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Credit to small and medium-scale enterprises (SMEs) and households was tightened recently as a result of low cash flow, unsatisfactory account operation and poor credit history, a credit conditions survey conducted by the Bank of Ghana (BoG) in October has revealed.
But credit stance for large enterprises and consumers eased reflecting improved economic expectation.
The Central Bank, which made this known, said: “Private sector credit continued to expand in the year. In nominal terms, credit grew by 43.8 percent on an annual basis in September 2012 compared to 25.5 percent a year ago. In real terms, credit to the private sector recorded an annual growth of 31.4 percent against 15.8 percent in September 2011.”
Also, it said the pace of growth in broad money supply slowed to 28.8 percent in September 2012 from 41.9 percent in September 2011, adding that the slowdown was largely driven by a decline in net foreign assets (NFA) of the country’s banking system.
“The banking system continued to show steady asset growth and profitability in the year to September 2012. Total assets increased to GH¢25.1 billion from GH¢20.3 billion in September 2011. The growth in assets was mainly funded by domestic deposits.”
The Central Bank said although the quality of loan portfolio in the banking industry continued to improve slightly over the period, the non-performing loans ration declined further to 13.1 percent in September 2012 from 13.4 percent in July 2012 and 15.7 percent a year ago.
Between July and September, this year, interest rate trends stabilized while the average three-month deposit rate moved up to 11.95 percent in September from 10 percent in July 2012, while lending rates edged up slightly to 25.7 percent from 24.7 percent recorded in July 2012.
On a year-to-date basis, the lending deposit spread narrowed to 13.8 percent in September from 14.7 percent in July 2012.
By Emelia Ennin-Abbey
An Inter-agency taskforce set up by the Ministry of Trade & Industry has uncovered Ghanaians fronting for foreign retailers who are illegally operating in the country’s retail industry.
Members of the taskforce, who have the mandate to eject non-Ghanaian retailers from open markets legally preserved for Ghanaians have been facing several challenges, making the exercise unproductive.
During a recent operation during which a team made up of representatives from the Domestic Trade Unit of the Ministry of Trade and the Ghana Union of Traders Association thronged the Central Business District of Accra in response to calls on government to intervene in the matter, some unpatriotic Ghanaians were fronting for unscrupulous foreigners.
Some Ghanaians suddenly claimed ownership of several shops which previously belonged to Chinese to the utter surprise of the taskforce.
Other foreigners who failed to make arrangement for Ghanaians to cover up for them took to their heels when news about the activities of the taskforce spread through the market.
The team, led by K. Ntim Atuahene, Director of Domestic Trade and Distribution of the Ministry of Trade and Industry delivered warning letters to non-Ghanaian retailers to vacate the markets voluntarily.
Even though Ghanaians in such shops claimed there had been transfer of ownership, the team believed the indigenes were only fronting for the foreigners upon a tip-off.
In most of the shops, public notices pasted by the task force over five months ago asking such shop owner to relocate before October, were still in place while the occupants undertook their activities unconcerned.
Further probing by the taskforce showed Ghanaians who claimed to be the new shop owners had no documentation such as transfer deed, certificate of Business registration, tenancy agreements, among others in their names to prove their claim.
In one of such instances, one George Gbobitey claimed he had taken over Merrs Le Golf Ghana Limited even though records of the task force showed it was owned by a Chinese.
When he was asked to show documents to back his claim, he produced a business certificate with the name Gbobi Enterprise and this conflicted with the data of the task force.
After several questioning by the task force, it was further revealed that he had moved from his shop which was a few steps away to cover up for the Chinese, a business friend just for a fee.
Another suspect, Erica Esi Prah hastily pasted the name Erica Shoes in front of a shop which according to the task force belonged to a Chinese.
The young lady claimed her lawyers were yet to complete the business transfer arrangement as well as tenancy agreement and other documentation.
The shops of such perpetrators were immediately locked up by taskforce.
The suspects were ejected and subsequently asked to report to the Ministry of Trade and Industry.
Leader of the taskforce, Mr. Atuahene, in an interview, told BUSINESS GUIDE that full investigation would be conducted into the matter after which a decision would be taken.
