Business Analyst - August 11

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Thursday, August 11, 2022. Vol. No. 180
GH¢2.50
• Prof.
Samuel
Kobina
Annim,
Government
Statistician
• Ken
Ofori-Atta
RatInG agency,
Fitch, has
downgraded
Ghana's Longterm
Foreign-Currency (LtFC)
Issuer Default Rating (IDR) to
'CCC' from 'B-'.
the downgrade, it said,
reflects the deterioration of
Ghana's public finances,
which has contributed to a
prolonged lack of access to
Eurobond markets, in turn
leading to a significant
decline in external liquidity.
“In the absence of new
external financing sources,
international reserves will fall
close to two months of current
external payments (debits in
the current account) by end-
2022,” it added.
the government has
requested support from the
International Monetary Fund,
which is likely to lead to

Thursday, August 11, 2022
Donald Trump refuses to answer
questions in New York investigation
FoRMER US President Donald
trump has said he declined to
answer questions as part of a
new York investigation into his
family's business practices.
Mr trump appeared at the new York
attorney general's office on Wednesday.
State officials accuse the trump
organization of misleading authorities
about the value of its assets in order to
get favourable loans and tax breaks.
Mr trump denies wrongdoing and has
described the civil investigation as a
witch hunt.
Katty Kay: Will an FBI 'raid'
supercharge trump?
Could trump investigation stop him
running in 2024?
an hour after he was pictured
arriving at the Manhattan office where
he was questioned under oath, Mr trump
released a statement in which he
criticised new York attorney General
Letitia James and the broader
investigation.
"Years of work and tens of millions of
dollars have been spent on this long
simmering saga, and to no avail," he said.
"I declined to answer the questions under
the rights and privileges afforded to every
citizen under the United States
Constitution."
His deposition comes just days after
the FBI executed an unprecedented
search warrant at his Florida estate, Mara-Lago,
as part of a separate investigation
that is reportedly linked to his handling
of classified material.
While the attorney general's
investigation is a civil one, a parallel
investigation is being carried out by the
Manhattan District attorney's office
which could result in criminal charges.
Legal analysts suggest Mr trump may
have declined to answer questions on
Wednesday because his answers could
have been used against him in that
criminal investigation. the former
president invoked the Fifth amendment,
which protects people from being
compelled to be a witness against
themselves in a criminal case.
Ms James' office has said that the
depositions - a legal term that means
testimony not given in court - were
among the last remaining investigative
procedures to be carried out.
once the investigation concludes, the
state attorney general could decide to
bring a lawsuit seeking financial
penalties against Mr trump or his
company.
Ms James had sought Mr trump's
deposition - and that of two of his
children, Ivanka and Donald trump Jr -
for more than six months while the
family resisted subpoenas through the
new York court system.
Lawyers for Mr trump had also
attempted to sue Ms James in a bid to
prevent her from questioning the former
president and his children.
But in February, a new York Supreme
Court judge ruled that all three must sit
for depositions. Ivanka and Donald
trump Jr were questioned earlier this
month.
the judge said the investigation had
uncovered "copious evidence of possible
financial fraud" giving the attorney
general a "clear right" to question under
oath the former president and two of his
children involved in the business.
Ms James hailed the judge's decision
as a victory, saying that "justice has
prevailed".
the investigation, which was first
opened in 2019, seeks to prove that Mr
trump and the trump organization
misrepresented the value of assets in
order to obtain favourable loans and tax
breaks. the alleged fraud is said to have
taken place before Mr trump took office.
2px presentational grey line
analysis box by John Sudworth, north
america correspondent
"the mob takes the Fifth," Donald
trump said at an Iowa campaign rally in
2016.
His target? You've guessed it - Hillary
Clinton. Some of her former staffers had
exercised their right to silence during a
congressional inquiry.
the boot is now on the other foot, as
they say.
"I once asked," said his statement on
Wednesday - published while his
deposition by the new York attorney
general was still ongoing - "If you're
innocent why are you taking the Fifth
amendment?"
"now I know the answer to that
question," he concluded, suggesting that
he had been left with no choice.
there are parallels here - in terms of
Mr trump's response - with the separate
investigation into his handling of official
documents, thought to have been the
reason for the recent search of his Florida
estate.
While his allies have been demanding
answers from officials over the
unprecedented action, he could choose to
provide some himself. that's because he'll
have a copy of the warrant and the
inventory of material removed from his
property.

Thursday, August 11, 2022
Credit rating
Fitch downgrades
Ghana to CCC
• Continued from front
additional financing from the Fund and
other multilateral lenders.
However, Fitch said “the
government's high-interest costs and
structurally low revenue as a
percentage of Gross Domestic Product
have increased the likelihood that IMF
support would necessitate some form of
debt treatment, although this is not our
main scenario. the high-interest
burden on local-currency debt also
• From 'B-'
means that the inclusion of a domestic
debt treatment cannot be ruled out”.
Ghana could secure a deal in six
months
again, Fitch believes that a deal
with the IMF is likely within the next
six months.
“We estimate that a programme
could disburse as much as $3 billion
and unlock budget support from other
multilateral lenders. However, the
timing of such a deal is uncertain and
would be dependent on the
government's ability to present a
credible fiscal reform plan in line with
increasing government revenue and
improving debt affordability metrics”.
the most recent IMF debt
sustainability analysis, conducted in
2021, found Ghana at a high risk of debt
distress and vulnerable to shocks from
market access and high debt servicing
costs.
on tight external debt servicing
schedule, Fitch estimates that Ghana
faces $2.75 billion of external debt
servicing in 2022, including
amortisation and interest, and $2.8
billion in 2023.
“access to external financing will
remain tight, as Ghana is likely to
remain locked out of Eurobond
markets, which had come to be a
regular source of external financing for
the government”, it stressed.
“In 2022, we expect that the
government will meet its external debt
obligations, in part, through a
combination of a USD750 million term
loan from the african Export-Import
Bank (BBB), USD250 million in
syndicated loans from international
commercial banks, and up to US$200
million from the government's sinking
fund. the 2022 mid-year policy review
indicates that the government expects
to source the rest from the IMF and
other multilateral lenders. In the
absence of an approved programme by
the end of the year, the government
would have to draw more heavily on its
international reserves, which were
US$7.6 billion, including oil funds and
encumbered assets, as of June 2022”.
