Day: February 5, 2023

Ghana hasn’t always had the Cedi as its legal tender – currency. As a colony of the British whose currency is the British Pounds, the country had to be given a currency in line.

In the 50s countries under the British Colony were using the British West African Pound which was the currency of the British colonies in the region.

According to the Bank of Ghana, during this period, the West African Currency Board (WACB) was in charge of issuing currencies including the West African Pound, Shillings, and Pence.

But in 1958, a year after Dr. Kwame Nkrumah gained independence for Ghana, the country began using the Ghanaian Pound.

This came both in paper form and in coins. The paper denominations had 10/–, £1 and £5. The £1 and £5 notes were produced until 1962 when they were phased out of the system.

However, the 10/– note was produced until 1963.

Bronze coins which were also used side by side the notes were issued for 1/2d and 1d, along with cupro-nickel 3d and 6d, 1/– and 2/–. The 3d coin was scalloped in shape.

8 years after, on the 19th of September 1965, the Ghana Pound was phased out throughout the country and replaced by the Cedi.

Dr. Nkrumah decided to move away from the British colonial monetary system and adopt the widely accepted decimal system.

Until the 17th of September, 1966 however, both currencies – Pound and Cedi were being used side by side until the eventual ceasure of the Pound as a legal tender in Ghana.

Derived from the Akan word “sedie” which means cowries, the Cedi notes were introduced on 19th July 1965. The Pesewa whose name was derived from the British Penny also was introduced and these currencies replaced the previous Ghana pounds, shillings and pence.

The “Pesewa” represented the smallest denomination (quantity) of the gold-dust currency regime.

Source: Ghana Web

Last year, Vice President, Dr. Mahamudu Bawumia announced a new government policy dubbed “Gold-for-Oil”.

The policy, as explained by government, is to allow government pay for imported oil products with gold in a direct barter with gold purchased by the central bank.

The move, announced by the Vice President in the midst of the depreciation of the cedi against the US dollar and the rising cost of fuel prices, was explained as an intervention to help stabilise prices of fuel products as well as reduce pressure on Ghana’s foreign exchange as the direct gold barter would be the mode of paying for imported oil instead of depleting the foreign exchange reserve.

The ‘Gold-for-Oil’ programme has since been implemented with the first oil consignment arriving last month.

Below is everything you need to know about the policy:

Introduction:

1. The Gold-for-Oil Programme is an initiative of the Government of Ghana to use the existing Bank of Ghana (BoG) Domestic Gold Purchase (DGP) Programme to support the import of petroleum products into Ghana.

2. The prime objective of the programme is to use additional foreign exchange resources from the BoG’s DGP programme to provide foreign currency for the importation of petroleum products for the country which currently stands at about USD350 million per month.

3. The government has begun the implementation of the Gold-for-Oil Programme where gold purchases under the BoG’s DGP Programme mainly through the Precious Minerals and Marketing Company (PMMC) and where required from aggregators and mining firms is used to purchase petroleum products.

4. This is intended to free up foreign exchange resources to meet petroleum imports of the country thereby reducing pressures on the Bank of Ghana’s foreign reserves and the banking sector emanating from the Bulk Import, Distribution and Export Companies (BIDECs) request for foreign exchange.

5. The programme also aims to procure petroleum products at very competitive prices through Government-to-Government (G2G) arrangements. The programme will ensure that the cost of importing the products from international oil traders will always be comparatively lower.

6. The consequent reduction in foreign exchange pressures, the reduction in premiums charged by international oil traders as well as efficiency gains from the value chain will translate to lower ex-pump prices in the country. The G4O Programme Process Flow and Requirements:

7. Under the programme, all the dore gold produced and exported by companies with licensed small-scale concessions including community mines through the PMMC shall be purchased by the BoG. The Ministry of Lands and Natural Resources has issued directives towards the realisation of the programme.

