Price of fuel at the pump likely to be increased
The Institute of Energy Security has said fuel prices are likely to go up by 2% from December 16 to December 31, 2016 per the second pricing window.
Speaking to Benard Nasara Saibu on the Morning Starr, Principal Research Analyst at the Institute of Energy Security, Richard Rockson said consumers should brace themselves for an increment of not less than 2%.
According to Mr. Rockson, a market scan of the petroleum sector for the second window indicates prices going up.
”For the first window in December we predicted that prices are going to fall and it did happen but in the second window unfortunately we are looking at prices of fuel going up.
The dollar rate at now is about Ghc4.25, before this window it was ghc4. When you look at crude oil prices, they have gone up on the world market. When you take crude, our forex and our reserves what we have now is an all-time low…diesel will not take us up to three weeks in all we have about 100 to 200million of fuel stock in the country at the moment.
When you put all these together and do the indices we are looking at 4 to 6% of prices going up not less than 2% no matter what prices will go up between December 16 and December 31 in the second window.”
Mobile telephony company, MTN has apologized to its customers for a nationwide network outage which occurred Wednesday night.
Customers were unable to make and receive calls or access data throughout the period which lasted for several hours.
MTN says the outage was as a result of a technical Internet Protocol problem which affected some of its sites, disrupting voice and data services.
Corporate Services Executive, Cynthia Lumor in a release says engineers of MTN have been working to isolate the root cause and also put measures in place to avert future occurrences after managing to resolve the problem.
She maintained MTN is committed to providing reliable services to its customers.
Source: Ghana I Nhyira FM I Ohemeng Tawiah
The Official Liquidator for DKM micro finance company, the Registrar General’s Department has denied reports that it has put on hold indefinitely the payment of locked up investments of validated DKM customers.
The department has on several occasions postponed the payments citing administrative challenges for the delay.
The department was scheduled to commence payments yesterday 14th December, 2016 but postponed it to a later date – Monday 19th December 2016.
The department however yesterday, released the amended list for payments which will cover over forty thousand customers across all Regions in the country that were affected.
Principal Company Inspector for the Registrar General’s Department, Jones Nathaniel Ansah speaking to Citi Business News on the matter said ‘’the reports of the suspended payments of the DKM customers are not true, as I am talking to you a press release is ready stating that the second part of payment is to commence on Monday 19th December’’. Mr Ansah said.
‘’ The press release will be circulated tomorrow so as I said the reports of the suspended payment is not true.’’ He added.
President elect urged to retrieve investments
Early this week customers of DKM microfinance urged President elect of Ghana, Nana Akufo Addo to live up to his promise of getting their locked up investments refunded.
According to them they voted massively for Nana Akufo Addo based on his campaign promise to retrieve their monies for them.
Spokesperson for the DKM customers in Tamale, Mohammed Ibn Issaka said they believe the matter will be addressed by Nana Akufo Addo in accordance with his promise to retrieve their monies.
‘’ Currently we wish Nana Addo well as he takes office in January 7th we wish him well and we just want to remind him of the promises he gave us. Infact Nana Addo received massive endorsement from most of the DKM customers in the country. He was voted for because of the promise he gave us. We only have the hope that he will be able to fulfill his promises and not fail us.’’
The customers are also demanding an investigation into the root cause of what led to the closure of DKM and other microfinance companies.
‘’He shouldn’t look into only the DKM issue. He should also look into others like God is love, A little Drop and Care for humanity. There are several microfinance companies in Brong Ahafo Region that the Bank of Ghana closed down. God is love in particular won many cases against the Bank of Ghana and yet they refused to release the money to them and now the customers of God are love and DKM are the ones paying for it”. Mohammed stressed.
Woes of DKM customers.
Thousands of customers of DKM Microfinance Company lost their investments running into millions of cedis after the central bank in 2015 suspended the operations of DKM for violating the banking Act.
Though the central bank subsequently lifted the ban on the company’s operations, DKM was unable to pay its customers their locked up cash.
