Tuesday, December 22, 2015
Wednesday, December 16, 2015
Tuesday, December 8, 2015
GAWU urges mandatory lending to agric sector
THE General Agricultural Workers Union (GAWU) of the Ghana Trades Union Congress (TUC) is advocating a national policy that will compel banks to invest a certain portion of their loan portfolios in the agricultural sector.
The Deputy General Secretary of GAWU, Mr Edward Kareweh, told the GRAPHIC BUSINESS in an interview that the sector was being marginalised in terms of policy focus, hence the need for the government to intervene through policy directions.
Should the government heed the call and implement it, Mr Kwareh believes banks that did not abide by it should have their licences revoked and forced out of the sector.
“We are calling for a more serious reflection on the policies and development strategies of this country and the level of coherence of these policies and strategies,” he said.
The union’s comment is premised on recent data from the Ghana Statistical Services (GSS) on the contribution of the various sectors to Gross Domestic Product (GDP) for the second quarter of 2015.
Data from the GSS showed that the services sector maintained the lead in its contribution to GDP, accounting for 59.6 per cent. It was followed by the industry, which contributed 29.6 per cent to the period’s total productivity.
Agriculture, however, contributed 10.6 per cent; the lowest among the three sectors.
The GDP measures the value of final goods and services produced in the country.
GDP for the second quarter of the year 2015 grew by 3.9 per cent (year-on-year) compared to 2.6 per cent recorded for the second quarter of the year last year.
State of agriculture
In terms of growth, agriculture grew at negative 0.1 per cent between April and June this year.
The livestock sub-sector recorded a year-on-year growth rate of 13.4 per cent, while crops and cocoa sub-sector declined by negative 5.6 per cent.
Mr Kareweh said the place of agriculture could be determined by looking at first, its overall contribution to GDP and that of other sub-sectors.
“If we take the contribution of the agric sector in relation to other sectors, it suggests that as the size of the economy increases, agric takes a smaller proportion. This means the services sector is six times bigger than agric and industry three times bigger,” he said.
According to him, the figures also suggest that there has been an abnormal development trajectory.
Under normal circumstances, he said the services sector should not be leading in growth, given that the country was home to dozens of raw materials that could have been used to industrialise the economy.
“The growth of the services sector is predicated on the growth of agric and industry and if the two sectors are not growing and the services sector is growing, then there is a misnomer. This means that the services sector is servicing imports rather than agric or industry,” he said.
Currently, Ghana’s economy is considered an agrarian one, with much of the labour force — almost two-thirds — being in the agriculture sector.
Data further reveal that more than 70 per cent of the rural population is into agriculture.
Mr Kwareh said a decline in growth in the agricultural sector, therefore, signified that the country’s policy direction was not working.
“There is a policy failure because we are supposed to have irrigation agriculture but we continue to do rain-fed, which is erratic. That underscores our inability to fashion out measures to address the agriculture challenges,” he said. GB
writer’s email: ama.baafi@graphic.com.gh
Pull Quote
We are calling for a more serious reflection on the policies and development strategies of the country and their level of coherence.
Key Note
Experts have said government should make it mandatory for commercial banks in the country to set aside a proportion of their assets to support the growth of the agricultural sector.GAWU urges mandatory lending to agric sector
The Deputy General Secretary of GAWU, Mr Edward Kareweh, told the GRAPHIC BUSINESS in an interview that the sector was being marginalised in terms of policy focus, hence the need for the government to intervene through policy directions.
Should the government heed the call and implement it, Mr Kwareh believes banks that did not abide by it should have their licences revoked and forced out of the sector.
“We are calling for a more serious reflection on the policies and development strategies of this country and the level of coherence of these policies and strategies,” he said.
The union’s comment is premised on recent data from the Ghana Statistical Services (GSS) on the contribution of the various sectors to Gross Domestic Product (GDP) for the second quarter of 2015.
Data from the GSS showed that the services sector maintained the lead in its contribution to GDP, accounting for 59.6 per cent. It was followed by the industry, which contributed 29.6 per cent to the period’s total productivity.
Agriculture, however, contributed 10.6 per cent; the lowest among the three sectors.
The GDP measures the value of final goods and services produced in the country.
GDP for the second quarter of the year 2015 grew by 3.9 per cent (year-on-year) compared to 2.6 per cent recorded for the second quarter of the year last year.
State of agriculture
In terms of growth, agriculture grew at negative 0.1 per cent between April and June this year.
The livestock sub-sector recorded a year-on-year growth rate of 13.4 per cent, while crops and cocoa sub-sector declined by negative 5.6 per cent.
Mr Kareweh said the place of agriculture could be determined by looking at first, its overall contribution to GDP and that of other sub-sectors.
“If we take the contribution of the agric sector in relation to other sectors, it suggests that as the size of the economy increases, agric takes a smaller proportion. This means the services sector is six times bigger than agric and industry three times bigger,” he said.
According to him, the figures also suggest that there has been an abnormal development trajectory.
Under normal circumstances, he said the services sector should not be leading in growth, given that the country was home to dozens of raw materials that could have been used to industrialise the economy.
“The growth of the services sector is predicated on the growth of agric and industry and if the two sectors are not growing and the services sector is growing, then there is a misnomer. This means that the services sector is servicing imports rather than agric or industry,” he said.
Currently, Ghana’s economy is considered an agrarian one, with much of the labour force — almost two-thirds — being in the agriculture sector.
Data further reveal that more than 70 per cent of the rural population is into agriculture.
Mr Kwareh said a decline in growth in the agricultural sector, therefore, signified that the country’s policy direction was not working.
“There is a policy failure because we are supposed to have irrigation agriculture but we continue to do rain-fed, which is erratic. That underscores our inability to fashion out measures to address the agriculture challenges,” he said. GB
writer’s email: ama.baafi@graphic.com.gh
Pull Quote
We are calling for a more serious reflection on the policies and development strategies of the country and their level of coherence.
Key Note
Experts have said government should make it mandatory for commercial banks in the country to set aside a proportion of their assets to support the growth of the agricultural sector.GAWU urges mandatory lending to agric sector
SEND Ghana urges increased dialogue between Agric ministry, agencies
A development expert has recommended that Ghana finds ways of deepening collaboration between the agriculture ministry and its allied institutions if it really wants to make headway in linking social protection (SP) with agriculture to reduce poverty and hunger.