Ashfoam to support GJA
renovate Press Centre
ManaGERS of ashfoam
Ghana Limited have
agreed to support the
Ghana Journalists association
(GJa) to renovate
its secretariat- the
Ghana International
Press Centre.
this was made
known when the GJa
Executives paid a courtesy
call on ashfoam
Ghana last tuesday at its
Head office in the north
Industrial area.
During the meeting,
the GJa President, albert
Kwabena Dwumfour,
said as part of efforts to
transform the GJa, it
wanted to give the Press
Centre a new look and feel.
He, therefore, appealed to ashfoam
to support the GJa repainting of the
Press Centre and as well help change
the furniture to beautify the place.
albert Kwabena Dwumfour who
noted that ashfoam has been giving a 15
percent discount on purchases for journalists
also encouraged the company to
raise the 15 percent discount to 30% for
media practitioners who purchase their
products.
He also thanked ashfoam Ghana for
their continuous support towards the
GJa over the years.
For his part, the Head of Marketing
and Communications
at ashfoam
Ghana Ltd, nana
Yaw ampem-
Darko antwi, said
ashfoam Ghana
has supported the
GJa over the years,
not because it
wants returning
favours or
coverups when
they go wrong, but
rather, to ensure
the progress of the
association.
He said the
company will continue
to support
the GJa to the best
of its ability,
adding that the renovation will be discussed
by management, assuring that it
will come to the aid of the association
to renovate the Press Centre.
Meanwhile, nana Yaw ampem-
Darko antwi also raised concerns about
how cybercrime was affecting their
business, calling on the GJa and the security
agencies to help address the challenge.
He also advised the public to be cautious
of online fraudsters, especially
those who use ashfoam’s name to create
momo accounts and demand monies to
defraud online shoppers.
e-VAT invoicing
system to boost VAT
collection – Deloitte
aUDItInG firm, Deloitte Ghana says
the rollout of the e-Vat invoicing system
is expected to give the Ghana Revenue
authority (GRa) access to
transaction data in real-time and close
current gaps in Vat reporting and collection.
In its critique of the 2022 Mid-Year
Budget Review, it said small and
medium businesses can also take advantage
of this technological initiative
to mitigate the challenges encountered
with maintaining Vat records and enhancing
Vat compliance monitoring
and assurance.
“Implementation of this e-invoicing
system is expected to be completed
within one year from the passage of the
amendment act, with a possible extension
of three months. to
avoid any logistical challenges,
taxpayers are encouraged
to start
immediate preparations
to comply.”
as part of efforts to
improve and digitize revenue
mobilization, the Finance
Minister, Ken
ofori-atta announced the
introduction of an electronic
Vat (e-Vat) invoicing
system to take effect
from october 1st, 2022. the
system will require Vat-registered businesses
to issue Vat invoices through a
Certified Invoicing System (CIS). the
CIS is to be certified by the Commissioner-General
(C-G) and will be integrated
into the invoicing system of the
C-G.
the Minister of Finance also noted
that the GRa was reviewing legislation
for the taxation of e-commerce, betting
and gaming activities.
these are expected to be presented
to Parliament for consideration at a
later date.
Deloitte said these amendments are
broader in scope and in tune with current
trends in the technology space
which should lead to an increased revenue
intake for government of Ghana.

Thursday, August 11, 2022
GOVT MUST REVIEW
STANCE ON SIM
CARD REGISTRATION
THE government has extended the deadline for
the mobile telecommunication subscriber
identification module (SIM) re-registration by
two more months, but with conditions.
One of the conditions is that at the end of the
first month (August 31) when a review will be
conducted, any SIM card that has not been fully
registered will be barred from receiving certain
services, including voice and data services.
In addition, it will become more expensive to
use unregistered SIM cards.
The Minister of Communications and
Digitalisation, Ursula Owusu-Ekuful, announced
this at a press conference in Accra last week. She
mentioned the development of an App to
facilitate the process but at a fee.
The App, a Virtual Private Network (VPN)
connectivity and Application Programming
Interface (API) integration with all mobile
network operators (MNOs) is meant to
decongest the registration centres.
As of Thursday, July 21, 2022, 16,969,034
individuals had registered for the Ghana Card,
with about 16,535,623 cards printed; 15,702,719
cards had been issued, whereas some 832,904
cards had not been distributed or collected.
Much as the SIM registration exercise is well
intended, the Newspaper strongly holds the
view that the rigidities and timing is ill-timed
and a danger to revenue mobilisation as far as
the Electronic Levy (E-Levy) is concerned. It can
also have a consequence on the bottom line of
telcos and thereby impact the quantum of taxes
they pay to the state.
Already, the government has been forced to
drastically revise downwards the revenues
expected from the levy because of the drop in
usage of mobile money.
We trust that much as it is important to put
in place measures to get the citizenry to
conform, we also need to weigh the impact of
such measures on other programmes and
initiatives that the same government has put in
place.
To the Newspaper, the Communications
Minister must beware of her actions on the
government’s revenue mobilisation efforts from
the electronic transactions and work to
encourage more to be on board rather than the
reverse.
We agree totally that there are people who
will not act until they are pushed to the wall and
such characters must be dealt with.
However, we are gravely concerned about
the timing and, therefore, we will once again
prevail on the government to go slow with the
registration to ensure that the number of
subscribers are not reduced because one
subscriber lost is costly in view of the present
dire situation.
Speculators
driving interbank,
retail FX rates gap
UnCERtaIntIES surrounding
the country’s
ongoing access to
forex are causing
speculations on the FX
market – which has effectively
driven the spread between cedi depreciation
on the interbank and the
retail markets.
this is happening despite the
central bank’s intervention on the
FX market, through its bi-monthly
FX forward auction as well as spot
market operations.
In January 2022, the cedi lost
0.29% month on month (m/m) and
1.59% m/m on the interbank and retail
markets respectively. Meanwhile,
the BoG remained active on
the market, scaling its bi-weekly FX
sale to US$75million in quarter-1 of
2022 – up by 50% on quarter-1 of 2021
– to support the currency.
at the last FX forward rate auction
on February 8, 2022, the treasury
sold a total size of US$75million
against a total bid worth US$293million
demanded by investors across 7-
to 45- day tenors. this translated to a
bid cover ratio of 3.91x underlining
strong US$ demand.
anaylsts have said that, generally,
there is high demand which the
market is uncertain how it may be
resolved amid the country’s downgrading
by both Fitch and Moody’s
credit rating agencies – reflecting
the increasingly difficult task government
faces addressing its intertwined
liquidity and debt
challenges. tentatively, this tightens
government’s access
to international
capital
markets – further
exposing
the cedi to deprecation
pressures
in the course of
the year.
apakan Securities
Limited, in
its analysis of
the currency
market, argued
that the strong
dollar demand by
large corporates
and offshore investors
continues
to exert
pressure on the
local unit, leading
the GH¢ to
post losses
against the US$
in January 2022.
