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The Ghana Investment Promotion Council (GIPC) has disclosed that, there is high thirst on the part of investors around the world to invest in the Ghanaian economy.
According to the GIPC’s Chief Executive Officer Yofi Grant, the country is likely to begin reaping of the benefits of work done by the council to attract investors to Ghana from June this year.
The Minister of Finance Ken Ofori-Atta in presenting the 2017 budget of the government, announced some policy initiatives including some tax incentives to lure more foreign investors into the country.
Mr. Ofori-Atta, announced the government’s decision to abolish some taxes which included the one per cent special import levy, the 17.5 per cent VAT/NHIL on financial services, the 17.5 per cent VAT/NHIL on selected imported medicines that are not locally produced.
Others include the 17.5 per cent on domestic airline tickets, the 5 per cent on real estate sales, excise duty on petroleum, reduce special petroleum tax rate from 17.5 per cent to 15 per cent, abolishment of duty on spare parts, among others.
Mr. Grant believes this was a step in the right direction as it would lead to reducing the cost of doing business for the private sector and lead to the creation of more jobs.
The government believes that in growing the economy reducing and abolishing some taxes which are seen as nuisance tax will not only help boost the economy but bring in the needed foreign direct investments.
In an interview with the thebftonline.com, the Chief Executive Officer of the Ghana Investment Promotion Council Yofi Grant said, Ghana since the beginning of the year has seen many investors express confidence in the economy and there is the will to explore opportunities to invest in the country by most investors the GIPC has met.
“I have already done a couple of trips where I have met some interesting people who potentially are interested in investing in Ghana. I have been to Dubai, Turkey and I was in England where I was speaking to technology investors and they seem very keen in investing in Ghana. Incidentally there are a number of Ghanaians in England who are doing amazing things in the area of technology and are very interested in coming to Ghana.”
Mr. Grant further added that, “there are some investors who are already looking into the market and there are some of the businesses that have come through. In fact, I spoke to a major business group in South Africa which was looking to do some interesting investments in the country.”
The GIPC CEO also noted that the budget was a well thought out one which would address the challenges of the country.
“The budget will significantly repair some of the ills we have in the country and also set the agenda for growth and wealth creation,” he stated.
This, Mr. Grant said would be done by easing the cost of doing business and making the ease of doing business even much better than before.
“This is the sort of confidence you need to give to the people. This government is serious about what it says and we are starting most of our initiatives now.”
The GIPC in 2017 plans to attract some GH¢5 billion in Foreign Direct Investments (FDIs).
This, it intends to do by embarking on an aggressive local and foreign investment campaign which will see big industry players coming to invest in the country.
Source: Norvan Acquah - Hayford/thebftonline.com/Ghana
Exxon Mobil Corp. said it will buy a 25 percent stake in a project off Mozambique from Italy's Eni SpA for about $2.8 billion as the U.S. oil giant expands in natural gas.
Eni will continue to lead the Coral floating liquefied natural gas project and all upstream operations in Area 4 while ExxonMobil will lead the construction and operation of gas liquefaction facilities onshore, Exxon said in a statement Thursday. The purchase will be completed after a number of conditions are passed, notably clearance from the authorities in Mozambique.
"This strategic investment will enable Exxon Mobil's LNG leadership and experience to support development of Mozambique's abundant natural gas resources," Chief Executive Officer Darren W. Woods said in the statement.
The U.S. oil major's participation will potentially accelerate development of one of the world's largest LNG projects. Former Exxon CEO Rex Tillerson discussed plans to buy into Eni's assets with Mozambique President Filipe Nyusi in July.
The Nigeria Deposit Insurance Corporation (NDIC) has said three million Nigerians lost N18 billion in the Ponzi scheme, popularly called Mavrodi Mundial Movement (MMM).
Speaking yesterday during the NDIC day at the 38th Kaduna International Trade Fair, the Managing Director, Alhaji Umaru Ibrahim, said despite repeated warnings by the Central Bank of Nigeria (CBN) and the NDIC on the activities of the fraudsters, Nigerians still patronised the MMM.