The Country Director of SEND Ghana, Mr George Osei-Bimpeh, said that at the moment there was not a strong link between what the agriculture sector is offering and the mainstream SP agencies are offering.
In an interview with the GRAPHIC BUSINESS, he said the above situation was largely because institutional collaboration and coordination had been very weak, “and so we don’t seem to align our SP programmes with the agric sector with a view of targeting women specifically, and persons with disability. These are challenges and these are things that at the moment not happening.”
Mr Osei-Bimpeh was speaking on a new report by the Food and Agriculture Organisation (FAO), of the United Nations (UN), titled “The State of Food and Agriculture 2015,” that states in poor countries, social protection schemes, such as cash transfers, school feeding and public works, offer an economical way to provide vulnerable people with opportunities to move out of extreme poverty and hunger and to improve their children's health, education and life chances.
He said that unlike between health and SP where Livelihood Empowerment Against Poverty programme (LEAP) was used to identify indigenes in order to register them for the purposes of accessing the National Health Insurance (NHI), “in the case of agric there isn’t a clear target of the vulnerable of those in the sector so there isn’t also a clear linkage between what the agric sector is providing and what mainstream SP programmes are also providing.”
SP is a set of interventions to reduce social and economic risk and vulnerability, and alleviate
extreme poverty and deprivation.
SP and agriculture to reduce poverty and hunger
Mr Osei-Bimpeh said that basically, what SP looked at the vulnerable groups in society to provide them with access to basic services and so when its is linked with agriculture, then it is addressing the nutritional needs while ensuring that the selected individual have access to basic social services.
“In this case you are building the social capital of such individuals and as you link agric to that it means that you are using an isolated poverty reduction approach so that your attempts to reduce poverty is not only one dimension of it than looking at all forms of it,” he said.
Although the report mentions economic growth as a key factor in reducing poverty and hunger, it said that alone was not sufficient but needed to be inclusive to reach the poorest.
“Yes in the sense that where growth is not inclusive it’s only in the service sector and the service sector doesn’t employ vulnerable groups. In that case growth is not inclusive. Inclusive growth should be perused in terms of making sure that all the sectors in the economy of the population benefits from the growth that you generate,” he said.
SP and dependency
Mr Osei-Bimpeh said SP did not foster dependency per se but was used as way of building capacities beneficiaries to be on their own.
In this way, at any point in time, he said there should be a clear plan of exiting while ensuring that they do not just exit from programmes but they exit with newly acquired skills and capital that have been accumulated over the years.
“If we are able to do that then we cannot say that it creates dependency. However, if we fail to do that and we also fail to ensure strong monitoring of the utilisation of such intervention then we only succeed in just providing protection without talking about how people can begin to depend on themselves. Of course that is where it creates a dependency syndrome,” he said.
The FAO report
It was released on the eve of World Food Day (October 16, 2015), and focuses on SP’s role in breaking the cycle of rural poverty.
It said such programmes currently benefit 2.1 billion people in developing countries in various ways, including keeping 150 million people out of extreme poverty.
“Expanding such programs in rural areas and linking them to inclusive agricultural growth policies would rapidly reduce the number of poor people,” the report said.
A news release quoted the FAO Director-General, Mr José Graziano da Silva, as saying that it was urgent to act to support the most vulnerable people in order to free the world of hunger.
“Social protection programs allow households to access more food - often by increasing what they grow themselves -- and also make their diets more diverse and healthier. These programs can have positive impacts on infant and maternal nutrition, reduce child labor and raise school attendance, all of which increase productivity,” he said. GB
Writer’s email: ama.baafi@graphic.com.gh
Pull Quote
Expanding such programs in rural areas and linking them to inclusive agricultural growth policies would rapidly reduce the number of poor people.
Key Note
Social protection protects the poor and prevents worse deprivation.
The Country Director of SEND Ghana, Mr George Osei-Bimpeh, said that at the moment there was not a strong link between what the agriculture sector is offering and the mainstream SP agencies are offering.
In an interview with the GRAPHIC BUSINESS, he said the above situation was largely because institutional collaboration and coordination had been very weak, “and so we don’t seem to align our SP programmes with the agric sector with a view of targeting women specifically, and persons with disability. These are challenges and these are things that at the moment not happening.”
Mr Osei-Bimpeh was speaking on a new report by the Food and Agriculture Organisation (FAO), of the United Nations (UN), titled “The State of Food and Agriculture 2015,” that states in poor countries, social protection schemes, such as cash transfers, school feeding and public works, offer an economical way to provide vulnerable people with opportunities to move out of extreme poverty and hunger and to improve their children's health, education and life chances.
He said that unlike between health and SP where Livelihood Empowerment Against Poverty programme (LEAP) was used to identify indigenes in order to register them for the purposes of accessing the National Health Insurance (NHI), “in the case of agric there isn’t a clear target of the vulnerable of those in the sector so there isn’t also a clear linkage between what the agric sector is providing and what mainstream SP programmes are also providing.”
SP is a set of interventions to reduce social and economic risk and vulnerability, and alleviate
extreme poverty and deprivation.
SP and agriculture to reduce poverty and hunger
Mr Osei-Bimpeh said that basically, what SP looked at the vulnerable groups in society to provide them with access to basic services and so when its is linked with agriculture, then it is addressing the nutritional needs while ensuring that the selected individual have access to basic social services.
“In this case you are building the social capital of such individuals and as you link agric to that it means that you are using an isolated poverty reduction approach so that your attempts to reduce poverty is not only one dimension of it than looking at all forms of it,” he said.
Although the report mentions economic growth as a key factor in reducing poverty and hunger, it said that alone was not sufficient but needed to be inclusive to reach the poorest.
“Yes in the sense that where growth is not inclusive it’s only in the service sector and the service sector doesn’t employ vulnerable groups. In that case growth is not inclusive. Inclusive growth should be perused in terms of making sure that all the sectors in the economy of the population benefits from the growth that you generate,” he said.
