The Market Place with Pious Kojo Backah (26-9-23)
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NewsTranscript
00:00 Thanks for your company. I am Pius Kujo Baka. Let's now settle for the details.
00:04 And the Bank of Ghana has been able to save $2 billion of its reserves due to the external
00:09 debt suspension by government. Governor Dr. Ness Addison disclosed this at a news conference
00:14 in Accra. George Yafi reports.
00:17 Governor of the Bank of Ghana noted that this has impacted positively on the country's
00:22 international reserves ending August this year.
00:25 "Compared to a year ago when we were paying a lot of money to save this external debt,
00:33 this year we are not spending that money to save this external debt. We've estimated nearly
00:39 a savings of almost $2 billion arising out of just the debt service suspension for now
00:48 maybe. So that obviously is a major relief to the balance of payments and a major relief
00:58 to the economy as a whole."
01:00 Dr. Ness Addison has also been giving some indications on how the current negotiations
01:05 with external creditors will pan out and how that could impact on the country's external
01:10 debt stock.
01:11 "Discussions with the external creditors, both the bilaterals and the bondholders are
01:17 ongoing. We expect the discussions to be successful and our debt service payments will be significantly
01:23 lower at the end of the discussions. This is still privileged information so I cannot
01:28 share it with you."
01:29 This is what the governor had to say on the Ghana Stabilization Fund and timelines for
01:35 full take-off.
01:36 "The fund has been set up. The government's contribution, we all know, is $500 million
01:40 US dollars. The World Bank has contributed $250 million. Hopefully in the next week or
01:46 two I think the details about how the funds will be disbursed will come out."
01:52 On the rise in non-performing loans for most of the commercial banks in the industry, the
01:56 governor of the Bank of Ghana believes we might have picked what as a challenge could
02:00 be over soon.
02:01 "Going forward, first we have to deal with the macro. We are seeing that the environment
02:06 has stabilized so the situation cannot get any worse than where it is."
02:11 When it comes to the city's performance, Dr. Ernest Addison believes recent forex measures
02:16 as well as the IMF program has contributed heavily to its downfall.
02:21 George, you have failed that report. Let's analyze this further. Joining us via Zoom
02:29 to make sense out of this is a senior finance lecturer at the University of Cape Cod, Serem
02:34 Kawa. Serem, I'm grateful to know you are on with us here on the Marketplace. First
02:39 off, the Bank of Ghana claims it has saved $2 billion of reserves due to external debt
02:44 suspension with government. Good to know that, right?
02:48 "Yeah, it's good that we've been able to save about $2 billion because of the debt
02:53 suspension. But that $2 billion that we have saved because we are not servicing our debts
03:01 have a dire implication for the investors that we are not paying. We need to find out
03:09 what conditions that they will ask us to undertake when we finally have the negotiations with
03:16 them. But that should not be a good thing going forward. We need to make sure that we
03:22 put in enough funds to service our debts when they fall deep."
03:26 Now, he also mentioned that discussions with external creditors and bilateral and bond
03:32 holders have been positive so far. That's translating into a lower debt levels and ultimately
03:38 having a great impact on the economy. Do you get a safe signal looking at the current economic
03:43 conditions we find ourselves in?
03:45 "All right, thank you very much. That is a pretty good news for us to hear because
03:52 we do not know much about the negotiations government and the Bank of Ghana have undertaken
03:58 with the external debt holders and the bilateral debt holders that we have. But getting that
04:05 pretty good news from the Bank of Ghana governor, having stayed in a privileged position and
04:12 knows what is going on in the negotiation room, it's pretty good for us to know that
04:18 when all these things are done, we would be on the way to recovery from the dire economic
04:24 situation within which we find ourselves."
04:27 On the stabilisation fund, as it stands now, we do know that government has contributed
04:34 $5 million and the World Bank also contributing some $250 million. What would be your advice
04:42 as to how the disbursement should be done in the coming weeks? Which sectors are you
04:47 looking at?
