The Agricultural Development Bank
(adb) says it is on course to list on the Ghana Stock Exchange (GSE)
this year to enable it raise additional equity to deepen its operations.
The move, though yet to be
endorsed by government which is the majority shareholder, will enable
the bank to finance capital-intensive businesses in all sectors of the
economy -- including the oil and gas sector.
“Our plans of going to the stock
market for recapitalisation and expansion programmes this year is very
much on course,” Adam Sulley, Head of Marketing & Client
Service of the bank told B&FT at an interview in Accra.
“There has been discussion for
some time now, and there are still a lot of discussions with the Finance
Minister in terms of reporting, structure, among others. A lot depends
on the Minister now, but there is goodwill -- even from the Bank of
Ghana which is very much willing,” he added.
adb prides itself on being a bank
dedicated to financing agriculture, but concerns have been raised about
whether its current structure and operations give the needed thrust to
the agricultural sector, with many commentators asking for the bank to
be repositioned to upscale its agriculture business.
Ghana’s agricultural sector employs
approximately 42 percent of the working population, according to census
data. The sector is often said to be growing below potential with
farmers facing perennial problems such as the unavailability of modern
equipment, erratic rainfall, and expensive credit.
Nana Soglo Alloh IV, chairman of the
bank’s board of directors, stated that adb’s key plan is the injection
of additional capital into its business through the planned public
floatation.
The additional capital, he said, will
be used to expand the bank’s business frontiers, open more branch
locations, venture into new channels and make its banking products
accessible to more Ghanaians.
Currently, the bank is in the initial
stage of its follow-up strategic plan for the 2014-2016 period --
designed to ensure sustainable growth and profitability and build on the
key successes achieved in the previous strategic plan that was
completed in 2012.
“We are committed to leveraging our
skills, resources and risk expertise to build an efficient policy-led
agricultural-financing institution of choice and contribute to the
building of a strong national economy,” the board chairman said.
Minister of Finance and Economic
Planning, Seth Terkper, whose address was read on his behalf by his
Deputy, Kweku Ricketts-Hagan, said: “The country’s medium-term objective
and strategic direction is to expand opportunities for all and
reinforce the foundation for socio-economic transformation in
partnership with the private sector”.
He said the strategy of agricultural
modernisation is pivotal, and government is working to harness all
resources toward achievement of this objective.
“For this reason, an efficient credit
delivery system to the sector remains one of the high points of
government’s economic policy. Government will therefore implement
measures that will enhance the role and efficiency of financial service
providers in the agriculture sector.
“adb as an indigenous banking
institution has contributed immensely to the government’s development
agenda, especially its role as one of the closest partners of government
in prosecution of the country’s agricultural development,” he said.
He commended the bank for its
involvement in all national agricultural development programmes,
projects and schemes undertaken by the government and various local and
international donor organisations over the years.
“Since 2009, the bank has undertaken
transformational restructuring with a view to repositioning itself in
the face of the challenges of operating as a universal bank,” he said.
adb, which was set up in 1965 by Act
286, is wholly public-owned -- with government holding 52% of the
shareholding while the remaining 48% is held by the Financial Investment
Trust on behalf of the Bank of Ghana.
It provides a full range of banking products and services in retail, commercial, corporate and investment banking.
Despite its limited support, the bank
continues to remain the number-one financier in the agricultural sector.
In 2011, the bank’s total lending to the agricultural sector amounted
to GH¢142million. It also made some new interventions in the
agro-processing sub-sector and invested a total of GH¢84.5million.
In the same year, the bank transferred
GH¢25million to its stated capital account, which increased its stated
capital from GH¢50million to GH¢75million.
This enabled it to fully comply with
the regulatory minimum capital requirement of GH¢60million ahead of the
31st December 2012 deadline given by the Bank of Ghana for full
compliance by indigenous Ghanaian banks.
Thursday, January 23, 2014
COCOBOD confident of exceeding target
Ghana Cocoa Board (Cocobod) says it is confident of exceeding its cocoa
production target of 850,000 metric tonnes in the ongoing season, due to
good weather conditions.
“We can cross 850,000 metric tonnes this season. The weather has so far been good and other new farms have come onboard; we have some good cocoa coming from the Volta Region, too,” Dr. Stephen Kwabena Opuni, Chief Executive Officer, told B&FT in Accra.
He said Cocobod is also deploying a task-force to fight the smuggling of beans to Ivory Coast, the number-one producer, where prices paid to farmers are higher due to Ghana’s weak currency.
This country, the second-biggest producer, runs a two-cycle cocoa season consisting of the October-June main crop harvest which is mainly exported, and the July-September light crop that is discounted to local grinders.
The current 2013/14 main crop season opened on October 18 with an initial target of buying around 830,000 tonnes. Dr. Opuni declined to say how much beans have been purchased so far by Cocobod. The country produced 835,410 tonnes of cocoa during the 2012/13 crop year, down 5 percent on the previous season.
An unprecedented one million tonnes of cocoa was produced during the 2010/11 crop-year thanks to good weather and improved farming techniques -- but production declined to about 850,000 tonnes in the 2011/12 season.
Government has kept faith with farmers by ensuring that they receive at least 70 percent of the Free on Board cocoa price. But amid falling prices of the crop in the past two seasons, the actual price received by farmers per tonne has increased by just 3.4 percent since the 2012/13 season.
Ghanaian farmers currently produce 400 kg/ha, which is far below the productivity of farmers in Ivory Coast and Indonesia, who produce 600 kg/ha and 1000kg/ha respectively.
Cocobod has expressed worry over rising production costs over the years as it worked to raise cocoa output from a previous 400,000 tonnes per annum to about 900,000 tonnes at present.
The cocoa regulator said inputs such as planting materials and chemicals have seen their costs rise, and spending on infrastructure in cocoa communities has increased.