SP and dependency
Mr Osei-Bimpeh said SP did not foster dependency per se but was used as way of building capacities beneficiaries to be on their own.
In this way, at any point in time, he said there should be a clear plan of exiting while ensuring that they do not just exit from programmes but they exit with newly acquired skills and capital that have been accumulated over the years.
“If we are able to do that then we cannot say that it creates dependency. However, if we fail to do that and we also fail to ensure strong monitoring of the utilisation of such intervention then we only succeed in just providing protection without talking about how people can begin to depend on themselves. Of course that is where it creates a dependency syndrome,” he said.
The FAO report
It was released on the eve of World Food Day (October 16, 2015), and focuses on SP’s role in breaking the cycle of rural poverty.
It said such programmes currently benefit 2.1 billion people in developing countries in various ways, including keeping 150 million people out of extreme poverty.
“Expanding such programs in rural areas and linking them to inclusive agricultural growth policies would rapidly reduce the number of poor people,” the report said.
A news release quoted the FAO Director-General, Mr José Graziano da Silva, as saying that it was urgent to act to support the most vulnerable people in order to free the world of hunger.
“Social protection programs allow households to access more food - often by increasing what they grow themselves -- and also make their diets more diverse and healthier. These programs can have positive impacts on infant and maternal nutrition, reduce child labor and raise school attendance, all of which increase productivity,” he said. GB
Writer’s email: ama.baafi@graphic.com.gh
Pull Quote
Expanding such programs in rural areas and linking them to inclusive agricultural growth policies would rapidly reduce the number of poor people.
Key Note
Social protection protects the poor and prevents worse deprivation.
Govt to expand LEAP coverage
By Ama Amankwah Baafi
THE government plans to scale up its spending on the Livelihood Empowerment Against Poverty (LEAP) with an amount of GH¢50.00 million and to extend coverage of the programme to more than 250,000 beneficiary households.
The Minister of Finance, Mr Seth Terkper, during the presentation of the 2016 Budget to Parliament yesterday, said the policy was needed to address the weaknesses in social protection (SP) programmes and to serve as a coordinated approach towards the effective and efficient provision of SP generally, and ensure that the programmes were better targeted.
The main interventions being implemented currently include the LEAP, Social Inclusion Transfers (SITs), School Feeding, Take-home Rations for Girls, Free School Uniforms, Free Exercise Books, Programme on Elimination of Child Labour, Education Capitation Grants and Supplementary Grant (GEP).
The rest are the National Health Insurance Scheme (NHIS) Exemptions, Government Subsidy for Senior High Schools (SHS), GETFund Scholarships, Senior Secondary Scholarships and Girls-PASS Scholarships.
The government, he said, would maintain those programmes as priority areas of spending in 2016.
Mr Terkper also indicated that the government had made provisions for the implementation of a social protection policy (SPP) in the 2016 budget as part of a broader national development strategy to address the extreme poverty and vulnerabilities in the country.
SPP
According to the finance minister, the social protection programmes implemented over the years had sought to provide some compatriots respite from hardships and, further, equip them to participate in the basic socio-economic activities.
Those programmes, however, had not always achieved the expected outcomes due to poor targeting and uncoordinated approach to their delivery.
“The policy document seeks to structure and anchor social protection with accompanying institutional reforms to deliver identified priority interventions. It seeks to clarify social protection objectives to which Ghana can aspire at each stage of our development. The document, therefore, defines social protection for Ghana as a range of actions carried out by the state and other parties in response to vulnerability and poverty, which seeks to guarantee relief for those sections of the population who for any reason are not able to provide for themselves,” he said.
The SPP identifies three main vulnerability categories: The chronically poor (the severely disabled, terminally ill, rural unemployed, urban unemployed and subsistent smallholders); the economically at risk (food crop farmers, persons on the street, internally displaced persons, orphans, informal sector workers, widows, older persons and migrants); and the socially vulnerable (tuberculosis sufferers, victims of domestic violence, homeless persons, people living on the street, internally displaced persons and female-headed households).
SEND Ghana
The Country Director of SEND Ghana, Mr George Osei-Bimpeh, said such a policy should clearly address the challenges associated with the release of resources for the implementation of the social protection programmes.
“Is there a guarantee that without a proper framework for institutional collaboration greater outcome can be achieved?,” he asked.
ISODEC
A Policy Analyst at the Integrated Social Development Centre (ISODEC), Mrs Charlotte Esenam Afudego, explained that social intervention programmes must be well targeted to reap the desired benefits and explained that there should be coordination among all stakeholders involved and these interventions should be able to target the poor ones who need it most.
LEAP
Mr Terkper said that in 2016, the government would scale up spending on the LEAP with GH¢50.00 million and that it would be expanded to cover over 250,000 beneficiary households. It would also strengthen the institutional arrangements for SP.
The main social insurance interventions currently being implemented in Ghana are the National Health Insurance Scheme (NHIS) and the Social Security and National Insurance Trust (SSNIT).
At the end of September 2015, GH¢929.69 million had been transferred to the National Health Fund, while SSNIT received GH¢650.47 million for the same period.
In 2016, GH¢1,497.28 million is projected for NHIS transfers, while SSNIT will receive GH¢1,289.51 million.
Spending on poverty-reduction activities
Mr Terkper said spending on poverty-related activities were government expenditures incurred on the activities of MDAs and MMDAs which were considered to be poverty related and had, each year, supported the provision of basic education, primary health care, poverty-focused agriculture, rural water, feeder roads and rural electrification.
“Total government spending on pro-poor activities for 2016 is estimated at GH¢8,754.13 million, representing 22.67 per cent of GH¢38,611.44 million total government expenditure. Out of a total budget for 2015 of GH¢34,402.43 million (which excludes tax expenditures and foreign-financed capital expenditures), an amount of GH¢7,594.34 million, representing 22.08 per cent was earmarked for poverty-reduction activities. By the end of September, 2015, a total of GH¢5,290.87 million had been spent, representing 24.18 per cent of the total government expenditures of GH¢21,884.32 million,” he said.
Other poverty
For 2016, GH¢2,511.70 million is projected to be spent on “Other Poverty” and this represents 6.51 per cent of total government expenditure.
