The Market Place with Pious Kojo Backah (14-9-23)
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NewsTranscript
00:00 Also known on the marketplace, government announces reopening of domestic debt exchange
00:04 program for investors who did not sign up in February this year.
00:07 We'll bring you the latest on that.
00:13 Also in this bulletin, prices of diesel and liquefied petroleum gas expected to go up
00:17 marginally by 1 and 4 percent respectively from Saturday, September 16th.
00:22 We'll hear a forecast from the Institute for Energy Security.
00:28 Last, Guta issues two-week ultimatum for government to end alleged harassment of its members by
00:33 the Ghana Revenue Authority.
00:52 We have details of these and many others coming your way all in a moment.
00:55 Please stay.
01:21 Always a pleasure to have you on.
01:22 I am Pius Kujubaka.
01:23 On to our very first story, government has announced that it is reopening the debt exchange
01:27 program particularly for investors who didn't sign up in the February program this year.
01:33 The finance ministry in a statement noted that the opportunity will also cover holders
01:38 of the Esla PLC and Daci Trust.
01:41 The ministry added that government is aware of the number of holders of these bonds who
01:45 did not participate in the earlier offer on time and therefore were left out.
01:50 Let's get on to Zoom and speak to economists.
01:52 Dr. Patrick Yasumeng for more on this.
01:54 Dr. Patrick Yasumeng, pleasure you could join us on the Marketplace.
01:57 Now in your assessment, what do you think may be encouraging government to keep the
02:02 reopening of the domestic debt exchange program, you would say?
02:05 Good afternoon and good afternoon viewers.
02:08 Thanks for having me.
02:11 I think it's a signal that government has had difficulties with restructuring other
02:18 components of the debt.
02:21 You know, go ahead.
02:23 Yes.
02:24 So earlier on, when it closed in February, we were told that this was very successful.
02:32 So to have the government come back after the finance minister had back in the spring
02:38 meeting denied that there will be no second round, it just tells you that there are some
02:42 difficulties between the restructuring or the volume of restructuring in some other
02:48 places.
02:49 So even though the statement is trying to say the government is trying to help out those
02:54 who couldn't take up the offer the first time, you get a sense that government is really
03:00 struggling to restructure a substantial amount of the external debt.
03:05 That's why it's been forced to bring this back.
03:07 I see.
03:08 What kind of signal does such actions, as you've rightly spelled out, send to investors
03:14 basically?
03:17 I think overall, it's quite problematic when we seem to be doing some back and forth and
03:24 to be flip-flopping a little bit.
03:27 So at some point, it's clearly communicated that this is done, this is good, we are good
03:32 to go.
03:33 And then suddenly it comes back.
03:36 And then sometimes you get some rumors that this is coming back.
03:40 And then there's some denial that comes.
03:42 I think all of those are not helpful in terms of the policy communication.
03:48 I think it just tells us that the government definitely wants to reduce the debt as much
03:58 as it can.
04:00 And it won't shy away from imposing more of the burden on Ghanaians.
04:07 Now would you describe this latest opening as a good move that may yield the targeted
04:13 results, despite the fact that the finance minister had earlier indicated that we aren't
04:17 going to have another round?
04:22 I think I won't describe this as a very good move.
04:26 I think you see there are different things we can do to bring down the debt.
04:32 We've done domestic debt exchange.
04:35 We have to grow the economy.
04:37 And then we have to cut the size of the deficit.
04:40 So if we had cut the deficit substantially for this current year, and going forward,
04:49 maybe it wouldn't have been so necessary to come back to do domestic debt exchange.
04:54 Or if the economy was growing as much as it could have, this wouldn't have been necessary.
05:02 So I think that it's a reflection that other things have gone as well as they should have
05:07 gone.
05:08 And for me, I would have preferred that we probably focus a little bit more on expenditure
05:16 cuts.
05:17 Because don't forget that this DDEP, more DDEP actually hurts the financial system.
05:23 And it's going to delay--
05:32 It seems Dr. Patrick Yasume's line has frozen.
05:36 We will rectify that and have him back on stream to speak to the issues for us.
05:42 But basically, it has to do with the reopening of the domestic debt exchange program for
05:46 investors who didn't sign up earlier to that initial reopening of the debt exchange program
05:54 for investors.
05:56 We will visit that story subsequently.
05:58 But let's touch on this story.
05:59 And prices of diesel and liquefied petroleum gas are expected to go up by 1% and 4%, respectively,
06:05 from Saturday, 16th September.
06:08 That's a projection by the Institute for Energy Security, IES.
