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The Market Place with Daryl Kwawu on JoyNews (9-8-23)
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NewsTranscript
00:00 perspective, we see an upward trend with food inflation inching up by 0.8 percentage point
00:08 between June and July 2023 and non-food inflation increasing by 0.4 percentage point
00:14 from 33.4 in June 2023 to 33.8 in July 2023. Also coming up, eight banks accounted for 67%
00:25 of banking industry exposure to the domestic debt action program according to a report by PwC.
00:30 And as the National Petroleum Authority gears up to implement the cylinder recirculation program
00:39 next month, Joy Business visits some action points and bottling plants to assess the readiness.
00:45 Our yearly production will be 1.2 million cylinders if we work double shifts but at
00:51 the moment as you saw half of the machines we are not operating them, we are not in our
00:56 full capacity, we are just waiting for the CRM to kick off so that we can meet the demands.
01:02 My name is Daryl Quad, thanks for being with us, details coming up.
01:19 And we begin with the latest inflation figures from the Ghana Statistical Service. The year-on-year
01:31 inflation shot up marginally to 43.1% in July 2023 from the 42.2% recorded in June.
01:39 According to figures from the Statistical Service, rising prices of food and non-alcoholic beverages
01:44 pushed the overall inflation up. Speaking at a press briefing, government statistician Professor
01:49 Samuel Kobuneni said food inflation continues to significantly impact the overall inflation.
01:55 Both food and non-food perspective, we see an upward trend with food inflation inching up by
02:04 0.8 percentage point between June and July 2023 and non-food inflation increasing by 0.4 percentage
02:13 point from 33.4 in June 2023 to 33.8 in July 2023. Disaggregating further from a locally produced
02:22 item and an imported item perspective, we find an 8.2 percentage point difference between
02:28 inflation for imported items and inflation for locally produced items with imported items
02:34 recording an inflation rate of 45.7% and locally produced items 37.5%. Further disaggregating
02:42 year-on-year inflation from a regional perspective, the Northeast region recorded the highest rate
02:48 of 64.0% and the Greater Accra region recorded the lowest rate of 31.8% indicating about a
02:56 two-time difference between these two regions, that is the Northeast region and the Greater
03:00 Accra region. On a month-on-month basis, we saw that month-on-month inflation inched up by 0.4
03:07 percentage point, 3.2 for June 2023 and 3.6 for July 2023. Disaggregating this from a food and
03:15 non-food perspective, food inflation on a month-on-month basis was 3.8% and non-food inflation
03:22 on a month-on-month basis was 3.4%.
03:26 All right, joining us on Zoom, Associate Professor of Finance at the Andrews University in the US,
03:34 William Swipra, thank you so much for your time. So your reaction to the latest numbers as prices
03:40 of food continue to trigger an increase in inflation? Good afternoon, Darrell. So what
03:48 is really happening, we may know that we are not out of the inflationary pressures yet.
03:56 Cost of inputs from the world market is going up. We also noticed that our currency has not
04:06 finally come to its realization or stabilization. We see a small increase in currency devaluations.
04:14 And also, we noticed that when the food price reduced at the world market, there was not much
04:21 reduction in the food cost, which also kept the transport sector also a little bit high.
04:29 And in fact, the farmers in Ghana, if you've noticed, they are also feeling the pinch of
04:36 the high cost of living. So they are also reflecting, they are also letting their prices
04:42 reflect that high cost of living. So we also noticed an increase in electricity cost, which
04:49 also have an impact on the general economy. So these factors put together are the reasons why
04:56 we've seen a marginal increase in the inflationary rates at the moment. So from the food side,
05:02 there's also the talk that there might be a shortage of rice because of the policies by
05:10 India. So these are also going to have an impact on the rice importation. And remember, in Ghana,
05:17 we currently now consume a lot of rice. So putting all these together, that's why we've
05:24 seen that our food basket keeps on being the leader for inflation as compared to the non-food items.