According to the finance minister, GH¢1,263.46 million was spent on other poverty-related activities, representing 5.78 per cent of total government expenditure at the end of the first three quarters of 2015.
The other poverty expenditure include spending on social welfare, public safety, drainage, human rights, environmental protection, rural housing, legal aid and decentralisation. GB
QUICK READ
By Ama Amankwah Baafi
THE government plans to scale up its spending on the Livelihood Empowerment Against Poverty (LEAP) with an amount of GH¢50.00 million and to extend coverage of the programme to more than 250,000 beneficiary households.
The Minister of Finance, Mr Seth Terkper, during the presentation of the 2016 Budget to Parliament yesterday, said the policy was needed to address the weaknesses in social protection (SP) programmes and to serve as a coordinated approach towards the effective and efficient provision of SP generally, and ensure that the programmes were better targeted.
The main interventions being implemented currently include the LEAP, Social Inclusion Transfers (SITs), School Feeding, Take-home Rations for Girls, Free School Uniforms, Free Exercise Books, Programme on Elimination of Child Labour, Education Capitation Grants and Supplementary Grant (GEP).
The rest are the National Health Insurance Scheme (NHIS) Exemptions, Government Subsidy for Senior High Schools (SHS), GETFund Scholarships, Senior Secondary Scholarships and Girls-PASS Scholarships.
The government, he said, would maintain those programmes as priority areas of spending in 2016.
Mr Terkper also indicated that the government had made provisions for the implementation of a social protection policy (SPP) in the 2016 budget as part of a broader national development strategy to address the extreme poverty and vulnerabilities in the country.
SPP
According to the finance minister, the social protection programmes implemented over the years had sought to provide some compatriots respite from hardships and, further, equip them to participate in the basic socio-economic activities.
Those programmes, however, had not always achieved the expected outcomes due to poor targeting and uncoordinated approach to their delivery.
“The policy document seeks to structure and anchor social protection with accompanying institutional reforms to deliver identified priority interventions. It seeks to clarify social protection objectives to which Ghana can aspire at each stage of our development. The document, therefore, defines social protection for Ghana as a range of actions carried out by the state and other parties in response to vulnerability and poverty, which seeks to guarantee relief for those sections of the population who for any reason are not able to provide for themselves,” he said.
The SPP identifies three main vulnerability categories: The chronically poor (the severely disabled, terminally ill, rural unemployed, urban unemployed and subsistent smallholders); the economically at risk (food crop farmers, persons on the street, internally displaced persons, orphans, informal sector workers, widows, older persons and migrants); and the socially vulnerable (tuberculosis sufferers, victims of domestic violence, homeless persons, people living on the street, internally displaced persons and female-headed households).
SEND Ghana
The Country Director of SEND Ghana, Mr George Osei-Bimpeh, said such a policy should clearly address the challenges associated with the release of resources for the implementation of the social protection programmes.
“Is there a guarantee that without a proper framework for institutional collaboration greater outcome can be achieved?,” he asked.
ISODEC
A Policy Analyst at the Integrated Social Development Centre (ISODEC), Mrs Charlotte Esenam Afudego, explained that social intervention programmes must be well targeted to reap the desired benefits and explained that there should be coordination among all stakeholders involved and these interventions should be able to target the poor ones who need it most.
LEAP
Mr Terkper said that in 2016, the government would scale up spending on the LEAP with GH¢50.00 million and that it would be expanded to cover over 250,000 beneficiary households. It would also strengthen the institutional arrangements for SP.
The main social insurance interventions currently being implemented in Ghana are the National Health Insurance Scheme (NHIS) and the Social Security and National Insurance Trust (SSNIT).
At the end of September 2015, GH¢929.69 million had been transferred to the National Health Fund, while SSNIT received GH¢650.47 million for the same period.
In 2016, GH¢1,497.28 million is projected for NHIS transfers, while SSNIT will receive GH¢1,289.51 million.
Spending on poverty-reduction activities
Mr Terkper said spending on poverty-related activities were government expenditures incurred on the activities of MDAs and MMDAs which were considered to be poverty related and had, each year, supported the provision of basic education, primary health care, poverty-focused agriculture, rural water, feeder roads and rural electrification.
“Total government spending on pro-poor activities for 2016 is estimated at GH¢8,754.13 million, representing 22.67 per cent of GH¢38,611.44 million total government expenditure. Out of a total budget for 2015 of GH¢34,402.43 million (which excludes tax expenditures and foreign-financed capital expenditures), an amount of GH¢7,594.34 million, representing 22.08 per cent was earmarked for poverty-reduction activities. By the end of September, 2015, a total of GH¢5,290.87 million had been spent, representing 24.18 per cent of the total government expenditures of GH¢21,884.32 million,” he said.
Other poverty
For 2016, GH¢2,511.70 million is projected to be spent on “Other Poverty” and this represents 6.51 per cent of total government expenditure.
According to the finance minister, GH¢1,263.46 million was spent on other poverty-related activities, representing 5.78 per cent of total government expenditure at the end of the first three quarters of 2015.
The other poverty expenditure include spending on social welfare, public safety, drainage, human rights, environmental protection, rural housing, legal aid and decentralisation. GB
QUICK READ
Personal income tax rate has been reduced by 67.7 per cent in the 2016 budget, a Tax Policy Advisor at the Ministry of Finance (MoF), Dr Edward Larbi-Siaw, has said.
He said government in line with its social democratic principles had reviewed the income tax thresholds from a minimum of GH₵1,584 to GH₵2,592, in spite of the drawback in personal income tax rates in the country.
“The first GH₵1,584 to the last exceeding GH₵31,680 has been in existence for the past three years. If we are able to get more people paying our personal income tax, we should be able to revise these rates. If there is excess expenditure over revenue, it has to be funded, domestic borrowing or external and if we borrow domestically, we disadvantage the local entrepreneurs and also the interest rate will go up,” he said at a post budget forum for members of the Institute of Financial Journalists (IFEJ) and the Parliamentary Press Corps in Accra.
He said if at least six million Ghanaians should be paying tax from the current four million, out of a population of about 27 million, it would reduce the tax burden.