“Our cost is rising even as we continue to sustain our production target of between 800,000 tonnes and over 900,000 tonnes annually through sustainable input supply systems like planting materials, chemicals to control pests and disease, improved infrastructure at some cocoa-growing centres, and also sustainable income for farmers,” the board said.
Cocoa has gained 3.1 percent in London this year and was trading at £1,729 on Monday. Ghana and Ivory Coast account for about 70 percent of global supplies. Other big producers are Indonesia, Brazil and Ecuador.
“We can cross 850,000 metric tonnes this season. The weather has so far been good and other new farms have come onboard; we have some good cocoa coming from the Volta Region, too,” Dr. Stephen Kwabena Opuni, Chief Executive Officer, told B&FT in Accra.
He said Cocobod is also deploying a task-force to fight the smuggling of beans to Ivory Coast, the number-one producer, where prices paid to farmers are higher due to Ghana’s weak currency.
This country, the second-biggest producer, runs a two-cycle cocoa season consisting of the October-June main crop harvest which is mainly exported, and the July-September light crop that is discounted to local grinders.
The current 2013/14 main crop season opened on October 18 with an initial target of buying around 830,000 tonnes. Dr. Opuni declined to say how much beans have been purchased so far by Cocobod. The country produced 835,410 tonnes of cocoa during the 2012/13 crop year, down 5 percent on the previous season.
An unprecedented one million tonnes of cocoa was produced during the 2010/11 crop-year thanks to good weather and improved farming techniques -- but production declined to about 850,000 tonnes in the 2011/12 season.
Government has kept faith with farmers by ensuring that they receive at least 70 percent of the Free on Board cocoa price. But amid falling prices of the crop in the past two seasons, the actual price received by farmers per tonne has increased by just 3.4 percent since the 2012/13 season.
Ghanaian farmers currently produce 400 kg/ha, which is far below the productivity of farmers in Ivory Coast and Indonesia, who produce 600 kg/ha and 1000kg/ha respectively.
Cocobod has expressed worry over rising production costs over the years as it worked to raise cocoa output from a previous 400,000 tonnes per annum to about 900,000 tonnes at present.
The cocoa regulator said inputs such as planting materials and chemicals have seen their costs rise, and spending on infrastructure in cocoa communities has increased.
“Our cost is rising even as we continue to sustain our production target of between 800,000 tonnes and over 900,000 tonnes annually through sustainable input supply systems like planting materials, chemicals to control pests and disease, improved infrastructure at some cocoa-growing centres, and also sustainable income for farmers,” the board said.
Cocoa has gained 3.1 percent in London this year and was trading at £1,729 on Monday. Ghana and Ivory Coast account for about 70 percent of global supplies. Other big producers are Indonesia, Brazil and Ecuador.
Tuesday, January 21, 2014
EU optimistic of EPA agreement
…says deal possible in coming weeks
The European Commission (EC) is optimistic it will reach an agreement in the coming weeks with ECOWAS on the Economic Partnership Agreement (EPA), the European Union’s controversial trade and investment treaty whose negotiation has been dogged by differences over some of its most crucial aspects.The EU intends the EPA to replace its long-running preferential trade arrangements with African, Caribbean and Pacific (ACP) nations, which are not compliant with World Trade Organisation (WTO) rules.
“We are optimistic an agreement will be reached in the coming weeks. Good progress has been made though there are still some challenges,” Dr. Nicholas Westcott, Managing Director for Africa, European External Action Service (EEAS) at the EC and a former Ambassador of the UK to Ghana, told journalists in Accra prior to a meeting to officially invite President John Mahama to the fourth EU-Africa summit taking place in Brussels from April 2-3, 2014.
The EU and ACP countries had until the end of 2007 to sign the EPA, failing which ACP states, including those in ECOWAS, were going to lose their tax-free export access to the EU market.
While many Caribbean states have ratified the EPA, the negotiations between the EU and ECOWAS have been held back by differences over issues such as how much of ECOWAS’ market should be liberalised, and the so-called Most Favoured Nation (MFN) clause -- which requires ECOWAS states to extend to the EU any more favourable treatment they may grant to third-parties in a future trade agreement.
To avoid losing their generous access to the EU market, Ghana, Côte D’Ivoire, and a few other countries signed an interim EPA as they waited for their respective regional blocs to iron-out differences with the EU.
But the European Commission warned as early as 2012 that it will change its market access regulation -- which had allowed countries like Ghana which ratified an interim EPA to continue exporting to the EU quota-free and duty-free -- and remove preferential access for countries that fail to ratify the EPA by the end of 2013.
The EU is Ghana’s largest export market, accounting for more than half of all exports -- and loss of the current tax-free access regime will, at least initially, cause the country’s exporters to lose competitiveness in the EU market.
If Ghana signs a full EPA, its exports to the European market will be 100 percent exempt from customs and other duties, while exports from the EU to Ghana will enjoy 80 percent exemption from similar duties and levies.
But the deal has never excited civil society organisations in the country, who warn that signing the agreement will lock the country’s economy deeper into its primary commodity dependence-trap and derail regional integration.
On a cost-benefit analysis basis, some critics have even argued that Ghana will be the loser.
According to Osman Mensah, a research consultant, the country could lose about US$88.6million annually if it signs the EPA -- adding the agreement will erode government’s revenue from imports, with the country standing to lose US$1.12billion in import revenue by 2022.
US$200m owed to Cocobod
Minister of Finance and Economic
Planning Seth Terkper is worried over a US$200million debt owed by local
cocoa processing companies to Ghana Cocoa Board (Cocobod).
“Some of these local cocoa processing companies have not lived up to expectation and are owing Cocobod over US$200million.
“I am charging the governing board and management of Cocobod to ensure that these monies are retrieved as early as possible. The same applies to the Licenced Buying Companies that owe Cocobod huge sum of monies,” Terkper disclosed.