05:32 I mean, it's interesting to point out because last month, for instance, we saw an increase in
05:38 the price of dog meat, in the price of fish. And it makes you wonder really where the increase is
05:44 coming from. For instance, for dog meat, it makes you wonder what is really happening. I mean,
05:50 you cite things like rice, which you understand there's a global issue going on. But then locally,
05:54 some of these items don't really make sense. So locally, because we are mostly importing
06:01 most of the food items we consume, that is one major factor. So like for dog meat, for instance,
06:10 we don't produce them in Ghana. It's an imported item. So aside the exchange rate devaluation,
06:17 there's also increase in taxes. All this will cause the cost of the product being going high.
06:23 And also from the farmer's perspective, we also see that there is also an increase in the farm
06:30 inputs. So definitely, they will also factor in the prices of the items that they produce
06:39 in Ghana. So that is why we've seen that kind of miss in Ghana. And then there's also that kind of,
06:45 you see that production output itself is not as significant as in the past. Some part of the land,
06:55 because of the issue of Galamsey, you may also see that there are the ripple effects that we are
07:01 currently facing. And also, as expected, we are not seeing a lot of the youth also going to
07:08 agriculture, which is also affecting production. So there's a slight shortage. And people are also
07:14 reflecting the cost of living into the product that they are selling. That's why we've seen the
07:21 prices going up. Yeah, because I was going to say, because you mentioned people factoring the cost
07:27 of living as well, whether it could also be the situation that people are exploiting the economic
07:33 situation to make some gains. I mean, it may be true. We may have to find out from the Ghana
07:40 Social Service, what is the prices we are getting from the farm gates as compared to the urban
07:45 centers. If the price disparities are too wide, then it means that the middlemen are really
07:51 profiting from it. Remember, the government actually did take some time past trying to
07:56 move the product from the farm gates to Accra to the ministry to sell. Can we find out whether
08:03 that is the real situation? If not, the middlemen may be profiting from the entire transaction
08:11 until government comes in with some staff measures or policies to address that kind of issue.
08:18 So far, we have not seen any pragmatic measures to curtail food inflation, at least I've not heard
08:25 of any. What should the government be doing? Are they approaching this wrongly?
08:32 I don't know what is happening to the slogan that the government started when they were
08:39 approaching getting the youth to go into agriculture and...
08:43 Planting for food and jobs?
08:45 Food and jobs. So, that kind of policy, we should strengthen that kind of policy and it may bring
08:54 down the whole issue. In my perspective, I think we spent a lot of money building about a thousand
09:02 warehouses, hoping that we are going to produce more and store them at the moment, but we cannot
09:12 talk of that kind of much storage of food products in the 100,000 warehouses that were built.
09:19 So, these are some of the policies we want to see government maybe going down to the market gates,
09:26 buying them and storing them. And at this time, we're releasing them onto the market so that we
09:31 see that the prices come down. Because there are some commodities probably which we can produce,
09:36 buy them and store them in the warehouses and then sell them when it's needed. Some products,
09:45 especially tomatoes, onions and the rest, the government may have to find a strategy to make
09:51 sure that we try to cultivate them and then produce them ourselves instead of going to
09:57 Burkina Faso and the rest. But they all increase the inflationary pressures because we go as far
10:04 as Burkina in Niger. And we should also remember that Niger is also closing its borders. So,
10:12 the anticipation is that onions are going to be very expensive very soon because we get a lot of
10:19 onions from Niger. And there are some kind of meat also that we get from Niger, they call it
10:26 kutubi. It's also going to affect the food basket in the coming year. So, all these factors are
10:34 something that we need to find out what the policies of government should be. Probably
10:40 encourage the youth to go into agriculture and those programs. If not, the situation will get
10:46 very bad. And based on what you're saying, especially with the situation in Niger,
10:51 it looks as though we're going to see inflation continue to rise at least in the next couple of
10:57 months. I don't know what you think about that. And what are the implications for economic recovery
11:03 if this trend continues? I mean, so, you know, World Bank issued a report that we should
11:12 anticipate this. And also in our IMF document, it's already mentioned that the situation will
11:17 get very worse before it will get better. So, all these issues are going to be at play.
