Ghana could miss MDGs on hunger – Report

Story: Maxwell Adombila Akalaare

GHANA’s failure to halve poverty and reduce hunger in the three northern regions, as in the case of the other regions, could prevent the country from meeting the United Nation’s Millennium Development Goal (MDG on hunger, a new report on the MDGs has showed.

The report which written by the National Development Planning Commission (NDPC) and the United Nations System in the country further found that the three regions accounted for more than 55 per cent of the nation’s poor as of 2006.

“On the contrary, only one out of every 10 poor people in Ghana comes from the Ashanti Region. Four regions – the Western, Central, Greater Accra and Eastern regions – account for less than 5 per cent each of national poverty while the Volta and Brong Ahafo regions contribute 6 per cent and 8 per cent respectively to national poverty,” the report which was published this month added.

It observed that although Ghana has over the years managed to halve extreme poverty from 36.5 per cent to 18.2 per cent between 1991 and 2006, “the three northern savannah regions and food crop farmers have not benefited from this.”

Poverty levels in these areas have ranged between 52 and 88 per cent – far higher than the national average of 18.2 per cent, the report said.

The findings would, among other things, constitute the subject of discussion at the 2012 Consultative Group Meeting and Multi-Donor Budget Support (MDBS) Annual Review which begins in Accra today to Wednesday.

The report which was published under the theme: ‘Achieving the MDGs with Equity in Ghana: Unmasking the Issues Behind the Averages’ looked at the country’s progress towards attaining the MDGs on or before the 2015 deadline.

The MDGS are a set of eight targets that was devised and adopted by the United Nations and majority of its member countries in 2000 as progress benchmarks for developing countries in the areas of poverty and hunger reduction, health, education, access to water among others.

Since their take-off in September 2000, various countries, their development partners and the UN in particular have often mooted development policies towards them as each country is tasked to meet all the eight goals by 2015.

With the 2015 deadline now inching closer, concerns are that the widening socio-economic gaps between Northern Ghana and rural farmers in general and the wealthy southern dwellers could derail the nation’s efforts at achieving the goals, especially in the area of eradicating extreme poverty and hunger.

“Ghana’s performance in eradicating poverty has been quite remarkable at the national level and urban areas,” the report stated.

It however said the socio-economic inequalities, poverty incidence and its depth across the 10 regions “are worrying.”

According to the report, the incidence of poverty in the three northern regions remained “very high and far above the national average.

Mr Kwesi Ahwoi, Minister of Food and Agriculture

“The Northern Region managed to reduce upper poverty incidence from 63 per cent in 1991 to 52 per cent in 2006 while Upper East recorded an increase from 67 per cent to 70 per cent over the same period,” it said.

Although poverty incidence in the Upper West had declined from 88 per cent in 1991 to 84 per cent in 1999, the report found that the rate rose again to 88 per cent in 2006, thus raising concerns over the sustainability and depth of poverty reduction strategies in these areas.           

Given that poverty and hunger has rippling implications on the country’s ability to meet the other MDGs, the report recommended that strategies aimed at reducing poverty and hunger be tailored towards the areas lagging behind.

“The high incidence of poverty in the three northern regions and among food crop farmers at the national level and in rural areas should engage the attention of policy makers and relevant stakeholders.

“Strategies to further reduce poverty therefore need to account for geographical, gender and socio-economic disparities in poverty incidence,” it further recommended.

T'di Port expansion will reduce shipping cost – Shippers

THE Ghana Shippers’ Authority (GSA) –the umbrella body of shippers in the country – has welcomed moves by the government to expand the Takoradi Port in response to the rising volumes of number of vessel and cargo traffic.

The authority is hoping that the expansion works, if completed successfully, will help ease traffic congestions, fast track loading and offloading activities at the port and consequently lessen the cost of shipping which has been linked to congestion and pressure on limited port facilities.

The Chief Executive Officer (CEO) of GSA, Dr Kofi Mbiah said in an interview that “shippers are happy to hear that the government has secured funds to expand the port.  We are keenly interested in seeing the expansion take place,” he added.

Concerns from shippers and port authorities over limited facilities at the Takoradi Port despite increasing volumes of business there prompted the government to allocate part of the US$3 billion loan contracted from China last year to the GPHA to, among other things, deepen the draft, extend the port’s seawall to about 1,000 metres and separate containerised cargo from bulk cargo operations.