04:48 "All right. So, with the stabilisation fund, it's a fund that has been established
04:53 to help the financial institutions, especially the banks that have been hit hard by the domestic
05:00 debt exchange. It is long overdue for the modalities to be out. And knowing very well
05:08 that the government and then the Bank of Ghana has, sorry, the World Bank has given some
05:14 amount of money to be put into these funds, it shouldn't be a wholesale kind of thing
05:20 that should be given to all financial institutions. Some of the financial institutions have a
05:26 strong liquidity position and they are not affected by the liquidity challenges in the
05:32 banking sector. And so the Bank of Ghana should analyse the liquidity position of the various
05:39 financial institutions, especially the banks, and see how best they can ameliorate the situation
05:46 by prioritising the needs of these banking institutions that we have in the country.
05:54 Some insurance companies may have also been hit hard and then they would also prioritise
05:59 them. But it shouldn't be a wholesale kind of fund that should be given to people who
06:04 may not necessarily need this amount of money.
06:09 Finally, your quick thoughts on the mission team in the country to assess us for our next
06:16 branch?
06:17 Yeah, it is always good for them to be around. Having gone to them, we try to do the right
06:24 things as a country. And so once the mission is here, they are going to scrutinise every
06:30 bit of the agreement that we've entered into with them. And I expect that the wrongs that
06:37 may have been committed during this particular period would be addressed, and then the right
06:44 ways of making sure that we stabilise the economy, returning into macroeconomic stability,
06:51 the exchange rate coming up, and then we having a lower rate of inflation will all be conceded
06:57 and Ghana will be on the road to recovery.
07:00 Great. Thank you very much, Seryam Kawa, for your time here on the Marketplace. He's
07:03 a Senior Finance Lecturer at the University of Cape Coast speaking to us there.
07:08 Ewa Lunga, within the industry and banks operating in Ghana, recorded strong profitability in
07:13 the first eight months of this year. According to the Bank of Ghana, the banking industry
07:18 recorded a profit of 5.7 billion CEDs as of August this year. This represents 41.4% growth
07:25 compared with 26.5% a year ago. More in this report.
07:31 Stability indicators improved with return on equity and return on assets all going up
07:36 sharply. Similarly, net interest income increased sharply by 37.9% to 13.5 billion CEDs, while
07:45 net fees and commissions went up by 27.3% to 2.9 billion CEDs. The key financial soundness
07:54 indicators also remained broadly stable. Whilst liquidity indicators for the industry improved
08:00 during the period, capital adequacy ratio adjusted for the regulatory relief was 14.2%
08:06 in August this year, higher than the revised prudential minimum of 10%. The industry's
08:12 non-performing loans ratio, however, increased to 20% in August 2023 from 14.3% a year ago.
08:22 This was attributed to elevated credit risk associated with the lagged effect of the macroeconomic
08:27 crisis in 2022.
08:31 Yesterday we told you about the total money transactions in the first eight months which
08:36 has hit a record of 1.19 trillion CEDs. Well, this was captured in the September 2023 summary
08:42 of economic and financial data from the Bank of Ghana. We've got more for you in this
08:47 report.
08:48 This is compared with 655.97 billion CEDs recorded during the same period in 2022. According
08:58 to the figures from the Central Bank, the month of July 2023 recorded the biggest mobile
09:05 money transaction of 169.6 billion CEDs. From the figures, month-on-month mobile money transactions
09:14 have been exceeding 130 billion CEDs. This presupposes that governments should be able
09:22 to meet the electronic transfer levy target for this year. On January 11 this year, governments
09:29 reduced the rate on electronic transactions from 1.5% to 1%. Despite the growth in mobile
09:38 money transactions, revenue has been well below the government's expectations. Meanwhile,
09:44 total value of mobile money interoperability for the first six months was estimated at
09:50 22.795 billion CEDs.