06:11 However, the price of petrol is likely to remain unchanged during the second pricing
06:16 window.
06:17 The impeding increases are coming on the back of an increase in international market prices
06:22 of diesel and LPG, coupled with a 0.7% depreciation of the CD to the dollar during the same period.
06:29 Joining us via Zoom now is the executive director of IES, Nana Mwisi VII, for more on this.
06:36 Nana, pleasure you could join us on the Marketplace.
06:38 So tell us the rationale behind the expected marginal increase in the prices of diesel
06:43 and LPG.
06:44 The IES has been monitoring the Standard and Poor's platform over the last two weeks, and
06:56 found that the price of gas oil on the international market went up by 3.3%, moving from about
07:04 $930 per metric ton to $943 per metric ton.
07:10 The price of LPG also moved up from $557 per metric ton to $570 per metric ton.
07:18 And so the price of these key products on the international market has gone up, as induced
07:24 by the rising crude oil price.
07:27 The last two weeks we had the average price of crude oil going for about $84, and at close
07:34 of the window it went around $92 per barrel.
07:40 And so these key changes are some of the things that's informing the decision.
07:47 We also realized that on the local forest markets, the city depreciated by close to
07:53 1%.
07:54 And so any time you're looking at the direction of fuel prices, you may be mindful and be
08:01 concerned about how your forest is doing, or your city is doing against the US dollar,
08:06 the greenback, as well as the international price of these key commodities.
08:11 And so international price of fuel has gone up, and the city has depreciated.
08:17 That's reflecting the impending price increases.
08:21 And in your projection, you did mention that the price of petrol, for instance, is going
08:24 to remain unchanged.
08:26 I want to know the dynamics.
08:27 Why so?
08:30 Of course, we were lucky that on the international market, the price of gasoline, we call it
08:36 petrol, went down by 2%.
08:39 However, and this 2% reduction should have brought some relief to consumers.
08:45 But because the city depreciated against the greenback, that's, you know, comfort may not
08:52 be experienced by consumers.
08:55 So the price of gasoline is expected to remain stable.
09:02 But then the oil marketing companies can choose to spread the rising across gasoline.
09:10 So we may also see price of gasoline go up, just to compensate the, you know, the cushioning
09:15 of rising of the gas oil price.
09:18 And how is the downstream petroleum industry faring, especially with this fluctuation in
09:22 prices of petroleum products?
09:25 Well, what's happening is that when prices are going up like this, then if the working
09:35 capital of the importers is the same and price of international markets are rising, it means
09:41 that they can bring less of their products against the previous time.
09:47 And it also means that they can give some small parcels to the OMCs to also supply on
09:55 the markets.
09:56 The next thing is that when the prices of products goes up and the importers also hinge
10:01 on their price to reflect international prices, their OMCs also struggle to buy larger quantities
10:08 because their working capital are to be short of to accommodate the increases.
10:15 And you sometimes find that as they struggle to get adequate supply to their station, we
10:21 will see pockets of shortages, as we have experienced over the last one year.
10:28 Mostly you find gold stations without fuel.
10:31 In spite of the gold oil program, gold is still struggling to make sure that enough
10:37 of fuel is made available at their outlets.
10:41 Let's stay a while longer with them.
10:42 Are they making profit or breaking even with this high of oil prices?
10:48 You know, anytime, we can't speak for them, but the normal thing is that when the importers
10:54 increase their price for the OMCs, there are two things to do.
10:58 Either they transfer that cost to us or they absorb it.
11:01 If they absorb, then of course they will make losses.
11:04 But if they transfer to us, then of course it's the consumer that suffers.
11:09 And the impact on consumers are quite, you know, that as well.
11:15 For a consumer, anytime price of fuel goes up, your disposable income after taking out
11:21 your transportation and fuel costs, it goes down.
11:26 Also, transportation costs also surges.
11:29 There will be some rising production costs and there will be inflation concerns as well
11:35 on the side of the consumer and not the OMC, if they choose to transfer their increased
11:40 cost to the consumer.
11:42 All right.
11:43 Talking about the consumer, in this very projection you're making, how should they brace themselves?
11:48 I know for a fact that indeed the increase you are making, what you are projecting, is
11:53 marginal.
11:54 Well, for consumers, when prices are going up, you plan your daily routine so that you
12:02 spend less of that.
12:04 And you also want to manage your fuel in such a way that it's efficient.
12:11 You can choose to reduce the amount of time you put your air conditioning on.
12:20 And you also plan your routine, like I mentioned earlier, that from work I buy my stuff and
12:25 come home and I reduce all the movements.
