Business Analyst - May 17

BUSINESS MARKET RATES

US$ 1 – GH¢7.52

GHANA STOCK MON, 16 MAY. 2022

Indices and Market Cap Level Previous Level Change % Change

GSE Composite Index 2,810.01 2,798.27 +11.74 +0.42%

GSE Financial Index 2,073.63 2,073.63 0.00 0.00%

GSE Market Cap (GhS 'mn) 63,883.61 63,760.71 +122.90 +0.19%

Tuesday, May 17, 2022. Vol. No. 157

GH¢2.50

COCOA: US$2,473.00 per tonne

CRUDE OIL: US$104.6 per barrel

GOLD: US$1,851.99 per ounce

• Vice

President,

Mahamudu

Bawumia

• Dr John

Kwabena

Kwakye

Ghana may import

electricity as a

result of shortterm

capacity

shortages caused

by faults or fuel supply

contingencies, the 2022

Electricity Supply Plan for

Ghana has revealed.

The initial plan was no

import of power till the end of

the year. however, inadvertent

energy exchanges on tie-lines

could result from transient

flows.

The report indicated that

Ghana’s system peak demand is

projected to increase from 3,987

Tuesday, May 17, 2022

Russia-Ukraine War Update

Turkey says it will veto

Nordic states' Nato bids

Ukrainian fighters being

evacuated from azovstal - reports

REUTERS news agency said this

picture shows one of the buses

carrying fighters from the steel

works - the BBC cannot

independently verify this

We've news of what appears to be a

development at the azovstal steelworks in

Mariupol.

about a dozen buses carrying Ukrainian

fighters who were holed up beneath the

besieged plant have been seen leaving the

site, Reuters news agency is reporting.

This has not been confirmed by

Ukrainian authorities and the BBC cannot

verify it independently.

a senior commander of Ukrainian

forces at the besieged plant said earlier in a

post on social media that fighters there were

carrying out a decision by the Ukrainian

military high command to save the lives of

service personnel, but he gave no details of

what the decision was.

Earlier we reported that Russia's

Ministry of Defence said it had reached an

agreement with Ukraine for wounded

soldiers to be evacuated from the besieged

azovstal steelworks.

Putin making military decisions

in Donbas - Western military source

General Valery Gerasimov was pictured

in a meeting with President Putin days after

the start of Russia's invasionImage caption:

General Valery Gerasimov was pictured in a

meeting with President Putin days after the

start of Russia's invasion

Russia's President Putin and his military

chief, General Valery Gerasimov, are believed

to be directly intervening in Russia’s

military offensive in Ukraine and taking

decisions normally made by more junior

officers - according to a Western military

source.

Speaking on the condition of anonymity,

the source said: “We think Putin and

Gerasimov are involved in tactical decisionmaking

at a level we would normally expect

to be taken by a colonel or brigadier.”

The military source said the two were

the ones making decisions about troop

movements in the Donbas – the area of

eastern Ukraine which is now the focus of

Russia’s military offensive.

There have already been suggestions

that President Putin has become more

involved in the day-to-day running of the

military campaign, ever since Russia

suffered setbacks in the north of the country

and around the capital Kyiv.

There’s also been recent speculation that

Russia’s military chief, General Gerasimov,

may have been sidelined – along with

unsubstantiated rumours that he was

injured while visiting the Donbas a few

weeks ago.

But the Western military official made

clear that Russia’s chief of the general staff

was still giving orders. “Gerasimov is up and

running,” he said.

Russia revives classic Soviet car as

Renault pulls out

Two Moskvich cars travel through

Moscow's Red Square, circa 1963Image

caption: Two Moskvich cars travel through

Moscow's Red Square, circa 1963

One of the Soviet Union's best known

car brands could be about to make a

comeback, after car company Renault

announced plans to transfer 100% of

Renault Russia to the city of Moscow.

Moscow Mayor Sergei Sobyanin said

Renault's car factory in the city would be

nationalised and repurposed to produce

Moskvich cars, which were last produced

over 20 years ago.

The Moskvich, which means Muscovite,

was the first Soviet-produced car made for

individual use, rolling off the production

line in 1946.

It was designed to be sturdy and

affordable, made from parts produced in the

Soviet Union and communist East

Germany.

Sobyanin said the move would "open a

new page in the history of the Moskvich",

adding that the plant would produce

conventional cars to begin with, but could

make electric cars in the future.

Turkey's nato objections set to

dominate US discussions

Turkey's President Tayyip Erdogan says

he will not approve Finland and Sweden's

bids

For Finland and Sweden to join nato, all

30 existing members must say yes. But for

now, one is saying no.

President Erdogan says he won’t agree to

admit countries which apply sanctions on

Turkey.

Sweden suspended arms sales to Turkey

three years ago, following ankara’s military

intervention in Syria. and according to the

official Turkish news agency, both Finland

and Sweden have rejected dozens of

requests to extradite Kurdish militants who

Turkey describes as terrorists.

Both countries are sending delegations

to ankara to try and solve the problem, but

President Erdogan says they shouldn’t

bother.

he seems determined to extract a price

for his precious vote. On Sunday, the US

Secretary of State anthony Blinken said he

was confident that Finland and Sweden

would both join, despite Turkish objections.

The issue is likely to dominate

discussions between Mr Blinken and his

Turkish opposite number in Washington on

Wednesday.

White SA student filmed urinating on black student's property

a white student in South africa

has been suspended from

university after he was accused

of urinating on the property of a

black student at Stellenbosch

University, the institution

confirmed to BBC news on

Monday.

The university has said the

incident will be investigated

and further action including

expulsion and criminal charges

may be taken, depending on the

outcome of the investigation.

Scores of students protested

at Stellenbosch University on

Monday demanding swift

action against the first-year

student .

The university – like many

on social media who have seen

the widely circulated video –

has said the incident appears to

have been racially motivated.

In a statement, Stellenbosch

University spokesperson Martin

Viljoen said that the university

"strongly condemns the

destructive, hurtful and racist

incident”.

The victim is still in shock

and trying to process what

happened, the university has

said.

according to local media

reports, he was sleeping and

awoke when he heard that

someone was in his room.

In the video he is heard

asking the white student why

he is urinating on his

belongings.

The incident has once again

shone a spotlight on South

africa’s struggles with racism –

decades after the end of

apartheid.


Ghana may import

electricity in 2022

• Continued from front

megawatts (MW) in 2023 to 5,172 MW in

2027.

also, the total electricity requirement

for Ghana including power exports to

Togo, Benin, Burkina, and Mali is

projected to increase from 25,983

gigawatt/hour (GWh) in 2023 to 34,920

GWh by 2027 at a Compound annual

Growth Rate (CaGR) of approximately

7.7%.

This requires an additional capacity

• Due to power shortages

to augment the existing generating

facilities and the enlisted committed

generation projects from years 2023 to

2027 to continue to meet projected

demand with adequate reserve margin as

required for reliability.

The report further revealed that an

estimated amount of $872.8 will be

required to purchase natural gas to run

the thermal plants (.i.e. a monthly

average of $72.74).

This includes provision for Light

Cycle Oil (LCO), diesel, and heavy Fuel Oil

(hFO) during the gas outage period

which leads to a total of $988 million

required for fuel purchase in 2022.

again, the relocation of the 250 MW

ameri Power Plant from Takoradi to

Kumasi will reduce transmission system

losses significantly.

It will also improve the voltage

regulation in Kumasi & its environs and

aid export.

The report further said additional

generation capacity will be needed from

2023. Specifically, 184 MW, 187 MW, 114

MW, and 337 MW additional generation

capacity will be needed in 2023, 2024, 2026,

and 2027, respectively.

Recommendations

The report noted that due to the

growing electricity demand in Ghana,

there is an urgent need to make

arrangements to increase gas supply

volumes for more Thermal generation.

also, it is very important to make

necessary investments towards an

improved gas supply reliability owing to

the increasing dependency on natural gas

for power generation.

again, efforts should be expedited to

complete the relocation of the 250 MW

ameri Power Plant to Kumasi by

September 2022 to create a new

generation enclave in Kumasi as well as

create a new generation enclave between

Kasoa and Winneba to improve network

stability and supply reliability to accra.

Veep’s office to assist NPRA

digitise its operations

ThE Office of the Vice President stands

ready to assist the national Pensions

Regulatory authority (nPRa) to digitalize

its operations and to roll out attractive,

credible pension schemes,

especially for persons in the informal

sector, the Vice President, h.E Dr Mahamudu

Bawumia has assured.

h.E Dr Mahamudu Bawumia gave

the assurance when the management

and senior staff of the nPRa led by the

Board Chairman, Mr Simon Koranteng,

the Chief Executive Officer, Mr hayford

attah Krufi, accompanied by the Minister

for Employment and Labour Relations,

hon Ignatius Baffour-awuah

called on him at the Jubilee house on

Monday, 16th May 2022.