11:26 Noticing that rice is also going to be in shortage because of the Indian policy. Indian
11:35 controls about 40% of the rice production and are sent to some part of Europe and Africa.
11:41 So, food prices or inflation is going to go up because of shortages. So, as for that, I believe
11:51 that it's going to get worse. What I may say is that maybe the rate of increase will not be as it
12:00 happened in November, December last year. Maybe the rate of increase may be marginal as we noticed
12:07 between the previous month, June and July. Something like that. But it's not going to be
12:14 that kind of shock. So, if the government is able to address some policies, comes up with strategies
12:20 to address the prices of the foreign grid versus the urban market, then that kind of issue can be
12:28 make it to. But we should anticipate that inflation will get worse before it starts to come down.
12:34 Thank you so much for your time, Professor Williams, associate professor of finance at
12:40 the Andrews University in the US. Thank you for your analysis. Well, let's turn to
12:46 issues concerning the domestic debt exchange program and our banking industry. Eight banks
12:51 accounted for 67% of banking industry exposure to the domestic debt exchange program. This confirms
12:58 a joy business story in November last year that eight banks were highly exposed to the government
13:03 of Ghana bonds. Now, according to the 2023 Ghana banking survey by accounting professionals, PWC,
13:10 72% of the impairment charges recorded in 2002 were linked to these banks. There's more in this
13:16 report. GCB, Consolidated Bank Ghana, Eco Bank Ghana and APSA recorded the highest impairment
13:25 charges of 1.81 billion, 1.77 billion, 1.62 billion and 1.61 billion CDs respectively.
13:35 The banks most impacted by impairment charge as a proportion of the investment securities
13:41 portfolio were Cal Bank, Prudential Bank, Zenith Bank and First National Bank. With the terms for
13:49 the restructure of dollar denominated securities yet to be finalized, the report said it will be
13:55 interesting to assess the adequacy of the credit losses estimated by banks once the terms are
14:01 finalized for exchange. The domestic debt exchange program coupled with the downgrade of the
14:06 government of Ghana's credit rating by rating agencies swung the industry into an unprecedented
14:13 loss. This resulted in the erosion of the industry's assets base by 15.7 billion CDs
14:21 through the recognition of impairment charges on government securities.
14:34 Now, the National Petroleum Authority says it is deepening stakeholder consultation before
14:39 the Cylinder Recirculation Model takes off next month. According to Deputy Chief Executive of
14:44 the MPA Perio Kujeto, the authority is open for more dialogue with LPG marketers. James Hsien
14:50 visited one of the bottling plants and action points here in Accra to assess the readiness
14:55 for the program. The formulation of the Cylinder Recirculation Model is warranted to cater
15:04 for the frequent gas explosions that recurrently hit the country and also solve the stress consumers
15:10 go through in filling the acetylates. After a successful implementation of the policy,
15:15 it is estimated that over 9,000 direct jobs will be created in relation to new jobs. The
15:21 implementation of the CRM is to ensure that at least 50% of Ghanaians have access to safe,
15:27 clean and environmentally friendly LPG by 2030. It is also meant to improve access to LPG and to
15:34 increase adoption of LPG. Additionally, it is a policy shift to stop unnecessary loss of lives
15:40 and properties as well as gas filling stations mostly due to human error.
