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The Market Place with Daryl Kwawu on JoyNews (7-8-23)

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Transcript
00:00 Hello everyone this afternoon on the marketplace crude oil records gains in prices for the past few weeks hitting
00:05 $85 a barrel we are at a tipping point and what could be the implication for fuel prices locally
00:11 Also coming up National Petroleum Authority says citizens without Ghana card risk being excluded from the cylinder recirculation model program
00:28 We need to know at every point in time who has it so it's a simple registration process
00:35 Also ahead despite the effect of the domestic debt exchange program on consumer confidence
00:43 Ecobank remained the biggest bank in Ghana in 2022 with a market share of
00:48 13.58 percent meantime bank deposits more than doubled last year we will discuss
00:57 My name is Darrell Karl. Thanks for being with us details coming up
01:00 Thanks for staying with us everyone crude oil has been recording gains and prices over the past few weeks last Friday
01:26 Brent could hit $86 a barrel after top producers Saudi Arabia and Russia extended supply cuts through September
01:33 Adding to under supply concerns. What are the implications for us?
01:37 Joining me on zoom is energy strategist you see if Suleymana also
01:42 CEO of Eureka energy solutions and emerging energy consultancy firm. Thank you for joining us
01:49 This afternoon as we look at the prices right now
01:53 Brent crude $85 a barrel are we heading to another tipping point and tell us more about what is
02:00 accounting for this rally
02:02 Thank you very much
02:06 And across the globe and thank you thank you for having me once again, yeah, so indeed
02:14 That's very interesting
02:17 Things are developing very fast within the international scene
02:20 Indeed within the week. We have this kind of bullish sentiment that is setting into the market
02:25 typically
02:27 Typically, we have three
02:29 particular factors that are accountable for this
02:31 One would be the recessionary tendencies that is beginning to team down
02:37 the second one being OPEC cuts that you have just mentioned and then the third one is a
02:41 revitalization of the Chinese economies
02:44 so
02:46 If you look at this three factors that I think at this moment time what is holding my potency in
02:52 Deciding what the prices are prevailing what the price is actually being sold at the current market is supply destruction
03:00 We haven't quite a number of supply distractions that is happening within the market
03:04 Yes, so not even this quantitative tightening in terms of this exchange rate
03:09 I mean policy risk hikes from the central banks notably feds from the US and then the ECB that is
03:16 I'm a European central bank from the Eurozone is able to tame the prices. So
03:21 Yes, OPEC have announced their especially OPEC can pick Saudi Arabia
03:26 The phenomena has announced that they will keep the supply cut of voluntary 1 million barrels out of the market. That is huge
03:33 Alongside Russia also announced that they will also take about 0.3 million barrels out of the market. That is huge
03:38 So we are living in time where these two players this OPEC plus leader which is Russia and then OPEC
03:46 Leader OPEC can be which is had a ready idea. So the question is very strong and they coordinate this activity
03:52 So yes, we are now beginning to see that impact been felt in the market and I see that there are two opposing forces one
03:59 The quantitative tightening by the West, you know in a way that they also want to reduce oil prices
04:05 they want to put our pressure on the oil price and then the opposite guys also equally see that as
04:10 As a market destruction and they see what they are their intervention as still lies in the market
04:16 So there are interesting times ahead
04:18 But what's accountable for the price now is just because of supply distractions here for how long would we see this price rally? Do you think?
04:25 Yes, or it will
04:28 It's early days yet. So the market we have to just monitor the market
04:33 Assuming this case like this, you know get it on next window. So definitely we're gonna have precious
04:39 coming on to our pump so the persistence or the sustainability of this price high will be dependent on the
04:45 Persistence of this practice that I just enumerated and the situation is still looking for you
04:50 We could have been coming down but OPEC is bent on keeping oil price at the 80s
04:54 What direct impact would it have on the pumps? We monitor in the currency market as well
05:01 The the city has been fairly stable over the past few weeks
05:06 And so that if you have a multiplicity of factors impacting your pumps this what is happening
05:11 Sometimes you said your head is aching you before your leg is aching
05:15 So yes, it could be doing well. And again, the international market is not looking to be a problem at this many times
05:21 So what will happen is that even the stability of the city if this trajectory in the international scene?
