Kofi Ahovi

By Kofi Ahovi According to a report by PricewaterhouseCoopers, prepaid in collaboration with the Ghana Association of Bankers, three majority Ghanaian owned banks and a majority foreign owned bank have already met the new minimum capital requirement, six months ahead of the deadline for completion of the first stage for the recapitalization demanded by the Bank of Ghana. The new minimum capital requirements are to be met in stages, involving differing minimum capital levels for indigenous and foreign banks, during the first stage which has December this year as its deadline, but a common minimum capital level by the end of the second and final stage, which has the end of 2012 as its deadline. Banks with majority foreign owned equity are required to have minimum capital of GH¢60 million by the end of this year. However, banks with majority Ghanaian owned equity are required to have minimum capital of first GH¢25 million by the end of this year, but must have increased this to at least G

Elorm Desewu Provisional data on the implementation of the 2009 budget shows that the government’s fiscal deficit has continued to narrow for the first five months of this year. The overall balance shows a deficit of GH¢608.9 million, excluding payment of some 2008 arrears of GH¢225 million, which is equivalent to 2.8% of GDP. Total revenue and grants amounted to GH¢2.4 billion in the first five months of this year, representing an increase of 13% over the outturn for the same period in 2008. Domestic revenue totaled some GH¢2.0 billion from the January-May period of this year. Compared to the GH¢1.7 billion collected in the same period of 2008, representing an increase of 17.4%. Tax revenue was also 17.8% higher than the corresponding figure in the same period of 2008. Total expenditure during the first five months of this year, amounting to GH¢2.9 billion, was 4% more than total expenditure during the same period of 2008. Non-interest expenditure during the first five months of 2009

By Kofi Ahovi Enterprise Insurance Company (EIC) is planning to establish a holding company to oversee all its subsidiaries. The establishment of a holding company became necessary due to the Insurance Law which does not permit insurance companies to fully engage in profitable ventures outside the insurance sector. The essence of the establishment of the holding company is to redeploy all landed properties of EIC to the holding company. It is also to increase their earning capacity for the benefit of share holders as well as the company. The holding company would own 100% of EIC, 51% of Consortium House Ltd, 51% ELAC (all subsidiaries of EIC) as well as own majority shares in all new subsidiaries that may be established. The new subsidiaries may include real estate development, pension scheme and insurance in West Africa, among others Currently EIC has supervision over all its subsidiaries; hence the advent of the holding company indicates that EIC would now be a subsidiary of the hold

By Kofi Ahovi Ghana Stock Exchange has begun Remote Trading on the bourse. This means stockbrokers can now trade directly from their offices without coming to the trading floor. The introduction of the remote trading would boost activities on the Ghanaian bourse while bolstering investor confidence in the capital market. As part of the Exchange’s effort to among other things, improve liquidity and efficiency on the market, GSE in 2007, embarked on a project to automate its trading processes. Three systems were put in place namely Electronic Trading system, Electronic Clearing & Settlement system and a Depository. The Exchange’s Depository commenced operations in November 2008, enabling investors to open securities accounts to deposit their shares. The System allows investors to transfer, pledge and access security information in a more efficient manner. The new electronic trading system makes it possible for stockbrokers to trade from three different levels namely, the floor of the

By Kofi Ahovi The ministry of energy in collaboration with the Ghana National Petroleum Corporation is set to finish the final draft of the bill by next month and subsequently submit it to parliament for ratification. The policy will provide government with a clear direction and guidelines to develop Ghana’s emerging oil industry ahead of the expected production in 2010. Obviously, this underscores government’s touted commitment and efforts to putting adequate measures in place to explore, develop and produce oil in a sustainable manner and at a rate appropriate for the development of Ghana and its economy. The new policy which is currently being scrutinized by GNPC was drafted under four thematic areas namely Resource Management; Revenue Management; Environmental Management and Security. Sources close to the ministry have disclosed to BusinessWeek that the policy among other things captures certain key actions that will soon be undertaken by government in collaboration with other stak

