Thursday, March 16, 2017

Ghana Rubber to construct €50million factory

The Ghana Rubber Estate Limited (GREL) is to begin the construction of a €50million rubber factory at Agona in the Western Region.
The project, when completed, will create additional 2,000 jobs and increase the production capacity of the rubber producer.

The first phase of the project is scheduled to be completed in 2019 and the final phase in 2028.
The Rubber producer, last year, purchased approximately 19,500 tonnes of dry rubber from over 3,000 farmers in the Western, Ashanti, Eastern and the Central regions.

Frank Kweku Famiyeh, GREL’s Factory Manager, in an interview with B&FT, explained that the factory, since 2012, has seen a significant increase its production capacity.

“Between 2013 and 2014, we increased our install capacity to five tonnes per hour and between 2015 and 2016 we increased it to eight tonnes per hour. So in 2017, we are anticipating to get to 10 tonnes per hour with this present factory.

Per our master plan, that is the final capacity of this existing factory. In terms of machinery and storage, raw materials and finished goods, the site has become congested, so we can’t increase the capacity here again. We are restricted by the size of the site. Because of this, we are initiating a new factory in 2017, the first rubber will come out in 2019,” Mr. Famiyeh said.

Rubber production stood at 18,000 tonnes in 2012; 19,600 tonnes in 2013; 28,754 tonnes in 2014; 30,816 tonnes in 2015; and 36,816 tonnes in 2016. For the 2017 calendar year, the company expects to produce between 40,000 and 41,000 tonnes.

He explained that the company has two sources of raw materials, namely its estate plantation and suppliers from out-growers.

“We receive 50% from our estate and 50% from the small holder farmers. The factory processes these rubbers into two main products that has been identified as quality and in line with the international rubber standards at the world market.

So, depending on what is going to be produced, we depend on the ratios, whether 50% from our rubber or 50% from outgrow, or 60, 40% depending on the outcome,” he said.

Rubber is one of the most commonly used plant products in virtually every industry. From tyre industries to aviation, health, education, sports to engineering, rubber is in high demand. 

The rubber latex is useful for a wide range of industries and products. It is used for adhesive, insulating, friction tape, crepe rubber used for footwear and insulating blanket. The rubber is also used in aviation tires, hose, and domestic clothes wringers to printing presses.

Rubber latex is used in the manufacture of articles such as cushions, balls, air hoses and balloons. Its ability to resist water and most fluid chemicals has resulted in its use in diving gear, rainwear and chemical and medicinal tubing. It is also used as a lining for railroad tank cars, storage tanks and processing equipment.

There are so many reasons why farmers must engage in rubber farming. Including the huge industrial demand expected to keep the price of rubber high for decades.

It provides high income, high cost of synthetic rubber, low maintenance cost, long period of productivity, has a wide range of adaptability, provides regular income; environment sustainability, high value of rubber wood and allows inter cropping of food and cash crops for higher farm income.

Rubber latex is extracted from rubber trees. The economic life period of rubber trees in plantations is estimated around 35 years with up to 7 years of immature phase and about 25 years of productive phase.

The rubber producing countries in Africa only produce four per cent of the total global production, while Thailand, the largest rubber producer in the world produces 27 per cent. 

Ivory Coast, which is the largest producer of rubber in Africa, produces 50 per cent of the total Africa production, while Nigeria produces only 11 per cent with Ghana producing about 19,134 metric tonnes in 2009. 

Research has shown that rubber business is more of a smallholder type of business. This is the case in most countries of the world where rubber is planted. It is the smallholders that are more in it than commercial outfits. But the case is different in Ghana as the bulk of production comes from commercial outfits.

As of 2009, approximately 11,855 hectares of land had been cultivated under outgrower schemes financed by the government. The rubber plant has a productive lifespan of 35 years. The country moved from 12,000 hectares of rubber plantations in 1995 to 35,000 hectares, helping to create employment for some 100,000 people.