The national Pensions Regulatory

authority (nPRa) was established by

the national Pensions act 2008, (act

766) to regulate and monitor the operations

of the three-tier pension scheme

and ensure effective administration of

all pensions in the country.

amongst others, the nPRa is mandated

to register occupational pension

schemes, provident funds and personal

pension schemes; approve, regulate

and monitor trustees, pension fund

managers, custodians and other institutions

that deal with pensions as the

authority may determine; regulate and

monitor the implementation of the

Basic national Social Security Scheme;

Carry-out research and ensure the

maintenance of a national data bank

on pension matters.

as well, the nPRa is expected to

sensitize the public on matters related

to the various pension schemes; receive

and investigate complaints of impropriety

in respect of the

management of pension schemes; promote

and encourage the development

of the pension scheme industry in the

country; receive, and investigate grievances

from pensioners and provide for

redress; advise government on the general

welfare of pensioners; and advise

government on the overall policy on

pensions in the country;

“a well-regulated and functioning

pension system is a major driver for investment

and development, and I am

keenly interested in the growth of the

pensions industry. We are ready to help

you work on the appropriate technology,

software and designs to help you

achieve your objectives, especially in

reaching people in the very large informal

sector,” the Vice President said,

adding “we will help you digitalize

your operations.”

The Minister for Employment and

Labour, who has oversight responsibility

for the nPRa, said the authority is

looking to leverage on appropriate

technology including mobile money

interoperability to help make pension

contributions and payments less cumbersome,

and work with stakeholders

to design the necessary software to

make pensions administration easier.

“Ghana has a working population

of about 12 million, but only about two

million are in the formal sector and actively

making pension contributions.

We need to work harder to bring in

those from the informal sector,” he

added.

With offices in Kumasi, Sunyani,

Takoradi, Tamale, and Tema with more

in the offing the authority is poised to

expand its operations in order to be

even closer to its clients, the CEO, Mr

hayford attah Krufi disclosed, and

urged employers to pay their employees’

contributions promptly to avoid

prosecution.

IEA projects 2%

increase in policy rate

• Expects more increase in cost of living

ThE Institute of Economic affairs

(IEa) is projecting another

200 basis points in the policy

rate of the Bank of Ghana (BoG)

to a further 19.0%.

This it believes will help

narrow the gap with inflation

and also ease to some extent the

risk of foreign currency outflows.

In its analysis ahead of the

Monetary Policy Committee

(MPC), the IEa said the adjustment

will also provide some assurance

to the markets that the

BoG is committed to addressing

the resurging inflation, adding

that “anything less than this

may be interpreted as a weak response,

which may be concerning

to the markets.”

“The BoG must buttress its

decision with an effective communication

strategy to make its

intentions clear so that the

Bank can rally the markets behind

the decision”, it explained.

Furthermore, the policy and

economic think tank said “it is

known, however, that in the

Ghanaian context, the transmission

of the PR is constrained

by an under-developed and lessresponsive

financial sector. But

even more important is the fact

that Ghana has a long history of

inflation with strong supply or

cost undercurrents, in particular,

food, fuel and the exchange

rate. Therefore, as an essentially

demand-management tool, the

IT framework is less suited to

Ghana’s type of inflation. It is

more suited to mature

economies where inflation

tends to be more demand-driven”.

Inflation hit 23.6% in april

and is expected to go up further

in May 2022.

The continued that “I have

argued previously—and repeat

now—that in the Ghanaian context,

a more comprehensive approach

going beyond the IT

[Inflation targeting] framework

is needed to stem inflation on a

durable basis. In particular, BoG

should engage with government

and relevant agencies to

target directly the key sources of

inflation pressures, in particular,

fuel, food, transport and the

exchange rate.”

The report also said the

country should be prepared to

mitigate oil price shocks that

may occur due to geopolitical

developments. This should require

that Bulk Oil Storage Company

maintain strategic oil

reserves that could be released

to cushion pump prices in the

midst of shocks.

“Government should also be

ready to use some of its windfall

earnings from higher oil prices

to cushion domestic prices and

also suspend or reduce some of

the numerous fuel taxes and

levies amidst oil shocks.”

For food, the report said it is

necessary to increase production

and ensure storage and

preservation of excess produce,

especially during the peak seasons

so that buffer stocks may

be released to cushion prices

amidst shocks and during the

lean seasons.

For transport, it said the

public transport system should

be improved and the availability

of intra- and inter-city public

transport increased. The public

transport system should be subsidised

to cushion the masses

that mainly use it.

For the exchange rate, it

pointed out that it’s necessary

to leverage capacities and opportunities

for earning foreign

exchange, including through

greater processing of export

commodities and increasing

earnings from natural resources.

The institutional and legal

framework regarding remittances

should be reinforced to

promote inflows from the

Ghanaian diaspora. at the same

time, demand for foreign exchange

should be curtailed

through policies that promote

the production of import substitutes

domestically.

In addition to the supply or

cost drivers of inflation, the IEa

said fiscally-fueled demand is

also an important driver, therefore,

it is important to institutionalize

fiscal discipline,

including through adherence to

the Fiscal Responsibility act

that limits the deficit to 5% of

GDP, so that the demand side of

inflation can also be restrained.


MINING SECTOR

NEEDS SUPPORT

TO DELIVER MORE

ExPErts in the extractive industry have

converged on Cape town, south Africa, for the

largest global gathering on mining.

the four-day conference on African mining,

dubbed “African Mining Indaba”, featured an

array of speakers and participants, including

three Heads of state and a Prime Minister.

the 2022 Investing in African Mining Indaba,

which ends today, is the largest mining dialogue

platform in Africa and the largest mining

investment conference and exhibition in the

world.

this Mining Indaba is taking place at a time

the world is recovering from the effects of the

COVID-19 pandemic.

It is important to note that almost every

industry is having to adapt to new

circumstances and confront new challenges and

be prepared to seize new opportunities; the

mining industry in Africa is no different.

As it responds to the effects of the pandemic,

the mining industry also needs to manage the

risks and potential benefits of rapid

technological change, shifting market demand,

climate change and geo-political uncertainties.

After more than 65 years of independence,

mining remains a critical pillar of the country’s

economy. It is a significant contributor to export

earnings and an important source of foreign

direct investment, which directly employs

several hundreds of people.

It is important to note that the revenues from

mining increased from $4.572 billion in 2019 to

$5.140 billion in 2020, the year COVID-19 struck.

the 12.4 per cent upturn in mineral receipts

was due to the record level of gold price which

subdued the impact of the downturn in

production.

Indeed, the 27 per cent year-on-year growth

in gold price offset the 4.7 per cent decline in

production to occasion an expansion in receipts

from $4.156 billion in 2019 to Us$4.999 billion

in 2020.

As mining remains one of the mainstays of

the country’s economy, we must take steps to

improve the functioning of our railways and

ports, and more importantly, ensure a secure

and reliable supply of affordable electricity.

these tasks are at the forefront of our economic

reconstruction and recovery efforts.

the Western railway line, which is the

primary mode of hauling bulk minerals to the

takoradi Port, has deteriorated over the years

as a result of obsolescence and limited

investments.

Consequently, the bulk mining companies

have had to make use of the more expensive

road system. this for us, makes mining more

burdensome.

Artisanal fishers blame

dwindling fish stock

on climate change

KOBIna atta has been

fishing in Sekondi on

the western coast of

Ghana since age 20. now

at 51, he complains

about the changes in the seasons, rise

in sea level, and dwindling stock of

fishes, having a toll on his livelihood.

“These days, the seasons have

changed, we cannot differentiate

between the harmattan and the

rainy seasons. It can rain today and

in the next minute, the sun will be

blazing. This really disrupts our

activities,” he said.

This, he believes, has brought in

its wake an increasing decline in fish

stock and catch as fishing boats often

returned from sea almost empty.

atta, like many other artisanal

fishers, has a strong conviction that

changes in the climate is one of the

driving forces behind the

phenomenon.

Ghana’s fisheries sector

according to the Ministry of Food

and agriculture there are more than

two million people in Ghana, or

around 10 per cent of the population,

who rely directly on fishing and

related activities for their livelihoods.

a report published by the

Environmental Justice Foundation

(EJF) in 2018 said Ghana accounts for

about 11 per cent of the total artisanal

canoes in West africa with smallscale

fishing employing around 80

per cent of all fishers in the country.

The EJF said widespread illegal,

unreported and unregulated (IUU)

fishing and destructive practices

such as the use of dynamite,

monofilament nets, DDT, and light,

continually cause irreplaceable

damage to marine ecosystems.