By Kofi Ahovi More oil refinery companies have joined the quest to establish an oil refinery in the country owing to the oil find in commercial quantities. About six more oil refinery companies including AGIG, AGOG have submitted proposals to acquire license to operate in the country. Most of these companies are requesting to establish in Takoradi in Western Region closer to the extraction site. Interestingly, most of these companies intend to refine crude oil on a capacity that out produces what Tema Oil Refinery (TOR) produces on a daily basis. TOR currently produces about 50,000 barrels of crude oil per day but AGIG is seeking to refine about 200,000 bpd almost equal to the total extraction capacity of the country. Not less than 900 jobs would be created if any of these companies is granted a license. Ghana recently emerged as an oil nation when the West Cape Three Points became a host to some deep water blocks with large crude and gas content. This was followed by subsequent discov

By Kofi Ahovi Sixteen listed equities on the Ghana Stock Exchange (GSE) were merely affected by the market correction during the first half of this year spanning from January to the end of June. These include Accra Brewery Limited(ABL), Ayrton Drugs, Clydestone, Camelot, Cocoa Processing Company (CPC), Golden Star Resources (GSR), Golden Web (GWEB), Home Finance Company (HFC), Mechanical Lloyd (MCL), Produce Buying Company (PBC), Pioneer Kitchenware Limited (PKL), Standard Chartered Bank (SCB) preference share, Starwin Product Limited (SPL), Sam Wood Limited (SWL), Trust Bank Limited (TBL) and TOTAL. During the same period no stock actually recorded any substantial gain but 15 listed equities recorded losses. CAL Bank was the hardest hit when its share price fell from GH¢0.60 to GH¢0.20 representing -66.6%. It was followed by SG-SSB which fell from GH¢1.35 to GH¢0.46 representing -65.9%. Ecobank Transnational Incorporated (ETI) also loss GH¢0.29 when its share price fell from GH¢0.45

Kwabena Koranteng Ghana may miss the 30th June deadline signing of the Interim Economic Partnership Agreement (IEPA), as the government has called for more time to carefully study the proposal. According to sources at the Ministry of Trade and Industry (MOTI), the government has informed the European Commission that it is new on the governance seat and therefore needed more time to study the proposal. The delay by the government is said to be in line with the position of civil society organizations (CSOs), especially the Third World Network (TWN), which has, for many years, been advocating against the signing of the EPAs. TWN has argued that liberalizing 80% of Ghana’s trade with the EU will have a significant negative impact on Ghana’s trade, especially employment opportunities in the manufacturing sector and reducing competition in both the service and the industrial sectors, as subsidized goods from the European market are likely to flood Ghana’s market at cheaper rates. Ghana earli

By Kofi Ahovi The common currency for West African economies, ECO, which was supposed to take effect from December this year, is expected to be postponed again. The expected postponement is due to the inability of member countries to meet the convergent criteria to enable the smooth take of the common currency. The new currency would facilitate cross-border payment of transferring funds, which would also put in place the single payment system. Four out of the five member countries, Ghana, Guinea, Sierra Leone and Nigeria were unable to meet the convergent criteria under the West African Monetary Zone (WAMZ). Gambia is the only country to meet all the criteria for three years running (2006 to 2008). WAMZ was expected to take off effectively with the ushering in of the ECO by December 1, 2009. As it appears, the launch date may be shifted by the Heads of State in June at their meeting, although the new date is yet to be confirmed. Business week checks revealed that ECO is not likely to b

Ginosko healthcare …your one stop-shop healthcare centre Ginosko healthcare ltd, a multi-national healthcare service provider, has partnered with Seth Ramdas Shah Memorial Hospital and Research of India to provide a one stop-shop healthcare service to Ghanaians and beyond. What Ginosko does under its ‘corporate healthcare retainers and facilitators’ health wing is to liaise between patients in Ghana and its neighbouring countries and Seth Ramdas by facilitating health dispensing to the patients. Ginosko sometimes acts as the mediator in booking appointment with doctors of Seth Ramdas Shah Memorial Hospital and Research and facilitating the transportation of patients to India, all at no extra cost to the patients. This occurs when the treatment of the particular disease cannot be treated in Ghana. To ensure its leadership in the health care sector, Ginosko has a network of specialized doctors both in Ghana and outside to meet the demands of patients. “We provide everything you need incl

By Kofi Ahovi The Bank of Ghana (BoG) has introduced an Electronic Financial Analysis Surveillance System (E-FASS) which will make it possible for banks in the country to file their prudential returns on line. This will also enable BoG to carry out much of its supervisory duties online, speeding up the entire process. Banks in the country have therefore been advised to invest in information technology systems which would enable them interface with the central bank’s systems, in this regards, universal banks and non bank financial institutions have already been taken through the necessary processes to adequately prepare them to hook onto the new system. Now as a policy from the central bank, rural banks that wish to open new agencies are required to first computerize their operations. BoG in discharging its supervisory functions over the banking industry, has also adopted the Risk-Based Approach (RBS) to supervision, this involves the critical identification of risks associated with the