Cocobod has over the years been supplying cocoa beans to local processing companies on credit at a discount of 20 percent, targetted at growing local businesses and creating employment.
Mr. Terkper made this revelation at the inauguration of a new board of directors for Cocobod in Accra yesterday.
The new board, he said, is coming into being at a time when the cocoa sector is facing a huge number of challenges -- which include falling cocoa prices.
He explained that with the sustained hi-tech and Cocoa Disease and Pest Control programmes (CODAPEC) which have helped to raised national production, “you have to work closely with management to make the programmes more efficient and effective”.
He indicated that Cocobod has been in the news in recent weeks concerning haulage trucks’ congestion at the points of Tema and Takoradi -- due apparently to concerns by cocoa carriers. This situation appears to be an annual national concern that must be resolved once and for all.
“Iam told that management of the board has resolved the current crisis, but I would implore the new Board to work closely with management to ensure that all underlying issues to the problem are resolved with finality to put the issue to rest.”
These are but a few of the challenges the new Board is being asked to provide policy guidelines and direction for management to address.
Mr. Terkper explained that the Board is expected to work in consonance with management to be consistent with the Ghana Cocoa Board Act, PNDC Law 81; ensuring that the cocoa sector remains vibrant, resilient and competitive to continue to support the livelihood of millions of people.
He said cocoa remains critical to the health of the Ghanaian economy and the livelihoods of millions of households across the country, adding that despite the oil find, the country cannot afford to abandon the production and marketing of a crop that has supported infrastructural development since independence.
“In nominating you to serve on the Board, The President is confident that individually and collectively you possess the attributes that will bring harmony to the operations of the Cocobod.”
Mr. Daniel Ohene Agyekum, Chairman of the board of directors of Cocobod, after the swearing-in ceremony said: “It is indeed with much pleasure that we accept this national call to duty to serve on the Cocobod, an institution that epitomises the entrepreneurial abilities of our rural farmers to individually and as families organise the cultivation of one crop the has changed the economic fortunes of our country for over a century.
Mr. Agyekum added: “There is absolutely no doubt that cocoa is critical to the livelihood of our people. Millions of Ghanaians have benefited from the hard work of our farmers. It is time for us to make some contributions to the sustenance of the cocoa sector.
“We should not allow pest and diseases, low soil fertility, lack of appropriate planning materials, smuggling and illegal surface mining, among others, to deprive this country of an enterprise that still has the potential to address the issue of poverty -- particularly in our rural communities which deserve improved livelihood.”
“Some of these local cocoa processing companies have not lived up to expectation and are owing Cocobod over US$200million.
“I am charging the governing board and management of Cocobod to ensure that these monies are retrieved as early as possible. The same applies to the Licenced Buying Companies that owe Cocobod huge sum of monies,” Terkper disclosed.
Cocobod has over the years been supplying cocoa beans to local processing companies on credit at a discount of 20 percent, targetted at growing local businesses and creating employment.
Mr. Terkper made this revelation at the inauguration of a new board of directors for Cocobod in Accra yesterday.
The new board, he said, is coming into being at a time when the cocoa sector is facing a huge number of challenges -- which include falling cocoa prices.
He explained that with the sustained hi-tech and Cocoa Disease and Pest Control programmes (CODAPEC) which have helped to raised national production, “you have to work closely with management to make the programmes more efficient and effective”.
He indicated that Cocobod has been in the news in recent weeks concerning haulage trucks’ congestion at the points of Tema and Takoradi -- due apparently to concerns by cocoa carriers. This situation appears to be an annual national concern that must be resolved once and for all.
“Iam told that management of the board has resolved the current crisis, but I would implore the new Board to work closely with management to ensure that all underlying issues to the problem are resolved with finality to put the issue to rest.”
These are but a few of the challenges the new Board is being asked to provide policy guidelines and direction for management to address.
Mr. Terkper explained that the Board is expected to work in consonance with management to be consistent with the Ghana Cocoa Board Act, PNDC Law 81; ensuring that the cocoa sector remains vibrant, resilient and competitive to continue to support the livelihood of millions of people.
He said cocoa remains critical to the health of the Ghanaian economy and the livelihoods of millions of households across the country, adding that despite the oil find, the country cannot afford to abandon the production and marketing of a crop that has supported infrastructural development since independence.
“In nominating you to serve on the Board, The President is confident that individually and collectively you possess the attributes that will bring harmony to the operations of the Cocobod.”
Mr. Daniel Ohene Agyekum, Chairman of the board of directors of Cocobod, after the swearing-in ceremony said: “It is indeed with much pleasure that we accept this national call to duty to serve on the Cocobod, an institution that epitomises the entrepreneurial abilities of our rural farmers to individually and as families organise the cultivation of one crop the has changed the economic fortunes of our country for over a century.
Mr. Agyekum added: “There is absolutely no doubt that cocoa is critical to the livelihood of our people. Millions of Ghanaians have benefited from the hard work of our farmers. It is time for us to make some contributions to the sustenance of the cocoa sector.
“We should not allow pest and diseases, low soil fertility, lack of appropriate planning materials, smuggling and illegal surface mining, among others, to deprive this country of an enterprise that still has the potential to address the issue of poverty -- particularly in our rural communities which deserve improved livelihood.”
Friday, January 17, 2014
End-year inflation target missed ….as Dec. rate surges to 13.5 percent
Government’s end-of-year inflation
target has been missed as headline inflation for December 2013 surged to
13.5 percent, against a target of 9 percent.
The December inflation rate, which is the highest since March 2010, represents a 0.3-percentage-point increase compared to the November rate of 13.2 percent.
The jump was mainly attributed to price changes in housing, water, electricity, gas and other fuels as well as clothing and footwear during the last quarter of 2013, which kept non-food inflation – that constitutes 55.09 percent of the consumer price index (CPI) basket – rising.