15:45 "Systems side by side. And then as the new policy takes new territory, the old policy
15:57 sort of shuts down gradually. And then for a particular timeline that we will set for ourselves,
16:04 we'll then finally phase out the old system. So yes, currently our monthly consumption
16:14 of LPG is about 30,000 metric tons. If you put that into the math,
16:23 80,000, if our bottling plants are able to produce 80,000
16:29 cylinders per day, if you calculate that per the current demand, we need to feed the system
16:39 about 50,000 cylinders a day. So the capacity is enough. And we think that at full implementation,
16:49 this is just the beginning. Like we said earlier, we've issued eight licenses. We have four bottling
16:56 plants that are currently being constructed. We're looking to have more bottling plants come up and
17:03 the capacity is going to increase." Perry Okuje to explain that the model had been well-piloted
17:08 and the system had been streamlined. The infrastructure now in place to ensure the safe
17:13 delivery and use of LPG across the operational areas. "Because the cylinders have been an
17:19 investment by a bottling plant, we need to know at every point in time who has it. So it's a simple
17:27 registration process. You go to an exchange point, you identify yourself, they take your details,
17:36 you must have a valid, when you go to a bank to cash a check, you present a Ghana card. If you
17:42 go to an exchange point, you present a Ghana card. The Ghana card has all your details,
17:47 has your location, where you live and all of that on it. So that we can have, or the exchange point
17:53 can have data and there can be traceability in case the cylinder goes and for one year,
18:00 it doesn't come back. So that is for the registration. And like I said,
18:05 without, well apart from Ghana card, if there's another form of identification, that gives the
18:16 exchange point operator comfort. And you know, the exchange points we have are not going to be
18:23 too different from what we currently have. What will be different is that they are not going to
18:30 fill the cylinder on site. The cylinders will be delivered from a bottling plant. That is the only
18:36 thing that is going to change. So usually you will notice that exchange points have a relationship
18:42 with the community or outlets have a relationship with the community. I believe the only way you
18:48 carry a cylinder to Jolu to fill is if you don't have LPG in a local LPG station in your area. So
18:57 definitely you know each other, they know where you live and all of that. It is a matter of making
19:03 sure that they keep a record of who has the cylinder at every point in time. And like I said,
19:08 the subsequent public education and messages that we will craft for your networks will further
19:16 explain these processes so that citizens can be abreast with how we want to implement this.
19:24 On a visit to one of the bottling plants and exchange points, I engaged Sigma Cylinders on
19:29 their preparedness prior to the implementation of the CRM. Carlo Zitonian is the managing director.
19:35 We manufacture the LPG cylinder in four different sizes, 3kg, 6kg, 12.5kg and 15kg cylinders.
19:44 We have been in Ghana for 25 years. The company is fully owned, a Canadian company. We have been
19:50 providing cylinder manufacturing service for almost 25 years in Ghana. Right behind me,
19:56 I could see quite a lot going on. I actually don't have the technical expertise to respect
20:01 what's happening there. Talk to me, what's basically happening here? As you can see,
20:06 the factory is newly renovated and we have brought new machines. We work in four different
20:14 countries, in Abidjan, in Iraq, in Lebanon and in Ghana. We have initiated from Ghana.
20:20 We are manufacturing the cylinders. If you want, we will go through to the process of
20:25 manufacturing cylinder. All the process of manufacturing cylinder is done here in our
20:30 facility in North Industrial Area. All our workers are Ghanaians. We have more than 100
20:36 workers at the moment. We follow all the safety measures that are put by GSA and MPA.
20:43 [Music]
20:57 Alright, you're watching the Marketplace. Time to talk tech. Zoom, the video communications
21:02 company whose name became synonymous with remote work during the pandemic, has
21:07 ordered staff back to the office. The firm said it believed a structured hybrid approach was most
21:13 effective and people living within 50 miles of an office should work in person at least twice a week.
21:19 It is the latest push by major firms to roll back a flexible working policy service,
21:24 suggests that workers are still holding on to the ability to work from home to some degree.