The Bank of Ghana confiscated the assets of the company and appointed the Registrar General’s Department to commence liquidation process to refund customers of the company.
By: Anita Arthur/citibusinessnews.com/Ghana
The incoming government led by President elect Nana Akuffo Addo is likely to renegotiate Ghana’s deal with the International Monetary Fund (IMF) in a bid to stabilize the economy.
This is the assertion from some economists.
According to them, renegotiating aspects of the IMF deal will save the country from further increase in its debts.
Ghana’s three-year agreement with the IMF which will see the disbursement of a total of 918 million dollars (USD 918,000,000), was approved on April 3, 2015.
The program aims to restore debt sustainability and macroeconomic stability in the country; to foster a return to high growth and job creation, while protecting social spending.
Speaking on Business Today, Economist Dr Adu Sarkodie maintained that the new government must restructure the deal to grow the economy.
“We must renegotiate certain parts of the IMF deal. One of the items that have contributed to the slow effectiveness of the program is that they have front loaded the policies and programs and have kept the money.
So in other words I go into a deal with you, I expect you to take certain good steps before I hand you the money but it has not been the case in the previous IMF programs.”
He added, “So I think that this time round the IMF should rather front load the money. They should frontload about 70% of the remaining 50% for us to stabilize because the macroeconomic stability is the most important thing.”
Meanwhile Dr Adu Sarkodie has cautioned the incoming administration to be cautious of some economic fundamentals in order to propel economic growth.
“If we are not vigilant and the exchange rate gets out of hand, it is going to multiply the external debt. Right now what we need to do is research our debt and grow our economy.” he concluded.
Ghana has so far received a total of about US$464.6 million as disbursements from the IMF.
The latest was on September 28, 2016.
The completion of the third review of Ghana’s economic performance by the Executive Board of the Fund led to the disbursement of US$116.2 million.
By: Jessica Ayorkor Aryee/citibusinessnews.com/Ghana
It appears the decision by the Bank of Ghana(BoG) to introduce a new logo for all microfinance companies in the country may face a stiff resistance.
The Bank of Ghana in announcing new regulations for microfinance companies in Ghana launched a logo to distinguish between licensed microfinance institutions and unlicensed ones.
Unveiling the logo in Kumasi, officials of the central bank insisted that the logo will replace all logos of microfinance companies in the country.
But the decision was vehemently criticized by the Association of Microfinance companies.
Speaking to Citi Business News, Banking Consultant Nana Otuo-Acheampong stated that the resistance was expected since most microfinance companies have build their corporate brands with their unique logos.
Nana Otuo Acheampong
According to him, the central bank could have used a small signage on the logos of microfinance companies to indicate its endorsement.
He argued that replacing the logos of all microfinance companies in the country will not work since some firms have spent huge funds in branding.
“We can have a small signage similar for what we have for Visa cards , but not such big thing that will replace what they have. People have built their brands over a number of years and some of these microfinance companies have been trading for ten, fifteen twenty years. All of a sudden you come and say deface it and use this big thing, it will be difficult so I think the brand must be there,” he stressed.
Mr. Otuo-Acheampong stated that the BoG has promised to readdress the issue and come out with a final decision soon.
Expressing optimism in the central bank’s ability to resolve the issue, Mr. Otuo-Acheampong observed that the relevant authorities will come out with position that will strengthen the relationship between the bank and the companies.
“BoG as a listening bank said they are taking their concerns so hopefully they should come out with something not big as the one they show but something a miniature of the Visa sign,” he said.
By: Lawrence Segbefia | Citi Business News
Some bank treasuries are anticipating a relative stability of the cedi in the short to medium term following the Bank of Ghana’s auctioning of dollars to commercial banks.
According to them, the depreciation may either drop slightly or remain stable in relation to other major currencies.
On Thursday, the cedi depreciated slightly and hit the 4 cedis mark.
