As a result, commercial banks also bear greater responsibility to their customers in earning interests on such deposits.

The latest banking sector report by the Bank of Ghana shows that deposits accounted for 62.5 percent of the banking industry’s assets as at December 2017.

According to the central bank’s data, total deposits went up by some 6.67 billion cedis between December 2016 and the same period last year.

For the twelve months period, total amounts deposited with all banks amounted to 58.28 billion cedis.

This is up from the 51.66 billion cedis recorded in December of the preceding year.

84.2 percent of all deposits came in as domestic currency while the remaining 15.8 percent came in foreign currency.

Borrowings by commercial banks also came in as the second source of funding for commercial banks accounting for about 16 billion cedis of the funding needs of the banks.

By this, commercial banks were able to raise money for their operations from short and long term instruments.

Although income from loans to customers dropped between December 2016 and the same period last year (46.4 percent in December 2017, from 50.7 percent in December 2016), it perhaps still leads as income generating source for banks.

A situation, the central bank attributed to the drop in lending rates as well as the rising Non Performing Loans.

Meanwhile, the share of income from investments (both short and long term) increased from 33.5 percent in December 2016 to 38.0 percent in 2017, justifying the shifts in banks’ portfolio preferences despite declining money market rates.

Also, the money that the banking industry made from fees and commissions such as ATM card use dropped from 10.6 to 10.2 percent between the twelve month period.

While ‘other’ income, recorded a marginal increase from 5.2 percent to 5.5 percent during the period under review.

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By: Pius Amihere Eduku/citibusinessnews.com/Ghana

The post Deposits still major source of funds for banks – BoG report appeared first on Citi 97.3 FM - Relevant Radio. Always.

The latest follows the close of submission of request for proposals today, March 26, 2018.

A statement from the Millennium Development Authority (MiDA) and copied to Citi Business News said that at the close of the submission, two companies namely; BXC Ghana and Manila Electric Company (MERALCo) had submitted their bids.

It is interesting to note that French electricity conglomerate EDF and French transnational company Veolia, together with their local partners CH Group, did not put in bids for the private participation.

The businesses had raised concern over the 51 percent local stake in the new entity.

It is unclear what led to their latest decision.

Meanwhile MiDA says the evaluation of the bids is expected to be completed in April 2018.

Read full statement below;

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By: Pius Amihere Eduku/citibusinessnews.com/Ghana

The post Bidders for ECG concession drops to two appeared first on Citi 97.3 FM - Relevant Radio. Always.

According to him, the high cost of the project is already throwing government’s budget out of gear.

“For me I’m looking at the figures…Out of GHc240 million that was going into the ABFA [Annual Budget Funding Amount] to be used for good and services, GHc211.11 million went into the free SHS…So is that which is causing some of the misalignment in the budget,” he added.

Speaking on the Citi Breakfast Show on Monday, March 26, 2018, Mr. Terkper warned that other critical sectors of the economy, such as health, risks being cash starved if allocation meant for them are diverted to finance the Free Senior High School project.

[contextly_sidebar id=”FhgPKucoNfwxb1jIQHb3RIPXTjZYTuGp”]“Free SHS helps a lot of poor people, no question about that. But what is the cost? We have taken a lot more of our oil revenue there. We said we will raise revenue for Free SHS, now we are using the traditional sources of revenue,” he stated.

He recalled that all the measures government outlined to sustain the project have not materialized.

Mr. Terkper pointed out for example that government promised to set a special fund to support the project but it yet to be done.

“We said that we would create an education fund for the Free SHS.  What is the status of that fund? We have capped statutory funds and others and we are using it”.

He warned that capping some statutory funds is already affecting other areas of the economy which also urgently need funding.

“We are seeing a misalignment of the budget. We have to start putting things together. Ministers are out there saying their allocations are not adequate. Where is the money going at a time that we are getting more oil from the TEN fields and Sankofa field?”.

Mr. Terkper observed that there must be a new approach to save the program from collapsing since government has not put in place a long term policy to sustain it.

Click below for the full interview on the Citi Breakfast Show:

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By: Lawrence Segbefia/citibusinessnews.com/Ghana

The post Free SHS has thrown budget out of gear – Terkper appeared first on Citi 97.3 FM - Relevant Radio. Always.