The move is expected to lessen pressure on the port while upgrade its facilities to the levels of an international port capable of handling all kinds of trade including oil exports.

Although the Takoradi Port was constructed in the late 1920s mainly as a shipment destination for cocoa beans abroad, continuous pressure on the Tema Port has caused it to undertake other maritime activities either than cocoa shipment.

 Data from the Ghana Ports and Highway Authority (GHPA) also indicate that trading activities at the port have been rising over the past few years. Container traffic to the port rose from about 47,828 in 2009 to 56,598 in 2011 with cargo vessel traffic also moving from 956 vessels in 2009 to 1,798 in 2011 on the back of oil production at the Jubilee Field and the general rise in shipment to and from the country.

“The port is really congested,” Dr Mbiah said explaining that cargo vessels and containers at the port had often swelled into the land and coastline leading to unusual delays in clearing and shipment of goods.

“We the commercial shippers are always competing with oil vessels for space,” the CEO added.

The result, he said has been a rise in the cost of shipping given that “the more days a hired commercial container or vessel stays at the port, the more cost the shipper in question incurs.”

Thus, shippers in the country are hoping that the successful completion of the expansion works will help ease these frustrations and lower the cost of shipping to the benefit of the industry and the country as a whole, Dr Mbiah said.

Economy reels under imports

As imports into the country surge, growth in key sectors of industry slows, reports Maxwell Adombila Akalaare

IMPORTS into the country within the first three months of 2012 overran exports by 2.5 million metric tons, further exposing the dull state of the country’s industrial sector and the import-dependent nature of the national economy.

The items imported within the period included furniture, used clothes, manufacturing equipment and raw materials, beverages, foodstuffs among others.

Statistics from the Ghana Shippers’ Authority (GSA) showed that out of the over 4.9 million metric tons of goods registered at the ports in the first quarter, about 3.7 million metric tons were imports. That represented 76 per cent of the period’s total trade compared to about 1.2 million tons, representing 24 per cent, which were exports.

The data indicates that the drop in exports over imports within the first quarter of 2012 is three per centage points higher than the one recorded in the first quarter of 2011. Imports in the first quarter of 2011 constituted about 73 per cent (3.5 million tons) of total throughput which was about 4.2 million tons at the time.

“The trend is worrying,” bemoaned the Chief Executive Officer (CEO) of the GSA, Dr Kofi Mbiah. “We need to implement tunnel initiatives; specialised economic policies that are focused and directed towards stimulating growth in selected areas of the manufacturing sector while limiting imports in the long term,” Dr Mbiah said.

Dr Kofi Mbiah, CEO, GSA

Although less patronage for local fabrics is currently crashing local textile companies out of business, imports of foreign textiles, cloths, yarn and second hand clothing has over the years been on a consistent rise.

Statistics on the country’s trade pattern showed that a total of 199,331 metric tons of second hand clothing, foreign textiles, yarn and cloth were imported into the country in 2010 alone. That figure meanwhile jumped to 263,986 metric tons in 2011, a year that witnessed massive employee layouts in most local textile companies nation-wide as the industry struggled to contain the effects of less patronage of their products.

The General Secretary of the Textiles, Garment and Leather Employees Union (TEGLEU), Mr Abraham Koomson, once told the GRAPHIC BUSINESS that “the influx of pirated textiles into the country is killing the local textile industry.

“That trend is denying the state of revenues and employment opportunities,” he said.

Local textile companies which were employing about 25,000 people are now employing less than 3,000 people, a development the Shippers’ Authority CEO said was a signal of how a country’s high taste for imports could be injurious to its local economy.

“Encouraging imports kill the economy slowly. It makes the country and the manufacturing sector in particular worse off,” he said.

A statement issued by the latest IMF mission to the country said in part that “despite buoyant exports, the (country’s) current account deficits exceeded 9 percent of GDP in 2011 on account of high import growth.”

According to the statement, the “rapid depreciation of the cedi in the first five months of this year has begun to feed into domestic prices, a development Dr Mbiah of the GSA said could be blamed on high imports.

“People normally argue that importing used items does not take away foreign exchange but limiting those imports also stimulates industrialisation, stabilises the local currency and generates job opportunities in the long run,” Dr Mbiah observed.

