Cocobod on course to attain fully-certified cocoa

Ghana is on course to achieve the 2015 cocoa production certification standards stipulated by the World Cocoa Foundation, Noah Amenyah, Public Relations Manager of Cocobod, has told B&FT.

“Certification issues will not be a problem for the country’s cocoa sector, by the stipulated year, all our cocoa will be certified,” he said.

Cocoa buyers and consumers of chocolate around the world are increasingly demanding traceable cocoa that is certified as grown in a sustainable manner. As a result, a lot of cocoa- producing countries are grabbing the opportunities therein.

Cocoa certification demands that a farmer’s social, environmental and economic activities fall in line with best labour practices, in exchange for receiving a premium price on the produce.
The standards will also push farmers to develop better drying and fermentation practices.

Mr. Amenyah disclosed that a number of organisations, including Fairtrade and the German Development Co-operation (GTZ) are working with Cocobod to effectively train farmers to meet the certification standards.  

“The Cocoa Livelihoods Programme, for example, is helping to bring about new technologies to help reduce the cost of farmer training and improve productivity and yields.”

The Kuapa Kokoo Farmers’ Union has been urging Cocobod to take a critical look at the cocoa certification directives as a key factor in modern cocoa production.

This year, Divine Chocolate Limited is contributing US$178,000 in Fairtrade premiums through Fairtrade cocoa purchased from Kuapa Kokoo, which owns a part of the UK-based chocolate maker.

Managing Director of Divine Chocolate, Sophi Tranchell, said: “The certification is very useful for consumers in places like England and America to know that the beans  have been checked.”

Cocoa certification consultant, Rita Owusu Amankwah, said the country stands to benefit from the cocoa certification process, as the global chocolate and cocoa industry rapidly moves towards certified and sustainable cocoa marketing.

She observed however that challenges, like increased labour cost and untimely supply of farm inputs, could be discouraging for farmers who want to join certification programmes.

Nevertheless, she said cocoa farmers would be better off in the long run, as findings from a research conducted in cocoa-growing communities in the Ashanti and Western regions have shown.

“The certified farmers that I talked to, within a period of one and a half years, most of them have increased their yield by 10-55% after adopting good agricultural practices, integrated pest and crop management, and adhering to other environmentally-friendly standards,” she revealed.

Bill Guyton, President of the World Cocoa Foundation, said his organisation is empowering communities by training farmers, enhancing education, investing in families, and improving community health and welfare.

 “We were formed in 2000 to help improve cocoa sustainability in all three cocoa regions of the world; but because of the importance of West Africa a lot of our programmes focus on that region. We’re currently working on three major regional programmes.

“The first one is called the Cocoa Livelihoods Programme, which is funded by the Bill and Melinda Gates Foundation and 16 of our company members as well as the German Development Agency.
 
“The programme aims to reach over 200,000 cocoa farmers over the next few years with the intent of doubling incomes. So it’s a very ambitious programme but it’s also making some very good progress,” he said.

Nigeria, Côte d’Ivorie, Ghana and Cameroon together produce 70 percent of the world’s cocoa, generating about $13 billion annually, while the end-product of cocoa, chocolate, has a turnover of US$105 billion.

Small-scale miners want simpler licensing

Small-scale miners want government to simplify licensing procedures for mineral concessions to achieve a better compliance regime – with timelines for issuance of licences to facilitate the process.

The miners argued that the Minerals Commission and the Environmental Protection Agency (EPA) need to expedite the decentralisation of issuance of licences.

Currently, it takes 90 days – with a 21-day statutory requirement for publication – before the issuance of such a licence, while the licences are issued by the sector minister.

“A further simplification of the licensing procedures, with timelines for issuance of licences, would create a better compliance regime,” said Collins Osei Kusi, President of the Ghana National Association of Small-Scale Miners, at a policy dialogue with stakeholders in Accra.

The stakeholders included Environmental Protection Agency, Minerals Commission, Office of the Stool Lands Administrator, and the Water Resources Commission.

The dialogue was organised by the Ghana Chamber of Mines in partnership with the Business Sector Advocacy Challenge Fund (BUSAC Fund). It was aimed at ensuring compliance and expanding revenue generation from the country’s mining industry through encouraging best practices by small-scale mining operators.

The policy dialogue discussed how to finalise the national policy on mining, which is currently at the cabinet level, and highlighted small-scale mining as a serious national issue.

Participants discussed a 13-point action plan that has been drafted to help address some of the challenges associated with small-scale mining in the country.

The work plan seeks to back speedy promulgation of the National Mining Policy, decentralisation of the licencing of small-scale miners, training of illegal miners in a bid to regularise their activities, and registering of small-scale miners among others.