The impact of climate change

In Ghana, ocean warming and

acidification, arguably the two most

dramatic effects of climate change on

oceanographic conditions, are

already wreaking havoc on those

who make their living from the sea.

This is coupled with widespread

IUU fishing, which spans from

indiscriminate use of chemicals and

explosives by canoe fishermen to

increasing light fishing by both

small-scale and tuna vessels.

Most fishermen complain that

surface water fishes appear to be

disappearing with reduction in the

sizes of the fishes, attributing it to

the changes in the marine

environment.

The rise in sea levels has also

resulted in coastal erosion, high tides

in recent times, tidal waves affecting

fishers, and storms making fishers

unable to go for fishing expeditions

as they wished.

“nowadays we have noticed some

changes in the sea. We have realised

that the seawater has become

warmer than it used to be,” said atta.

another fisherman, Samuel

Tetteh, who has been fishing since

age 15, said: “These days the fishes do

not stay at the surface of the sea, they

go deep down. You know for us in

artisanal fishing, we have to see the

fishes before we cast our nets, so

sometimes we have to go long hours

before we can see some fishes and

cast our nets”.

at age 41, Tetteh said though

climate change was a contributory

factor, it could not be solely blamed

for the decline in fish stock and

mentioned engagement in light

fishing among other IUU practices as

other factors.

“The concentration of carbonic

acid at the surface of the seawater

makes it uncomfortable for fishes to

stay at the surface. The fish now

prefer to stay at the bottom than at

the surface,” he said.

another challenge has to do with

the rise in sea levels, which the

fishermen say is destroying many

coastal lands.

“Sometimes we are unable to go

to sea because of the high tides. We

believe that the tidal waves as we

have been witnessing in recent times

are all as a result of changes in the

climate,” Mr Tetteh said.

nana Kweigya is a fisherman at

anomabo in the Central Region and

the Chairman of the Canoe and

Fishing Gear Owners association of

Ghana.

he said climate change is

impacting negatively on artisanal

fishing.

“Climate change has affected

fisheries and continues to affect

small-scale fisheries especially. There

are pieces of evidence that point to

the fact that it has increased acidity

of the seawater and has, in turn,

affected the production of fish,” he

said.

nana Kweigya said the sizes of

fish had reduced and also believed

that they were all as a result of global

warming and climate change.

That, he said, had affected fish

production because many of the eggs

were destroyed long before they

matured, resulting in a decline in fish

stock.

nana Kweigya explained that it

was the reason fishermen had

resulted to using light to attract fish

before they cast their net.

“General I will say climate

change is negatively impacting on

fishing and limiting access to fish by

artisanal fishers,” he said, and called

for serious discussions on how to

mitigate the impact of climate

change on fishing and related

activities.

however, in contrast, Mr. Socrates

Segbor, the Fisheries Programmes

Manager of EJF, believes that there

are not enough scientific data to

prove that climate change is

impacting fishing.

Though he did not rule out its

possible negative impact, he said the

stories of the fishermen remained

their opinion until they were

scientifically proven.

For him, the lack of scientific data

about the impact of climate change

gave people the opportunity to

speculate and lux about what to do to

address the issues of IUU.

he, therefore, appealed to Ghana’s

Fisheries Commission and other

academic institutions to undertake

scientific research on the impact of

climate change in the fisheries sector

to confirm or reject the opinions of

the fishermen.

By Afedzi Abdullah

Source: GNA


GRA reimburses over

120,000 persons

FOLLOWInG the initial

issues that beset

the early days of the

implementation of

the electronic transfer

levy (E-Levy), over 120,000

customers have had their

monies refunded for wrongful

deductions.

according to the head of

Project Management Unit at

the Ghana Revenue authority

(GRa), Isaac Kobina amoako,

who made this disclosure, “the

data we had for those who had a

refund on 1st of May from one

particular charging entity was

around 120,000 customers

whose monies have been refunded

for 1st of May. I do not

have the statistics for the other

charging entities and for the

other days that the reversal has

been made. We’ve met Mobile

Money association, and we’ve

seen that the transfers have stabilised.”

“People are now gaining

confidence that when they

transact with the vendors, cash

• After initial hitches in E-Levy

is not affected by the e-levy.

Cash-out is also not affected by

e-levy and with the provision

for also online businesses

where they are being protected

so that when you are purchasing

online you don’t have to pay

e-levy.”

Mr amoako was speaking to

the media on the sidelines of a

sensitisation programme by the

GRa for some trade associations

in accra on the E-levy.

after many agitations and

protest against the Electronic

Transfer levy, it finally took effect

on the 1st of May 2022. But

it wasn’t without the usual

challenges that confront the

implementation of a policy, especially

in its initial stages.

Some persons were overcharged

while others had

monies deducted from their accounts

even though their

transactions were exempted

from paying the levy.

Many took to social media

to vent their frustration with

the situation.

But nearly two weeks into

the introduction of the policy,

some of these concerns have

already been addressed.

The e-levy is a 1.5 percent

tax on selected electronic

transactions introduced by the

government in the 2020 budget

as part of efforts to raise revenue

locally.

Fuel prices to rise marginally

ThE Institute of Energy Security

(IES) is predicting a 3 to 6

percent rise in the price of

petrol and LPG.

It is also forecasting a 2 percent

rise in the price of diesel

on the local market.

according to IES, this is attributed

to the 7.64% rise in

Gasoline price, 1.90% rise in

Gasoil price, and the 6.05% rise

in the price of LPG on the international

market.

The national average price

for Gasoline remains at

Ghh¢9.41 per litre, while Gasoil

is pegged at Gh¢11.12 per litre.

IES in a statement said,

“the upward revision of Gasoline,

Gasoil, and LPG prices may

be significant, on the back of

rising international fuel prices,

and the growing pockets of fuel

shortages across the country.”

• IES forecasts

in a statement said,

“the upward revision of

Gasoline, “IEs

Gasoil, and LPG

prices may be significant,

on the back of rising

international fuel prices,

and the growing pockets of

fuel shortages across the

country.”


Connecting mining to the

wider Ghanaian economy

For over a century Ghana’s

mining industry has been

regarded as an enclave one,

contributing to the country’s

economy directly but adding very

little to economic activity outside

of the mining sector itself. Now

however, through the self

regulatory efforts of the mining

companies themselves, under the

guidance of the Ghana Chamber

of Mines, the industry is not only

joining mainstream economic

activity , but is actually

empowering the manufacturing

sector to become internationally

competitive in both product

quality and pricing. TOMA

IMIRHE examines the potential

impact Ghana’s mining industry

has started asserting over the

country’s manufacturing sector.

IT may have taken close to a

century, but finally, Ghana’s

vibrant mining industry – the

country is now the biggest gold

producer on the entire african

continent – is being brought into the

mainstream of economic activity across

the nation. This is crucial; for most of the

past 100 years the mining industry had

correctly been criticized for being an

enclave one, generating more to Ghana’s

tax revenues (Ghc4.172 billion in 2020)

and foreign exchange inflows (US$3.67

billion in 2020) than most – if not all – of

the other sectors of the economy but not

offering significant knock-on business

opportunities for the rest of the

economy.

By its very nature, the mining

industry relies much more on

technology than human resources to

extract solid minerals from the ground

which means its ability to generate

employment opportunities is very low.

Last year, for instance the mining industry

directly employed 8.760 and another 25,803

indirectly. By comparison Ghana’s cocoa

industry is responsible for the livelihoods of an

estimated 800,000 entire households.

Furthermore, with the development of a

gold mine requiring hundreds of millions of

investment into equally large values of physical

infrastructure and equipment, Ghana’s local

financial services industry lacks the capacity to

fund more than working capital requirements

and the relatively cheaper

aspects of project finance

such as acquisition of

vehicle fleet. The sheer size

of mine development

financing costs requires that

mining firms are listed on

foreign, more developed and

liquid stock markets than

the Ghana Stock Exchange,

although a couple have

listed locally in addition to

their foreign listing to give

Ghanaians a chance to buy

into (insignificantly) small

portions of their equity.

add to this the fact that

the end products of their

activities are necessarily

sold on international

commodity markets rather

than local markets which deprives the

domestic commerce community from deriving

business opportunities.

however, over the past half a decade,

Ghana’s mining industry has taken deliberate,

concerted steps toward mainstreaming it into

the wider economy and this has produced

impressive successes. Key here has been the

drawing up of a Mining List which identifies an

ever increasing array of production inputs

which mining companies are required to

procure locally. This has dramatically increased

the local sourcing of such iputs, giving local

enterprise huge production and sales

opportunities.

In 2020 alone, mining companies in Ghana

spent US$4.387 billion in the local economy

through payments to manufacturers and

suppliers of goods and services (including

labour), government taxes and financing of

corporate social responsibility projects. This

amounts to 85.7% of their total expenditure for

last year.