05:26 persists and we will have a
05:29 precious settlement the pumps but like I said
05:32 And the direct impact is that there will be much more much more much more precious on the pump if the situation
05:38 Persists for a little bit of time, but like I mentioned is early days yet
05:42 We just have to give it and I'm sure by the end of our next window
05:45 We'll have the picture very clear, but I can say that this bullish sentiment
05:50 We are looking more potent at this moment in time, you know, then the potential very sentiment
05:57 Let's talk strategies. I mean, what what can we do? What can we implement to minimize the impact of such rapid fluctuations?
06:04 Yeah, that's an interesting one
06:07 in Ghana
06:10 I seem to see that we are living what we call a strategy vacuum
06:15 We lack, you know, if a very concerted strategy to be able to tackle this
06:19 you know
06:21 perennial boom and bust or oil cycle, you know fluctuations
06:26 I'm in most regions what they do see if you have an upstream and your downstream industry
06:31 I mean you should have if you make a set effort to be able to link up the two when I say link up the two
06:37 You have to have a workable formula
06:39 So that whenever the upstream is booming
06:41 bear in mind that your downstream will struggle and if you don't have that kind of workable formula where you can cascade some benefit from
06:47 The upstream to the downstream and then the vice versa
06:49 You will always complain when oil prices rise and you will equally complain when oil prices drop and that's what is happening
06:55 So what I always say is that in Nigeria, they are taking an excellent cue from this
06:59 If you notice an MPC in Nigeria, they are taking zero stake in this refinery
07:04 That is the way to go. Even if you don't have a workable refinery if the upstream is booming
07:10 Let's not think that we are having a windfall. The downstream is going to struggle
07:14 So let's work out the formula. Maybe the X plus that we are not expecting coming from the upstream
07:18 Let's have a way of cascading it to the downstream to cool down the pump because ultimately if the downstream bears out
07:24 Whatever you get from the upstream is going to vaporize, you know
07:27 and I
07:28 from where I see I think downstream it has direct impact on the economic growth and economic
07:33 survival of populace as compared to the upstream because
07:36 While price are very high that cascade into inflation figure that cascade on to what a common man or common
07:43 person buys on the streets
07:45 So if you can handle your poor prices fluctuations
07:48 Then you can just be certain that you cannot have a handle on your economic, you know
07:54 revitalization
07:56 Dr. Isi Sulemana, Energy Strategist, also Chief Executive of Eureka Energy Solutions and Emerging
08:03 Energy Consultancy. I appreciate your time with us. Next to the National Petroleum Authority
08:10 which says citizens without the Ghana Card risk being excluded in the cylinder recirculation model program
08:15 According to the authority this is to help in the traceability of the cylinders by action point dealers
08:21 Deputy Chief Executive Perry Okudio explains that this is an investment by a bottling plant
08:27 Hensus move will serve the interests of Ghanaians across the country. He was speaking at a media engagement
08:32 Cylinders have been an investment by a bottling plant. We need to know at every point in time who has it
08:42 So it's a simple registration process. You go to an exchange point, you identify yourself
08:50 They take your details. You must have a valid, when you go to a bank to cash a check
08:57 You present a Ghana Card. If you go to an exchange point, you present a Ghana Card
09:02 The Ghana Card has all your details, has your location, where you live and all of that on it
09:07 So that we can have, or the exchange point can have data and there can be traceability
09:13 In case the cylinder goes and for one year it doesn't come back
09:19 So that is for the registration. Well apart from Ghana Card, if there's another form of
09:25 identification that gives the
09:28 Exchange point operator comfort and you know the exchange points we have
09:33 Are not going to be too different from what we currently have
09:38 What will be different is that they are not going to fill the cylinder from the sides
09:45 The cylinders will be delivered from the bottling plant. That is the only thing that is mandatory
09:50 So usually you notice that exchange points have a relationship with the community
09:55 Now despite the effect of the domestic debt exchange program on consumer confidence
10:04 Ecobank Ghana remained the biggest bank in the country in 2022 with a market share of 13.58%
10:11 According to the 2023 Ghana Banking Survey by accounting and auditing firm PWC
10:16 Its market share in terms of banking industry share of deposits was better than the 11.93% recorded in 2021
10:24 Here's more in this report
10:26 GCB Bank placed second but lost some market share in terms of the industry's deposits
10:33 In 2022 its market share stood at 10.87%
10:38 Slightly lower than the 11.43%
10:42 recorded in 2021
10:44 From a trend analysis
10:46 GCB Bank has been losing its market share since 2017
10:51 The third, fourth and fifth positions were occupied by
10:55 Istambic Bank Ghana, Absa Bank Ghana and Consolidated Bank Ghana
11:01 Indeed, Consolidated Bank Ghana improved its position and overtook Fidelity Bank to fifth place
11:08 from sixth place in 2021
11:11 Although its total percentage of deposits to the industry deposits decreased in 2022
11:18 At the end of 2022, the other banks in the top 10 of industry deposits were Fidelity Bank, Zenith Bank, Stanchart, Assess Bank and Cow Bank
11:29 Again, Ecobank Ghana maintained its position as the bank with the biggest loans and advances in the industry last year
11:37 Its share of industry loans was 14.7%
11:41 Meanwhile, the banking sector saw a jump in deposits growth by more than double the growth recorded in 2021
11:52 On Zoom with us to discuss some of the outcomes of the Ghana Banking Survey by the PwC's Banking Consultant Christian Tichijan
12:00 Good afternoon to you
12:02 One of the observations Christian from the survey was a jump in deposits by more than double the growth recorded in 2021
12:11 I mean compared to 12.1% rise observed in 2021
12:15 Growth in deposits was 31.3% as of the end of 2022
12:20 How do you explain this?
