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Odei Amoako-Atta …the shoe maker with class

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When things are tough you find a way to create something and lemonade he did make out of lemons. Odei Amoako Atta is one of the most determined young men of his generation. Being on the back bench isn’t one of the things this shoe maker has in mind. Determined to make a living for himself, he resigned from his previous employment and ventured into making his own shoes which now has the signature ‘AJ’. Take time out and join the B&FT Inspiring Start-ups as he shares his story.

Background

He graduated from the KNUST with a Bachelor of Arts in Rural Arts and Industrial Development, after his dream of becoming an architect didn’t materialise. He had his secondary education at Kumasi High School where he studied visual arts. During his days at KNUST, Odei spent some time interning at the Burgar Shoes in Kumasi. He went on to do his national service at Dihoc Footwear Division Ltd, also in Kumasi, where he was retained on contract basis upon completion.

The experience he gathered from his internship and national service moved him to set up his own shoe business, rather than be employed by another shoe manufacturer which, he felt, would limit his talent.

The footwear dream

When his mind was made up to start his own business, he took the bull by the horns and set on the long and lonely journey of entrepreneurship.

With the little money he saved form his national service proceeds, he found a space near the Kumasi Sports Stadium and started his creative works there.

He first made three shoes which he sold at a GH₵100 each to his friends. He ploughed back the proceeds and made additional shoes. That has been his modus operandi for financing his business since then.

A lady friend was happy with his works and gave him an idea which has since become one of his creative innovations.

“I remember a lady friend of mine asked if I could do something creative to the traditional slippers which we call ‘Ahenema’. I thought it was a good idea and I decided to design them  with our local kente and leather. After the final work, everyone that saw the new Ahenema waw amazed. It has since become one of my flagship products.”

How the products are marketed

In a world highly driven by social media and lots of businesses taking full advantage of it, Odei has accounts on Facebook and Instagram where his products are advertised. The result has been good, as many customers have contacted him through this media.

Again, he engages a lot in personal selling where he has one-on-one contact with customers. This, he says, gives him the advantage of getting spontaneous feedback about his products and that has helped him to improve.

How his products stand out

Atta Junior Footwear stands out for its quality. His shoes have such a fine finishing that some clients, upon seeing them for the first time, think they are foreign. This, Odei says, can be attributed to his creativity and innovation, which have been his talent since childhood and have grown to become a hallmark of his business.

Vision

As every business hopes to grow sturdily, so does Odei see his business in the next five years. He wants Artta Junior Footwear to be mentioned among the leading shoe brands in the country; and also, be primary driving force of sustainable development within the community through the creation of employment.

Challenges

Of course, no business operates without challenges, especially startups. The first challenge he had to grapple with was discouragement from some friends. Some of his friends felt making shoes after acquiring a university degree was a sign of failure and a dent on his dignity. But, he got the support he needed from his family and other sincere friends who spurred him on with their encouraging comments.

Another of the bitter challenges Odei has faced in his business is dealing with the mindset of Ghanaians about locally produced goods.

“I remember one day, at an exhibition, I showed a client a shoe which he was so pleased with. But the size was a little smaller and couldn’t fit him. So, I told him I can do one that fits him. Then, he asked whether the shoes are made here. When I said yes, he told me he is no longer interested. Meanwhile, when he didn’t know it was locally produced, he wanted to buy it. So, one of the challenges we are facing in this industry is the attitude of some toward locally produced products.”

Again, a challenge is the lack of leather manufacturing company in the country. This has created the situation where all sort of fake leather are imported into the country, accounting partly for the reason people shun locally produced shoes.

And the age-old problem of access to finance can’t be left out of the challenges. Odei wishes to expand his business and produce more to enter other markets aside Kumasi where he operates. But his limited finances is not helping him to do so.

How education has helped

Odei believes education has helped hone his creativity and sharpen his technical expertise. Education, he says, has also helped him understand how to deal with customers in a nice and polite manner.

How government can support

He believes that government should place high taxes on imported shoes as a way of protecting local manufacturers.

He also wants government to set aside special funds to promote the shoe industry.

