Sunday, 20 September 2020

Ghanaians react to S&P B- ratings… economist assures it won’t affect investor confidence

 


 

Adnan Adams Mohammed

 

The most recent ratings of Ghanaians economy and fiscal stability by internationally acclaimed rating agency, Standard & Poor's (S&P), have not been welcomed by many Ghanaian economists and the government.

 

Already, the Finance Ministry has described the rating as unfortunate. The Rating Agency had lowered Ghana’s long-term foreign and local currency sovereign credit ratings to B- from B and affirmed its B short-term ratings.

 

A press statement by the ministry said that while it recognized that the downgrade was widespread, affecting other countries worldwide, it found it disturbing that ratings agencies would choose that path at a time when countries, including Ghana, are battling an unprecedented crisis. But, an economics professor has refute assertions that the rating will affect investor confidence.

 

“The agency is doing its job by rating. However, the timing is not too good, but I believe well-meaning people out there, investors and the like will look at this rating and understand it within the context of the pandemic that yes we have been downgraded but within the context of the pandemic”, Professor Peter Quartey, senior researcher at the Institute of Statistical, Social and Economic Research reacted.

 

He noted that, nobody expected an upgrade so it is not surprising, but it is something that we were all expecting, except that I believe investors who will see this data will be discerning. We are not in normal times and it was not just Ghana but several other countries that were downgraded because of the effects of the pandemic.

 

The outlook is adjudged stable. The COVID-19 pandemic-related expenditures elevated the fiscal policy stance. This was to ensure that we save our people and provide relief to many Ghanaians severely impacted by the pandemic. This was the fundamental reason for the lowering of the rating.

 

A review of global credit ratings indicates that lowering of sovereign credit ratings have affected more than 80 countries and there has been more than 100 negative outlook revisions for this year.

 

Most of these credit rating downgrades and negative outlook revisions are heavily concentrated on the countries who previously were at B/B2 credit ratings.

 

These adverse rating actions have touched almost all continents as rating agencies react to the effects of the pandemic on the global economy.

 

 

In Ghana, the primary focus is on saving lives and livelihoods which may require some temporary fiscal and economic adjustments including some one-off expenditures. This position was aptly echoed by President Nana Akufo-Addo in one of his addresses to the nation on the pandemic…” We know how to bring the economy back to life. What we do not know is how to bring people back to life.”

 

 

The government chose to save lives and therefore instituted temporary life-saving initiatives and interventions aimed at protecting the general population against the negative economic effects of the pandemic.

 

 

These necessary interventions, which led to significant unbudgeted expenditures, included subsidies on water and electricity to support vulnerable households during the lockdown period.

 

 

The Government also provided credit to MSMEs whose businesses were most-impacted by the lockdown. Despite these interventions, Ghana’s economic fundamentals remain strong, and recovery prospects are high and this is reflected in the positive narrative on how Ghana has managed the economy under the pandemic. In addition, Ghana’s medium-term plan has a robust strategy to safeguard growth.

 

 

As at September 7th, our fatality rates have been less than 0.7% as compared to 2.4% for Africa and 3.25% globally. Our recoveries are over 97%, compared to 79.7% for Africa and 71% globally. Our cases as at 10th September 2020, stood at 842.

 

 

As the South African Revenue Services Commissioner recently argued “Whilst we understand the underlying factors that are pointed out by the ratings agencies, we think that during such a time of crisis, where the whole world is recalibrating and redefining its economic status, for any downgrades to be issued during this time is like kicking us when we’re down.” We therefore call on Rating Agencies to seriously consider freezing any rating actions during global pandemics such as COVID-19. It is very unfortunate that rating agencies will choose to downgrade our countries in these unprecedented times.

 

 

S and P Global Ratings noted the significant positive developments in the areas of current account position, external reserve build-up and the unparalleled stability witnessed in interest and exchange rates. Compared to Ghana’s peers, the GDP growth is still positive, despite the global crisis.

 

 

Going forward, we expect that with the gradual easing of restrictions, the economy will swiftly rebound and all the one-off expenditures eliminated. We have a clear path towards the restoration of economic stability in the short to medium term.

 

 

We will sustain our progress and accelerate this through the GHS 100 Billion Ghana CARES transformation programme within the general policy framework of Ghana Beyond Aid and certainly beyond the pandemic.

COVID-19 exposes fragility of Ghana's economy

 

 

 

 

Adnan Adams Mohammed

 

Ghana’s economy contracted for the first time in almost four decades in the second quarter, by an annual 3.2%, as coronavirus restrictions stalled economic and social activities in the part of the year.

 

 The country during the early stage of the spread of COVID-19 imposed a three-week lockdown in March to halt the spread of the pandemic, forcing many businesses to close, government statistician Samuel Kobina Annim told a news conference.

 

 An economist has said Ghana’s economy would have sunk deeper into recession but for the financial sector reforms implemented by the central bank as well as the fiscal stimulus package announced by government

 

 “The various reforms strengthened the economy to withstand the shock presented by the pandemic”, Courage Martey, an economist with the Databank Group, commenting on the Ghana Statistical Service’s (GSS) latest data

  

“Even after the restrictions have been lifted, many businesses across sectors have continued to close down,” Prof Samuel Kobina Annim, Government Statistician said.

 

 

“For the first time in 37 years, Ghana’s economy has seen a contraction of 3.2%, compared with a growth rate of 5.7% in the same quarter in 2019.”

 

 

The fall in output was mostly felt in manufacturing and in the services sector, where hotels and restaurants were shuttered to stop the virus spreading.

 

 

Ghana’s finance minister has said in July that the economy was expected to grow at its slowest rate in 40 years, at around 0.9% this year compared with a previous forecast of 6.8%.

 

 

The financial services sector, according to the statistical service, grew at 3.9 percent in the second quarter of this year, among a number of sectors that escaped the contraction caused by the coronavirus.

 

 

“Ghana had just emerged from fiscal and financial sector reforms, with the growth momentum already strong around its potential levels. Consequently, while the contraction was expected, the fiscal and financial sector reforms had already strenghtened Ghana’s capacity to withstand shocks,” Mr. Martey noted.

 

 

“Also, the swift decision by the Bank of Ghana to provide strong liquidity support to the financial system to mitigate a total collapse in private sector demand may have played a part. And since private sector demand would take time to recover, the government’s fiscal stimulus, as the bigger spender in the economy, was crucial to provide a backstop for aggregate demand.”

 

Other factors

 

The biggest slump in the second quarter GDP data occurred in the hospitality sub-sector, which fell by more than 79 percent year-on-year. This was followed by the trade, repair of vehicles, and household goods sub-sector, which saw a 20.2 percent contraction.