He urged Ghanaians to support the operation of the taskforce and not cover up for the foreigners whose activities were hampering indigenous retailers.
The taskforce was set up by the Trade Ministry to ensure non-Ghanaians engaged in retail and petty trading vacated open markets which were reserved for Ghanaians.
Data gathered by the task force as part of the exercise identified 1,070 shops operated by non-Ghanaians across the country.
It would be recalled that members of the Ghana Union Traders Association (GUTA) staged a demonstration and criticized the taskforce for the delay in ejecting foreigner traders.
By Emelia Ennin Abbey
Over 90 per cent of vegetables on Ghana’s market are unsafe for consumption even though they may look attractive, the Crops Research Institute of the Council for Scientific and Industrial Research (CSIR) has warned.
A recent study conducted by the Institute revealed enormous amounts of chemical residues in selected vegetables produced in the Greater Accra, Volta and Ashanti regions.
It said vegetable farming in Ghana was fraught with misuse and overuse of pesticides.
Some farmers have resorted to the use of such chemicals to reduce or eliminate yield losses, preserve high product quality, check or control pests, diseases, weeds and other plant pathogens.
George Ortsin, Country Programme Coordinator of the UNDP’s Global Facility for Small Grants Programme, in an interview with the BUSINESS GUIDE in Accra recently, noted that the selected vegetables included tomato, okro, lettuce, cabbage and cucumber.
The vegetables were taken from five different locations in Accra including Weija, Kawukudi; a farm gate at Akumada in the Ashanti region and Keta in the Volta region.
He revealed that the vegetables were subjected to chemical analysis by the Crops Research Institute, one of the 13 institutes of the Council for Scientific and Industrial Research which conducted the study between 2007 and 2008.
“It was realized that all the vegetables had chemical residues of banned chemicals such as DDT and other bad chemicals. There were some with presence as high as 5000 per cent and the least was about 500 per cent.”
He stated that dichlorodiphenyltrichloroethane (DDT), an organ chlorine insecticide “was very high in all the vegetables.”
DDT was banned in the United States in 1973, although it is being used in some other parts of the world.
Mr Ortsin hinted that “there are plans to repeat the research and I guess the situation will be worst in 2013 when we conduct the next chemical analysis on sampled vegetables.
“The problem is on-going because our borders are not tight enough when it comes to the flow of chemicals. There are all sorts of people carrying banned chemicals into the system.”
Mr Ortsin mentioned that “the finding was forwarded to government and the response we had was that something will be done about it but nothing has been done till date.”
To avert the effects of the chemical residues in vegetables on consumers, the Programme Coordinator said measures had been adopted to institute the certification of vegetables.
“When you go and buy tomato, you will have the option to choose from a certified and an uncertified tomato,” he said.
To encourage organic farming, the Global Facility for Small Grants Programme has identified five farming groups in the middle belt and southern zone of the country which would be certified to produced the organic vegetables.
The programme has also linked up with an Indian company to set up an organic fertilizer plant in Ghana.
“By December, the Indian company will be shipping samples of their products to us and then when the Ghana Standards Authority certifies it, the project might take off in 2013,” he disclosed.
The Indian company produces organic fertilizer from animal droppings and household waste which are processed into either liquid or granular forms.ations.
Government’s total expenditure from January to October this year shot up by 52.8 per cent higher than the amount spent in 2011, a Monetary Policy Committee (MPC) report of the Bank of Ghana (BoG) for the third quarter has indicated.
This includes public expenditure such as payments for the clearance of arrears and outstanding commitments, which currently stands at GH¢16.2 billion.
It also covers compensation for state employees, purchasing of goods and services, cost of other expenditures under government obligation and statutory funds, among others.
Acting Governor of the Bank of Ghana, Dr Henry Kofi Wampah, the chairman of the MPC, who disclosed this to the media in Accra recently, said government’s spending went up due to higher recurrent spending which totaled GH¢10.8 billion.
He explained that the higher growth in the recurrent spending was on account of the higher levels of personal emoluments which increased by 65.8 percent on a year-on-year basis.
This, he noted, was mainly due to the implementation of the Single Spine Salary Structure (SSSS).
