THE share price of Tullow Ghana, partners of the country’s Jubilee Oil Field, last week, witnessed record low depreciations on the Ghana Stock Exchange after the company said its production targets for 2012 would average between 70,000 to 90,000 barrels of oil per day (bopd) and not the projected 120,000 bopd.
The announcement mid last week saw Tullow Ghana’s share price on the Accra bourse dipping from an initial GH¢31 to GH¢30 as its shareholders rushed to sell.
The current share price is the lowest to be recorded by the company since its listing on the local bourse in July last year.
A stock market analyst at CDH Financial Holdings and a partner with Akotia and Partners, Mr Aseye Akotia, told the Daily Graphic the fall in Tullow Ghana’s share price on the back of the announcement could have been informed by “investor’s perceptions that the company’s low production targets for 2012 could very likely affect its profitability levels in the year.
“Investors of Tullow may think that the low production targets could lower its turnover for the year, bring its profits down and subsequently limit it from paying dividends to shareholders. So, some think they are better off selling their shares in the company than keeping them,” he said.
Although Mr Aseye would not say if the decline in Tullow’s share price would continue into this week, he admitted that more people could be pushed into selling their shares “especially now that the share price has already declined.”
Tullow Ghana was listed on the GSE after successfully floating 3,531,546 shares at GH¢31 per share.
The company’s listing caused the GSE’s market capitalisation to more than double; a development that saw the country’s stock market becoming one of the most capitalised in sub-Saharan Africa.
Tullow Ghana’s listing on the Accra bourse was tipped to generate excitement on stock activities in the country as more people cluttered for an opportunity to own a part of a company that drills Ghana’s premier oil.
Such an excitement is, however, yet to be felt as the company’s share price has virtually seen any activity after its listing mid last year.
The company’s share price declined from the initial GH¢31 with which it listed to GH¢30 sometime last year. The price rose marginally before declining again to the current GH¢30 which has been heavily influenced by the reduction in its end of year production targets for 2012.
Mr Akotia of Akotia and Partners attributed the dull activity recorded by the company on the bourse to an industry-wide phenomenon.
“Generally, the market has been bad for most listed equities especially for last year and Tullow was not an exception,” he said.
The share price of the company, he said, was not moving up “not because the company is not performing but because the market itself is dull,” Mr Akotia added.
Friday, January 27, 2012
Ghana Re assures clients of prompt claim payments
GHANA Reinsurance Company Limited (Ghana Re) has assured its clients that the company will continue to pay claims promptly despite losing its BB+ ratings recently.
The Acting Managing Director of Ghana Re, Mr Gustav Siale, who gave the assurance in an interview with the Daily Graphic in Accra, added that the company was also strategising to enable it “resume our rightful position in credit rating very soon.”
A.M. Best Europe Rating Services Limited, an insurance ratings agency, earlier this week downgraded the Issuer Credit Rating (ICR) of Ghana Re from BB+ to BB, citing the reinsurer’s weakened business profile within its core market, outstanding premium debts and a reduced premium income as the bases.
The state-owned nature of Ghana Re, according to A. M. Best, also exposes the company to industry shocks as it risks state interferences in its operations.
The agency, however, re-affirmed Ghana Re’s financial strength rating (FSR) at ‘B’, indicating fair.
The current downgrading of Ghana Re could cause it to lose more businesses within and outside the country, limit its operations in markets that accept ratings higher than its current BB or cause multi-nationals in the country to take their insurance premiums outside with the excuse that the company’s rating fell below their standing.
While admitting that the downgrade would affect the future operations of the company, the acting MD said “our reputation for prompt claim payment would even help win us more businesses.”
Mr Siale explained that although the insurance regulation enjoined companies operating in the country to first exhaust the local reinsurance capacity before heading outside, some companies circumvented the regulation using ratings as a point.
Mr Siale was confident, however, that the company’s internal operations would help stem such challenges and make it write more businesses in the coming years.
He called for more collaboration between insurance companies and Ghana Re to help grow the country’s insurance industry.
The Acting Managing Director of Ghana Re, Mr Gustav Siale, who gave the assurance in an interview with the Daily Graphic in Accra, added that the company was also strategising to enable it “resume our rightful position in credit rating very soon.”
A.M. Best Europe Rating Services Limited, an insurance ratings agency, earlier this week downgraded the Issuer Credit Rating (ICR) of Ghana Re from BB+ to BB, citing the reinsurer’s weakened business profile within its core market, outstanding premium debts and a reduced premium income as the bases.
The state-owned nature of Ghana Re, according to A. M. Best, also exposes the company to industry shocks as it risks state interferences in its operations.
The agency, however, re-affirmed Ghana Re’s financial strength rating (FSR) at ‘B’, indicating fair.
The current downgrading of Ghana Re could cause it to lose more businesses within and outside the country, limit its operations in markets that accept ratings higher than its current BB or cause multi-nationals in the country to take their insurance premiums outside with the excuse that the company’s rating fell below their standing.
While admitting that the downgrade would affect the future operations of the company, the acting MD said “our reputation for prompt claim payment would even help win us more businesses.”
Mr Siale explained that although the insurance regulation enjoined companies operating in the country to first exhaust the local reinsurance capacity before heading outside, some companies circumvented the regulation using ratings as a point.
Mr Siale was confident, however, that the company’s internal operations would help stem such challenges and make it write more businesses in the coming years.
He called for more collaboration between insurance companies and Ghana Re to help grow the country’s insurance industry.
GhIPSS to automate payment for public services
THE Ghana Interbank Payment and Settlement Systems (GhIPSS) is working to replace the manual payment of services rendered by public insitutions with an electronic payment system.
The move, it said is to allow the general public to pay for such services online.
The General Manager at GhIPSS in charge of Project and Business Development, Mr Achie Hesse, who disclosed this to the Daily Graphic in Accra, said the electronic payment system was aimed at reducing the various frustrations and costs associated with the manual payment process.
Mr Hesse said the electronic payment system was part of a series of projects that the GhIPSS intended to deplore this year.
He mentioned a hybrid Automated Teller Machine (ATM) that would accept the ATM cards of all banks in the country, a complimentary switch that allows GhIPSS’s e-zwich point of sale device to accept all other money cards.
Another project for the year is a system to link up the mobile money services of the telecom companies to one system.
Most of these projects, he said, were expected to be piloted in the second quarter of this year and fully become operational in the subsequent quarters.
On the online payment system for the services of government institutions, Mr Hesse said the GhIPSS has since commenced discussions with some of the institutions on the various modalities of the new system which was expected to test-run within the second quarter of this year.
“We want to introduce an Internet payment system that will allow clients of public sector institutions to pay for the costs of their transactions with public institutions online without necessarily having to walk to the institution concerned to do payments,” the GM said.
Such a strategy, according Mr Hesse, was informed by the various difficulties and time constraints associated with cash payments for services rendered to the general public by government institutions.
The GhIPSS, since its establishment, has been fighting to reduce the country’s over reliance on cash transactions and its inherent difficulties to individuals and the economy at large.
On the performance of the GhIPSS e-zwich card, Mr Hesse said patronage of the facility has been encouraging as more corporate institutions and individuals resorted to it for various transactions.
“More employers in the informal sector are beginning to realise the importance of the card and their patronage for it has been increasing,” Mr Hesse said adding that unlike the automated clearing system where workers salaries were sometimes delayed because of inter-bank payment difficulties, “payment of salaries on the e-zwich is accessible moments after the cash has been paid in.”
“And that is one of the numerous features of the card that makes it more favourable to corporate institutions that wish to avoid the challenges that come with salary delays,” he added.
The GhIPSS GM said the operations of the Ghana Automated Cheque Clearing House (GACH), another facility by GhIPSS launched last year, has also picked up successfully within the banking community.
“We are recording an average of 60 transactions per month as against the projected 40 transactions per month initially estimated and that is good news,” he said.
He emphasised that GhIPSS was committed to easing the various difficulties associated with cash transactions in the economy while smoothening the way for banks and their clients to operate efficiently.
He thus called on the banks and other financial institutions in the country to cooperate with GhIPSS as it implemented the infrastructure necessary for a smooth take-off of these initiatives.
The move, it said is to allow the general public to pay for such services online.
The General Manager at GhIPSS in charge of Project and Business Development, Mr Achie Hesse, who disclosed this to the Daily Graphic in Accra, said the electronic payment system was aimed at reducing the various frustrations and costs associated with the manual payment process.
Mr Hesse said the electronic payment system was part of a series of projects that the GhIPSS intended to deplore this year.
He mentioned a hybrid Automated Teller Machine (ATM) that would accept the ATM cards of all banks in the country, a complimentary switch that allows GhIPSS’s e-zwich point of sale device to accept all other money cards.