As a result, no one person shall assume two top positions in any regulated financial institution.

These are but a few of the strong words contained in the Bank of Ghana’s new banking business – corporate governance directive.

The document comes barely a week after the central bank announced yet another major decision involving the take over of Unibank by the Bank of Ghana, over corporate governance issues.

According to the Bank of Ghana, the directive is in fulfillment of Section 92(1) of the Banks & Specialised Deposit Taking Institutions Act , 2016 (Act 930).

Among others, the corporate governance directives seeks that the regulated financial institutions adopt sound corporate governance principles and best practices, promote and maintain public trust and confidence in regulated financial institution as well as minimize the possibility of regulated financial institution failures.

A major highlight of the corporate governance directive is the central bank’s stance on separation of powers.

Section 32 and 33 of the directives outlines the mode of selection and occupancy of the MD/CEO as well as Board Chairman as,

32. “There shall be a clear division of responsibilities at the top hierarchy of the regulated financial institution. The positions of the Board Chair and the Managing Director/Chief Executive Officer shall be separate. No one individual shall have unfettered powers of decision in any regulated financial institution and therefore no one person shall combine the two (2) top positions in any regulated financial institution at the same time. The two (2) top positions of Board Chair and Managing Director (MD)/CEO in a regulated financial institution shall not simultaneously be occupied by foreigners. One of these positions shall be occupied by a Ghanaian national.”

32. No two (2) related persons shall occupy the positions of Chair and MD/CEO or Executive Director and Chairman in a regulated financial institution.

In addition, the tenure of the Managing Director/CEO of a regulated financial institution shall be a maximum of twelve years.

This could be split into three terms not exceeding four (4) years per term.

Directors on the other hand, shall have a maximum tenure of three (3) terms of three (3) years per term.

Meanwhile, a Board of any financial institution shall have two (2) board subcommittees, namely: an Audit Committee and a Risk Committee both of which shall be chaired by independent directors.

The Audit Committee shall have oversight of the regulated financial institution‘s internal and external audit functions.

On the other hand, the risk committee shall be responsible for advising the board on the financial institution‘s overall current and future risk tolerance/appetite and strategy of the regulated financial institution for various risks including Anti money laundering or CFT risk and for overseeing senior management‘s implementation of the risk strategy.

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By: Pius Amihere Eduku/citibusinessnews.com/Ghana

The post BoG enforces separation of powers with new directive appeared first on Citi 97.3 FM - Relevant Radio. Always.

It follows what they cite as favourable conditions that warrant a further reduction in the rate at which the central bank lends to commercial banks for onward lending to customers.

The Monetary Policy Committee (MPC) of the Bank of Ghana is later today, Monday, expected to conclude its meetings with an announcement of the policy rate which is at 20 percent.

Speaking to Citi Business News ahead of the announcement, an Economist with Barclays Africa’s sub Saharan group, Ridle Markus said he is highly optimistic of a reduction.

In his view, the expected increase in oil exploration activities and the projection of a stable currency, should prompt a drop in the policy rate.

“We’re not worried about the currency; there’s a potential for 2.5 billion dollar Eurobond inflows coming through in the next couple of months. Also, the additional oil inflows will be supportive of the currency. There’s a strong case to be made that the currency could actually continue to remain around current levels even drifting slightly stronger, which then becomes very favorable to inflation. So those are a couple of reasons why I think they should be less precautionary a little bit and for cutting the policy rate.”

The Bank of Ghana has reduced the policy rate by 550 basis points over the last one year.

The figure has dropped from 25.5% to 20 percent currently.

The Managing Director of Zenith Bank, Henry Oroh also tells Citi Business News he is hopeful the MPC will reduce the policy rate to sustain the impact on private sector growth.

“Interest rates have also moved down, because the government wants to support the real sector. If interest rates go up, the cost of business also goes up but the government wants to create an environment with cheap cost of business. And I think they’ve done so well with their previous Monetary Policy Committee decisions they’ve taken.”

He added, “So I believe whatever decision they take this time around will be complementary to the previous decisions, and it will all be driven to creating macro-economic stability in the area of interest rate, inflation and exchange rate.”

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By: Pius Amihere Eduku/citibusinessnews.com/Ghana

The post Bankers, businesses urge BoG to reduce policy rate appeared first on Citi 97.3 FM - Relevant Radio. Always.

