Tuesday, July 30, 2013

Chamber of Mines lauds President Mahama

The Ghana Chamber of Mines has commended President John Mahama for devising measures to fight the illegal mining menace in the country’s small-scale mining sector.

The President this year set up an inter-ministerial task-force headed by the Lands and Natural Resources Minister to investigate and end illegal mining activities which have attracted Chinese nationals in recent times.

Dr. Toni Aubynn, CEO of the Chamber of Mines speaking in an interview emphasised the need to resource small-scale miners to enable them to carry out mining in a coordinated and regulated manner.

“Laws governing businesses like small-scale mining must be respected, and I believe that is the import of Government’s action.”

He indicated that small-scale mining is the preserve of Ghanaians and the activities of the inter-ministerial task force is a good first step.

Dr. Aubynn encouraged Government to make capital available to the Ghanaian small-scale miners to prevent them from bringing in foreigners to mine on their behalf.

“It is important that capital is made available. I know Government made an effort some time ago to make available some capital to the small-scale miners to enhance their operations.

“I have proposed to the sector Minister to look at the rural banks who work closely with these artisanal miners to find ways of developing policies and have some arrangements that will enable them to raise capital for their business,” he said.

Black-pod to wipes out 25% of cocoa output

Ghana is expected to loses about 25 percent of its annual cocoa output to the black pod disease, Chief Executive Officer of the Ghana Cocoa Board (Cocobod) Anthony Fofie has said.

Approximately 212,500 metric tonnes of cocoa beans, representing 25 percent of the 850,000 metric tonnes produced in 2012, was lost to the disease.

This corresponds to an annual revenue loss of about US$700million, given average earnings of US$2.8billion from cocoa and related exports annually. 

 “The black-pod disease is costing us and the farmers a lot; it can easily wipe out the entire crop, and that is a worry to us,” Mr. Fofie said.

To halt the crop losses, its impact on farmer incomes and the resultant revenue losses suffered by the country, Cocobod last month signed a public-private partnership (PPP) agreement with the Netherlands Embassy and three other institutions to help fight the black-pod disease.

The initiative, which has the Ghana Cocoa Growing Research Association Limited, Mars Incorporated and Mondelez International as partners, will make available over US$400million toward the production of new varieties of cocoa that can withstand the disease.

According to a press release issued after the signing of the agreement between the partnership-institutions in Accra, the current programme -- which is expected to run for the next four years -- is a continuation of the Mabang Megakarya Selection Programme (MMSP) that was launched in 2005 as a joint initiative in cocoa breeding.

An implementation board chaired by the Deputy CEO of Cocobod in charge of Quality Control, Dr. Yam Adu-Ampomah, was also inaugurated to see to the disbursement and continuation of the programme.

The new initiative, which has Cocobod as the coordinator, is expected to help curtail the spread of the black-pod disease, thereby minimising its impact on farmers’ and national revenue.

The Megakarya form of the disease is dominant in cocoa-producing communities in parts of the Ashanti and Brong Ahafo Regions.

Cocoa has for decades remained a strong pillar of Ghana’s economy, contributing substantial foreign exchange revenues to Government while serving as a source of livelihood to more than 800,000 farmers.

These notwithstanding, challenges relating to pests and disease, ageing trees and harsh climatic conditions abound and continue to threaten the annual production targets of the country.

But Cocobod says it is confident it will achieve its 2012-2013 crop-year harvest target of 800,000 metric tonnes, though the rains delayed in the early part of the season.

Cocoa output peaked at one million metric tonnes in the 2010/2011 season, but declined to 850,000 metric tonnes in the 2011/2012 season.

GRA stepping up rent tax collection

The Ghana Revenue Authority (GRA) is stepping up the collection of tax on rent income from owners of residential and commercial properties following the re-launch of the tax in Accra.
Though it has been in the statute books since 1973, compliance with the tax, which is charged at 8% of gross rent income, has not been encouraging and the GRA said it will increase efforts to collect the tax, especially since the real estate sector is witnessing a boom.

