Mobile money transactions won’t be taxed – Govt

Government says claim by the Minority National Democratic Congress in Parliament that mobile money transactions would be taxed is false. A Deputy Information Minister, Kojo Oppong-Nkrumah told Media General’s Bright Asempa of Onua 95.1FM on Wednesday that government has no intention to tax that sector now, at least not in the 2018 budget. At round table discussion on the 2018 budget, the Minority criticised the government for planning to impose tax on the thriving mobile money business, describing it as “retrogressive”. “The intention to tax mobile money transaction must be abolished immediately, since it constitutes a serious threat to financial inclusion and economic growth in Ghana,” Cassiel Ato Forson, Minority spokesperson on finance said on Monday. But Kojo Oppong-Nkrumah revealed that the yet-to-be read 2018 budget statement and economy policy of government did not capture that claim. He said the Minority’s position was just a “distortion” of the 2018 budget and wondered where they got that information from. Since the 2018 budget would have nothing to do with their claims, he said, it is predictable that the Minority will change position and say it was removed from the budget because of their disclosure. According to Oppong-Nkrumah, who is the Member of Parliament for Ofoase-Ayirebi, the preparation for the budget started about two months ago and finalised way back before the Minority made the mobile money claim. In a related development, the Deputy Information Minister said government managed to clear a number of debts it inherited from the previous administration and stabilise the economy in 2017. He cited the reduction of inflation from about 15 it inherited in January 2017 to 11.6 percent as at October, interest rate brought down to around 28 from over 30,  import cover improved from 2 to 4 months. All these were achieved as a result of prudent financial management of the government, he claimed. Government, Oppong-Nkrumah said, would be looking at sustaining the micro economy gains it made this year in 2018. The 2018 budget would also be looking at measures government can put in place to create the enable environment for businesses to grow and create employment. He said is government is also keen on ensuring that the national purse is safeguarded against officials who misuse public funds. When that is done and the government is able to achieve its revenue target, it would then translate into development, he stated.



Document: 2017 budget highlights

Finance Minister in March this year presented to Parliament the 2017 budget, his first budget statement and economic policy.

The budget gave details of government’s expenditure and revenue generation plan for the year 2017.

It also announced a number of tax reliefs for businesses in the country.

The highlights of the 2017 budget include the following:

Some Tax Incentives

– abolish the 1 percent Special Import Levy;

– abolish the 17.5 percent VAT/NHIL on financial services;

– abolish the 17.5 percent VAT/NHIL on selected imported medicines, that are not produced locally;

– abolish the 17.5 percent VAT/NHIL on domestic airline tickets;

– abolish the 5 percent VAT/NHIL on Real Estate sales;

– abolish excise duty on petroleum

– reduce special petroleum tax rate from 17.5 percent to 15 percent;

– abolish duty on the importation of spare parts;

– abolish levies imposed on kayayei by local authorities;

– reduce National Electrification Scheme Levy from 5 percent to 3 percent;

– reduce Public Lighting Levy from 5 percent to 2 percent;

– abolish levies imposed on religious institutions by local authorities;

Other Initiatives

– Under the “One Village One Dam” campaign, small to medium scale irrigation schemes to be identified and rehabilitated.

– Ministry of Trade to implement the “One District One Factory” initiative to ensure an even spatial spread of industries.

– Ministry of Education to commence implementation of free secondary education in September for the 2017/18 academic year.

– 275 constituencies to be allocated the equivalent of US$1 million annually under the Infrastructure for Poverty Eradication Programme (IPEP)

Click here to access the full document.


Give us practical job creation steps, not rhetoric – TUC to Gov’t

The Trades Union Congress (Ghana) has asked the government to advance in the next budget proposal to parliament, practical steps to create jobs in the country.

According to the TUC, the greatest challenge facing the national economy is how to create decent jobs for the millions desperately seeking jobs and thus expect the 2018 budget statement to address the challenge in a more practical manner beyond the rhetoric.While commending the government for largely achieving its 2017 targets of stabilizing the economy, albeit some level of fragility still outstanding, the labour movement said stabilisation is not sufficient to deal with the employment challenge.“There is the need to get the economy on a higher and sustained growth path that creates decent employment. A disaggregation of current growth figures shows that economic growth is driven, primarily, by oil and gas, and mining. These sectors cannot be relied upon to address the employment challenge.”

TUC’s position on the economy was contained in its proposals to the government for consideration in the 2018 Budget and economic policies, and was released Tuesday.

Other specific issues the TUC wants addressed include economic growth, salaries, pensions and labour administration.

Below is the full statemtnt issued by the TUC.