“We’ve seen some price changes in the food component and increases in the non-food, especially changes in petroleum prices and utility prices,” acting Government Statistician Dr. Philomena Nyarko told journalists at news conference in Accra.
The increase has given impetus for interest rates to be pegged higher by the Bank of Ghana at its next monetary policy meeting.
Analysts are of the view that on the average the economy has faced massive challenges with lots of external shocks, and some have predicted a further surge in inflation this year based on government’s fiscal and monetary policy framework, expectations for key commodity prices and instability of the cedi against major currencies like the US dollar.
The country’s economy, which depends largely on the export of commodities like oil, gold and cocoa, was hard hit by the persistent fall in commodity prices on the global market last year.
The Public Utilities Regulatory Commission (PURC) increased power tariffs again this month, maintaining that the adjustment will allow utility companies to cut down on their losses.
The weak cedi also contributed to the high rate of inflation last year, with the currency losing 17 percent to the dollar.
Over the coming months, the hike in the value added tax from 15 percent to 17.5 percent is likely to fuel inflation, threatening the Central Bank’s end-2014 target of 9.5 percent.
Inflation dynamics. The monthly change rate for December 2013 was 1.0 percent, against the 0.8 percent recorded in November 2013.
The food and non-alcoholic beverages group recorded an average year-on-year inflation rate of 7.2 percent, 0.1 percentage points lower than the 7.3 percent recorded in November 2013.
Three subgroups of the food and non-alcoholic beverages group recorded inflation rates above the group’s average of 7.2 percent.
The non-food group recorded an average year-on-year rate of 18.1 percent in December 2013, compared to a rate of 17.6 percent in November. Two subgroups recorded year-on-year inflation rates above the group’s average rate.
Housing, water, electricity, gas and other fuels recorded the highest rate of 35 percent, followed by transport, which recorded 25.6 percent. Inflation was lowest in the communications subgroup, which recorded 4.4 percent.
At the regional level, the inflation rate ranged from 6.2 percent in the Upper West Region to 14.8 percent in the Central Region. Five regions, namely Central, Greater Accra, Eastern, Western and Ashanti, recorded inflation rates above the national average of 13.5 percent.
The December inflation rate, which is the highest since March 2010, represents a 0.3-percentage-point increase compared to the November rate of 13.2 percent.
The jump was mainly attributed to price changes in housing, water, electricity, gas and other fuels as well as clothing and footwear during the last quarter of 2013, which kept non-food inflation – that constitutes 55.09 percent of the consumer price index (CPI) basket – rising.
“We’ve seen some price changes in the food component and increases in the non-food, especially changes in petroleum prices and utility prices,” acting Government Statistician Dr. Philomena Nyarko told journalists at news conference in Accra.
The increase has given impetus for interest rates to be pegged higher by the Bank of Ghana at its next monetary policy meeting.
Analysts are of the view that on the average the economy has faced massive challenges with lots of external shocks, and some have predicted a further surge in inflation this year based on government’s fiscal and monetary policy framework, expectations for key commodity prices and instability of the cedi against major currencies like the US dollar.
The country’s economy, which depends largely on the export of commodities like oil, gold and cocoa, was hard hit by the persistent fall in commodity prices on the global market last year.
The Public Utilities Regulatory Commission (PURC) increased power tariffs again this month, maintaining that the adjustment will allow utility companies to cut down on their losses.
The weak cedi also contributed to the high rate of inflation last year, with the currency losing 17 percent to the dollar.
Over the coming months, the hike in the value added tax from 15 percent to 17.5 percent is likely to fuel inflation, threatening the Central Bank’s end-2014 target of 9.5 percent.
Inflation dynamics. The monthly change rate for December 2013 was 1.0 percent, against the 0.8 percent recorded in November 2013.
The food and non-alcoholic beverages group recorded an average year-on-year inflation rate of 7.2 percent, 0.1 percentage points lower than the 7.3 percent recorded in November 2013.
Three subgroups of the food and non-alcoholic beverages group recorded inflation rates above the group’s average of 7.2 percent.
The non-food group recorded an average year-on-year rate of 18.1 percent in December 2013, compared to a rate of 17.6 percent in November. Two subgroups recorded year-on-year inflation rates above the group’s average rate.
Housing, water, electricity, gas and other fuels recorded the highest rate of 35 percent, followed by transport, which recorded 25.6 percent. Inflation was lowest in the communications subgroup, which recorded 4.4 percent.
At the regional level, the inflation rate ranged from 6.2 percent in the Upper West Region to 14.8 percent in the Central Region. Five regions, namely Central, Greater Accra, Eastern, Western and Ashanti, recorded inflation rates above the national average of 13.5 percent.
Tuesday, January 14, 2014
Obuasi mine revival takes centre-stage
Government is to hold discussions with management of Anglogold Ashanti on the future of the Obuasi Mine.
The discussion, likely to be fixed this week, is expected to focus on issues including the stability agreement, the high tax regime and poor power supply among others.
The Obuasi Mine has been struggling with overage equipment, poor security, inadequate power supply and the activities of illegal miners.
The mine also needs massive capital injection to renew its antiquated infrastructure, improve underground transport and sharpen the skills of its employee.
Once the biggest gold mine in the country and the leading employer in the industry with about 8,500 workers, Obuasi Mine has in recent years become a high-cost producer and not produced above 400,000 ounces since 2004. It has over 20 years of mine-life with 9 million ounces of gold reserves.
Already, with the persistent drops in gold price, mining companies are struggling to keep the cap on rising cost of operations.
The metal lost 25 percent of its value last year, and this came on the back of an increase in the mining sector’s corporate tax rate from 25 percent to 35 percent.