Specifically, last year mining companies in

Ghana spent US$ 2.670 billion on the

procurement of non-energy goods and services

from manufacturers and suppliers domiciled

in the country, this translating to 51/93% of

their revenues for the year. Importantly the incountry

spend on locally procured goods and

services continues to rise – in 2019 the

proportion of the industry’s revenues spent on

local procurement was 42%.

There are still problems though. Most

notably, a significant proportion of locally

procured products are actually

imported and only qualify as locally

procured because they were secured

through enterprises registered and

domiciled in Ghana. although this too, adds to

business opportunities and wealth generation

by local firms along the supply chain , it is not

an optimal situation.

Crucially though, Ghana’s mining

companies, operating through their industry

association, the Ghana Chamber of Mines, are

determined to change the situation for the

better. “Locally produced goods should mean

locally manufactured goods, as much as is

possible” asserts Sulemanu Koney, the

Chamber’s chief executive officer.

This however requires deliberate

affirmative action to dramatically upgrade the

capacity of local producers of mining industry

inputs, with regards to production volumes,

product quality and price competitiveness.

Instructively, it is the mining industry itself

through its Chamber, rather than government

that is leading this drive. For instance the

Chamber has been engaging the Ghana

association of Bankers to facilitate the

provision of competitively priced funding to

support the local content agenda. Consequently,

the two associations are noe developing special

purpose vehicles for the provision of supply

chain financing for local mine support services

companies.

Even more instructively, the Chamber’s

producing members are deliberately turning a

blind eye to the availability of cheaper imported

alternatives to the locally produced versions

they tend to, opt for. Regulations frequire them

to opt for the local version rather than the

foreign alternative as long as the former is not

more than 5% more expensive than the latter

but mining companies in Ghana willingly

accept local versions that are up to 10% more

expensive, without prodding from anywhere.

however product quality cannot be

compromised on like pricing can and this is

where the Chamber is making potentially its

most promising interventions, having devised a

product quality improvement strategy for local

manufacturers that not only stands to make

them quality – competitive for Ghana’s mining

industry, but for all industries they are involved

in and for markets all across africa.

This strategy is based on quality

standardization through collaborative action

between the Chamber, manufacturers, product

standards institutions and government itself. It

has already been applied for the electrical cables

industry – the quality if which is crucial to the

mining industry but which hitherto was not

subject to universally accepted international

quality standards. It involved a procedure

developed and implemented over half a decade

of intensive research, conceptualization and

actual implementation and has produced

excellent results – Ghana now produces

electrical cabling that is accepted worldwide for

its quality.

But even more importantly, the procedure

used to arrive at the standards for locally

manufactured electrical

cables can be used for all sorts

of other locally made

products too. Indeed this goes

far beyond their usefulness to

Ghana’s mining industry; it

shows that the mining

industry can play a vital role

in ensuring that locally

manufactured products meet

quality standards that would

enable them be

internationally competitive.

Coming at a time that the

african Continental Free

Trade agreement is opening

up markets all around the

continent to made in Ghana

products on preferential, duty

free terms, this can prove

pivotal.

here the mining industry thus goes far

beyond providing a market for Ghanaian

manufacturers. Through the product quality

standards it is setting, such as with electrical

cables, is challenging them to meet the

standards than can make them competitive all

around africa and indeed globally.

Given that transnational firms demand

that their inputs meet globally acceptable

standards, ultimately with the appropriate

development programmes in place, local

companies will not only be in a position to be

competitive in producing for the local

transnational firms but also be able to compete

in the regional and african markets.

“The presence of transnational firms such

as large-scale mining companies in a

developing country as ours provides a fillip for

building the local capacity of local producers of

their inputs” asserts Sulemana Koney.

“accordingly, whilst deepening local content is

a desirable goal, the building blocks to a

competitive, sustainable and thriving local

production base is predicated on a sound

strategy that includes appropriate supply

development programmes.”

This is precisely what Ghana’s mining

industry has facilitated with regards to

electrical cables; and having identified a most

effective process, is now positioned to replicate

with regards to a host of other products which

it uses and which can be made in Ghana and

sold world wide.

This may turn out to be the biggest and

longest lasting legacy of Ghana’s mining

industry, and its members, through their

Chamber, are leading by example. The Chamber

is already heavily invested in a comprehensive,

thoroughly workable initiative aimed at

making the industry a hub for mining support

services across the whole of West africa.

Indeed, even as Ghana’s mining industry

has proven hugely successful in

mainstreaming it into the wider national

economy it has already embarked on the next

step – facilitating the capacity of local industry

to compete in foreign markets, using the local

mining industry as the staging post. Thus it is

establishing a legacy that will prove crucial yto

Ghana’s economic performance well into the

future.


How to choose a Bank

that will be useful to you

By Toma Imirhe

Just understand this; not all

banks will be useful to you and

your business!

A few decades ago a large

number of Ghanaians and

especially self-employed

people in the informal

sector didn’t want

anything to do with a

bank. Cocoa farmers

would just go to the bank

because that is where they

were paid. Farmers could

spend days before having

access to their money.

They will just withdraw

all their monies, just turn

around and walk away,

till the following year.

“Choosing a bank” was

not part of the

conversation then.

SOME formal sector employees used to

collect their salaries and wages over

the counter or table top. There were

many reasons people did not

patronize the services of banks;

• There were few banks

• The banks didn’t really do much to attract

customers because there was very little

competition

• If you are self-employed the banks gave

you very little attention and when making

withdrawals it was very frustrating because of

long waiting times (which is still the case

though).

• People preferred handling cash as

opposed to recent financial education on the

need to go cashless and still be able to transact

business.

• Prohibitive bank charges

• Laborious account opening procedures

(even without anti-money laundering

requirements)

In effect, it appeared banks just excluded

individuals who were in retail businesses. The

informal sector and rural Ghana were not

traditionally part of their target. Their

corporate accounts were just enough.

Small business owners (informal sector)

mainly didn’t show much interest in dealing

with the financial institutions. People

preferred keeping their monies in their safes,

lockers, under pillows, with a trusted partner

and any other place apart from the financial

institutions.

WhaT ChanGED?

Ghana had a change of government in 2000

and in came President Kuffour. his

liberalization of the banking sector opened up

the banking industry. Treasury rates dropped

from the 40s to the 20s.

Foreign banks rushed in, lower-tiered

banks emerged, the Savings and Loans as well

as the Microfinance sector blossomed. all of a

sudden, the informal sector and rural Ghana

had what they can call their ‘bank’. They began

taking up some of the valued customers of the

then existing banks.

The traditional ‘elephant’ banks were

caught napping. They all realized that they

have to evolve to begin doing banking outside

of their plush and crowded halls.

They went on customer hunting,

scrambling for new accounts from the markets,

picking customers’ cash in specie operations

and credit giveaways (which was also a

blunder).

In addition to the industry trends, changes

in the way we do business and modern

advancements in technology also fueled the

need for businesses to maintain a bank

account.

This is the time customers should now

choose their banks. In the past decades, banks

in Ghana chose their customers. But now the

tables have turned.

now customers have the option to choose

their banks. Though the recent bank failures

have dented the opportunities, there are still

credible options. Suffice to say that financial

institutions do share some similar

characteristics, they can be different in certain

specifics. The specifics are what you go for. Do

not just allow some bank’s sales executive to

sell you any misfit service.

There are many banks in existence now

and businesses have a choice as to which

institution to bank with. Banks have now been

categorized into different bands serving

different needs.

There are;

• Universal banks

• Savings and loans institutions

• Rural banks

• Microfinance institutions

• Cooperatives associations

• Others

To have a fruitful relationship with your

bank, look for a bank that best serves your

needs and do business with them. not every

bank would be ideal in providing a service that

will be the best for you. Banks in themselves

have interests, specialities and sectors or

industries they see as profitable. They,

therefore, target such businesses and clients.

For every client segment they serve, they

choose which of their services or products that

best suit them.

In all of these, it is the duty of the business

owner or manager to decide, looking at what

the business has set out to do, to figure out

which financial institution will best serve their

needs.

In choosing a bank what do you look for?

• Look at your business needs, e.g. do I have

payments by cash, cheques, mobile money,

• how do you also pay people? Do they have

the facilities to do seamless and safe

transactions? It may shock you to know that as

of 2021, some banks do not have reliable mobile

money integration. Sometimes you have to

walk to the bank to effect simple transactions.

This is the stone age!

• If you collect cash, are you safe with it?

There are savings and loans companies that

visit businesses for cash collection purposes.

This saves time and money journeying to their

office to make those same deposits.

