Kofi Ahovi

A nationwide road show organized by the Venture Capital Trust Fund has revealed challenges and opportunities for the venture capital industry around the country. To build on its already veritable successes, these challenges will have to be met and the opportunities exploited, reports TOMA IMIRHE. Last week, the Venture Capital Trust Fund, VCTF completed a three month nationwide road show campaign which has taken it around the country to educate potential business promoters and the general public about the alternative source of financing in the form of equity and quasi equity which the trust fund seeks to promote in the Ghanaian financial market. The road show started on August 16 in Ho, the capital of the Volta Region and was concluded last week in Accra. To be sure, the road show was a pertinent one. The VTCF provides support to small and medium sized enterprises (SMEs) by providing low cost, long term equity and quasi equity capital through special entities called Venture Capital Fin...

By Kofi AHOVI The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) has started its quarterly meeting to review the health of the national economy. The committee usually considers developments within the economy and reviews them against the backdrop of the international economy to which Ghana’s economy has both direct and indirect connections. It would look at the financial sector and trace the pattern of loans by the banks and also look at trends in inward remittances by embassies, Non Governmental Organizations (NGOs) and individuals into the country, among others. The committee will also examine core inflation behaviour, domestic receipts and payments, as well as foreign receipts and payments. The behaviour of world market prices of primary commodities, such as gold, cocoa and crude oil, is of immense importance to the economy, which exports mainly primary commodities but imports everything from capital goods to consumables. The last time the committee met was in September,...

By Kofi AHOVI The Association of Ghana Industries (AGI) has proposed to government an increase in the withholding tax for foreign suppliers of service from 15% to 25%. According to the president of the association, Nana Owusu-Afari, this would put them at par with local companies which are paying 25% corporate profit tax. The current withholding tax of 5% applied across board for foreign suppliers of services makes local entrepreneurs who are subject to 25% corporate tax, plus all other payroll taxes, uncompetitive, especially in the supply of services in the extractive sectors of the economy. For this reason, the withholding tax on foreign suppliers of services was increased from 5% to 15% in the 2011 budget statement and economic policy of government. The AGI is however of the view that the 15% is still low. It made the proposal last week to state its position on the 2011 budget statement of government presented to parliament a fortnight ago. AGI also recommended to government to rev...

By Kofi AHOVI Based on projected revenues and expenditures up to the end of the 2010 fiscal year, government has projected a fiscal deficit for the full year to be GH¢2.51billion, equivalent to 9.7% of Gross Domestic Product (GDP). The projected higher than originally expected fiscal deficit is mainly as a result of the projected higher disbursement of project loans from the country’s development partners than was earlier estimated. Provisional data on the implementation of the budget for the first three quarters of 2010 indicate that revenues were below the budget target by 1.8%. On the other hand, expenditures were higher than estimated by 8.0%. Given the performance of revenues and expenditures for the same period, the overall budget balance showed a deficit of GH¢2.3 million. This is equivalent to 8.8% of GDP, compared with a budget target of a deficit equivalent to 7.6% of GDP. The bigger than expected deficit is mainly as a result of increased disbursement of project loans than w...

By Kofi AHOVI The government has reconsidered its decision to transform the Export Development and Investment Fund (EDIF) into a non-bank financial institution. According to the government, the current operations of EDIF bar any unnecessary government or political interference and thereby giving it the free hand to operate. The Minister of Trade and Industry, Hannah Tetteh, explained to BusinessWeek during the meet-the-press session last week, that considering the fallouts from the Micro-finance and Small Loan Centre (MASLOC) where issues of political meddling were raised and the huge record of non- payment of loans, the government decided to maintain the status quo of EDIF The previous government, under President John Agyekum Kufuor, was considering the restructuring of EDIF as a non-bank financial institution to enable it to operate efficiently. This was because exporters were complaining about their inability to access the fund through the designated commercial banks. EDIF funds we...

By Kofi AHOVI The Ghana Free Zones Board (GFZB) has approved a total of 13 out of 23 applications received from investors for the first half of 2010. Interestingly, the Board received a total of 13 applications for the first half of this year, but there was a backlog of 10 applications from 2009 for consideration. The 13 approved companies were made up of two each in the service sector and commercial sector and nine in the manufacturing sector. The total capital invested by the enterprises for the first half of this year is estimated at US$122 million. The value of production by the enterprises for the same period is US$431 million, while the value of export is US$691 million. Employment figure recorded for the same period is 30,969 comprising 50,006 Ghanaians and 963 expatriates. Total duties paid on sales into the local market as at the end of the first half year of 2010 is estimated at US$1.10 million, while an estimated amount of US$641.939 was spent on training Ghanaian employe...

By Fred SARPONG The Collateral Registry (CR), a subsidiary of the Bank of Ghana (BoG), which is mandated to principally register charges and collaterals created by borrowers to secure credit facilities provided by lenders is expected to be fully automated next year. It is also aimed at ensuring that its services are accessible to all participants and stakeholders of the credit market, particularly borrowers and lenders. BusinessWeek learnt that the automation is in collaboration with the International Finance Corporation (IFC). Under the Borrowers and Lenders Act, CR is the first collateral registry in Africa to be established in Ghana by the Bank of Ghana. Sources at the CR indicated that measures were far in advance to start the full operation of the automation next year. The CR also provides an avenue to lenders to search for information on the existence of relationships between lenders and borrowers as they relate particularly to movable and immovable collateral(s). As a provision...