The Government of the New Patriotic Party (NPP) will present its second Budget Statement and Economic Policies to Parliament in a couple of days. As has been the practice, the TUC takes the opportunity to share its perspectives on the economy and make proposals for consideration of government.

In our submission for the 2017 Budget Statement, we pledged our support for policies that will return the economy to growth and reduce poverty in all parts of the country. We emphasized that economic growth can lead to poverty reduction only if it leads to creation of decent jobs.

In this submission, we continue to place emphasis on economic growth and employment generation. Other specific issues addressed include salaries, pensions and labour administration.

Economic Growth and Job Creation
In 2017, the focus of the budget and economic policy was primarily to stabilise the national economy. This has largely been successful even though some level of fragility remains. Inflation has come down from 15.4 percent in December, 2016 to 12.2 percent in September, 2017. The exchange rate of the Ghana Cedi has been quite stable in the last few months. The fiscal deficit is declining. The Treasury bill rates have decreased, even though commercial bank’s lending rates remain high.

In the first quarter, GDP growth was estimated at 6.6 percent. The second quarter growth is estimated at 9 percent compared to 1.1 percent growth recorded for the same period in 2016. These developments are very encouraging.

The greatest challenge now is how to create decent jobs for the millions who are desperately seeking jobs. We expect the 2018 budget statement to address this challenge in a more practical manner beyond the rhetoric. Stabilisation is necessary but not sufficient to deal with the employment challenge. There is the need to get the economy on a higher and sustained growth path that creates decent employment. A disaggregation of current growth figures shows that economic growth is driven, primarily, by oil and gas, and mining. These sectors cannot be relied upon to address the employment challenge.

The resources from our natural resources should be used to support other sectors that have the potential to create large numbers of decent jobs. In our previous submissions, we have expressed support for government initiatives such as the “one district one factory”, and “planting for food and jobs” among other initiatives intended to create employment. These initiatives will help grow agriculture and manufacturing.

However, the initiatives cannot be successful unless we make fundamental changes in our economic policies. Investors in these factories will first think of markets for their products. The domestic and the West African sub-regional markets will be their first consideration, given the difficulty of breaking into the European and American markets. A review of our trade policy will go a long way to support the “one district one factory” and help create jobs. It is also important that Ghana works with other West African countries to secure the West African markets for our industrial ambitions. That is why Ghana should proceed with great caution in respect of the Economic Partnership Agreement (EPA). Any unilateral action will undermine our interest in the sub-regional market.

Other issues that need to be addressed in support of employment creation include lending rates. Commercial banks’ lending rates remain high even as government borrowings on the domestic money market decrease and Treasury bill rates come down. Clearly, the traditional mechanism is not working. We expect the budget statement to show clearly how government will bring down cost of borrowing. It will be extremely difficult to create decent jobs in large numbers if the cost of borrowing remains so high.

The TUC fully supports government efforts to directly provide jobs in the public sector, especially when the private sector is unable to absorb a significant proportion of school leavers. The recruitment of trained nurses and teachers into the health and education sectors is commendable. We need more teachers and nurses across the country. We also need sanitary officers and cleaners in all our cities and towns. This can be an avenue for creation of large numbers of decent jobs for the youth.

We expect government to use the 2018 budget to consolidate the gains in the last eleven months and to implement policies that will spur rapid economic growth and employment creation.

We also expect government to resource the Ghana Statistical Service to provide up-to-date and accurate information on employment. Real time statistics provide a better way to evaluate the impact of government policies and programmes on employment creation.

Earnings remain too low in Ghana, even by sub-regional standards. The Single Spine Pay Policy (SSPP) boosted public service pay in the first three years of its implementation, albeit from a low base. In the last four years, however, the gains have been eroded, in real terms. At the same time complaints that the wage bill is absorbing more than half of the national revenue is getting louder. Reconciling the two positions is critical for industrial harmony, in the coming year and beyond.

Government has recently constituted a committee to review the Single Spine Pay Policy (SSPP), among other functions. The TUC welcomes the initiative because there are a number of outstanding issues with the SSPP that need further attention. For example, the pay point relativity has remained unchanged since 2010. There are still huge overlaps across pay levels on the Single Spine Salary Structure (SSSS) which is not consistent with the SSPP. The national minimum wage is still around US$2.00 per day, for eight hours of work. These levels of wages do not match the economic realities in the country. We expect government to provide financial and material resources to the committee so that members of the committee can approach their work with utmost seriousness and provide a way out of the current situation.

Labour Administration
We have already drawn government’s attention to the weak labour administration institutions due, mainly, to lack of funds. The Ministry of Employment and Labour Relations (MELR) and its agencies are among the least resourced institutions in the government machinery.