Briefing the press after a two-day working visit to Obuasi Mine to learn at first hand the myriad challenges facing it, Alhaji Inusah Fuseini -- Minister of Lands and Natural Resources -- said the meeting will allow both parties to know whatever intervention in the mine is needed from government to address its challenges.
“Obuasi Mine needs to be restrategised to help address the production challenges it is facing since the mine is not posting profit in its operations.
“Obuasi Mine has tremendous potential and all efforts should be made to make it profitable.
“It is an important mine in the country, contributing to the improvement of communities and the nation at large.”
The illegal mining activities, he said, poses huge problems to the environment -- with many water bodies being polluted.
“Government is committed to fighting the menace in the mining industry to bring sanity,” he stated.
Mr. Macombe, Senior Vice President of Anglogold Ashanti indicated that the mine is facing challenges including a decline in production.
He said the meeting will consider a number of options to improve the situation at the mine, which has potential mine-life of over 20 years.
Mr. Macombe told B&FT that “Although the mine is making progress in some areas, it is far from profitability as it is still making losses.
“The operation is currently undergoing ‘painful but necessary transformation’ at all levels to shore-up gold production and reduce cost of production with a view to setting it on the road to profitability -- because of declining gold production, increasing costs of power tariff, increasing activities of illegal mining and escalating costs.
“These challenges mean that the Obuasi mine is underperforming; it is not producing enough gold to generate profit to improve its cash flow, hence forcing the operation to borrow unsustainably to keep it afloat.
“Obuasi is simply a loss-making entity, but this cannot go on forever.”
He said reversing these challenges definitely needs strong and courageous decisions to address and fix the mine, which is one of the oldest in the world.
Mr. Morcombe said the company will be shirking its responsibility if it fails to reverse the decline and address the fundamental challenges undermining the future of the famous Obuasi Mine, saying that ‘we are implementing painful but necessary measures to grow the company as a ‘lean and profitable operation’.
About 430 Obuasi employees have already been retrenched, and the signs are that more changes are being planned ahead.
Mr. Morcombe explained that in spite of the changes made, the mine is still not out of the woods; suggesting that more changes will be made later to stabilise and secure the future of the Obuasi operation.
“The mine will continue to engage and update the stakeholders on ongoing activities to ensure their cooperation and continuous support,” he said.
The discussion, likely to be fixed this week, is expected to focus on issues including the stability agreement, the high tax regime and poor power supply among others.
The Obuasi Mine has been struggling with overage equipment, poor security, inadequate power supply and the activities of illegal miners.
The mine also needs massive capital injection to renew its antiquated infrastructure, improve underground transport and sharpen the skills of its employee.
Once the biggest gold mine in the country and the leading employer in the industry with about 8,500 workers, Obuasi Mine has in recent years become a high-cost producer and not produced above 400,000 ounces since 2004. It has over 20 years of mine-life with 9 million ounces of gold reserves.
Already, with the persistent drops in gold price, mining companies are struggling to keep the cap on rising cost of operations.
The metal lost 25 percent of its value last year, and this came on the back of an increase in the mining sector’s corporate tax rate from 25 percent to 35 percent.
Briefing the press after a two-day working visit to Obuasi Mine to learn at first hand the myriad challenges facing it, Alhaji Inusah Fuseini -- Minister of Lands and Natural Resources -- said the meeting will allow both parties to know whatever intervention in the mine is needed from government to address its challenges.
“Obuasi Mine needs to be restrategised to help address the production challenges it is facing since the mine is not posting profit in its operations.
“Obuasi Mine has tremendous potential and all efforts should be made to make it profitable.
“It is an important mine in the country, contributing to the improvement of communities and the nation at large.”
The illegal mining activities, he said, poses huge problems to the environment -- with many water bodies being polluted.
“Government is committed to fighting the menace in the mining industry to bring sanity,” he stated.
Mr. Macombe, Senior Vice President of Anglogold Ashanti indicated that the mine is facing challenges including a decline in production.
He said the meeting will consider a number of options to improve the situation at the mine, which has potential mine-life of over 20 years.
Mr. Macombe told B&FT that “Although the mine is making progress in some areas, it is far from profitability as it is still making losses.
“The operation is currently undergoing ‘painful but necessary transformation’ at all levels to shore-up gold production and reduce cost of production with a view to setting it on the road to profitability -- because of declining gold production, increasing costs of power tariff, increasing activities of illegal mining and escalating costs.
“These challenges mean that the Obuasi mine is underperforming; it is not producing enough gold to generate profit to improve its cash flow, hence forcing the operation to borrow unsustainably to keep it afloat.
“Obuasi is simply a loss-making entity, but this cannot go on forever.”
He said reversing these challenges definitely needs strong and courageous decisions to address and fix the mine, which is one of the oldest in the world.
Mr. Morcombe said the company will be shirking its responsibility if it fails to reverse the decline and address the fundamental challenges undermining the future of the famous Obuasi Mine, saying that ‘we are implementing painful but necessary measures to grow the company as a ‘lean and profitable operation’.
About 430 Obuasi employees have already been retrenched, and the signs are that more changes are being planned ahead.
Mr. Morcombe explained that in spite of the changes made, the mine is still not out of the woods; suggesting that more changes will be made later to stabilise and secure the future of the Obuasi operation.
“The mine will continue to engage and update the stakeholders on ongoing activities to ensure their cooperation and continuous support,” he said.
Businesses comply with new VAT rate
The Ghana Revenue Authority (GRA) has said that ports and domestic
businesses have realigned their figures to comply with implementation of
the new Value Added Tax (VAT) rate.
The new effective VAT rate of 17.5 percent (standard rate plus insurance levy) has taken effect following the presidential assent given the VAT Act 2013 (Act 870) on December 30, 2013.
The tax now has an extended scope covering immovable property, the supply of financial services, domestic transportation of passengers by air and haulage, as well as rental of vehicles, business activities of auctioneers, businesses of gymnasiums and spas, and the manufacture or supply of pharmaceuticals.