Ibrahim, who was represented by the Deputy Director, Corporate Affairs, Alhaji Hadi Suleiman, warned against trading in Ponzi schemes or virtual currencies, such as Bitcoin, Ripples, Monero, Litecoin, and others, which are not authorised by the CBN due to the risks involved in their operations.
The NDIC boss argued: "The scheme is the phenomenon of illegal fund managers, otherwise called 'wonder banks,' which have continued to defraud unsuspecting members of the public of their hard-earned money."
- The Guardian Nigeria
The Ghana Rubber Estate Limited (GREL) is to begin the construction of a €50million rubber factory at Agona in the Western Region.
The project, when completed, will create additional 2,000 jobs and increase the production capacity of the rubber producer. The first phase of the project is scheduled to be completed in 2019 and the final phase in 2028.
The Rubber producer, last year, purchased approximately 19,500 tonnes of dry rubber from over 3,000 farmers in the Western, Ashanti, Eastern and the Central regions. Frank Kweku Famiyeh, GREL’s Factory Manager, in an interview with B&FT, explained that the factory, since 2012, has seen a significant increase its production capacity.
“Between 2013 and 2014, we increased our install capacity to five tonnes per hour and between 2015 and 2016 we increased it to eight tonnes per hour. So in 2017, we are anticipating to get to 10 tonnes per hour with this present factory. Per our master plan, that is the final capacity of this existing factory. In terms of machinery and storage, raw materials and finished goods, the site has become congested, so we can’t increase the capacity here again. We are restricted by the size of the site. Because of this, we are initiating a new factory in 2017, the first rubber will come out in 2019,” Mr. Famiyeh said.
Rubber production stood at 18,000 tonnes in 2012; 19,600 tonnes in 2013; 28,754 tonnes in 2014; 30,816 tonnes in 2015; and 36,816 tonnes in 2016. For the 2017 calendar year, the company expects to produce between 40,000 and 41,000 tonnes.
He explained that the company has two sources of raw materials, namely its estate plantation and suppliers from out-growers. We receive 50% from our estate and 50% from the small holder farmers. The factory processes these rubbers into two main products that has been identified as quality and in line with the international rubber standards at the world market.
So, depending on what is going to be produced, we depend on the ratios, whether 50% from our rubber or 50% from outgrow, or 60, 40% depending on the outcome,” he said.
Rubber is one of the most commonly used plant products in virtually every industry. From tyre industries to aviation, health, education, sports to engineering, rubber is in high demand. The rubber latex is useful for a wide range of industries and products. It is used for adhesive, insulating, friction tape, crepe rubber used for footwear and insulating blanket. The rubber is also used in aviation tires, hose, and domestic clothes wringers to printing presses.
Rubber latex is used in the manufacture of articles such as cushions, balls, air hoses and balloons. Its ability to resist water and most fluid chemicals has resulted in its use in diving gear, rainwear and chemical and medicinal tubing. It is also used as a lining for railroad tank cars, storage tanks and processing equipment. There are so many reasons why farmers must engage in rubber farming. Including the huge industrial demand expected to keep the price of rubber high for decades.
It provides high income, high cost of synthetic rubber, low maintenance cost, long period of productivity, has a wide range of adaptability, provides regular income; environment sustainability, high value of rubber wood and allows inter cropping of food and cash crops for higher farm income. Rubber latex is extracted from rubber trees. The economic life period of rubber trees in plantations is estimated around 35 years with up to 7 years of immature phase and about 25 years of productive phase.
The rubber producing countries in Africa only produce four per cent of the total global production, while Thailand, the largest rubber producer in the world produces 27 per cent.
Ivory Coast, which is the largest producer of rubber in Africa, produces 50 per cent of the total Africa production, while Nigeria produces only 11 per cent with Ghana producing about 19,134 metric tonnes in 2009.
Research has shown that rubber business is more of a smallholder type of business. This is the case in most countries of the world where rubber is planted. It is the smallholders that are more in it than commercial outfits. But the case is different in Ghana as the bulk of production comes from commercial outfits. As of 2009, approximately 11,855 hectares of land had been cultivated under outgrower schemes financed by the government. The rubber plant has a productive lifespan of 35 years. The country moved from 12,000 hectares of rubber plantations in 1995 to 35,000 hectares, helping to create employment for some 100,000 people.
