Government has outlined new measures to avert a fiscal explosion as expenditure continues to spiral ahead of revenues, threatening the attainment of key budgetary targets. The measures include re-imposition of the fiscal stabilisation levy; additional import levies; increase in excise duties; review of user fees and charges; and a special audit of the revenue administration system to plug leakages. These proposals, to be put before Parliament shortly, will boost tax revenue -- which was 14 percent short of target between January-April, Finance and Economic Planning Minister Seth Terkper said last week. The fiscal stabilisation levy, introduced in 2009 but abolished in the 2012 fiscal year, is an additional profit tax on selected sectors of the economy -- including the financial services sector, mining companies and breweries. Government will also take concrete steps to refinance portions of the public debt to reduce debt service costs, undertake more regular adjustment of utility prices to complement the recent increase in petroleum prices, and implement the Market Premium Policy approved by Cabinet for Single Spine salary negotiations. “Given the fiscal outcome for the first four months of the year -- in particular, the cost of debt service and the burden of wage and other personal emoluments on the budget -- Cabinet approved the use of additional revenue, expenditure and debt measures to achieve the end-year targets,” Mr. Terkper said. In his budget statement presented in March, Mr. Terkper said Government aims to cut the fiscal deficit from 12 percent of GDP in 2012 to 9 percent in 2013 through a combination of revenue and expenditure measures. The budget deficit for the first four months of the year was however larger than expected, due to a shortfall in revenue and grants. The gap, which was GH¢3.4billion, was equivalent to 3.8 percent of GDP -- against a target of GH¢2.7billion or 3 percent of GDP. Spending on wages was GH¢3billion, against a projection of GH¢2.8billion, while interest expenditure amounted to GH¢1.6billion compared to an estimate of GH¢1.1billion. “One effect of the fiscal pressures we have outlined is that funds for social intervention programmes -- which fall under the goods and services category of the budget -- are being crowded out,” said Mr. Terkper. “Government will ensure that part of the additional revenue to be generated will be used to resource this balance,” he added. Government will also uphold the objective of improving productivity in its negotiations with public-sector workers under the Single Spine pay policy. A further risk to the budget, according to the Finance Minister, emanates from falling international commodity prices and import pressures. The price of gold, the economy’s number-one export earner, has slumped by more than 18 percent this year, and the cedi has depreciated by more than 3 percent, weighed down by strong foreign exchange demand. Most of the new fiscal measures, Mr. Terkper said, will have sunset clauses because they are only meant to fix the current problems.   On the total public debt stock, he said although it increased by 7 percent over the figure for 2012 -- from US$18.83billion to US$20.12billion at the end of March 2013 -- the increase was as a result of disbursements in existing loan arrangements and not new ones. By Ekow Essabra-MENSAH  

  The Volta River Authority (VRA) has tabled a proposal for power tariff increases, and says the current tariff it receives is among the lowest in West Africa. The power producer, whose current tariff was fixed as far back as 2011, receives 4 cents (8 pesewas) per Kilowatt hour of power sold to the Electricity Company of Ghana, whereas other power producers within the sub-region receive between 10 cents and 13 cents per Kilowatt hour. Togo buys power from its national and regional power producers at 10 cents per Kilowatt hour; Benin and Burkina Faso pay 13 cents; and Ivory Coast pays 12 cents per Kilowatt hour. VRA also exports power to these countries at between 10 and 12 cents per Kilowatt hour. The low domestic tariff has stifled the ability of the company to generate enough revenue to invest in new projects in order to meet the increasing electricity demand in the country, said Ekow Acquah, VRA Manager, Sales Contracts and Regulations, in an interview with the B&FT. “We need to charge realistic tariffs to encourage Independent Power Producers (IPPs) to come into the sector and invest. If we don’t do that people [investors] won’t come or will invest in other areas,” he said. “The bulk of the cost build-up in the production of power lies in the generation sector. For that reason, the power generator should be given the right tariff to enable it to produce efficiently. Looking at the current cash flow, we wouldn’t be able to support the construction of the Akosombo Dam if we were to construct it today.” He said the environmental requirements of power producers are so stringent now compared to 50 years ago, and must be mitigated through tariffs. “Because our tariff is low, we are not able to provide medical services to the people of the Volta Basin who were displaced when the dam was constructed. We are also not able to mitigate other economic challenges of the people.”    