Ambrose Yenneh, Executive Director of International Centre for Advocacy and Social Research, who chaired the function, said it was critical to discourage illegal mining.

Participants proposed that an online application for licences be worked out by the Minerals Commission to help reduce the time required for issuance of licences.

They stressed the importance of maintaining a comprehensive database of small-scale mining operational areas for proper monitoring and evaluation of the sector.

They also suggested the development of a community action plan to protect the interest of both small- and large-scale mines in the various mining communities.

Is windfall tax on the back burner?

The election of John Dramani Mahama as President brings renewed concern about a windfall tax on miners.


Government in its 2012 budget statement announced that the corporate tax rate for miners is being increased from the 25percent to 35percent, while a windfall profit tax of 10 percent will also be imposed.  It also planned a uniform regime for capital allowance of 20 percent for five years of mining.

The windfall tax was deferred, while the other two proposals were passed.

Clarus Securities analyst Nana Sangmuah has suggested that these discussions may return to the forefront as the controversy surrounding the thresholds for applying the windfall tax has not been clarified.

“A reintroduction of this bill in parliament could negatively impact the outlook on miners and developers with exposure to the country,” Mr. Sangmuah said.

He highlighted Golden Star Resources Ltd. and Perseus Mining Ltd. as the two producers with full exposure to the country.

The analyst observed that Newmont Mining Corp., Kinross Gold Corp., Gold Fields Ltd. and AngloGold Ashanti are producers with partial exposure, while Keegan Resources Inc., PMI Gold Corp. and Azumah Resources Ltd. are also developers with exposure to the sector.

Reactions have so far been mixed -- with mining firms fretting over the impact the measures would have on their earnings and investments even as groups such as the Ghana Mineworkers’ Union celebrate the changes.

In the wake of the announcement of the new taxes, Dr. Toni Aubynn, Chief Executive of the Ghana Chamber of Mines, worried that the new reforms could deter mining companies from making further investments in the sector.

“Uncertainties must be looked at carefully. The country’s new tax moves have brought forth warnings and cautions about the impact these measures could have, such as making the nation unattractive for future mining efforts and scaring off investors,” he said.

The Chamber of Mines has warned that the new tax measures need to be implemented ‘scientifically’ because high gold prices do not necessarily mean mining companies are making more money.

According to the Chamber, some gold miners are currently producing at US$1,200/oz.
At that rate, their gold mining costs appear to be far above the average for the continent.

Ernst & Young, the global accounting and consulting firm, reported that for 2011-2012 the number-one  risk for miners is resource nationalisation (number four in 2010), which involves countries attempting to get more money from their minerals.

The report said resource nationalisation takes many forms, including increased royalties, taxes and mandatory participation whereby governments mandate the involvement of certain stakeholders.

The mining and metals sector rebounded quickly from the global financial crisis, making it an early target to restore treasury conditions, the report said.


“Government officials have sought to assuage miner’s concerns about the new taxes. Seth Terkper, Deputy Finance Minister, in a recent engagement with representatives of mining firms, said: “The changes in the taxes are part of a rationalisation plan.”

Later on, other natural resource sectors will be brought on board. So, it’s not about targetting mining companies; and they are not meant to be anti-investment.

He assured that the tax initiatives are not intended to be punitive nor a deliberate attempt to cripple the mining sector.

The introduction of the new tax measures, according to him, is intended to create an enabling environment for the country to derive maximum economic and social benefits from the industry. 

“As partners in development, the time has come for the mining sector to contribute its due share to the development of the country,” he said.

Civil society organisation commended government for the bold move, in particular for measures to rationalise fiscal operations in the natural resource sector. 

Others, especially the mining community that has been hard hit by the proposals, are unhappy and have called on government to take a second look at them.

But the Private Enterprise Foundation (PEF), private sector umbrella-body, does not think the issue is necessarily so.

PEF President, Asare Akuffo, opined that the corporate tax hike is in order since government and the country should benefit more from the mining sector.

He however cautioned government to reconsider the proposed windfall tax on the mining companies.

“Companies thrive on profit; the reality in business however is that there are periods of losses and the savings made in good times are what keep the companies in operation,” 

Mr. Akuffo said, adding that the windfall tax may be a disincentive for future investments in Ghana’s mining sector. 

Mining sector operators proposed an intensive dialogue with government for possible and future negations regarding mining tax reforms.

“It appears it was difficult for government to dialogue with us, the mining operators, concerning the introduction of the new mining tax. We are ready to dialogue with government to ensure that the country maximises revenue from mining rather than deterring investors,” said some mining operators.