Another project for the year is a system to link up the mobile money services of the telecom companies to one system.
Most of these projects, he said, were expected to be piloted in the second quarter of this year and fully become operational in the subsequent quarters.
On the online payment system for the services of government institutions, Mr Hesse said the GhIPSS has since commenced discussions with some of the institutions on the various modalities of the new system which was expected to test-run within the second quarter of this year.
“We want to introduce an Internet payment system that will allow clients of public sector institutions to pay for the costs of their transactions with public institutions online without necessarily having to walk to the institution concerned to do payments,” the GM said.
 |
| Mr Achie Hesse, GM at GhIPSS |
Such a strategy, according Mr Hesse, was informed by the various difficulties and time constraints associated with cash payments for services rendered to the general public by government institutions.
The GhIPSS, since its establishment, has been fighting to reduce the country’s over reliance on cash transactions and its inherent difficulties to individuals and the economy at large.
On the performance of the GhIPSS e-zwich card, Mr Hesse said patronage of the facility has been encouraging as more corporate institutions and individuals resorted to it for various transactions.
“More employers in the informal sector are beginning to realise the importance of the card and their patronage for it has been increasing,” Mr Hesse said adding that unlike the automated clearing system where workers salaries were sometimes delayed because of inter-bank payment difficulties, “payment of salaries on the e-zwich is accessible moments after the cash has been paid in.”
“And that is one of the numerous features of the card that makes it more favourable to corporate institutions that wish to avoid the challenges that come with salary delays,” he added.
The GhIPSS GM said the operations of the Ghana Automated Cheque Clearing House (GACH), another facility by GhIPSS launched last year, has also picked up successfully within the banking community.
“We are recording an average of 60 transactions per month as against the projected 40 transactions per month initially estimated and that is good news,” he said.
He emphasised that GhIPSS was committed to easing the various difficulties associated with cash transactions in the economy while smoothening the way for banks and their clients to operate efficiently.
He thus called on the banks and other financial institutions in the country to cooperate with GhIPSS as it implemented the infrastructure necessary for a smooth take-off of these initiatives.
NLA loses GH¢10million yearly to illegal lotto operators
THE National Lottery Authority (NLA) says the authority is losing an average of GH¢100 million annually to individuals and institutions who engage in illegal lottery.
Such a loss, according to the authority is consequently limiting its annual revenue generation rate to the state.
The NLA has thus reaffirmed its commitment to fighting the menace through intermittent raids and court injunctions to enable it rake in more revenues for the state.
The Chief Operating Officer of NLA, Mr George Addo-Yobo, disclosed this to the Daily Graphic on the sidelines of a press conference organised by the authority “to provide clearity on what a recent court decision on a case of illegal lottery brought against tiGO by the authority does and does not mean.”
Mr Addo-Yobo said “NLA projections show that the state, through the authority, is losing about GH¢100 million to the activities of institutions and individuals who engage in various kinds of illegal lottery without due course to the NLA.”
He explained that the law that established the NLA, the National Lotto Act 2006, Act 722, outlawed individuals and institutions from engaging in banker to banker activities, and marketing or consumer promotions that were lottery in nature but disguised as promotions.
That notwithstanding, Mr Addo-Yobo said some institutions and individuals “are still engaging in these activities and that is having a toll on NLA’s finances and our revenue generations to the state in particular.”
The NLA has since 2011 instituted a series of court cases against some corporate institutions which were engaging in illegal lottery but shrouded in promotions.
In one of such cases, the NLA succeeded in securing an injunction against Milicom Ghana, operators of tiGO, from carrying out its tiGO House Promotion, arguing that the activity was a lottery but disguised as a consumer and marketing promotion.
An Accra based court subsequently declined jurisdiction to determine the illegality or otherwise of the matter but said “the NLA lacks the capacity to bring civil mandatory enforcement proceedings under Act 722 against tiGO.”
While hinting that the NLA was looking at appealing the said judgment, Mr Kojo Andah, Director-General of the NLA said “the judgement has not changed in anyway the mandate of the NLA as enshrined in the National Lotto Act, 2006 (Act 722).”
At the moment, Mr Andah said the authority would collaborate with the police and the attorney-general in the arrest and prosecution of individuals and institutions engaging in illegal lottery to the detriment of the authority.
The NLA generated GH¢10.5 million in 2011 as against the GH¢13.5million realised in 2010.
It’s chief operating officer attributed the dip in the 2011 revenue of the authority “to the massive investments that we undertook last year as part of efforts to strengthen the operations of the company.
“We procured about 10,000 lottery point of sale terminals for our lotto vendors, deplored a software connectivity that will automates our operations very soon including having to undertake other projects and all these ate into our reserves for the year,” he added.
In 2012, Mr Addo-Yobo said the authority would consider increasing its revenue generations by 15 per cent from the current GH¢10.5 million through the implementation of modern lotto strategies, fighting revenue leakages through illegal lotto operations and diversifying its activities to include mobile lottering.
Such a loss, according to the authority is consequently limiting its annual revenue generation rate to the state.
The NLA has thus reaffirmed its commitment to fighting the menace through intermittent raids and court injunctions to enable it rake in more revenues for the state.
The Chief Operating Officer of NLA, Mr George Addo-Yobo, disclosed this to the Daily Graphic on the sidelines of a press conference organised by the authority “to provide clearity on what a recent court decision on a case of illegal lottery brought against tiGO by the authority does and does not mean.”
Mr Addo-Yobo said “NLA projections show that the state, through the authority, is losing about GH¢100 million to the activities of institutions and individuals who engage in various kinds of illegal lottery without due course to the NLA.”
He explained that the law that established the NLA, the National Lotto Act 2006, Act 722, outlawed individuals and institutions from engaging in banker to banker activities, and marketing or consumer promotions that were lottery in nature but disguised as promotions.
That notwithstanding, Mr Addo-Yobo said some institutions and individuals “are still engaging in these activities and that is having a toll on NLA’s finances and our revenue generations to the state in particular.”
The NLA has since 2011 instituted a series of court cases against some corporate institutions which were engaging in illegal lottery but shrouded in promotions.
In one of such cases, the NLA succeeded in securing an injunction against Milicom Ghana, operators of tiGO, from carrying out its tiGO House Promotion, arguing that the activity was a lottery but disguised as a consumer and marketing promotion.
An Accra based court subsequently declined jurisdiction to determine the illegality or otherwise of the matter but said “the NLA lacks the capacity to bring civil mandatory enforcement proceedings under Act 722 against tiGO.”
While hinting that the NLA was looking at appealing the said judgment, Mr Kojo Andah, Director-General of the NLA said “the judgement has not changed in anyway the mandate of the NLA as enshrined in the National Lotto Act, 2006 (Act 722).”
 |
| Kojo Andah, Director-General, NLA |
At the moment, Mr Andah said the authority would collaborate with the police and the attorney-general in the arrest and prosecution of individuals and institutions engaging in illegal lottery to the detriment of the authority.
The NLA generated GH¢10.5 million in 2011 as against the GH¢13.5million realised in 2010.
It’s chief operating officer attributed the dip in the 2011 revenue of the authority “to the massive investments that we undertook last year as part of efforts to strengthen the operations of the company.
“We procured about 10,000 lottery point of sale terminals for our lotto vendors, deplored a software connectivity that will automates our operations very soon including having to undertake other projects and all these ate into our reserves for the year,” he added.
In 2012, Mr Addo-Yobo said the authority would consider increasing its revenue generations by 15 per cent from the current GH¢10.5 million through the implementation of modern lotto strategies, fighting revenue leakages through illegal lotto operations and diversifying its activities to include mobile lottering.
Sunday, January 22, 2012
Integrate small businesses into the mining sector - Dr Aubynn
THE Ghana Chamber of Mines (GCM) has called on the government and other stakeholders to help fashion out a strategic policy that will help integrate subsidiary businesses within the country’s mining sector into the economy.
According to the chamber, this will help the country to reap more benefits from the sector while erasing the growing perceptions among the populace that the sector was contributing less to the economic development of the country.
The Chief Executive Officer (CEO) of the chamber, Dr Toni Aubynn, said that to the Daily Graphic in an interview and added that the chamber would be more willing to help in that regard.
Dr Aubynn explained that instead of waiting for mining companies to pay taxes to the government, the business community and the government should fashion out a policy that would help create business opportunities in adjoining areas within the sector.
“The country needs to properly integrate mining into the economy to enable it realise the full benefits of the sector. It is not only through taxes and royalties that we can derive maximum benefits from mining,” he said.