“Risk off sentiments, stemming
from fiscal and debt sustainability
concerns, also weighed on the GH¢,”
apakan highlighted. “We perceive
prolonged US$-GH¢ pressures in the
near-term as weaker investor sentiments
drive portfolio outflows.”
Usually, the market can fairly
determine that there will be cyclical
moments in currency; but now, due
to the negative ratings on the country,
players on the FX market are
buying more dollars with intentions
to hoard in the expectation that
rates will slide upward even further.
Per the Bank of Ghana, last year
significant inflows into the financial
and capital account in 2021 more
than offset the deficit in the current
account – resulting in an overall Balance
of Payments surplus of
US$510million.
a sigh of relief is elicited by the
current Gross International Reserves,
which stood at US$9.7billion
– equivalent to 4.4 months of import
cover – as of December 2021. this, according
to the BoG, has further increased
to US$9.9billion as of
January 28, 2022.
Expressing his optimism despite
the depreciation concerns of the
market, Senior Investment analyst
at octaneDC Limited, Kwadwo
acheampong, said in an interview
with B&Ft: “I believe there are no
fears at all in the near-term; and the
BoG will continue to intervene, even
if it has to increase its intervention.
“It is in the medium- to longterm
that this could be worrying if
risk factors such as increasing oil
prices and decrease in cocoa and
gold prices occur. the cedi should be
stable, or at worst depreciate marginally,”
Mr. acheampong however
cautioned. “the BoG needs to continue
with its intervention. the wide
spread between interbank exchange
rates and forex bureau rates should
narrow as speculator fears dampen.”
Databank, in its exchange rate
outlook, expressed the view that the
Ghana cedi (GH¢) remains vulnerable
to foreign portfolio outflows
amid the elevated import demand.
the heightened uncertainty
around Ghana’s fiscal outlook worsened
the cedi’s woes in late-2021,
after a hawkish policy tone in the US
triggered a flight-to-safety by foreign
portfolio investors in the third
quarter of 2021.
“We expect these conditions to
persist in first-half of 2022 in addition
to corporate import demand as
Ghana’s economy rebounds – also
given the low prospect of an early-
2022 treasury issuance on the international
capital market,” the assets
management company said.
However, Databank remains confident
that the BoG’s spot and forward
forex sales, together with a
tighter GHS liquidity, will help limit
the depreciation pressure in 2022.
Projecting the cedi’s position, it
stated: “We project the FY22 BoG
reference rate at 6.45 per US dollar
(±GH¢0.1) and the retail FX rate at
6.80 per US dollar (±GH¢0.1)”.

Thursday, August 11, 2022
Inflation hits 31.7%
GHana’S inflation
rate
hit 31.7 percent
in July
2022, following
significant increases
in prices of transport and
food.
the new inflation represents
a 1.9 percentage
point increase over the
29.8 percent rate recorded
in June 2022. on a
monthly basis, inflation
between June 2022 and
July 2022 was 3.1%.
this became known
when the Ghana Statistical
Service (GSS) released
the Consumer Price Index
(CPI) data yesterday
(Wednesday, august 10,
2022.)
according to the data,
food inflation rose again
“We composed
this from two
perspectives, the
food, and nonfood
inflation,
and a domestic
and imported
perspective. From
the food and nonfood
inflation, we
recorded food
inflation of 32.3%
and 31.3% for
non-food
inflation.”
to 32.3% while non-food inflation
was 31.3 percent.
Government Statistician,
Professor Samuel annim,
stressed the impact of the key
drivers on the increase in the
overall inflation rate for July
2022.
“We composed this from
two perspectives, the food, and
non-food inflation, and a domestic
and imported perspective.
From the food and
non-food inflation, we recorded
food inflation of 32.3% and
31.3% for non-food inflation.”
“From the domestic perspective,
we recorded 29.2% and
imported inflation of 31.3%.”
He further indicated that
Eastern Region recorded the
highest inflation rate of 38.1%
whereas the Upper East Region
recorded the lowest inflation
rate of 19.8%.
Ghana Water Company to read meters with drones
ManaGEMEnt of the Ghana
Water Company Ltd has introduced
an electronic billing
system to tackle challenges
such as delays in billing, nonbilling,
non-reflection of bill
payments, and difficulty in
monitoring meter readers
among others.
the Managing Director of
“Ing. Abdallah
Braimah, mentioned
that the adhesives
used to connect the
pipes in households
should be certified by
the FDA Ghana as
something friendly to
human health, but if
customers of Ghana
water illegally connect
water into their house,
they cannot determine
the adhesives in the
pipes used.
GWCL, Ing. Dr. Clifford abdallah
Braimah, indicated that as
part of efforts to improve customer
services, GWCL has
started a technological drive
by introducing a drone metering
system for capturing
meter readings, catchment
monitoring, mapping, among
others.
the utility company says
the new system will significantly
reduce the time between
customer meter reading
and customer billing, eliminate
arm-chair meter reading,
effectively reduce human errors
inherent
in the current billing
system, link customer billing
to customer location, allow for
bill payment anywhere in the
world, enable online service
connection application and
reduce new service connection
time.
He then called on national
Security to consider the illegal
connection of water as a national
security threat.
Speaking at the launch,
under the theme: ‘’accounting
to our customers,” Dr. Clifford
said when someone does an illegal
connection; the person is
threatening the lives of
Ghanaians.
Ing. abdallah Braimah,
mentioned that the adhesives
used to connect the pipes in
households should be certified
by the FDa Ghana as something
friendly to human
health, but if customers of
Ghana water illegally connect
water into their house, they
cannot determine the adhesives
in the pipes used.
He encouraged the public
to report illegal water connections
to help reduce the cost of
producing potable water.