Most people, he said “just have taste for foreign goods, be them furniture or clothing and once you allow that taste to fester, then you can expect the economy to suffer in the long run.

Dr Mbiah recommended the implementation of “selective tariff regimes that will help discourage the importation of particular items so as to promote growth in local businesses.

“We must initiate tunnel-like policies; those that are directed and focused on specific sectors of the economic. We could even use tariffs to discourage imports of items that fall within those sectors.

“Once we do that, then we can give ourselves some targets that indigenous businesses must have a firm control over those areas by a certain time and work towards achieving those targets. If we do that, then we can be sure of achieving a longer aim of limiting imports to save local industries,” the GSA CEO added.

He, however, admitted that the economy at its current state was not “resilient enough” to manufacture to feed its populace.

But added that “that is why we must set targets for ourselves. We can start from somewhere. It doesn’t have to be an overnight thing.”

TOR debt still haunting GCB

The Ghana Commercial Bank (GCB) is still recovering from series of negative impacts that the Tema Oil Refinery (TOR) inflicted on its operations. Maxwell Adombila Akalaare reports 

THE government’s decision to convert a GHC572 million-loan owed the Ghana Commercial Bank (GCB) by the Tema Oil Refinery (TOR) into a bond has returned to hurt the bank, causing its profits to jump down by 65 per cent in the 2011 financial year.

That is because the conversion of the loan into a bond caused the bank to lose more than half of the 25 per cent annual interest it enjoyed on the loan prior to the conversion. That consequently pulled GCB’s profits down from GHC48.0 million in 2010 to GHC16.7 million in 2011.

The 2011 financial results of the bank also showed that an almost GHC60 million rise in the bank’s operational costs in 2011 added to GCB’s record high loss in the year.

Managing Director of the bank, Mr Simon Dornoo, admitted during a media interaction in Accra that the dip in the bank’s 2011 profits was “a combination of a sharp decline in revenues and a rise in operational costs.

“Total income is a function of the loan and investment portfolios. In 2011, income from our loan book was down by more than half because the bond that government issued to pay the loan became an investment to us. However, the yield on that investment was lower than the yield on the loan and that obviously had a knock on effect on our loan portfolio,” he explained.

The government in 2010 and 2011 issued bonds to defray a total GHC572 million-loan owed to GCB by the TOR, much of which was accumulated to the stated-owed commercial bank as a result of years of under recovery of production and operation costs at the refinery.

Although the decision to pay off the loan through bonds was hailed as a breather to GCB due to the crippling effect the loan had on the bank’s operations, the bonds’ annual yield of 12 per cent has now limited interest income to the bank leading to the substantial dip in yearly profit.

“The loss was simply because of TOR,” the MD said but admitted that the bank’s decision to set aside some money to cater for some long-outstanding balances also played a part.

“In actual sense, we made gains in 2011 over the previous year but the impact of the TOR debt on our loan portfolio together with other non-credit related costs resulting from our restructuring significantly cancelled those gains,” he said.

He was, however, confident that the situation will normalise into the year.

The bank’s performance in the first quarter of 2012 has already showed some significant improvements in profit and net interest income. Interest income in the first quarter of 2012 rose to GHC58.4 million from the GHC54.3 million it was in the first quarter of 2011.

The bank’s first quarter profit after tax also jumped by about 18 per cent to GHC23.4 million, developments Mr Dornoo said were clear testimonies of GCB’s readiness to redeem its image in the banking sector.

GCB, he said was currently restructuring its operations to enable it operate “like an institution” so as to reduce cost while boosting revenues.

“We have invested massively in restructuring our governance criteria and our risk management systems. We are confident these measures will bring returns in the coming years,” he said.

On the issue of the restructured Ecobank Ghana Limited now becoming the biggest bank in the country following its successful acquisition of The Trust Bank Limited (TTB), Mr Dornoo said “we will see who will be the biggest in the industry.

“They (Ecobank) have chosen to grow through acquisitions, we will do it organically and in the long run, we will all see who is going where,” the MD added.

The bank’s Chief Transformation Officer, Mr. Samuel Sarpong, also disagreed with suggestions that GCB under its current state needed to be downsized, arguing that such an action was not an end in itself.

“That theory is even floored because you can downsize and still operate at a loss,” he said stressing that the bank was currently aiming at improving efficiency in its operations rather that considering a downsize.