 

Despite the overall contraction in GDP growth, Mr. Martey explained that government’s decision to ease restrictions earlier, compared to most African countries, may have prevented further damage.

 

“This enabled a quicker restart of the economy and partly explains Ghana’s relatively modest contraction, compared to its peers. This also set up the economy to avoid a recession when the third-quarter numbers are published, because we expect a marginally positive growth rate for the third quarter of 2020,” he added.

 

Mr. Martey said government’s projection of achieving 0.9 percent GDP growth in 2020 appears more feasible now considering that the economy showed signs of a rebound in the latter part of the second quarter.

 

“If we consider the GSS data that proved that the economy had started showing signs of restarting from late Q2-2020, then there’s a reason to be hopeful for the 2H-2020.

 

For growth to fall short of the 0.9 percent projection for end-2020, we would have to grow by less than 1 percent on average in the second half of 2020.

 

“But I feel strongly that we have the potential to recover growth to 1 percent or more. Public expenditure in the lead up to the December 2020 elections should also provide another extraordinary lift to aggregate demand.”

GRA to maximize tax collection with ITaPS as tax payment made easier

  




  

Adnan Adams Mohammed

 

The Ghana Revenue Authority has indicated that the Integrated Tax Application Process System (ITAPS) introduced last year has already recorded about 6000 users with over 5000 users filing their taxes through the system.

 

The first phase of the project targeted the Personal Income Tax category, with the second phase to be launched soon which will cover local companies and multinationals. The online tax payment system was introduced to help make tax filing easy and convenient to taxpayers and also reduce the cost of compliance with the taxpayer.

 

The app is an e-services platform that will enable taxpayers to prepare, apply and receive GRA services online. With this, both individuals and companies will be able to file their annual tax returns at their own convenience. The app also allows, electronically, access to TAX Clearance Certificate (e-TCC) as well as Withholding Tax Credit Certificate (e-Tax Credit) and VAT Withholding Tax Credit Certificate (e-VAT Credit)

 

“ITAPS is a compliance tool and to that extent, it would improve on our revenue”, Rev. Ammishaddai Owusu-Amoah, Commissioner General of GRA noted at a media interaction event organised by PRINPAG with support from GRA. He retorted, "We are working hard to achieve the target or better exceed it through the implementation of policies."

 

The Authority at the press event declared their preparedness and making maximum efforts through effectiveness and efficiency to exceed the revised tax revenue target set by the finance minister in the mid-year budget.

 

The government revised down the tax revenue target from GHC47.2 billion to GHC42.7 billion using the Coronavirus pandemic as an excuse.

 

According to figures from GRA, half-year performance missed the target by a little over a billion Ghana cedis as it recorded GHC19.9 billion against the target of GHC21 billion. This was when the coronavirus pandemic was ravaging all sectors of the economy at its peak, during the second quarter from March to June.

 

 

Of this, the mining sector (which saw gold price appreciating continuously over the last months), the telecommunications sector (through the communication service) and the financial sector contributed most to the half-year performance of tax revenues collected.

 

However, the excise duties,  mostly on consumables such as soft drinks, water, alcohol and others, Pay As You Earn (PAYE) and income tax of SMEs underperformed during the half year.

 

Also, in solving the challenges of under-clearing and under-invoicing of some taxpayers and also to address the complaints of taxpayers, the Authority has strengthened and increase the capacity of its Tax Audit and Quality Assurance Department to be able to do double-checking of accounts of companies so they detect any deliberate or oversight malpractices to maximize tax collections. It will also be efficient in addressing clients’ complaints to ensure hassle-free tax system for all.

 

With these, the management of GRA believes it will help them to maximize tax collections and meet or exceed their target.

 

 

According to the GRA, the introduction of the app follows calls by the Vice President, Alhaji Mahamudu Bawumia, to move away from the manual filing of taxes to a digital module to increase compliance.

 

 

The Authority says the app will complement government’s efforts in improving its rank on the ease of doing business. GRA also seeks to reduce cost and time required by taxpayers to comply with tax laws.

 

 

By way of record-keeping, the ITAPS seeks to assist taxpayers to keep the records required to fulfil their tax obligations. GRA also aims to improve its performance of Tax Administration Diagnostic Tools (TADAT) ranking under voluntary compliance.

 

 

The digital app is expected to improve the quality of tax returns submitted by the payers. According to the GRA issues surrounding revenue assurance, convenience and simplicity have also been addressed by the app. As a result, taxpayers have the option of either filing their returns via mobile money or online.

 

 

The Authority says is also working with SSNIT, NIA among other organizations in terms of data sharing to ensure optimum benefit.

 

 

The Authority has revealed that plans available to ensure that the informal sector does not have any challenge transacting on the app. It has however hinted of routine education and campaigns in the coming days.

Gov’t should publish renegotiated ‘Take or Pay’ power contracts – energy expert



 

Adnan Adams Mohammed

 

An energy expert is calling on the government to be transparent with the power sector contracts by publishing all the ‘Take Or Pay’ contracts it claims has renegotiated to ‘Take And Pay’.

 

The Ministry of Energy has for some time now claimed it has renegotiated all the ‘Take Or Pay’ power contracts the erstwhile NDC administration signed with Independent Power Producers to ‘Take And Pay’ saving the country some hundreds of millions of U.S dollars. Yet, a former top government official in the energy sector believes there existed no more ‘Take Or Pay (TOP)’ contracts justifying that, most of the active IPPs have violated their TOPs terms of the contract.     

 

The Blomberg reported that Ghana’s debt owed to the power companies have grown, rising to US$1.4 billion at the end of June, more than doubling from US$600 million in July last year, according to the Chamber of Independent Power Producers, Distributors and Bulk Consumers noting that, its members may be forced to shut their operations, it said last month. Ghana lured investors to its power industry to end chronic electricity shortages, which lessened in 2016, with deals it can no longer afford. The deals’ terms required the government to pay for electricity generated even if there’s no demand for it. Those emergency power interventions helped the country to boost its generation to about 4,600 megawatts, well above national peak demand of 2,700 megawatts. 

 

“The lack of transparency about these so-called ‘Take or Pay’ contracts are interesting. It only seems to come up only when NPP wants to blame the NDC for the challenges in the power sector”, the former CEO of National Petroleum Authority and GNPC, Alex Mould reacted to a Blomberg publication on the power sector debt.

 

“Government should simply show which IPPs are being paid for not producing”, he further challenged the government, explaining that, “As far as I can tell we have no real ‘Take Or Pay (TOP)’ contracts still in existence except for those that are producing, that is, most of the recent IPPs. Many of the old IPPs, with so-called TOP contracts, have violated various covenants of these TOP contracts and as such they should not be paid under the violated ToP contracts.”