Advice to the youth

The Kumasi-bred gentleman believes passion is the only key to success and that every youth should make it a point to nurture their business ideas through their sense of belief and passion for their course.

Contact Odei on: 0246040811

 

CCI France launches Ghana Days to attract investments

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Mrs Delphine Adenot-Owusu (left), MD CCI France Ghana together with CCI France Lebanon at the roundtable discussion

The Chamber of Commerce and Industry France Ghana has successfully kicked off a new initiative dubbed Ghana Days to attract French and Francophone companies extend their business activities to the country.

Ghana Days is an initiative which seeks to promote the Ghanaian market, its viability, lucrative and potential nature to foreign corporate giants, multinationals and investors. In collaboration with CCI France and CCI France International which is composed of 120 Chambers in 90 countries, the Managing Director of CCI France Ghana (CCIFG) Mrs Delphine Adenot-Owusu, awarded by WomanRising as one of the 60 corporate woman leaders in Ghana, embarks on a series of road shows where meetings, round table discussions and symposiums are held so as to draw investor’s interest.

With a grade B ranking above Nigeria (D) and Cote d’Ivoire (C) as published by Coface, Ghana’s business friendly environment which stands over the sub-Sahara average needs further promotion to French and Francophone markets. The rebound of the Ghanaian economy motivated and gave birth to the need for CCI France Ghana to use its worldwide network to educate moguls on the country’s welcoming market. Ghana Days is thus a product stemming from ways to fulfil this quest.

The maiden edition of Ghana Days was executed in June 2017 where Mrs Adenot-Owusu visited France. There her road trip took her to Paris where she attended a series of meetings as well as business speed-dating organised together with CCI France and CCI France International. From Paris, her next destination was the French Region Alsace. There, roundtables where held which led to further follow up meetings with interested business giants who sought to have more information.

The success of the maiden edition sparked conversation and further planning to execute more of these events but beyond France. The second leg of Ghana Days was thus planned for October. Bigger than the maiden edition, and also making more of an impact, Mrs Adenot-Owusu was invited to meet investors in Paris, Bordeaux and Rouen in France, followed by a symposium held in Lebanon. With each group, she spoke on the reasons why to invest in Ghana, the mutual benefit for the economy and for the investor or business, and engaged with participants to clarify misgivings, as well as shed more light on business implantation in Ghana.

These events have sparked collective trade missions to Ghana to meet with local businesses according to investor’s interest. With more Ghana Days already in play to take off in 2018, CCI France Ghana has positioned itself to be a promotor of the Ghanaian market.

Early February, CCIFG will welcome the Cap Afrique seminar. A delegation of all the African experts from regional CCIs in France will come to Ghana to better understand the market and explore business opportunities. They will be visiting headline projects, meeting with key Ghanaian stakeholders as well as French companies across major sectors in Ghana.

Through its activities locally and abroad CCIFG continues to contribute significantly to the global rising of activities in the France in Ghana network as well as to the benefits of its internal network made up of more than 110 members from diverse sectors in Corporate Ghana.

For the first time since 2011, Ghana has presented at the end of 2016 a positive balance of payments with a EUR 232.2 M (USD 247.4 M) surplus. This progression is mostly a due to the improvement of the current account balance and more particularly the trade balance, whose deficit went from EUR 2.9 Bn (2015) to EUR 1.6 Bn at the end of the year. In addition to this, FDI inflows have reached EUR 3.3 Bn in 2016 against EUR 2.9 Bn in 2015, thus an increase of 13.7% according to the UNCTAD, a progression that is being pursued in 2017.

Patrick Prado, President of CCI France Ghana

Mr Patrick Prado, President of CCI France Ghana, Managing Director of Allianz Insurance Company Ghana Limited and nominated for the Ghana Expatriate Business award said:“Ghana is not only a business-friendly environment, but also a country which is open to global businesses”. For him, knowledge of its attractiveness can be better known abroad and mostly in France to the benefit of the local economy.