Mining revenues already substantial
 

The Ghana Chamber of Mines figures have revealed that total investment inflows into the country’s mining sector increased from US$770million in 2010 to US$780million in 2011.

The total mineral revenue of producing-member companies of the Chamber also rose from US$3.7billion in 2010 to US$4.8billion in 2011, representing an increase of 28percent -- primarily on account of the increased price of gold and manganese in the period.

The proportion of mineral revenue returned to the country increased appreciably from 68 percent in 2010 to 75 percent in 2011.  

During 2012, the industry contributed about 40percent of the economy’s total mechanised exports.

The sector accounted for approximately GH¢1billion of government revenue, representing 27.61percent of total Ghana Revenue Authority (GRA) collections in 2011. 

Mining operators continue to meet their company-tax obligations which cover corporate tax, withholding tax and levies.

This was 38.27percent of the total company tax that GRA collected in 2011. On this account, the sector maintained its position as the highest contributor of company tax during the year. 

Mine workers call for Prestea/ Tarkwa township revival

The General -Secretary of the Ghana Mine Workers Union (GMWU), Mr. Prince William Ankrah has proposed to government to revive the ailing mining townships of Prestea and Tarkwa all in the Western Region.

 
“The two mining areas used to be the cash cow of the nation and the potential still existed. There is the need to construct a modern railway system to facilitate mining activities and rejuvenate economic activities in the mining communities.

“This important project can no longer be shortchanged if the perceived future of the sector is to realize its fullest potential,” Mr Ankrah said this at the Union’s national executive council meeting in Accra to review activities and deliberate on the future of the mine industry.

He indicated that the Union is willing to partner the Chamber of Mines, government and other internal actors to develop a comprehensive framework in the area of sustainable livelihood in the mining economies before the industry’s economic fortunes change due to ore reserve depletion.

Providing some way forward for the growing mining skills shortage, Mr Ankrah said the situation, which had sparked an unprecedented demand for key mining professionals like geologists, metallurgists, mining engineers, rock drillers, artisanal mining skills and mine planning engineers, needed an urgent intervention.

He added that such intervention would help to “avoid a situation where we can boast of economically available deposits but cannot find the required skills internally to turn the ore into cash.”

In terms of mineworkers’ welfare, he indicated that, over the last six years the GMWU had insisted on double digit pay rise in addition to gains made due to its US dollar indexed salaries. “GMWU is further committed to engaging the industry’s leaders in its quest to attain excellence in operations.”

Although mining experts believe the International Labour Oragnisation (ILO) Convention 176 remains the surest safeguard for mining safety, Ghana has still not ratify it since 1995 of its adoption.

He explained that the Union had for the past 16 years had been advocating for governments to ratify the International Labour Oragnisation (ILO) Convention.

 “It is shameful that our governments since 1996 have reneged on their promises and pledges to ratify the ILO Convention (Safety in the Mines Conventions) and its recommendations.”

Mr Ankrah, added: “GMWU members have on many platforms espoused the relevance of the International Labour Organization (ILO) Convention 176 to our Ghanaian situation.”

“No amount of improvisation in whatever form by our governments could negate the relevance of the ILO Convention on safety in the mines.

“Indeed the intransigent posture of our governments on the ratification process is a clear manifestation of their preparedness to mortgage the health and safety of the mineworkers”.

On the issue of the introduction of the Windfall Tax in the 2012 budget, Mr Ankrah said the Union was closely monitoring all the issues surrounding its implementation.

This, he said, was because the substantial revenue to be generated by the state could be used to finance key developmental interventions in the resourced-rich communities.

Inflation gains slightly in Nov.

Headline inflation rose slightly from 9.2 percent in October to 9.3 percent in November, the Ghana Statistical Service (GSS) has announced.

 

The marginal rise, which confirmed analysts’ predictions, was driven generally by both the food and non-food sectors.

Government Statistician, Dr. Philomena Nyarko, speaking at a media conference in Accra, explained: “The food and non-alcoholic beverages group recorded an average year-on-year inflation rate of 3.9 percent, down from the 4.1 percent recorded in October 2012.

“Eight subgroups of the food and non-alcoholic beverages group recorded inflation rates above the group’s average inflation rate of 3.9 percent.”

Dr. Nyarko said non-food inflation recorded a rate of 12.4 percent, with transport recording the highest rate of 20.8 percent followed by alcoholic beverages, tobacco and narcotics with 16.5 percent.

Six sub-groups recorded year-on-year inflation rates above the group’s average rate. 

At the regional level, the year-on-year inflation rate ranged from 6.3 percent in the Upper East and Upper West regions to 11.2 percent in the Greater Accra region.