Rubber production increased from 9,300 metric tonnes in 2000 to 19,134 metric tonnes in 2009, recording an increase of 74 percent over the period.
About 95 percent of the country’s rubber produce is exported to China, France, Turkey, East Africa and South Korea. Ghana also exports to neighbouring Burkina Faso. Currently the traditional rubber-growing regions are the Western and Central Regions, but the northern parts are also being explored for their potential to cultivate the crop. Strong global economic growth in recent years, especially in the rapidly developing economies of China and India, has increased demand for rubber significantly.
The global demand for natural rubber has been consistently on the rise. Global consumption of natural and synthetic rubber, pegged at 12.3 and 16.8 million tonnes, respectively, in 2015, was an increase of 3.1 percent and 0.9 percent from 2014. It is projected to reach 15 and 19.4 million tonne by 2020.
China, the United States, Japan, India and Germany are the main rubber consumers, accounting for 56.8 percent of global consumption.
The expansion of global trade over the last 50 years has created industries, jobs and value on an unprecedented scale, driving innovation and technological advances and in the process, benefitting most of the countries, most of the time.
“While this growth has not been even, much can be done to ensure that future growth continues to support economic development,” says Vinod Madhavan head of transactional products and services for Africa at Standard Bank.
Global and cross-border trade is the fastest contributor to growth, supports domestic trade, small and medium enterprise formation and job creation. This has been especially evident in emerging markets over the last 30 years.
However, the growing trend towards de-globalisation in some developed markets, driven through concerns around job-losses due to automation and de-industrialisation, is resulting in an increasingly negative reputation for trade. In contrast though, the opportunity that trade presents for markets in Africa is potentially game-changing.
“Africa could increase its intra- Africa trade three fold and still not match Asia’s level of internal trade. In Asia, trade – and exports – have been central to the regions exponential growth, lifestyle improvements and stability of last 30 years,” explains Mr Madhavan.
Looking into the future, Africa is expected to grow as the second fastest growing region in the world over the next 4 years returning growth rates between 4 and 5 percent. As intra-African trade grows, this will drive even more growth and job creation on the continent. While the value of trade in Africa dipped in 2016 - tracking recent historically low commodity prices - the volume of trade trended upwards. This points to the depth, spread and longevity of trade and trade opportunity – beyond just commodities – in Africa.
“As commodities rebound, 2017 is expected to set new records in the volume and value of African trade,” says Mr Madhavan, “however, the point is not to get side-tracked by some of the current headwinds.”
Africa’s current headwinds are certainly real. There has been debt default in Mozambique, local currencies are losing value, US dollar and other hard currencies remains scarce within key economies, legislators do not always adopt the most efficient policies, political risks are real, and there have been over 10 bank defaults in a number of countries, in the near past.
“Despite the defaults seen over the last year, we are seeing greater accountability and transparency in the banking system across markets which provide a level of comfort for investors,” says Mr Madhavan.
Perception however, remains key in Africa.
While Africa exhibits many of the risks endemic to emerging markets generally, “the concerns around operating in Africa are often much higher,” says Mr Madhavan. This is where banks like Standard Bank have a critical role to play, to reduce the perception gap that can materially affect people’s lives by diminishing the continent’s ability to trade.
Negative perceptions of trade can reduce the funding available for trade finance, widening the gap between the need for trade finance and the funding available. This is a characteristic of many emerging markets and acts to retard the positive effects of trade-fuelled growth, reducing the number of jobs created along with the development revenue generated.
“As an African bank, we need to be clear on how we help our client manage risk, by helping clients understand the headwinds in the right context and then delivering the solutions that mitigate such headwinds,” says Mr Madhavan. “Beyond managing risk, we work across all our markets in Africa to create an environment that allows people in Africa to do business within and between countries - as well as for people across the world to do business with Africa.”
Something as simple as a letter of credit enables a trade where one was not possible before. Every trade generates at least two jobs – one on either side of the letter of credit. Most trades generate many more. Mr Madhavan expects 2017 to be the year that Africa recognises the huge opportunity available to the continent in driving regional and global trade.