He added that foreign direct investment is critical for developing and emerging market countries such as Ghana. The capital injected and companies that extend their business activity to Ghana will cause a positive effect through the stimulation of the country’s economic development. Employment generation arises from the new companies established by investors as well as new opportunities which in turn leads to an increase in income and more buying power to the people, resulting in an economic boost.

At CCI France Ghana, we decided to use our network to its advantage to better execute its objective as a partner in the France and Ghana network. By collaborating with French Chambers of Commerce in all the French regions and abroad, we are going out there to sell the Ghanaian market so as to attract more businesses to the country. By this initiative we have named Ghana Days a means by which this objective is being executed.  Business opportunities will be created to the benefit of the economy and also presented to our internal network by giving the platform to the members of the chamber to derive the most from the business network we have created.

Africa must move beyond aid – President

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Africa should move beyond aid handouts that have failed to bring growth and prosperity and move to an era of mutual respect with Western countries, the President said on Tuesday.

President Nana Akufo-Addo, elected less than a year ago, said aid to his nation from donor countries was unsustainable and harmful to both sides.

“We do not want to remain the beggars of the world, we do not want to be dependent on charity,” he said in a speech in London, setting out a vision for Africa’s future.

“We can and we should be able to build a Ghana with use of her own resources and their proper management as a way to engineer social and economic growth in our country,” he said.

Resource-rich Ghana is an exporter of gold and oil and the world’s second largest cocoa producer. Akufo-Addo has vowed to clean up corruption in the West African nation’s cocoa sector and restore output to 1 million tonnes by 2020.

Akufo-Addo, who took office in January, called for closer trade ties with neighbouring Ivory Coast and across Africa, home to 1.2 billion people and a burgeoning middle class.

Ghana was the first country in sub-Saharan Africa to win independence from colonial rule 60 years ago, a milestone that paved the way for independence for nations across the continent.

“We are painfully aware we are nowhere near where we should be,” he said in the speech to the Royal African Society. “After 60 years it is obvious that the aid bus will not take Africa where it has to be.”

British-Ghanaian musician “Fuse ODG” agreed that Africa must create its own narrative and hoped his music would offer the world a new perspective of a continent free from dependency.

“We have to stop the aid, it messes up our economy, it messes up our markets,” added Herman Chinery-Hesse, a Ghanaian software entrepreneur often dubbed the Bill Gates of Ghana.

Mindsets of dependency and donations must be discarded for equality in global relationships, Akufo-Addo said.

“We do not want to be pitied,” he said. “We do not want to be pawns or victims.

We cannot trade without producing – Alan K. tells industry

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Trade and Industry Minister, Alan Kyerematen

The only way Ghana can benefit fully from trade agreements with other countries across the world is when it increases it production of goods for export, Trade and Industry Minister, Alan Kyerematen, has said, asking industrialists to up their game.

The country’s low level of production, the Trade Minister said, remains a major challenge confronting exports.

“We are talking about the Continental Free Trade Area, but we already have market access opportunity to the United States of America and the European market. We can export duty free, quota free, over 6400 products to the USA,” he said at the 28th anniversary celebration of the African Industrialisation Day, in Accra.

“Intra-African trade is the lowest amongst all the regions of the world, slightly over 12 percent, but we cannot trade without having the goods to trade in and take advantage of that market, and I think this is really the challenge that confronts us.”

The event, held under the theme: “African Industrial Development: A Pre-Condition for Effective and Sustainable Continental Free Trade Area (CFTA), was put together by the Association of Ghana Industries (AGI) and the United Nations Industrial Development Organisation, (UNIDO), in collaboration with the Ministry of Trade and Industry.

It sought to examine the level of industrialisation on the African continent, to highlight the challenges in the area, and to engage stakeholders on ways to deal with those challenges.

Mr. Kyerematen also encouraged African countries to take steps towards enhancing intra-African trade, particularly, by adding value to the continent’s natural resources for export.

He said: “The development experience of all the matured economies in the world point to one thing, that they developed on the back of their own regional economies.

As Africans and as Ghanaians, I hope we will begin to appreciate that our natural resources, in and by themselves, cannot bestow prosperity on us, unless we add value to them through industrialisation, that we will begin to see prosperity.”