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

About 95 percent of the country’s rubber produce is exported to China, France, Turkey, East Africa and South Korea. Ghana also exports to neighbouring Burkina Faso. Currently the traditional rubber-growing regions are the Western and Central Regions, but the northern parts are also being explored for their potential to cultivate the crop.

Strong global economic growth in recent years, especially in the rapidly developing economies of China and India, has increased demand for rubber significantly. 

The global demand for natural rubber has been consistently on the rise. Global consumption of natural and synthetic rubber, pegged at 12.3 and 16.8 million tonnes, respectively, in 2015, was an increase of 3.1 percent and 0.9 percent from 2014. It is projected to reach 15 and 19.4 million tonne by 2020.

China, the United States, Japan, India and Germany are the main rubber consumers, accounting for 56.8 percent of global consumption.

Wednesday, March 15, 2017

GRA hopeful of meeting target amid tax cuts

The Ghana Revenue Authority (GRA) has said although its revenue collection target for the 2017 fiscal year is challenging in view of the tax cuts, it is hopeful that with appropriate strategies, hard work and resilience of staff, it will be achieved.
Commissioner General of the GRA, Mr. Emmanuel Kofi Nti said: “In 2017, GRA has been given the task to mobilise over GH¢34billion into the national kitty. This calls for hard work on the part of all staff. The abolishment and reduction of a number of taxes announced by the government in the 2017 budget statement has thrown a big challenge to GRA to meet the gap that will be created.

We are hopeful that in 2017, though it is challenging, we have to make it. With the measures that we’ve taken, instead of frontloading the taxes we are rather back loading them and with all the incentives that we are giving the private sector, we should be able to up our revenue.”

The GRA has been tasked to collect GH¢34billion for the 2017 fiscal year. The Authority was tasked to mobilise GH¢29.59billion for 2016. 

It exceeded its 2015 target of GH¢21.57 billion by GH¢620 million at GH¢22.17 billion, a 29.3 percent increase over that of 2014.

In an interaction with the media, Mr. Nti explained that a number of revenue enhancement measures will be undertaken principally to bring the untaxed segment of the population, especially operators in the informal secto,r into the tax net and thereby widen the scope of coverage.

These measures, he said, are also meant to ensure that those already in the net comply with the tax laws. 

Other tax mobilisation measures, he explained, will include increasing the number of audits, regular external visits and inspection of taxpayers’ businesses to retrieve outstanding taxes, and monitoring by operational offices. 

Last year, the GRA was unable to meet its GH¢29 billion target. Figures from the Revenue Authority reveal that it was able to collect about GH¢27 billion, representing a shortfall of about GH¢1.2 billion or negative 4.9 percent. 

He attributed the shortfall to the challenges that crippled most of the sectors of the economy.
“The fact of the matter is that the weak performance of the economy in 2016 also reflected in the amount of taxes that were realised.” 

In 2016, PAYE amounted to 12.5 percent compared to a target of 15 percent. Also, corporate taxes declined for the period under review. 

The Finance Minister, Ken Ofori Atta, in presenting the 2017 budget, mentioned that eight taxes have been abolished.  

They include the 1% Special Import Levy, Kayayei market tolls, 17.5% VAT/NHIL on financial services, 17.5% VAT/NHIL on selected imported medicines that are not produced locally, 17.5% VAT/NHIL on domestic airline tickets, Duty on imported spare parts, 5% VAT/NHIL on Real estate sales as well as Excise duty on petroleum. 

The following reviews were equally announced: Corporate income tax to be progressively reduced from 25% to 20% in 2018, replacement of 17.5% of VAT/NHIL with 3% flat rate for traders, tax credits and other incentives for businesses that hire young graduates from tertiary institutions, Tax incentives for young entrepreneurs and reduction special petroleum tax rate from 17.5% to 15%.