09:59 And we've got to bring in the perspective of Dr. Benjamin Amwa, who is a finance lecturer
10:03 at the University of Ghana Business School. For more on this developing story, we are
10:07 following up for you. Dr. Amwa, thanks so much for joining us here on the Marketplace.
10:12 Now what do you make of these mobile money numbers? 1.90 trillion dollars, CEDs, I beg
10:18 your pardon.
10:19 1.12 trillion CEDs is good news if you are the regulator of the industry, especially
10:31 the Bank of Ghana. When you are looking at moving away from fiat money, which is paper
10:38 or printed money, to digital money, in this case using e-money as a means of transaction
10:47 because it's a heavy tool from the printing side of currency and the minting of coins
10:53 in terms of the cost. So from that perspective, yes, it is good because you are having a lot
10:58 of transactions now using mobile money as a means of payment. Indirectly, it's also
11:06 helping us to gauge how formalized our payment system and transactions are becoming, apart
11:13 from checks and the traditional banking supported means of payment. So from that perspective,
11:18 it is very good if you see huge transactions and numbers coming in as mobile money transactions.
11:24 But we should not forget that if you look at the fiscal side of the economy, which is
11:29 about mobilizing tax revenue to the state, then the issue of how much we're expecting
11:36 as a country from the e-levy vis-a-vis how much we are getting compared to the transactions
11:42 that are taking place within the mobile money ecosystem really confront us in the face and
11:51 raises a lot of questions as to how successful we have been at mobilizing tax revenue in
11:57 terms of e-levy for the state.
12:01 On the e-levy to the states, as you've rightly mentioned, what do you make of arguments that
12:07 the recent element of double counting?
12:12 That is very possible. That is very possible because a lot of transactions are going through
12:17 the entire mobile money architecture. But I believe strongly that the implementers of
12:21 this particular payment and those who are observing the architecture for e-levy have
12:30 a fair idea of what transactions are e-levy exempt and what transactions must suffer e-levy.
12:38 Now if you are having issues about double counting, as you have indicated, then it calls
12:45 for re-auditing the entire e-levy architecture to know exactly what is it that is happening
12:53 that is making us not to be able to achieve a near targeted amount as one would have anticipated.
13:02 But without a proper audit of the entire e-levy architecture to identify what may be contributing
13:08 to the abysmal performance of the e-levy in terms of how much we are expecting, it will
13:14 be difficult for one to just leave it the way it is. So we need to, if possible, audit
13:21 the entire e-levy architecture, use the exemptions that are available in the e-levy act and then
13:30 also consider what transactions should suffer and not suffer e-levy. Then we can have a
13:36 better appreciation of what is happening. We should not also forget that we are having
13:40 an e-levy architecture where individuals are also effecting transactions that do not necessarily
13:47 make it possible for them to pay the e-levy. They go to the merchant, they go to the dealers,
13:52 and what they do is they split their costs. So they allow the merchant to effect the transactions
13:56 and what should have gone to the state by way of 1%, they give the agent 50% of it and
14:03 they also keep 50% of it. And that is also another way of going around the e-levy payment.
14:08 Dr. Amwa, some have argued that if all these transactions are going on, then why is government
14:14 still struggling to get what it's looking for when it comes to the e-levy?
14:18 Mobile money transactions we are seeing does not and will not necessarily translate into
14:27 a one-on-one revenue jump by way of e-levy. You see, if you look at the e-levy act, we
14:34 have exemptions. What we are seeing is mobile money transactions. The transactions have
14:41 not decomposed the figures we are seeing into transactions that should necessarily attract
14:48 e-levy and transactions that are e-levy exempt. It just says transactions, 1.1 trillion Ghana
14:55 cities. Let's go into it. When we go into it, we will know which of the transactions
15:03 qualifies or do not qualify for e-levy. It is when we get close to that point that we'll
15:09 know how successful our implementation has been in the e-levy drive. But if you are just
15:16 looking at the amount as 1.2 trillion Ghana cities, and so we need to get about 10 billion
15:22 Ghana cities as e-levy, that may not be entirely a correct assessment of the entire e-levy
15:29 architecture because the exemptions in there and the transactions that must suffer in there.