As at Thursday morning, it was trading at 4 cedis 1 pesewa on the interbank market.
“From the morning the interbank average rate has inched up to 4.03 but this is the first auction and we expect that in two weeks time, when the Central Bank comes into the market again, it is likely that with supply on the market increasing, either the rate will come down slightly or stabilize,” the General Manager for Treasury at HFC Bank, Joseph Nketia told Citi Business News.
The Central Bank, on Wednesday (30th November), issued the first of three 20 million dollars auctions scheduled between November and December this year.
The total auction amount of 60 million dollars, is part of proceeds from the 1.8 billion dollars cocoa syndicated loan.
Citi Business News understands banks with prices ranging between 3 cedis 99 pesewas and 4 cedis 3 pesewas were largely successful.
Joseph Nketia further explained that the price accepted by the BOG demonstrates its commitment to keep the rate at marginal levels.
“It is an indication that the central bank is not expecting the rate to go rather high; ideally in most auctions, the highest bidder is considered before others.”
Meanwhile as at Friday, 2nd December 2016, the cedi has gained 3 pesewas and it is selling at 4 cedis 4 pesewas.
On the interbank foreign exchange market, the dollar gained as much as 18 pesewas to trade at 4 cedis 36 pesewas.
By: Pius Amihere Eduku | Citi Business News
The Bank of Ghana (BoG) will from this Wednesday, November 30 start selling part of the $1.8 billion dollar cocoa loan to commercial banks.
The Central Bank to this end has released regulations for interested banks and the calendar to guide the auction.
The Bank of Ghana in a notice said only those who are licensed, can participate in the auction, “participation in the auction is restricted only to Authorized foreign Exchange dealing banks”.
It adds that authorise banks shall submit their bids via a secured Bank of Ghana page on Reuters Terminal or through a designated email in approved format provided by the regulator.
Participating banks are permitted to submit maximum three bids in the auction and quoting their desired amount, however, each bank will be allowed a minimum bid size of 500,000 and in multiples of 250,000.
A Maximum bid size of a single bid shall not exceed ten percent of the auction target, the cumulative volumes from any single bid shall not exceed 20 percent of the auction.
This should mean that no bank may get more 4 million dollars. According to the calendar, the Bank of Ghana is planning to sell 60 million dollars over the next four weeks.
The first auction will start on Wednesday, November 29 which will see the Central Bank auction $20 million. The second auction will take place on December 14 with the final one being done on $20 million.
The final auction will happen on December 28, 2016. However, some banks have told JOYBUSINESS that the amount being put out is not enough to meet their demands.
A source close to one of the top banks in the country has told JOYBUSINESS that what the Bank of Ghana is planning to sell, will not even meet a quarter of their demands.
This is because there are more businesses looking for dollars to finance their imports for the first quarter of 2017.
This move has raised questions about whether, the auction will be enough to stabilize the Ghana cedi, which has witness some consistent drop in value marginally over the past four weeks.
But the Central Bank, on the other hand, is challenging the claims, arguing that apart from the auction of the cocoa loan, which will be done every quarter over the next 12 months, it is also working to introduce additional interbank interventions which actually started Monday.
Some of the forex bureaus are selling $1 at GH¢4.20 whiles a commercial bank is likely to quote GH¢4.15.
Source: Abubakar Ibrahim | My Joy Online
The Official Liquidator for DKM Microfinance, the Registrar General’s Department has told Citi Business News the final list of creditors affected in the error ridden list, will be released by close of this week.
According to the Official Liquidator, 93,000 validated customer list was completed last Saturday, November 26th, 2016.
The Principal Company Inspector for the Official Liquidator for DKM Microfinance, Jones Nathaniel Ansah, earlier told Citi Business News customers who were paid less than their entitlements would be paid their monies after all the necessary corrections are completed.
Mr. Ansah was optimistic the creditors will receive their monies this week when the final list is released.