8. The purchased dore gold is used for the payment of oil supply to Ghana. Payment for oil supply is to be done in two channels: by way of barter trade or via broker channel.

The Barter Channel:

• For suppliers willing to take gold in direct exchange for petroleum products, BoG will provide equivalent volume of gold. Both the Bank and the International Oil Trading Companies (IOTCs) are required to open Gold Metal Accounts in a mutually agreed gold refinery for the purpose of gold transfer.

• BoG accumulates refined gold in its metal account at a refinery nominated by a supplier to fund petroleum product shipments.

• BoG transfers equivalent amount of gold based on petroleum products supply invoice from its metal account to a supplier’s metal account on receipt of Quality Certificate (QC) of the product supplied and final invoice from Bulk Oil Storage and Transport Company (BOST). The Broker Channel:

• BoG executes a Gold Supply Agreement under which it sells gold to a gold broker, which provides forex cover to pay for petroleum products.

• Gold Broker buys dore gold from BoG and deposits the proceeds in BoG gold holding account.

• BoG transfers funds from gold holding account to an Escrow Account to pay for petroleum product shipment on receipt of QC and final invoice from BOST.

9. BOST, a state company, operates as an off taker for petroleum products, and therefore executes an agreement with IOTCs for the import of petroleum products to Ghana, for onward sale to licensed BIDECs.

10. BIDECs buy directly from BOST with cash and or a letter of credit (guarantee) from a reputable financial institution.

11. BOST and the National Petroleum Authority (NPA) ensure that the cedi proceeds from the sale of imported petroleum products will be collected and deposited with a collection bank in favour of BoG. The collection bank is required to transfer collected funds into BoG’s G4O proceeds account within 48-hours which is then used to fund the next cycle of gold purchases.

Pricing of Products:

12. To ensure that the price of petroleum products imported under the G4O programme reflects at the pumps to benefit the consumer, the NPA will regulate the prices of these products in the interim to correct market failure until the policy matures.

13. NPA will work with BOST to negotiate prices with the international oil traders to ensure that the landed cost of products procured under the programme are always competitive. NPA will approve the IOTC that will be selected to supply products to BOST under the programme based on the competitiveness of the offers made by them. BOST will sign supply contracts only after approval has been granted by the NPA.

14. The price at which BOST will sell the products to BIDECs will be approved by the NPA. The price at which the BIDECs will sell the products to Oil Marketing Companies (OMCs) will also be approved by the NPA.

15. The applicable exchange rate for pricing the products supplied under G4O will be based on the average rate at which the gold was purchased from the licensed gold exporters by BoG.

16. The NPA will put measures in place to ensure that OMCs that lift products supplied under the G4O programme pass the price on to consumers accordingly. In this respect, BIDECs and OMCs who lift and supply G4O products will sell at the ex-refinery and ex-pump prices that will be determined by the NPA. If there must be a comingling of products supplied under G4O and other sources, the ex-refinery and ex-pump prices will be computed using a weighted average.

17. All BIDECs and OMCs who wish to purchase products under the G4O programme will be required to sign off an undertaking confirming their willingness to comply with the terms and conditions for partaking in the purchase and sale of G4O products.

18. To ensure that the impact of the G4O programme on ex-pump price will be significant and effectively monitored, the number of BIDECs and OMCs who will be permitted to lift G4O products will be controlled. Payment Structure:

19. BOST will be required to pay for products supplied to it under G4O into an Escrow Account at BoG within 60 days of receipt of products from the international oil traders.

20. BIDECs will be required to pay for products procured from BOST within 15 days of loading. Payment for the products will either be on a cash basis or with a 15-day letter of credit (LC) from reputable commercial banks.

21. BOST will be required to provide BoG with copies of the LCs from BIDECs for verification and to give BoG the assurance that receipt of payments will be made on agreed dates.