The African Economic Outlook 2017, a flagship report of the African Development Bank, indicates that trade among African countries has the greatest potential for building sustainable economic development and integration.

The report, however, cites low manufacturing and processing capacity as a major limiting factor for trade among African countries. Intra-African trade in manufacturing declined from 18% in 2005 to about 15% between 2010 and 2015.

According to the report, most of Africa’s primary exports undergo little processing before they are re-exported, citing cocoa beans from Côte d’Ivoire and Ghana and crude oil and petroleum products from Nigeria as examples.

“Petroleum exports from Africa to the rest of the world stood at US $85 billion, yet Africa’s fuel imports from outside the continent ranged between US $63 billion and US$84 billion from 2010 to 2015,” it said.

Speaking at the event, Prince Kofi Kludjeson, past President of the AGI, appealed with government to strengthen structures in support of industry to improve statistics in the sector.

“Ghana can take advantage of the CFTA to create a pool of industries that would look more at exports in order to generate enough foreign exchange to shore up our trade balance,” he said.

President holds talks with May

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President Nana Addo Dankwa Akufo-Addo Monday held talks with British Prime Minister Theresa May at 10 Downing Street, to strengthen bilateral ties in the mutual interest of their countries.

The President, who is on a three-day visit to the United Kingdom, used the meeting to push Ghana’s new posture of moving bilateral relations from dependence to mutual cooperation beyond aid.

An official statement issued, both leaders also reflected on next year’s Commonwealth Summit, as preparations for the Forum intensified.

Prime Minister May, the statement said, congratulated Ghana on her 60th Independence, saying that she and the people of the United Kingdom were “looking forward to building a sound relationship, and also developing historic ties with Ghana for the next 60 years.”

She said increasing the volumes of trade between the two countries was the key to boosting the growth, progress and prosperity of the countries and their respective populations.

The Prime Minister said next year’s Commonwealth Summit, which would be held in London, would present member states with the opportunity “to grow together”, and she was pleased that President Akufo-Addo would be participating in the Summit.

She expressed the hope that during her tenure of office, the United Kingdom would continue to build “on the strong relationship we have with Ghana.”

President Akufo-Addo thanked the British Prime Minister for the warm welcome afforded him and his delegation.

He noted that despite 60 years of parting company, Ghana and the UK “didn’t part company for good”, and that the relations between them had held, regardless of the governments of the day through the years.

The President assured Prime Minister May that, under his leadership, the already strong relationship would deepen.

He expressed the hope that their respective tenures would be marked by the strengthening of the bilateral relations for the mutual benefit of their citizenry.

Ghana, the President said, was looking forward eagerly to next year’s Commonwealth Summit, which would provide the opportunity to reinvigorate the Commonwealth around its theme of, “A Common Future”, and make it a dynamic instrument for the growth of the global community in the 21st Century.

He commended the British PM on the decision of the British Government to host next year’s Summit.

As part of activities marking his visit to the UK, the President delivered a speech on “Democracy and Development” at the Cambridge Union Society of the University of Cambridge .

School feeding enrolment to increase to 2.1m

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As part of measures to sustain the Ghana School Feeding Programme (GSFP), the Ministry of Gender, Children and Social Protection has indicated that it plans to embark on a 30percent expansion of the programme, which will increase the enrolment on the programme to 2.1m from an initial 1.7m.

Speaking on the floor of Parliament to answer questions on measures being put in place to sustain the programme, the sector Minister, Otiko Djaba, explained that the ministry is working on the development of an appropriate legal framework to establish an agency or authority to secure the gains.

This, she said, will ensure the availability of reliable and consistent funds, with the view to position the school feeding programme as a vehicle for reducing poverty and hunger and increasing national development.

She also stated that the ministry has facilitated the payment, so far, of GH₵210m for the programme.

Additionally, she said the Ministry of Finance has provided GH₵100m for the programme, which will cover additional 44 days of the 2nd term.

One key challenge facing the programme is funding and the minister noted that the ministry has been working hard through the Ministry of Finance for timely, regular flow of funds.