“Ninety three thousand claims have been verified by PWC. They have made it known to us that it has been done but what they are doing probably is to finalize the list of payment to those creditors over there so tomorrow we are going to have those that came for their money or those that didn’t come for it then will take it up from there,” he said.
Thousands of customers of DKM Microfinance Company lost their investments running into millions of cedis after the owners of the company invested in unapproved venture and lost their funds.
Customers of the company thronged to all the branches to withdraw their funds after the news went viral, creating a panic situation.
The Bank of Ghana confiscated the assets of the company and appointed the Registrar General’s Department to commence liquidation process to refund customers of the company.
By: Anita Arthur | Citi Business News
Data from the Bank of Ghana (BoG) indicates that Ghana’s public debt went up by GHC6.2billion between July and September, 2016.
According to the summary of economic and financial data released by the bank, the country’s total debt stock reached GHC112.4 billion as at September this year.
rt from government’s unbridled appetite for borrowing, other factors such as the cedis’ marginal depreciation and possible delays in interest payments could have resulted in the debt numbers recording such a significant increase.
Ghana’s total public debt grew from GHC100.2billion in December 2015 (representing 71.6 per cent of GDP) to about GHC105.1billion by the end of May 2016. The debt increased to GHC106.2billion by July 2016 representing 66 per cent of GDP.
Ghana’s development partners have expressed concerns about Ghana’s worsening debt situation as well as government’s spending spree.
According to them, failure to check government’s borrowing appetite and expenditure could lead to a recurrence of the fiscal slippages experienced during the 2012 elections.
The Institute of Statistical, Social and Economic Research (ISSER) has criticised government‘s debt strategy of increasing borrowing on the private capital market, saying the strategy is counterproductive, especially when its management of and spending of borrowed funds is fraught with inefficiencies.
The Institute in its ‘State of the Ghanaian Economy in 2015’ said “Ghana must start to curb the relentless rise of debt; one thing is certain: the longer managers of the economy delay in reckoning with Ghana’s macro-economic problems, the more severe the eventual consequences will be.”
“There is no doubt that a debt crisis looms if corrective measures such as cutting and realigning expenditures are not prioritized; the plain truth with respect to improving the country’s debt position is the need to cut back on spending,” ISSER said in its position on the country’s debt.
Source: The Finder Online
Technological advancement and the use of internet has become very indispensable in the present day banking environment.
It is therefore in this regard that rural and community banks have been encouraged to embrace technology in banking so as to attract and retain clients as most of them are technologically knowledgeable and therefore must begin to invest in e-banking products, such as Automatic Teller Machines (ATMs), electronic payment cards among others.
However, directors and managers of rural and community banks have been cautioned on the deployment of electronic banking products with the best risk-mitigating measures in deploying these electronic products and have further been urged to do so with the maximum security to avoid losses that can occur through security lapses.
The National President of the Association of Rural Banks, Dr Nana Akowuah Boamah gave the advise at the 19th Biennial General Meeting of rural banks held last Friday on the theme ‘Forty years of Rural Banking-Achievements, Challenges and Prospects'.
According to him, Rural and Community Banks have contributed significantly to the development of Ghana over the past forty (40) years in spite of the numerous challenges posed by the economy. The industry currently employs about 4000 people, most of who are in rural communities.
In the area of education, the industry has not only constructed classrooms and science laboratories, but has also provided computers to schools and awarded scholarships to brilliant but needy students in their operational territories
Rural and Community Banks have also supported financial literacy development in communities through the organization of road shows and radio and television discussions as well as supporting such national events as Farmers’ Day and best teacher awards among others.
The aforementioned contributions of rural banks have not gone unnoticed by both national and international bodies and institutions. At the latest prestigious Ghana Club 100 awards, twenty-two rural and community banks were in the top 100 Companies in Ghana.
However the industry has been confronted with some major challenges which include weak corporate governance, competition from micro finance and savings and loans companies, liquidity, and mismanagement. Member banks have therefore been encouraged to implement requisite strategies to address these challenges by supporting one another in these times of difficulty.