Laycan allocation for product imports:

22. The NPA will ensure that adequate laycan slots are allocated to BOST to import products under the programme.

23. NPA will advise BOST on the projected demand on a monthly basis.

Source: Ghana Web

Michael Boadi, Fund Raising Manager for the Ghana Integrity Initiative (GII) Ghana’s Chapter of Transparency International (TI), has observed that corruption is pervasive in Ghana because it has been embraced by the entire country as a means of their daily routine.

He has, therefore, called for a collective effort in resisting and fighting all forms of corruption to limit violent extremism in the country.

Mr Michael Boadi said this in an interview on the Kumasi-based OTEC 102.9 FM’s morning show Nyansapo on Friday, February 3, 2023.

“Despite a fairly robust legislative framework comprised of several accountability institutions mandated to tackle various forms of corruption, the phenomenon is still widely prevalent in Ghana. It is [therefore], ultimately, the people of Ghana who must play their part in bringing corruption to a stop”, he said.

“Even the Special Prosecutor has expressed his dissatisfaction about Ghana’s fight against corruption, is not only the top politicians but I can say that almost everyone in the country is at fault,” he added.

“The people engaging in corrupt practices, bringing the nation down are all Ghanaians, and none in the country is ready to join the fight against corruption”.

He noted that, the increasing cases of corruption recorded in the country remained a problem and had the tendency to further degrade the country’s ailing economy and called on all to help save the country by saving no to corruption.

Source: Ghana Web

The government has been advised to use a three-thronged approach of fiscal and structural adjustment and debt restructuring to ensure debt sustainability in the shortest time possible.

Specifically, the government has been urged to further cut down its expenditure, including reducing the number of Ministers by merging some ministries, to support debt sustainability for its US$3 billion International Monetary Fund (IMF) loan-support programme.

Professor Godfred Bokpin, Professor Peter Quarter and Dr John Kwakye – all eminent Ghanaian economists, said this in an exclusive interview with the Ghana News Agency on the ongoing DDE programme.

Additionally, efforts should be intensified to change the structure of the economy from being highly-import-driven by streamlining various sectorial agriculture, manufacturing and trade policies and implementing them effectively, they said.

They expressed confidence that the progress made on the DDE so far could lead to Ghana’s debt sustainability path to secure an Executive and Management Board of IMF by March 2023 for the US$3 billion loan-support programme.

However, the Economists stated that DDE programme alone, requiring bondholders to trade about 80 per cent of a total of GHS137 billion in bonds for new ones, could not secure debt sustainability.

They, therefore, asked the Government, to immediately reduce the number of ministers and merge some ministries to save money in addition to intensifying efforts to change the structure of the economy with prudent and sustainable initiatives to spur manufacturing and industrial growth.

Prof Bokpin of the University of Ghana Business School said efforts by the government such as the audit of Ghana’s COVID-19 expenditure and reaching some level of agreement with bondholders signalled a sign of progress on the DDE.

However, he said: “When your debt is judged to be unsustainable, measures for sustainability must be a triangle approach, which involves fiscal adjustment, structural adjustment and debt restructuring.”

He said: “If the president decides that he is going to have to reduce the size of the government by 50 per cent and also reduce the number of ministers, and merge some Ministries, Agencies, and Departments, we could have saved more than GHS10 bn.”

Prof Quartey, Director, Institute of Statistical, Social and Economic Research (ISSER) said the government, in addition to the proposed reduction in spending as put in 2023, should “go ahead and reduce the size of government.”

The ISSER Director said: “If we minimise waste, and corruption and ensure value for money in our expenditure, add value to our raw materials and support the agriculture value chain and manufacturing, we’ll be able to export more and get more foreign exchange and enhance our revenue mobilisation.”

“The Government should keep its focus, continue dialoguing and build consensus with the key stakeholders and ensure that we’re able to sign onto this IMF programme and get it running by the first quarter of this year.” He advised.