By Kofi Ahovi A draft bill for the proposed National Agricultural Fund in Ghana has been completed by a consultant on behalf of the Private Enterprise Foundation (PEF), an umbrella body of private business in Ghana. The establishment of the fund is to support all aspect of agriculture, which is the largest contributor to the country’s Gross Domestic Product (GDP). The fund would be managed by Ghana National Agricultural Fund Corporation, which would be set up after the law is passed. The corporation would have decentralized offices at both the regional and district levels. The initiative to establish the fund became necessary due to the unwillingness of banks to lend to farmers because of the high risk associated with farming, which has resulted in a huge gap between credit demand by farmers and supply. Also agricultural production is peculiar and seasonal, hence requires specialized financial services which the bank do not offer. The establishment of the fund is expected to make resou

By Kofi AHOVI The Securities and Exchange Commission of Ghana (SEC), the statutory regulator of the capital market is expected to complete the regulatory framework for the establishment of the commodities exchange and a warehouse receipts system in Ghana by the end of this month. The legal and regulatory framework, which would regulate the modality in which commodities exchanges may be established, organized and operate, is to ensure that all those in the supply and value chain in agriculture benefit from their involvement. The framework would consist of Dealing and settlement rules, Warehouse minimum standards/requirement, Warehouse receipts- minimum contents format implications, Commodity backed warrants-defined minimum requirements, Insurance coverage and Arbitration rules. SEC in collaboration with the Natural Resources Institute UK organized three different workshops for stakeholder to make input into the modalities for the establishment of a commodities exchange and a warehouse

By Kofi Ahovi Foreign Direct Investment (FDI) recorded for the country during the first quarter of 2009 has increased from GH¢351.79 (USD256.68 million) to GH¢521.25 million (USD372.32 million) as new investment. The increase represents 45.05% over the corresponding quarter of 2008. The figure comprises of GH¢508.68 (USD363.34) worth of re-investments and GH¢12.57 (USD8.98 million) as equity transfer for new projects registered. Total new projects of 35 were registered, a decrease of 62% compared to 92 new projects recorded for the same period of 2008. The total estimated value of the newly registered projects is GH¢25.27 million (USD18.05 million) compared to GH¢2.97 billion (USD3.03 billion) recorded for the same period last year. This development indicates that even in the face of the global credit crunch, investors in Ghana have retained their confidence in the economy and maintained their re-investments while the country have attracted new players albeit at a slower rate. Of the 3

By Kofi Ahovi The University of Science and Technology (KNUST), Kumasi has become the latest beneficiary of a new e-banking product introduced by HFC Bank (GH) Limited aimed at making campus life easier for students. The university becomes the second tertiary institution in Ghana to benefit from the use of the system, HFC Transflow, after the Regent University in Accra. The system allows students to pay their fees and make other payments to the university directly online. The system further makes payment more convenient as it eliminates the burden buying payment orders from the bank which also comes at a cost. Charles Martinson, General Manager, Business Development of HFC Bank, explained that the long queues on university campuses by students to make payments informed the HFC Bank to come up with a system that would ease the burden of the students. HFC Transflow therefore enables students who need to make payments to their institutions to just go to any branch of the bank and make suc

Industrialists, academia urged to collaborate for student development Industrialists and academia have been urged to collaborate in order to adequately develop students for the job market. This is to ensure that students that graduate from the tertiary institutions are well equipped for the challenges of the industry. According to Dr. Kwabena Frimpong, a renowned marketer of the Databank Financial Services Ltd, who reiterated the call at a seminar organized by the Professional marketers association of Ghana (PROMAGS), he said most often than not student are not given the requisite practical lessons needed to support them at their job site. He noted that although he is aware of the fact that the nation’s education system is not mainly aimed at providing students with practical training, there should be a collaborative effort between the education institutions and the industry to close this gap. Dr. Kwabena Frimpong diffused the misconception that marketing only has to do with selling, e

