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Economy not resilient; environment not enabling – Pianim

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The Ghanaian economy is not resilient given it is failure to generate enough reserves, renowned Economist, Dr. Kwame Pianim has said.

“Where the [Ghanaian] economy is now is not pretty” and the environment cannot be described as enabling, Mr. Pianim disclosed at the first IMANI-GIZ Reform Dialogue Series (RDS) on the theme “Ghana’s Macroeconomic Environment: An Enabler or Hammer to Investment?”.

According to him, the monetary policy rate is a key indicator of how the Bank of Ghana perceives the economy, adding, when the Central Bank increases its policy rate, it is indicative of the fact that it is not comfortable with the fiscal stance of the government.

He further said that structural imbalances between expenditure and revenue continue to affect the economy, adding, Ghana needs a cost-benefit analysis on the significant expenditures by the government, citing areas like Free Senior High School (‘Free SHS’).
He questioned the excessive focus of the government on the revenue side of the economic equation with the often touted mantra that Ghanaian citizens are not paying enough taxes.

Instead, he argued that citizens pay different indirect taxes, especially Value aAdded Tax (VAT).

Mr Pianim stressed that the main area of focus for policymakers should be the expenditure side and recommended that government should use quality predictive models and analysis in their economic decision-making.

He finally remarked that “we should not waste the [current] crisis” but instead use it to create a better and sustainable macroeconomic environment.

For his part, Economist, Dr Priscilla Tsumasi Baffour said Ghana’s export basket is not so diversified which exposes the economy to many international shocks such as the ongoing COVID-19 pandemic and Russia-Ukraine War.

She also indicated that the economy accumulates a lot of fiscal deficits which drive the current high public debt [estimated at 80.1% of GDP as of December 2021

Dr Baffour added that with the current high levels of inflation, the depreciating cedi and high cost of capital, the economy cannot be said to be doing well. 

She therefore suggested that Ghana needs to increase its revenue, spend wisely on items that maximise returns while cultivating the discipline and political will to reduce expenditure on consumption related programmes and projects.

Some experts and policy analysts also contributed to the discussions.

Kofi Bentil explained how the nature of the Ghanaian constitution makes it absolutely impossible for the National Development Planning Commission to be successful in achieving its mandate.

Also, Dr. Humphrey Kwesi Ayim Darke of Association Ghana Industries urged government to focus on targeted social interventions.

He believes the lack of effective Momitoring and Evaluation has made the investment in the area of Planting for Food and Jobs gone down the drain as farmers exported their produce at a discount to neighbouring countries.

He also stressed that the huge losses reported by the State-Owned Entities (SOEs) need to be addressed. 

Professor Godfred Bokpin also said the fiscal council needs to be looked at as it currently has an advisory role which is not being beneficial.

He believes that opacity and full disclosure of government fiscal information is needed.

He also advocated for the independence of the fiscal council as it has currently fails the independence test.

The dialogue sought to engage relevant stakeholders in Ghana’s investment ecosystem to discuss how a conducive macroeconomic context creates the right investment climate.

The macroeconomic environment are the set of factors that affect investment and growth in an economy.

Basic indicators of the macroeconomic environment include inflation rate, exchange rate, the fiscal balance, and the external current account balance, among others.



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Dangote seeks to raise $1.1bn to complete refinery project

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The report published by Fitch, the world’s biggest global rating agency, alleges that the Nigerian billionaire requires an additional $1.1 billion (900 billion) to complete the refinery but has invested all his cash and even borrowed to finance the refinery project.

According to the report, the Dangote refinery project is still on track to be completed by 2023 and requires an additional $1.1 billion capex in 2022 to be partly funded by the new bond.

The report adds that Dangote Industries Limited (DIL) is planning to establish a local bond programme amounting to $750 million to partially finance the completion of its refinery and petrochemical plant. DIL’s subsidiaries – Dangote Oil Refining Company Limited (DORC) and Dangote Fertiliser Limited (DFL) – will be co-obligors under the proposed programme.

“Funding for the completion of the refinery project is expected to be partly covered by proceeds of the new bond. If the transaction is not successful, or should completion costs overrun or market conditions in the cement or urea sector deteriorate materially, we do not believe that DIL’s existing creditors would have further lending capacity. We believe that further asset sales, either in cement or stakes in the projects, would be the more likely options to address funding of the refinery.”

Fitch also noted that Dangote Industries suffers from weak corporate governance, adding that it’s a risk for Dangote, who already has a lot of power over operations, to remain the largest shareholder and CEO of the project.

In the report, Fitch said, “DIL has a complex group structure with a large amount of related-party transactions, with a negative effect on operational and financial transparency. We also view the dominance of Aliko Dangote, as CEO and the main shareholder, in operations as an additional risk.”

Fitch concluded its report by saying that the refinery project is expected to sustain strong margins and yield solid cash generation, adding diversification to DIL’s profile and allowing rapid deleveraging.

“Once operational, we expect this project to contribute around $1 billion to EBITDA annually when ramped up from 2024,” it added.



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Krobo District customers given up to 5 years to defray their debt-ECG

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The Electricity Company of Ghana (ECG) has extended grace period for customers in the Krobo District of the Tema region, from two to five years, to settle their debt for power consumed between 2018 and 2021.   

“ECG management has decided to ring-fence the debt from 2014 to 2017. After recent engagement which also involved national security and others, the 2018-2021 debt has been rescheduled from two years to five years,” General Manager of the Tema region, Ing. Emmanuel Akinie, disclosed this at a stakeholder meeting at Odumase-Krobo in the Eastern region.