He added: “Hopefully when we sign onto the programme, we should make judicious use of the resources so, we’re able to grow the economy out of where we find ourselves. Once we do that, we can restore confidence and get our economy running.”

Dr Kwakye, Director of the Institute of Economic Affairs (IEA), noted that while the government urged bondholders to make some sacrifices, it was also prudent for it to do same.

“We believe the DDEP cost should be spread across the economy to the widest extent possible, in the spirit of burden-sharing,” he said and encouraged the Government to also make some sacrifices.

“All the borrowings that the government accumulated, the Finance Minister earned GHS160 million directly or indirectly, as part of burden sharing, why doesn’t he say, I’m also refunding 50 per cent?” He quizzed.

The DDE forms part of efforts by the government to assure the International Monetary Fund (IMF) of debt sustainability through creditors’ confidence by signing up for the programme, which has so far seen four postponements in the deadline as the government continues to engage stakeholders.

Individual bondholders and pension schemes have been exempted from the programme, though the Government has made new provisions for individual bondholders to be part of the DDE.

Source: Ghana Web

Takoradi – Mr Nathaniel Dwamena, President of the Young Africans for Opportunity (YAFO), has called on the Government to exempt vehicle insurance funds from its Domestic Debt Exchange Programme (DDEP).

He said despite the agreement with the Ghana Insurers Association, caution needs to be taken since the entities that watched on for the Government to excessively borrow into this current crisis are the same entities to supervise risk mitigations.

Mr Dwamena, in an interview with the Ghana News Agency (GNA), was of the view that the country could a not afford to risk vehicle insurance that would be needed during an eventuality.

He contended that exempting vehicle insurance would not significantly impact the government’s DDEP because the government needs to first demonstrate its commitment to ensuring financial stability rather than falling on individuals’ funds safeguarded for unforeseen circumstances.

He indicated ?that insurance penetration was low in Ghana due to a widespread notion of unwillingness to pay claims to subscribers.

? “According to our Driver MO 2022 report, the benefit of vehicle insurance is yet to be realized because most subscribers have reported that they subscribe to third-party to avoid police harassment and also to fulfil statutory obligations, making most Ghanaians reluctant to report for insurance claims,” he stated.

Mr Dwamena explained that the National Road Safety Authority (NRSA) reported that a total of 17,272 vehicles were involved in accidents of which about 1,900 lives perished in 2022 and therefore, there was the need for the readiness of funds to compensate victims during any eventuality.

He said ?the DDEP was an invitation involving GH¢137 billion exchanges for domestic notes and bonds and promises to deploy all regulatory and supervisory tools to mitigate risks to financial stability.

He noted that the current situation with debt to GDP hovering around 97%, was not a sudden event but an accumulation of reckless borrowing and spending.

Mr Dwamena cautioned that it was time to put a ceiling on government borrowings ?and provide a transparent and participatory process for the increment of such ceilings ?if the need arose.

Also, the government must approach the crisis holistically and demonstrate commitment by reducing the size of the government, employing fiscal discipline, and cutting down not only spending but also reducing government waste.

Source: Ghana News Agency

Accra – Government’s programme on Gold for Oil is expected to increase imports under G40 from the current 10 per cent to 50 per cent by March 2023 after taking delivery of the first consignment of diesel in January.

That will ease pressure on the dollar (the currency used for the importation of petroleum products) and avoid the occasional increases in petroleum prices resulting from the depreciation of the cedi against the dollar.

A statement from the National Petroleum Authority and copied to the Ghana News Agency in Accra on Sunday said the prime objective of the programme was to use additional foreign exchange resources from the Bank of Ghana’s Domestic Gold Purchase(DGP) programme to provide foreign currency for the importation of petroleum products for the country which currently stood at about US$350 million per month

The implementation of the government’s Gold for Oil (G4O) programme commenced with the arrival of the first consign¬ment of about 40,000 metric tonnes of diesel on January 15, 2023, valued at about US$40 million.