21:29 In studio to discuss this is my colleague Isaac Ataseh Nyakok. Good to have you in studio to talk
21:34 tech now. So question really is, are the days of remote work coming to an end? Well, Darrell, that's
21:40 an interesting question, especially when Zoom, one of the leading tech companies which
21:46 fronted working from home, is now asking a chunk of their workers to
21:53 come back to work or sit in the office space. Now, the thing is, a lot of people are saying that
21:58 now if Zoom is asking workers to come back to work, then it could be that the days of remote
22:02 work is gradually coming to an end or has ended. However, it takes more or there is more to remote
22:09 work. Now, research has shown that remote work increases or is able to influence
22:16 productivity and so there is that bit of the conversation as well. But we also see that when
22:23 it comes to remote work, now though some companies are asking workers to move back to their offices,
22:30 there are some other companies or some other industries that are also promoting remote work,
22:36 especially the creatives. Now, a lot of people are now asking creative people, doing
22:42 designing, graphics and all of that, video editing, or creating the space for them in the remote
22:49 work industry. And so for them, it's not much of a big deal because they can stay anywhere,
22:54 work from home and still deliver what they are being asked to do. I mean, if it increases productivity,
22:59 then why do employers have a problem now with people staying out of the office and doing the
23:04 work they're supposed to do and producing results? Well, for the employers, I think the issue here
23:10 is that it sort of promotes inclusivity when you are in the office. Knowledge sharing is also
23:17 one of the things that's very important. You being with colleagues, you sharing knowledge, and it's
23:22 that easy for bosses. Now, let's make this point here. Bosses are calling for this, not necessarily,
23:29 you know, workers. Let me put it that way. Now, bosses, because they believe that or they think
23:36 that they should have that control over workers, they should be able to see workers in the office
23:41 space, work, go about or see them do the work they are supposed to be doing. However, like I was
23:46 saying earlier, that remote work has the ability to increase productivity because now when people
23:52 are working from home, a chunk of their time is spent on the road, especially here in Ghana.
23:57 We, you know, a greater part of the time we spend when we leave the home is on our road, en route
24:03 to work and from home. Now, this decreases productivity because a lot of the time you
24:07 get to work tired. Now, if I'm working from home, it offers me that flexibility, wake up at any time
24:13 and still will be able to deliver. I don't have to put on a suit and tie if I have to.
24:18 I can easily wear anything and that sort of flexibility, having kids at home,
24:23 taking a break in between time intermittently, is what is or has increased productivity because
24:30 that has offered that, you know, refreshing space, if I can put it that way, or some form of,
24:36 you know, a change in environment to workers for them to be able to deliver on their...
24:43 And so that makes the case for working remotely, doesn't it? Well, the trend we're seeing right
24:48 now is that most multinationals are asking workers to come back at least maybe twice a week or three
24:55 times a week, I don't know. But then what are the pros and cons for employees?
25:01 Well, for employers, I mean, again, the flexibility. For employees, let me begin with employees,
25:08 the flexibility. So now for employees, the fact that you don't have to think about commuting to
25:13 work and from work, going through that hassle, you deciding on what to wear to work, but you being
25:19 able to live within your comfort, within your space, however you want to sit and work, whatever
25:25 you want to do to, you know, deliver on your duties, that is one of the things pushing for
25:30 employees or to be able to, you know, push for this remote work thing. For employers, I mean...
25:36 Two seconds.
25:37 So again, so then for employers, clearly now in AssessStance, they don't really, I wouldn't say
25:43 they don't care about productivity, but they want to see workers in their space, they want to see
25:48 workers in their offices. But then again, for employers, it also has come at a cost reduction
25:54 since working in the office spaces can be costly sometimes. So we look at even companies here in
25:59 Ghana who have had to ask employers to do some hybrid, partly work at home, partly work in the
26:06 office because they're able to cut down cost when, you know, these workers work from home.
26:11 Got to go. Thank you so much Isaac Ataseh. We'll continue this debate in the office.
26:15 That's the marketplace. Thanks for watching everyone.
26:17 Money is on our website, myjoyonline.com/business. You can read more about our top story today on
26:24 inflation increasing marginally to 43.1% in July, myjoyonline.com/business.
26:31 We are back same time tomorrow.
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