 

However, Samantha Singh, a Johannesburg-based Africa strategist at Absa Bank believes the country’s power sector “Debt levels could rise even further”. 

 

“The potential increase in these liabilities could hurt government finances even further in a time it is already strained due to Covid-19”, he said in an email.

 

 

When President Nana Akufo-Addo came to power in 2017, he started the sale of so-called energy bonds on the back of fuel levies to clear the outstanding liabilities. This helped cut the debt by half by early 2018, though more bonds haven’t been sold because there isn’t enough revenue to support them.

 

 

State-owned Electricity Co. of Ghana Ltd. has suffered an estimated annual revenue loss of US$580 million due mainly to transmission leakages, illegal connections and unpaid bills. Plans to tackle the problem by introducing private investors under a U.S.-funded aid program failed to win approval. The company’s managing director, Kwame Agyeman-Budu, could not comment immediately when he was reached on phone.

 

 

Much help isn’t coming either from the West African Power Pool project, under which member countries could sell their excess power to neighbors. While Ghana was a net exporter of 967 megawatts of electricity to other countries in 2019, further exchange is hindered until 2023, when current interconnection projects will be completed.

 

 

The coronavirus pandemic pushed Ghana further into financial straits. It responded with more than 3 billion cedis ($519 million) in unplanned spending that included providing free electricity and water to citizens, tax waivers and credit to small businesses, a situation that made it difficult to keep up with the debt repayments, according to Finance Minister Ken Ofori-Atta.

 

 

“When you have limited resources in a COVID-19 environment you have to be specific about what you’re paying and how much you pay,” Ofori-Atta said in a phone interview. “We’ve tried to keep the lights on for these four years.”

 

Ghana’s public debt increased to GHC258 billion by the end of June, equivalent to 67% of gross domestic product, from 61% at the end of March. The government previously said it will use US$1 billion of the US$3 billion raised from the sale of a Eurobond in February to help producers refinance their commercial loans.

 

 

The country’s dollar bonds made returns of 2.9% for investors this quarter, compared with 4.4% in emerging markets, according to Bloomberg Barclays indexes.

 

 

The potential constraints on Ghana’s creditworthiness make it imperative that the government attends to the debt problem in the power industry urgently, according to Gregory Smith, a fixed income strategist at M&G Ltd. in London.

 

 

“Responding to the immediate threat of the pandemic became essential,” Smith said. “Once the pandemic is beaten the focus and finances should shift back to ensuring the financial viability of the electricity sector.”

Ofori-Atta’s scheming to favor foreign investors, family and friends alarming – finance expert




 

  

Adnan Adams Mohammed

A former Standard Chartered Bank top official is calling on the Finance Minister to ensure that this time around, all Ghanaians are given the opportunity to invest in, and benefit from the Agyapa gold royalties deal, which is fundamentally Ghanaians asset.

 

To this, the finance and corporate governance expert is advising Ken Ofori-Atta and the Minerals Infrastructure and Investment Fund (MIIF) managers to reconsider the decision on the 51:49 ration of how the Agyapa Royalties Company plans to list the Initial Public Offer (IPO) on the Ghana Stock Exchange (GSE) and the London Stock Exchange (LSE) respectively.   

 

Rhetorically, the expert quizzed, If this so-called novella truly is for the benefit of the people of Ghana, why not float the majority of the shares of this “wonderful company” Agyapa on the Ghana Stock Exchange (GSE)? This would surely allow Ghanaians to purchase and own at least 75% of what is being offered to Investors. The remaining 25% that would be floated on the London Stock Exchange (LSE) could be offered exclusively to Ghanaians living in the diaspora in order to be inclusive.

 

“This is definitely a more patriotic option than selling the 49% to foreign investors, which people are speculating could be limited to a very few select investors, and perhaps mainly to Friends & Family, directly or indirectly”, Alex Mould intimated in a letter he wrote and addressed to the finance minister last week on the controversial Agyapa deal, adding that, “a notion that is not farfetched, based on your track record from the 2017 bond issuance saga which favoured your friend and partner Franklin Templeton and which excluded Ghanaians in the diaspora from investing.”

Below is the full letter:

A Letter to the Finance Minister

 

AGYAPA - OFORI-ATTA FLOUNDERS IN MURKY STREAMS OF GOLD

 

Dear Minister of Finance, Ken Ofori-Atta (KOA), would you be as kind as to explain a few things to us on this Agyapa deal? 

 

To paraphrase Donald Rumsfeld - there are some known knowns, many known unknowns and even unknown unknowns!

 

So let’s start with the known knowns, what we know - Agyapa’s source of funds will be our royalty revenue; which has been used in past years for budget support and was part of the governments consolidated fund. 

 

This revenue will now be used by Agyapa to invest in other gold companies and in companies that lend monies to gold companies worldwide; i.e. Gold Royalties or Gold Streaming - the business of lending money to gold mines and being repaid over the life of the loan in gold.

 

So the People of Ghana’s fundamental question is: WHY take a risk-free and secure flow of funds (our royalties) and use that to invest in risky, speculative ventures?

 

This then leads us to the known unknowns.  It is our understanding that you want to participate in the stock market by investing in speculative ventures like over-priced gold Funds.

 

Yet, said gold Funds invest in gold companies and in debt instruments of gold mining companies, whose shareholding and risk management you have zero knowledge of.

 

KOA, I am certain that the people of Ghana do not know this is what you intend doing. Hence, it is important that you elucidate to us Ghanaians, exactly what you want to do and the related risks; you owe this much to the people of Ghana - it is your fiduciary duty!

 

Lastly KOA, the apocryphal explanations you have provided thus far have done nothing to

ease our minds. If this so-called novella truly is for the benefit of the people of Ghana, why not float the majority of the shares of this “wonderful company” Agyapa on the Ghana Stock Exchange (GSE)?

 

This would surely allow Ghanaians to purchase and own at least 75% of what is being offered to Investors. 

 

The remaining 25% that would be floated on the London Stock Exchange (LSE) could be offered exclusively to Ghanaians living in the diaspora in order to be inclusive.

 

This is definitely a more patriotic option than selling the 49% to foreign investors, which people are speculating could be limited to a very few select investors, and perhaps mainly to Friends & Family, directly or indirectly - a notion that is not farfetched, based on your track record from the 2017 bond issuance saga which favoured your friend and partner Franklin Templeton and which excluded Ghanaians in the diaspora from investing.

 

All Ghanaians must be given the opportunity to invest in, and benefit from, what is fundamentally OUR Ghanaian assets.

 

And finally, the unknown is on the valuation of Agyapa and this requires a whole new set of other questions; some even unknown!!!