This is a reduction from the 73.3 percent recorded in December 2016.

The total debt stock in 2016 was at 122.6 billion cedis.

This means that the debt stock has almost hit the dreaded 70 percent of GDP, a point the International Monetary Fund (IMF) has constantly cautioned against.

The data shows that in September 2017, Ghana’s debt stood at 138.9 billion cedis representing 68.1%; the figure dropped to 137.6 billion cedis in October representing 67.4%.

But in November 2017, it went up to 139 billion cedis representing 68.1 percent.

The domestic component of debt as at December 2017 stood at 66.7 billion cedis, while the foreign debt stock was at 75.8 billion cedis.

Export Earnings

In the first two months of the year, export earnings by February 2018, reached 2.8 billion dollars.

Gold raked in a little over 1 billion dollars, while cocoa fetched cocoa 650 million dollars. Earnings from oil export also reached 664 million dollars.

On the import side, Ghana spent 2.2 billion on imports.

Banking Sector 

In the banking sector, Total Advances of banks saw a drop this year from 38.5 billion cedis in January to 35.8 billion cedis in February. Also, Banks Total Asset stood at 95.1 billion cedis, same as January this year.

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By: Lawrence Segbefia/citibusinessnews.com/Ghana

The post Ghana’s debt hits GH¢142.5bn, reaches 69.8% of GDP appeared first on Citi 97.3 FM - Relevant Radio. Always.

The proceeds of the bond are expected to finance the provision of capital expenditure captured in this year’s (2018) budget for sectors such as the health, roads & highways and railway.

The Finance Minister, Ken Ofori Atta in the 2018 budget presentation stated that the government will raise the amount as it has become necessary to develop the beneficiary sectors.

The IMF in its recent discussions on the government’s performance under the agreement suggested that the government limits its borrowing to 500 million dollars citing rising public debt stock.

However, the Minority Spokesperson on Finance, Cassiel Ato Forson has raised concerns of inconsistencies and wants government to review the plan.

According to him, the government data submitted in the budget goes contrary to the planned use of the proceeds of the bond.

“So they are going to use the money to fund projects that are not in the budget statement and that is serious. For me I believe in fiscal discipline and I cannot be part of this and that is why I said that I cannot witness or see the Minister of Finance to go this tangent; it is a terrible tangent, it is not a tangent that we should allow it to stand,” he argued.

Mr. Forson added, “So I am asking the Finance Minister to amend this document immediately so that he does not go contrary to what is stated in the budget.”

But responding to the concerns of the Minority, a Deputy Information Minister, Kojo Oppong Nkrumah maintains that the government has not flouted any aspects as spelt out in the budget.

“They have gone to one particular part of the budget and are reading the totals and saying that those totals are not equal to the 4.7 billion dollars we are talking about and therefore we will be spending beyond the budget. Take the total appropriation and the uses were outlined in the original budget and highlighted today that we will be using part of the money for road, railway and infrastructure.”

“What we have done today is just requesting Parliament to give us the approval to go to the international market. If we were raising this money locally, we would not have come to Parliament. But because we are going to the international market, that is why we have come to the House for the warrant to do so. In any case Parliament has approved this as part of the economic policy,” Mr. Oppong added.

GH¢500m global depository notes

Meanwhile Parliament has approved the equivalent of a 500 million cedi to be issued as global depository notes.

The notes will allow Ghana to issue shares in a foreign company which will be held by a foreign branch of an international bank.

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By: Pius Amihere Eduku/citibusinessnews.com/Ghana

The post Parliament approves government’s $2.5 bn Eurobond appeared first on Citi 97.3 FM - Relevant Radio. Always.

This is a significant improvement over the previous year’s figure of 7.2 million cedis.

Despite this, the bank still acknowledges the impact of the legacy debts in the energy sector on its loan books.

In the first of Citi Business News’ series of report on the performances of the listed banks, we throw the spotlight on CAL bank and reasons accounting for its performance.

In 2017, CAL bank’s income comprising revenue from loans disbursed, charges and commissions on ATM cards as well as cheques and other services, amounted to 446.3 million cedis, up from the 357 million cedis recorded in 2016.