Mr. George Blankson, Commissioner-General of GRA, in an interview with the B&FT in Accra explained that a directive to the various taxpayers and collectors -- particularly at the country’s ports and the domestic fronts -- to implement the new rate has been issued to ensure compliance.
“Agents who collect the tax on our behalf settled on 8th January as the day that the tax took effect, particularly at the ports, and we have issued tariff interpretation orders that took effect from 8th January and have also issued all the directives for it to take effect on the domestic fronts.
“We’ve also been planning the implementation of the law, and therefore when the law received assent last week Friday, we immediately swung into motion to have it implemented -- allowing for the convenience of the taxpayers and tax collectors,” Mr. Blankson said.
Parliament in November 2013 approved the increase in standard VAT from 12.5 percent to 15 percent, while the National Health Insurance Levy remained at 2.5 percent. The approval by parliament was met with fierce resistance from minority MPs.
Finance Minister Seth Tekper in the 2014 budget statement explained that proceeds from the increment will be channelled into an infrastructure fund, which will take off in the first quarter of this year.
GRA in a release directed taxpayers who have been authorised by the Commissioner-General to use their own computer-generated invoices as well as electronic cash registers to re-programme their equipment and ensure that VAT is charged at the new rate.
The statement signed by Mr. Blankson said registered entities must use the GRA’s VAT/NHIL invoices, which should be adjusted to comply with the new rate in any instance where they are unable to use their computer-generated invoices or electronic cash register receipts.
The GRA statement reminded the business community that their tax returns should be submitted to the Commissioner-General on the last working day of the month, whether or not the tax is payable for the period.
It also stated that the allowable period for deducting input tax is reduced from three years to six months, adding: “All registered persons who are in possession of valid VAT/NHIL invoices for input tax claims which are more than six months old are to claim them on the December 2013 returns”.
Meanwhile, all businesses authorised to operate under the VAT flat rate scheme (VFRS) are required to charge and account for the tax at the rate of 3 percent of the taxable value of their supplies.
The new effective VAT rate of 17.5 percent (standard rate plus insurance levy) has taken effect following the presidential assent given the VAT Act 2013 (Act 870) on December 30, 2013.
The tax now has an extended scope covering immovable property, the supply of financial services, domestic transportation of passengers by air and haulage, as well as rental of vehicles, business activities of auctioneers, businesses of gymnasiums and spas, and the manufacture or supply of pharmaceuticals.
Mr. George Blankson, Commissioner-General of GRA, in an interview with the B&FT in Accra explained that a directive to the various taxpayers and collectors -- particularly at the country’s ports and the domestic fronts -- to implement the new rate has been issued to ensure compliance.
“Agents who collect the tax on our behalf settled on 8th January as the day that the tax took effect, particularly at the ports, and we have issued tariff interpretation orders that took effect from 8th January and have also issued all the directives for it to take effect on the domestic fronts.
“We’ve also been planning the implementation of the law, and therefore when the law received assent last week Friday, we immediately swung into motion to have it implemented -- allowing for the convenience of the taxpayers and tax collectors,” Mr. Blankson said.
Parliament in November 2013 approved the increase in standard VAT from 12.5 percent to 15 percent, while the National Health Insurance Levy remained at 2.5 percent. The approval by parliament was met with fierce resistance from minority MPs.
Finance Minister Seth Tekper in the 2014 budget statement explained that proceeds from the increment will be channelled into an infrastructure fund, which will take off in the first quarter of this year.
GRA in a release directed taxpayers who have been authorised by the Commissioner-General to use their own computer-generated invoices as well as electronic cash registers to re-programme their equipment and ensure that VAT is charged at the new rate.
The statement signed by Mr. Blankson said registered entities must use the GRA’s VAT/NHIL invoices, which should be adjusted to comply with the new rate in any instance where they are unable to use their computer-generated invoices or electronic cash register receipts.
The GRA statement reminded the business community that their tax returns should be submitted to the Commissioner-General on the last working day of the month, whether or not the tax is payable for the period.
It also stated that the allowable period for deducting input tax is reduced from three years to six months, adding: “All registered persons who are in possession of valid VAT/NHIL invoices for input tax claims which are more than six months old are to claim them on the December 2013 returns”.
Meanwhile, all businesses authorised to operate under the VAT flat rate scheme (VFRS) are required to charge and account for the tax at the rate of 3 percent of the taxable value of their supplies.
‘Credit unions good vehicle for savings’
Mr. Tony Dzadzra -- Head, Tax Policy Unit of the Ministry of Finance and
Economic Planning, says credit unions provide base capital for small
business ventures and play a crucial role in the country’s financial
sector.
“Credit unions in the country support the microfinance policy initiative in creating an enabling environment for small and medium enterprises to expand their ventures and to provide employment avenues for the youth.
“Credit unions are good vehicles of savings mobilisation, and a country that does not save loses out on investment,” he said.
Mr. Dzadzra made these statements on behalf of the Minister for Finance and Economic Planning at the seventh Annual General Meeting of the Ghana Revenue Authority Cooperative Credit Union (GRACCU) in Accra.
Mr. Godwin Aaron Monyo, Chairman of the Management Board of GRACCU, speaking under the topic ‘Financial Independence, Our Goal’, said: “Today, credit unions have become big-time businesses competing for scarce investment funds from the common capital market.
It has become imperative for the leadership of modern credit unions to be innovative and shrewd in designing products that can bring in more income and, in the long -run, maximise the earnings of the contributors”.
He said the aim of the union is to secure financial independence for members to adequately prepare them for retirement, adding: “Management will not shy away from bold decisions that will bring good returns to the union.
“It was in the pursuit of this objective that the union facilitated an agreement with JMET Corporation of China to acquire 300 mini-buses for members to own and operate as commercial vehicles.”