The TUC is committed to deepening and strengthening social dialogue. We expect government to do its part by investing in the National Labour Commission, Labour Department, Fair Wages and Salaries Commission and Factories Inspection Department. A very significant proportion of labour disputes in the country can be avoided if these labour administration institutions were operating effectively. Failure to strengthen institutions for social dialogue may mean more frequent strikes and other industrial disturbances.

For a very long time, Ghana has been grappling with low pensions. A very large proportion of pensioners subsist on a minimum pension of GH¢276. In addition, a very small section of the workforce has access to pensions despite the introduction of the third-tier pension intended to capture informal workers.

Low pension results from low earnings and poor management of pension funds. Enhancing salaries will, therefore, have substantial effect on pensions and welfare of pensioners.

There is also the need to ensure that pension funds are managed efficiently. Recent developments at the Social Security and National Insurance Trust (SSNIT) do not inspire confidence. Obviously, there is the need to reform SSNIT to rescue it from the undue influence of government and party politics. The reforms should be designed to ensure that SSNIT focuses its attention exclusively on improving benefits for pensioners. Our proposals for reforms of SSNIT will be submitted to government shortly.

On the second-tier pension, we urge government to settle its indebtedness to the public sector schemes without further delay. The non-payment of government contribution is jeopardizing the schemes and undermining the sound reasons that informed the implementation of the three-tier pension scheme. A continuous dialogue with the public sector unions should be a necessary part of any such arrangements.

Privatization of Strategic National Assets
The TUC holds the view that privatization of strategic national assets is never in the best interest of Ghana. The argument that private participation will help revive the fortunes of such companies is a denial of faith in the people of Ghana. The NPP was elected with so much promise of solving the country’s problems. It must not take the easiest route, especially when that route betrays national interests. Governments are not elected to do the easiest things. Selling off state assets could be the easiest way around a problem. But a dispassionate analysis of the challenges facing these state-owned companies will show that most of the challenges emanate from impediments erected by governments. Electricity Company of Ghana (ECG), Volta River Authority (VRA) and Ghana Water Company Limited (GWCL) are very good examples. We believe that if governments stop their interference in these companies, they will perform satisfactorily.

Developments in the economy in the last eleven months indicate that we are on the right track. The 2018 budget and economic policy must consolidate these gains and propel the economy onto a rapid growth path that can create decent jobs in both public and private sectors. More workers are needed in education, health and sanitation sectors. In the private sector policy constraints on growth have to be addressed aggressively in this budget statement. Policies that raise costs of doing business and renders the domestic private sector uncompetitive, even on the home market, should be removed completely.

The employment challenge remains the greatest of all the policy challenges facing our country. We expect the 2018 budget to address this challenge in a very practical way.

Source: Ghana | Graphiconline

BoG to get tough on rural banks as paid-up capital requirement deadline draws near

The Bank of Ghana in 2015 raised the minimum paid-up capital requirement of all rural and community banks in Ghana from GH¢300,000 to GH¢1million.

All the 141 rural and community banks were expected to raise their paid-up capital to GH¢500,000 by December 2016 and GH¢1million by December 2017.

As at June 2017, out of the 141 rural banks in Ghana 51 had met and exceeded the GH¢1million   threshold paid-up-capital; 51 RCBs also had paid-up capital ranging from GH¢500,000 to GH¢950,000 and the

Mr. Kofi Amoa-Awuah, Head of the Other Financial Institutions Supervision Department, OFISD, Bank of Ghana, in a speech delivered on his behalf by Mr. Yaw Akomgong at the 16th National Managers’ Conference of the Rural and Community Banks held recently in Ho, reminded the industry of the approaching deadline.

Mr. Kofi Amoa- Awuah, who raised other regulatory concerns, mentioned weak credit risk management culminating in high NPLs as a result of poor appraisal of credits, lack of monitoring and weak recovery systems.

According to him, some rural banks – especially those with BoG’s composite ratings of ‘critical’ and ‘unsatisfactory’, continue to violate the 8% Primary Reserve Requirements.

The RCBs, he said, must, therefore, ensure that they are liquid at all times so as to inspire confidence in the public.

The Bank of Ghana official also warned against the continuous investment in unprofitable subsidiaries and fixed assets, which has serious implications for liquidity.

Besides, he said, many RCBs also do not comply with the 10% minimum capital adequacy ratio requirement as stated in Section 29 (2) of the Banks and Specialised Deposit-Taking Institutions Act 2016, (Act 930). This indicates that non-compliant institutions have insufficient funds to absorb unanticipated losses, and therefore the safety of customers’ deposits is jeopardised.