He also expressed worry
over the level of devastation
caused by illegal miners on
various water bodies stating
that the menace of the illegal
miners along the water bodies
has caused its turbidity to rise
above the limit.

Thursday, August 11, 2022
Risk Watch with Alberta Quarcoopome:
Loan monitoring— A
panacea to loan default? (Part I)
The issue of problem
loans is an albatross
that keeps rearing its
head in the affairs of
financial institutions in
both and advanced and
less advanced
economies. Granting
loans is one of the core
functions of banks.
What are the effects of
bad loans?
abank with high
percentage of bad
loans has cause to
worry. While liquidity
and profitability faces
decline, there is an erosion assets
and capital causing insolvency,
and an eventually run on the bank
and collapse.
Risk Watch with alberta
Quarcoopome: Loan monitoring—
a panacea to loan default? (Part I)
the Banker’s Duty of Care
Many loan defaulters have an
easy playing field when they are
left to themselves after the funds
have been disbursed. When this
happens, loan officers are unable
to detect early signs of default.
Whether as an investor or a
borrower, regular customer
contact is key in a banking
relationship. Investment/Sales
Executives sometimes desert their
customers after the deal is closed.
We don’t know that subsequent visits
or calls can make the customer feel a
greater sense of belonging and can even
bring more funds from offshore to be
added to the existing funds. Some Loan
officers also neglect their customers
when the loan is approved and disbursed.
In both circumstances, we should know
that customer visits or calls as well as
face to face meetings go a long way to
impact the bank’s profitability. How do
we minimize the risk of default of bank
loans and customer attrition?
Supervision and
Follow-up of Loans
the basic objective of supervision
and a follow-up system is to ensure
that the advances granted by the bank
are safe. the funds lent by banks belong
to the depositors and the bank staff
have responsibility in safeguarding the
interests of millions of depositors.
Supervision of loans starts right from
the stage of selection of a borrower
whereas follow-up of loans starts
immediately after
disbursement of the loan.
the branch is the unit from
which the proposal is made for any
advance and disbursement channeled
through. the borrowers’ maintain
accounts are with the branch,
operations are conducted through the
account, reports, and returns are
submitted, by the borrower to the branch
and loans officers. Success therefore
depends on how effectively the branch
and loans departments ensure
supervision and follow-up of the credit.
Let me share some
real-life cases:
Case one: a key distributor for
“The branch is the
unit from which the
proposal is made for
any advance and
disbursement
channeled through.
The borrowers’
maintain accounts
are with the branch,
operations are
conducted through
the account, reports,
and returns are
submitted, by the
borrower to the
branch and loans
officers.
Unilever products who benefitted from a
guarantee to his supplier (Unilever)
diverted the sales proceeds into building
a warehouse. the bank which had
guaranteed payment of cheques had to
continue the misfortune of honouring
the cheques until the amounts were
crystalized into an actual loan, running
into several hundreds of thousands of
cedis.
Didn’t the Loan officer make regular
visits to the shop(s)? What about the
account operation? Were there no
evidence of reduceds turnovers, diversion
of payments to builders or suppliers of
building raw materials? Dear Loans
officers, please do not leave the
monitoring of account operations to the
branch operations staff alone. In banks
where the loan processing rests only at
the Business or Retail departments, they
sometimes may not have the full details
of the loan agreement and will only
honour cheques that are funded!
Case two: a customer who has been
financed to sell alcoholic beverages
suddenly displays a variety of other items
such as rice, sugar, oil etc. a loan officer
may admire customer’s ingenuity and
business acumen but for all you know,
he/she has defaulted in paying the
supplier of the beverages and has

Thursday, August 11, 2022
therefore diverted to try
other items whom he or she
has no experience to deal in!
Mr. Loan officer, please visit
your customer, check their
books, as well. It falls within
your right. Perhaps the loan
repayment proceeds is being
diverted to build up a good
track record at another bank
for bigger loans!
Case three: a customer
who was financed to
complete a government
building contract suddenly
moved house into a posh
residential area, “acquired a
new wife” as well as a brand
new luxury car! the building
site was deserted. He put 90%
of the blame on nonpayment
by the government
because he is not a “card
bearing” member of a ruling
government’s party! this one
too, they bring politics
inside! Haba!
Case Four: How do you
check your borrowing
customers’ standing in the
community? one does not
need to work in the Bureau of
national Investigations to
find this out. there is a
tendency for some customers
to offer ten percent of bank
loans disbursed, as tithes!!
Can you imagine? Yes, the
tithe-giving message has
been taken to the extreme
levels. I have seen contractors
take their cheques to their
pastors to be prayed over,
with some of the funds being
siphoned away by the
charlatan pastors!
Funds meant for business
should be used for business
to enable them make profit
and repay the loans and pay
genuine tithes! Please make
it a point to monitor the
account operations, call your
customers and visit them. If
you are good at a little
psychology, you can read in
between the lines when
customers are edgy and not
able to explain certain
expenditure patterns. Don’t
behave as if you are a know it
all, but do it in a very discrete
way and make your
suspicions known to your
supervisor.
Sometimes face to face
meetings within the bank
premises make them see the
seriousness of the situation. I
remember decades ago when
I used to monitor customers
who had been assisted with
the purchase of huge
consignments of imported
frozen fish at the tema
fishing harbour. I had to go to
there every other day to
monitor their transactions.
at a point in time, the bank
vehicle meandering its way
between the small lanes in
the harbour as well as the
cold stores became
notoriously known as
Madam Fish.
there were times I found
it difficult but eventually it
became mutually satisfying
for both the bank and the
customers. Even with my
eagle eyes, a few of them
managed to divert some sale
“There were times I
found it difficult
but eventually it
became mutually
satisfying for both
the bank and the
customers. Even
with my eagle
eyes, a few of
them managed to
divert some sale
proceeds into
buying other types
of fish for sale,
before eventually
repaying the loan.
Entering various
cold stores in the
harbour, without a
jacket, to check
customers’ stock
balances, were
some of the
unforgettable
experiences.
proceeds into
buying other
types of fish for
sale, before
eventually
repaying the
loan. Entering
various cold
stores in the
harbour,
without a
jacket, to check
customers’
stock balances,
were some of
the
unforgettable
experiences.
Case Five:
Sometimes a
call or visit can
even help
identify sick or
even deceased
customers!
Relatives of
borrowing
customers are
usually the last
to inform the
bank about his
or her death.