By Kofi Ahovi The Vice President, John Dramani Mahama, has given the assurance that government will continue to support pension fund reforms. According to him, the government will ensure that credible, capable and competent fund managers get involved in pension fund administration in the country. He gave the assurance during a meeting with organized labour and employers at the Osu Castle last week. Explaining the postponement of the launch of the new pension scheme, Vice President Mahama said there was the need to look into concerns raised by other stakeholders in pension fund management. He indicated that government would deal with these concerns expeditiously to enable the launch to take place as soon as possible. He added that the Attorney-General and Minister of Justice had been requested to speed up drafting and passage of the legislative instrument to the National Pensions Act, 2008 while ensuring full stakeholder participation. The new retirement law covers a unified pension sch

By Kofi Ahovi Toyota Ghana, the sole distributor of Toyota products authorized by Toyota Motor Corporation of Japan, has launched its seasonal “parts campaign” aimed at educating vehicle users and owners to regularly check and replace worn out car parts to avoid accidents. The campaign is also aimed at educating them on the effects of inferior or counterfeit car parts on the performance of their vehicles and the associated risks to their lives. According to the public affairs manager, Ama Orleans Asante, the company deems it fit as a corporate social responsibility and a duty to protect the lives of its cherished customers and Ghanaians at large. She added that the safety and welfare of their customers and the durability and genuineness of the parts sold to customers are of great concern to the company. The campaign is mainly on wipers, and bulbs and this is particularly due to the onset of the rainy season. The company has also instituted 10-15% discounts on these items. Other product

By Kofi Ahovi The banking sector in the country is gradually expanding with 27 banks currently operating, however, credit to small and medium scale enterprises (SMEs) is rather diminishing. To this effect, governments have established credit institutions like MASLOC among others to address this issue, yet the challenge still persists. The Lenders and Borrowers Bill which was recently passed by parliament forms part of measures being put in place to improve the credit culture in the country. To ensure that SMEs grow, banks would need to shift from short term loan facility to medium to long term loan facilities. This implies that the banks will have to take more risk to ensure that SMEs have enough capital to not only sustain their operations but also expand thereby creating more jobs. This is where Eximguaranty Company Ghana comes in. Eximguaranty was set up to facilitate the flow of credit to SMEs by providing credit guarantees and general financial risk management solutions. The objec

Bank of Ghana, (BoG) statutory regulator of the banking industry, last year introduced a biometric smart card, the e-zwich, onto the Ghanaian market. Kofi Ahovi takes a look at its achievements and challenges. E-zwich is a major component of Bank of Ghana’s payment system programme and strategy. It is aimed at increasing electronic payments in the economy while reducing the over reliance on cash and paper-based payments. This development is consistent with a general and growing international trend towards retail electronic payments which are considered more efficient, reliable, timely and catalytic for higher economic growth. Given the important role of payment systems as the core of any financial system, the case for e-zwich and other electronic payment products cannot be overemphasized. To underscore its commitment to the promotion of electronic payments on a full time basis, BoG in 2007 established a wholly owned subsidiary, the Ghana Interbank Payment and Settlement Systems Limited

A medical conference and exhibition dubbed West African health 2009 has been slated for September this year in Nigeria. The exhibition, which is on the theme “Re-engineering healthcare services in West Africa,” will take place in Lagos from September 16-18, 2009. The event will also feature the 4th NHIS stakeholders’ forum. The exhibition is expected to bring together healthcare manufacturers, wholesalers, Healthcare Providers, Hmos, Healthcare regulators, Banks, insurance companies, Government Agencies and other Stakeholders. Global Resources & Projects Nigeria Limited, the organizers of the conference and Exhibition said the exhibition will offer an ideal environment for Companies, Ngo’s and Donor agencies to showcase their products and Services in one of the fastest growing and most lucrative healthcare markets in Africa. Ginosko healthcare centre (Ghana) is the local organizer of the conference in Ghana. Unveiled in 2006, as the first ever health business event, will also posit

By Kofi Ahovi The Ghana Association of Bankers (GAB) in collaboration with players in the financial sectors of ECOWAS sub region and with support from the African Caribbean and Pacific Countries has established a Private ECOWAS Financial Improvement Board (PEFIB) to facilitate greater financial integration within ECOWAS. The success of PEFIB initiative, which is yet to be commissioned, would be based on the implementation of four identified road-map program activities which includes the improvement of market insights and banking penetration rates, resolve consumer cross border disputes and provide, improve strategic capability and perspective among middle and senior bank management and analytical basis for improving financial infrastructure and lobbying policy makers. The strategy advocated is to focus on the implementation of policy measures that are within the authority and competence of stakeholders to pursue and implement without any official intervention. The objective of PEFIB is