“The Ministry is collaborating with some private organisations and civil society groups, through a Public-Private Partnership, to continue to support this programme.

Feeding our children is very important and as part of corporate social responsibility, we welcome contributions and support from corporate entities like Unilever, Ghana Lotteries, MASLOC, GETFUND and local authorities”.

Monitoring and Evaluation, she said, is also a critical component to the sustainability of the programme, and that the ministry is determined to improve routine monitoring for timely and corrective action to assess processes and application of resources.

The ministry is also working with development partners to enhance the capacity of staff and caterers to enable them perform at their maximum capacity under healthier, nutritious and environmentally acceptable standards.

From the inception of GSFP, the use of local foodstuff or home-grown produce from the vicinity of the consuming children was preferred, the minister added.

“We are pleased to say that under the leadership of the President, the government’s initiative of Planting for Food and Jobs, One District-One Factory and One District One Warehouse would provide the intermediate facilities needed to link the Ghana School Feeding Programme to Agriculture”.

NPA engages gas consumers in Brong Ahafo Region

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As part of its effort to reduce gas related accidents in the country, The National Petroleum Authority (NPA) has engaged consumers of liquefied petroleum gas (LPG) in the Brong Ahafo Region.

The exercise is aimed at sensitizing chopbar operators, restaurants, hotels and door-to-door business operators on safe dispensing and use of the gas.

The team lead by Communication Officer of the Authority, Benjamin Sekyere Owusu, interacted with some operators of LPG sale outlets and consumers in Sunyani, Berekum, Techiman, Nsoatre and Ahafo Ano respectively.

Briefing the media, Mr. Owusu explained: “We take them through what to do when you smell gas, the process of lighting the LPG stove, how to store it, the amount of ventilation that is required to ensure that in the event of any leakage, we can contain the situation much more easily”.

He added that: “we engage them not to place cylinder (empty or filled) near any naked flame or inflammable liquids, to always keep the cylinder in a vertical position with the valve on top and installed at ground level on the flat surface and ensure regulators are always kept in off position when the cylinder is not in use.”

While on the field, he said the team identified worrying trend where most of the consumers they visited had placed stones on the valve to prevent any leakage.

He advised consumers to as a matter of urgency desist from it and consult experts to change their valves when they identify any leakage.

“The cost of replacing a spoilt valve does not come anywhere near the lives and properties that will be lost in case of an explosion” he stressed.

Liquefied petroleum gas, just as other petroleum products, has accounted for many of the fire outbreaks recorded in the country because users are either unskilled in its use, or do not adhere to proper instructions on its use.

To minimize such accidents, the NPA has embarked on a national campaign on the dispensing and use of the product to increase people’s conformity to minimum safety measures.

The Authority has so far been in regions such as the Ashanti, Central, Eastern, Volta, Northern, Upper East, and Upper West region’s respectively.

GIPC closes in on US$5bn FDI target

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The Ghana Investment Promotion Centre (GIPC) has said it is confident of meeting its 2017 target of registering foreign direct inflows to the tune of US$5 billion, a more than 108 percent increase from the US$2.4 billion recorded last year.

The GIPC’s third quarter report indicates that close to US$3.4billion FDIs was recorded in the period spanning January to September, leaving a gap of about US$1.6 billion for the investment promotion agency to meet its yearly target.

Commenting on the performance, its CEO, Yofi Grant, stated: “we at GIPC are indeed encouraged to work harder to exceed our targeted FDI of US$5 billion for the year. The GIPC continues to be a central pivot of government in facilitating foreign direct and domestic investments to support development of our economy.”

With government’s intention to push the economy towards industrialisation, GIPC has been tasked, as one of the key agencies, to sell the country as an investment destination.

Interacting with the media in Accra after the release of the third quarter results, Yofi Grant said, “there are clear indications of increasing FDIs on the back of improving macroeconomic environment, with the government committed to improving the business climate as well as the repositioning of the GIPC to play a more active and aggressive role in making Ghana the most attractive and competitive investment and business destination in Africa.”

An improved and attractive investment environment framework that will enhance sustainable partnerships and empowerment of indigenous businesses will continue to be a key focus of the GIPC, he said.