• If you travel out do you have to carry

plenty of cash? You might want to consider a

financial institution with good nationwide

coverage to leverage on transactions when

travelling for business. This reduces incidences

of carrying of cash and eases the risks of cash

lost in transit.

• how often do you need financial support

to meet your obligations? You should not do

business with a financial institution that

always refuses you financial assistance, when

in need of support for supplies and meeting

operational expenses. You can do a simple

background check and ask around about the

financial standing of the particular institution

you want to do business with. The smaller

banks and Savings and Loans have generally

proven more responsive in that regard.

• how much am I prepared to pay for

banking services? Some banks charge for every

transaction you make. as a small business, it

could cost you a fortune. Get the full details and

seek advice from someone who can help you to

understand and interpret the charges.

• Do I even have time to visit the bank?

You will be better off doing business with a

bank that provides mobile banking services. It

saves you time and money.

• Do you usually get spare cash that

can sit? You may need a bank that has an

investment arm that could advise you to do

some investments apart from the old

uninspiring Fixed Deposit.

• Test their responsiveness. Send any

request to any of their customer channels and

see how long it takes for them to come back. It

took a bank 3 days to respond to our Whatsapp

message. You know that the bank will give you

a run for your money when you need attention.

all the institutions talk of good customer

service but you can bet, some do not know

where customer service was born. From such

FLEE!

One warning, however; if you are start-up a

business, don’t approach any of them for

financing. They won’t and can’t help you.

Banks are not for startups. Venture capital or

Equity finance can help better.

We have not mentioned, the overcrowded

banking halls while only one cashier sits in the

cage. That is more for particular branches than

an entire bank’s attribute. Therefore be

conscious of which branch you will choose to

physically do your transactions.

Choosing a Bank – Final hints

Once some of these questions are answered

you know that you have something to hold on

to even before you venture to work with a bank.

It may even be necessary to work with more

than one bank but don’t do more than three.

That is diversification but it can be costly in

terms of account maintenance fees.

Some business owners mistakenly open

multiple accounts because perhaps they

couldn’t resist the good customer service

by the sales and marketing reps of a

particular bank so they rush to open

accounts.

Don’t let a bad experience let you

begin to put your money in pillows or

safes in your room. You know if you

placed Ghc10 million in a safe in 2010

and open the safe in 2021, you would

have lost over 50 percent of purchasing

power, which is the real value of your

money.

apart from the bank giving you

some interest to preserve purchasing

power, it would also be safe for you. So

you obviously need a bank, and you

deserve to have a fruitful relationship

with your bank. You need to choose your

bank, don’t let your bank choose you.

SOURCE: Ghana Talks Business


FINANCE

Tax reliefs for employees

and how to invoke the laws

FOR many employees

in Ghana,

the amount of

taxes they pay on

their wages and

salary is so high that, they

do not bother to pay attention

to the taxes deducted.

In Ghana, sources of income

that are subject to income

tax include income

from employment, income

from business and income

from investment.

Tax laws have made

provisions for employees to

reduce their taxes in the

form of personal tax reliefs

if they are so minded.

The problem is that many

people in Ghana do not take such

an advantage leading people to

pay even more in taxes.

In the 2019 budget, the government

took a bold step to increase

the amount of relief to

individuals. The ministry of finance

indicated the total relief

was expected to cost the nation

in excess of GhS 133m per

annum.

Some of the reliefs saw an increase

of 900% over the previous

years. But the question is are

Ghanaian employees taking advantage

of these reliefs?

In this article, we take a look

at how employees can reduce

their taxes by simply complete a

one-page form and endorsed by

their employers.

PERSOnaL TaX RELIEFS:

In calculating the tax payable

by individuals, tax laws take into

consideration the person’s personal

circumstances in life. For

instance, a married individual

who has three children, in school,

this individual provides the necessaries

of life of his aged relatives.

Such a person is likely to be

hard-pressed in life than a single

unmarried person who has no responsibilities.

On this basis, the

tax system has personal reliefs

and allowances which are intended

to reduce the person’s tax

liability.

WhaT IS a TaX RELIEF?

Tax relief is an approved deduction

intended to reduce the

taxable income and thereby

lessen the tax burden on the taxpayer.

The amounts are deducted

from the assessable income to reduce

the amount that should be

subjected to the tax rates in force.

The taxpayer’s personal circumstances

are always taken into

consideration in granting the relief

if certain conditions are satisfied.

There are conditions that

guide tax reliefs.

1. The reliefs are mostly

claimable by individuals as opposed

to companies and trust.

2. The reliefs are claimable

only by resident’s individuals as

opposed to non-residents.

3. The reliefs are available for

a year of assessment. They cannot

be carried forward. Take it in the

year or lose it.

4. The reliefs are personal in

nature and they cannot be transferred

from one person to another.

The following reliefs are allowed

under the 5th Schedule of

the Income Tax act, 2016 (act 896)

1. MaRRIaGE OR RESPOnSI-

BILITY RELIEF-GhS 1,200

a married person with a dependant

spouse or an unmarried

person with dependant children

can be hard press in life than

someone who is not married. In

line with the principle of equity,

the PnDCL 166(1986) enacted this

relief to individuals. Section 5(2)

of the PnDCL 166 provided relief

of 2,500 Cedis (GhS 0.25 today) to:

i. a married man or married

woman who maintains the husband

and the household, provided

that the husband of a

woman who claims this relief

shall not be entitled to the same

relief;

ii. an unmarried man or

woman with two or more children

who depend on him/her;

Conditions:

a. The relief is currently

Gh¢1,200.00 per year.

b. Only one of the spouses (either

the husband or the wife) is

entitled to this relief.

c. a single unmarried person

must have at least two defendant

children to qualify

d. The Employer must certify

the details provided to be true

Self-employed individuals

can also apply by completing the

tax relief application form. The

individual must prove that he or

she provides the necessities of

life for the dependant spouse or

children. The 5th Paragraph of

act 896 defines a dependant as

follows: “Dependant child, spouse

or relative” in respect of an individual,

means a child, spouse or

relative of the individual for

whom that individual provides

the necessaries of life”.

2. ChILD EDUCaTIOn RE-

LIEF-GhS 600

This relief is intended to help

take care of children’s education.

It is granted to an individual

sponsoring the education of the

individual’s children or wards in

any recognized registered educational

institution in Ghana. It is

claimable by one parent only

with respect to a child. a “Child”

under the law includes an

adopted child or ward. Under the

PnDCL 270 1991 amendment, this

was modified to cover children in

both first and second cycle institutions.

however, under the Income

Tax act, 2015 (act 896) the

level of education is silent.

Conditions

a) The relief is Gh¢600 per

child per annum up to a maximum

of three (3), GhS 1,800 in

total.

b) It is granted to persons

who have children/wards in

recognized educational institutions

in Ghana.

c) Only one of the parents is

entitled to the relief for the same

child. This means that both parents

cannot claim this relief in

respect of the same child. Where

the children are more than three,

both parents may decide who

should apply for which child.

d) The Employer must certify

the application form to be true.

3. DISaBILITY RELIEF-

25% of assessable Income

The Disable Relief serves as

an incentive to individuals who

in spite of their disabilities are in

gainful employment or business.

It is granted to persons who are

physically challenged who earn

income from any business or employment.

The applicant must

prove to the satisfaction of the

Commissioner that he is disabled.

Conditions

a) The relief is limited to 25%

of assessable income from business

and/or employment only. Income

from investment is not

included in calculating this relief.

Disability does not affect investment

income.

b) It is granted to a person

who is certified to be disabled by

the Department of Social Welfare.

a certificate is thus required to be

produced to the employer from

the Social Welfare Department

after a physical examination of

the person.

4. OLD aGE RELIEF-

GhS1,500

This relief is granted to persons

who are sixty years and

more and earns taxable income.

Conditions

a) The relief is Gh¢1,500 per

annum or the total income,

whichever is less.

b) The relief is granted to persons

who are sixty (60) years and

above and are in receipt of taxable

income.

5. aGED-DEPEnDanT

RELIEF -GhS 1,000

This relief is for individuals

who have a dependant relative

above sixty (60) years. This relief

can only be claimed in respect of

two dependant relatives. Where

two or more persons qualify in

respect of the same relative, only

one relief would be granted. The

dependant relative should be any

dependant other than a child or

spouse.

Conditions

a) The relief covers only two

dependant relatives.

b) Dependant relatives do not

include children and spouse

c) The relative must be 60

years and above

d) Only one individual taxpayer

can apply in respect of the

same relative.

6. COST OF TRaInInG/SELF-

IMPROVEMEnT-GhS 2,000

any individual taxpayer who

undergoes training to update his

professional, technical, or vocational

skills or knowledge is eligible

for relief of Gh¢2,000 or the

cost of training whichever is less.