Government had initially targeted a capital expenditure of GH¢4.1 billion, but the slow disbursement of project loans and grants resulted in the payment of GH¢2.8 billion compared to GH¢2.2 billion in 2011.
Interest payments for the last three quarters of the year also amounted to GH¢1.6 billion, representing a 35 percent rise over the same period in 2011.
“This was mainly the result of high domestic borrowing and associated cost of debt servicing.”
Many analysts have expressed worry over government’s financial outflows, which are expected to go up especially during the last quarter of the year as political activities peak.
Ghana has been cited as one of the countries that overspend public funds during electioneering periods since 1992.
It is believed that incumbent governments spend excessively just to woo the electorate to vote for them.
According to a VOA News report in 2011, Ghana borrowed $1 billion from the International Monetary Fund (IMF) after it overspent in the 2008 election year.
By Emelia Ennin Abbey
Though the number of foreign insurance companies operating in Ghana increased from two as at December 2006 to 16 as at October, this year, their presence has not been without undesirable effects, Nyamikeh Kyiamah, Commissioner of the National Insurance Commission (NIA) has noted.
According to Mrs Kyiamah, aside occasioning a sharp increase in the number of operators in addition to fierce competition for growth and survival, some foreign companies were exhibiting dishonorable characteristics.
She disclosed this while addressing the formal opening session of the West African Insurance Companies Association (WAICA) Accra 2012 Educational Conference in Accra yesterday.
“Some of the companies have resorted to unethical marketing and underwriting practices as well as bad credit management practices to manage the competition. Also, some foreign companies conduct their business in such a manner that leads to premium flights. In a number of instances, huge premiums which hitherto had been retained in Ghana and can be retained in Ghana are sent overseas through pseudo re-insurance arrangements of some foreign insurance companies.”
Under such circumstances, she said the aim of the local insurance companies to harness foreign direct investment which lately has been flowing into the country’s oil and gas industry, would be difficult to attain.
She therefore urged all foreign companies to play by the rules of the industry to ensure a win-win situation.
Referring to a 2011 Swiss Re Sigma Report, the Commissioner stated that insurance penetration in Ghana and Nigeria were 1.06 percent and 0.06 percent respectively while those of South Africa, Namibia and Kenya stood at 12.9 percent, 7.3 percent and 3.2 percent respectively.
In order to address the situation, Mrs Kyiamah said her outfit had supported the development of micro-insurance products for Ghana’s informal sector.
“The implementation of these provisions is expected to help increase access to a significant percentage of the population and thus help to create wealth and reduce poverty. I am aware that a similar initiative is underway in Nigeria. I will therefore like to encourage other WAICA countries to do same as a major step to growing our insurance markets.”
Kwame-Gazo Agbenyadzie, president of Ghana Insurers Association (GIA), in a welcome address, stated: “If we compare the rainfall induced floods that hit us in Accra in October last year, and its financial impact on most of our companies to devastating effects of super storm Sandy in the US for which the early damage are estimated at about $50 million billion and still continuing, then we must start rebuilding the financial capacity of our industry in West Africa and Africa.
“Indeed, we must go back to the basic principles and practices that constituted the foundation upon which insurance thrives worldwide and ensure high ethical standards and an overall increase in professionalism.”
The insurance industry in West Africa requires massive inflow of capital to bring about the expected growth and expansion. It was for this reason that Ghana’s Insurance Law of 1989 (PNDCL 227), which contained certain restrictions which served as disincentives to the inflow of FDI especially in the area of foreign ownership of insurance companies in the country was repealed.
By Samuel Boadi
Ghana cannot boast of a national housing policy after 55 years of independence.
This is due to the fact that governments, both past and present, are not ready to commit themselves to funding any pro-poor housing scheme since it would demand a lot of financial commitment.
John Tettey, a Director of Housing Policy at the Ministry of Water Resources, Works & Housing, who expressed dissatisfaction with the situation recently during the press launch of the 2012 Centre for Housing Excellence in Accra, said government must resolve to ensure that Ghanaians obtain roofs over their heads.