You may not
know but a
family member may be
operating a deceased
account’s sole proprietor’s
account without the
knowledge of the bankers.
the KYC on customers
should be continued until
the account is terminated.
Dear bankers, despite this
era of digital banking,
artificial intelligence and Big
Data analytics, the human
touch can never be replaced.
Make banking great again in
this new decade.
I will pause here. next
week, we shall examine the
early warning signals that
loan monitoring officers
should identify easily and
take action to avoid the
deterioration of their loan
portfolio.
(TO BE CONTINUED)
For more insights on this
topic, please book a copy of
my new book, “tHE MoDERn
BRanCH ManaGER’S
CoMPanIon” which
involves the adoption of a
multi-disciplinary approach
in the practice of today’s
branch management. It also
shares invaluable insights on
the mindset needed to
navigate and make a
difference in the changing
dynamics of the banking
industry. Call 0244333051 for
your doorstep delivery.
to BE ContInUED
aBoUt tHE aUtHoR
alberta Quarcoopome is a
Fellow of the Institute of
Bankers, and CEo of aLKan
Business Consult Ltd. She is
the author of three books:
“the 21st Century Bank
teller: a Strategic Partner”
and “My Front Desk
Experience: a Young
Banker’s Story” and “the
Modern Branch Manager’s
Companion”. She uses her
experience and practical case
studies, training young
bankers in operational risk
management, sales, customer
service, banking operations
and fraud.
Website
www.alkanbiz.com
Email:alberta@alkanbiz.c
om or albique@yahoo.com
Tel: +233-
0244333051/+233-0244611343

Thursday, August 11, 2022
BaNKING
Cryptocurrencies don’t yet pose
a threat to financial stability,
Bank of England’s Cunliffe says
Key Points
• “The speculative boom in
crypto is very noticeable
but I don’t think it’s
crossed the boundary into
financial stability risk,”
Bank of England Deputy
Governor Jon Cunliffe told
CNBC.
• Bitcoin and other digital
currencies shot up in value
at the start of the year, but
have since fallen sharply.
• Regulators have
increasingly been
sounding the alarm about
crypto.
CRYPtoCURREnCIES aren’t yet
big enough to pose a systemic risk
to financial stability, Bank of
England Deputy Governor Jon
Cunliffe said Wednesday.
this view is coming as central bank’s
around the world – the Bank of Ghana
included - are increasingly getting worried
about the potentials of cryptocurrencies to
disrupt financial stability and the impact of
prudent monetary policy in their respective
jurisdictions and possibly even on a global
scale eventually. Consequently Ghana’s central
bank has joined many of its counterparts all
around the world in working towards the
issuance of national digital currencies,
regulated by them, to satiate interest in digital
currencies.
But some top central bankers believe the
worries are exaggerated, at least for now.
“the speculative boom in crypto is very
noticeable but I don’t think it’s crossed the
boundary into financial stability risk,” Cunliffe
told CnBC’s Joumanna Bercetche in an
exclusive interview.
Bitcoin and other digital currencies shot
up in value at the start of the year, briefly
becoming a $2.5 trillion market. Backers of
bitcoin claimed it could offer an alternative
store of value as savers struggle to find yield
due to ultra-low interest rates.
However, cryptocurrencies are highly
volatile, and the market has lost more than $1
trillion in value since May. Bitcoin has fallen
from a record high of nearly $65,000 reached
in april to around $32,500 as of Wednesday.
Regulators have increasingly been
sounding the alarm about crypto. China in
particular has sought to crack down on the
industry, in a series of measures that have
weighed on investor sentiment in recent
weeks.
Meanwhile, Binance, the world’s largest
crypto exchange, was banned from operating
in the U.K. by the Financial Conduct authority
last month. Binance was one of many
exchanges that failed to register with the
regulator due to not meeting anti-money
laundering requirements.
Cunliffe said crypto speculation was
mainly limited to retail investors for now,
reiterating the central bank’s position that
people investing in digital assets should be
prepared to lose all their money.
“there are issues of investor protection
here. these are highly speculative assets,” he
said. “But they’re not of the size that they
would cause financial stability risk, and
they’re not connected deeply into the
standing financial system.”
“Were we to start to see those links
develop, were we to start to see it move out of
retail more into wholesale and see the
financial sector more exposed, then I think
you might start to think about risk in that
sense,” he added.
the Bank of England official added a
distinction should be drawn between
speculative crypto assets like bitcoin and socalled
“stablecoins” which are backed by
existing financial assets.
tether, for example, is the world’s largest
stablecoin with more than $60 billion worth of
tokens in circulation. It is meant to be backed
1:1 by U.S. dollars to maintain a stable value,
however tether has garnered controversy due
to concerns it doesn’t have enough reserves to
justify its dollar peg.
Cunliffe said he thinks stablecoins should
come under regulatory supervision.
“I think the international community
needs to at least be developing standards to
actually be able to distinguish but also to have
regulatory standards for that sort of product,”
he said.
It comes as several central banks around
the world — including the Bank of England —
are exploring digital currencies of their own,
in response to dwindling cash use and
growing interest in crypto.
How to keep crypto from crashing the financial system
onCE upon a time, the realm of
cryptocurrencies was a curious
sideshow, a place where criminals
did business and enthusiasts
dabbled at their own peril. not
anymore. It’s rapidly evolving into a
veritable Westworld of finance,
where glitchy simulacra of
investment funds, banks and
derivatives allow visitors to take on
immense risks — risks that could
ultimately spill over into traditional
markets and the broader economy.
Regulators have been struggling
to get a grip on all this. It’s
increasingly important that they
succeed, and soon.
Whether crypto will prove to be,
on balance, a good thing is still
unclear. as money, it has so far
failed: the volatility, transaction
costs and carbon footprint of
Bitcoin, for example, have made it
largely useless for purposes other
than speculation and ransomware
(and even there it has flaws). that
said, the underlying blockchain
technology — which allows people
anywhere to transact and create
indelible records without relying on
a trusted intermediary — may yet
have uses beyond selling “official”
copies of video clips and
commemorating the torching of
valuable artwork. In due course, it
might help sovereign states improve
their official currencies.
Lately, though, the denizens of
crypto have been replicating the
work of traditional financial
institutions, without any of the
regulatory guardrails designed to
keep them in check. Left
unattended, this is not likely to end
well.