The statement said payment for oil supply would be done in two channels: by way of barter trade where gold is exchanged for oil or via broker channel, where the gold is converted into cash and paid to the supplier.

The first consignment of 40,000 metric tonnes of diesel constituted about 10 percent of the country’s combined monthly demand for petrol and diesel.

The statement said the programme would ensure that the cost of importing the products from international oil traders would be comparatively cheaper and the consequent reduction in foreign exchange pressures and premiums charged by international oil traders as well as efficiency gains from the value chain would lead to lower ex-pump prices in the country.

“ To ensure that the price of petroleum products imported under the G4O programme reflects at the pumps to benefit the consumer, the National Petroleum Authority (NPA) will regulate the prices of the products in the interim until the volumes increase significantly.”

The statement said the NPA would work with Bulk Oil Storage and Transportation Company Limited (BOST) to negotiate prices with the international oil traders to ensure that the landed cost of products procured under the programme were competitive.

“The price at which BOST will sell the products to Bulk Import, Distribution, and Export Companies (BIDECs) will be approved by the NPA. The price at which the BIDECs will sell the products to Oil Marketing Companies (OMCs) will also be approved by the NPA”.

It said the applicable exchange rate for pricing the products supplied under G4O would be based on the average rate at which the gold was purchased from the licensed gold exporters by BoG and the BoG ordinarily purchases the gold aggregated by the Precious Minerals Marketing Company (PMMC)

“The NPA will put measures in place to ensure that OMCs that lift products supplied under the G4O programme pass the price on to consumers accordingly. In this respect, BIDECs and OMCs who lift and supply G4O products will sell at the ex-refinery and ex-pump prices that will be determined by the NPA.

If there must be a comingling of products supplied under G4O and other sources, the ex-refinery and ex-pump prices will be computed using a weighted average”.

The statement added that all BIDECs and OMCs who want to purchase products under the G4O programme would be required to sign off an undertaking confirming their willingness to comply with the terms and conditions for partaking in the purchase and sale of G4O products.

Source: Ghana News Agency

Black Stars captain, Andre Ayew made his debut for Nottingham Forest in their 1-0 win over Leeds United.

Brenan Johnson scored the only goal in the match in the 14th minute with a volley from a rebound.

Nottingham Forest were able to defend their lead in the match to ensure they earn all three points in the match.

Andre Ayew was brought on as a substitute in the 88th minute to replace Neco Williams.

The 33-year-old Ghanaian player won a free kick for his side with his first touch on the ball.

He also made one significant clearance with a header from a dangerous cross from the visitors.

Andre Ayew’s debut for Forest made him the third Ghanaian player in history to play for The Tricky Trees after the late Junior Agogo and Albert Adomah.

The former Swansea player joined Nottingham Forest as a free agent after terminating his contract with Qatar side, Al-Sadd.

Source: Ghana Web

The worsening Ghanaian economy under President Nana Akufo-Addo is making it difficult for the governing New Patriotic Party to craft a message for the 2024 election, flag bearer hopeful Alan Kyerematen has said.

Speaking to the Sefwi Wiawso Traditional Council during his campaign tour, the former Minister of Trade and Industries said although his former boss has achieved some milestones during his administration, the current messed-up economy is dwarfing that success to the extent that the party cannot even come up with a credible message to sell to the electorate.

Mr Kyerematen pointed out, for instance, that the Akufo-Addo government introduced the Free SHS, Planting for Food and Jobs, One District One Factory and a lot more programmes but contrasted: “As we are all aware, the economy is currently not doing well; things are not well at all”.

As a result, Mr Kyerematen said the NPP cannot even put together a message to woo the electorate.

He, however, urged the electorate to, for the first time, give the same party that has already been in government for two terms, another chance to correct its mistakes, arguing that it is a better option than changing the party in government for another one given the country’s history of successive governments destroying the gains made by their predecessors of another party.

Source: Ghana Web