He further mentioned that weak boards and management usually result in operational losses, weak loan recoveries and high cost-centres, and investments in high-risk institutions – all of which drive the CAR below the 10% prudential threshold.

Dynamic and well-functioning economies depend on widely-accepted forms of banking to improve the standard of living for their citizenry and support growth of enterprises. In the era before the late 1970s, rural dwellers in Ghana had almost no access to institutional credit; and in many rural communities, secure, safe, and convenient savings and payment facilities hardly existed.

In response to this situation, the government of Ghana, together with the Bank of Ghana, took several measures to increase access to credit in rural areas, including facilitating the establishment of Rural and Community Banks (RCBs).

Rural Banks have not only played an important role in the development of the financial services sector of Ghana economy, but have also contributed meaningfully to the lives of people in various communities in terms of education, health, security, employment, business among others, in their catchment areas across the country.

Meanwhile, Mr. Simon Nero Davor, Volta Chapter President of the Association of Rural Banks (ARB), has appealed to the Bank of Ghana (BoG) to soften its stance and be considerate in imposing penalties on rural and community banks.

According to him, if the penalties being imposed are not paid, it could lead to the collapse of rural banks with social impacts on rural economies.

He mentioned that a good number of rural and community banks are facing challenges and urged the BoG to devise means of reviving such banks instead of closing them down, which could cause loss of customers’ deposits, as well as loss of jobs and rural enterprises.

Another major challenge facing RCBs, Mr. Davor said, is managers giving loans to themselves – either personally or through third parties – and cautioned them to desist from the practice.


Fake electrical cables inundate market as 70% imported brands are substandard

In a scheme to rake in profits, several importers of electrical cables are flooding the market with fake products that do not meet critical safety requirements.

A nationwide surveillance conducted by the Ghana Standards Authority (GSA) last Friday revealed that more than 70 per cent of all imported electrical cable brands on the market were substandard and could cause fires.

Out of 22 electrical cable brands sampled for laboratory testing, only two, which were manufactured locally, passed the critical safety requirement test for conductor resistance at the GSA Cable Laboratory in Accra.The test showed that 20 of the brands, all imported products, were not designed or test-approved to meet the requirements in safety standards.

The Director General of the GSA, Prof. Alex Dodoo, told the Daily Graphic in an interview that “19 out of the 20 imported brands of electrical cables failed the critical safety requirement for conductor resistance and this is dangerous because such cables can cause fires”.

He explained that the GSA, as part of its consumer protection and import inspection mandate under the Standards Act, had begun the testing of imported products and market surveillance.

As part of the exercise, 22 brands of electrical cables were purchased from the market in Accra for laboratory tests to prove their authenticity. Out of the number, two were locally manufactured brands and the remaining 20 were imported ones.

Fake cables cause fires

The Deputy Director of Public Relations at the Ghana National Fire Service (GNFS), Mr Billy Anaglatey, reacting to the upsurge in fake electrical cables on the market, said most domestic fires could be attributed to the use of inferior wiring and defective electrical materials for buildings.

He said an alarming 80 per cent of all domestic fires in the country resulted from the use of substandard electrical cables to wire buildings.

“Substandard electrical cables are the major cause of domestic fires in the country. About 80 per cent of all the domestic fires we have recorded can be linked to the use of such inferior products. These days traders warn buyers before they sell the cables to them, but because of the cost, some buyers still buy the inferior products and that is why some newly built houses which are not yet occupied are catching fire,” he said.

Market surveillance

Meanwhile, checks by the Daily Graphic from the market last Saturday revealed that imported electrical cables were far cheaper than locally manufactured ones.

For instance, while locally manufactured cables cost between GH¢160 and GH¢180 per coil, imported ones went for between GH¢30 and GH¢45.

That trend, we gathered, was because the imported cables were mostly fake.

Although a fake cable may not be spotted from its cover, a simple test in a laboratory could reveal that it is inferior.

“The flooding of the markets with substandard cables is due to manufacturers reneging on quality and safety to produce cheaper cables,” a source in the construction industry who wants to remain anonymous told the Daily Graphic.

He said some of the features of substandard cables included reduced diameter of copper conductor, using copper-clad aluminium or other metals, instead of copper conductor, reduced insulation thickness, shorter length per coil and fake labels or packaging, even in terms of quality certification.

Implications of using fake cables

The implication of the influx of fake electrical cables on the market are many. Aside from destroying the market for genuine local manufacturers, the phenomenon, engineered by some elements, is directly responsible for the many fire outbreaks all over the country.