12:22 Thanks again for having me this afternoon
12:26 There were a lot of issues with the government securities runoff to the domestic debt exchange program
12:32 that was making a lot of institutions to downgrade the government portfolio coupled with certain uncertainties
12:39 The general public had actually gotten wind of a lot of the things that were happening
12:43 so they didn't feel their investments actually were safe with the government
12:47 Some of them were even terminating prematurely their investments in the government portfolio
12:54 including the T-bills
12:56 Those who were discounting it were now placing it with the universal banks in fixed deposits
13:02 That scenario and that trend led to the banks having a rise in their total deposit portfolio as captured in the PwC report
13:10 So it was as a result of people losing confidence in their government long-term securities or even short-term securities
13:17 and now placing it with their banks in fixed deposits
13:20 The Ghana Banking Survey was themed on how banks intend to build back after a challenging year
13:28 We saw what happened with the GDP in 2022
13:31 Now most of the banks in their responses wished they had taken a less significant position in government securities
13:39 Do you think we are going to see that happen going forward?
13:42 What would the implications be for government?
13:45 Yeah, rightly so
13:47 Over the years it had actually never happened when government securities had been in doubt in terms of the risk
13:53 and over the years they had been risk weighted at 0%
13:57 So that had given that portfolio a lot of confidence
14:00 Of course now we expect them to have diversified portfolios
14:05 where they wouldn't be suffering from that concentration risk as they used to do
14:11 and all the issues that actually happened with them
14:14 On implications to government, we don't really expect that high of a subscription
14:18 especially in government long-term securities
14:21 The short-term securities, that's the treasury bills, will continue to enjoy high patronage
14:26 but in the long run government will be the ultimate beneficiary
14:29 since now a lot of the banks will channel some of the funds that they will have actually invested in the government treasuries
14:36 now into giving out loans to their customers
14:40 and so far as that happens, it begins to expand the economy
14:44 and when the economy gets expanded, there are a lot of ramifications and a lot of benefits that the economy will enjoy once it gets expanded
14:53 and at the end of the day, it's the government of the day that will actually be receiving the plaudits for some of these things when it does happen
15:00 And again, banks based on the survey thought they should have used more robust economic policy analysis and market research
15:08 to improve their ability to predict economic risks
15:12 How significant is this? What do you think would have changed about the outcome we saw in 2022?
15:17 Yeah, rightly so. Very few of these banks have got what we call the market research departments
15:24 that will have been charged to give insights into some of these happenings and predict future phenomenon
15:30 based on some of these variables that they were going to actually research in them
15:35 and that duty or exercise can really not be underrated and it's a must-have department for all the banks
15:41 I wouldn't be surprised if now they are beginning to set them up or they are springing up in the banks
15:47 and it's a must-have like I've already indicated
15:50 Institutions actually thrive on some of these departments for sustainability based on the predictions that they are able to give
15:57 and it's not to say that having that department solves all your problems
16:01 but at least it gives a bit of leverage in terms of research into the unknown
16:05 and the predictions that are actually given into the future will be made which could be very valuable significance
16:12 to the issue that, for example, we are having on hand with the domestic debt exchange program
16:18 and all of these economic meltdowns that the country actually went through
16:23 Well, so with the second DDEP underway, banks appear calm
16:28 What meaning should we read into this? Have they got everything under control?
