Build human capacity with oil revenue — CEPA

THE Centre for Policy Analysis (CEPA), a policy analysis think tank has tasked overseers of Ghana’s oil revenue to use the revenues to build a quality human resource for the country.


The centre is also of the view that Ghana needs to improve on her public spending habits, a situation the centre said was currently causing the country a huge developmental gap.

“We need to encourage efficiency in managing public funds. People should not be paid money they did not work for, Dr Joe Abbey, the Executive Director of the CEPA said and added that Ghana could have grown at seven per cent per annum instead of the four per cent, if we had reached the efficiency level of Uganda”.

Dr Abbey was speaking to the Daily Graphic after briefing journalists on the economic history and current status of the nation.

Dr Joe Abbey, Executive Director of the CePA

“We at CEPA are happy that Ghana has finally started drilling oil. That excitement would, however be short-lived if revenues to be accrued from the said oil is not used to enhance the economic and intellectual well-being of the Ghanaian to help him/her take the economy of this country to where we all want it to be.

According to him, the Ghana’s Economic Recovery Programme (ERP) that was initiated around the 1980s and was touted as one of the effective tools that returned the country to sound economic footing, “was evidence that the Ghanaian can bail this nation out of any economic mess.

“That programme was home-grown and it took Ghana out of the then economic troubles that the country was going through prior to its implementation”, the CEPA Executive Director said and discounted claims that the ERP was initiated for Ghana by her then development partners.

Dr Abbey was also not impressed with the country’s resort to a borrowing spree, a situation he insisted could have dire consequences for the economy if not checked.

“It is good to go for funds, to borrow money for development but what happens if that money is not paid back in time”, he asked and further wondered if the current public debt was not enough to signal Ghana’s economic managers against further borrowings.

The CePA Executive Director was of the view that a precise fund disbursing and repayment strategy needed to be formulated to help Ghana properly utilise her borrowed funds and also enable her pay back those loans in time.

“A lot of the debt loans that were cleared by the HIPC initiative were as old as 40 years. Most of them had 15 years grace periods with interest rates as low as 0.5 per cent yet we could not pay back. All we concentrated on was borrowing and not repayment. So what is the guarantee that we will be able to pay back most of these loans that we are currently happily taking”, he asked.

Dr Abbey would, however, not state if Ghana should cut-off borrowing and rely on revenues from the just-started oil except to say “we need to expedite action on what we borrow and what we use that borrowed funds for”.

The visit to the Centre’s offices in Accra formed part of an initiative by El de De Consults aimed at training selected journalists on the basics of financial and economic reporting.

The ten day-training session is christened “Finance and economic clinic for journalists” and is the second in a series of its kind by the consultancy firm.

BoG heeds to susu collectors request BUT...............