 

Stay tuned Mr. Minister

 

#StillOnTheAgyapaMatter

#OurQuestionsNeedAnswers

#GhanaiansFirst

 

Signed

Alex Mould

(Former Executive Director of Standard Chartered Bank Ghana and Immediate past CEO of GNPC)

16/09/2020

Thursday, 17 September 2020

Alex Mould’s affectionate letter to Ofori-Atta on ‘scandalous’ Agyapa Deal

 


 

Adnan Adams Mohammed

A finance expert and former top government appointee has scribed a tabloid addressed to his the Finance Minister of Ghana with the subject being the ‘scandalous’ Agyapa gold royalties deal.

 

The former Standard Chartered Bank Executive Director and GNPC CEO, Alex Mould’s letter sought for further explanation on the deal and also proffered some alternative ways to make the deal better and welcoming.      

  

 

“Dear Minister of Finance, Ken Ofori-Atta (KOA), would you be as kind as to explain a few things to us on this Agyapa deal?” Mr Mould quizzed rhetorically in his opening sentence.

 

Below is the full letter:

 

 

A Letter to the Finance Minister

 

AGYAPA - OFORI-ATTA FLOUNDERS IN MURKY STREAMS OF GOLD

 

Dear Minister of Finance, Ken Ofori-Atta (KOA), would you be as kind as to explain a few things to us on this Agyapa deal? 

 

To paraphrase Donald Rumsfeld - there are some known knowns, many known unknowns and even unknown unknowns!

 

So let’s start with the known knowns, what we know - Agyapa’s source of funds will be our royalty revenue; which has been used in past years for budget support and was part of the governments consolidated fund. 

 

This revenue will now be used by Agyapa to invest in other gold companies and in companies that lend monies to gold companies worldwide; i.e. Gold Royalties or Gold Streaming - the business of lending money to gold mines and being repaid over the life of the loan in gold.

 

So the People of Ghana’s fundamental question is: WHY take a risk-free and secure flow of funds (our royalties) and use that to invest in risky, speculative ventures?

 

This then leads us to the known unknowns.  It is our understanding that you want to participate in the stock market by investing in speculative ventures like over-priced gold Funds.

 

Yet, said gold Funds invest in gold companies and in debt instruments of gold mining companies, whose shareholding and risk management you have zero knowledge of.

 

KOA, I am certain that the people of Ghana do not know this is what you intend doing. Hence, it is important that you elucidate to us Ghanaians, exactly what you want to do and the related risks; you owe this much to the people of Ghana - it is your fiduciary duty!

 

Lastly KOA, the apocryphal explanations you have provided thus far have done nothing to

ease our minds. If this so-called novella truly is for the benefit of the people of Ghana, why not float the majority of the shares of this “wonderful company” Agyapa on the Ghana Stock Exchange (GSE)?

 

This would surely allow Ghanaians to purchase and own at least 75% of what is being offered to Investors. 

 

The remaining 25% that would be floated on the London Stock Exchange (LSE) could be offered exclusively to Ghanaians living in the diaspora in order to be inclusive.

 

This is definitely a more patriotic option than selling the 49% to foreign investors, which people are speculating could be limited to a very few select investors, and perhaps mainly to Friends & Family, directly or indirectly - a notion that is not farfetched, based on your track record from the 2017 bond issuance saga which favored your friend and partner Franklin Templeton and which excluded Ghanaians in the diaspora from investing.

 

All Ghanaians must be given the opportunity to invest in, and benefit from, what is fundamentally OUR Ghanaian assets.

 

And finally, the unknown unknown is on the valuation of Agyapa and this requires a whole new set of other questions; some even unknown!!!

 

Stay tuned Mr. Minister

 

#StillOnTheAgyapaMatter

#OurQuestionsNeedAnswers

#GhanaiansFirst

 

Signed

Alex Mould

(Former Executive Director of Standard Chartered Bank Ghana and Immediate past CEO of GNPC)

16/09/2020

Sunday, 13 September 2020

Regulation of real estate agency services is much needed now

 

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Adnan Adams Mohammed 

A Senior Lecturer at the Kwame Nkrumah University of Science and Technology, last week made a clarion call for work be expedite on the regulations of the real estate sector.

 

In a detailed paper on the Real Estate Agency Bill, which is currently, in Parliament awaiting passage, Dr Jonathan Zinzi Ayitey noted that, the real estate sector is of great importance to the economy of every country and particularly to the financial market because of the large monetary transaction involved.

 

Also, he stressed the need for the regulation of real estate agency services to rid the industry of fraud, laundering of illegal income, and tax evasion. He was speaking at a stakeholders’ workshop organized by Ghana Chamber of Construction Industry under the auspices of the Ministry of Works and Housing with funding from the BUSAC FUND and donor partners DANIDA and USAID.

 

The purpose of the Bill is to regulate real estate agency practice, the conduct of real estate agency practitioners, commercial transactions in real estate including the sale, purchase, and rental and leasing of real estate, and other real estate transactions.

 

The practise of real estate agency has grown considerably in recent years as the property market has become more active with the buying, selling, and leasing of property as an asset class and also for occupation.

 

“One result of the increase in activities in the property market has been the influx of persons who have introduced fraud into the trade. Many real estate brokers and agents do not have any particular training in real estate agency and many others have no identifiable office accommodation.

 

“Investors in property who deal with real estate brokers have no guarantee against fraud and many have been swindled,” he said.

 

Besides, the real estate business shows the lack of appropriate internal control mechanisms, policies, training and audit systems, among other things which make the sector attractive to crooks.

 

Real estate transactions by their nature involved huge sums of money and there was the need to ensure that real estate agency practitioners and parties to real estate transactions keep records of their transactions for tax purposes.

 

The lack of record-keeping by most real estate practitioners and parties to real estate transactions fails to pay tax on the incomes earned from the transactions. This denies the government the necessary income for developmental purposes.

 

In the country’s quest to adhere to international best practices, the Bill seeks to plug the avenues in which real estate transactions were used to launder money including the prohibition of the use of cash for real estate transactions.

 

This will ensure that there is a detailed tracking of transactions and the persons involved in the real estate transactions.

 

The bill would also help stem the current practice of the promotion of unhealthy competition between legitimate and criminal businesses because investment in the real estate sector offers advantages for legitimate law-abiding individuals and businesses and criminals who abuse the system.

 

Additionally, Ghana, as a signatory to international conventions on corruption, including the African Union Convention on Preventing and Combatting Corruption and the United Nations Convention against Corruption, needs to adhere to international standards for the prevention of money laundering.

 

The passage of the Bill will go a long way to strengthen the anti-corruption initiatives in the country and curb money laundering and other financial malpractices in the sector.