While Standard Bank provides its clients with the tools and systems to conduct efficient trade on the continent, the bank also supports the evolution of new fintech applications aimed at improving the cost-effectiveness, speed and ease of trade in Africa.
Africa’s financial services industry is rich and varied. It is rich in the sense that in South Africa, for example, you have a financial services sector that leads even countries such as the United Kingdom, Germany and France in the Financial Market Development pillar of the Global Competitiveness Index (as mentioned in the World Economic Forum Global Competitiveness Report 2016-2017). It is varied since at the same time, in some African markets, legislators grant certain licences to corporates, that can only be used in a specific branch of a bank.
“This combination of world-leading expertise and capability, with untold opportunity for growth, defines the continent as a hot bed for innovation,” says Mr Madhavan.
By 2019, Mr Madhavan expects to see an indigenous technology that will support intra-regional trade in Africa, “probably designed by a tech start up in Cape Town or Nairobi, transforming the way cross-border and global trade happens in Africa.”
This kind of original technology that helps reduce friction in cross-border trade, could ensure that Africa benefits practically from the World Trade Organisation’s recent global trade treaty that is expected to boost global exports by US$ 1 trillion, “as we develop the mind-set, clear policy commitment to multilateral trade, and the platforms, to drive African development through trade-led growth,” says Mr Madhavan.
Safaricom Ltd, East Africa’s biggest mobile-phone company, would have to reconsider future investment in Kenya if proposals to break up the company are implemented, the head of mobile money at parent Vodafone Plc said.
The company 40 percent owned by Newbury, England-based Vodafone was found to be Kenya’s dominant carrier in a draft report by U.K.-based advisory group Analysys Mason. The study was commissioned by the Communications Authority of Kenya to check whether the market leader had abused its position.
The report recommends Safaricom opens up its mobile-money platform known as M-Pesa to transfers from competitors’ services at prices determined by the regulator. Separately, Kenyan opposition lawmaker Jakoyo Midiwo is also proposing a law to force a Safaricom split, a plan that Chief Executive Officer Bob Collymore has called “plain stupid.”
The proposal is “inconceivable thinking,” said Michael Joseph, Vodafone’s director of mobile money, who founded the decade-old service when he was Safaricom’s chief executive officer.
“If you say it’s a 100 percent subsidiary of Safaricom, the M-Pesa Company has to buy services from Safaricom because of the tax implication; value added tax, inter-company taxes, Competition Authority regulations,” Joseph said in a phone interview Monday. “If you have to make these investments and everybody benefits including your competitors, you probably won’t make that investment, you’ll think very carefully about them.”
Depending on how the split is executed, M-Pesa may have to buy services such as Unstructured Supplementary Service Data, or USSD, from its parent at market rates, which would push up the cost of making transfers, Joseph said.
“The whole idea that you want to split a company up because it is successful to me is just completely ridiculous,” he said, referring to the lawmaker’s proposal to break up the company. “You are punishing success. Why would you do that?”
Analysys Mason has declined to comment on its report, which is yet to be finalized. The Communications Authority, which regulates the industry, said last week it’s reviewing the report before releasing it to the public.
Safaricom is Kenya’s biggest mobile provider with a 69 percent market share, according to the regulator’s statistics. Its closest rival is the national unit of Bharti Airtel Ltd., with 17.5 percent, while it also competes with Helios Investment Partners LLP-owned Telkom Kenya.
The Kenyan government doesn’t support regulation that stifles competition or forces companies to split based on their innovation, Information, Communications and Technology Secretary Joe Mucheru said last week. Safaricom shares have fallen for seven consecutive sessions to the lowest level since March 21, according to data compiled by Bloomberg.
“I don’t know why you need a regulatory intervention in a free-market economy,” Joseph said. “I cannot see why you need to have regulations for a guy who cannot be successful because they have never invested.”
The introduction of disarmament, demobilisation and reintegration programmes have become common practice in countries emerging from violent conflict. Arguably, the most difficult aspect is the successful and long-term reintegration of former combatants into civilian life.