Within the last five months, VRA has spent US$300million -- much higher than the US$200 million bill for crude oil recorded for the whole of 2011 -- to generate thermal power as a result of the curtailment of natural gas flow from the West Africa Gas Pipeline. With the damage to the pipeline, which has led to the reliance on more expensive crude oil, VRA’s fuel bill has risen threefold, its Chief Executive Kwaku Andoh Awotwi told the B&FT in a separate interview.  “Yet the tariff has not changed,” he added. Annual electricity demand and consumption is rising between 8-10 percent. Demand and consumption hit 1,664 megawatts in 2011, and grew to 1,800 megawatts in 2012 -- just about equal to the supply. The Ghana Grid Company Limited (GRIDCo), transmitter of power produced by the VRA, however estimates that the country needs an additional 340 megawatts of reserve power capacity for contingencies. The matter of removing subsidies on electricity tariffs is a dicey one for Government, which has to strike a balance between sustained investments in electricity supply and safety-nets for the poor segment of consumers. On Thursday, Finance Minister Seth Terkper hinted that Government will soon adjust electricity tariffs as part of steps to streamline public expenditure and improve the financial strength of the utilities. By Dominick ANDOH  

The Peasant Farmers Association of Ghana (PFAG) and SEND Ghana, a policy, research and advocacy organisation, are jointly undertaking an advocacy programme aimed at drawing Government’s attention to the huge gap between the number of agric extension officers in the country and the number of farmers they have to serve.   Research suggests that currently there is only one Agricultural Extension Agent to about 1,300 farmers in the country.  The situation is said to be even worse for some districts of the Brong Ahafo and Northern Regions, where one Extension Agent is deployed to offer services to over three thousand farmers.     “The few Extension Agents are also faced with challenges such as lack of incentives, especially for those working in very deprived communities and districts,” said Daniel Alotey of SEND Ghana at an inception meeting of the advocacy programme geared toward getting Government to commit more resources to training extension officers and deploying them to serve farmers.   “Poor access to extension services has led to poor agronomic practices, poor post-harvest management, inefficient use of inputs, over-use of pesticides, low adaptive capacity for use of research and technology and other information that could help increase productivity,” he said.   The two organisations have received an amount of US$80,000 from Trust Africa to undertake the project over a two-year period.   Activities to be undertaken under the project include media campaigns for mass public education on agricultural extension, national stakeholder workshops on agric extension and financing, engagement of policy-makers, among others.   “It is a campaign, so along the line we will organise meetings with the Parliamentary Select Committee on Food and Agriculture. We want the policy issues to be addressed at that level and also the ministry itself,” Daniel Alotey said.   The National President of the Peasant Farmers Association, Mohammed Adam Nashiru, said laudable Government projects like fertiliser and input subsidies will come to naught if agric extension agents, who serve as a link between the ministry and farmers, are not effectively deployed.   “As you are aware, throughout Ghana we have only four agricultural training colleges and then one veterinary college, which some of us describe as woefully inadequate looking at the farmer population and the size of this country.”   The number of farmers, he said, is an “elephant load” for the limited number of extension officers.   “You and I know very well that even if you are a robot, with this kind of load you cannot perform. On this note, the two organisations are calling on Government to consider as a matter of urgency the expansion of agricultural training colleges throughout the country -- at least one in every region,” he said. Graduates from such colleges, he added, should be put under salary schemes like other professionals, since a lot of them are poorly remunerated and “frustrated”. A recent survey conducted by PFAG indicates that only about 10% of the country’s largely uneducated farmers have access to extension services, with women farmers being the wors off. The situation of the women is such that while a lot of them are not comfortable with male extension officers following them to their farms, the rigorous nature of providing extension services also puts off women extension officers. A thirty percent quota exists for women extension officers at agric training colleges, but it is said they are not filling it. By Basiru ADAM  