 

We wish Parliament and other stakeholders will expedite action on the passage of the bill so there could be sanity and regulations of one of the critical sectors of the economy and human life.

PRMA Amendment: stakeholders want restrictions on Heritage Fund peg at 25years

 


 

Adnan Adams Mohammed

 

Stakeholders involved in the consultative process on the proposed amendments to Ghana’s Petroleum Revenue Management Act, 2015 (Act 893) have unanimously agreed to a proposal that, restrictions on transfers from Heritage Fund (HF) should be extended to 25 years from the current 15 years.

 

The proposal which was made by the Investment Advisory Committee justified that, a longer period of lockup of funds in the Ghana Petroleum Fund (GPF) is advisable and also in line with potential tenors of long term projects and global best practices. The stakeholders also want the definition of Section 10.4 of ACT 893 extended to cover all earnings, including equity dividends, capital gains and ownership interests.

 


There is indication that, government will push to have the amendments passed by the end of 2020. Some of the stakeholders involved in the consultative process were: Ministry of Finance, Bank of Ghana, Investment Advisory Committee, Public Interest and Accountability Committee, Ghana Revenue Authority, Petroleum Commission of Ghana, Audit Service Ghana and some CSOs.

 

“GPF is envisaged to also allow investments beyond fixed income” Dr Steve Manteaw, former Chairman of PIAC said during a virtual media and CSOs training session organized by NRGI in collaboration with PIAC on the proposed amendments.

 

The training session was to achieve overriding objective of enhancing CSOs and the media skill on the reform process, particularly proposals made by CSOs, to be able to keep track of every stage of the amendment/review process and influence the outcome.

 

The Petroleum Revenue Management Act, 2011 (Act 815) as amended by the Petroleum Revenue Management (Amendment) Act, 2015 (Act 893) (“PRMA”) was enacted to provide a strong governance framework for the collection, allocation, and optimum management of petroleum revenues in Ghana. The underlying philosophy is to ensure a responsible, transparent, accountable, and sustainable management of petroleum revenues to the benefit of the citizens of Ghana, in accordance with Article 36 of the Constitution. Specifically, the PRMA provides for the establishment of the Petroleum Holding Fund (PHF) and Ghana Petroleum Funds (GPFs).

 

Additionally, it provides a framework for the allocation of funds to the GPFs, Annual Budget Funding Amount (ABFA), a National Oil Company (NOC), and the Ghana Infrastructure Investment Fund (GIIF). Other provisions include a mechanism to manage oil price volatilities, and the establishment, composition, and funding of the Public Interest and Accountability Committee (PIAC) and Investment Advisory Committee (IAC).

 

Since 2015, petroleum revenue management processes in Ghana have largely been effective and well streamlined under the PRMA. This has culminated into increased transparency, accountability, and use of revenues for development.

 

However, there exist broad implementation bottlenecks and compliance challenges with the PRMA. Among others, specific challenges relate to revenue collection relative to non-payment, deferred payment, and wrongful lodgment of revenues.

 

The rest are political interference in the management and utilisation of the GPFs; recurring non-compliance in the reported expenditure of the Ministry of Finance (MoF) to the PRMA requirement to spend at least 70 percent of the ABFA on Public Investment Expenditure (PIE); and the inconsistent allocation of petroleum revenue to GIIF, contrary to the Law. These militate against good revenue management efforts, and therefore require remedial action.

 

To this end, the MoF, in 2019, started a consultative process with sector stakeholders to trigger reform of the petroleum revenue management framework to address the identified challenges and respond to the current context. Two consultative fora which drew representation from CSOs and key government institutions were held in October 2019 and February 2020. These were to ensure holistic review of the PRMA and to solicit stakeholders’ inputs on specific provisions in the PRMA that may require amendment, and to discuss same for consideration.

 

At the end of the consultation process, a compendium of proposed amendments to the PRMA was developed from the various stakeholder inputs by a Technical Committee constituted by relevant sector stakeholders, and presented to the MoF for Government’s study and consideration.

Small businesses won’t pay tax, medium-sized to pay 15% tax only – Mahama promises

 


 

The flagbearer of the National Democratic Congress (NDC), John Dramani Mahama has promised to exclude small businesses from paying both corporate and personal income tax.

 

This is to enable entrepreneurs to pump back the profits they make into their businesses for them to grow, he explained during the manifesto launch of the NDC ahead of the 2020 elections.

 

He vowed, “We will make the business environment friendly again…we will exempt small businesses from paying corporate and personal income tax. That is to inject their profit back into their businesses. We estimate that this will involve about 1.4 billion Ghana cedis a year and that will be the best stimulus you can inject back in order to expand small and medium enterprises”.

 

For Medium enterprises, the next NDC government will allow organisations to pay only 15 percent of the corporate income tax instead of the current 25 percent to empower them to reinvest and grow their businesses.

 

Bringing to bear other tax relief programmes for businesses, Mahama indicated that “We will exempt newly established medium-sized companies that employ up to 20 people from paying corporate income tax for the first year when they are establishing the business”.

 

Mahama explained that this is important because the “most critical time in establishing a business is the first year when you are investing and when you are investing, it is not the right time government has to come asking you to bring money and so we will give them that relief”.

 

For businesses that have over 20 employees, they would be exempted from tax payment for 2 years.

 

“And for businesses that employ 20 or more…they’ll get corporate tax exemption for 2 years so that they can establish the business properly and then expand the business to employ more people”.

 

All these tax reliefs, Mahama stated, are to put an end to job loses.

GRA confident of exceeding revenue target amidst COVID-19

 

 

 

 

Adnan Adams Mohammed

 

 

The Ghana Revenue Authority has declared their preparedness and making maximum efforts through effectiveness and efficiency to exceed the revised tax revenue target set by the finance minister in the mid-year budget.

 

The government revised down the tax revenue target from GHC47.2 billion to GHC42.7 billion using the Coronavirus pandemic as an excuse.

 

GRA's half year performance missed the target by a little over a billion Ghana cedis as it recorded GHC19.9 billion against the target of GHC21 billion. This was when the coronavirus pandemic was ravaging all sectors of the economy at its peak, during the second quarter from March to June.

 

 "We are working hard to achieve the target or better exceed it through the implementation of policies", Rev. Ammishaddai Owusu-Amoah, Commissioner General of GRA noted at a media interaction event organised by PRINPAG with support from GRA.

 


The mining sector (which saw gold price appreciating continuously over the last months), the telecommunications sector(through the communication service) and the financial sector contributed mostly to the half year performance of tax revenues collected.

 

However, the excise duties,  mostly on consumables such as soft drinks, water, alcohol and others, Pay As You Earn (PAYE) and income tax of SMEs underperformed during the half year.