Friday, March 3, 2017

Gov’t pledges to complete Western railway lines

Government has pledged to complete the Sekondi to Takoradi via Kojokrom and Kojokrom to Tarkwa through Nsuta sections of the Western railway line to facilitate the haulage of manganese, bauxite, cocoa and other bulk commodities.
The wertern railway corridor, when completed, will help improve the operational performance and revenue of Ghana Railway Company Limited (GRCL) and enable the company wean itself from central government support. It will also enhance the performance and competitiveness of the manganese mine located on the corridor.

Finance Minister, Ken Ofori-Atta, presenting the 2017 Budget Statement of government to the 275-member Parliamnet, said: “Government will commence work on the Western Rail Line from Takoradi and terminates at Kumasi having two branch lines namely; Dunkwa to Awaso and Kojokrom to Sekondi, covering a distance of 340km. The Feasibility Studies and Front End Engineering Design (FEED) have already been done on the Line.”

Mr. Ofori-Atta explained that government will initiate discussions to secure funding for other major projects, such as, the Central Spine which stretches from Kumasi to Paga covering a distance of 700km. The corridor is a greenfield and will be developed in sections.

The sections,he said, are Kumasi to Buipe and Buipe to Paga. “A pre-feasibility study was undertaken on the line, and in 2017, we plan to undertake full feasibility studies to enable the Railway Ministry to invite developers and source funding for the development.

The Eastern Railway Line on the other hand, will cover a distance of 330km and starts from Accra to Kumasi--with a branch line from Achimota to Tema. When the line becomes operational, it will decongest the port and facilitate the movement of cargo and passengers to Kumasi and its environs.

He noted that: “The Central Railway Line, as part of the grand railway plan, will cover a distance of 200km and spans from Kotoku on the Eastern Line to Huni Valley on the Western Line. It will have a branch line from Achiase to Kade and we plan to undertake feasibility study on the line and extend it to Kibi. The Western line and the Eastern line—Tema, Akosombo and the Central Spine is expected to cost about US$21 billion.

Government believes that rail will be a major catalyst to drive the growth that we envisage in the coming years. Rail transportation provides safer, cheaper and faster way of moving goods and people to facilitate trade and support economic activity. Our vision is to open up the country and provide new opportunities to our people to do business and trade among themselves.”

Approximately 133.6 kilometres (km) representing 14.1% of the entire rail network of 947 kilometres that is currently operational is faced with an obsolete network and poor track infrastructure, resulting in the closure of greater part of the Western and Eastern lines and the entire Central line -- leading to a high incidence of derailments that lead to loss of operational hours and damage to rolling stock.

Available data show that the rail sector commanded an over-70% market share of freight and passenger transport in the country during colonial days until the 1970s, and carried over 2 million tonnes of freight and 8 million passengers annually in the 1960s and 1970s.

However, due to inadequate funding for maintenance, the rail network started to deteriorate; leading to the diversion of freight traffic onto roads, exacerbating deterioration of the roads.

The Ghana Chamber of Mines, in recent times, has aggressively been advocating the rehabilitation of the railway system, notably the Western rail lines. The officials observed that benefits to the country would be enormous -- given its services will extend to passenger travel and other sectors of the economy.

“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,” the Chamber said.

As a result, the Ghana Bauxite Company has completely stopped hauling the commodity by rail and solely transports its ore by the less cost-effective road mode, while Ghana Manganese Company uses the railway on a reduced operational level. This has adversely impacted realisation of these companies’ strategic objectives.  

President 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.  

“Examples are 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. 

Fast Facts
Total route length, Accra to Paga, 947km (593 miles)
Track length of 1,300km (807 miles)
Track gauge of 1.067 metres (3ft.6ins) with a maximum axle load of 16 tonnes
Except for the 30-km Takoradi-Manso section, which is double-track, the network is a single-track system of 1067 mm (3' 6") gauge (cape or narrow gauge)
Railway Network is divided into 3 main lines with branch lines. The main lines are:
Western Line: 340 km                 
Central Line: 240 km
Eastern Line: 330 km