The bank’s allocation to items such as personnel expenses, depreciation as well as loan recovery costs, went down within the one year period.

The figure declined by about 137 million cedis; from 345 to 238 million cedis.

Similarly, CAL bank’s assets comprising investments, cash as well as property, plants and equipment, reached 4.21 billion cedis in 2017 from 3.6 billion cedis the previous year.

This, the bank attributed largely to the rise in borrowing by customers.

Meanwhile between 2016 and 2017, CAL bank’s Non Performing Loans (NPLs) went up from 8 to 10.9 percent.

The Board however did not approve for the payment of dividends to shareholders of the bank.

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By: Pius Amihere Eduku/citibusinessnews.com/Ghana

The post CAL Bank records GH¢145m profit in 2017 appeared first on Citi 97.3 FM - Relevant Radio. Always.

The policy, was aimed at fumigating all imported cargo upon arrival at the ports.

[contextly_sidebar id=”Z8Zjxhu9kpgTivYMVCYWlZmMFMRWJfMb”]However, a statement signed by the Information Minister, Mustapha Hameed and copied to Citi Business News said, “After extensive consultation between the government and various stakeholders, the Economic Management Team has instructed that the proposed fumigation levy for shippers be indefinitely suspended.”

The Importers and Exporters Association, freight forwarders as well as the shippers association, have complained about the high cost of production the exercise would have brought on their businesses.

They argued among others that cargoes are already fumigated at the port of origin.

As a result, an additional fumigation upon arrival would increase cost and duplicate activities leading to possible delay in clearing goods.

In the meantime, the suspension is to bring all these concerns to rest.

Govt suspends import VAT on phones, day-old chicks, others

Government has also suspended the charging of import VAT on some 64 commodity groups effective Wednesday, March 21, 2018.

The decision was arrived at after extensive consultation between the government and various stakeholders.

Citi Business News understands that the charges had been implemented since the 1^st of March this year.

The traders of such commodities comprising mobile phones, day old chicks, outboard motors and electrical transformers, have resisted the taxes citing the high cost of operation.

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By: Pius Amihere Eduku/citibusinessnews.com/Ghana

The post Proposed cargo fumigation levy suspended indefinitely appeared first on Citi 97.3 FM - Relevant Radio. Always.

The decision was arrived at after extensive consultation between the government and various stakeholders.

[contextly_sidebar id=”EWlGK1fFMcmxK8eRP7hFpxfGsV7uN27P”]Citi Business News understands that the charges had been implemented since the 1^st of March this year.

The traders of such commodities comprising mobile phones, day old chicks, outboard motors and electrical transformers, have resisted the taxes citing the high cost of operation.

Government has also ordered the indefinite suspension of the proposed fumigation levy for shippers. The policy, was aimed at fumigating all imported cargo upon arrival at the ports.

A statement signed by Information Minister, Mustapha Hameed and copied to Citi Business News confirmed the suspension.

“The Ghana Revenue Authority (GRA) suspends with immediate effect, the charging of import VAT on the 64 commodity groups which started on March 1, 2018, leading to an unintended hike in import charges,” it said.

It also indicated that it is pending an assessment of Harmonized code for customs which were reviewed on March 1^st, 2018.

On March 1, 2018, government rolled out two tax policies; the excise tax stamp and the Harmonized ECOWAS Common External Tariff (CET).

Tax Stamp requires that Excise Tax Stamps should be fixed on specified excisable products to enhance security and tracking features on those products.

The excise tax stamp will affect businesses that are engaged in the importation or manufacturing of excisable goods such as canned or bottled drinks, non-alcoholic carbonated beverages, cigarette and tobacco products.

On the other hand, the Harmonised ECOWAS CET will affect importers of goods classified under the CET.

Although the CET is being implemented at the ports, Citi Business News understands that an international review of the system has led to the addition of new products such as tripod which attracts 20 percent tariff to be borne by importers of the product among others.

Some economists have suggested to Citi Business News that the move has become apparent as government is expected to rake in enough revenue to provide funding for some key government projects such as the free Senior High School programme.

Read the full statement below;

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By: Pius Amihere Eduku/citibusinessnews.com/Ghana

The post Govt suspends import VAT on phones, day-old chicks, others appeared first on Citi 97.3 FM - Relevant Radio. Always.