Exhibit 1 is stablecoins,
representations of fiat currencies
that operate on the blockchain. they
mimic bank deposits by purporting
to be worth, say, exactly one U.S.
dollar per coin. But unlike banks, the
organizations that manage them
have no deposit insurance, no
recourse to emergency loans from
the Federal Reserve, and no limits
on where to invest the reserves of
fiat money that allegedly back them.
tether, the outfit behind one of the
most popular stablecoins, has
already been caught lending its
dollar reserves to its affiliated crypto
exchange, and still claims to hold
potentially volatile assets such as
precious metals and other digital
tokens.
History has repeatedly
demonstrated how dangerous such
a naked combination of deposit-like
liabilities and risky investments can
be. Even the rumor of losses can
trigger a rush to redeem before the
money is gone, with systemic
consequences. Suppose, for example,
stablecoins became large buyers of
commercial paper, short-term debt
that companies issue for purposes
such as buying supplies and paying
employees. (tether says it already
holds tens of billions of dollars of
such paper.) a sudden wave of
redemptions could starve the
market of cash, rendering
companies unable to make payroll
— similar to what happened in 2008,
when the bankruptcy of Lehman
Brothers triggered a run on moneymarket
funds that devastated the
commercial paper market (a
vulnerability that itself has yet to be
fully addressed).
Exhibit 2 is the burgeoning
world of decentralized finance, or
DeFi. Working on the Ethereum
blockchain, using “smart contracts”
capable of automating transactions,
often-amorphous teams of
developers have set into motion a
panoply of applications. these
include exchanges, bank-like
platforms and derivatives dealers
where people can lend, borrow and
make highly leveraged bets. Many of
the services have decentralized
governance systems that leave
decision-making to a constantly
changing community of users.
Scams abound. Hackers frequently
find ways to drain funds, as
famously happened with the
original autonomous blockchain
organization, the Dao. think of it as
full-service shadow banking with
nobody in charge.
So far, the sums involved are
relatively small — the equivalent of
tens of billions of dollars, compared
with the hundreds of trillions
coursing through global capital
markets. But this could change
quickly, with far-reaching
repercussions — particularly given
the amount of leverage involved.

Thursday, Tuesday, August March 11, 1, 2022
Africa’s unfinished
trade agenda
tHE african Continental Free
trade area (afCFta), which
entered into force on January 1
last year, promises to accelerate
the diversification of the
region’s economies and reduce the impact
of commodity-price cycles on growth.
Whereas africa’s external trade is
dominated by primary commodities and
natural resources, the first shipment
under the afCFta – from Ghana to South
africa – comprised manufactured goods of
the sort that largely drive intra-african
trade.
Many therefore hope that the afCFta –
by creating a single market of 55 countries
with a total population of more than 1.3
billion and a combined GDP of $3.4 trillion
– will catalyze industrialization as firms
take advantage of economies of scale to
spread the risk of investing in smaller
markets. to that end, the trade agreement
will eliminate tariffs on 90% of goods (the
ultimate goal is 97% liberalization).
the afCFta will likely boost foreign
direct investment across africa – empirical
evidence elsewhere shows that joining a
free-trade area could increase it by around
a quarter – and shift its emphasis from
natural resources toward labor-intensive
manufacturing industries. Moreover, the
pact has the potential to transform african
economies, significantly increase the
continent’s share of global trade, and
strengthen its bargaining power in
international trade negotiations.
But while many have touted the
afCFta as a game changer for africa, trade
liberalization alone will not necessarily
guarantee economic success.
to be sure, the agreement has rightly
attracted much attention in academic and
policy circles. the World Bank, the
International Monetary Fund, the United
nations Conference on trade and
Development, and the african Export–
Import Bank have all compiled extensive
studies on the afCFta’s potential impact.
and the Journal of african trade recently
published a special issue on “the afCFta
and african trade,” which I co-edited with
andrew Mold of the Un Economic
Commission for africa.
all these analyses point to the
agreement’s significant and positive
impact on economic development.
Specifically, the empirical results
according to computable general
equilibrium models – which allow for
trade-diverting and trade-creating effects
of tariffs and non-tariff shocks by
exploiting countries’ comparative
advantage and price adjustments – are
highly encouraging. aggregate headline
estimates derived from these models show
that the afCFta would increase africa’s
GDP by 0.5% after full implementation in
2045, relative to a scenario without
continental trade integration.
Real wages would increase for both
skilled and unskilled workers, and
especially for the latter, suggesting a shift
toward more inclusive growth. the World
Bank estimates that the afCFta could lift
30 million people out of extreme poverty
and around 68 million out of moderate
poverty by 2035, with women benefiting
more than men. trade integration could
also have a significant impact at the
household and corporate level: Combined
consumer and business spending is
projected to reach $6.7 trillion by 2030.
trade within africa is expected to
grow strongly under the afCFta, with
intracontinental exports increasing by
34% (equivalent to around $133 billion
annually) compared to a scenario without
the agreement. Moreover, around twothirds
of intra-african trade gains will
likely be realized in the manufacturing
sector – historically the most effective
elevator out of poverty. this would set the
stage for a welfare-enhancing and
mutually reinforcing relationship between
intraregional trade and industrialization,
resulting in sustainable growth of wellpaid
manufacturing jobs while
broadening countries’ tax bases and
improving their external accounts.
But substantial non-tariff barriers,
regulatory differences, and divergent
sanitary, phytosanitary, and technical
standards increase the costs of crossborder
trade within africa by an estimated
14.3%, well above the average tariff of 6.9%.
Removing these constraints and
deepening the integration of african
businesses into global value chains will
significantly boost intra-african trade and
drive growth. the World Bank estimates
“Overcoming Africa’s
chronic infrastructure
deficit – both physical and
digital – will boost the
power of trade creation
and help to ensure the
successful implementation
of the AfCFTA. By tackling
the continent’s supplyside
constraints,
policymakers can enhance
both production and
logistics in a region with
more landlocked countries
(16) than any other.
that full implementation of the afCFta
could raise africa’s real income by 7%
(about $450 billion) by 2035, with trade
facilitation measures to cut red tape and
simplify customs procedures responsible
for $292 billion of this increase.
overcoming africa’s chronic
infrastructure deficit – both physical and
digital – will boost the power of trade
creation and help to ensure the successful
implementation of the afCFta. By tackling
the continent’s supply-side constraints,
policymakers can enhance both
production and logistics in a region with
more landlocked countries (16) than any
other. as investors seek to capitalize on the
economies of scale offered by the afCFta,
integrating markets and improving
connectivity must be a top priority.