7. CaTEGORIES OF PER-

SOnaL RELIEFS

The reliefs come in two

forms.

i) Upfront Reliefs: This is

granted to the employee on

monthly basis. The employee will

receive it through his payroll on a

monthly basis. The following are

the upfront reliefs:

a) marriage or responsibility

relief;

b) child education relief;

• Continue on Page 11

Tuesday, May March 17, 2022 1, 2022

THE WORK PLACE

Can you ever beat an internal

candidate for a job?

BY ADEDEJI ADEMOLA

YOU apply for a job – only for it to

go to an internal candidate.

Were you wasting your time all

along?

You’ve found a job advert that excites

you, and you’re already readying yourself to

send off an application. Yet, with a little

closer examination, the advert seems somehow…

off. Maybe the information about the

day-to-day role is surprisingly brief, or the

application window is very short. Congratulations:

you’ve identified a position that’s

probably aimed squarely at an internal candidate

– one who’s already been picked.

applying for jobs internal candidates

will almost certainly fill can be hugely demoralising.

The applications and cover letters

– even the emotional energy you spend

on the process – end up feeling like a complete

waste of your time. Is there a way you

can spot these postings in advance to save

yourself time and effort – and if you suspect

there’s an internal candidate in play, is it

even worth applying for a role?

‘Sketchy’ processes

Why post a position when it’s barely open

in the first place?

Whether they have a preferred internal

candidate or not, some organisations are required

to post jobs openly. “This is usually

the case in the public sector, but may also be

a governance requirement in the private sector,”

says Lauri Vaisto, a former recruiter

who’s now the strategy and employer brand

consultant for the Swedish job-search engine

Jobbland.

The idea behind requiring organisations

to open hiring to all applicants is recruitment

should be meritocratic, adds Daphne

Lok, an hR manager in Sydney. “So, if it’s

going to be based on merit, how do you determine

what that merit is unless you have

comparison candidates?”

Sometimes the requirement exists for

immigration purposes, to ensure that a foreign

resident is only hired for a job that a

local can’t fill. For instance, in australia,

companies generally need to have an open

recruitment process, even if they already

know the overseas worker they want to hire.

Ideally, all these postings are genuinely

competitive, rather than a tick-box obligation

before an employer is finally allowed to

hire the intended candidate. Yet, all too

many job seekers have shared stories of applying

for a job, seeing that an internal hire

was made and suspecting – or being told –

the company’s intention was to hire that

current employee all along.

External candidates are not the only

ones who notice how unfair this process can

be; internal employees can also see the problems

– even if they are the ones who theoretically

benefit. Last year, Jake, a worker at a

meat processing factory in the Southern US,

was on the internal side of the equation. The

24-year-old was overqualified, and many employees

had taken early retirement due to

Covid-19, so Jake soon moved from manual

work on the floor to computer-based work in

the packaging warehouse. Eventually, he was

offered a supervisory position.

The way it came about was strange,

though. The department head came into the

office where Jake and a colleague were working,

saying that he wanted those in the room

to know that the job had been posted, and

that he couldn’t promote the person he

wanted to unless they applied formally

through the website. It was clear that he was

talking about Jake.

“I remember that part well, because it

stuck out to me as a little sketchy that he

wouldn’t say it directly for whatever reason,”

recounts Jake. he assumed this was a breach

of equal-opportunity laws. “I found the job

posted listed only as ‘WaREhOUSE’ with almost

no description, no title or real requirements.”

Once he applied, he was quickly

offered the post, even without knowing the

job title.

I found the job posted listed only as

‘WaREhOUSE’ with almost no description,

no title or real requirements – Jake

Of course, for Jake and his department

head, this ‘sketchy’ experience had a positive

outcome: Jake got a promotion and a

pay rise, while the manager got his preferred

candidate in the post. But for anyone else applying

to the role, this ‘search’ for a fitting

candidate became a demoralising waste of

time.

Warning signs

In Jake’s case, the nearly blank job ad

was clearly not designed to attract many applicants.

But internally geared job ads aren’t

always so obvious.

Vaisto, the Jobbland consultant, offers

“I found the job

posted listed only

as ‘WArEHOUsE’

with almost no

description, no title

or real

requirements.”

Once he applied, he

was quickly offered

the post, even

without knowing

the job title.

some clues as to whether a position is likely

to be filled from within:

• The job is advertised only on the

employer’s website

• The vacancy seems challenging to

fill, but the application time is remarkably

short

• The job ad doesn’t provide contact

information or a timescale, or is unusually

concise

• The job description is vague, or is

written in a way that assumes the applicant

has more information about the job than

would realistically be expected of an external

applicant

• The experience and skills required

are described with unusual precision, or require

an atypical combination of skills that

can only reasonably be expected to be met

in-house

These can be tell-tale signs – but it’s still

important to note list isn’t gospel. “Then

again,” cautions Vaisto, “we have to remember

that sometimes there are just

badly/hastily written job postings. Even if all

of the above were to happen, it is not automatically

a case of deliberately trying to be

misleading.”

and not all job postings aimed at internal

candidates are sketchy. Some companies

do explicitly state an internal candidate exists

for a given role, but that external applications

are still welcome. One such company

is the Washington Post. according to managing

editor Tracy Grant, “Stating that an internal

candidate has been identified is a

long-standing practice and applies to only a

small share of our job postings. We aim to be

as transparent as possible when we have

someone in mind for a role, and often times

other candidates emerge and we may interview

them for that role or future opportunities.”

So, if you know there’s an internal candidate

for a role that’s been advertised – or suspect

from the job advertisement that there is

one – it’s likely still worth applying.

Jed DeVaro, a management professor at

California State University, East Bay, believes

an external applicant has the best chance of

getting a foot in the door at a new company

if they set their sights slightly lower. Especially

at higher levels of seniority, companies

often hold ‘biased promotion contests’ in

which an external applicant has to be far

stronger than an internal applicant in order

to have a chance.

“Where it becomes really challenging

for the external hires is if the move involves

not just an external move, but also a promotion

at the same time,” says DeVaro, who’s

also the author of Strategic Compensation

and Talent Management: Lessons for Managers.

“So, where the external hire is in a

much better spot is if he or she is competing

with an internal candidate who’s one level

down.”

as dispiriting as it can be to get passed

over for jobs, the best strategy may ultimately

be to obtain as much information as

possible about the role and the company,

and chalk up the process to experience if

you don’t secure a position after all. Even if a

recruiter is just filling a quota for interviews,

going through the process might reap benefits

for the applicant later on.

“It’s an investment in building a relationship,”

according to Michele aguilar Carlin,

the executive vice president of the

US-based hR Policy association. “Especially

now, with how scarce talent is, the right job

may come up,” and the hiring manager may

remember an applicant for a previous position.

Eventually, the external may become the

internal.


ENTREPRENEURSHIP

How to overcome startups

obstacles in Ghana

By Kofi Ayisi Aboagye

In recent years, africa is making great

strides to become the launch pad for

high-growth innovative companies.

This is evidenced by the increasing

number of tech startups to have received

financial backing, which grew by 46

percent annually. This is six times faster than

the global average, according to Partech Partners

(a venture capital firm in the US).

Unfortunately, africa has not done well in

sustaining and scaling up startups. Even

though startup development has been progressive,

there is only three “unicorns” on the

continent, including nigeria’s fintech Flutterwave.

Unicorns are privately owned tech companies

valued at more than US$1 billion.

Whereas such unicorns are common in advance

economies; 200 in United States, 100 in

China and 50 in Europe, but non-existent in

Ghana and rare in the rest of africa,

also, there are less than 20 african ‘zebras”

(companies with market value of motre than

US$200 million) including Ghana’s only one,

JUMO.

according to the Boston Consulting Group

(BCG), african startups rarely survive beyond

the Series B funding stage and return on venture

capital investment remains weak at a

continental average of 3% compared to 16%

and 11% in Europe and asia-Pacific respectively.

The situation is worse in Ghana, which is

one of the growing economies in africa. according

to Briter Bridges (briterbridges.com),

there were less than 20 disclosed deals in

Ghana valued at US$19 million at close of the

3rd quarter of 2020 whereas the likes of South

africa and nigeria closed over 70 deals valuing

more than US$200 million.

The Ghanaian startup faces various structural

challenges including low consumer purchasing

power, inconsistent and complex

regulations, inadequate infrastructure, and

scarce capital. however startups manages to

surmount these challenges, there is fierce

competition from incumbent companies, especially

from large companies in -to-consumer

sectors, such as retail, financial services

and energy.