Seventy selected fish farmers along the Volta Lake have undergone a one-day training session aimed at equipping them with modern techniques in aquaculture, to enable them take advantage of Government’s five-year aquaculture development plan. The training session, which took place at Akosombo in the Eastern Region, has been designed to help Government achieve the country’s target of producing 400,000 tonnes of fish within a five-year period to meet the national fish protein requirement. The seminar, under the theme “Prudent farm management practice for maximum fish yield: a measure towards meeting Ghana’s protein requirement for a healthy population”, was organised by Coppens Ghana -- an international and globally acknowledged dealer in fish feeds. This is the second time that Coppens Ghana has -- with support from its mother company, Coppens International based in The Netherlands –organised such farmer sensitisation programme on effective use of the company’s feeds to ensure optimum fish harvest. The company’s Export Manager, Mr. Marc Verkuyl, said officials from the company have been visiting farmers who benefitted from the first training workshop last year on their farms -- taking them through practical demonstrations to ensure that skills acquired from the workshop are put to good use. Mr. Emmanuel Aryee, Deputy Head of the Inland Fisheries and Aquaculture Division of the Fisheries Commission, said Ghana currently produces far below 50 percent of its protein needs as result of fast-depleting ocean-fish stocks, which has also made fishing itself unattractive. He partly blamed the depletion of the country’s marine resources on illegal fishing methods used by some fishermen, saying that the situation is better in neighbouring countries due to strict adherence to the fishing laws by the people. He said the five-year aquaculture development plan will significantly increase the country’s fish stock from 27,000 tonnes 100,000 tonnes per annum. It will also provide the necessary skills and support for fish farmers to enable them produce more for the country’s protein needs, and he advised them to form cooperatives to make it easier when seeking Government support. Dr. Peter Ziddah, a fish-health specialist who was a resource person, appealed for Government to regulate the use of agro-chemicals in the country -- which according to him pose a threat to aquaculture, especially along the Volta basin.He also advised the participants to follow instructions and take their business seriously. The Sales and Marketing Manager of Coppens Ghana said the company understands the needs of Ghanaian fish farmers, and therefore her outfit will continue to train them through such programmes.

Cabinet has approved a transaction size of US$1billion based on anticipated market conditions and financing needs of the proposed Eurobond auction, Finance and Economic Planning Minister Seth Terkper has disclosed. Prior to the approval by Parliament, the exact amount will be subject to variations that might be dictated by market conditions and parliamentary approval. The lead managers of the transaction are Citi Group and Barclays. The co-managers will be EDC Stock Brokers and Strategic African Securities. Mr. Terkper explained at a media briefing that the Eurobond is intended to restructure the public debt, reduce the interest burden on the budget, and provide funds to finance critical infrastructure projects. “The indicative use of proceeds as approved by Cabinet includes payment of counterpart funds for capital projects,” he said.   He said, “The global interest rates are low and Government, upon advice from international experts, believes this is the right time to float a bond. We won’t be reckless in issuing the bond. We are optimistic the bond issue will be a success.” He added: “Government, as part of debt management policy in the 2013 Budget Statement and Economic Policy, indicated its intention to extend the maturity profile of the public debt by diversifying its sources of funding for major infrastructure projects and for other specified purposes -- including tapping the global bond market. “Investors don’t only look at the current situation; they also look at what policies you have for the future.” Mr. Terkper indicated that Cabinet approved the constitution of a transaction team toward issuance of the sovereign bond, comprising the Ministry of Finance and the Bank of Ghana, to manage preparatory activities for the issue.   The country’s financial sector is aiming to benefit from a lower interest rate when Government sells its second Eurobond -- tentatively from July 2013, discussions over which are currently ongoing. The first 10-year Eurobond in 2007 attracted a coupon rate of 8.5 percent, but the yield for the next one is likely to be lower because of the prevailing low international interest rates, Bank of Ghana (BoG) Governor Henry Kofi Wampah told B&FT.  â€œWe want to take advantage of the low interest rates. We’re looking at rates that are lower than what we paid in 2007.” Dr. Wampah nevertheless insisted that the timing is right because of the lower yields in the market, which could begin to rise if the economic recovery in advanced countries firms up. Government has said the budget deficit -- which became the source of much anxiety after it rocketed to 12 percent of GDP last year -- will be narrowed to 6 percent of GDP in the medium-term, after it’s been trimmed to 9 percent this year. Fitch Ratings has already cut the outlook on Ghana’s B+ sovereign rating to negative from stable on the back of the blown-out deficit and persistent wage-expenditure pressures. In 2007, Fitch rated Ghana B+ with a positive outlook ahead of floating the first Eurobond. Dr. Wampah said the credibility of policies to achieve fiscal targets and stabilise the cedi “is what investors will be looking for”. There is a need to refinance some of Government’s debts including the 2007 Eurobond, he said, and part of the proceeds from the next sale will be used for that purpose. By Ekow Essabra-Mensah