“Most investors are not willing to commit their resources to the continuation of existing housing projects. They are a bit apprehensive to do that because they are not sure whether these would be profitable or not,” he indicated.
Information gathered by BUSINESS GUIDE on the foregoing subject indicates that a policy of such nature is being drafted and would be presented to Parliament for approval after which it would be forwarded to Cabinet for endorsement.
A lot of Ghanaians cannot actualize their dream of gaining shelter after so many years of hard work and perseverance. Some have even lost their lives without realizing their cherished dreams.
Also, most people expect their dreams to materialize through the prudent management of their pensions contributions but they have been let down by pensions fund managers who have used proceeds from such investment to better their lot.
Enoch Teye Mensah, Minister of Water Resources, Works & Housing, recently told journalists in Accra that about four out of 90 companies that applied to build housing units had been granted permission to do so.
These include Ital Construct, which is expected to build 4,000 housing units, American Capital, which has partnered local companies to build 5,000 units, the Tema Development Corporation (TDC) and the Commonwealth Business Council.
Their applications were approved in April, this year, he indicated.
He said a seven-member committee, set up by the ministry, was investigating the backgrounds of the applicants to determine whether they had the means and integrity to execute such jobs.
Others that are seeking approval include Amandy Company and a company from Brazil which has entered into agreement with Ghana Home Loans, among others.
SSNIT and Regimanuel Grey Limited, he added, were collaborating to build some 700 housing units at Klagon, near Nungua in Greater Accra region.
The minister noted that such housing units are specifically targeted at Ghanaians, who are unable to own houses, adding that the houses would be affordable.
Currently, Ghana’s housing deficit stands at 1,700,000 units per annum.
By Samuel Boadi
Parliament cannot trace the whereabouts of a 2011 report submitted by Richard Q. Quartey, Auditor-General since June, this year on the financial stewardship of government Ministries, Departments and Agencies (MDAs) and Metropolitan, Municipal and District Assemblies (MMDAs).
An attempt by Albert Kan Dapaah, chairman of the Public Accounts Committee (PAC) to get the august House to lay the report about a fortnight ago was greeted with a big ‘I don’t know’ from Doe Adjaho, First Deputy Speaker of Parliament, who indicated that he was not aware of the submission of such report to the Speaker.
According to reports, the Speaker of Parliament traveled outside the country at the time the issue cropped up and has still not returned.
After submitting the report in June, Mr Quartey complained bitterly about the refusal of MDAs and MMDAs to duly submit their financial statements to his outfit for auditing.
According to him, the unwillingness of the MDAs to submit their financial statements for auditing had created ‘an expectation gap’ that has not been filled since 2003 when Act 654 was passed.
Furthermore, he disclosed that the 2011 report he submitted to Parliament was replete with negative occurrences, adding that the report must be submitted six months after the end of the year.
Reports suggest leaders of the august House are deliberately dilly-dallying with the report in order to prevent the discovery of skeletons in the cupboard of MDAs and MMDAs which are headed by government appointees.
The Auditor-General said anytime auditors unearth malpractices and other breaches of the country’s financial regulations, auditee management committees handle the issues with kids’ gloves making the offenders to often go unpunished.
Additionally, he noted that the audit finding sometimes receives no attention from the seat of government.
Such apathetical attitude, he emphasized, continued to encourage the perpetuation of malpractices and irregularities in the public financial management.
“When the offenders are not within the audited entity, but are third parties that transact business with the entity, auditee staff sometimes collaborate with the third party and try to cover up the offence.”
The inability of MDAs and MMDAs to establish audit report implementation committees as required by Section 30 of the Audit Service Act, 2000 leads to the consequent perpetration of various internal control weaknesses and other irregularities in the public financial management system, he said.
This is about the second time this issue has been raised this year.
By Samuel Boadi
The Civil Society Platform on Oil & Gas has asked George Sipa Yankey, Chief Executive Officer (CEO) of the Ghana National Gas Company (GNGC), to step aside for investigations to be conducted into his stewardship.
According to the group, Sinopec International Petroleum Services Corporation (SIPSC), a subsidiary of the Sinopec Group, which is constructing the gas processing plant at Atuabo in the Western region, has overpriced the project while GNGC remains indifferent.
