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The Market Place with Daryl Kwawu (30-8-23)

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Transcript
00:00 Hello, welcome to the marketplace. My name is Darrell Powell at the top of the hour
00:04 we were at the commissioning of the electric and salt mine by the president of the country that
00:10 Poses implant is expected to create some more jobs and also help boost economic growth
00:15 We want to just go straight to our stories this afternoon
00:18 Government has now set the end of September this year as a new date for the Ghana financial stability fund to take off
00:24 It's coming after an earlier date was reviewed by the finance ministry
00:28 The government says it has now secured the initial seed capital for this fund as well as commitment from the country's donor
00:36 Partners the Ghana Association of Banks in a recent report pushed for quick establishment of the fund to support banks facing liquidity challenges
00:44 Dr. Mohammed Amin Adam is Minister of State at the Finance Ministry
00:47 the DEP was based on the
00:52 stress test the comprehensive stress test that we conducted, you know to determine the effect of the
00:59 program on the domestic banks
01:01 And so we fully understood what the effect could be is the quantum of the effect that we we did not know
01:09 But we knew that some would be adversely affected
01:12 The good news is that some of the banks have recovered quickly and a lot of them have declared profits
01:19 But those that are still faced with solvency
01:22 Challenges we want to be able to address that through the financial stability
01:26 fund and
01:29 And this is money government is putting in place as well as the World Bank
01:34 We are contributing about 500 million dollars. The World Bank wants to do about
01:38 250 million dollars and and this is the first phase of the
01:43 The funds that we are going to disperse to banks that have insolvency challenges liquidity
01:50 We shouldn't even go there because we don't think there is much of liquidity
01:53 our problems in the banking and local banking sector as a result of the forbearance is the
01:59 Bank of Ghana are provided but for solvency issues. Yes, some have especially the state
02:07 Banks with state interest and they are the target banks for support under the financial stability
02:15 Fund we're hoping that by the end of September
02:18 I think we should be operational so that the banks can begin to receive
02:23 This support in order to make them stronger
02:26 You also know that government is embarking on an aggressive group strategy and to be able to achieve that
02:32 We need to be able to provide a private sector with capital so that they can be able to invest
02:38 and and and therefore finalizing the financial stability
02:43 Fund and then implementing it as as quickly as we could
02:47 Will also help the private sector have access to capital through our local
02:53 Financial institutions to support our group. So that doesn't mean that you you you go ahead with what you have the seed capital
03:00 Well, you look forward to because you are now working towards September the World Bank is still
03:05 Working on to advance your support as well
03:08 We start with something whilst later the additional donor funding come from both support. Our actual target is 1.5 billion dollars
03:16 But this is 750 we are doing as I indicated is the first
03:20 Phase of support that will be provided through the the financial stability fund
03:26 And so yes
03:27 We're talking to donors a lot of them have shown interest as and when it is necessary for government to raise additional funds
03:34 So that overall we are able to meet the 1.5 billion
03:38 Donors going forward we should be able to do that
03:41 The economist intelligence unit is warning Ghana and other African countries
03:47 That have high inflation and interest rates could continue to weigh on growth and investor confidence over the 2023-2024
03:55 Forecast period that's according to his latest report dubbed Africa's operational risk outlook
04:02 It said these situations disrupt businesses investment and economic growth
04:06 Leading to uncertain operating environments furthermore the UK based organization pointed out that although greater focus
04:14 Will be placed on building regional markets and value chains progress on the continent-wide African continental free trade area will remain slow
04:22 This is given the complexities and challenges of setting up effective trading arrangements and existing non tariff barriers such as poor
04:31 infrastructure connectivity in addition