According to Dr Aubynn, a bulk of the mining revenues and expenses goes into the supply chain and contracts awarded by the companies for subsidiary jobs but the country was yet to take advantage of such fall-outs.
The chamber’s call come in the midst of growing resentment among most people, especially persons within mining communities, that the mining sector has contributed little to the economic development of their areas despite enriching mining companies in diverse ways.
The Chamber of Mines’ CEO said although the country produced rubber in commercial quantities, most mining companies were still faced with the challenge of importing tyres for their heavy duty trucks just because “we do not have a threading company in Ghana to manufacture these tyres.”
Dr Aubynn said that was not good for the country and the economy and pointed out that “if we fashioned out a linkage between mining and the other sectors of the economy, then mining companies would not be sending money outside this country to import these things.”
With gold prices continuing to rally high and demand for other minerals firming up in the mineral market, Dr Aubynn said revenues from the sector to the government could be expected to jump up in 2011 and subsequently do same in 2012.
He lauded the government’s decision to dialogue with the chamber over the newly introduced windfall tax for the sector and the upward adjustment of the corporate tax from 25 per cent to 35 per cent.
The GCM CEO, however, called for a speedy clarification of the modalities involving the calculation of the windfall tax so as to enable the companies plan into the year.
With 2012 being an election year, Dr Aubynn feared the menace of illegal mining (galamsey) could spike and lead to a reduction in the concessions of mining companies.
He thus called on the government and the security agencies to tighten their surveillance against the galamsey phenomenon “since perpetrators of the act have a feeling that the government often gets weak in election periods.”
According to the chamber, this will help the country to reap more benefits from the sector while erasing the growing perceptions among the populace that the sector was contributing less to the economic development of the country.
The Chief Executive Officer (CEO) of the chamber, Dr Toni Aubynn, said that to the Daily Graphic in an interview and added that the chamber would be more willing to help in that regard.
Dr Aubynn explained that instead of waiting for mining companies to pay taxes to the government, the business community and the government should fashion out a policy that would help create business opportunities in adjoining areas within the sector.
“The country needs to properly integrate mining into the economy to enable it realise the full benefits of the sector. It is not only through taxes and royalties that we can derive maximum benefits from mining,” he said.
According to Dr Aubynn, a bulk of the mining revenues and expenses goes into the supply chain and contracts awarded by the companies for subsidiary jobs but the country was yet to take advantage of such fall-outs.
The chamber’s call come in the midst of growing resentment among most people, especially persons within mining communities, that the mining sector has contributed little to the economic development of their areas despite enriching mining companies in diverse ways.
The Chamber of Mines’ CEO said although the country produced rubber in commercial quantities, most mining companies were still faced with the challenge of importing tyres for their heavy duty trucks just because “we do not have a threading company in Ghana to manufacture these tyres.”
Dr Aubynn said that was not good for the country and the economy and pointed out that “if we fashioned out a linkage between mining and the other sectors of the economy, then mining companies would not be sending money outside this country to import these things.”
With gold prices continuing to rally high and demand for other minerals firming up in the mineral market, Dr Aubynn said revenues from the sector to the government could be expected to jump up in 2011 and subsequently do same in 2012.
He lauded the government’s decision to dialogue with the chamber over the newly introduced windfall tax for the sector and the upward adjustment of the corporate tax from 25 per cent to 35 per cent.
The GCM CEO, however, called for a speedy clarification of the modalities involving the calculation of the windfall tax so as to enable the companies plan into the year.
With 2012 being an election year, Dr Aubynn feared the menace of illegal mining (galamsey) could spike and lead to a reduction in the concessions of mining companies.
He thus called on the government and the security agencies to tighten their surveillance against the galamsey phenomenon “since perpetrators of the act have a feeling that the government often gets weak in election periods.”
Wednesday, January 18, 2012
Will BoG tighten the screws?
Current developments in the national economy are causing some economic watchers to predict 2012 as a thorny year for the Bank of Ghana’s Monetary Policy Committee and the government’s economic management team
CONTINUOUS rise in food production and a slow down in government expenditure last month helped to sustain the rate at which the general price levels of goods and services increase in the country within that period.
Consequently, inflation for December 2011 inched up to 8.58 per cent after ending November 2011 at 8.55 per cent. The December 2011 rate thus represented a 0.03 per cent surge from that of the November 2011 rate, but 0.41 per cent lower than the goverment’s end-year inflation target of nine per cent for 2011.
WHY THIS REVERSE BLIP?
Although the December 2011 inflation rate was a blip, it contrasts sharply with the dips that were recorded in the same period in 2009; when the 16.92 per cent rate for November 2009 declined by 0.95 per cent to 15.97 per cent in December 2009. The situation was the same in 2010 when the November rate of 9.08 per cent went down 0.58 per cent to 8.50 per cent in December.
The Government Statistician, Dr Grace Bediako, who announced the December 2011 inflation figures in Accra, said the rise could have been higher had the food group of the inflation basket not acted positively to suppress the jumps in the non-food group.
The non-food inflation group, she said, recorded a 11.21 per cent rate in the month under review which “was more than two and half times that of the food inflation rate of 4.27 per cent.” This means the non-food group exerts more pressure on the entire basket.
She explianed that the rise in inflation for last December was partly due to the minimal hike in utility prices in late November.
The 15 per cent and 30 per cent increment caused a corresponding 10 per cent rise in transport fares nationwide. The rise in transport fares is currently feeding into prices of goods and services nation-wide as many traders now charge higher to offset the additional cost coming from the adjustment.
REALITIES FOR THE MPC
All things being equal, the general price levels of goods and services in the country, otherwise known as inflation, should go up slightly between January and February. But such an increase (if it does happen) will not come as a surprise since a similar adjustment in the prices of petroleum product in December 2010 caused inflation to reverse a then declining trend in January and February 2011 only to resume a consistent decline in March.
The challenge, however, is how this projected rise in inflation (for January and February) added to the speculated rise in government spending and a continuous pressure on the cedi will play to the benefit of the national economy in the coming months.
Some policy analysts and economists are already beginning to see the Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) sitting on tentacles as they face a difficult decision of tightening its policy rate to contain the heavy spending to accompany the electioneering or leaving the policy rate untouched in order not to disrupt the free fall in interest rates.
Also, the inability of the various managers of the economy to tame these fears and the reality of a possible high spending in an election year are further fueling public anxiety over the status of the economy during and after 2012.
Such anxiety can lead to panic in the market as many people could opt for foreign currencies as safe havens for their individual investments. Banks can hold on to (or at worst hike) their lending rates for fear of a distabilised economy after 2012 or businesses rushing to import more so as to avoid the blues of trading with a weaker cedi after election 2012.
With all these in place, the MPC and the government’s economic management team will definitely have hard issues to tackle in the year under review.
Key among those for the MPC will be what to do to the monetary policy rate, which is already under pressure from speculated spending and projected rise in inflation for an upward review.
According to the Executive Director of the Centre for Policy Analysis (CEPA), Dr Joseph Abbey, “the MPC is really under pressure to review the rate upward, gauging from the quarter four MPC report that was released after that sitting.”
He added that “unless the BoG is well-cushioned (build up more international reserves) to offset these pressures, a rise in the policy rate should be expected soon.”
An upward review of the rate would, however, limit the amount of cash flow in the economy, slow down economic activities and raise the cost of credit again. And that will be disincentive to the economy unless accumulated surplus funds are found and used to offset the deficit that may arise thereof.
For the government, managing the fears and mistrust of the business community and the general public on government expenditure and fiscal policies and actions in an election year will be paramount. Beyond that, however, the government will have to muster the political courage against the temptations of excess spending in a bid to fulfil election promises.
Anything short of that will mean returning the economy to harsher times after 2012 and a recurrence of the rebuilding of the national economy after every election year. And that is a reckless phenomenon that must not be accepted. GB
CONTINUOUS rise in food production and a slow down in government expenditure last month helped to sustain the rate at which the general price levels of goods and services increase in the country within that period.
Consequently, inflation for December 2011 inched up to 8.58 per cent after ending November 2011 at 8.55 per cent. The December 2011 rate thus represented a 0.03 per cent surge from that of the November 2011 rate, but 0.41 per cent lower than the goverment’s end-year inflation target of nine per cent for 2011.
WHY THIS REVERSE BLIP?
Although the December 2011 inflation rate was a blip, it contrasts sharply with the dips that were recorded in the same period in 2009; when the 16.92 per cent rate for November 2009 declined by 0.95 per cent to 15.97 per cent in December 2009. The situation was the same in 2010 when the November rate of 9.08 per cent went down 0.58 per cent to 8.50 per cent in December.