12:28 It's some way to pushing consumers.
12:31 They could also be looking out for some firms and OMCs that may be selling least priced
12:37 products.
12:38 If you're looking at the top ones, you may struggle.
12:41 You may want to consider the smaller OMCs that are selling below the top OMCs.
12:49 I won't mention MCA.
12:51 Great.
12:52 Thank you very much, Executive Director of IES Nanamwe Sidi VII, for your time here on
12:56 the Marketplace.
12:57 Let's shift focus and touch on the story.
13:00 Ghanaian traders have issued a two-week ultimatum to government to address allegations of harassment
13:05 and intimidation by the Customs Division of the Ghana Revenue Authority.
13:10 The Ghana Union of Traders Association is particularly concerned about the continued
13:14 harassment along the Accra-Kumasi and Takradi-Kumasi routes, which has persisted since 2022.
13:21 The group claims the situation has led to the closure of numerous businesses in the
13:25 Ashanti region.
13:26 Mohamed Nouroudin Hasmo.
13:36 The Ashanti Regional Financial Secretary of Ghana Union Traders Association, Maxwell Bamfo,
13:42 enumerated challenges faced by traders in transporting goods on the Accra-Kumasi road.
13:48 During a press conference in Kumasi, he noted the regional and national tax forces duplicate
13:55 their operations, compounding the difficulties faced by traders.
13:59 "We are coming into force of the imperial system.
14:02 We all heard the Vice President, Dr. Mahama Ndubawiya, telling the whole world of the
14:07 removal of the customs barriers across the country.
14:09 However, in the case of the Ashanti region, the reverse has been the case.
14:15 Since last year till now, there has been constant harassment and intimidation on the Accra-Kumasi
14:21 and Takradi-Kumasi routes.
14:23 On the Accra-Kumasi route, one has to contend with the Bonsu and Kubasi barriers.
14:29 Beyond these two, there are now what they call the regional and national tax force,
14:34 all operating in a duplicative manner.
14:37 The same applies to the Takradi-Kumasi route beyond the Ariangbanta barrier.
14:43 Goods with duties duly paid and cleared at the port are many a time arrested by the tax
14:49 forces of customs, leading to extortions, delays, re-examination, which result to heavy
14:56 penalties on owners of the goods."
14:58 Mr. Bamfo explained that confiscated containers are frequently taken to the Abuabu yard of
15:04 customs where owners are compelled to offload and reload at their own expense.
15:11 This incurs significant financial losses for traders.
15:15 "In many cases, said containers are taken to the Abuabu yard of the customs where owners
15:22 are made to offload and reload at their own expenses.
15:26 This has led to losses of several cities to their owners in demoralization, transportation,
15:32 offloading, reloading costs and penalties of hundreds per cent.
15:38 This has led to collapse of several businesses and relocation of others out of the region.
15:43 What is worrisome is the fact that we pay the same duties as our counterparts in other
15:47 parts of Ghana."
15:48 Ashanti Regional Chairman of the Association, Antonio Pong, said if the government does
15:54 not intervene within two weeks, a mass protest will be staged in the region.
15:59 "We are saying that me in my position as a third national president of Guta, I communicate
16:08 with all my counterparts in the regions.
16:10 Nothing of this sort is going on in other regions.
16:13 We are only Ashanti region.
16:14 So we think it's a deliberate policy or agenda by some people to collapse businesses in Ashanti
16:19 region.
16:20 That's why we are calling them to, we are giving them two weeks of meeting to ensure
16:23 that this harassment stops.
16:24 Else we are going to call for the closure of all shops in Ashanti region for two weeks.
16:25 After that, if they hear from the government, we are going to organize a massive demonstration
16:26 on the streets and make sure the government hears from us."
16:37 The Association has reported the issue to all relevant authorities but received no response.
16:44 Hence, the planned action to protect their businesses.
16:48 "We've engaged everybody who matters in this issue.
16:51 Our regional minister, the assistant commissioner for the regions, the BNI director for the
16:56 region, we've contacted the regional security coordinator, everybody who matters.
17:01 We've gone all the way to Accra to meet the commissioner of customs himself.
17:06 He's not available.
17:07 So the people think enough is enough.
17:08 So now they are fed up.
17:09 That's the reason why you see what we are seeing."
17:18 Now the Association of Ghana Industries is making a strong case for more alternative
17:22 funding to support small and medium scale enterprises.
17:25 This they say will ensure sustainability and aid in the creation of jobs across all sectors
17:30 of the economy.