04:33 widespread corruption in public services a lack of accountability among civil servants
04:39 limited government control beyond key urban capital centers a lack of judicial independence
04:45 Among others will continue to hold back Africa's operational risk environment in the medium term
04:51 Meanwhile the five best rated African countries for operational risk in Africa as of mid
04:58 2023 are Mauritius Cape Verde, Botswana, South Africa and Morocco
05:03 Now president of the Chartered Institute of Taxation Ghana George Kwetia has advised government to close the tax gap by
05:11 investing in existing tax laws rather than introduce new levies
05:15 According to him the introduction of new taxes and increases in levies without corresponding increase in GDP is counterproductive
05:22 Mr. Kwetia spoke on Joy Businesses discussion themed Ghana's high taxes
05:28 the causes and finding remedies
05:30 We are the World Bank
05:33 Conducting a study
05:36 In 2020 with respect to Ghana's tax gap and
05:42 The bottom line of that study was the fact that Ghana
05:48 with respect to pay taxes, which is
05:51 important duties
05:54 Corporate tax and VAT. We had a tax gap of about 20%
05:58 if you take
06:01 2021
06:02 GDP estimate of about
06:04 77.6 billion dollars
06:07 If you work out the 20% on the
06:12 77.6 billion and you translate it to
06:18 HCD equivalent depending on the exchange rate you use we are talking about
06:22 155 to 170 billion as tax gap
06:27 if you look at
06:31 Total tax revenue as I've mentioned for the revised one for 2023 government is only looking at
06:38 108 billion plus you have a tax gap of about 55 to 70 billion
06:46 so obviously you really
06:49 country that want to invest and make sure
06:52 That you will be in the right taxes in my view is not about
06:56 more taxes
06:58 But it's rather an investment into making sure that you close the tax gap and if we are able to do so for instance
07:06 We should be able to double
07:09 our tax revenues from
07:12 the neighborhoods of
07:14 108 billion to almost
07:16 250 and any more billion
07:20 While speaking on the same program
07:25 economists at the Institute of studies called social and economic research professor Charles Akka said government must find a better way of
07:32 Taxing the informal economy where much income generated
07:36 Much income is generated, but is unaccounted for
07:42 Baba the Baba I go to where I Baba my yes
07:45 Yeah
07:46 And this Baba has been there for more than 15 years since I've been living in a different more than 15 years
07:51 When I go there haircut is to be honest with you. I
07:54 Asked him how many people do you Baba a day?
07:58 Is it at least 10 people on Saturdays and Sundays?
08:01 He gets as much as 30 people come into Baba by my calculation every month. He gets about 9,000 Ghana City
08:08 That's more than the teacher. That's more than a nurse. That's actually musical to what a professor takes
08:13 And so when you are taxing the university security officer who ends about just 800 Ghana City
08:19 The nurse or the cleaner in Colombo who has just about seven to Ghana City and you post income tax on him
08:25 And then you have people doing business like Baba headdresses mechanics who are not in the bush
08:30 They are right in the community
08:31 They've been there for 10 years 20 years and you cannot raise their ending as much as 9,000 a month
08:36 80,000 I'm a song for them count a lot of about a million Ghana City in a week
08:40 And you don't find a way of taxing them even 5% of their dietary revenue every month
08:46 You will not raise your tax revenue. Then you now go and concentrate on the free former sector people like me
08:51 Small businesses and impose high taxes on them increase V 80 to 15% impose a lot of excise duties are not crippling businesses
09:00 You will not grow the economy people will find a way of avoiding and evading the tax and you come back the same way not
09:06 Achieving your target. So I've just wanted to show that even if you look at the budget
09:10 The the targets are not ambitious enough. Our tax effort is too low is inadequate
09:17 That's what the World Bank analysis. He was mentioning shows that if you take even corporate tax
09:22 The gap the tax is about 84%
09:26 We are raising only just about 16% of the potential
09:31 We could have raised more revenue from the corporate sector than we are doing if you come to that is the same thing if you
09:37 Come to import duty, which there's a lot of evasion at the customs
09:41 We could have raised about 30% more revenue from import duty than we are driven