“Let me be plain, if we are not able to increase the numbers we are unable to reduce the burden. Currently, the income tax contribution figure is at GH¢4.1 billion so if there is a double of this, you can imagine what it can do. So as a nation, let’s mount a campaign that everybody must pay his or her taxes,” he said.
Getting the population to pay their taxes
Dr Larbi-Siaw said poverty was a bar to taxation but not illiteracy as people believed and that most countries relied on their citizenry for information on tax evaders but unfortunately the case was different in Ghana.
“We know those who are not paying so why should we sit down and be paying for others? It is this Ghanaian rhythm I’m still trying to understand. You journalists are part of the people who can bring change,” he said.
He said the ministry was working on an existing system which demanded that by law every Ghanaian with income above GH¢2,592 was to file a return and if implemented would help.
Budget on closing the funding gap
To enhance resource mobilisation, government introduced a number of tax policy and administration to enhance efficiency in tax administration, compliance and increase tax revenue.
The budget states that efforts are being made to extend the Tax Identification Number (TIN) to other sectors to facilitate the identification of eligible taxpayers. Eventually, the TIN will form part of the relaunch of the National Identification Number initiative to serve multiple national requirements.
Commercial vegetable production
A Technical Advisor to the Ministry of Finance, Dr John Kofi Baffoe, said the ministry would work with the Ministry of Agriculture to set up Green House Capacity Building and training centres for the production of commercialised vegetables.
He said there would be centres of excellence where small and large scale farmers would be trained to produce specific varieties for the value chain and that the initiative would complement the work of agriculture extension officers.
“The principle is that agriculture is going to be seen as a business and not the usual small scale production. We are going to have training centres in the country to train agric graduates, women and youth in commercialised, modernised vegetable production. They will be trained and possibly be given seed money to start with,” he said.
Subvented agencies
Mr Baffour said some state owned enterprises (SOEs) were identified to be capable to exist on their own without subvention from government, and so they were going to be turned into companies.
“The Driver Vehicle and Licensing Authority (DVLA), Environmental Protection Agency (EPA), Energy Commission, Gaming Commission, Securities and Exchange Commission (SEC), Data Protection Commission, all these will eventually be turned into companies where they will run as business,” he said.
He added that potential ones to be eventually weaned off are the Ghana Broadcasting Corporation (GBC), Ghana Standards Authority (GSA), teaching hospitals, all tertiary institutions, Forestry Commission, Minerals Commission, Ghana Investment Promotion Centre (GIPC), and the Food and Drugs Authority (FDA). GB
writer’s email: ama.baafi@graphic.com.gh
Pull Quote
If there is excess expenditure over revenue it has to be funded, domestic borrowing or external and if we borrow domestically, we disadvantage the local entrepreneurs and also the interest rate will go up.
Key note
To improve the fairness, progression and also provide tax relief to the minimum wage earners, the existing minimum income which is exempted from income tax will be increased from GH¢1,584 to GH¢2,592.
He said government in line with its social democratic principles had reviewed the income tax thresholds from a minimum of GH₵1,584 to GH₵2,592, in spite of the drawback in personal income tax rates in the country.
“The first GH₵1,584 to the last exceeding GH₵31,680 has been in existence for the past three years. If we are able to get more people paying our personal income tax, we should be able to revise these rates. If there is excess expenditure over revenue, it has to be funded, domestic borrowing or external and if we borrow domestically, we disadvantage the local entrepreneurs and also the interest rate will go up,” he said at a post budget forum for members of the Institute of Financial Journalists (IFEJ) and the Parliamentary Press Corps in Accra.
He said if at least six million Ghanaians should be paying tax from the current four million, out of a population of about 27 million, it would reduce the tax burden.
“Let me be plain, if we are not able to increase the numbers we are unable to reduce the burden. Currently, the income tax contribution figure is at GH¢4.1 billion so if there is a double of this, you can imagine what it can do. So as a nation, let’s mount a campaign that everybody must pay his or her taxes,” he said.
Getting the population to pay their taxes
Dr Larbi-Siaw said poverty was a bar to taxation but not illiteracy as people believed and that most countries relied on their citizenry for information on tax evaders but unfortunately the case was different in Ghana.
“We know those who are not paying so why should we sit down and be paying for others? It is this Ghanaian rhythm I’m still trying to understand. You journalists are part of the people who can bring change,” he said.
He said the ministry was working on an existing system which demanded that by law every Ghanaian with income above GH¢2,592 was to file a return and if implemented would help.
Budget on closing the funding gap
To enhance resource mobilisation, government introduced a number of tax policy and administration to enhance efficiency in tax administration, compliance and increase tax revenue.
The budget states that efforts are being made to extend the Tax Identification Number (TIN) to other sectors to facilitate the identification of eligible taxpayers. Eventually, the TIN will form part of the relaunch of the National Identification Number initiative to serve multiple national requirements.
Commercial vegetable production
A Technical Advisor to the Ministry of Finance, Dr John Kofi Baffoe, said the ministry would work with the Ministry of Agriculture to set up Green House Capacity Building and training centres for the production of commercialised vegetables.
He said there would be centres of excellence where small and large scale farmers would be trained to produce specific varieties for the value chain and that the initiative would complement the work of agriculture extension officers.
“The principle is that agriculture is going to be seen as a business and not the usual small scale production. We are going to have training centres in the country to train agric graduates, women and youth in commercialised, modernised vegetable production. They will be trained and possibly be given seed money to start with,” he said.
Subvented agencies
Mr Baffour said some state owned enterprises (SOEs) were identified to be capable to exist on their own without subvention from government, and so they were going to be turned into companies.
“The Driver Vehicle and Licensing Authority (DVLA), Environmental Protection Agency (EPA), Energy Commission, Gaming Commission, Securities and Exchange Commission (SEC), Data Protection Commission, all these will eventually be turned into companies where they will run as business,” he said.
He added that potential ones to be eventually weaned off are the Ghana Broadcasting Corporation (GBC), Ghana Standards Authority (GSA), teaching hospitals, all tertiary institutions, Forestry Commission, Minerals Commission, Ghana Investment Promotion Centre (GIPC), and the Food and Drugs Authority (FDA). GB
writer’s email: ama.baafi@graphic.com.gh
Pull Quote
If there is excess expenditure over revenue it has to be funded, domestic borrowing or external and if we borrow domestically, we disadvantage the local entrepreneurs and also the interest rate will go up.
