake gates to retain a lot of water so as to attain the minimum requirement needed to generate power.”

He explained that 89 percent of civil works for powerhouse units one, two, and three and the erection bay have been completed, with generators yet to be assembled and erected.

“The installation of turbines and other turbo-generator components have commenced in earnest, and the turbine shaft will transfer mechanical energy from the turbine to the generator.

 “Following the impoundment of the Black Volta River between June 8, 2011 and July 20, 2012, the water level had reached 140.57 metres above sea level (masl), but it was less than the minimum of 168 masl required by the reservoir to start power generation.

“The reservoir, according to design reports on hydrology, will need two rainy seasons to attain the minimum level required to start power generation” Mr. Apatu said.

Additionally, finishing works have also resumed on the downstream permanent bridge which is about 90 percent complete.

The bridge, constructed across the Black Volta River, will serve as another link between Brong-Ahafo and Northern Regions, to enhance road transport and to enable communities in the project area to have better market-access to sell their farm produce.

More than 633 transmission towers are to be constructed to aid in the evacuation of power from the Bui Generating Plant: 252 out of the 633 towers have been erected, representing 40 percent of works; and the stringing of the lines is also on-going with 125 of the towers strung, indicating 20 percent completion.

Power produced from the plant will be evacuated from the Bui Switchyard through four 161kv transmission facilities, which will send the power produced from the Bui Generating Station to four GRIDCO sub-stations in Sawla, Techiman, Kintampo and Sunyani.

GH¢175m expected from new mining tax

Government expects to generate additional tax revenue of GH¢175million from the mining sector, following changes to the mining tax regime, Dr. Kwabena Duffuor, Minister of Finance and Economic Planning, has disclosed.

“Corporate tax on mining was increased from 25 percent to 35 percent in the 2012 Budget, and a uniform regime for capital allowance of 20 percent for five years was also announced. These measures are expected to generate additional revenue of GH¢175million.

“In January this year, government established a National Mining Re-Negotiation Committee to critically review the mining sector’s fiscal regime and existing mining agreements with the view to ensuring that the country obtains its fair share of the gains from the mining sector.

“Fees and other charges related to the granting of stability agreements were expected to generate some GH¢525million as revenue to the government,” Dr.  Duffuor said in Accra.

Government in its 2012 budget statement announced that the corporate tax rate for miners is being increased from the current 25% to 35%, while a windfall profit tax of 10% will also be imposed.

The proposals in the 2012 budget include -- in addition to the hikes in corporate and windfall taxes -- the reduction in capital allowance tax from 80% to 20% for a period of five years for all mining companies, as in the case of the oil and gas sector.

The announcement of new mining and mineral taxes was received with mixed reactions; sector operators describing them as too high and having the potential to impede future investments in the sector.

Dr. Toni Aubynn, CEO Ghana Chamber of Mines, told B&FT: “Uncertainties must be looked at carefully. The new reforms could deter the mining companies from making further investments in the sector.”

A study conducted by PricewaterhouseCoopers (PwC) and sponsored by the Ghana Chamber of Mines to assess the industry’s contribution to the economy revealed that the country received US$301million in taxes from nine mining companies which took part in the study.

Of the amount, US$121million consisted of profit-taxes and US$113million of mining-specific taxes including royalties. The figures are a measure of the cash-taxes paid by the mining companies, covering both taxes borne and taxes collected.

The report said the total tax contribution made by the nine companies was 9.6 percent of government’s total tax revenue in 2010.

In 2010, total employment taxes borne and collected by mining companies on behalf of employees averaged US$4,200 for each employee -- with the study noting that this figure is higher than the country’s per capita income of US$1,370.

The Chamber of Mines revealed that total investment inflows into the mining sector increased from US$770million in 2010 to US$780million in 2011, while the total mineral revenue of producing member-companies of the Chamber rose from US$3.7billion in 2010 to US$4.8billion in 2011 -- an increase of 28%.

GRA deepens tax compliance

The Ghana Revenue Authority (GRA) Self Assessment Policy Document aimed at guiding and encouraging voluntary tax compliance has been unveiled.

The policy which forms part of the ongoing tax reforms exercise is aimed at simplifying and modernising the tax system and also enhancing taxpayers’ compliance and reducing cost.

 It will ensure that all taxpayers will be able to assess their tax liabilities and file a return on the self-assessed tax to go on the self-assessment scheme within the next five years.