 

 

Speaking on behalf of the PRINPAG at the event, Edwin Arthur lauded the willingness of the GRA to accept to meet and interact with media to help broaden and update one of the society's watchdog players.

 

He called on the media to support the intention of PRINPAG to launch a campaign against tax evaders in the country which is denying the state of needed revenues to provide better and equitable socioeconomic infrastructure to benefit all classes of the citizens and foreigners in the country.

 

In solving the challenges of under-clearing and under-invoicing of some tax payers and also to address the complaints of taxpayers, the Authority has strengthened and increase the capacity of its Tax Audit and Quality Assurance Department to be able to do double checking of accounts of companies so they detect any deliberate or oversight malpractices to maximize tax collections. It will also be efficient in addressing clients’ complaints to ensure hassle free tax system for all.

 

The Authority has also rolled out the Integrated Tax Application Processing System (ITAPS), which an online tax payment system to help make tax filing easy and convenient to tax payers. Already, the Personal Income Tax was automated which currently has about 6000 users with over 5000 users filing their taxes through the system.

 

With these, the management of GRA believes it will help them to maximize tax collections and meet or exceed their target.

Thursday, 10 September 2020

How did Government value all Ghana’s gold royalties at US$1.0bn? – CSOs and experts demand answers

 


 

 

Adnan Adams Mohammed

 

The Alliance of Civil Society Organisations (CSOs) working on Extractives, Anti-Corruption, and Good Governance have questioned the government through the ministry of finance, Minerals Infrastructure Investment Fund (MIIF) and the Agyapa Royalties Company on how it arrived at the  US1.0 billion value of all the royalties that could accrue the country for the next 15 years.  

 

According to the group of CSOs which is calling for the suspension for the deal, the justification from government that the US$1.0 billion is the book value for Agyapa is not the actual valuation for the IPO, doesn’t answer the question.

 

Already, some financial and resource governance experts have contested the figure given as the estimated value for all the gold royalties of all the over 40 mining concessions (with 12 active companies now).  A net present value (NPV) calculations by Kofi Ansah of Ghana’s gold mining royalties pegged the valuation of total royalties at US$2.4 billion at a market price of US$1,600/oz and at US$2.7 billion at a market price of US$1,800/oz.

But, the Member of Parliament for Adentan Constituency and also the Communication Director of the New Patriotic Party (NPP), Yaw Buaben Asamoa has justified that, the US$1 billion valuation put on the Agyapa Royalties deal was only to ‘spice’ up the deal to attract investors on the stock market. Noting that, the money to be recouped from the deal should be between US$1.5 – US$2 billion. However, that doesn’t mean Ghana has to put out the actual figure of valuation out there on the market.

 

“This doesn’t answer the question. The US$1.0 billion valuation reflects the Ghana government’s assessment of its assets assigned to Agyapa which has been approved by Parliament”, the CSOs asserted in their statement released to the media on Tuesday.

 

The CSOs expatiated that, in recent communication, the Minister of Finance has stated that Agyapa’s asset value of US$1 billion approved by Parliament will not be the fair value that will be determined by the market. This is where appreciating the difference between net asset value and fair value becomes extremely important. Granted that the market will determine the fair value of the asset, it is important for government to determine the appropriate net asset value for the market to consider what it deems fair. This essentially is what the contract states as US$1 billion.

 

“Therefore, if the asset is under-valued by government itself, then Ghana cannot expect the market to give a favourable valuation of the IPO which the Minister himself states will be about 0.6 to 3.2 times the asset value. This indicates that Ghana is just gambling on the market for the determination of the value of an important revenue stream.

 

“The interesting thing for citizens to appreciate is that, through government’s communication it is evident that it is either not paying attention to the revenue flows in the sector, or deliberately undervaluing the assets for unknown reasons. When a direct question was posed to the Deputy Minister of Finance on the amount of royalties received from gold in 2019, he said Ghana received about GHS650 million ($123 million). The truth is that Ghana received GHS 1.06 billion ($200 million) from the big companies under the Chamber of Mines alone.”

 

The CSOs surprisingly alleged that, “Government has data on the other receipts, yet it decided to under-report the numbers.

 

“Again, in our meeting with the Ministry of Finance, we were given half year receipts for 2019 of $72 million (GHS 366 million). The underreporting of the 2019 revenue which is the most significant period for revenue projection and emphasis on old royalty numbers is intriguing.”

 

The Parliament of Ghana passed the Minerals Income Investment Fund Act in 2018 for the management of Ghana’s equity interest mining companies and also receive royalties on behalf of the Government of Ghana. The Minerals Income Investment Fund, which is mandated to invest royalties and revenues it receives on behalf of the government, is also allowed by law to establish Special Purpose Vehicles (SPVs) to help realise its objectives.

 

As a result, the Minerals Investment Fund established a company called Agyapa Royalties Limited, which will trade 49% of its shares on Ghana Stock Exchange and the London Stock Exchange, with the Government of Ghana, through the Mineral Income Investment Fund, remaining as a majority shareholder.

 

Below is the full Calculation of the NPV by Mr Kofi Ansah:

ESTIMATION OF THE PRESENT VALUE OF THE AMOUNT TO BE ASSIGNED TO AGYAPA

 

The factors that go into the determination of the valuation are:

1. Total Projected Gold Production over a chosen period by all the mining companies included in the agreements.

2. Gold Price projections over the chosen period

3. Effective Royalty Rate

4. Discount Rate (for discounting future amounts)

5. Number of years over which valuation is considered.

6. Percentage assigned to Agyapa

Projections of Gold Production

The 2020 forecast of total gold production from 12 gold mining companies currently in production is 3.2 million ounces.

 

The 2021 production forecast for these same companies is 3.5 million ounces. A number of companies in the group have embarked on expansion projects. In addition four more companies with mining leases that haven’t yet started production but are likely to do so within the next 4 years are included in the agreements. Therefore it is reasonable to assume that production over the 15-year valuation period would on the average be 4 million ounces per annum for the 12 mines.

 

Additionally, a number of companies at various stages of prospecting are included in the agreements and when they start producing their royalty payments will be included in the Agyapa assignment. Even if it is assumed that only a couple of them would succeed in making commercial finds it will be reasonable to add 0.5 million ounces per annum to the 4 million ounces per annum projected to be produced by the current mining lease holders.

Therefore we use 4.5 million ounces in our valuation computations.

 

Gold Price Projection

 

The current gold price is around $1,950 per ounce and has been around that level for the past few months. Current predictions suggest that prices would trend at this level for quite some time to come.