Key note
To improve the fairness, progression and also provide tax relief to the minimum wage earners, the existing minimum income which is exempted from income tax will be increased from GH¢1,584 to GH¢2,592.
2016 budget to address crop sub-sector challenges
The General Agricultural Workers’ Union (GAWU), affiliated to the Ghana Trades Union Congress (TUC), says it is happy that the 2016 budget seeks to address the declining performance of the crop sub-sector, by allocating a substantial amount to fertiliser and mechanisation.
Growth in crops sub-sector of agriculture declined from 5.9 per cent in 2013 to 3.6 per cent in 2014.
Thankfully a total of GH¢355.14 million has been allocated to the agricultural sector, out of which about GH¢302.46 million, representing 85.17 per cent, is to be spent on the Fertiliser Subsidy Programme (FSP) and the Agricultural Mechanisation Service Centres (AMSECs).
Commenting on the 2016 allocation to the agric sector, the Deputy General Secretary of GAWU, Mr Edward Kareweh, said though the crop sub-sector was not explicitly stated, “the fact that much of the allocation is going into fertiliser and mechanisation also means the overall performance of agric would improve because within the sector, the crop sub-sector has weight and so what happens there has a significant impact on the overall performance of the sector.”
He said that the policy, if implemented to the latter would bring back the fortunes of the sector.
“What we need to emphasise is that implementation must take place. Most often there is a huge gap between what has been allocated and what is spent at the end of the year. Targeted sub-sectors within sector must be adhered to strictly,” he said.
He cited tax exemption to companies that go into agro-processing in the first five years as a complementary policy that would induce a large number of entrants into the agro-processing business.
“It will eliminate the glut and create ready market. Sometimes it is also the complementary policies that actually undermine or prop up a particular major policy,” he said.
Caution
Mr Kareweh however advised on the need to deal with other policies that counter or undermine the effect of the new agriculture policy.
“For instance if we don’t do much about unbridled importation of cheap agriculture produce, that will actually take over the whole domestic market and create a huge loss for producers within the crop sub-sector. So we should watch out for those counter unproductive policies and address them so that we can have the full import of the budget,” he said.
2015 expenditure on agric
Total budgeted expenditure for the agriculture sector in 2015 was GH¢395.19 million. By the end of September 2015, GH¢91.54 million had been spent and about GH¢82.57 million of this actual sector expenditure, representing 90.21 per cent, was spent on poverty focused expenditures such as the FSP and the establishment of AMSECs, among others to boost agricultural production.
In 2016, however, 50 tractors with the requisite components will be procured to support the AMSECs.
In the same year, 90,000mt, out of a target of 180,000mt of fertiliser was procured and distributed to farmers nationwide and is expected to increase the use of fertiliser in the country and also enhance crop production especially in the Northern Sector where soil nutrients are low.
Again, in compliance with the Plant and Fertiliser Act, 2010 (Act 803), the ministry in collaboration with relevant stakeholders analysed 11 out of 60 newly introduced fertiliser samples. Out of the 11 samples analysed, only four met the technical and regulatory requirements.
In 2016, the remaining 49 fertiliser samples would be analysed in order to ensure good quality fertilisers and increased productivity.
State of agriculture
Agriculture grew at negative 0.1 per cent between April and June 2015. The livestock sub-sector recorded a year-on-year growth rate of 13.4 per cent, while crops and cocoa sub-sector declined by negative 5.6 per cent.
Experts say the place of agriculture could be determined by fist looking at its overall contribution to Gross Domestic Product (GDP) and that of other sub-sectors.
Currently, Ghana’s economy is considered an agrarian one, with much of the labour force, almost two-thirds being in the agriculture sector. Data further reveal that more than 70 per cent of the rural population is into agriculture.GB
writer’s email: ama.baafi@graphic.com.gh
Pull Quote
Most often than not there tend to be a huge gap between what has been allocated and what is spent at the end of the year. Targeted sub-sectors within sector must be adhered to strictly.
Growth in crops sub-sector of agriculture declined from 5.9 per cent in 2013 to 3.6 per cent in 2014.
Thankfully a total of GH¢355.14 million has been allocated to the agricultural sector, out of which about GH¢302.46 million, representing 85.17 per cent, is to be spent on the Fertiliser Subsidy Programme (FSP) and the Agricultural Mechanisation Service Centres (AMSECs).
Commenting on the 2016 allocation to the agric sector, the Deputy General Secretary of GAWU, Mr Edward Kareweh, said though the crop sub-sector was not explicitly stated, “the fact that much of the allocation is going into fertiliser and mechanisation also means the overall performance of agric would improve because within the sector, the crop sub-sector has weight and so what happens there has a significant impact on the overall performance of the sector.”
He said that the policy, if implemented to the latter would bring back the fortunes of the sector.
“What we need to emphasise is that implementation must take place. Most often there is a huge gap between what has been allocated and what is spent at the end of the year. Targeted sub-sectors within sector must be adhered to strictly,” he said.
He cited tax exemption to companies that go into agro-processing in the first five years as a complementary policy that would induce a large number of entrants into the agro-processing business.
“It will eliminate the glut and create ready market. Sometimes it is also the complementary policies that actually undermine or prop up a particular major policy,” he said.
Caution
Mr Kareweh however advised on the need to deal with other policies that counter or undermine the effect of the new agriculture policy.
“For instance if we don’t do much about unbridled importation of cheap agriculture produce, that will actually take over the whole domestic market and create a huge loss for producers within the crop sub-sector. So we should watch out for those counter unproductive policies and address them so that we can have the full import of the budget,” he said.
2015 expenditure on agric
Total budgeted expenditure for the agriculture sector in 2015 was GH¢395.19 million. By the end of September 2015, GH¢91.54 million had been spent and about GH¢82.57 million of this actual sector expenditure, representing 90.21 per cent, was spent on poverty focused expenditures such as the FSP and the establishment of AMSECs, among others to boost agricultural production.
