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.

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.

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 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.

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.”