Behind every wall at home, in an office or a building in general, there are cables that channel electricity for daily consumption. They may be visible or buried in conduit pipes. These are housing electrical cables that connect all electricity-powered items and sockets to the main electricity source.

Consumers are likely to pay little or no attention to the kind of cables that wire their homes, but rigorous laboratory tests will reveal the dangers associated with using such cables to wire buildings.

Some of these dangers include fire outbreaks through overheating when the small diameter of a substandard housing cable reduces its ability to conduct electricity effectively, thereby causing the cable to overheat. When that happens, it causes the cable to burn or melt.

Also, the reduced conducting ability of a substandard housing cable may cause it to lose insulating properties and that could lead to circuit malfunction and possible electrocution and electrical disruptions.

Source: Ghana | Graphiconline

IMF Warns Gov’t Over High Expenditure Projects

The International Monetary Fund (IMF) has expressed worry over the high expenditure programs being pursued by the government.

According to the fund, even though the Akufo-Addo government promised to save money, the nature of the projects it is embarking on makes it difficult to leave up to the promise.

The Fund is, therefore, suggesting that government is not allowed to borrow from the Bank of Ghana, except on an emergency basis.

“The IMF recognizes the recently issued energy bond as public debt and insists that the government classifies it as such.

“The IMF considers it a misplaced priority to be working towards reducing the indebtedness of State Owned Enterprises without first addressing the causal factors responsible for their indebtedness.

“In the view of the IMF, the government should have issued a “Vanilla bond”, not a bond through a Special Purpose Vehicle (SPV).

“IMF does not support massive injection of liquidity into the sector to address debt situation. It believes that a better approach would be to release the liquidity in tranches,” the IMF said in a document compiled after a meeting between the IMF mission to Ghana and the Civil Society Platform on the IMF program.

It added: “ The fund is concerned that while on the one hand government has passed the Earmarked Funds capping and Realignment Act, ostensibly to create fiscal space, on the other, the government has chosen to embark on a series of high expenditure projects, a move which appears to defeat of EFCRA”.

The Akufo-Addo government has among other things promised to construct at least, a factory in every district across the country and also provide one million cedis to every constituency for local development. It has already started the implementation of its major campaign promise of providing free secondary school education for all eligible Ghanaians.


Source: Ghana/StarrFMonline.

China made 10% of tourists visiting Africa in 2016

The massive influx of Chinese tourists to Africa has in the recent years made a buzz, and it is for all possible reasons. After seven consecutive years of annual double-digit growth in spending, China continues to lead global outbound travel, reaching US$ 261 billion of Chinese travelers’ expenditure in 2016, a 12% growth since 2012. Approximately 135 million Chinese outbound tourists travelled in 2016, out of which 10% were bound for Africa up from 3% in 2008.

As at the end of Q1/2016, China’s economy stood at an approximate $11.3 trillion, the second largest in the world just after the US with about $17trillion. However, while the US remains on top of the chart, the case is expected to be different by 2027 in terms of tourism spending and investment as well as in total travel & tourism GDP; as China overtakes the world giant.

In Africa, various data has shown that Chinese tourists spend an average of 40% in excess of their European and American counterparts. Increasing Chinese investments in the continent (China’s total trade with Africa peaked at $222 billion by December 2014), involvement with African governments’ projects such as the construction of the recently launched Standard Gauge Railway in Kenya; remain among major factors that influence China’s appetite for Africa.

This, not to mention a highly tech savvy and adventurous generation of Chinese millennials with a comparatively high purchasing power. “Chinese millennial travelers are fueling the growth of global tourism as they seek new and fresh experiences,” states a report by Carat & Jing Travel on what’s influencing Chinese millennials. Other factors include ease of travel following the introduction of direct flights between China and several African countries such as South Africa, Ethiopia, and Kenya; which according the Kenya Tourism Board (KTB) saw a whopping 100,000 Chinese visitors in 2016. Less stringent visa restrictions for Chinese travelers to countries such as Morocco and Tunisia is also a big plus.

If the endlessly breathtaking destinations, wild safaris, comfortable weather to escape the massive heat waves in China are all anything to go by, then Africa can only expect stronger projections from this Asian country with a vast capital base. For instance, by having Chinaas one of its outbound destinations, Africa’s leading online travel agency Jumia Travel is capitalizing on the trend by creating a link between China and the African market. “This helps us leverage on the diversity of operating on both the African and Chinese markets,” says Estelle  Jumia Travel COO. It is therefore up to the concerned stakeholders in the hospitality and tourism industries in Africa to gain momentum in meeting what seems to be an increasingly demanding Chinese tourism source market.