In 2016, however, 50 tractors with the requisite components will be procured to support the AMSECs.
In the same year, 90,000mt, out of a target of 180,000mt of fertiliser was procured and distributed to farmers nationwide and is expected to increase the use of fertiliser in the country and also enhance crop production especially in the Northern Sector where soil nutrients are low.
Again, in compliance with the Plant and Fertiliser Act, 2010 (Act 803), the ministry in collaboration with relevant stakeholders analysed 11 out of 60 newly introduced fertiliser samples. Out of the 11 samples analysed, only four met the technical and regulatory requirements.
In 2016, the remaining 49 fertiliser samples would be analysed in order to ensure good quality fertilisers and increased productivity.
State of agriculture
Agriculture grew at negative 0.1 per cent between April and June 2015. The livestock sub-sector recorded a year-on-year growth rate of 13.4 per cent, while crops and cocoa sub-sector declined by negative 5.6 per cent.
Experts say the place of agriculture could be determined by fist looking at its overall contribution to Gross Domestic Product (GDP) and that of other sub-sectors.
Currently, Ghana’s economy is considered an agrarian one, with much of the labour force, almost two-thirds being in the agriculture sector. Data further reveal that more than 70 per cent of the rural population is into agriculture.GB
writer’s email: ama.baafi@graphic.com.gh
Pull Quote
Most often than not there tend to be a huge gap between what has been allocated and what is spent at the end of the year. Targeted sub-sectors within sector must be adhered to strictly.
Decline in agric is threat to devt - agric economist
An agricultural economist at the University of Ghana, Dr Kwadwo Tutu, is worried that the country’s declining agricultural sector poses serious threat to economic development.
Economic growth, he explained, would be stunted with a structure that had agriculture’s share of Gross Domestic Product (GDP) declining from 50 per cent about a decade ago to 19 per cent in 2015.
“If the share has gone down so much and service sector has increased from 20 per cent to over 50 per cent, then we are a ‘kwashiorkor’ economy because basic development theory will tell you that you first grow with agriculture and when productivity goes up, it transfers into manufacturing before services sector comes in. Now suddenly, agric is primitive and clearly it is not a priority and that is dangerous,” he said at a post budget analysis forum in Accra.
The Ministry of Finance (MoF) and the Institute of Financial and Economic Journalists (IFEJ), organised the forum aimed at giving media and civil society organisations some perspectives on the budget statement.
State of agriculture
Agriculture grew at -0.1 per cent between April and June 2015. Data from the Ghana Statistical Services (GSS) on the contribution of the various sectors to GDP for the second quarter of 2015 shows that the services sector maintained the lead in its contribution to GDP, 59.6 per cent and was seconded by industry, 29.6 per cent. Agriculture contributed 10.6 per cent.
The GDP measures the value of final goods and services produced in the country. Developing Ghana’s agricultural sector has generated debate since the 2016 budget was presented.
In the 2016 budget, an amount of GH¢501.5 million has been allocated for the implementation of programmes and activities in the agriculture sector. Out of this, GH¢322.1 million is Government of Ghana (GoG) funding, GH¢4.1 million is internally generated funds and GH¢175 million is from development partners.
Development constraints
According to Dr Tutu, the lack of a national long term development strategy had contributed to the decline of the agric sector, saying that it was only such a plan that would inform the kind of share the economy would have in the next 10 years.
“So now if you have an aggregate of several projects and at the end of it you say rice is going to grow this much, what tells you the kind of growth that you are expecting from agric is going to fit into a plan which in the next 20 years will give you what you want. So we are like somebody in an ocean without a compass,” he said.
Dr Tutu said Ghana was developing under energy and attitudes (incompetence, mediocrity, inefficiency, indiscipline and corruption) constraints that were borne out of lack of enforcement of law and order, and which translated into the achievements of budget targets.
“Unless these are addressed all that we are talking about is useless because there is no way you can hold what you put in the budget as real,” he said.
He said it was important that Ghana took a critical look at production and productivity, storage and marketing, processing and technology.
“The vision of agric is using science and technology to modernise agriculture. For instance, what proportion of cocoa is being processed to know if it is increasing our processing capacity or not. These things we don’t find it in the budget and unless we do that, we get a congregation of programmes and projects and outputs which doesn’t tell us where we are going, whether we are making progress or not,” he said.
Mechanisation
A Principal Agriculture Engineer at the Ministry of Agriculture, Ms Catherine Amegatcher, said the reduction in budget allocation was a worrying trend.
She said efforts by the ministry over the years to source funding to procure machinery for farmers along the entire value chain had been a challenge.
“One of the things that the ministry is trying to do now is to promote mechanisation and machinery. This is one key thing that is necessary but as we speak now, some of these things are not possible because funding has not been available because the entire allocation has been slashed,” she said.
She said though in a rudimentary stage, plans were advanced to make mechanisation services available to farmers, especially those who could not afford to buy machinery.
The ministry, she said, had instituted Agriculture Mechanisation Service Enterprise Centres (AMSECs) in all the 216 districts, where there would be a range of machinery to cover the whole value chain – starting from land preparation to harvesting.
At the moment, there are 89 of such centres in 62 districts.
A Director at the Real Sector Division at the MoF, Dr Oku Afari, said agriculture was basically a private sector affair so government’s role was to facilitate and create the right environment for it to thrive. GB
Pull Quote
The lack of a national long term development strategy had contributed to the decline of the agric sector.
Key Note
Experts have said that government should make it mandatory for banks in the country to set aside a proportion of their assets to support the growth of the agricultural sector.
Economic growth, he explained, would be stunted with a structure that had agriculture’s share of Gross Domestic Product (GDP) declining from 50 per cent about a decade ago to 19 per cent in 2015.
“If the share has gone down so much and service sector has increased from 20 per cent to over 50 per cent, then we are a ‘kwashiorkor’ economy because basic development theory will tell you that you first grow with agriculture and when productivity goes up, it transfers into manufacturing before services sector comes in. Now suddenly, agric is primitive and clearly it is not a priority and that is dangerous,” he said at a post budget analysis forum in Accra.