A rich chief tax collector called Zacchaeus was seeking to see who Jesus was when Jesus went to Jericho and was walking through. According to Bible accounts, Zacchaeus found it very difficult to have a glimpse of Jesus because of the large crowd as he was small in size. So he ran ahead to an advance position and climbed a fig-mulberry tree in order to see him, because Jesus was about to go through that way. Clearly, Zacchaeus did not want to be left out of getting a glimpse of Jesus -- hence he needed to be smart, put in extra effort and to act fast so as to avoid being left out. Naturally, nobody wants to be left out in society; everybody wants to move along with their peers and would do everything possible to achieve their aim. Sadly, that is not the case for some companies listed on the Ghana Stock Exchange. As to whether they are being left out or they are leaving themselves out is a question we all have to find answers to. There are thirty-four companies listed on the Ghana Stock Exchange, but not all of them are receiving equal investor attention.   Undeniably, all the stocks cannot attract equal investor attention. Although they are all listed on the same exchange, they are different companies operating in different sectors and in different environments under different regulatory regimes. This situation is wisely justified by Aristotle when he stated that, ‘the worst form of inequality is to try to make unequal things equal’. Hence, we cannot attempt to unfairly suggest that all the listed companies must follow the same price trends at the same time all the time. Even so, bulls markets which are characterised by optimism, high investor confidence and expectations that strong results will continue, somehow work for a good number of listed companies at the same time. Although it is difficult to predict consistently when the trends in the market will change, part of the difficulty is that psychological effects and speculation sometimes play a large role in the bullish stock markets. Investors are always excited with a bullish market, regardless of the sectors their listed companies belong to. Comparatively, out of the thirty-four listed companies on the Ghana Stock Exchange, some have not recorded a single trade for over eighteen months. In my opinion, these companies are clearly not getting up to be counted. The Stock Exchange is a secondary market where investors can sell their securities to other investors for cash, thus reducing the risk of investment and maintaining liquidity in the system. If it is true that the stock exchange is meant to provide an exit platform for shareholders, then imagine what the shareholders of the companies whose shares have not traded for a long time have been going through when they need money to pay school fees or pay the funeral expenses of a loved, deceased person, among other reasons for exit.   General stock market activity requires that prices move up or down or remain unchanged when shares exchange hands. Although every trade is not characterised by price movements, movement of shares from one investor to another is a primary function in the very existence of a stock exchange -- and price movement becomes secondary. Imagine a scenario where none of the thirty-four listed companies registers a single trade on the exchange in a whole year. Happily, though, the Ghanaian stock market is quite active and exciting these days, because there has been a significant increase in trade volumes with a corresponding increase in the magnitude of changes in prices of shares. This has resulted in an impressive appreciation in prices of shares of most listed companies. Indeed, proud shareholders of these companies have recorded gains ranging from 7% to 82% while the mechanism that measures the performance of the Ghana Stock Exchange, (the GSE’s Composite Index) has recorded over 54% gain from January to-date. Although stock prices of some of the companies have recorded price depreciation, some have recorded no movement as in most cases there has been no trade in the shares of those companies. Logically, it is expected that most listed companies do well to record some market activity, especially when the larger market is in a ‘bullish mood’. Ostensibly, trades occur when there are shares offered for sale with equal interest to buy those shares. Again, interest to buy shares is normally stimulated by several factors including the release of price-sensitive information about the company’s activities, its future prospects and its financial wellbeing. Sharing of information about public companies with investors is an essential component to the investment decision-making process by investors. It is said that ‘a cat is not priced when it is hidden in a sack’. The buyer must certainly see what he is buying; that way, he can effectively get a good bargain to guarantee value for money. The least directors of companies that are not getting up to be counted on the stock exchanges can do is share information with their shareholders and the investing public -- whether such information is good or bad. Whatever the case, investors have a basic right to information so as to make decisions. That right must not be trampled upon.  