15:33 Alright, finally, what does these transactions again tell you about the size of the economy
15:38 and activities within which we find ourselves in?
15:41 It gives us a good idea about the extent to which Ghanaians are moving away from paper
15:45 money, what we call the hard print money, fiat money, and minted coins. And we are making
15:51 use of bubamano, which is convenient, which is easy. So on that score, it is giving us
15:58 an overview of the change in our means of effecting payment, that we are becoming more
16:08 into electronic. That is from that point of view. It has its own set of challenges anyway,
16:13 but then compared to where we were some time ago, we're using more of cash. This is good
16:20 news if you are the regulator at the Bank of Ghana, and also for the third course, by
16:24 way of innovation, and making our country a little bit closer to what we call the cash-lit
16:29 economy that we have been dreaming about.
16:31 Great. Thank you very much, Dr Benjamin Amwa, for your time here on the Marketplace. He's
16:35 a senior finance lecturer at the University of Ghana Business School, sharing his perspective
16:40 with us there. To one of our headline stories, Joy Business is learning the National Petroleum
16:44 Authority is taking steps to address the looming fuel shortage following a threat by the tanker
16:49 owners' union to halt the transportation of petroleum products across the country,
16:54 over claims some foreign entities are taking over their businesses. Now, under the local
16:58 content law and the deregulation of the petroleum sector, the haulage of petroleum products
17:04 across the country is reserved for indigent companies, basically. According to the union,
17:11 a Chinese firm behind the construction of an oil refinery at Tema and Sentu has brought
17:16 tankers to offload the petroleum products locally. Here's her report.
17:21 Speaking to Joy Business, Mr Doe said although his outfit has informed the National Petroleum
17:28 Authority, the regulatory body is yet to take a concrete step. He underscored the risk of
17:34 collapse if stakeholders do not take immediate action.
17:38 Recently we had information that some tankers have been brought into the system. But seeing
17:47 tanker at the harbor or somewhere parked does not actually indicate that it's them. But
17:51 we very distant at the time we started hearing reports that those vehicles have been calibrated
17:59 and then when we sent people there to watch them we realized that they are for a Chinese
18:04 company which has set up a refinery. We even highlighted this thing or expressed our disgust
18:11 about the whole thing when we met MP at the forum on the 14th of September. But having
18:20 assured us that they are going to do something about it, we realized that the calibration
18:23 was going on which was what, the first steps towards the licensing of the vehicle. So we
18:31 can't tell who actually has given them the go ahead to go and even what calibrate the
18:36 vehicles. So our thinking is that somebody somewhere is giving them the go ahead to do
18:45 whatever they are coming to do.
18:47 On his part, lawyer Kwame Jamtua, a member of the union reiterated that the invasion
18:53 of these Chinese companies to the petroleum business is a threat to the country and the
18:58 economy and as such he expects government to intervene.
19:04 The petroleum sector downstream has been deregulated. That's why we have MP, we have BOST. They
19:11 look after that section. And if Ghanians have invested money to haul refined petroleum products
19:18 to their depots, why should we stop them? Look the danger is that they have built a
19:26 refinery. They are going into haulage. The next thing you see, they are buying petrol
19:32 stations. The moment they start buying petrol stations, forget Goyal, because they would
19:37 undercut the price. They are producing, aren't they? They will undercut the price. And if
19:42 they undercut the price, definitely they will be able to sell more than any other person.
19:46 What then happens? They take over. Once they take over, where does the Ghanian sit?
19:55 And my colleague Elton Brogbe joins me in studio for more on this. Elton, good to know
20:00 you are on with me here on the Marketplace. What has the MP been saying?