Clarifying the afCFta’s rules of origin
– which determine whether products are
duty-free under the agreement – also is key
to accelerating industrialization and the
development of regional value chains.
Despite the challenges posed by CoVID-19,
negotiators have made significant
progress on the rules-of-origin agreement,
which should be concluded later this year.
that will pave the way for phase-two
negotiations on key drivers of future
growth, including protocols on
investment, competition policy, and
intellectual-property rights.
But, as the rush to conclude bilateral
trade agreements with third-party
countries suggests, africa’s most
important trade-integration challenge
may be the perennial one of putting the
region’s collective interest first. although
the afCFta does not bar member countries
from entering such negotiations, bilateral
deals with third parties could affect
african trade patterns and set precedents
for regional trade and investment rules. In
practice, they could lead to trade
deflection, given that the afCFta’s mostfavored-nation
clause automatically
extends tariff concessions granted to a
third party to afCFta members.
as Jeffrey Sachs has argued, “Without
a doubt, if africa becomes economically
integrated, it will be a global leader and the
largest economic region in the world.” as
of this writing, 41 countries have ratified
the afCFta. But if the pact is to become
the launchpad for africa’s deeper
integration into the global economy,
governments must complement trade
liberalization with robust trade facilitation
measures, and strengthen regional
coordination in order to engage with
external partners as a unified trading bloc.
Hippolyte Fofack is Chief Economist
and Director of Research at the african
Export-Import Bank (afreximbank).

Thursday, August 11, 2022
Policy considerations for
students’ loan adoption
InVEStMEnt in higher
education forms a critical
aspect of improving the
human capital of nations.
In the absence of a
conscious investment effort, a
national skill deficiency ensues;
and there is also an attendant low
quality of human capital which
undermines development and
standards of living. against this
backdrop, it has become a
constitutional mandate for
governments to develop their
people through education at all
levels.
Due to limited resources and
poor planning, governments of
developing countries struggle to
finance higher education for their
citizens. Student loan scheme (SLS)
offer one of the popular platforms
for the financing of higher
education in both developed and
developing countries. Students’
loan schemes (SLSs) are acceptable
cost-sharing mechanisms used
worldwide by governments to
reduce part of their financial
burdens connected to higher
education financing.
Since its emergence in 1950,
SLSs have grown in polarity.
Economically, students’ loans provide
an alternative remedy to the financial
constraints facing students; offering
improved access to higher education for
students from low socio-economic
backgrounds who would otherwise be
denied access to higher education
because of their inability to pay. It also
serves as a third leg to cost-sharing and
makes students more responsible and
value higher education more.
Like other countries, the SLS
administered in Ghana by the Students’
Loan trust Fund (SLtF) is confronted by
pockets of challenges. a major challenge
is an indiscriminate manner in which
funds are disbursed to recipients without
combining it with other finance
schemes. there is also the problem of low
adoption of the SLS among Ghanaians.
Scrutiny of these challenges presents an
opportunity to address policy lapses
undermining the effectiveness of the SLS
in Ghana.
SLSs as an innovation
SLSs are lending innovations which
when appropriately designed, can help
point the way for financial institutions to
lend a hand in higher education
financing and also, impact investors’
interest in supporting access to tertiary
education in emerging markets.
Further, with sustainable models
that provide fair terms to students
and favourable returns to investors,
student finance has the potential to
become a growing terrain for investors.
In Ghana, commercial banks,
educational institutions, churches, nongovernmental
organizations (nGos) and
some student bodies such as the
students’ representative councils (SRCs)
have supplemented governments’ efforts
in providing loan products, scholarships,
grants and other funding mechanisms to
support student funding but these have
not been adequate.
one thing necessary with the
proliferation of SLSs in many countries is
the need to have an innovative welltailored
module that meets the peculiar
needs of a particular market. this is the
sure way of making SLSs sustainable.
although admirable, introducing these
innovations straight away in different
markets without testing them can be
disastrous. thus, tailoring students’ loan
offerings to suit specific contexts and
contents is key to the success of any such
scheme. Consequently, any
country/institution determined to have a
well-patronized scheme should not
overlook the innovation bit.
the SLS adoption challenge
Like all innovations, SLSs such as the
one operating in Ghana are confronted
with low adoption rates. the factors that
impact adoption could be broadly
categorised as technological and
behavioural factors. For instance, SLSs
now leverage information technology
(I.t.) platforms to achieve simplicity or
improve service delivery and streamline
administrative procedures.
Limited literature and research are
investigating how technological and
behavioural factors might be impacting
the adoption of the SLS among
Ghanaians. However, available data from
the Students’ Loan trust Fund suggests
that less than 10 per cent of eligible
tertiary students in Ghana patronizes the
SLS.
assessing factors influencing the
adoption of the students’ loan scheme, it
could be envisaged that the relative
advantage of the scheme (i.e. the added
value a scheme offers compared to
existing approaches in the adoption of
loans); its complexity (i.e. its simplicity
in use by students); its compatibility
with the end-users who are the students;
its observability (i.e. students’ ability to
track the benefits that the scheme offers
that encourages peer-to-peer
recommendations); its trialability (as in
how easily the scheme could be tried
before full indulgence); or a combination
of these factors work together as factors
affecting their final decision to adopt the
scheme or not to.
the adoption of a
loan scheme involves
decision-making. as
well, the attitude of a
person is believed to
have a direct link to the
decision.
organizational
researchers have also
argued that social
norms or the social
expectations of
individuals go a long
way to affect their
financial decisions,
likewise behaviours that
are controlled by
externalities (control
behaviours).
apart from the
aforementioned factors,
policy lapses also
account for this low
patronage. Policy
changes are needed to
address the myriads of
misconceptions
surrounding the
“One thing
necessary with
the proliferation
of SLSs in many
countries is the
need to have an
innovative welltailored
module
that meets the
peculiar needs of
a particular
market. This is
the sure way of
making SLSs
sustainable.

Thursday, August 11, 2022 PAGE 11
repayment of students’ loans
in Ghana.
one area of the
misconception that must be
addressed is the argument
that lack of employment
opportunities and subsequent
stigmatization of loan
defaulters might be
responsible for low patronage.