Projects breakdown

The GIPC has recorded a total of 139 new investments since the beginning of the year. Of the projects registered, the manufacturing sector recorded the highest number of investments, with 37 projects.

It is followed by the services sector with 34 projects. The agriculture sector recorded only one project, whilst no investment was recorded in the tourism sector. In terms of the estimated value of investments, the manufacturing sector, again, topped with US$ 2.65 billion.

The high value is attributable to a joint venture investment from Netherlands with an activity of manufacturing power for sale to ECG.

GC Club 100

Earlier, last week, Mr. Grant told the media that the upcoming Ghana Club 100 seeks to provide a platform for businesses to consolidate the gains they have made.

The GIPC, he said, intends to use this year’s edition of the GC 100 as a spring-board to promote partnerships between Ghanaian manufacturers and their foreign counterparts while showcasing the country’s industrialisation potential and its impact on employment creation and skills development.

“This year’s awards is in line with government’s vision to use manufacturing, through the one district, one factory initiative, as an economic development and job creation tool to enhance the competitiveness of the corporate market,” he said.

The 16th GC 100 awards will be held on November 30 at the Kempinski Hotel, Gold Coast City, Accra.

Stock exchange invites start-ups to list on GAX

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The Ghana Stock Exchange (GSE) has urged start-up businesses to take advantage of the Ghana Alternative Market (GAX) to raise capital to expand and take their businesses to higher heights.

With lending rates above 30 percent, it has become a major challenge for small businesses in the country to access capital from financial institutions to expand their businesses.

It is against this background that the GSE has lowered the bar for small businesses, including start-ups, to use the secondary stock exchange to address this situation.

“We have made provisions for start-ups; however, it is not all start-ups we cater to; we look at ones with a three-year business plan with very good projections as well as good fundamentals that will propel these businesses.

If we know that your business is viable, we then put it up for the general public to be a part of, because we know that start-ups can’t just happen to be profitable the day after they’re listed. So, we offer them the opportunity to issue bonds, invite investors and grow the company,” Head of Listing at the GSE, Joyce Boakye, said.

She was speaking at a seminar in Accra organised by the Canada-Ghana Chamber of Commerce under the theme: ‘The role of GSE in Ghana’s private sector development.’

Also at the programme, Board Chairman of the GSE, Albert Essien, said the boom in the local bourse this year is an indication that the country’s economy is stabilising.

“The market index gained in 2017; January to October was about 39 percent. It is a significant upturn from the -2 percent and -15 percent for 2015 and 2016.

It has turned good and is going up, but this improvement is largely dependent on the economy. That is how come it is a barometer, so that any investor looking at what the stock exchange is doing would know whether the economy is doing well or doing badly,” he said.

Even though the stock exchange has performed impressively this year, some analysts are calling for an increment in the minimum capital requirement of the market, saying it will strengthen the economy and protect investors.

Bernard Osei-Tutu, Chief Executive Officer of Dusk Capital, told the B&FT earlier this month that: “We, in the industry, acknowledge the fact that there must be sanity in the industry. We are of the thought that for you to be in the industry, you have to be well capitalised. But we think it must be done, and done well, so we don’t let people just get out of the market because the kind of service we provide doesn’t really require large capital”.

The Director General of the Securities and Exchange Commission, Daniel Ogbamey Tetteh, hinted in October that there were plans to increase the stated capital for operators on the local bourse to strengthen the sector and protect investors.

 

 

 

Inadequate revenue measures threaten economic stability

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Government intends to use its revenue and expenditure measures in the 2018 budget to continue to stabilise the economy, offer reliefs to make the private sector competitive and create more employment.

But without the needed revenues, these objectives will not be realised. Funding for most of government’s developmental projects is heavily reliant on donor support and borrowing.

These funding sources have their limits. Hence, Ghana’s main challenge in the coming years will be how to deal with the mismatch between revenue and government operations amidst growing infrastructure needs.