By Elorm DESEWU The merger between two giant universal banks, The Trust Bank and Merchant Bank Ghana, is most likely to be concluded by the end of this year, according to Isaac Owusu-Hemeng, managing director of TTB. The legal aspects of the merger, which will create a single corporate entity out of the two banks, will soon be completed. Also, the actual operational integration of the banks into one seamless financial services firm is expected to be finalized by the end of the year. The merger of the two banks is being made possible largely by the fact that the Social Security and National Insurance Trust (SSNIT) is the largest shareholder in both banks. The merger will create one of Ghana’s biggest banks in the country. For instance, if the merger had taken effect at the end of 2008, it would have created Ghana’s fifth largest bank, adjudged by total assets which would have amounted to GH¢693 million, with Merbank contributing GH¢440 million and TTB GH¢253 million. Actually, the opera

By Kofi Ahovi The Board of Directors of the World Bank last week approved a total of US$535 million to support three credit facilities aimed at helping improve economic governance and stabilizing Ghana’s economy. These are Economic Governance and Poverty Reduction Credit (EGPRC) US$300 million, Transport Sector Project, US$225 million and Natural Resources and Environmental Governance (NREG) US$10 million These first set of credits are part of US$1.2 billion the Bank plans to support the government of Ghana with over the next three years. The credit has a zero interest rate with a 40-year period of maturity including a 10-year grace period. The government is currently faced with a difficult macro-economic situation, the consequence of combination of domestic and external shocks (fuel and food crisis, droughts and floods in the North, financial crisis and global slowdown) which revealed and exacerbated a number of structural challenges in the public sector in general, and in the energy

President John Evans Atta Mills has re-affirmed government's commitment to African unity and would work with other African leaders to realize the developmental aspirations of Africans. Addressing the 13th Ordinary Session of the Assembly of Head of States of African Union at Sirte, Libya last week, President Mills invited African leaders to the centenary celebration of the birth of Osagyefo Dr Kwame Nkrumah, Ghana's First President in September. About 52 African leaders are attending the three-day summit that would deliberate on investing in agriculture for economic growth and food security. It would in addition, examine strengthening the role of AU in the prevention, management and resolution of election disputes and violent conflicts in Africa. Apart from exploring ways to prevent unconstitutional changes of government and strengthen the capacity of AU to deal with such situations, the summit is expected to focus on the implementation of a decision made during the Ethiopia Su

By Kofi AHOVI United Bank for Africa (UBA) is preparing the modalities for a rights issue to enable it to meet the new minimum capital requirement set by the Bank of Ghana (BoG). The bank is planning to raise an unspecified amount from its shareholders in Ghana and its parents company in Nigeria. The bank has up to December this year to meet the BoG’s new minimum capital requirement of GH¢60 million which was increased from GH¢7 million for universal banks in the country. According a report by PricewaterhouseCoopers on the banking industry in Ghana, UBA currently has about GH¢20.6 million and needs about GH¢39.4 by year end to enable it to meet the new minimum capital requirement. The right issues will see the group supporting its local subsidiary with part of the required capital, while the rest is raised by its local shareholders. The new minimum capital requirements are to be met in stages, involving different minimum capital levels for indigenous and foreign banks, during the fi

The government through the Ministry of Transport has developed a Transport Sector Development Programme to replace the Road Sector Development Programme. The project sets out an integrated programme of development activities for Ghana’s transport sector from the period 2008 to 2012. The project components include Improvement of Trunk Roads, which is estimated at U$$64.0 million, and will be implemented by the Ghana Highway Authority and consist of rehabilitation of a major trunk road from Ayamfuri-Asawinso (52 km) to establish a South-North transport corridor in the Western part of Ghana. Improvement of Urban Roads component is estimated at $78 million and will be implemented by the Department of Urban Roads and consists of rehabilitation of the Burma Camp and Giffard roads, and the financing of urban transport infrastructure such as depots, terminals, and access facilities to the planned Bus Rapid Transit system in Accra. Lastly, Improvement of Feeder Roads estimated at US$50.5m, thi