“The SIPSC is delivering a processing plant that is costing $40 million more than another plant which is considered superior by virtue of having five additional features including specifications that are favourable to the Volta River Authority (VRA),” Dr. Steve Manteaw, chairman of the group, stated at a press conference in Accra.
He said “SIPSC has overpriced the materials for both the power plant and pipes by building hidden costs purportedly occasioned by an arrangement with SIPSC’s special purpose subsidiary offshore firm called SAF Petroleum Investments (FZE), registered in Dubai.
“Under the arrangement, SAF will make the initial procurement and resell the items to SIPSC. Meanwhile, the same person – Ms Yang Hua serves as Project Director for both SIPSC and SAF.”
The gas project would cover the processing of gas from the Jubilee Oilfield into clean fuels and feedstock for the domestic and export markets while promoting the development of the country’s petrochemical industries to eliminate the flaring of gas.
A visit by BUSINESS GUIDE to Atuabo recently showed that pipes were being laid from the processing plant to the Takoradi Thermal Plant at Aboadze to meet the December deadline for the commencement of the first phase of the project.
Dr. Manteaw stated that attempts by the Petroleum Commission and the Ministry of Energy to obtain details of the transactions entered into by GNGC and Sinopec were thwarted by its Chief Executive Officer, Dr. Sipa-Yankey.
He said his outfit called for investigations “because of the huge costs being recorded relative to the gas project and their ramifications for gas pricing when the project is completed.
“We believe that by the singular act of investigating these allegations of fraud and impropriety at Ghana Gas, the President will be sending a strong signal to the skeptics that his government is serious about fighting corruption,” Dr. Manteaw emphasised.
The group is also calling on Parliament to take immediate steps to call for the GNGC-SINOPEC deal to be laid before it for debate and possible ratification in order to streamline GNGC’s activities.
It appealed to authorities to restructure GNGC as a subsidiary of the Ghana National Petroleum Corporation (GNPC) under the Ministry of Energy’s oversight.
“This is important not only for tapping into GNPC’s technical expertise and years of experience but also for enhancing the corporate profile and industry leverage of GNPC. Again, even though the GNGC has been incorporated, its mandate is not clear as the GNPC by law and by the Jubilee contractual arrangements owns the gas reserves with the international partners, and is expected to develop and transport gas to onshore facilities.”
Reacting to the statement, Kwesi Botchwey, Board Chairman of GNGC, said every act of procurement by the GNGC had been done in strict accordance with the country’s procurement laws and in compliance with the company’s own internal regulations regarding the thresholds for board approval, as it pertains in all companies in both the public and private sector.
“The allegations of impropriety in procurement practices, and the talk of so-called “transfer pricing” by the project contractor Sinopec are allegations that the board of Ghana Gas has thoroughly discussed and found to be without merit or substance.”
Dr Botchwey continued: “I am aware that there are some who would have preferred to have one company exercise dominion over the entire oil and gas industry from upstream, midstream and downstream and preferably be responsible also for regulating the entire industry.”
According to him, “Dr. Manteaw of the Civil Society Platform sounds very much like the hireling and advocate of these vested interests. But if per chance I am wrong and Dr. Manteaw’s group is truly interested in constructive debate, Ghana Gas will be more than happy to debate them publicly.”
He indicated that Ghana Gas was studying the group’s statement and would issue a more detailed response if need be.
By Esther Awuah
Ghana should be preparing to single-handedly champion her development projects in the near future.
This is because the level of development assistance it enjoys from European Union (EU) countries will soon dwindle.
The head of the EU Delegation to Ghana, Claude Maerten, in an interview with BUSINESS GUIDE recently in Accra, asserted that “the level of external assistance will decrease because the crisis is not one which affects just Europe but affects the growth rates of all countries of the world – the USA, South East Asia and all countries.”
In order to counteract the effects of the current economic crisis unfolding in Europe, the head of delegation said Ghana should pursue more investment and trade.
“Ghana’s growth rate projected for this year, compared with the growth rates of some countries in Europe, is very high. In some EU states, there is no growth rate at all while in some countries, there is a decline of the GDP. A few countries in Europe had positive GDP.”