Four regions, including Greater Accra, Central, Northern and Ashanti recorded inflation rates above the national average of 9.3 percent.

The Bank of Ghana (BoG) has said it expects the path of disinflation to continue into 2013 – barring risks associated with the recovery of global demand and the extent to which crude oil prices might rebound.

The Bank held its benchmark interest rate last month at 15%, citing easing inflation pressures and the relative stability of the cedi. 

Ghana’s economy is projected by the International Monetary Fund (IMF) to grow at 8.2% this year, and 7.8% in 2013.

Mahama faces high hopes

Jobs, infrastructure, quality education and healthcare are foremost among people’s expectations of President John Dramani Mahama and the next government that he will lead after his victory at last Friday’s polls. 

 

President Mahama has promised to grow the economy by at least 8% annually, and increase the per capita income, currently in the region of US$1,500, to US$2,300 by 2016. But he faces calls to use his government’s second-term mandate to translate the gleaming growth numbers into tangible development outcomes.

“I want to see jobs and good healthcare; these are the things that facilitate development,” Joseph Mills Lamptey, a student, told B&FT in a survey to gauge voters’ expectations of the President’s second term.

The President told voters during his campaign that job-creation will be a priority of his administration, which, in its first term, has expanded real GDP at more than 8% per annum and halved inflation from 18% to 9%.

The government has also largely maintained a stable economy – with inflation trapped within a narrow 8-10% range for 30 consecutive months – and continued with financial sector reforms targeted to improve access to capital by households and businesses.  

A blot on this record of stability, however, is the sharp depreciation of the cedi witnessed this year, which caused the Bank of Ghana (BoG) to raise interest rates to cool the growth in credit and import demand that was undermining the strength of the currency.

In its 2012 election manifesto, the government has said it will create a GH¢10 million Jobs and Enterprise Development Fund to support youth entrepreneurial ventures and increase job-creation.

The manifesto has also assured of thousands of jobs to be created in new industries such as petrochemicals, fertilizer, and steel manufacturing – which will be built using the oil and gas resources that are currently being developed.

Oil revenues received by the government from the start of production to September 2012 total US$784 million, and though the funds have been invested in accordance with rules established in the petroleum revenue management legislation, the President has more to do to convince many that Ghana’s oil wealth is impacting their lives in positive ways.

“I don’t see any concrete thing that has been done with the oil money,” said Eugene Kwasi Gyekye a public relations practitioner, who added that he expects the next government to use oil receipts to fund “creative and innovative” social programmes to improve people’s lives.

Education, which was at the centre of a heated political debate in the run-up to the December 7 elections, continues to occupy peoples’ minds.

“I expect that since education is the backbone of every country, the government should improve facilities in the schools and provide quality education as it has promised,” said Eugene. 

President Mahama has emphasised “quality” over “free” education, and said he will bolster school infrastructure and boost teacher-training institutions. 

An important dilemma he faces in 2013 is whether to retain the costly subsidies on petroleum and utilities or to scale them back in order to free the resources to be used in critical sectors such as education and health.

The cost of the subsidies in 2012 – GH¢697.7 million according to the supplementary budget approved by Parliament in July – is more than the government’s total income from oil in the first three quarters of the year. 

In the health sector, the President will have to close a wide infrastructure deficit and address weaknesses in the operation of the National Health Insurance Scheme (NHIS) – which a World Bank report on the financing of health in Ghana, published in January 2012, highlighted.

The government had promised to introduce a “one-time” health insurance premium for all users during its first term, but it seems to have backtracked amid experts’ warnings that the scheme could be jeopardised by such a policy.

But even as the President will confront serious challenges in his next government, he will benefit from the inflow of substantial new revenues from the oil sector as production at the Jubilee field picks up and new oil wells come on stream. 

From 2013, the economy will begin to realise the benefits of the major infrastructural investments that have been started with Chinese-backed loans secured on future oil revenues. 

The electricity-sector outlook is particularly seen as very encouraging due to the expected completion of the Bui hydro-electric dam, which has a 400-megawatt generating capacity, and the development of natural gas from the Jubilee field for power generation.

Other prospects lie in the development of renewables to augment the traditional energy sources, with international energy companies turning their attention to Ghana following the enactment of a renewable energy law in 2011. 

Mere Power Nzema Ltd., a UK-based firm, announced plans last week to build a 155-megawatt solar power plant valued at US$400 million in the Nzema area. The renewable energy law expects renewables to constitute 10% of energy generation by 2020 and includes provisions to guarantee market and prices for investors.

“I want to see all this translate into jobs and money in our pockets,” said Dennis Opare, a taxi driver. “With such good things coming in future, I want to see an improvement in everything.”

Source: B&FT