Despite the introduction
of changes to the loan
application process and
disbursement to improve
access, patronage is still low.
Further, the presence of
several brilliant but needy
students requiring financial
assistance for higher
education underpins the
necessity of a paradigm shift
in policy to address the
bottlenecks.
Policy
considerations and
recommendations
From an innovation and
policy perspective, Ghana’s
SLS must be well-defined and
designed bearing in mind the
following characteristics:
Simple management
policies to ensure universal
access to the loan scheme by
all eligible students.
an instrument of
repayment should be flexible,
thus allowing for shocks in
the income of borrowers
during the repayment period.
the coverage of the loan
should include tuition fees,
maintenance fees and other
educational needs to ensure
students from lower-income
families are attracted to adopt
the loan scheme.
Be tailored to suit the
needs of each student with an
adequate evaluation and
monitoring system to ensure
the sustainability of the
program.
Further to the policy
recommendations, the
following recommendations
will help address some
practical bottlenecks of the
SLS in Ghana:
Urgently address all
technical challenges
associated with the use of the
SLS. this will help improve
processes connected with
applying for and repaying
student loan and thus
improve parentage.
Provide financial literacy
training for students.
Financial literacy training
must form part of the
“A revision of the
loan requirements
is needed. Many
student
beneficiaries and
those yet to apply
complained about
the lack of
guarantors and
compound
interests. To make
the scheme more
compatible and
less complex, the
requirements for
guarantors should
be taken out
completely and
biometric national
identifications
used instead.
orientation programs offered
to students by the SLS.
a revision of the loan
requirements is needed. Many
student beneficiaries and
those yet to apply complained
about the lack of guarantors
and compound interests. to
make the scheme more
compatible and less complex,
the requirements for
guarantors should be taken
out completely and biometric
national identifications used
instead. as well, digital
address systems now in place
should be used to track loan
beneficiaries to enforce
repayments. Compound
interest rates should be made
a straight line with a little
margin added to the interest
rate to make up for any loss in
value of funds. these would
relax the requirements.
Conclusion
the success of the SLS in
Ghana depends on policy
innovativeness. It important
that existing policies and
systems are redesigned to
practically cater to the needs
of the targeted users.
Essentially, the relative
advantage of the innovations
(policies) over existing ones
must be evident.
this concerns the
effectiveness/efficiency of the
new SLS system or policy in
addressing issues that the old
system could not properly
resolve. also, users will judge
well the new policy compares
with existing ones, regarding
its integration and
compatibility with already
existing systems.
another important factor
will be the ease of usability of
the new policy/system
underpinned by an
understanding of the extent
to which it streamlines the
performance of actions or
procedures. When policies
introduced to address SLS
bottlenecks successfully
demonstrate its advantages,
innovativeness and ease of
use to students/parents, they
are more likely to adopt it.
a typical example will be
the integration of the
internet and other
electronic/mobile phone
payment systems. this is an
indication that students are
likely to adopt a loan scheme
if they think it will enable
them to accomplish their
educational tasks more
quickly.
The writer is the Exec.
Director, Shield Insurance
Brokers and Shield
Microfinance Ltd

BACK
PAGE
Thursday, August 11, 2022
GMWU threatens strike
• the General Secretary of the
Union, abdul-Moomin Gbana
the Ghana Miners
Workers’ Union
(GMWU) has
warned of embarking
on an industrial
strike.
this union’s warning
comes at a time when the
country was experiencing serious
economic challenges.
the General Secretary of
the Union, abdul-Moomin
Gbana indicated that government
has refused to meet their
concerns during stakeholder
engagement sessions.
among other things on the
table, the Union is calling on
government to ensure their
safety in their line of work.
Speaking with Citi Business
news, which was monitored
by Business anaLYSt,
abdul-Moomin Gbana
stressed, “the Ghana Miners
Union will not hesitate to embark
on an indefinite strike action
to drive home our demands
of paying particular
attention to the increasing
state of our insecurity in the
mining industry.”
He cited an incident in
newmont in the ahafo Region
where a member lost his
eye as a result of a fierce
confrontation with illegal
encroachers who
had invaded their mining
concession.
Mr. Gbana maintained
that it was time
the sector minister and
other stakeholders paid
attention to their demands.
“We have signaled
government to compel
employers within the
mining industry to ensure
that the safety protocols
of workers are
standard.”
the union noted
that their strike will
take the stakeholders
unawares if their calls of security
among other things are
left unaddressed.
“We have
signaled
government
to compel
employers
within the
mining
industry to
ensure that
the safety
protocols of
workers are
standard.”
Excessive govt expenditure cause
of free fall of cedi-Economist
tHE continuous depreciation of
the Cedi has been attributed to
the excessive expenditure before
and during the advent of
CoVID-19 as against the poor
revenue mobilisation targets
through the e-levy and others.
according to Economist,
Courage Boti, managers of the
economy have failed to take
counteractive measures to revert
the poor performance of the
cedi.
“I thought we missed an important
opportunity in november
when we were reading the
budget to try to address the market.
Clearly, during the Covid-19
era, we spent monies we did not
have, coupled with the energy
sector problems and financial
sector clean-up. We exceeded
our budget. It will take about 3
to 4 years of rationalization to
bring things back to normal.”
“after Covid-19, we could
have streamlined expenditure
• Ken ofori-attah,
Minister of Finance
to make up for the excess expenditures
we had in the past,”
he noted.
harm has been
caused, the first
solution
““The
is to
accelerate the
conversations with
IMF. This will depend
on our transparency
and the amount of
information we are
willing to give,” he said
He went on to add that:
“Having done all these, the natural
thing going into consolidation
would have been to have an
IMF bus stop, where we had policy
guidance and balance of payment
support. If we were under
such programs in 2021 and 2022,
it would have guaranteed fiscal
discipline which the market
will trust and balance of
payment support that can
reassure investors that
they are safe.”
“the harm has been
caused, the first solution is
to accelerate the conversations
with IMF. this will
depend on our transparency
and the amount
of information we are willing
to give,” he said
the cedi has depreciated
against the dollar,
trading at 9 cedis per dollar.
the sharp fall from 6
cedis at the beginning of
the year, to 9 cedis now,
has had a major impact on
importers in particular,
with a far-reaching effect
on the purchasing power
of consumers.