The Government Statistician, Dr Grace Bediako, who announced the December 2011 inflation figures in Accra, said the rise could have been higher had the food group of the inflation basket not acted positively to suppress the jumps in the non-food group.
The non-food inflation group, she said, recorded a 11.21 per cent rate in the month under review which “was more than two and half times that of the food inflation rate of 4.27 per cent.” This means the non-food group exerts more pressure on the entire basket.
She explianed that the rise in inflation for last December was partly due to the minimal hike in utility prices in late November.
The 15 per cent and 30 per cent increment caused a corresponding 10 per cent rise in transport fares nationwide. The rise in transport fares is currently feeding into prices of goods and services nation-wide as many traders now charge higher to offset the additional cost coming from the adjustment.
REALITIES FOR THE MPC
All things being equal, the general price levels of goods and services in the country, otherwise known as inflation, should go up slightly between January and February. But such an increase (if it does happen) will not come as a surprise since a similar adjustment in the prices of petroleum product in December 2010 caused inflation to reverse a then declining trend in January and February 2011 only to resume a consistent decline in March.
The challenge, however, is how this projected rise in inflation (for January and February) added to the speculated rise in government spending and a continuous pressure on the cedi will play to the benefit of the national economy in the coming months.
 |
| Dr Kwabena Duffuor, Minister, Finance and Economic Planning |
Some policy analysts and economists are already beginning to see the Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) sitting on tentacles as they face a difficult decision of tightening its policy rate to contain the heavy spending to accompany the electioneering or leaving the policy rate untouched in order not to disrupt the free fall in interest rates.
Also, the inability of the various managers of the economy to tame these fears and the reality of a possible high spending in an election year are further fueling public anxiety over the status of the economy during and after 2012.
Such anxiety can lead to panic in the market as many people could opt for foreign currencies as safe havens for their individual investments. Banks can hold on to (or at worst hike) their lending rates for fear of a distabilised economy after 2012 or businesses rushing to import more so as to avoid the blues of trading with a weaker cedi after election 2012.
With all these in place, the MPC and the government’s economic management team will definitely have hard issues to tackle in the year under review.
Key among those for the MPC will be what to do to the monetary policy rate, which is already under pressure from speculated spending and projected rise in inflation for an upward review.
According to the Executive Director of the Centre for Policy Analysis (CEPA), Dr Joseph Abbey, “the MPC is really under pressure to review the rate upward, gauging from the quarter four MPC report that was released after that sitting.”
He added that “unless the BoG is well-cushioned (build up more international reserves) to offset these pressures, a rise in the policy rate should be expected soon.”
 |
| Amissah-Arthur, Governor, BoG and Chairman of the MPC |
For the government, managing the fears and mistrust of the business community and the general public on government expenditure and fiscal policies and actions in an election year will be paramount. Beyond that, however, the government will have to muster the political courage against the temptations of excess spending in a bid to fulfil election promises.
Anything short of that will mean returning the economy to harsher times after 2012 and a recurrence of the rebuilding of the national economy after every election year. And that is a reckless phenomenon that must not be accepted. GB
Lack of port facilities hindering business
As growth in the country’s maritime trade business gathers momentum, stakeholders in the sector will have to devise strategic solutions for the inherent challenges or risk limiting growth in the sector, writes Maxwell Adombila Akalaare
THERE is growing concern among stakeholders in the country’s maritime business that the lack of adequate port infrastructure and space constraints at the ports could limit the volumes of businesses recorded at the ports in the near future.
The constraints are consequently raising the cost of shipping and clearing of cargoes at the ports to the frustrations of the shippers and port authorities.
Statistics from the Ghana Shippers’ Authority (GSA) show an annual average growth rate of 25 per cent in the sector, a trend the Head of Freight and Logistics at the authority, Mr E K Arku, said could pose a challenge to port authorities gauging from the various infrastructural challenges currently facing the ports.
“There is increased business activity at the ports and that is good news to the government and the economy since more revenue will be generated and more businesses created for freight forwarders.
“The challenge, however, is the capacity of the ports to contain those volumes,” he said noting that lack of space at the Tema Port has so far limited expansionary works there even though it continues to record higher volumes of trade.
The country’s maritime trade business has been witnessing tremendous growth after recording a sharp dip in 2009 as a result of the global recession at the time.
The dip in growth of maritime businesses, however, recovered in 2010 as the global economy rebounded from the recession and is now recording an average growth rate of 25 per cent per annum.
The first three quarters of 2011 for instance saw total throughput (the total amount of cargo imported and exported) rising by 29 per cent to 12.78 million metric tons from the 9.88 million metric tons recorded within that same period in 2010. Total exports for the period amounted to 3.35 million metric tons with the remaining 9.43 metric tons coming from imports. Transit trade (using the country’s corridors to transport cargo to neighbouring countries) also grew by 46 per cent during the period under review.
In terms of monetary value, the statistics show that export businesses in the first three quarters of 2011 amounted to US$11.8 billion as against the US$14.4 billion raked in by imports within the same period.
Although the shippers’ authority is estimating cargo throughput to end 2011 at 14.5 million metric tons using a projected increase in quarterly tonnage of 23 per cent, officials at GSA said the figure could even jump beyond 16 million tons “base on information we are getting from the Tema and Takoradi Ports.”
But as oil inflows begin to gain momentum and production of gold and cocoa firm up, port authorities will have to brace themselves and the ports up for greater volumes of business in the years ahead.
The challenge, therefore, is the ability of the ports to handle these increments as growing throughput and transit trades will mean more infrastructure expansion, personnel and adequate regulations to address the various challenges that arise as a result.
“Increasing volumes is good but the challenge has always been space constraints which end up making it frustrating and costly to ship and clear goods at the ports,” Mr Arku observed. Despite the said constraints, Mr Arku said “the volumes keep coming thereby causing congestions at the individual ports.”
Shippers, he said, have consequently been confronted with the challenge of having to pay higher amounts as demurrage (the price paid for delayed clearance of goods at the port), rent fees and other associated prices and penalties.
According to Mr Arku, about 85 per cent of all the imports that pass through the ports attract demurrage, a trend that confirms the various frustrations that the issue of space constraints at the ports is causing shippers.
An average of US$45 million, he said has been spent yearly to pay demurrage fees with an extra US$13.5 million also going to shipping agents as rent fees due to the lack of space to house cargoes that are yet to be cleared.
The Head of Freight and Logistics at GSA also blamed the apparent disorganised nature of some shipping and clearing agents and complex clearing procedures at the ports which he said was unnecessarily causing some shippers to incur high costs by way of rent and demurrage fees.
He also mentioned shipping agents’ resort to charging for shipment in addition to the fees already charged on the cargo by the main shipping company.
Such double charges, he said were costing shippers as much as US$45 million a year, an amount Mr Arku said is siphoned out of the economy for no service rendered.
“All these high costs of shipping cargo translate into frequent increases in prices and that greatly hurts the national economy,” he observed.
In a bid to tame some of these challenges, Mr Arku said the GSA as an advocacy institution for shippers in the country will introduce a cargo tracking information “to enable shippers track their vessels. Once the vessel arrives, then we quickly notify them to clear and avoid these fees associated with delayed clearance.”
In addition, Mr Arku said the authority was also seeking Parliamentary approval for a new regulation, the Ghana Shipper Authority Regulation 2011, to mandate freight forwarders, shipping and clearing agents to negotiate with their respective shippers over the implementation of standards for the industry and the charging of fees for the various services rendered.
While admitting that services rendered by freight forwarders and agents ought to be paid for by the shippers, Mr Arku said “the forwarders and agents need not hide under that to take undeserving monies which intend hurt the economy in diverse ways.”
THERE is growing concern among stakeholders in the country’s maritime business that the lack of adequate port infrastructure and space constraints at the ports could limit the volumes of businesses recorded at the ports in the near future.
The constraints are consequently raising the cost of shipping and clearing of cargoes at the ports to the frustrations of the shippers and port authorities.
Statistics from the Ghana Shippers’ Authority (GSA) show an annual average growth rate of 25 per cent in the sector, a trend the Head of Freight and Logistics at the authority, Mr E K Arku, said could pose a challenge to port authorities gauging from the various infrastructural challenges currently facing the ports.
“There is increased business activity at the ports and that is good news to the government and the economy since more revenue will be generated and more businesses created for freight forwarders.
“The challenge, however, is the capacity of the ports to contain those volumes,” he said noting that lack of space at the Tema Port has so far limited expansionary works there even though it continues to record higher volumes of trade.
The country’s maritime trade business has been witnessing tremendous growth after recording a sharp dip in 2009 as a result of the global recession at the time.
The dip in growth of maritime businesses, however, recovered in 2010 as the global economy rebounded from the recession and is now recording an average growth rate of 25 per cent per annum.