Instead of established companies using

their privileged position to advance the national

interest, they often use their market

power to push new entrants with disruptive

business models out of business. Such hostility

against startups do not only threatens competitiveness

and kills innovative technologies,

products and business models, it also deprives

job creation and economic development.

notwithstanding, Ghana remains a very

fertile ground for entrepreneurs. It is politically

stable, fast increasing internet penetration,

fast growing economy in the africa, and

also part of africa’s young population. This

presents tremendous opportunities for innovators

to develop product and services to improve

social and economic development.

however, startups will need to develop new

strategies, and Ghana’s national champions,

investors and governments will need to work

together to tackle the challenges of startups.

Scaling up through Corporate Partnerships

Large companies have demonstrated the

ability to overcome structural challenges affecting

business. They have access to capital,

the human expertise to steer complex regulatory

environment, and the ability to expand

into other markets. Therefore, rather than

Ghanaian startups competing with incumbents

for consumers, it is advisable to collaborate

with such large entities by providing

innovative business-to-business solutions to

survive and be successful.

On the other hand, large enterprises must

be willing to open up and engage startups as

partners. Such partnership model is already

well-established in financial and geographical

technology. For instance tech companies such

as JUMO and Vokacom have partnered with

large corporations and government respectively

to provide data and addressing services.

With such collaborations, incumbents can

nurture startups by providing direct investment

or partnerships with external incubators

and accelerators. an example of such

collaboration is that of Indonesia companies

Lippo Group, a conglomerate, and OVO, a leading

digital payment service. Lippo Group provided

financial support to OVO in its early

stage. OVO benefited from Lippo’s ecosystem,

which include hypermarkets, telcos, e-commerce

marketplaces, content streaming, and

banks serving small and medium enterprises.

Lippo also got valuable help from OVO to bring

merchants onto its platforms and provided incentives

for consumers.

Incumbents can also form strategic alliances

with startups to develop new technologies

or innovative business models. Such

partnership can be revenue-sharing, joint-venture,

or technological alliances between two or

more companies. JUMO, the Ghanaian mobile

financial services is a perfect example of how

such partnership can be a win-win and could

enable a startup grow into a zebra. JUMO,

which holds credit-scoring algorithm, collects

behavioral data from willing customers and

share with telecom operators.

It then collect mobile-wallet data from telcos

to provide credit scores to partner financial

institutions such as Ecobank and Letshego to

enable them review loan applications. This alliance

is helping telcos to earn revenue from

data sharing, banks to reached out to untapped

markets and JUMO is gaining access to

wider customers within the informal sector.

In addition to the above strategies, established

companies can also set up startups on

their own. This enables companies to overcome

internal processes and cultures that inhibit

innovation. Established companies can

set up in-house incubators or accelerators to

attract and develop new businesses or products.

For instance, In Ghana, companies like

Kosmos, Stanbic Bank and Ecobank has inhouse

hubs setup to invest in local talent and

capacity.

Such initiatives have benefited the likes of

Ecobank to come up with various Fintech

Products to enhance services delivery and revenue

generation.

Support from Governments and Investors

Governments and investors are important

players to improve startup development and

growth in Ghana. For instance large companies

can help new businesses to scale up

through strategic alliances. Financial incentive

from government, such as tax reliefs, cash

grants, is a good initiative to entice investors

and large companies to support the growth of

new ventures.

Ghana, through government initiatives,

has established innovation hubs such as the

accra Digital Centre to drive digital innovation

in Ghana. however, to further improve the development

of the startup ecosystem, there is

the need for government to collaborate with

development institutions such as the african

Development Bank to develop bigger innovation

hubs to enable partnership between

larger companies and new venture and attracts

and investments. For instance, the

african Development Bank and Rwanda have

invested $400 million to develop the Kigali Innovation

City on a 70-hectare land size.

Government also needs to support or direct

state agencies such as the national Entrepreneurship

and Innovation Programme and

the Ghana Enterprise agency to educate and

build the capacity of entrepreneurs on initiative

and programmes happening within the

West african Region and africa. Such as the

afCFTa and the implementation of a comprehensive

legal and regulatory framework for

private equity and venture capital fund being

developed by the West african Economic and

Monetary Union and the World Bank.

The government has undertaken initiatives

to advance the development of startups

in Ghana. however, more needs to be done by

the public and private sector to release the

wave of innovation to create jobs and improve

economic opportunities in Ghana.

Mr Aboagye is a Chartered Accountant

(ICAG) and an MBA holder from the University

of Warwick Business School in the United

Kingdom; a Staff of Ghana Export Import

Bank and a freelance entrepreneurship

trainer.

Tuesday, May 17, 2022 PAGE 11

Development Discourse with Amos

Safo: Cost benefit analysis of Free SHS

DEBaTE over free secondary

school education (ShS) has remained

on the national agenda

five years after implementation

of the policy, despite its huge relief

for parents and its impact on the youth of

Ghana. Statistics from the Ghana Education

Service indicate that so far 1.6 million youth

have benefitted from the Free ShS policy.

Even with this increased enrollment in

secondary school, Ghana’s education enrollment

as a percentage of the population of

school-going children (21%) is comparatively

very low. an increase of 40% is anticipated in

the next few years. The surest way to improve

school enrollment is policy-targeting, such as

the Free ShS policy.

On 12th September 2017, when President

akufo-addo launched the Free ShS policy at

the West african Senior high School (WaSS)

premises, he stated: “Because I know that

knowledge and talent are not for the rich and

privileged alone, and that free education

widens the gates of opportunity to every child –

especially those whose talents are arrested because

of poverty…we lift the financial burden

off our parents, and the heartrending anxiety

that accompanies the beginning of every

school term”. It was obvious from the president’s

pledge that this laudable policy was

aimed at the poor and poorest, to bridge the education-gap.

The recent debate on the cost benefit

analysis of free ShS was sparked by a statement

of the asantehene, Otumfuo Osei Tutu II – that

though beneficial to the nation, Free ShS has

implications for the public purse as well as a

need to create employment opportunities for

the millions of youth beneficiaries. The asantehene

made the comment as a special Guest

of honour at the Memphis International Day.

Ghana was picked as the honoured country in

2020, but the pandemic derailed the city’s signature

festival and events.

In fact, organisers of the Memphis May International

Day couldn’t have made a better

choice, considering the rich cultural heritage of

the asante kingdom, with the occupant of the

Golden Stool as the epitome of asante culture.

Undoubtedly, the asantehene is not only an

emblem for the ashantis, but also a symbol for

tourism in Ghana.

Contemporary Challenges

The asantehene’s speech, titled ‘Contemporary

Challenges in United States and africa

Relations’, highlighted the importance of education

in nation-building. King Osei Tutu II alluded

to his educational foundation, launched

two decades ago to provide educational support

for poor needy children… even to the highest

level. he said some beneficiaries of his initiative

have risen to various positions and are

contributing to national development. “We established

the foundation to support the education

of children from poor backgrounds,” the

king stressed. “It has so far become the largest

private intervention in education in the country,

and has provided for students who would

have otherwise been deprived of a basic education.”

he also linked the vision and mission of

his educational foundation to the current government’s

Free ShS policy, describing the policy

as the boldest policy for the nation. But

such a policy, he said, comes with constraints

on the national purse and raises further challenges

regarding creation of jobs for the increasing

number of graduates. Otumfuo

however indicated that Ghana is on the right

path with its democratic experiment.

The asantehene’s forecasts of future unemployment

challenges are based on facts. The

first batch of Free ShS are currently at level 200

in various tertiary institutions; and truly, as the

asantehene noted, if all of them graduate in

2024 they will constitute a huge pool of graduates

ready for the job market. This huge pool of

graduates should be of serious concern to wellmeaning

Ghanaians, including the asantehene,

as he noted “Because of our recognition

that creating understanding in the youth is the

surest way to ensure the future of the world”.

This calls for innovative policy interventions to

create jobs for the youth. In his speech, Otumfuo

Osei Tutu mooted the idea of entrepreneurial

skills development through collaboration

between Memphis University and the Kwame

nkrumah University of Science and Technology

in Kumasi.

naGRaT’s spin

as if on cue, the national association of

Graduate Teachers (naGRaT) has waded into

the asantehene’s honest comments on the

constraints of Free ShS on the public purse,

and the attendant lack of jobs for beneficiaries.

It is surprising that naGRaT, like the opposition

national Democratic Congress (nDC)

party, remains among the staunchest pressure

groups against the Free ShS policy. In a statement,

naGRaT’s president, angel Cabonu, is

predicting that the policy will face funding

challenges in future – implying that the asantehene’s

comments carried the same weight as

their opposition to the policy. I wonder why a

teacher’s group is so much against a policy

that has turned out to be the boldest policy for

the nation, as the asantehene indicated.