Mr. Monyo said GRACCU is attracting investors’ attention, particularly Marvel Properties Limited, an estate developer that has expressed interest in providing Ghana Revenue Authority (GRA) staff with affordable houses.
The estate company, he said, has proposed an affordable housing scheme through the credit union for the staff -- and added that the houses will be given as mortgages over a 10-year period.
Mr. Monyo observed that the demand for withdrawal by members who are servicing loans poses a threat to the continued existence of the union.
“The long-term effect of the withdrawal denies the union necessary funds for gainful investments for the members as a whole.” GRACCU as at June 2013 had a membership of 4,219 with total assets of GH¢16.9million.
Some members received awards for their contributions toward the growth of the union. They received items including water dispensers, television sets and cash.
GRACCU was inaugurated on December 10, 2010 and began as the Internal Revenue Service (IRS) Credit Union.
“Credit unions in the country support the microfinance policy initiative in creating an enabling environment for small and medium enterprises to expand their ventures and to provide employment avenues for the youth.
“Credit unions are good vehicles of savings mobilisation, and a country that does not save loses out on investment,” he said.
Mr. Dzadzra made these statements on behalf of the Minister for Finance and Economic Planning at the seventh Annual General Meeting of the Ghana Revenue Authority Cooperative Credit Union (GRACCU) in Accra.
Mr. Godwin Aaron Monyo, Chairman of the Management Board of GRACCU, speaking under the topic ‘Financial Independence, Our Goal’, said: “Today, credit unions have become big-time businesses competing for scarce investment funds from the common capital market.
It has become imperative for the leadership of modern credit unions to be innovative and shrewd in designing products that can bring in more income and, in the long -run, maximise the earnings of the contributors”.
He said the aim of the union is to secure financial independence for members to adequately prepare them for retirement, adding: “Management will not shy away from bold decisions that will bring good returns to the union.
“It was in the pursuit of this objective that the union facilitated an agreement with JMET Corporation of China to acquire 300 mini-buses for members to own and operate as commercial vehicles.”
Mr. Monyo said GRACCU is attracting investors’ attention, particularly Marvel Properties Limited, an estate developer that has expressed interest in providing Ghana Revenue Authority (GRA) staff with affordable houses.
The estate company, he said, has proposed an affordable housing scheme through the credit union for the staff -- and added that the houses will be given as mortgages over a 10-year period.
Mr. Monyo observed that the demand for withdrawal by members who are servicing loans poses a threat to the continued existence of the union.
“The long-term effect of the withdrawal denies the union necessary funds for gainful investments for the members as a whole.” GRACCU as at June 2013 had a membership of 4,219 with total assets of GH¢16.9million.
Some members received awards for their contributions toward the growth of the union. They received items including water dispensers, television sets and cash.
GRACCU was inaugurated on December 10, 2010 and began as the Internal Revenue Service (IRS) Credit Union.
President pledges to revive rail transport
Government is ready to revive the country’s defunct
railway system, commencing with the Eastern and Western corridor lines,
President John Dramani Mahama has said.
The reconstruction of the railway lines, expected to
begin this year in earnest, is currently at a very deplorable state.
The
Western rail line for instance has been a major problem for bulk producers of
manganese and bauxite miners, forcing them to use costly road transport to haul
their minerals and equipment.
“It is my hope that this year we cut the sod
for beginning the reconstruction of railways in this country,” President Mahama
told journalists in Accra.
“For any country that intends to develop, the
railways system is very important and we cannot continue to carry all cargo by
road. This situation is not acceptable,” he said.
The President explained that the main railway lines being targetted are the Western and Eastern corridors.
The President explained that the main railway lines being targetted are the Western and Eastern corridors.
The Eastern line will particularly be tied in with
the Boankra Inland Port, which has partly been completed is but yet to be
activated due to lack of facilities such as warehouses and rail lines.
“I believe that if the railways were reconstructed
and the Boankra Inland Port was activated, it would make it easy for importers
from Burkina Faso and other areas to pick their cargo from there instead of
driving all the way to Tema.
“The inland port is supposed to serve the middle-belt,
the northern parts of the country as well as Burkina Faso, Niger and Mali,”
President Mahama said.
The Ghana Chamber of Mines has been
advocating rehabilitation of the railway system, notably the Western rail lines,
as the inherent benefits to the country would be enormous -- given that its
services will extend to passenger travel and other sectors of the country.
“On two occasions, the Ghana Manganese Company
has offered to directly invest in the rail infrastructure; but until now, the
authorities are yet to accept the company’s offer,” according to the chamber of
mines.
As a result, the Ghana Bauxite Company has completely
stopped hauling goods by rail and solely transports its ore by the less
cost-effective road mode, while Ghana Manganese Company uses the rail on a
reduced operational level.
This has adversely impacted realisation of these companies’
strategic objectives. B&FT
has gathered that rehabilitation of the Western railway, which is envisaged
under the US$3billion China Development Bank (CDB) loan agreement, will cost an
estimated US$400million.
President John Dramani Mahama in his 2012 state-of-the-nation
address pledged a massive revival of the defunct rail system.
“There will be significant improvement in our railway
network in the next three years. Government believes that the private sector
has a role to play in the ongoing modernisation of the rail sector.
“An example is the rehabilitation of the Accra to Tema
railway network, Kumasi to Ejisu railway line, Accra-Nsawam railway line, and
Takoradi to Kojokrom railway network,” he said.
In 2010, a contract was signed to construct a railway line
from Paga (on the border with Burkina Faso) to Kumasi plus a branch from Tamale
to Yendi, but nothing realistic appears to be ongoing.
The operation of the country’s rail lines began in 1898
under the Gold Coast Civil Service, with headquarters in Sekondi.
The headquarters was transferred to Takoradi after the
building of Takoradi Harbour, and railways and ports were jointly administered
under the Ghana Railways and Ports Authority.