The natural investor reaction to non-disclosure of information is a boycott of the shares of that company on the market, and this largely accounts for the little activity in the shares of such companies.   However, the process cannot be completed one-sidedly; buyers are needed as much as sellers. Essentially, there are several ways by which companies can stay in touch with shareholders through the provision of information. This can be done through press releases, press conferences, or by appearance on the Ghana Stock Exchange’s ‘Facts Behind the Figures’ programme among others. These are fine and inexpensive platforms available for management to interact with investors. Zacchaeus might not have been an expert in tree-climbing, but when necessity demanded it he rose to the challenge and found himself on a tree high enough to get himself noticed by Jesus. He certainly achieved his aim and even got rewarded by Jesus. Companies listed on the Ghana Stock Exchange must be willing to go the extra mile to share price-sensitive information with investors.   They must draw strength from the effort put into the Initial Public Offering (IPO) exercise of their shares to raise money. If companies recognise their statutory and moral obligations in the provision of information, they will realise that it is not a favour but rather a duty and respect of investors’ right when they start seeing the results of their effort.     By Seth Q. OforiSIC Financial Services Ltd.

The Lions Club of Ghana received financial support of three thousand Ghana cedis toward surgical operations of children born with cleft-palate deformities in a special project dubbed ‘Operation Smile’ in the three Northern Regions of Ghana. Presenting the cheque to Executives of the Ghana Lions, the Managing Director of Ghana Life Mr. Ivan Avereyireh intimated that apart from its business aspirations and prospects, the Company also embarks on a number of corporate social responsibility activities in support of worthy causes of this nature to help address some of the many socio-economic, health and other challenges of society.  The cheque was received on behalf of the Club by the President of Legon Lions, Lion Alidu Ibrahim, who expressed their sincerest appreciation to the Management of Ghana Life Insurance for the kind gesture and made an appeal for other business entities to emulate this gesture. In a related development, the 48 Engineer Regiment in Teshie recently honoured Ghana Life Insurance Company Ltd. -- a member of the prestigious Ghana Club 100 -- for its prompt payment of life insurance claims. The award is in the form of a plaque, presented at a thanksgiving ceremony organised by the 48 Engineer Regiment to climax the annual West Africa Security Services Association (WASSA).   The Commanding Officer of the Regiment, Lt. Col. Mustapha, speaking at the ceremony cited the countless maturity and death claims Ghana Life pays -- key among which is the one for Lance Corporal Abuchow who died in the Allied Plane crash on June 2, 2012. Meanwhile, for the period 1st January 2012 to 31stDecember 2012, Ghana Life Insurance Company Ltd. paid claims amounting to GH¢3,051,297 constituting death and maturity claims --- broken down into GH¢99,955 in death claims and GH¢2,947,691 in maturity claims respectively. The Management of the Company is therefore totally committed to the development of desirable products to meet policyholders’ needs, delight and prompt claims settlement.  

  Since acquiring BMI just over a year ago, British Airways has substantially increased its African network adding three additional destinations and 20 more services. In Morocco, it has just announced an increase in its schedule to Marrakech from daily to 10 flights a week and added a third weekly service to Agadir. The additional frequencies go on sale immediately. The Marrakech services increase on 28 October with the third Agadir flight starting on 29 October. This is the second time in less than a year that the airline has grown its Morocco services. Late last year it added four flights a week to Marrakech and began a twice-weekly service to Agadir. In West Africa it started flying three times a week to Sierra Leone and Liberia. The new flights to these fast-growing regional economies are in addition to the well-established West-African routes in Ghana and Nigeria. Schedule increases to East and Southern Africa include upping the Nairobi frequencies to eight a week. In South Africa it confirmed three additional frequencies to Johannesburg, on top of the existing double-daily services to the country’s business hub and its direct daily Cape Town/ London flights, which increase to double daily over the southern hemisphere summer peak season. “The acquisition of bmi has enabled us to expand our flying programme in Africa to serve 18 routes in 15 countries. We now fly to more places, more often than we ever have before in the 80 years we have served the continent. These flights link growing African destinations to London and provide onward connections to the world’s business capitals,” says Ian Petrie, Regional Commercial Manager for Africa. In addition to this international network, British Airways’ franchise partner, Comair, operates to domestic and regional destinations in South and Southern Africa, flying over 700 departures a week. It recently added Maputo to its regional network.  