The National President reiterated that the destinies of all individual banks are linked and this regard, the Association is designing measures to shore up the performance of member banks.
The Bank of Ghana(BoG) has assured that the cedi will not lose its stability against the dollar despite signs of the currency recording some marginal depreciation in recent times.
Some market watchers have attributed the development to speculations as the general elections draw closer.
But assuring the public of a stable currency during and after the elections, the Governor of the Bank of Ghana, Dr. Abdul Nashiru Issahaku maintained that the cedi is rather stabilizing and has shown remarkable performance compared to election period in 2012.
According to him, such marginal movements in the exchange rate market are expected, hence adequately being observed by the central bank.
“One of the things we do is moderate volatility of the currency. Stability means there will be some movements up and down. What we are seeing is some of the movement which is expected and we’ve indeed expected that to happen,” he assured.
Pointing out some measures being taken, Dr. Issahaku stated that the central bank is always moderating the volatility, allowing the market to determine the price.
“We are proactively responding to the[volatility] both from the way we intervene in the market to moderate the volatility, not hold it because we operate a liberal price system here,” he stressed.
Dr. Issahaku insisted that the cedi is experiencing stability since a period comparison of the currency with previous years can prove that.
He cited for example that the currency was unstable in the same period this year in 2012, which was an election year.
“The claim that the cedi is stabilizing is evident, it’s actually stabilizing. When we compare to last year and previous elections it’s for a reason. There is improved performance of the currency given what we expected in an election year, when I say ‘we’ I mean general citizenship of this country. And what we are seeing is a remarkable performance of the currency compared to last year when it was about 15 percent depreciation,” he said.
By: Lawrence Segbefia | Citi Business News
Some financial analysts are anticipating that the Bank of Ghana (BoG) will sustain the decision to reduce further, its policy rate to ease access to credit to businesses.
According to them, commercial banks will respond to calls for lower interest rates if the primary reference which is the policy rate, drops.
“It is in the right direction and we hope that it will continue and we will see lower interest rates because businesses presently are finding credit very expensive,” Nana Otuo Acheampong, Banking Consultant told citibusinessews.com.
The Monetary Policy Committee (MPC) of the Bank of Ghana, on Monday reduced the prime rate which is the rate at which the central bank lends to commercial banks in the country.
The Governor of the Central Bank, Dr. Abdul Nashir Isshaku cited the cedi stabilization and reducing inflation as basis for the decline in the policy rate.
The figure which had been kept unchanged at 26 percent for four consecutive times this year, declined by 50 basis points to 25.5 percent.
Like other analysts, Nana Otuo Acheampong further ruled out a significant impact of the reduction on interests on loans.
He explained the factors determining the base rates would eventually culminate in a figure that will be equal or above the new policy rate.
“Banks are now going to add on their risk factors for lenders so we wouldn’t see a big reduction in the lending rate for the banks to enable businesses to generate the required turn over that we want to see.”
Meanwhile the Head of the Osei Tutu II Centre for Executive Education and Research is optimistic commercial banks could lessen their stance on restricting credit if the MPC reduces the prime rate subsequently.
“With the non performing loans structure that the banks encountered last year, they are not lending much and that was expressed in the report that the Governor read to the press that credit is very tight,” he concluded.
By: Pius Amihere Eduku | CitiBusinessNews
The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) has reduced the policy rate by 50 basis point to 25.5 percent after holding it at 26 percent for months.
The policy rate, which is the rate at which the central bank lends money to commercial banks, before its reduction, had remained at 26 percent for four consecutive times.
The central bank’s Governor Dr. Abdul Nashir Issahaku attributed the reduction external factors, the cedi’s stabilization over the months as well as the recent drop in inflation figures.
Prior to today’s reduction there had been calls from the business community as well as some economists for the central bank to reduce the rate.
But some economists had predicted that the central bank will reduce the rate because all other economic indicators were in the right position to reduce the policy rate.