“It has become necessary, after assessing the performance of the tax on rent income as a percentage of total GRA collections, for us to re-strategise to ensure that the tax takes a respectable position among the tax types,” said George Blankson, GRA’s Commissioner-General.

“I believe strongly that there is a boom in the real estate sector. Unfortunately, the tax revenue from this sector does not correspond to the boom we are experiencing.”

Available data show that the contribution of rent income tax to total direct tax collections was 0.42% in 2011, representing GH¢15.92 million out of GH¢3.75 billion in direct taxes. In 2012, the tax contributed 0.32%, representing GH¢17.48 million out of GH¢5.4 billion. As a share of total GRA collections, rent income tax registered 0.14% in 2012.

“We are very much determined and committed to enhancing the contribution of the tax to total GRA collection in 2013 and beyond,” said Mr. Blankson, adding that the Authority will ensure full implementation of the renewed directive by collaborating with public bodies and private organisations to enable it gain access to relevant information for assessment purposes.

He said the GRA will engage with institutions such as the Electricity Company of Ghana, Ghana Water Company, the Lands Commission, Ghana Real Estate Developers Association, Ghana Institution of Architects and the Ghana Institute of Engineers who deal with property owners. 

Speaking at the event, Minister of Finance Seth Terkper said the re-launch of the tax is timely and has come at a period when the nation needs to mobilise “every available tax revenue” to cover rising expenditure.
He said the 2013 budget is focused on revenue generation through expanding the tax-base and improving the efficiency of tax administration.
“Any new initiative in this regard is therefore welcome. For me, the re-launch and the emphasis that is being given to the tax on rent income is an indication of the preparedness of GRA to broaden the tax-base. I charge the GRA to come up with many new ideas in this direction,” he said.

“Even though the housing sector is one area where the tax potential is huge, we have not derived much revenue from this sector for various reasons. Therefore any fresh initiative which aims at breaking the barriers and increasing compliance is very much welcome and appreciated,” he added.

The rent income tax law, LI 1698, also obliges institutions and corporate bodies to withhold the tax whenever paying rent to property owners.

The GRA said it is targetting companies, financial institutions, partnerships, educational establishments, medical establishments, corporations, government agencies, consular offices, and international organisations in its renewed attempt to improve collection of the tax.

Goldfields CEO calls for collective action

Mr. Nick Holland, Chief Executive Officer of GoldFields Limited has called for a strategic workshop to be convened immediately for all industry players to consider common strategies to re-structure their operations in a bid to cut loses and safeguard jobs in the face of the crippling effect of falling gold prices.

 “There is an urgent need for all stakeholders in the sector to act together to forge a consensus on the way forward on the looming crisis in the industry.

“The falling prices of gold pose a major threat to the mining industry,” he said.

Mr. Holland made the proposal when he paid a courtesy call on Alhaji Inusah Fuseini, Minister for Lands and Natural Resources.

Mr. Holland explained that there is need for industry operators to brainstorm together to explore how they can leverage on the poor market in a manner that will enable them to create opportunities to bolster the gold industry.

“Government’s position on the situation is critical for us to fashion a win-win outcome for all stakeholders.”

The visit provided Mr. Holland an opportunity to update the Minister on the Goldfields Limited’s operations and discuss ways of countering devastating effects of the falling prices of gold on the industry.

Inusah Fuseini welcomed the call for all mining industry players to dialogue in an open manner to manage the challenge in a way that will not only help sustain their operations, but will also deepen partnerships and strengthen the relationship between government and the mining industry.

The Minister therefore pledged to forge a common stand among the industry players on the crisis and promised that government “will not do anything to further aggravate the already precarious situation in which mining companies find themselves”.

To help resolve rampant conflicts that have characterised relations between large scale mining companies and small scale miners, the Minister suggested a new model under which large mining companies can train small scale miners to acquire basic technical know-how as well as lessons on health and safety standards as part of their programme to secure their social licence.