Employers should create provident funds for their employees in order to fully optimise the benefits of the new three-tier pension scheme, Chief Executive of Capel Pensions Advisor Lillian Ricketts-Hagan has said. She said human resource professionals must advocate the creation of these funds at their workplaces and continually educate their employees on the benefits of the new pension scheme. She was speaking to human resource professionals in Accra at the monthly Society for Human Resource Management (SHRM) forum under the theme, “Making the New Pensions Act Work for You.” “The HR can act as an advocate on behalf of employees because they are the link between the employer and employees. They can convince the employer to set up a provident fund scheme that will boost the employees’ retirement income.   “The HR can therefore organise training for employees to help them understand the pensions scheme, what type of benefits they are entitled to, when they can get their benefits, and who the fund managers, trustees and administrators of the scheme are.” She said currently some employers have included HR professionals as members of the board of trustees of their provident funds, which is a good thing. “In some companies, HR professionals are doing a lot to expand the new pension scheme because they are allowed to sit on the board of trustees of the individual pension schemes. “When they sit on the board of trustees, not only do they protect member interest but they also advocate and negotiate the benefits that members should get from their pension scheme. In so doing they get firsthand information from the trustee meetings, which can easily be disseminated to employees.” Mrs. Ricketts-Hagan said because pension funds are invested in Government Treasury bills and bonds, they provide an additional pool of resources that can be used for infrastructure development. “Pension funds are very useful for the economy of this country because they can be used for infrastructure development. If we are able to mobilise pension funds within the country, we can support some of the infrastructure development we need,” she said. Mrs. Ricketts-Hagan added that pension funds can also reduce the rate of borrowing from outside because the funds provide resources for government to borrow from within. “Borrowing from within is always better because you are not suffering from foreign exchange risks. If you go and borrow cedis to fund projects which are priced in cedis, it is always better than borrowing in euros or dollars whereby you can suffer foreign exchange risks because the exchange rate is always rising and you always have to buy forex to pay back your loans.” President of SHRM Ghana Kojo Amissah urged all HR Managers to help establish provident funds in order to secure the retirement benefits of employees. By Bernard Yaw ASHIADEY

The Minister of Energy and Petroleum, Mr. Armah-Kofi Buah, has called on local  companies to take advantage of the opportunities associated with Ghana’s status as an oil producing country to create more jobs for the youth. Mr. Buah made the call in a speech read on his behalf by Ben Dagadu, Deputy Minister of Energy and Petroleum, at the opening of the Legon-Presec and Ogbodjo service stations in Accra.. He said his ministry has watched GOIL grow from strength to strength, and expressed hope that GOIL will work assiduously toward achieving its vision of becoming a world-class provider of good energy to benefit the people of Ghana. The Energy Minister renewed Government’s commitment to support both local and foreign investors, and urged them to avail themselves of the many opportunities that abound in the country. Mr. Patrick Akorli, the Managing Director of GOIL, said the bold initiative by the board and management of GOIL to rebrand the company last year is achieving positive results with the opening of more state-of-the-art service stations throughout the country. The GOIL boss added that the company has now invested a lot in its human resource, and expressed the hope it will ensure efficiency and fast delivery of services to its customers. The chairman of the Board of GOIL, Prof. W.A. Asomaning urged the staff of the stations to uphold the integrity of GOIL by avoiding deals and ensuring good service at all times. The Chief Inspector at the National Petroleum Authority, Mrs. Esther Anku, said her outfit will also ensure fair competition among the oil marketing companies -- and also ensure that consumers are well-protected. Those present at the ceremony included traditional rulers of the area and other dignitaries including Mathais Puozaah, MP for Nadowli.