 

However, predictions from experts on future gold prices over the years have not been known to be very reliable. We therefore do the valuation estimate for two average gold prices: first, a conservative $1,600 per oz, and then a more optimistic $1,800 per oz, over the 15-year period.

 

Valuation Computations

 

The assumptions for computing the valuation are:

1) Annual average production – 4.5 million oz

2) Average gold price – $1,600 per oz/$1,800 per oz

3) Effective Royalty Rate – 4.5%

4) Discount Rate – 6%

5) Valuation Period – 15 Years

6) Percentage Assigned to Agyapa – 75.6%

Therefore;

Annual Royalty Amount = Annual average production x Average gold price x Effective Royalty Rate

= 4.5 Million oz x $1,600/oz x 0.045 = $324 million

(AP) Annual Amount Assigned to Agyapa = Percentage Assigned to Agyapa x Annual Royalty Amount

= 0.756 x $324 million = $245 million

Therefore;

Present Value over the 15 years using the annuity formula

Amount = AP × [   ]

Where;

r = 6%

AP = $245 million (for $1,600 per oz gold price)

n = 15

Therefore;

Valuation Amount for $1,600 per oz gold price = $245 million x 9.7 = $2.4 billion

Valuation Amount for $1,800 per oz gold price = $2.4 billion x 18/16 = $2.7 billion

 

These makes government’s position and justification with the US$1.0 billion valuation is really a case of concern to every independent minded Ghanaian.

Gov’t underreporting mining revenue received in 2019 - CSOs

 


 

 

Adnan Adams Mohammed

 

Government has been accused of deliberately under-reporting the revenues it received from mining companies in last year just to support the valuation of the Agyapa Royalties deal at US$1.0 billion.  

 

The group of about 22 Civil Society Organisations (CSOs), calling itself ‘Alliance of CSOs working on Extractives, Anti-Corruption, and Good Governance’ at a press briefing in Accra yesterday claimed that, government reported Ghana’s gold royalties last year to be US$123 million during a meeting with them , but from their independent checks the figure was rather US$200 million.

 

Apart from the accusation of under-reporting the country’s earnings from gold royalties, they said, government is also hampering access to the information on the deal. Interestingly, through government’s communication it is evident that it is either not paying attention to the revenue flows in the sector, or deliberately undervaluing the assets for unknown reasons.

 

“When a direct question was posed to the Deputy Minister of Finance on the amount of royalties received from gold in 2019, he said Ghana received about GH¢650 million ($123 million), the spokesperson for the CSOs Alliance, Dr Steve Manteaw lamented.

 

The Co-Chair of Ghana Extractive Industry Transparency Initiative (GHEITI) disclosed further that, “The truth is that Ghana received GH¢1.06 billion ($200 million) from the big companies under the Chamber of Mines alone. Government has data on the other receipts, yet it decided to under-report the numbers.

 

“Again, in our meeting with the Finance Ministry, we were given half-year receipts for 2019 of $72 million (¢366 million). The underreporting of the 2019 revenue which is the most significant period for revenue projection and emphasis on old royalty numbers is intriguing,” Dr Manteaw added.

Ghanaians to petition FCA/LSE on Agyapa gold royalties IPO… for nondisclosure of vital information to owners of the gold

 

 

 

Adnan Adams Mohammed

 

Some Ghanaians including reputable Civil Society Organisations (CSOs) have hinted their intent to petition the Financial Conduct Authority (FCA), the regulator of London Stock Exchange (LSE), to draw its attention to how the government and Agyapa Royalties Company is hiding vital information from key stakeholders including owners of the gold (i.e Ghanaian citizens, especially those in the gold mining communities).

 

The 22 CSOs working on Extractives, Anti-Corruption, and Good Governance at a press conference held yesterday accused government of deliberately denying them hiding vital information from them even when they met with the finance minister on the deal last week. The CSOs have therefore pledged to use every means to get the needed information on the deal so they can offer better critique of the royalties which is has perpetual effect on the country’s revenue from all the gold resources endowed the country.      

 

Experts have alarmed that, if the petition is served to the LSE, through the FCA, then it can affect the price and credibility of the shares in the gold royalties Agyapa Royalties Company will be issuing on the LSE on behalf of Ghanaians through the Minerals Infrastructure and Investment Fund (MIIF). Already, the minority in Parliament of Ghana who walked out of parliament during the passage of the bill that permitted the government to execute the widely contest deal in opposition to the some terms of the deal and lack clarity and adequate disclosure of information, have declared their preparation of petition the LSE. This comes as majority of Ghanaians sees the deal as a ‘State or Elite Capture’ (a situation where few powerful individuals in government or outside government team up to use state resources for their benefit against state interest).

 

“At our last meeting with the Ministry, some slides containing some data were presented. However, when we requested for copies, those particular slides of interest to us, were omitted either deliberately or inadvertently”, Dr Steve Manteaw, Co-Chair of GHEITI who spoke on behalf of the CSOs disclosed at the press conference, adding that they have been constrained in conducting critical analysis of the gold royalties deal as is expected of them as they play their watchdog role on governance.

 

“We have so far been constrained in our analysis of this transaction by our inability to access the full complement of data and assumptions used in Government’s valuation of the royalties being traded.”

 

Below is the full statement:

 

Government’s Responses to Concerns on Agyapa Deal Unconvincing

8th September 2020

Distinguished Ladies and Gentlemen of the Media, since our last press conference on the controversial Agyapa Mineral Royalty deal, government has made efforts to respond to the questions we raised.

However, the more we get to know about the deal the more concerns it raises. We are therefore not surprised that many Ghanaians are encouraged to join our course to ask the necessary questions that help to bring our country to the path of consensus on how to protect our mineral royalties, and to optimise their use for the benefit of current and future generations.

We find it rather unfortunate, that, while the Minister for Finance has favourably responded to the call for further consultations, he has publicly stated that he will go ahead with the transaction regardless of the serious concerns being raised by a large section of the Ghanaian population. Such posturing raises doubts about the genuineness of the pledge to undertake further consultations.

We have so far been constrained in our analysis of this transaction by our inability to access the full complement of data and assumptions used in Government’s valuation of the royalties being traded. At our last meeting with the Ministry, some slides containing some data were presented. However, when we requested for copies, those particular slides of interest to us, were omitted either deliberately or inadvertently.

According to government, its objective for the Mineral Income Investment Fund is to maximise the value of the royalties due the Republic from the mineral wealth of the country, for the benefit of its citizens, in a responsible, transparent, accountable and sustainable manner. The challenge, however, is how the outright sale of up to 49 percent of the royalties from 48 leases that constitute the bulk of Ghana’s proven gold deposits and currently contributes about 95 percent of royalty receipts, translates into the stated objective.

Ladies and gentlemen, it is important for us to separate the key strands of the issue and deal with them in simple language.