Too many tax avoidance schemes in Africa

There are too many tax avoidance schemes being pursued by taxpayers in Africa, with Value Added Tax (VAT) being the most vulnerable, Anthony Ewereko Minlah, Commissioner of the Support Services Division at the Ghana Revenue Authority (GRA), has observed.
“Across Africa, there is low willingness to pay tax by taxpayers and therefore there are always attempts by corporate bodies and individuals to either evade or avoid the payment of tax, and VAT is the most vulnerable,”  Mr. Minlah told 35 tax auditors from 11 African countries at the opening ceremony of the African Tax Administrators Forum (ATAF) in Accra. 

The event, which is being held on the topic Auditing in VAT Systems”, aims to expand the current knowledge of participants on how to detect and deter non-compliant taxpayers by carrying out effective, efficient and quality risk-based audits on VAT systems, as well as improving the efficacy of the tax legislation and administrations among African nations. 

Mr. Minlah observed that it is unfortunate that voluntary tax compliance rates in Africa continue to be among the lowest in the world.

“Our challenges as tax administrators in Africa are many. We all know it is not easy to build effective systems in Africa, but at the same instance we need the tax income for development,” he said.
“We believe that with greater support from our taxpayers we can do more. Our taxpayers must cultivate the culture of voluntary compliance to ensure improved revenue.

“The GRA for the past three years exceeded its revenue targets due to great support from the government and our development partners, like German Agency for International Cooperation, Ghanaian Community Network, and some good corporate bodies.”

ATAF was set up in 2009 to promote and facilitate mutual cooperation among African tax administrations and other relevant and interested stakeholders. 

The forum brings together heads of African tax administrations and their representatives to discuss the progress made, challenges faced, and possible new direction for African tax policy and administration in the 21st century.

Friday, July 19, 2013

2nd Millennium Compact ready by 2014

Ghana is likely to access approximately US$500million from the second phase of the Millennium Challenge Account compact by the middle of 2014. 
Out-going Country Director of the Millennium Challenge Corporation (MCC), Katrina Ntep, told journalists in Accra that discussions on the compact are currently ongoing and she hopes the programme will be very well-formed by the end of this year to pave the way for the signing and official launch by mid-2014.

She said Ghana is one of two countries that have been eligible for the grant since 2004 on a continuous basis, and the country’s performance and indicators continue to be strong.

“I know that there are challenges at the national level, but when you compare Ghana’s performance to other countries’ performances, Ghana is very strong,” she said.

The second phase of the compact, Ms. Ntep said, will finance the country’s irregular and insufficient power supply. The grant will be targetted at enhancing the distribution system, effecting institutional changes and creating a Power Park to boost energy consumption.

“The country needs to improve the distribution system and make institutional changes at all stages within the power sector. Everybody is familiar with the Electricity Company of Ghana (ECG)’s performance. I think something can be done to support and incentivise institutional changes to improve business processes and reduce losses from lack of collection -- or there can be systems to identify theft more easily.”

In November, Government submitted a concept-paper proposal to the Board of Directors of the MCC to support power generation and distribution in the country.

Ms. Ntep said, currently, a team of US technical experts are engaging with Government and finalising plans for the second phase.

She observed that the power sector is a high-risk area, and that the MCC is interested in investing into high-risk ventures with high rewards -- as in the case of the power sector, because it impacts all sectors of the economy and more Ghanaians are expected to benefit.

Ghana’s demand for power is growing at around 10 percent per annum, spurred by robust economic growth and rising consumption. 

B&FT has gathered that the funds expected from the second compact will enable the country to construct a 400-megawatt thermal plant in the next three years to reduce over-reliance on hydropower generation.

In August 2006, Ghana signed the first compact for an amount of US$547million, making it the third-biggest beneficiary of this initiative by the United States Government after Tanzania (US$698million) and Morocco (US$69million).

The five-year compact came into force on February 16, 2007. The agricultural sector was the main focus, but transportation and rural development were also covered. In January 2011, Ghana was reselected with two other countries for the second compact.