16:33 Yes, they've got this under control
16:36 Already all government portfolios have been downgraded
16:39 and even in some instances, provisions have been made, adequate provisions
16:43 Some have even made 100% provisions for them
16:46 and that culminated in the losses made by banks in 2022, that was last year
16:51 So I would say the worst has already happened
16:53 They've seen the worst and most of these banks also had dollar-denominated securities
16:58 which is the portfolio that is going to be dealt with now
17:01 But like I've said earlier, provisions have already been made
17:04 and then the impact has already been seen in last year's figures
17:08 and with the government support of 15 billion to complement the existing framework by Bank of Ghana
17:14 where they give liquidity support to some of these institutions
17:17 they appear calmer because they've seen the worst of it
17:20 and adequate provisions have actually been made
17:23 which is quite different from the earlier DDEP that happened
17:27 where there were so many uncertainties, they weren't sure which ones were going to be touched
17:31 which ones were not going to be touched, which ones were going to be wholesale
17:34 which portfolios were going to get exemptions
17:37 There was so much uncertainty with the previous exercise
17:40 but this one, because they've already made adequate provisions, they appear calmer
17:45 Chris and Titi-Jan, great to speak with you this afternoon, banking consultant there
17:50 Well, the Bank of Ghana has vowed to strictly enforce a zero financing of government
17:55 as if any breach could affect the country's programme with the IMF
17:59 The central bank at the beginning of this year commenced the policy as part of the IMF programme
18:04 However, based on the liquidity challenges facing government
18:08 there are fears that the central bank could go back to the programme
18:12 but Director of Research Dr Philip Abedu-Otu says that will not happen
18:18 If we go against that zero financing, it will have implications for the IMF programme implementation
18:30 and that might create all sorts of problems for us regarding the triggering of other flows
18:38 associated with the completion of each IMF review
18:42 We would have missed that critical target, it would become big news
18:47 but it could flip into other things as we move along
18:50 For the first seven months of the year, we've respected that zero financing
18:56 And there hasn't even been a thousand Ghana cities or even a hundred Ghana cities
19:01 support government to balance the books or to meet a liquidity challenge?
19:05 No, absolutely no
19:07 And you're enforcing it to the letter?
19:09 We are enforcing it to the letter
19:11 But some shocks again for the economy
19:13 where government needs some amount of money to balance its operations
19:17 We'll still stand our ground
19:19 We'll still stand our ground
19:22 And that is being done?
19:23 That is being done
19:24 Let's turn now to the financial markets
19:28 Government Treasury bills still fell short of target marginally
19:32 as interest rates continue to surge on the money market
19:35 Now, according to the auction result published by the Bank of Ghana
19:38 the government secured 2.179 billion cities
19:41 as against the target of 2.261 billion cities
19:45 Patrick Edema Gama is with us on Zoom
19:47 Good afternoon to you, Patrick
19:49 A bit more detail about Friday's auction and what to look forward to this week
19:54 Darrell, while on the money market, we noticed that there was a shortfall
20:01 Slight shortfall was still recorded
20:04 although the money collected was enough to cover the maturing securities of 2.13 billion
20:12 We also noticed that on the 364-day bill
20:16 the government rejected about 4 million Ghana cities due to high yields
20:20 Now, the 91-day declared an interest rate of 25.57
20:25 increasing by 33.06 basis points
20:28 while the 182-day declared a 27.28% increase by 13.47 basis points
20:36 We also saw that the 364-day closing at 30.49%
20:41 increasing by 18.53 basis points
20:43 Again, the 91-day was desired by most investors
20:48 It took about 63.6% of the auction
20:52 against 29.8% and 6.6% for the 182-day and 364-day bill
20:59 And on the stock market, shares of Fan Milk, Societe General and Standard Chartered Bank
21:05 are expected to dominate the equity market this week
21:07 What's happening with those stocks?
21:10 Well, we are seeing increasing demand for these stocks
21:14 as well as GGBL, Societe
21:17 It keeps increasing and there is limited supply
21:20 Again, on the stock market, investors of Bob and Gwell should expect
21:24 some dividend payments in the course of the week
21:27 Bob is paying about 94 pesos
21:30 while Gwell is paying 0.056 pesos especially
21:35 Anything else to be on the lookout for this week, Patrick?