Measures to increase domestic revenue insufficient

Government announced some measures to increase domestic revenue through widening the tax net. These include revision of the suspense regimes, special audits, use of fiscal electronic devices, implementation of the excise tax stamps, the implementation of common reporting standards for exchange of information and strengthening the design and administration of property taxes.

Most of these measures have been in almost all government budgets in the past decade and there is little to distinguish these measures from what was contained in the previous budget. Hence, it is unclear why these measures should successfully increase revenue levels substantially unlike in the pass.

Though these measures are not enough, government is hopeful they will help increase revenue from the projected GH¢43 billion in 2017 to GH¢ 51billion in 2018, representing a growth rate of 18.4%.

Expenditure for 2018 is projected to be GH¢ 62 billion (21.1% of GDP) against the projected revenue of GH¢ 51 billion (25.7% of GDP). Analysis of expenditure allocations shows that 68% of the total revenue (86.5% of tax revenue) will go into funding of two items: expenditures on employees’ compensation and interest payments, leaving only 32% (13.5% of tax revenue) for all others including capital expenditure. This situation poses risks to medium to long term economic growth.

Government efforts at reducing the wage bill is yielding no or little results.

Compensation of employees for 2018 is estimated to be about GH¢ 19.6 billion, representing 38.4% of total revenue and 49% of tax revenue. In 2016, government spent GH¢14.2 billion (42% of total revenue 55% of tax revenue) on employee compensation. This year government projected to spend about GH¢ 16 billion (representing 37% of total revenue and 48% of tax revenue) on employees’ compensation. Provisional figures show that as at the end of the third quarter, GH¢12.5 billion (44% of total revenue and 56.5% of tax revenue) of the allocated amount has been spent.

Employees compensation for the social services sector (which includes education and health) got the highest increase from GH¢ 8.8 billion to nearly GH¢10 billion. This represents about 55% of compensation expenditure as against 50.8% for 2017. Compensation within the public safety category has also increased from GH¢2.7 billion in 2017 to GH¢3.7 billion in 2018, thereby increasing its share from 16.8% in 2017 to 19% in 2018.

However, allocation for the infrastructure category (Ministries of Water Resources and Sanitation, Works and Housing, Roads and Highways, Communications, Railways Development, Aviation, and Transport) has declined from GH¢113 million to GH¢91.5 million and decreasing its share from 0.71% to 0.47%. These allocations give an idea about government priority sectors.

Rate of borrowing continues to increase

Ghana’s debt as at June 2017 was GH¢138.6 billion, representing 68.6 percent GDP as against 73% at the end of December 2016. This means that the total public debt increased by about GH¢16 billion between January 2017 and June 2017. This is about double the amount within the same period last year. Between January 2016 and June 2016, the total public debt increased from GH¢ 100.2 billion to GH¢ 108.6 billion. This implies that the debt stock increased by an average of 2.1% per month in the first half of 2017 relative to 1.4% per month in the first half of 2016.  Government intend to borrow about GH¢10.9 billion in 2018 as against GH¢ 9 billion for 2017. This should obviously have consequences for private sector credit and government interest payment obligations.

Interest payments to consume 48% of tax revenue in 2018

By restructuring the public debt, government is extending the maturity periods while reducing interest rate on bonds and amounts borrowed. However, the interest payment has become a problem since it takes a large proportion of government revenue. Interest payment has increased significantly in the last five years due to increased borrowing.

In 2012, 2013 and 2014 it increased by 51.2%, 80.5% and 61% respectively. Between 2012 and 2016, interest payment increased by 342%, thereby increasing its share of expenditure from 15% to 21% over the same period.

It amounted to GH¢ 9.7 billion as at September 2017 compared to GH¢ 7.8 billion the same period in 2016. The rate of increase in interest payment should be looked at critically by government. The rate of debt accumulation should be reduced and borrowing should be at low rate.

It is a misnomer for a country with pressing infrastructure needs, especially in the education, health and transport sectors, to spend 68% of its total revenue or 86.5% of its tax revenue on wages and interest payment. Therefore, if Ghana is to maintain her economic stability in 2018 and beyond, government must prepare a more robust strategy to grow domestic revenue.

 

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