The first three quarters of 2011 for instance saw total throughput (the total amount of cargo imported and exported) rising by 29 per cent to 12.78 million metric tons from the 9.88 million metric tons recorded within that same period in 2010. Total exports for the period amounted to 3.35 million metric tons with the remaining 9.43 metric tons coming from imports. Transit trade (using the country’s corridors to transport cargo to neighbouring countries) also grew by 46 per cent during the period under review.
In terms of monetary value, the statistics show that export businesses in the first three quarters of 2011 amounted to US$11.8 billion as against the US$14.4 billion raked in by imports within the same period.
Although the shippers’ authority is estimating cargo throughput to end 2011 at 14.5 million metric tons using a projected increase in quarterly tonnage of 23 per cent, officials at GSA said the figure could even jump beyond 16 million tons “base on information we are getting from the Tema and Takoradi Ports.”
But as oil inflows begin to gain momentum and production of gold and cocoa firm up, port authorities will have to brace themselves and the ports up for greater volumes of business in the years ahead.
The challenge, therefore, is the ability of the ports to handle these increments as growing throughput and transit trades will mean more infrastructure expansion, personnel and adequate regulations to address the various challenges that arise as a result.
“Increasing volumes is good but the challenge has always been space constraints which end up making it frustrating and costly to ship and clear goods at the ports,” Mr Arku observed. Despite the said constraints, Mr Arku said “the volumes keep coming thereby causing congestions at the individual ports.”
Shippers, he said, have consequently been confronted with the challenge of having to pay higher amounts as demurrage (the price paid for delayed clearance of goods at the port), rent fees and other associated prices and penalties.
According to Mr Arku, about 85 per cent of all the imports that pass through the ports attract demurrage, a trend that confirms the various frustrations that the issue of space constraints at the ports is causing shippers.
An average of US$45 million, he said has been spent yearly to pay demurrage fees with an extra US$13.5 million also going to shipping agents as rent fees due to the lack of space to house cargoes that are yet to be cleared.
The Head of Freight and Logistics at GSA also blamed the apparent disorganised nature of some shipping and clearing agents and complex clearing procedures at the ports which he said was unnecessarily causing some shippers to incur high costs by way of rent and demurrage fees.
He also mentioned shipping agents’ resort to charging for shipment in addition to the fees already charged on the cargo by the main shipping company.
Such double charges, he said were costing shippers as much as US$45 million a year, an amount Mr Arku said is siphoned out of the economy for no service rendered.
“All these high costs of shipping cargo translate into frequent increases in prices and that greatly hurts the national economy,” he observed.
In a bid to tame some of these challenges, Mr Arku said the GSA as an advocacy institution for shippers in the country will introduce a cargo tracking information “to enable shippers track their vessels. Once the vessel arrives, then we quickly notify them to clear and avoid these fees associated with delayed clearance.”
In addition, Mr Arku said the authority was also seeking Parliamentary approval for a new regulation, the Ghana Shipper Authority Regulation 2011, to mandate freight forwarders, shipping and clearing agents to negotiate with their respective shippers over the implementation of standards for the industry and the charging of fees for the various services rendered.
While admitting that services rendered by freight forwarders and agents ought to be paid for by the shippers, Mr Arku said “the forwarders and agents need not hide under that to take undeserving monies which intend hurt the economy in diverse ways.”
New savings culture emerges in Bolga, to fund rural business ideas
In rural communities where modern day banking is still a preserve for the privileged few, a new initiative by the Catholic Relief Services (CRS) is giving the folks a reason to patronise savings for its long term business opportunities, writes Maxwell Adombila Akalaare
RURAL women in some parts of the Upper East region are quickly embracing, with both hands, a new savings and lending initiative that is fast proving a source of funding to their long-held business ideas.
With a motivation to save in groups and an opportunity to borrow at low rates from their saved monies, women in the area are now beginning to realise their dreams and create business ventures, proceeds of which are used to support their respective families.
Modest as it may be, the Savings and Internal Lending Community (SILC), an initiative of the Catholic Relief Services (CRS), is able to mob up funds in areas where commercial banks and their trained bankers would have failed to mobilise savings.
The community-based and savings-centered initiative was started in May 2011 by the CRS with one goal in mind; to encourage savings among rural folks as a way of empowering them to start up their own businesses.
But even before the programme takes shape, beneficiaries and facilitators of SILC have already started using their borrowed monies to start businesses and undertake petty tradings from which they generate incomes to cater for their individual needs.
HOW SILC WORKS
Madam Celestina Aduko, a facilitator within the Talensi-Nabdam District, who took the GRAPHIC BUSINESS through the various operations of SILC explained that persons wishing to join the SILC initiative are first put in groups with membership ranging from 15 to 30 persons per group.
Individual members, she said, are then encouraged to save (contributing any amount that the individual can afford) in a group’s money box which is kept by the group leader. Contributions are taken on weekly basis, a third of which is then loaned to an interested party after every other four weeks.
Madam Aduko explained that although the initial plan was to loan a third of an individual’s savings back to him or her after four week’s of savings, the groups had realised that “the individual’s savings alone will not be enough for him to use in starting something meaningful.”
Repayment of loaned funds, according to Madam Aduko is done base on the amount taken with a flat interest rate of a tenth of the loaned amount.
She mentioned that the programme which started with 19 groups in few communities has now flourished into the entire region as a result of its promising benefits to the people and the economy as a whole.
“The CRS realised that the poverty in our part of the country makes it difficult for the people to find a proper source of living for themselves and their families. And so they brought this initiative to encourage group savings and lending, from which comes businesses,” the SILC facilitator noted.
Madam Aduko added that the SILC initiative has currently brought about various forms of improvements in the lives of the populace with most of the beneficiaries using the proceeds to set up smaller businesses, engage in petty trading and also finance their individual family needs.
The SILC, she said envisions that “non of its members will have any money related problem because we don’t want a situation where members will still be poor, have no source of living and do not create income for members of their families come five years.”
WHY ENCOURAGE SILC
Although the revolution in the country’s banking and non-banking sector has agreeably pushed more people into patronising the services of financial institutions nation-wide, most people off the streets of city are yet to see any reason to do same. And That may not be a big surprise. After all, how many financial institutions have the nerve to set up their operations in these rural areas where money is best known to be saved in bedrooms and pillows.
But even where financial institutions, especially the banks, have registered their presence for the sake of deposit mobilisations, not many had patronised their services.
With Ghana’s low domestic savings rate of nine per cent, all efforts aimed at encouraging savings must, therefore, be pushed as a savings habit engineers an investment culture.
But in the face of that comes many challenges, some of which are currently facing SILC and its members.
In enumerating the various challenges facing the implementation of the SILC initiative, Madam Aduko said the successful operations of the SILC will be based on the market that will be created for the businesses it generates.
“The people are more than eager to use their savings to start businesses; to weave baskets, produce sheabutter and engage in petty trading. The headache, however is how fast can these produce move to enable them manufacture more.”
Madam Aduko thus called on the CRS and other benevolent institutions to help market the business proceeds of SILC so as to help encourage more savings and investments among Ghana’s rural folks.
“They should try and link our products to buyers outside the region so that the produce can move quickly for them to produce more,” she said.
And once that is done, Madam Aduko said the success of the SILC can then be replicated in other areas and regions to the benefit of the populace and the economy at large.
RURAL women in some parts of the Upper East region are quickly embracing, with both hands, a new savings and lending initiative that is fast proving a source of funding to their long-held business ideas.
With a motivation to save in groups and an opportunity to borrow at low rates from their saved monies, women in the area are now beginning to realise their dreams and create business ventures, proceeds of which are used to support their respective families.
Modest as it may be, the Savings and Internal Lending Community (SILC), an initiative of the Catholic Relief Services (CRS), is able to mob up funds in areas where commercial banks and their trained bankers would have failed to mobilise savings.
The community-based and savings-centered initiative was started in May 2011 by the CRS with one goal in mind; to encourage savings among rural folks as a way of empowering them to start up their own businesses.
But even before the programme takes shape, beneficiaries and facilitators of SILC have already started using their borrowed monies to start businesses and undertake petty tradings from which they generate incomes to cater for their individual needs.
HOW SILC WORKS
Madam Celestina Aduko, a facilitator within the Talensi-Nabdam District, who took the GRAPHIC BUSINESS through the various operations of SILC explained that persons wishing to join the SILC initiative are first put in groups with membership ranging from 15 to 30 persons per group.
Individual members, she said, are then encouraged to save (contributing any amount that the individual can afford) in a group’s money box which is kept by the group leader. Contributions are taken on weekly basis, a third of which is then loaned to an interested party after every other four weeks.