Mr. George Blankson, Commissioner-General of GRA, said: “There is need for strong a audit unit backed by modern and efficient techniques to boost confidence in the system, and that all these must be backed by financial resources and expertise to deliver on the goal.

“The self-assessment policy will also help to curb the tendency for “unofficial negotiations” between taxpayers and administrators for self-gain.  This policy has been recognised all over the world as the best vehicle for determining and accounting for tax liability.”

Mr. Blankson said both taxpayers and administrations will also be saved from the inconvenience of over-paid taxes and the need for refunds.

“Some of the benefits to be derived from implementation of the policy include voluntary compliance by taxpayers in the modern tax administration, and also savings to the revenue authority from the administrative costs associated with provision assessments,” he said.

Dr. Larbi Siaw, Tax Policy Advisor and Head of Policy Unit at the Ministry of Finance and Economic Planning, explained that the self-assessment -- which requires taxpayers to calculate their tax burden themselves -- will help improve cooperation between taxpayers and the administrators.

Mrs. Perpetual Dafour appealed for support and cooperation of all stakeholders in GRA’s bid to reform and streamline tax administration, and urged them to honor their tax obligations to boost nation’s quest to attain a high level of development.

As part of the reforms in revenue administration, the GRA is linking with the Registrar-General’s Department (RGD) electronically under the e-Gov. project to ensure that GRA has access to the database of the RGD to access the details of registered businesses to provide easy tracking for tax purposes.

In connection with this, new Taxpayer Identification Numbers were issued to registered businesses and individuals.

The Ghana Revenue Authority Act, 2009 (Act 791) received Presidential assent on December 31 2009, and has been passed to establish the Ghana Revenue Authority (GRA).

Its passage will integrate the management of domestic tax and customs divisions and modernise domestic tax and customs operations through the review of processes and procedures.

Wednesday, July 25, 2012

Rubber production to hit 70,000 mt

The country’s rubber production is estimated to reach 52,000 metric tonnes by 2020 and 70,000 metric tonnes by 2030, Mr. Joseph Baidoo-Williams, Head of the Perennial Crops Development Unit at the Ministry of Food and Agriculture (MoFA), has disclosed.

This projection is expected to earn the country nearly US$250million from its export by 2020, boosting the country's foreign-exchange revenue from the crop.

As of 2009, approximately 11,855 hectares of land had been cultivated under outgrower schemes financed by the government. The rubber plant has a productive lifespan of 35 years.

The country has moved from 12,000 hectares of rubber plantations in 1995 to 35,000 hectares, helping to create employment for some 100,000 people.

Rubber production increased from 9,300 metric tonnes in 2000 to 19,134 metric tonnes in 2009, recording an increase of 74 percent over the period.

About 95 percent of the country’s rubber produce is exported to France, Turkey, East Africa and South Korea. Ghana also exports to neighbouring Burkina Faso.

Currently the traditional rubber-growing regions are the Western and Central Regions, but the northern parts are also being explored for their potential to cultivate the crop.

Mr. Baidoo-Williams in an interview with the B&FT said: “The rubber sector is doing fairly well due to the ready market for the raw material, coupled with government's support for the farmers.

 “Government has identified the rubber sector as holding tremendous potential to create jobs and reduce poverty, and as such is giving it the necessary support to enable it contribute to the development of the economy.

“Recent trends in world prices suggest that rubber production when properly nurtured could easily become a major foreign exchange earner for the country.”

He explained that 7.4 million euro has been disbursed to the National Investment Bank (NIB) to finance the cost of development of out-grower plantations, while 757,400 euro has additionally been disbursed to the Agricultural Development Bank (ADB) to maintain and ensure sustainability of the farms.

“The contribution of rubber cultivation to employment-generation is enormous as it currently provides employment for over 37,083 farmers through its Rubber Out-grower Scheme. It has a potential of employing an additional 2,250 tappers for every 9,000 hectares, of which 25 percent will be females.”

He said 10,500 hectares of rubber trees are envisaged to be planted between 2010 and 2014, and this is expected to employ an additional 2,750 farmers.

 “The rubber industry has minimised the rural urban drift, increased income levels of farmers and their relatives, regularised the rainfall pattern, and created employment opportunities.”

Figures at MoFA indicate that in 2006, rubber exported to France was 13,618.36 tonnes, rising to 15,318.16 tonnes in 2007. It however fell to 14,132.12 tonnes in 2008 due to the cutting down of the old rubber trees and their replanting by the Ghana Rubber Estates Limited (GREL), the main industrial operator in the rubber industry.