21:40 Well, the government is targeting about 3 billion for the auction this week
21:46 We expect interest to be in the short side of the auction
21:52 So we expect 91-day to take most of the auctions as usual
21:57 Thank you so much, Patrick Adam Agamad there
22:01 He is Head of Trading at Republic Securities
22:05 Appreciate your time with us this afternoon
22:08 Our next story is on illegal mining
22:11 The very risk of climate change and the devastating influence of illegal mining
22:15 on farmlands are taking a toll on Ghana's agri-sector food security and biodiversity
22:20 It has been estimated that the country may in the coming years struggle to feed its indigenous
22:25 if measures are not instituted to fight the menace
22:28 Fortunately, 50-acre lands in six districts within Obuase and Adanse areas
22:33 degraded by illegal mining activities are being reclaimed through an oil palm plantation
22:39 Emmanuel Bright Kwaku has more in this report
22:42 Several open shallow pits dotted across an abandoned illegal mining site at Adanse
22:48 on the outskirts of the Obuase municipality
22:51 Like other communities and agricultural plantations ravaged by artisanal mining
22:56 the impact of the illegal activities are glaring
23:00 Director of Agric for Obuase East Yao Osei says the illegal miners have overtaken low lands
23:08 purposed for horticultural produce, threatening food security in the district
23:14 Most of the lowland areas which were used to cultivate vegetables and rice
23:22 have been taken over by these activities of GALAMSES
23:28 And if care is not taken, it will go a long way to affect the food production in the district
23:37 It will also go a long way to affect the food security situation in the country in general
23:44 Formation of sinkholes, contamination of soil and loss of biodiversity
23:50 are a few of the deleterious impacts of illegal mining on farmlands
23:55 There have been urgent calls on the government to find pragmatic solutions to the menace
24:00 In its bid to salvage the worsening situation
24:03 Anglegoo Deshanti Obuase Mine through its 10-year socio-economic development plan
24:08 is converting about 50-acre degraded lands in the Obuase municipality
24:13 and five adjoining districts into agroforestry block farms
24:17 Launched two years ago, the climate-resilient Oil Palm Project
24:22 is expected to contribute to Ghana's deforestation mitigation targets by the end of 2026
24:29 Daniel Atebentum is Sustainability Superintendent at AGA Obuase Mine
24:36 As part of our socio-economic development plan, 10-year plan
24:40 agric intervention is one of the key areas that we are looking at
24:44 So if you look at the plan, we've made several support towards agriculture
24:48 One of the key or highlight areas is the climate-resilient Oil Palm Project
24:53 which is affecting about six districts within the Adanse enclave
24:57 This is to try and then see how we're able to use oil palm to reclaim lots of the land
25:03 that have been degraded or that has been used for mining purposes
25:07 The study with Solidario shows that the Adanse enclave is climate vulnerable
25:14 Nearly 30,000 oil palm seedlings of two variants
25:18 have been distributed to over 2,500 farmers in the Obuase municipality
25:24 Obuase East, Adanse North, Adanse South, Adanse Asokwa and Adanse Akofum districts
25:31 So right here in the seedling yard we have about two varieties
25:35 That is the palm millet and also the one we got from Ghana Sumatra
25:41 Each of these seedlings have their strengths
25:44 and we would want to sort of put it across the Adanse enclave and learn from it
25:50 One is good and resistant to drought
25:53 The other also comes in abundance when it's seasonal
25:56 and these are the balances that we want the farmers to have
25:59 so that in their farm you see different varieties
26:02 and withstanding different conditions that we face within the Adanse enclave
26:06 And that's the Marketplace. Thanks everyone for watching
26:11 There is more news on our website, manjoonline.com/business
26:15 We will assign Ghana positive rating once local currency bonds
26:20 held by pension funds are restructured
26:23 That's according to Fitch, you can find that story on manjoonline.com/business
26:29 Let's go up one more
26:31 FBN was the most liquid bank in Ghana in 2022
26:35 That's according to the 2023 Ghana Banking Survey
26:38 which we have been talking about this afternoon
26:41 Let's do one more headline before we go on our website
26:45 Also on the Ghana Banking Survey, Ekoban Ghana remains biggest bank in Ghana
26:50 So you can read more on manjoonline.com/business
26:54 My name is Darrell Clark, thanks for watching
26:56 We will be back same time tomorrow
26:58 [Music]
27:19 [Music]

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