In 1976, SMC Decree 95 created the Ghana Railway Corporation
to separate railways management from ports. The company enjoyed the status of a
public corporation until 19 March 2001 when it became a limited liability
company.
Much of Ghana’s 953-kilometre rail network was built to support
agricultural and mining activities in the western, central and eastern zones of
the country, but in the last few decades they have failed to yield the impact
expected due to their deterioration -- brought about by lack of fresh
investment to modernise the system.
Friday, January 10, 2014
Delayed law holding back securities industry
Ghana’s capital market is losing the opportunity to exchange investor
information with other markets across the globe due to the delay in the
passage of new legislation for the securities industry.
A December 2012 deadline had been stipulated by the International Organisation of Securities Commissions (IOSCO), the global securities regulatory body, for Ghana to enact the law to ensure cross-border enforcement cooperation and investor protection.
IOSCO had warned that failure to comply with the deadline would result in the country’s securities market losing the opportunity to be upgraded to the highest international standing, whereas the country could be classified as an uncooperative jurisdiction in the areas of securities regulation, market conduct and prudential supervision.
That deadline has passed without compliance as the Securities Industry Bill, which went before parliamentarians in 2012, was subsequently withdrawn. The Minister of Finance is said to have resubmitted it to Cabinet, where it is expected to be fine-tuned and sent back to parliament.
“We are hoping that Cabinet will look into it. By middle of this year we are hoping it goes through parliament. The Finance Minister has worked on it and has submitted it to Cabinet,” Adu Anane Antwi, Director-General of the Securities and Exchange Commission (SEC), told the B&FT in an interview.
“We have done so much work regarding reviewing our laws; we are hopeful and believe that parliament will be able to pass it into law and allow Ghana to conform to the IOSCO standards.
We don’t want the international financial community to look at us in a way that our laws and rules are not conducive for investment; these are some of the things we want to avoid.”
Mr. Antwi said that as a member of IOSCO, SEC is under obligation to ensure that all the securities laws in the country are aligned to achieve the three main objectives of securities regulation: protect investors; ensure fair, efficient, and transparent markets; and reduce systemic risk.
“We are working towards it; that is why we have to amend our laws to bring in provisions which will allow us to do that. If we don’t have laws that are conducive enough, we’ll have problems.”
He explained that the amendment of the securities industry law will incorporate developing, implementing and promoting adherence to internationally recognised and consistent standards of regulation, oversight and enforcement in order to protect investors, maintain fair, efficient and transparent markets, and address systemic risks.
The amended bill, when eventually passed by parliament, will enhance investor protection and promote investor confidence in the integrity of Ghana’s securities market through strengthened information exchange and cooperation in enforcement against misconduct and in supervision of markets and market intermediaries.
The country’s securities industry will also be in a position to exchange information at both global and regional levels on their respective experiences in order to assist the development of markets, strengthen market infrastructure and implement appropriate regulation.
“Our securities law, as it is now, does not permit us to share information with the other regulators. As we are working on amending our regulations, we are collaborating with IOSCO’s review group to see how they can be well-structured to meet international securities standards,” Mr. Antwi said.
South Africa, Nigeria, Kenya and Tanzania are among a few African countries whose securities industry laws and regulations are consistent with IOSCO standards.
A December 2012 deadline had been stipulated by the International Organisation of Securities Commissions (IOSCO), the global securities regulatory body, for Ghana to enact the law to ensure cross-border enforcement cooperation and investor protection.
IOSCO had warned that failure to comply with the deadline would result in the country’s securities market losing the opportunity to be upgraded to the highest international standing, whereas the country could be classified as an uncooperative jurisdiction in the areas of securities regulation, market conduct and prudential supervision.
That deadline has passed without compliance as the Securities Industry Bill, which went before parliamentarians in 2012, was subsequently withdrawn. The Minister of Finance is said to have resubmitted it to Cabinet, where it is expected to be fine-tuned and sent back to parliament.
“We are hoping that Cabinet will look into it. By middle of this year we are hoping it goes through parliament. The Finance Minister has worked on it and has submitted it to Cabinet,” Adu Anane Antwi, Director-General of the Securities and Exchange Commission (SEC), told the B&FT in an interview.
“We have done so much work regarding reviewing our laws; we are hopeful and believe that parliament will be able to pass it into law and allow Ghana to conform to the IOSCO standards.
We don’t want the international financial community to look at us in a way that our laws and rules are not conducive for investment; these are some of the things we want to avoid.”
Mr. Antwi said that as a member of IOSCO, SEC is under obligation to ensure that all the securities laws in the country are aligned to achieve the three main objectives of securities regulation: protect investors; ensure fair, efficient, and transparent markets; and reduce systemic risk.
“We are working towards it; that is why we have to amend our laws to bring in provisions which will allow us to do that. If we don’t have laws that are conducive enough, we’ll have problems.”
He explained that the amendment of the securities industry law will incorporate developing, implementing and promoting adherence to internationally recognised and consistent standards of regulation, oversight and enforcement in order to protect investors, maintain fair, efficient and transparent markets, and address systemic risks.
The amended bill, when eventually passed by parliament, will enhance investor protection and promote investor confidence in the integrity of Ghana’s securities market through strengthened information exchange and cooperation in enforcement against misconduct and in supervision of markets and market intermediaries.
The country’s securities industry will also be in a position to exchange information at both global and regional levels on their respective experiences in order to assist the development of markets, strengthen market infrastructure and implement appropriate regulation.
“Our securities law, as it is now, does not permit us to share information with the other regulators. As we are working on amending our regulations, we are collaborating with IOSCO’s review group to see how they can be well-structured to meet international securities standards,” Mr. Antwi said.
South Africa, Nigeria, Kenya and Tanzania are among a few African countries whose securities industry laws and regulations are consistent with IOSCO standards.
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