Government has been sourcing financing to support the industry. In August 2006 it secured a loan from the Agence Francaise de Development (AFD), a French development agency, and Kreditanstalt fur Wiederaufbau (KfW), a German development bank.

AFD provided 23 million euros while KfW provided 6 million euros to support the out-grower project in the country. The money isbeing used to finance the third phase of a 7,000-hectare rubber plantation project. It is also being used to offer credit lines to about 1,800 farmers over a five-year period.

The first phase of this project started in 1995 and ended in 1999 after 400 farmers planted rubber trees on more than 1,200 hectares of land. The second phase was for 500 farmers who planted over 2,800 hectares of the crop.

Part of the funds will be used for the construction of 210 kilometres of farm roads and 77 kilometres of feeder roads to improve access to project areas and ensure easy access to production and marketing areas.

Gov’t to enact PPP law

A Public-Private Partnership (PPP) infrastructural development law is currently being drafted and is expected to be passed by Parliament by the end of the year.

The law will support the implementation of the national PPP policy that was launched by the government last year. It will also give confidence to both local and international investors who would want to participate in PPPs with the government.

Under the law, Parliament shall be the final approving authority for PPP projects -- subject to the provisions of the policy to ensure the protection of the public interest.

The National Development Planning Commission (NDPC) has been mandated to prepare a national infrastructure plan for Ghana, and every PPP project initiated by contracting authorities shall emanate from this plan.

The Attorney-General’s Department, with the assistance and advice of the Legal Division of the Ministry of Finance and Economic Planning (MoFEP), shall ensure the conformity of all project agreements with Ghanaian law.

The country’s development partners, including the World Bank and DFID, will support a project to move the PPP process forward with a total of US$30 million over a five-year period. This is to assist in the improvement of legislative, institutional, financial, fiduciary and technical frameworks for PPPs and develop bankable projects.  

The focus of the project is to build capacity in the various government agencies and assist them in developing and delivering PPP projects in the various sectors, making them bankable and sustainable.

The country is presently faced with a huge infrastructure gap averaging US$1.5 billion per annum for the next decade. This is required to bring the nation’s infrastructure to the recommended status of a middle-income country.

“The constraint of available resources provides the government with the ability to look for other innovative means of financing and procuring these projects and thereby expediting the delivery of the required infrastructure,” Mr. Paul Victor Obeng, Chairman of the National Development Planning Commission (NDPC), told journalists at a workshop on PPPs in Accra.

Mr. Obeng said over the years, governments have been unable to provide adequate infrastructure due to lack of resources, technology and entrepreneurship.

“The PPP policy is expected to encourage and facilitate investment by the private sector by creating an enabling environment for PPPs -- where value for money could be clearly demonstrated -- as well as to increase availability of public infrastructure and services and improve service quality and efficiency of projects. It is also to encourage and promote indigenous Ghanaian private sector participation in the delivery of public infrastructure and services.”

He was confident that there would be continuity and commitment to roll-out PPP infrastructure projects for socio-economic development.

Mrs. Magdalene Apenteng, Director of the Public Investment Division of MOFEP, said: “PPPs have become one of the important tools to facilitate the implementation of the nation’s critical investment programmes.

“The adoption of a PPP framework therefore reflects the government’s desire to improve the quality, cost-effectiveness and timely provision of public infrastructure and services in the country. 

“The government is mindful that PPPs are not a panacea for all public infrastructure investment needs and therefore the PPP framework should be viewed as a complement to, and not a substitute for, the government’s continued commitment to open up key services markets to competition.

“PPPs should only be considered where they can provide greater value for money than other fully-private or fully-public service delivery options.”

She added that the private provision of public infrastructure and services has the potential to offer enhanced value for money and enables the government to use the private sector’s delivery and project completion expertise and capabilities for the benefit of the people. 

It also helps the government better understand the whole life-cycle cost of investments and enables more rigorous project assessment. 

A PPP is a contractual arrangement between a public entity and a private sector party with clear agreement on shared objectives for the provision of public infrastructure and services traditionally provided by the public sector.

It is to provide a means of leveraging public resources with private sector resources and expertise in order to close the infrastructure gap and deliver efficient public infrastructure and services.

Ghana’s first attempt at PPPs was in 2004. However, some inadequacies, including the absence of a policy framework, led to difficulties in carrying the idea forward.

After a comprehensive diagnostic study in 2009-2010, the national PPP policy was launched in 2011 to create and foster an enabling environment for PPPs.