17:31 According to its chief executive officer Seth Chumakwabwa, government should provide
17:36 more support to existing equity fund companies.
17:38 He was speaking at a venture capital SME roundtable forum.
17:43 "The startup community has been growing in Ghana in recent years.
17:48 This has come along with an increase in the amount of money flowing from VCs into startups.
17:54 But there are some challenges faced by these SMEs.
17:57 Limited access to finance and quality providers of technical assistance has been one of these
18:02 challenges facing SMEs in the country.
18:05 The Association of Ghana Industries say more skills and management capabilities is key
18:10 to their expansion."
18:11 "The main traditional funding for businesses is the banking sector or financial institutions
18:18 that are providing short term funding.
18:20 In Ghana you hardly get access to medium to long term funding.
18:23 So people on their own try to plough back whatever profit and grow organically.
18:28 And that growth is very slow and that's why we don't have big businesses doing big ticket
18:32 business.
18:33 So we need alternative funding that is more reliable, that could give capital in a bigger
18:40 way and that is what has been lacking in the system.
18:43 I know that venture capital has been with us for some time and they are doing well now
18:49 but we've also known that over the years the level of capitalisation was not that strong
18:54 because if all this were financed only after about 70 businesses for over 15 years of operation
19:03 then that's not sufficient if you look at the number of businesses that we have in Ghana.
19:07 Of course there are other smaller equity funds that are also available but generally speaking
19:12 I think that venture capital is a major alternative funding source but we've not had them in
19:18 adequate numbers in the volumes that really can resuscitate our business sector.
19:24 Chief Executive Officer for Venture Capital Fund Yao Owusu-Brimpont said its outfit will
19:30 embark on various projects to strengthen women SMEs and start-ups by providing financial
19:35 and technical assistance.
19:37 Generally yes but then the women in particular have their problem is much worse than the
19:45 others and so we have to make conscious effort to make sure that businesses owned by women
19:51 or businesses that impact on women are also funded and so we've been working on that and
19:58 just yesterday our investment committee approved a 35 million funding into a fund that is going
20:05 to be managed by a woman or even if you had a woman let me say so the fund itself is being
20:11 managed by a woman and then most of the monies will go into companies that are owned by women
20:18 or that are majority owned by women.
20:21 The SME Roundtable on Venture Capital as an alternative financing source for SME growth
20:26 in Ghana aims to explore the tremendous potential of VC funding in accelerating growth and development
20:32 of small and medium-sized enterprises in the country.
20:38 James Sechen found that report.
20:40 Now some stakeholders within Ghana's pharmaceutical industry have expressed worry that the operations
20:45 would be grind to a halt if immediate steps are not taken to address port charges.
20:49 They also expressed concern about access to loans from the banks to finance their goods
20:54 at the ports.
20:56 According to Chief Executive Officer of Lok Pharma Company Limited Emmanuel T. Kenny the
21:00 importation of some pharmaceutical equipment can be made in Ghana hence the provision should
21:05 be readily available to push for more local content within the industry.
21:10 He spoke to Joy Business.
21:14 On average about 6% of its GDP on healthcare infrastructure.
21:18 The country's healthcare market is one of the most attractive markets in sub-Saharan
21:23 Africa for foreign products and investment.
21:26 Port charges for these medical infrastructure according to these stakeholders has been taking
21:30 a toll on their operations.
21:32 How do we capture the value we are creating?
21:35 Where in comes the value we are bringing in the equipment?
21:39 The capturing of the value is how to clear the equipment and this is where we tie it
21:43 into what you are saying, the high cost of inflation.
21:46 I can give an example like last year it was really hit hard because all our things are
21:53 in US dollars.
21:54 So if we are importing, we were importing last year in June around 6 point something
21:59 and then you've given things on credit to all the hospitals.
22:03 So by the time they pay you and you are supposed to repatriate dollars at 11.5, 12, 7 we've
22:08 actually lost.
22:10 So for last year I think we had to renegotiate most of our contracts with our pre-existing
22:14 clients which we haven't done for over a decade of our existence.
22:17 Ghana has a very limited local production of pharmaceuticals and even less manufacturing
22:21 of equipment and devices.
22:24 The country relies on imports for approximately 85% of its total healthcare consumption.
22:30 Now there are calls for more local content within the space.
22:34 We have principals who we've brought to the country are interested.
22:38 So if we could produce these things locally and some of the ingredients we produce are
22:42 just salt water with chemicals which I'm a chemist myself so it's not so difficult to
22:46 produce.