Madam Aduko explained that although the initial plan was to loan a third of an individual’s savings back to him or her after four week’s of savings, the groups had realised that “the individual’s savings alone will not be enough for him to use in starting something meaningful.”
Repayment of loaned funds, according to Madam Aduko is done base on the amount taken with a flat interest rate of a tenth of the loaned amount.
She mentioned that the programme which started with 19 groups in few communities has now flourished into the entire region as a result of its promising benefits to the people and the economy as a whole.
“The CRS realised that the poverty in our part of the country makes it difficult for the people to find a proper source of living for themselves and their families. And so they brought this initiative to encourage group savings and lending, from which comes businesses,” the SILC facilitator noted.
Madam Aduko added that the SILC initiative has currently brought about various forms of improvements in the lives of the populace with most of the beneficiaries using the proceeds to set up smaller businesses, engage in petty trading and also finance their individual family needs.
The SILC, she said envisions that “non of its members will have any money related problem because we don’t want a situation where members will still be poor, have no source of living and do not create income for members of their families come five years.”
WHY ENCOURAGE SILC
Although the revolution in the country’s banking and non-banking sector has agreeably pushed more people into patronising the services of financial institutions nation-wide, most people off the streets of city are yet to see any reason to do same. And That may not be a big surprise. After all, how many financial institutions have the nerve to set up their operations in these rural areas where money is best known to be saved in bedrooms and pillows.
 |
| Naba Moses Agangzuah Koomkiisibugu hands over a SILC savings box to Madm Abampoka Azidizian |
But even where financial institutions, especially the banks, have registered their presence for the sake of deposit mobilisations, not many had patronised their services.
With Ghana’s low domestic savings rate of nine per cent, all efforts aimed at encouraging savings must, therefore, be pushed as a savings habit engineers an investment culture.
But in the face of that comes many challenges, some of which are currently facing SILC and its members.
In enumerating the various challenges facing the implementation of the SILC initiative, Madam Aduko said the successful operations of the SILC will be based on the market that will be created for the businesses it generates.
“The people are more than eager to use their savings to start businesses; to weave baskets, produce sheabutter and engage in petty trading. The headache, however is how fast can these produce move to enable them manufacture more.”
Madam Aduko thus called on the CRS and other benevolent institutions to help market the business proceeds of SILC so as to help encourage more savings and investments among Ghana’s rural folks.
“They should try and link our products to buyers outside the region so that the produce can move quickly for them to produce more,” she said.
And once that is done, Madam Aduko said the success of the SILC can then be replicated in other areas and regions to the benefit of the populace and the economy at large.
Friday, January 13, 2012
December inflation inches to 8.58%
INFLATION ended December 2011 at 8.58 per cent, representing a minimal 0.03 per cent rise from the 8.55 per cent recorded in November 2011.
In ordinary terms, therefore, the general price levels of goods and services in the country went up by 8.58 per cent in December 2011, as against the 8.55 per cent change rate recorded in the previous month in the year under review.
The December 2011 rate compares favourably with the government’s revised end-year 2011 inflation target of nine per cent.
The Government Statistician, Dr Grace Bediako, who announced this at a press conference in Accra yesterday, said monthly inflation (comparing price changes in one month to another) for December 2011 stood at 1.16 per cent, indicating a 0.70 per cent increment from the November 2011 rate of 0.69 per cent.
She said the average inflation rate for 2011 (January to December) was 8.73 per cent.
She said the non-food group of the services inflation basket continued its dominance, accounting for well over two times of the food inflation rate in the month under review. While food inflation for December stood at 4.04 per cent, non-food inflation ended the year at 11.73 per cent.
Petrol and transport charges, according to the Government Statistician, recorded the highest inflation rates (price movements) in December 2011.
On the regional outlook, Dr Bediako said the Central Region recorded the highest regional inflation rate of 11.1 per cent, with the Upper East and the Upper West regions recording the lowest rate of 5.55 per cent in December 2011.
She admitted that the minimal utility price hikes at the tail end of November 2011 impacted directly on the December inflation figure but added that the impact was offset by positive rates recorded in other sub-groups.
Concerning the impact of the 15-30 per cent upward adjustment in petroleum product prices on inflation this year, Dr Bediako said, “We expect that the increment will reflect in next month’s (January’s) figure.”
That notwithstanding, she said “the extent to which that will reflect on the entire rate will depend on the impact of other competing factors on the whole inflation basket”.
In ordinary terms, therefore, the general price levels of goods and services in the country went up by 8.58 per cent in December 2011, as against the 8.55 per cent change rate recorded in the previous month in the year under review.
The December 2011 rate compares favourably with the government’s revised end-year 2011 inflation target of nine per cent.
The Government Statistician, Dr Grace Bediako, who announced this at a press conference in Accra yesterday, said monthly inflation (comparing price changes in one month to another) for December 2011 stood at 1.16 per cent, indicating a 0.70 per cent increment from the November 2011 rate of 0.69 per cent.
She said the average inflation rate for 2011 (January to December) was 8.73 per cent.
She said the non-food group of the services inflation basket continued its dominance, accounting for well over two times of the food inflation rate in the month under review. While food inflation for December stood at 4.04 per cent, non-food inflation ended the year at 11.73 per cent.
Petrol and transport charges, according to the Government Statistician, recorded the highest inflation rates (price movements) in December 2011.
On the regional outlook, Dr Bediako said the Central Region recorded the highest regional inflation rate of 11.1 per cent, with the Upper East and the Upper West regions recording the lowest rate of 5.55 per cent in December 2011.
 |
| Dr Grace Bediako, Government Statistician |
She admitted that the minimal utility price hikes at the tail end of November 2011 impacted directly on the December inflation figure but added that the impact was offset by positive rates recorded in other sub-groups.
Concerning the impact of the 15-30 per cent upward adjustment in petroleum product prices on inflation this year, Dr Bediako said, “We expect that the increment will reflect in next month’s (January’s) figure.”
That notwithstanding, she said “the extent to which that will reflect on the entire rate will depend on the impact of other competing factors on the whole inflation basket”.
CEPA sees a rise in BoG policy rate
THE Centre for Policy Analysis (CEPA) has predicted a minimal rise in the Bank of Ghana’s policy rate within the first half of this year.
The Executive Secretary of the centre, Dr Joe Abbey, told the Daily Graphic that the rise would be in response to pressures mounting on the various indicators used in determining the quarterly review of the rate.
“The Monetary Policy Committee (MPC) of the BoG is really under pressure to review the rate upward gauging from the quarter four MPC report that was released after that sitting,” he said
The policy rate is mostly used by Central Banks to regulate the supply of money in an economy.
It is normally set based on inflationary pressures, prevailing exchange rate, government reserves and the general performance of the economy within the period under review. The rate, in Ghana, is reviewed on quarterly bases by the MPC.
The committee maintained the rate at 2.50 after the fourth quarter review last year.
But with inflation set to rise as a result of the 15 to 30 per cent adjustment in prices of petroleum products, the current pressure on the cedi and a speculated rise in government expenditure this year, Dr Abbey said “unless the BoG is well-cushioned (build up international reserves) enough to offset these pressures, a rise in the policy rate should be expected soon.”
He, however, sees the rate moving up minimally so as not to signal a significant rise in the lending rates of commercial banks and a general squeeze in credit to the economy.
Dr Abbey feared that a rise in the rate would directly signal a rise in the already tightening lending rates in the country to the displeasure of the borrowing community.
A substantial jump in the policy rate would normally cause commercial banks in the country to raise their lending rates, leading to a squeeze in credit to businesses and a slow down of economic activities in general.
The CEPA Executive Director, thus, advised the Central Bank to, if need be, revise the rate upward now “instead of waiting to increase it substantially after the pressures have built up.”
The Executive Secretary of the centre, Dr Joe Abbey, told the Daily Graphic that the rise would be in response to pressures mounting on the various indicators used in determining the quarterly review of the rate.
“The Monetary Policy Committee (MPC) of the BoG is really under pressure to review the rate upward gauging from the quarter four MPC report that was released after that sitting,” he said
The policy rate is mostly used by Central Banks to regulate the supply of money in an economy.
It is normally set based on inflationary pressures, prevailing exchange rate, government reserves and the general performance of the economy within the period under review. The rate, in Ghana, is reviewed on quarterly bases by the MPC.
The committee maintained the rate at 2.50 after the fourth quarter review last year.
But with inflation set to rise as a result of the 15 to 30 per cent adjustment in prices of petroleum products, the current pressure on the cedi and a speculated rise in government expenditure this year, Dr Abbey said “unless the BoG is well-cushioned (build up international reserves) enough to offset these pressures, a rise in the policy rate should be expected soon.”