1. Government of Ghana is selling almost half of the royalties available for annual budgetary support for a lump sum of about $500 million for unknown quantities of mineral resource embedded in the 48 leases under the Agyapa transaction. This is a sale of right as of heritage. Put simply, the Government assumes half of the unknown share of the royalties in the most prolific 48 geographic areas are worth about $500 million.

2. An assumption is created that, the remaining share of 51 percent will generate returns to continue to support the budget by investing in a company incorporated in a Tax Haven and operated by politically exposed persons. However, the government has not told the good people of Ghana, what guarantees exist to ensure that risk free royalties can be invested without subjecting the resource to significant risk exposures. In the event where Agyapa’s investments do not yield the expected returns, Ghana would have risked its royalties that would have flowed from the mines to support the budget.

The sad part is that, Ghana has no way out, if the government wakes up in future to the reality that mining sector investments have their own risks as happened in the seventies when assets were nationalised.

3. Another assumption deduced from government’s communication is that, listing on the London Stock Exchange (LSE) will ensure transparency and accountability in the management of the resources. If the government is unable to ensure transparency and accountability when it controlled 100 percent of royalties, listing on the LSE through a company incorporated in a Tax Haven will not guarantee transparency.

Today we will try to, once again, break down the key questions to see if government will provide the answers rather than pushing a utopian agenda of revenue maximisation when in actual sense, it is selling half of the royalties accruing from the resource;

1. How did Government value the royalties at $1 billion?

The answer we have heard so far, is that, the $1 billion is the book value for Agyapa, it is not the actual valuation for the IPO. This doesn’t answer the question. The $1billion valuation reflects the Ghana government’s assessment of its assets assigned to Agyapa which has been approved by Parliament. In recent communication, the Minister of Finance has stated that Agyapa’s asset value of $1 billion approved by Parliament will not be the fair value that will be determined by the market. This is where appreciating the difference between net asset value and fair value becomes extremely important. Granted that the market will determine the fair value of the asset, it is important for government to determine the appropriate net asset value for the market to consider what it deems fair. This essentially is what the contract states as $1 billion. Therefore, if the asset is under-valued by government itself, then Ghana cannot expect the market to give a favourable valuation of the IPO which the Minister himself states will be about 0.6 to 3.2 times the asset value. This indicates that Ghana is just gambling on the market for the determination of the value of an important revenue stream.

The interesting thing for citizens to appreciate is that, through government’s communication it is evident that it is either not paying attention to the revenue flows in the sector, or deliberately undervaluing the assets for unknown reasons. When a direct question was posed to the Deputy Minister of Finance on the amount of royalties received from gold in 2019, he said Ghana received about GHS650 million ($123 million). The truth is that Ghana received GHS 1.06 billion ($200 million) from the big companies under the Chamber of Mines alone.

Government has data on the other receipts, yet it decided to under-report the numbers.

Again, in our meeting with the Ministry of Finance, we were given half year receipts for 2019 of $72 million (GHS 366 million). The underreporting of the 2019 revenue which is the most significant period for revenue projection and emphasis on old royalty numbers is intriguing.

2. What other investment options were considered before settling on the sale of up to 49 percent of Agyapa?

The assertion that government seeks to optimise the royalties presupposes that forward sale of part of the royalties is the best option available to government. We are interested in knowing what other options were considered by government and the specific trade-offs made to suggest that it is better to sell than wait for the revenues. In considering the stock market, what other deal structures besides the IPO route did Government consider, and can the comparative and benchmarking analysis be shared for review?

3. Why is Ghana patronizing a Tax Haven when internationally, countries are pushing against companies hiding in Tax Havens?

When we asked this of the government, it used examples of private companies to justify its decision. The consensus position of governments around the world is that Tax Havens inhibit the revenue mobilisation efforts of countries; the reason many regulators around the world are cracking down on Tax Havens. For Ghana’s government to do business and hide from tax anywhere in the world is a bad message to the rest of the world, particularly when the country is struggling to defend itself before the European Union, having been blacklisted on account of high money laundering risk.

4. Why is Government exempting Agyapa from taxes when it will be partly owned by investors?

Although the royalties are taxes, when a portion is sold to investors, dividend payout is income that must be subjected to tax. At that point the government is not taxing itself, rather, it is taxing income from a company in which it is only a shareholder. The provision in Section 28(5) of the MIIF Act seeks to declassify royalties as taxes and make it a revenue stream for MIIF, and by extension Agyapa. Exempting Agyapa from taxes does not exempt government alone but also the investors. This is the more reason why government should not exempt Agyapa from taxes, and failure to do so only benefits the investors.

5. In considering Agyapa, what becomes of government’s manifesto promise to increase royalty share to mining affected communities?

In government’s 2016 manifesto, it stated that;

“With regard to mineral royalties, the NPP’s policy is to ensure that mining communities receive a higher share. Currently, 80% of the royalty goes to Government, 10% to the Minerals Commission, and 10% to the community. The NPP will reduce Government share to 70%, while doubling the community share to 20%. The additional 10% to the community will be given to the District Assemblies to be used specifically for developing infrastructure in the mining communities.” How government is responding to this promise is missing from its new efforts through the MIIF.

Ladies and gentlemen, these are important questions that require a national conversation to be addressed. It is not enough for the Minister of Finance or the government to ask citizens to trust their sincerity and their expertise. It would not be right for them to try to bulldoze through a controversial transaction such as this, and about which genuine questions have been raised by experts as well as by ordinary people. We are therefore reiterating our call on the government to suspend implementation of this transaction pending a national dialogue on options available to optimise Ghana’s mineral royalties.

Thank you.

Participating Organisations:

1. Africa Centre for Energy Policy (ACEP)

2. Centre for Democratic Development (CDD)

3. Centre for Extractives and Development Africa (CEDA)

4. Centre for Public Interest Law (CEPIL)

5. Chamber of Petroleum Consumers Ghana (COPEC)

6. Citizens Movement Against Corruption (CMAC)

7. Civil Society Platform on Oil and Gas (CSPOG)

8. CSOs Open Licensing Monitoring Group

9. Ghana Anti-Corruption Coalition (GACC)

10. IMANI Centre for Policy and Education

11. Institute for Democratic Governance (IDEG)

12. Integrated Social Development Centre (ISODEC)

13. WACAM

14. Oil Watch Ghana

15. Penplusbytes

16. Public Interest and Accountability Committee (PIAC)

17. Publish What You Pay Ghana (PWYP)

18. SEND Ghana

19. The People’s Project (TPP)

20. Women Aspire

21. Centre for Social Impact Studies, Obuasi

22. Friends of the Nation, Takoradi