20:04 So Piers, we have intercepted a letter dated the 25th of September addressed to the CEO
20:10 of St. Joe Refinery Limited. Let me just run through three aspects of that. This is written
20:15 by the CEO of the MP. It says that it has come to the attention of the National Petroleum
20:19 Authority that your company has imported a large number of bulk road vehicles, BRVs,
20:26 into the country for the transportation of petroleum product. Additionally, we have also
20:29 noticed that the configuration of the loading gantry at the refinery can only accommodate
20:35 bottom loading instead of the top loading. And this configuration, according to them,
20:40 will mean that about 5,000 BVLs already in the country will not be able to load from
20:45 your gantry. And this situation, according to the MP, is already creating uneasiness
20:50 amongst stakeholders in the petroleum industry. And also make reference to the local content
20:55 law, which according to them, if indeed this Chinese company has imported their trucks,
20:59 that would be in violation of the local content law. And this is what the MP is demanding.
21:04 It says that we wish to advise you per the above policy, the authority will not be in
21:09 a position to license your BVLs to transport petroleum products in the country. If the
21:13 attention of your company is to transport petroleum from the loading gantry, furthermore,
21:18 the authority does not intend to disregard the Ministry of Energy's Ghanaian content
21:23 law policy and will ensure that no unlicensed entity carries out the transportation of petroleum
21:29 products in the country. And this is the latest on this matter. And there's a correspondent
21:34 we've intercepted from the MP to the CEO of Senchu refinery.
21:37 But what you do not know is whether Senchu has also responded back to the MP, do we?
21:42 Exactly. But we've been doing our own checks on this matter. What we are getting to understand
21:48 now is that Senchu is claiming that a subsidiary, which is owned by Ghanaian, is behind in the
21:56 importation of these vehicles in their country. So it's a matter that the MP says they will
22:00 investigate and then come with their final finding on this matter.
22:03 Great. Thank you very much Elton. Before your time here on the market, please, of course,
22:07 keep following up on that and keep us posted in our subsequent bulletins, Elton. Let's
22:11 move on to some other stories. The Commissioner General of the Ghana Expo 2023 in Doha, Dr.
22:17 Ifua Sabiasari says the country is looking forward to boost its export revenue from fruits
22:22 and vegetables. She explains that an outfit through the Expo is poised to expand investments
22:28 within the horticultural space. She was speaking at the Ghana Export Promotion Authority and
22:34 the Ghana Investment Promotion Media Engagement on the 2023 Doha Expo.
22:41 The Expo provides Ghana the unique opportunity to showcase the potential of the sector for
22:47 the needed investment and production infrastructure development. Dr. Ifua Sabiasari said the Expo
22:54 aid in attracting critical export-oriented investment into the sector.
23:00 The global demand for guavas and mangoes alone was close to four billion in 2022. The data
23:09 on imports of fruits, vegetables, nuts and other root crops is quite staggering. It is
23:15 worth 12.78 billion. This is in 2022 alone. If we juxtapose this with a mega three million
23:26 US dollars export revenue from fruits and vegetables to the same region in 2022, it
23:33 is clear that we have a long way to go. The Expo therefore provides Ghana the unique opportunity
23:42 to showcase the potentials of the sector for the needed investment and production infrastructure.
23:48 Ghana will be exhibiting under the following three themes.
23:54 Modern agriculture. This theme captures and expatriates the exciting opportunities in
24:01 agribusiness, urban agriculture, landscaping, agritech and related sectors.
24:08 The global horticulture market in 2021 was estimated to be valued at $20.77 billion and
24:15 is projected to reach $40 billion by 2026.
24:24 And that's all in this package by way of marketplace here on the Joe News Channel.
24:27 I am Pius Kujubaka. You can get great stories when you log on to myjoyonline.com/business
24:33 for all the business stories you need to read in the country and beyond. Go enjoy the rest
24:37 of our program. See you same time tomorrow. Bye.
24:40 [Music]
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