He, however, sees the rate moving up minimally so as not to signal a significant rise in the lending rates of commercial banks and a general squeeze in credit to the economy.
 |
| BoG Governor, Arthur-Amissah chairs the MPC |
Dr Abbey feared that a rise in the rate would directly signal a rise in the already tightening lending rates in the country to the displeasure of the borrowing community.
A substantial jump in the policy rate would normally cause commercial banks in the country to raise their lending rates, leading to a squeeze in credit to businesses and a slow down of economic activities in general.
The CEPA Executive Director, thus, advised the Central Bank to, if need be, revise the rate upward now “instead of waiting to increase it substantially after the pressures have built up.”
Ghana Re refuses to pay claims
Mounting arrears due from insurance companies is posing a debt threat to the state reinsurer, the Ghana Reinsurance Company Limited, which can be detrimental to the entire insurance industry, reports Maxwell Adombila Akalaare
The Ghana Reinsurance Company (Ghana Re) is refusing to pay claims to its clients (some insurance companies in the country) as part of measures towards getting those companies to settle their mounting arears to the reinsurer.
Insurance companies in the country owe Ghana Re over GH¢27 million, which is gradually becoming a bad debt, with direc consequences for the local insurance industry.
As a result, the insurance companies indebted to the reinsurance company will now have to look for thier own funds to settle their obligations to policy holders when claims fall due.
The Head of Finance, Mr Seth Nyamadi, said “our latest move is the only option that seem to be working. And we will carry on with it for the time being.
He added: “it is a harsh decision and we know it. But we are better off taking it than relying on the companies to willingly come and pay,” he added.
Massive default in claims payments by the ceding companies due to their inability to raise those monies independently could thus plunge the entire insurance industry into severe debt crisis leading to a loss of trust by the insuring public in the sector.
Mr Nyamadi said the unwillingness of some of the ceding companies to pay Ghana Re premiums covering policies the company had underwritten with them “is making the whole thing dicey.”
“We reinsurers carry much of the risk that insurance companies enter into through policy underwritings and so if the insurer is refusing to pay us premiums, how do you expect us to reimburse them when big claims come from a policy holder,” he asked.
The Ghana Re Head of Finance wondered how the ceding companies expected their reinsurer to raise money to pay them their claims when they themselves were not willing to pay premiums.
But while admitting that the company’s latest move was “drastic and could cause massive defaults,” Mr Nyamadi maintained the company will carry on with it as far as the debt continues to stay in Ghana Re’s books.
Head of Operations at Ghana Re, Mr M. Rogers-Akpatah also told the GRAPHIC BUSINESS that the company’s latest move could even lead to it loosing more customers, but it was determined to carry through their resolve.
He said the situation was putting a strain on the company’s ability to invest, undertake bigger projects and compete effectively.
Mr Rogers-Akpatah said earlier efforts by the company through constant reminders “were not working. And we can’t say that the companies should be left to pay at their own time because once the debts are left to stay, then the cash flow of the company is stressed, our investment premiums are limited and that intend puts our operations in a difficult position.”
The arrangements in the country’s insurance industry makes it possible for ceding companies to contractually transfer all or part of the risks of policies they have written to their clients onto the reinsurer, with the agreement that the reinsurer will be called upon when it comes to settling the claim.
The reinsurer thus acts as an insurer of the ceding company, collecting and keeping premiums from the cedant periodically while the ceding company intend collects premiums from its policy holders.
Officials of Ghana Re are hoping that latest revisions by the industry regulator, the National Insurance Commission (NIC), will help ease those difficulties in the industry and cause Ghana Re to operate in a debt-free situation.
They thus called on the commission to be tough in implementing its own rules, particularly, the one that mandates insurance companies to pay their premiums within 90 days after entering into a policy with a reinsurer.
The Ghana Reinsurance Company (Ghana Re) is refusing to pay claims to its clients (some insurance companies in the country) as part of measures towards getting those companies to settle their mounting arears to the reinsurer.
Insurance companies in the country owe Ghana Re over GH¢27 million, which is gradually becoming a bad debt, with direc consequences for the local insurance industry.
As a result, the insurance companies indebted to the reinsurance company will now have to look for thier own funds to settle their obligations to policy holders when claims fall due.
The Head of Finance, Mr Seth Nyamadi, said “our latest move is the only option that seem to be working. And we will carry on with it for the time being.
He added: “it is a harsh decision and we know it. But we are better off taking it than relying on the companies to willingly come and pay,” he added.
Massive default in claims payments by the ceding companies due to their inability to raise those monies independently could thus plunge the entire insurance industry into severe debt crisis leading to a loss of trust by the insuring public in the sector.
Mr Nyamadi said the unwillingness of some of the ceding companies to pay Ghana Re premiums covering policies the company had underwritten with them “is making the whole thing dicey.”
“We reinsurers carry much of the risk that insurance companies enter into through policy underwritings and so if the insurer is refusing to pay us premiums, how do you expect us to reimburse them when big claims come from a policy holder,” he asked.
The Ghana Re Head of Finance wondered how the ceding companies expected their reinsurer to raise money to pay them their claims when they themselves were not willing to pay premiums.
But while admitting that the company’s latest move was “drastic and could cause massive defaults,” Mr Nyamadi maintained the company will carry on with it as far as the debt continues to stay in Ghana Re’s books.
Head of Operations at Ghana Re, Mr M. Rogers-Akpatah also told the GRAPHIC BUSINESS that the company’s latest move could even lead to it loosing more customers, but it was determined to carry through their resolve.
He said the situation was putting a strain on the company’s ability to invest, undertake bigger projects and compete effectively.
Mr Rogers-Akpatah said earlier efforts by the company through constant reminders “were not working. And we can’t say that the companies should be left to pay at their own time because once the debts are left to stay, then the cash flow of the company is stressed, our investment premiums are limited and that intend puts our operations in a difficult position.”
The arrangements in the country’s insurance industry makes it possible for ceding companies to contractually transfer all or part of the risks of policies they have written to their clients onto the reinsurer, with the agreement that the reinsurer will be called upon when it comes to settling the claim.
The reinsurer thus acts as an insurer of the ceding company, collecting and keeping premiums from the cedant periodically while the ceding company intend collects premiums from its policy holders.
Officials of Ghana Re are hoping that latest revisions by the industry regulator, the National Insurance Commission (NIC), will help ease those difficulties in the industry and cause Ghana Re to operate in a debt-free situation.
They thus called on the commission to be tough in implementing its own rules, particularly, the one that mandates insurance companies to pay their premiums within 90 days after entering into a policy with a reinsurer.
The business in smock wearing; Now, before and the future
To many people, the culture of Northern Ghana is better portrayed with the wearing of smocks. But not all indigenes of that part of the country can afford the outfit as huge patronage and rising cost of materials for smock making is stretching the price of the Northern costume beyond the reach of ordinary northern folks. Maxwell Adombila Akalaare looks at the then and now of the smock as a northern cultural attire and a business adventure
GONE are the days when smock wearing in Northern Ghana was reserved for events such as festivals, funerals, marriage ceremonies and all other events that can be associated with the area’s cutural setup.
However, modern globalisation coupled with most people’s crave for fashion has now demystified those perceptions - making the wearing of smock a casual attire for everyday events.
More and more people both within and outside that catchment area are now craving for the smock, not for customary reasons but for reasons related to fashion, show-off and globalisation. And that is giving designers of the outfit a reason to smile but unfortunately, it has become a headache to some ordinary indigenes because the prices of the once affordable attire has skyrocketted beyond their purchasing powers.
THE THEN AND NOW
In times past, the wearing of smock in any of the three regions of Northern Ghana was quickly associated with old age, wealth, affluence, tradition, wars and, in most cases, chieftancy status.
And for the chiefs and old people who treasured smock as the only dress for occassional events such as wars, festivals, funerals, marriage ceremonies and the like, the dress was incomplete without a loose thigh-tight leg sort of pair of trousers and an oval kind of hat to match. Such a combination showed that the one wearing it is really up to the business of wearing smocks and the occassion indeed demands such.
The smock, otherwise known as Fugu, Batakali or Danshika, was a treasured dress that was worn rarely, washed once in a blue moon and only used when the ocassion necessitated it. Not all could wear it. And not all even thought of wearing it.
Some people, according to thier gods, were professed to wear certain smocks of specifc designs. And once that professed smock is made for the person concerned, it is treasured as another god, worned carefully and stored strategically.
For those who looked beyond the cloth called smock, black smocks were often associated with local medicines and with the few people who have been professed to wear such a colour. White signified happiness and all the good things that comes with it while combined colours had different interpretations depending on the event.