09:45 so that we need to look at a tax administration and
09:48 Reform it and set them ambitious target and let them raise the revenue. Otherwise, we'll keep going to I am
09:54 You
09:56 Now some commercial drivers appear to have found new ways of dealing with the impact of rising fuel prices
10:11 the increases are not just draining their pockets, but seem to be taking a
10:14 Psychological toll on the drivers while my colleague in Manoj even who caught up with a 20-year-old taxi driver
10:21 Who has blinded his fuel gauge to avoid distraction of seeing the fuel go down
10:26 That is Emmanuel Fatshau
10:47 a 20 year old man who has been driving for two years the persistent rise in fuel prices is
10:53 Forcing him to reconsider moving out of the driving business
10:56 The fuel price increases are eating away at his profit
11:14 It also affects his concentration on the road to Emmanuel says constantly witnessing his fuel reduced as seen from the fuel indicator
11:22 Distracts him so he has decided to cover the fuel gauge
11:26 [Speaking in Swahili]
11:44 To reduce the frequent visits to the filling station
11:46 Emmanuel opts for short distance rides. He believes short distance rides are more cost-effective than long rides
11:54 Although he admits the bargains from passengers can be irritating
11:58 Emmanuel appears not to be the only one covering the fuel gauge was on the road. Some commercial drivers also cover the fuel gauge
12:19 But what is the point when the fuel will decrease due to the kilometers covered?
12:23 Emmanuel explains that he parks his vehicle after a number of rides to check his gauge to avoid completely running out of fuel
12:46 In December 2021 when he started driving petrol was selling at six cities 80 pesos per liter
12:52 Now petrol is selling at 13 cities 50 pesos per liter
12:56 This represents a 99% increase in price should the fuel prices continue to escalate
13:01 Emmanuel fears he'll be squeezed out of business
13:04 [Speaking in Swahili]
13:17 For now the 20 year old is looking at saving enough to start his own business and get off the road
13:22 Until then he'll continue to temporarily cover his fuel gauge to give him some sanity on the road
13:29 Emmanuel Jivenu, Joy Prime
13:31 [Speaking in Swahili]
13:57 Small and medium enterprises in Ghana face challenge in securing capital as well as having access to capacity building
14:04 Due to this, Assess Bank Ghana and Deloitte have signed a memorandum of understanding
14:09 To build capacity of 10,000 SMEs in Ghana
14:12 The support will be in cash and capacity building to support SMEs expand their businesses
14:18 Speaking to Joy Business, the chief finance officer of Assess Bank Ghana
14:23 Michael Jambat said the partnership will bring change in the SMEs space
14:27 So this partnership largely with between Assess Bank and Deloitte is to really position us in a way that
14:34 beyond the financial services, beyond the loans, beyond the
14:37 Advances that we are able to provide to SMEs to scale their business
14:41 Deloitte also comes in on the back of the technical assistance in terms of capacity building
14:46 You know SMEs make up over 80% of our economy. That has become a cliche
14:50 We speak all over the place, but at the end of the day we believe that
14:53 We have to go to the next level and make sure that beyond the financing, there's also that capacity building, accounting services
15:00 financial services, governance and all of that
15:03 We believe that it should go hand in hand if you're able to tell if you want to take SME business or to take SME
15:08 Support to the next level. At Assess Bank, we've been doing this over the past few years and we believe that
15:14 over the
15:16 170,000 SMEs we've been able to support since coming to this market. We should be able to take it to the next level
15:22 Country managing partner Deloitte Ghana, Daniel Okwujo Owusu said the exercise is an exciting journey that would empower small businesses
15:30 According to him, businesses are struggling to have access to capital. So just as we said during the signing
15:38 So Deloitte is a big global firm
15:43 We are the biggest professional service firm with
15:46 significant knowledge in accounting
15:49 with technology
15:51 with strategy
15:54 with budgeting and the rest of the things. So what we are seeking to bring, we are coming with the knowledge
16:03 Assess Bank has the funds
16:08 And that's the marketplace. Thanks for watching everyone. There is more news on our website myjoyonline.com/business
16:15 We'll be back same time tomorrow
16:18 [Music]
16:43 [Music]

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