22:47 So yes if we could do these things locally then this importation and always depending
22:52 on the dollar becomes a thing of the past.
22:55 And then secondly for the particular industry that I operate in if we could have the national
23:01 insurance and we know the challenges that they face, yes if we could also have that
23:07 sorted out.
23:08 But the number one underlining factor is stability of the currency.
23:11 Fluke Pharma Hospital, none of them say they will deliver a consistent personal service
23:16 that will exceed client expectations.
23:20 More on SFE, small and medium scale businesses in the O2 region have been urged to take advantage
23:25 of opportunities presented by the African Continental Free Trade Area Agreement after
23:30 Alhaji Yusuf Yacoubu who is in charge of monitoring and evaluation from the African National Coordination
23:36 Office organized a day's sensitization workshop for businesses as well as owners in the O2
23:42 region.
23:43 Peter Asenu was there for Joy Business.
23:46 It was a gathering of small and medium scale business individuals in the O2 region at a
23:51 day's sensitization program on the need to rebrand and meet acceptable standards in the
23:57 export business with African Continental Free Trade Area.
24:03 Alhaji Yusuf Yacoubu is a monitoring and evaluation officer from the National Coordination Office.
24:09 He provides some explanations.
24:13 It is important that we work to ensure that those who are already exporting to European
24:20 market or any other market without Africa, we redirect them.
24:25 Because we have in fact the single largest market in the world when we talk of African
24:33 Continental Free Trade Area.
24:35 In fact it is 39 times size of Ghanaian market because it is estimated that the Ghanaian
24:42 market is around 32 million people.
24:47 So if you are talking of 1.2 billion, it means our Ghana market can be fixed into African
24:56 market 39 times.
24:58 As we speak, we are preparing to consolidate the East African market by trying to embark
25:04 on another market entry expedition to Tanzania.
25:11 The same companies and different companies are going there so that we consolidate the
25:19 markets of East Africa or the gains that we made in East Africa through Kenya.
25:23 DOT Regional Minister Joshua Makubu says with proper packaging he expects participants to
25:29 take advantage of the opportunities available to expand their business to a global reach.
25:34 When the products from the OT region is being traded in the African market, it will mean
25:42 that we have a larger market, there will be increase in demand.
25:46 When demand is increased, as we all know, basically the prices also go up.
25:51 When that happens, then the cost of production as compared to the gains will be less.
25:57 And when that happens, it becomes attractive.
25:59 In the area of the production of honey, the OT region, especially in the Kwanzaa sub-minority,
26:06 were noted for the production of honey.
26:09 I believe that if that honey was properly packaged and taken to the African market,
26:16 it would have added more value to it and the cost of production would have become less
26:20 as compared to what it gains.
26:21 It would become a lucrative area for the teaming youth to want to engage themselves in.
26:26 But when we are restricted to just the Ghanaian market, you realize that what can be put onto
26:31 the market there, what will be sold there, will definitely be what?
26:35 Limited.
26:36 And for that matter, the prices will not be as competitive as compared to the cost of
26:42 production and to be a disincentive to the youth, especially who want to be able to make
26:48 gains at the least effort.
26:51 So I feel that the coming of AFTA is in the right direction.
26:55 It is my prayer that by the end of the sensitization, what they call a program, participants will
27:00 learn to be able to package their products well and then not only putting them in the
27:06 Ghanaian market, but the larger African continental market.
27:11 That will make them competitive.
27:13 Some participants have been sharing their views on the program.
27:17 In fact, the program made me understand what is business.
27:22 I cook food to sell.
27:25 With this program, I may get a motorcycle.
27:29 Who would deliver my food?
27:31 And I will try to go and get some app so that I can locate where my business is.
27:40 With those are the beekeepers, the carpenters and other things, I think we are going to
27:44 form a big association.
27:45 So that is not going to be only the dressmaking.
27:47 No.
27:48 We have another group that is the carpenters.
27:53 They have something to be doing.
27:54 They have the beekeepers.
27:55 So with me and them, we collaborate and do more of the things so that we see it AFTA.
28:02 And at least we can also come up front in the region and find a means so that we can
28:05 export our things so that the OT region can also go far.
28:11 That's it for dry business.
28:15 And that's all for Marketplace.
28:16 I am Pius Kujubaka.
28:17 Get more stories when you log on to myjoyonline.com/business to enjoy the rest of our programs.
28:22 Bye.
28:22 Bye.
28:29 Bye.
28:36 Bye.
28:43 Bye.
28:51 Bye.
28:56 Bye.
29:02 Bye.