In Nigeria this was certainly the case. The country’s disarmament, demobilisation and reintegration programme is known locally as the amnesty program. It was introduced by the late President Umaru Musa Yar’Adua in 2009 and was aimed at members of armed militant groups that were present in the Niger Delta. This includes; the Movement for the Emancipation of the Niger Delta, Niger Delta People’s Volunteer Force, and Niger Delta Vigilante.
These militant groups emerged around 2006 and were known for their violent attacks on the region’s oil infrastructure and kidnapping oil companies’ employees for ransom. As a result of the violence and instability, the production and export of oil from the Niger Delta region decreased sharply after 2006.
The amnesty programme was set up to put an end to this. Its main objective was to disarm, demobilise and reintegrate armed militants back into communities. The programme involved offering benefits – such as opportunities in education as well as money – to militants who gave up their weapons.
Our ongoing research project at the University of Leuven identified why the initiative failed and highlights why programmes of this nature can fall apart. A major finding was that it wasn’t accompanied by meaningful and durable reintegration and that deep-seated socio-economic problems weren’t tackled at the same time.
Terms of the amnesty
Under its terms militants who freely handed over their weapons and demobilised wouldn’t be prosecuted and would even receive benefits. These benefits included; a formal education in Nigeria or abroad, small loans to start businesses as well as a monthly allowance of about US$400. The allowance was significantly higher than Nigeria’s minimum wage of about US$60 per month.
Leaders of militant groups were also offered large and highly profitable contracts in the oil industry and other sectors of the economy. In the wake of the amnesty programme, ex-militant leaders gained political power and influence in the cities to which they returned.
The programme initially resulted in a sharp reduction of violent attacks against the oil industry, leading to an increase in production. But cracks in the deal started to emerge.
Due to a sharp fall in oil prices, the programme became increasingly difficult for the Nigerian government to fund. In May 2015, for instance, the allowance payments to the enrolled ex-militants had to be suspended. This made matters worse and reignited tensions as a large number of ex-militants are unemployed and highly dependent on the monthly allowances.
One major problem is that the Nigerian government failed to tackle wider socio-economic grievances. These include the lack of social development in local oil communities, environmental pollution and the exclusion of local communities from the governance of oil production in the Niger Delta region.
New militant groups emerged in the last 18 months. They claim to represent the grievances of local oil communities. These groups include the Niger Delta Avengers (NDA), Red Scorpions and the Niger Delta Greenland Justice Movement (NDGJM). They have again started to attack the region’s oil infrastructure, resulting in a reduction of Nigeria’s oil production from 2.2 million to about 1.1 million barrels per day in 2016.
Our research also showed that Nigeria’s financial incentives actually worked as a disincentive for sustainable reintegration.
Firstly, ex-militants preferred to remain enrolled in the amnesty programme, instead of switching to lower-paying jobs in their communities.
Secondly, they started attracting new youth into militancy. The amnesty programme was initially designed for youths who were active members of armed militant groups. Evidence shows that youths, who weren’t part of any armed militant group, started to mobilise into new groups or join existing ones in order to benefit from the amnesty programme. In some instances, they quickly purchased weapons from the black market to enable them to participate in the programme.
Recognising this, the Nigerian government in September 2011 stopped the inclusion of new militant groups into the amnesty programme. But discontent over who’s and who’s not allowed to enrol have remained. This is partly behind the emergence of the Niger Delta Greenland Justice Movement (NDGJM) in Delta State.
The renewed instability and violent attacks in the region have again resulted in a serious reduction of the country’s oil production. This has complicated the Nigerian government’s already formidable financial and economic concerns and challenges. And attempts by the Nigerian government to use force against the (new) militant groups have proved unsuccessful as the militants continue to evade direct confrontation with the military.
It appears, despite all it’s failures, that the only short-term option to get the county’s oil production and exports back on track quickly is the continuation and possible expansion of the current amnesty programme to address the new groups that have emerged.
This would help increase oil exports and revenues and buy the government time to develop more effective reintegration strategies. However, any new amnesty strategy will need to de-emphasise financial payments to ex-militants for it to succeed. Instead, it will need to focus on underlying issues such as the development deficits and environmental pollution affecting communities. In the long term, the government should design transparent mechanisms which include local communities in the governance of oil production. This will reduce the tensions that provide justification for militancy in the region.