He revealed that EU countries have an agreement with the Government of Ghana that stipulates that from 2020 Ghana will be less aid dependent.
“We know that Ghana has a lot of natural resources, mines and also oil, which will flow more and more. There is also the gas infrastructure which will develop the energy sector and bring jobs to the youth.
“Ghana is very positive. So it is so clear that when we look at such situation in the world, we have to put in place a system of assistance for countries which badly need support. This being said, the relationship with Ghana will be quite high because Ghana is the most politically democratic country in the sub-region.”
The foregoing not withstanding, Europe still remains a major trading partner of Ghana. But Ghana could also look at trading with countries in South-East Asia and Latin America.
“It will affect external trade and exports but at the same time Ghana exports more raw materials with gold and aluminium. These products are in high demand and also the price of the products will be high in future. Ghana has been so much resilient in the competitiveness of these prices.”
Additionally, Mr Maerten said remittances might decline because if there are less jobs in Europe or any part of the world where Ghanaians reside, it will be difficult for them to send money home.
“That might also affect balance of payment of Ghana.”
Asked when the crisis would end, he said: “Nobody knows how long it will take. Recently the economic and financial ministers met and launched the European Stability Mechanism to lend support to affected countries. This comes with an amount of 500 billion Euros seed money.
Ghana-EU partnership, which has existed for about 35 years ago, has witnessed the investment of about GH¢3 billion in Ghana.
Between 2008 and 2015, the EU has earmarked GH¢1.2 billion for development in Ghana. So far, 40 percent has been spent.
By Samuel Boadi
IMANI GHANA, a policy think-tank, has noted that governance is a huge challenge for the National Pensions Regulatory Authority (NPRA) which ought to be addressed without delay to help the authority to deliver on its mandate.
According to the organization, an in-depth investigation revealed that the administrative sludge with NPRA was purely due to the board chairman under whose unclear tenure three acting Chief Executive Officers (CEOs) resigned within one and a half years.
“From outright usurpation of powers to direct threats of removal, all acting CEOs have been or nearly cowed into slavish submission except those who escaped.
And there are allegations of colossal financial impropriety, for instance, per the account of the last acting CEO, as a non-executive Chairman, he signs cheques and makes unapproved withdrawals from the money that hard working pensioners contribute,” the think-tank noted in a press statement issued on Wednesday in Accra.
Employers have since January 2010 been remitting 5 percent (Tier 2 contributions) of their employees’ salaries to the TPF but it appears the pensions of Ghanaian workers are being mismanaged for which reason the fate of contributors is unknown yet.
It revealed that the administrative behemoth, albeit retrogressive was aptly described by the last acting CEO who resigned as ridiculous.
“This is Ghana’s new pension scheme hanging dangerously on one man’s shoulder and his regulatory office. Perhaps if there is one major undeserving feat the board has chalked, it is that the board chairman has licensed third party Service Providers in March 2012 to handle data management as part of the transitional arrangement in the setting up of The Temporary Pension Fund, which was to receive the 5 percent second tiered contributions.
“That in itself is nothing compared with what the 5 percent contributions should have been used for in the last three years for which no information exists.”
It added that after three years of reforming pensions in Ghana, NPRA, a creation of the reforms, was yet to fulfil its major mandate of licensing occupational pension schemes that were ready to work directly with contributors.
The NPRA was set up to oversee the implementation of the National Pensions Act, 2008 (Act 766).
“The Act seeks to create a unified pension system under a three-tiered pension structure with SSNIT as the operator of the First Tier, and Approved Trustees (Corporate Trustees) as operators of the mandatory Tier 2 and Voluntary Tier 3 schemes.
To begin the implementation, the NPRA set up a Temporary Pension Fund (TPF) in January 2010 to provisionally administer Tier 2 contributions pending the licensing of Trustees.
“With no clear guidelines as to which ministry it must report to, it is in the NPRA’s interest to be resourceful by releasing contributors’ funds that must duly go to private and state schemes now so that ordinary back-breaking workers can determine how to invest their money for old age.
It is because people were not happy with the SSNIT Scheme that the new pension reforms came to be.”
By Samuel Boadi