Earlier requests by some micro-finance institutions in the country that, their regulator, the Bank of Ghana (BoG) softens its stance on a then proposed GH¢100,000 start-up capital for some micro-finance institutions had been heeded to following an outright scrapping of the minimum capital for these institutions by the Central Bank. The institutions latest requests however, seem to be meeting fierce resistance from their regulator. Maxwell Adombila Akalaare looks at the development.
THE Bank of Ghana has willyingly scrapped an initially proposed GH¢100,000 minimum capital for some micro-finance institutions in the country following various concerns raised against the said amount by the institutions’ respective umbrella bodies.Consequently, individual susu collectors, susu enterprises, individual money lenders and money lending enterprises that fall under tier four of the BoG’s categorisation for micro-finance institutions in the country are exempted from raising and maintaining any minimum capital.
Head of the Micro-Finance Unit at the BoG’s Banking and Supervision Department (BSD), Mrs Sarah Ampah-Nunoo explained to the GRAPHIC BUSINESS that the idea to allow the said institutions to operate without a stated capital was borned out of the need to encourage their existence rather than stifle their operations.
Mrs Ampah-Nunoo spoke to the paper after addressing the Greater Accra regional members of the Ghana Cooperative Susu Collectors Association (GCSCA) during a sensitisation workshop organised by the association in Accra for its regional members.
The workshop which is the first in a series was to among other things update the regional members on stages of the BoG’s regulatory procedures for the GCSCA members as well as afford the members the opportunity to clarify issues with the Central Bank regarding the regulations.
Mr Ampah-Nunoo noted that though people would have expected the Central Bank to tighten entry procedures into those areas including mandating those institutions to raise and maintain a specified minimum capital as a way of preventing any abuse of the system, the unit was also of the view that a proposed GH¢100,000 as start up capital for these institutions was capable of “throwing some of them out of business and that is what the BoG does not want.”
Meanwhile, the Micro-Finance Unit of the Central Bank’s BSD, which is currently tasked with the responsibility of overseeing the regulations, operations general activities of micro-finance institutions in the country is currently refusing to yield to present requests by members of the GCSCA that the BoG allowed individual members of the association the opportunity to go into loan disbursements to their clients, extend the six month grace period within which new and existing susu collectors should register with the unit as susu collectors and/or reduce the application processing, licensing and renewal fees for susu collectors.
While commending the BoG for not mandating susu collectors to meet a stated minimum capital, some of the GCSCA members at the workshop requested that the Central Bank allowed the individual members to advance loans to some of “our trusted clients.”
On the issue of operational fees for members, some of the GCSCA members said the BoG’s application processing, licensing and renewal fees which sum up to GH¢850 “was high enough to possibly deny some us our SSNIT and other contributions.”
They also requested that the Central Bank relaxed its six month grace period within which all prospective and operating susu collectors in Ghana were expected to finalise procedures towards migrating onto the new regulatory scheme or cease operations.
The members argued that such a period was too short to enable them meet the necessary requirements.
“We are all aware that when banks were recapitalised in this country, they were given about two years within which to meet the new capital requirements. So, how come we the micro-finance institutions are given just six months to comply with these new guidelines,” Mr Philip Danquah, a member of the association asked.
Some of the members also called on the BoG to consider allowing individual susu collectors in the system the opportunity to lend their mobilised funds to interested clients, a request when granted could see susu collectors in the country granting loans to interested parties.
The head of the BoG’s Micro-finance Unit, however disagreed.
According Mrs Ampah-Nunoo, decisions on the permissible duties of micro-finance institutions, the time period within which all affected bodies should comply with the bank’s new guidelines as well as the application procession, licensing and renewal fees for operators was reached “after series of discussions with your members.
“It is not that the BoG is trying to push these measures on you the members; these are decisions the bank took after various deliberations with your association’s heads,” she said and thus called on the individual members to rather strategise towards meeting the said requirements or risk being pushed out of business.
On the members request that individual susu operators in Ghana be allowed to lend to their clients, Mrs Ampah-Nunoo said the ill-equipped nature of the individual collectors made such a mandate very risky in their hands.
As a result, she said “there is no way susu collectors in Ghana would be allowed to give out loans to their clients. The BoG has realised that the individual members do not have the capacity to engage in loan disbursements “especially when it comes to monitoring the loan beneficiaries to ensure proper recoveries.”
CONCESSIONARY LOANS
Though the Central Bank is currently adamant to requests by some of the GCSCA members that they be allowed to do individual loan advancements to some of their ‘trusted clients’, information picked by the GRAPHIC BUSINESS indicated that the GCSCA as an umbrella body of susu collectors in the country is currently awaiting BoG’s response to its earlier memo requesting the bank to grant the association the right to collect loans on concessionary bases from commercial banks for its members.
Should the request be granted, the GCSCA would then be empowered to obtain funds from some of its bigger financial partners such as commercial banks for onward distributions to some of its ‘credible members’ who would intend unlend (advance) the said funds to their respective clients.
Though the National President of the GCSCA, Mr E E Aboagye Mensah would not go into the details of the said memo, he was optimistic the memo would receive the Central Bank’s blessing.
“We are sure that request will be approved by the BoG people,” the president said.
It is however not clear what difference this arrangement (individual susu collectors advancing loans to their clients from a concessionary loan) would make taking into consideration the current claims by the Central Bank that individual susu collectors in the country do not have the capacity to engage in loan advancements to their clients, especially when its comes to monitoring and recovering.