Minerals Development Fund law to boost infrastructure

The Minerals Development Fund Bill is expected to be passed by close of this year. 

When passed, it will allow for the establishment of a mining communities development scheme where proceeds from royalty payments and development funds of mining companies, as well as other relevant sources, would be paid into.

Currently, the drafted bill has gone through a number of stakeholder’s consultations and final inputs have been done. Parliament is yet to consider it for possible passage into law. 

Professor Bruce Banoeg-Yakubo, Chief Director at the Ministry of Mines, Lands and Natural Resources, said: “The funds mobilised from the various sources will be used by local mining community development committees exclusively for developing infrastructure projects in mining communities. 

“The bill also prescribed guidelines for rolling-out corporate social responsibility projects, set health and safety standards, tackle environmental issues and resolve issues relating to blasting activities of mining companies, among others.

“The government will also boost infrastructure such as roads and railway lines to help the industry contribute adequately to the country’s development,” Prof. Banoeg-Yakubo explained.

Chief Executive Officer of Minerals Commission, Ben Aryee, explained that the Fund has been in place since the 1980s and administratively approved by government. 

He explained that part of the royalty goes back to the community through the administrator of Stool Lands to support the assemblies, the chiefs and traditional council toward development of those local communities. 

“But the government wants a proper legal framework to govern the royalties in the country. Part of the royalties will be used to support some special projects in the mining sector, but a large part will be going to the community for development of those areas.”

Currently, royalties paid by the mining companies hover around 9%.  About 4.95% is meant for the Metropolitan, Municipal and District Assemblies (MMDAs); 2.25% for stool lands while 1.80% is for the Traditional Council. 

Mostly, the beneficiary communities are Wassa West, Adansi West, Bibiani Ahwianso Bekwai, Asutifi and Mpohor Wassa East.

Minerals Commission charged to curb ‘galamsey’ menace

The Minerals Commission has been charged to formulate and roll-out a proactive, aggressive communications strategy that will actively engage stakeholders to forge an integrated approach in the fight against illegal small-scale mining menace in the country’s mining communities.

“There’s an urgent need to build the requisite partnership to arrest the growing incidence of illegal small-scale mining activities in the country’s mining sector.

“In spite of the mounting outcry against this menace, stakeholders -- particularly security agencies and traditional leaders -- have remained apathetic and in some instances even continued to connive with illegal operators to degrade the environment with impunity,” said the Minister of Lands and Natural Resources Mr. Mike Hammah at a forum in Accra. 

He added: “Since local communities and the districts assemblies are in direct contact with these illegal operators, they could be conscientised through this strategy to play the role of ‘change agents’ in the campaign against galamsey”

Mr. Hammah emphasised an urgent need to review the nation’s legislation which gives discretionary powers to return equipment impounded from galamsey operators; adding that such equipment should be sold and the proceeds used to restore the environment degraded by illegal miners.

“Such measures would constitute a major deterrent and make ‘galamsey’ a high-risk venture.”

The country’s laws stipulate that foreign companies are only allowed to work on large, open-pit mining operations.

But there is evidence that Chinese entrepreneurs are also illegally controlling small-scale operations behind the scenes, typically through a local intermediary.

The influx of these Chinese immigrants into the country’s small-scale mining sector, reserved for Ghanaians, has now become a national crisis. Approximately 30,000 Chinese nationals now live and work in Ghana, according to official figures.

Dr. Benjamin Aryee, Chief Executive Officer of the Minerals Commission, told the Business & Financial Times (B&FT): “The situation has necessitated the establishment of a national task-force -- comprising National Security, Ghana Immigration Service, Minerals Commission, Chiefs, and the Municipal and District Chief Executives of the mining communities -- which has been tasked to monitor what is happening and try to stem it as quickly as possible.

“We are working with the security agencies, but beyond them we are as well collaborating with the local authorities and the Assemblies, because they are the key stakeholders as the problem has now become a national concern.”

Illegal small-scale mining activities have always resulted in the encroachment on large tracts of community land, depriving poor and marginalised communities of their land surface rights. This has deprived many communities of their sources of livelihood. 

The appropriation of local communities’ lands for mining has often engendered social upheavals and adversely impacted on the routine livelihood activities of those communities. 

Such social upheavals are commonplace in communities affected by mining projects in the country. The growing incidence of conflicts between mining communities and their chiefs on one hand, and the mining companies on the other, echoes the growing concerns about mining sector effects.