Economist Dr. Lord Mensah for example told citibusinessnews.com that “with all the indications on the ground we’ve seen inflation taken a dip and also stability in our foreign exchange rate, even though we are going to Christmas times, I think it calls for a review and for me, my expectation is that it comes down.
Once it comes down., it’s a sign in the right direction because at the end of the day the monetary policy rate is the base of all structures of interest rates , that’s the interest rate that central bank can do lending to the various banks and that in the end they extend the facility or the lending to individuals or business.”
Dr. Mensah however warned that, the effect of a reduction will take a while to realize its full effect since banks in the country will gauge the market before responding.
“You realize that the monetary policy rate for the past four quarters have been constant although have been stable and the review has not changed it in any way, so the banks are not going to react immediately if you adjust it down,” he said.
Ghana’s interest rates are one of the highest in the world with average base rates hovering around 27 percent.
Bankers have over the years asserted that the policy rate which is also used by banks to calculate their base rates must be reduced drastically in order for them to also reduce their rates.
By: Vivian Kai Lokko | CitiBusinessNews
Ghana’s total public debt has hit 112.4 billion cedis equivalent to 28.3 billion dollars, as at September 2016.
The figure represents about 14 percent increase from the 98.8 billion cedis recorded in January this year.
The latest Economic and Financial Data released by the Bank of Ghana also indicated that the country’s total debt represents 67.4 percent of Gross Domestic Product (GDP).
The external component of the debt is estimated at 65 billion cedis; representing 39 percent of GDP while the domestic component of the debt is estimated at 47.4 billion cedis; representing 28.4 percent of GDP.
As at July, the provisional figures released by the central bank indicated that the debt to GDP ratio had dropped from the 71.6 percent mark to 65.9 percent.
The external component of the country’s debt had been declining between January and June.
The figure dropped from 60.7 billion cedis in January to 60.4 billion cedis in June.
This translated into a debt to GDP ratio of 36.4 and 36.2 percent respectively.
However, the external component of Ghana’s debts increased by 2 billion cedis in July, inched up again in August and reached the 65 billion cedis at the end of September.
Meanwhile the local component of the debt has been increasing throughout the nine month period.
It moved from 40.4 billion cedis in January (24.2 percent of GDP) to 47.4 billion cedis in September (28.4 percent of GDP).
In addition, total expenditure as a percentage of GDP increased significantly from 1.4 percent in January 2016 to 14 percent in July 2016.
Total revenue and grants to GDP for the period also increased by over 700 percent; from 1.3 percent to 11.1 percent.
Similarly, tax revenue accruing to the state for the seven month period went up from 1.1 to 9 percent between January and July this year.
External sector performance
The country’s performance on the external sector still raises concern as imports still continue to rise and affecting the balance of payments.
Merchandise exports (gold, cocoa, oil) increased from 2.54 billion dollars in the 2016 first quarter to 7.94 billion dollars by the end of the third quarter.
Also, merchandise imports (oil and non-oil imports) increased from 3.29 billion dollars in the 2016 first quarter to 9.75 billion dollars.
The current account component of Ghana’s balance of payments reached (-1344.6 million dollars) at the end of the third quarter of this year from (-593.4 million dollars) recorded in the first quarter.
Meanwhile the capital account component increased from 64.2 to 150.2 million dollars between the first and second quarters of 2016.
Debt to cross 70% mark?
Economist Dr. Eric Osei Assibey has cautioned that Ghana’s debt to GDP ratio could hit the 70 percent threshold if the base rate for calculating the figure, is adjusted to reflect current growth targets.
“The projection was about 4.9 percent based on the revised budget. If that is what was used to obtain the 65.9 percent and now the IMF has revised the country’s growth target to 3.3 percent thereby reducing the base. Calculating the debt levels with the relatively lower growth rate will result in a higher figure,” he warned.
Crossing the 70 percent mark is also likely to affect Ghana’s international credit rating.
By: Pius Amihere Eduku | CitiBusinessNews