The sewing and designing of the smock was also not a profession for the young; it was a preserve of the old and people of certain family lineage. Such people valued their job so much that they, from time to time, pride themselves of having dressed chiefs of various origins and ages as well as people of societal influence with the best crafted smocks and their special pair of trousers to match.
These perceptions of smock sewing not being an all for all job thus made it impossible for some people to view the activity as a business. Rather, it was seen more of a treasured heritage than a commercial venture.
Modernisation is, however, changing things, atleast, for the better.
The long-held perceptions in associating the wearing and crafting of smocks with cultures and traditions are now fading off in today’s fashion era where modern globalisation coupled with most people’s crave for fashion has compelled many to patronise attires that better suit their bodies rather than sticking to traditions and cultures.
Unlike before, many people are now using the smock, which is made of handloomed strips of Kente fabrics sewed by hand or machine, for social events such as church activities, parties, film acting, and lately, as a political campaign attire by most politicians particularly when they vist any of the three northern regions or found themselves among northners.
The NPP’s 2012 Presidential Candidate, Nana Akuffo Addo is noted for his direheart love for this Northern costume. Former President Jerry John Rawlings is also noted for liking the modern combination of a smock over long sleeves. But even before them, the declaration of our country as an independent state from British colonial rule was marked with Dr Kwame Nkrumah and others wearing a smock.
THE BUSINESS ANGLE
The current rising demand for the smock by people of various cultures, origins, ages and status has now created business opportunities for many people. The rising demand is, however, pushing prices of the dress up and those who make them are happy. But this phenomenon is at the displeasure of some northern indigenes; They see the hiking prices for their once treasured attire as a potential threat that could drive cultural heritage to a point of extinction.
That notwithstanding, most indegenes think the hiking demand must continue, at least for the benefit of creating employment for the teaming youth while encouraging cultural diversity.
Talking about employment generation through smock, northern culture had until now frowned upon opening up the profession of smock designing to all ‘manner of people’.
In some parts of northern Ghana’s culture, the profession of smock sewing was no child’s play; it was a pass-on business by certain families that must be treasured and rolled over to the latest generations in those lines. As a result, not all dared to take up jobs in that area.
Mr Amadu Lunar who sews smocks at the Bolga Smock Market is a beneficiary of such a heritage. And he is surely passing it over to his younger generation.
Mr Lunar has, however, realised that the action goes beyond cutural heritage; it is a business that must be treasured as smock wearing was. And in the face of that, Mr Lunar said he would have to face several challenges in an attempt to keep up to the current pace.
In enumerating the cahllenges facing those who sew smocks in the market, Mr Lunar said “the cost of materials is rising so fast and that is causing us a lot. We do not have enough money to buy more materials, more colours, machines and all that is needed.”
To the government and all NGOs that may desire to support the designers, Mr Lunar said “they should help subsidise the price of the materials. We need modern machines and training too.”
And once that is done, Mr Lunar believed “more and more jobs will be created in the areas of sewing, marketing and weaving of the material.
His counterpart, Mr Victor Ayamndoo Anaambodey noted that their cash-trapped nature was preventing them from sewing in variety.
“We need to sew many colours, hand and machine and long and short sleeves but if you don’t have the money to do all that what do you do,” he asked.
Mr Anaambodey’s request to whoever that cares is simple; “benevolent institutions should help invest in us and market the attire to more people. If they do, they will not only be helping us here but the nation and the youth as a whole.”
GONE are the days when smock wearing in Northern Ghana was reserved for events such as festivals, funerals, marriage ceremonies and all other events that can be associated with the area’s cutural setup.
However, modern globalisation coupled with most people’s crave for fashion has now demystified those perceptions - making the wearing of smock a casual attire for everyday events.
More and more people both within and outside that catchment area are now craving for the smock, not for customary reasons but for reasons related to fashion, show-off and globalisation. And that is giving designers of the outfit a reason to smile but unfortunately, it has become a headache to some ordinary indigenes because the prices of the once affordable attire has skyrocketted beyond their purchasing powers.
THE THEN AND NOW
In times past, the wearing of smock in any of the three regions of Northern Ghana was quickly associated with old age, wealth, affluence, tradition, wars and, in most cases, chieftancy status.
 |
| The smock is a treasured attire for chiefs from northern Ghana |
And for the chiefs and old people who treasured smock as the only dress for occassional events such as wars, festivals, funerals, marriage ceremonies and the like, the dress was incomplete without a loose thigh-tight leg sort of pair of trousers and an oval kind of hat to match. Such a combination showed that the one wearing it is really up to the business of wearing smocks and the occassion indeed demands such.
The smock, otherwise known as Fugu, Batakali or Danshika, was a treasured dress that was worn rarely, washed once in a blue moon and only used when the ocassion necessitated it. Not all could wear it. And not all even thought of wearing it.
Some people, according to thier gods, were professed to wear certain smocks of specifc designs. And once that professed smock is made for the person concerned, it is treasured as another god, worned carefully and stored strategically.
For those who looked beyond the cloth called smock, black smocks were often associated with local medicines and with the few people who have been professed to wear such a colour. White signified happiness and all the good things that comes with it while combined colours had different interpretations depending on the event.
The sewing and designing of the smock was also not a profession for the young; it was a preserve of the old and people of certain family lineage. Such people valued their job so much that they, from time to time, pride themselves of having dressed chiefs of various origins and ages as well as people of societal influence with the best crafted smocks and their special pair of trousers to match.
These perceptions of smock sewing not being an all for all job thus made it impossible for some people to view the activity as a business. Rather, it was seen more of a treasured heritage than a commercial venture.
Modernisation is, however, changing things, atleast, for the better.
The long-held perceptions in associating the wearing and crafting of smocks with cultures and traditions are now fading off in today’s fashion era where modern globalisation coupled with most people’s crave for fashion has compelled many to patronise attires that better suit their bodies rather than sticking to traditions and cultures.
 |
| Modernisation is changing the trend in smock wearing |
Unlike before, many people are now using the smock, which is made of handloomed strips of Kente fabrics sewed by hand or machine, for social events such as church activities, parties, film acting, and lately, as a political campaign attire by most politicians particularly when they vist any of the three northern regions or found themselves among northners.
The NPP’s 2012 Presidential Candidate, Nana Akuffo Addo is noted for his direheart love for this Northern costume. Former President Jerry John Rawlings is also noted for liking the modern combination of a smock over long sleeves. But even before them, the declaration of our country as an independent state from British colonial rule was marked with Dr Kwame Nkrumah and others wearing a smock.
THE BUSINESS ANGLE
The current rising demand for the smock by people of various cultures, origins, ages and status has now created business opportunities for many people. The rising demand is, however, pushing prices of the dress up and those who make them are happy. But this phenomenon is at the displeasure of some northern indigenes; They see the hiking prices for their once treasured attire as a potential threat that could drive cultural heritage to a point of extinction.
That notwithstanding, most indegenes think the hiking demand must continue, at least for the benefit of creating employment for the teaming youth while encouraging cultural diversity.
Talking about employment generation through smock, northern culture had until now frowned upon opening up the profession of smock designing to all ‘manner of people’.
In some parts of northern Ghana’s culture, the profession of smock sewing was no child’s play; it was a pass-on business by certain families that must be treasured and rolled over to the latest generations in those lines. As a result, not all dared to take up jobs in that area.
Mr Amadu Lunar who sews smocks at the Bolga Smock Market is a beneficiary of such a heritage. And he is surely passing it over to his younger generation.
Mr Lunar has, however, realised that the action goes beyond cutural heritage; it is a business that must be treasured as smock wearing was. And in the face of that, Mr Lunar said he would have to face several challenges in an attempt to keep up to the current pace.
In enumerating the cahllenges facing those who sew smocks in the market, Mr Lunar said “the cost of materials is rising so fast and that is causing us a lot. We do not have enough money to buy more materials, more colours, machines and all that is needed.”
 |
| The smock will forever define the status of northern chiefs |
To the government and all NGOs that may desire to support the designers, Mr Lunar said “they should help subsidise the price of the materials. We need modern machines and training too.”
And once that is done, Mr Lunar believed “more and more jobs will be created in the areas of sewing, marketing and weaving of the material.
His counterpart, Mr Victor Ayamndoo Anaambodey noted that their cash-trapped nature was preventing them from sewing in variety.
“We need to sew many colours, hand and machine and long and short sleeves but if you don’t have the money to do all that what do you do,” he asked.
Mr Anaambodey’s request to whoever that cares is simple; “benevolent institutions should help invest in us and market the attire to more people. If they do, they will not only be helping us here but the nation and the youth as a whole.”
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