This was part of sensitisation exercise on the introduction of prepaid meters in the district.   

As of December last year, the 2014-2017 debt was estimated at about ¢70 million.  

Following the extension, customers are expected to visit ECG offices for debt schedule arrangement as the prepaid meter installation programme is rolled out. 

Krobo District customers given up to 5 years to defray their debt-ECG

Installation of the smart meters could help avert a repeat of hostility that characterised the relationship between the company and some communities.

These communities rejected bills issued them on grounds of being estimated bills, wrongful overbilling, lack of meter reading cards and other issues.

To amplify these concerns, groups such as Kloma Hengme, Kloma Gbi, United Krobo Foundation and Concerned Krobo Youth led a number of protests between 2017 and 2019 which resulted in casualties and destruction of property.

ECG on the other hand had admitted anomalies with its metering system after migrating from Customer Billing Information System (CBIS) to Customer Management System (CMS) across its operational areas between 2015 and 2016.

Tariff increment aside the new billing software issues is believed to have generated hike in bills but the challenges were subsequently addressed.

At the stakeholder meeting, Ing. Akinie indicated 25 prepaid meters had been installed as of May 4th, 2022 with customers having no hitches purchasing credit.

On the misconception about prepaid meters, the power distributor, however maintained it’s a policy that has been implemented in the last two decades.  

About 3000 post-paid meters have so far been captured in the first phase of the pre-installation survey. 

 Ruhiya Fuseini and Yusif Adamu leading the prepaid education team explained how the smart meter; Clou which comes in single and three-phase works.

The meter does not require customers to use their prepaid card to purchase power.

Krobo District customers given up to 5 years to defray their debt-ECG

Ruhiya Fuseini said one only needs the meter number and consequently buy prepaid credit at any vending station or ECG office after which it would reflect on the meter.

According to her, it allows users to manage power consumption.

Chair for the occasion, Nene Asada Ahor, who is the Public Relations Officer for Manya Krobo Traditional Council was happy the meeting was taking place to find lasting solutions to issues residents have with ECG’s operations.   

Representative from the Ministry of National Security, Col. Timothy Ba-Taa Banah reiterated the need to have lasting solutions to issues instead of repeated meetings trying to solve same, and therefore charged residents to embrace peace.  

‘We support the process being rolled out and would continuously monitor to ensure good faith on the part of ECG and beneficiaries of the process,” he assured.

Senior Manager, Consumer Complaints and Data Analysis of Public Utilities  Regulatory Commission,  Leon Acquaye reminded participants of the neutral role of the Commission  in protecting  interest of utility providers and consumers.

He urged consumers to clear their debt to help ECG reinvest the money to improve service delivery in the area.

Participants asked question relating to acquisition of new meters aside the replacement programme, accumulated bills, free electricity and other concerns.

The Tema Regional General Manager for ECG, advised them to visit the company’s office in the district to discuss their special needs.

Assemblyman for Kpong Ahudzo, Raymond Gborson, asked for more community engagement before field teams try installing prepaid meters to avoid tension.

He pleaded with the company to resume operations at its former district office at Somanya which was relocated to Juapong, over security reasons.

Ing. Akinie assured that ECG will continue to engage all communities before installation begins and will return to Somanya in due course.

Gershon Amaglo from Kpong narrated how some residents threatened him for using his information centre to disseminate information on prepaid meters and suggested ECG works with United Krobo Foundation to get the residents along.

On the issue of threats, Col. Timothy Ba-Taa Banah, urged participants to always refer such cases to the police and charged Lower Manya and Yilo Krobo municipalities to avoid blame game and embrace peace for development.

Secretary of United Krobo Foundation, Joshua Evor, does not completely agree with such engagement as he suggests community engagements will help explain pros and cons of the new meter much better. For him, the people he represents are not ready for the prepaid meters.   

Meanwhile, the Tema Regional Public Relations Officer for ECG, Sakyiwaa Mensah described the processes ahead of the introduction of smart meters as successful with great support from security agencies. 

Traditional authorities, Municipal Chief Executives for Lower Manya and Yilo Krobo, Simon Tetteh and Eric Tetteh, assembly members, security agencies among other stakeholders were present for the engagement.



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MC Bauchemie Ghana Limited to redefine construction industry

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German-Ghanaian based construction firm, MC Bauchemie Ghana Limited, says it is committed to redefining the state of the construction industry in Ghana.

According to the Managing Director, Noble Bediako, the company will provide a deeper understanding of concrete technology through collaboration with institutions and companies in Ghana to train players in the construction industry.

Speaking at the Grand opening of the office training centre and factory complex at Ashiyie in the Greater Accra region, Mr. Bediako said the company’s operations will facilitate capacity development in the construction industry across 5 countries on the continent.

Part of the project, according to the company, is the support for the building of a training centre to improve technical qualification and employability in the field of construction.

 Noble Bediako revealed that the company’s target is to create awareness for Ghanaians with respect to the development of the sector.

“We need to train Professional artisans and that is what we are trying to do to raise the bar in Ghana. We are looking forward to do more research to see how best we can use our local chemical products for the construction business,” he said.

The Minister for Works and Housing, Francis Asenso-Boakye, called on actors in the construction industry to be innovative and come up with pragmatic solutions to help address challenges in the sector.

He added that the government through various initiatives is working assiduously to reduce the housing deficit in the country.

The grand opening was to provide MC-Bauchemie Ghana with the opportunity to share its story with the players in the construction industry and to showcase what can be produced out of drive, determination and the management of small beginnings.



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