In fact, a careful analysis of the asantehene’s

speech suggests that naGRaT has taken

it out of context. The asantehene’s assertion

that the policy is putting strain on the national

budget and raises further challenges of job creation

in no way suggests that the policy is bad

and will fail, as naGRaT is indicating. The asantehene

was only stating the obvious, considering

the amount of money government is

expending on Free ShS – of course, at the expense

of other policies. as is the case everywhere,

policy implementations come with

several challenges, especially as governments

are compelled to apply opportunity costs in

funding priority policies.

Tax reliefs for employees and how to invoke the laws

• Continued from Page 8

c) old age relief;

d) aged dependant relative relief; and

e) Disability relief.

ii) Reliefs granted upon the filing of annual

tax returns: These reliefs are granted to

a person only when he files his annual tax

returns.

ThE TaX RELIEF aPPLICaTIOn FORM

FOR UPFROnT RELIEFS

Regulations 10 of the Income Tax regulations,

2016 (L.I 2244) provides the rules on

accessing the reliefs. The provisions under

regulations 10 mean that the employee

must apply for the upfront reliefs. a prescribed

form called Tax Relief application

Form is used to apply. Employers are advised

to file this form on behalf of all their employees.

a taxpayer must file an annual tax

return to enjoy the other reliefs which are

not upfront.

Types of Relief (In Ghana Cedis)

Year Marriage/

Responsibility Child Education Old age

Disability aged Dependant Cost of Training

1986 0.2 0.1 1.5 20% – –

1987 0.3 0.3 1.5 20% – –

1988 0.4 0.5 2.5 20% – –

1989 0.6 0.7 4.0 20% – –

1990 0.6 0.7 4.0 20% – –

1991 1.0 3.0 8.0 25% 1.2 –

1992 1.0 3.0 8.0 25% 1.2 –

1993 1.0 3.0 8.0 25% 1.2 –

1994 1.0 3.0 8.0 25% 1.2 –

1995 5.0 8.0 12.0 25% 3.0 –

1996 30.0 24.0 30.0 20% 20.0 –

1997 30.0 24.0 30.0 20% 20.0 –

1998 30.0 24.0 30.0 20% 20.0 –

1999 30.0 24.0 30.0 20% 20.0 –

2000 30.0 24.0 30.0 25% 20.0 –

2001 30.0 24.0 30.0 25% 20.0 50.0

2002 30.0 24.0 30.0 25% 20.0 50.0

2003 30.0 24.0 30.0 25% 20.0 50.0

2004 30.0 24.0 30.0 25% 20.0 50.0

2005 30.0 24.0 30.0 25% 20.0 50.0

2006 30.0 24.0 30.0 25% 20.0 50.0

2007 35.0 30.0 35.0 25% 25.0 100.0

2008 35.0 30.0 35.0 25% 25.0 100.0

2009 35.0 30.0 35.0 25% 25.0 100.0

2010 35.0 30.0 35.0 25% 25.0 100.0

2011 35.0 30.0 35.0 25% 100.0 200.0

2012 200.0 200.0 200.0 25% 100.0 200.0

2013 200.0 200.0 200.0 25% 100.0 200.0

2014 200.0 200.0 200.0 25% 100.0 400.0

2015 200.0 200.0 200.0 25% 100.0 400.0

2016 200.0 200.0 200.0 25% 100.0 400.0

2017 200.0 200.0 200.0 25% 100.0 400.0

2018 200.0 200.0 200.0 25% 100.0 400.0

2019 200.0 200.0 200.0 25% 100.0 400.0

2020 1,200.0 600.0 1,500.0 25% 1,000.0

2,000.0

Conclusion and way forward:

It appears tax policies over the years

have not improved tax reliefs granted to taxpayers.

In some jurisdictions, taxpayers

enjoy bigger tax reliefs. It is hoped that government

policies will pay attention to this

area and revise the reliefs on annual basis.

The current process of applying for relief annually

should also be automated. Indeed,

when managed properly the tax relief system

can help bring on board more taxpayers.

By: Timore Francis

(Mytimore@yahoo.ca); 0266-656595

The writer is a Tax Consultant and a

member of the Chartered Institute of Taxation

Ghan


BACK

PAGE

Ghana needs more entrepreneurs

to check imported inflation

– Finance Minister

FInanCE Minister, Ken Ofori-atta,

has explained that the only way by

which imported inflation in Ghana

can be minimized is if the country

is able to raise more entrepreneurs

to produce locally.

according to him, it is for this reason that

the government is investing heavily in projects

that can build an entrepreneurial society

in the country.

his comments come on the back of a soaring

inflation rate which currently stands at

23.6 percent, of which inflation for imported

goods exceeded domestic inflation for the first

time in 29 months.

The inflation for imported goods was 24.7

percent, which is higher than the 17.3 percent

recorded for March while the inflation for locally

produced items was 23 percent, up from

the 20 percent recorded in the previous

month.

Mr. Ofori-atta was speaking at a press

briefing in accra on Thursday.

“Cabinet was quite precise about the

budget and the theme of building an entrepreneurial

society. So the GhS10 billion intervention

where you’re going to have people create

their own jobs and have work to do is going to

be important and enhance productivity. Because

of imported inflation, what are you

going to do about food, fuel, and financing out

there? The question is whether we can get our

people to be more productive so that we move

towards an environment where people are in

control of their destiny.”

Meanwhile, industry players have intensified

calls for an intervention to check the rising

prices of goods and services in the country.

The Government Statistician, Prof Samuel

Kobina annim, has called on policymakers to

check the alarming situation.

“We tried pointing policy makers to what

they have to look at especially in light of the

conversation around whether the inflation

rate is heavily driven by the Russian-Ukraine

war. From the disaggregation we did, we noticed

that the domain that accounted for the

99 items that recorded changes in prices

higher than the national inflation were food

items.”

“So the Russian-Ukraine war does not

have a direct impact on the rise in imported

inflation. This is the perspective that we want

policy makers to direct their attention to, especially

asking whether monetary policies can

address all these different items in the same

way or you need a different sector to address

some of these changes in prices.”

The soaring prices of food in the country

only seems to be getting worse as the recent

figures from the Ghana Statistical Service

proves that food inflation was one of the main

drivers of the rising inflation rate for april.

Industry players have consistently asked

for government’s intervention to salvage the

situation. Some like the Chamber of agribusiness

Ghana have even suggested the constitution

of a national Food Security Committee

that will control the supply and pricing of food

commodities in the country.

The issue of transport fares also remains a

big headache for Ghanaians as the country

has seen a recent increment in fares by 20 percent

due to the rising cost of fuel.

Many have attributed these hikes to the

ongoing Russian-Ukraine war.

The rise in the inflation rate for april 2022

comes as the highest recorded since the

• Ken Ofori-Atta, Finance Minister

Ghana

Statistical Service rebased the Consumer Price

Index in august 2019.

Policy to ensure direct delivery of fuel products underway

a nEW policy is underway to ensure the

direct delivery of fuel products to the

country’s ports without bulk distributors.

Understandably, this policy is different

from the previous arrangement

where BDCs dealt directly with international

oil companies.

It is aimed at preventing cases of

fuel shortage in the wake of the

Russian-Ukraine war that has disrupted

global supply of crude.

Last week, there were reported

cases of shortage of fuel at some fuel

service stations.

Speaking on Citi TV’s Big Issue

which was monitored by Business

analyst, the head of Economic Regulation

at the national Petroleum authority

(nPa), abass Ibrahim Tasunti,

noted that the policy will last at least

for the next three months.

“Because Russia supplies almost

40% of the diesel to Europe and currently,

there are sanctions on these

supplies, all countries in the world

are having issues with diesel. as a

country, we aren’t going to allow for a

shortage of diesel. Ideally, what happens

is that importers or BDCs will

go to the international companies

themselves and order for products,”

• NPA discloses

he noted.

“The sector Minister has directed that

instead of waiting for the BDCs to go out

there to look for the product to buy, let’s

rather have a different arrangement for

the next three months to ensure security

of supply. It was directed that the international

oil companies be given a waiver so

that they would discharge the product to

Ghana. We won’t wait for the BDCs to

compete with other countries before they

can place an order for the products.”

Meanwhile, amid concerns of

fuel shortage in the country, the

national Petroleum authority

says there is enough diesel in

stock to meet consumer demand.

abass Tasunti explained that

some Oil Marketing Companies

are currently experiencing a

shortage because their preferred

Bulk Oil Distributors may have

stopped supplying the product for

some time.

Earlier, he said the situation

was not related to a shortage of

diesel.

“We have heard these concerns

about the shortage of diesel.

We have enough diesel to meet

demand. The challenge that is

being faced now is that some particular

OMCs are having challenges

getting the product from

their preferred importers, but

with respect to diesel we have

enough.”

Business Analyst - May 17

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