The Ministry of Finance (MoF) and the Institute of Financial and Economic Journalists (IFEJ), organised the forum aimed at giving media and civil society organisations some perspectives on the budget statement.
State of agriculture
Agriculture grew at -0.1 per cent between April and June 2015. Data from the Ghana Statistical Services (GSS) on the contribution of the various sectors to GDP for the second quarter of 2015 shows that the services sector maintained the lead in its contribution to GDP, 59.6 per cent and was seconded by industry, 29.6 per cent. Agriculture contributed 10.6 per cent.
The GDP measures the value of final goods and services produced in the country. Developing Ghana’s agricultural sector has generated debate since the 2016 budget was presented.
In the 2016 budget, an amount of GH¢501.5 million has been allocated for the implementation of programmes and activities in the agriculture sector. Out of this, GH¢322.1 million is Government of Ghana (GoG) funding, GH¢4.1 million is internally generated funds and GH¢175 million is from development partners.
Development constraints
According to Dr Tutu, the lack of a national long term development strategy had contributed to the decline of the agric sector, saying that it was only such a plan that would inform the kind of share the economy would have in the next 10 years.
“So now if you have an aggregate of several projects and at the end of it you say rice is going to grow this much, what tells you the kind of growth that you are expecting from agric is going to fit into a plan which in the next 20 years will give you what you want. So we are like somebody in an ocean without a compass,” he said.
Dr Tutu said Ghana was developing under energy and attitudes (incompetence, mediocrity, inefficiency, indiscipline and corruption) constraints that were borne out of lack of enforcement of law and order, and which translated into the achievements of budget targets.
“Unless these are addressed all that we are talking about is useless because there is no way you can hold what you put in the budget as real,” he said.
He said it was important that Ghana took a critical look at production and productivity, storage and marketing, processing and technology.
“The vision of agric is using science and technology to modernise agriculture. For instance, what proportion of cocoa is being processed to know if it is increasing our processing capacity or not. These things we don’t find it in the budget and unless we do that, we get a congregation of programmes and projects and outputs which doesn’t tell us where we are going, whether we are making progress or not,” he said.
Mechanisation
A Principal Agriculture Engineer at the Ministry of Agriculture, Ms Catherine Amegatcher, said the reduction in budget allocation was a worrying trend.
She said efforts by the ministry over the years to source funding to procure machinery for farmers along the entire value chain had been a challenge.
“One of the things that the ministry is trying to do now is to promote mechanisation and machinery. This is one key thing that is necessary but as we speak now, some of these things are not possible because funding has not been available because the entire allocation has been slashed,” she said.
She said though in a rudimentary stage, plans were advanced to make mechanisation services available to farmers, especially those who could not afford to buy machinery.
The ministry, she said, had instituted Agriculture Mechanisation Service Enterprise Centres (AMSECs) in all the 216 districts, where there would be a range of machinery to cover the whole value chain – starting from land preparation to harvesting.
At the moment, there are 89 of such centres in 62 districts.
A Director at the Real Sector Division at the MoF, Dr Oku Afari, said agriculture was basically a private sector affair so government’s role was to facilitate and create the right environment for it to thrive. GB
Pull Quote
The lack of a national long term development strategy had contributed to the decline of the agric sector.
Key Note
Experts have said that government should make it mandatory for banks in the country to set aside a proportion of their assets to support the growth of the agricultural sector.
VALCO’s debt cripples VRA’s operations
A US$ 95 million debt owed the Volta River Authority (VRA) by the Volta Aluminium Company Limited (VALCO) is crippling the state hydro power producer’s ability to pay for gas supply for power generation.
VALCO, over a period had accumulated so much debt, which as at October this year stood at US$95 million, to which the government was supposed to pay US$42 million as per VALCO’s agreement with the government.
A highly placed source told the GRAPHIC BUSINESS that although VALCO’s debt may be significant, other debtors, including metropolitan, municipal and district assemblies (MMDAS) and ministries, departments and agencies (MDAs), had contributed to the current state of VRA and subsequently, the power crisis being experienced.
Although VRA does not sell power directly to MMDAs, it sells to the Electricity Company of Ghana (ECG) and the latter distributes so they are supposed to pay the ECG,which will in turn pay the VRA and other power generation companies.
The VRA is currently indebted to Nigeria Gas (N-gas), which supplies gas through the West African Gas Pipeline Company (WAPCo) to the tune of US$180 million and the Ghana Gas Company Limited, a total of US$148million, for gas supplied to power the VRA’s thermal plants for power generation.
“We are shedding power because the VRA has no money to buy crude or gas they need to power the plant. So if the VRA had all these money it is being owed you can imagine what it can do. It owes the West African Gas Pipeline Company (WAPCo) about US$180 million which has resulted in a cut of supply to Ghana. If all these debts were settled it could have defrayed if not all part of the cost,” the source said.
Impact on VRAs operation
According to the source, the major problem of VALCO’s debts and other debts to the VRA is the kind of agreement the country signs with some of these companies.
The power rate given to the various power generation companies vary and that the VRA is being less than what it costs to produce the power.
“This Kar Power thing they have brought, they are going to pay them about 55 pence or pesewas per kilowatt hour. If the VRA distributes and you are giving them about 12 or 14 pesewas per kilowatt how would it survive? Is it because it’s public? If the VRA or ECG were private companies they would have closed down 30 years ago,” it said.
The source said even if the VRA was not for profit at least they should be able to pay for the cost of production.
Power generation
Ghana has installed a capacity of 2,884.5 megawatts (MW) of power which is more than what the country needs yet it is unable to generate up to that capacity.
About 1,000 MW of thermal generation has been added in the past 15 years, bringing the country’s generation capacity to 2,125 MW, which is made up of about 50 per cent hydro and 50 per cent thermal plants.
However, inadequate and unreliable power supply remains a major challenge to economic growth.
The government has procured a 250 MW power barge by Kar Power from Turkey to augment the country's electricity shortfall.
The move has attracted several criticisms. The paper’s source said that the idea of going for the power barge was not a smart one because the barge would add just about 250 MW of power.
“How much are we spending to bring that barge and how much are we to pay for the gas so we can have power. The problem is that we are not able to generate up to our installed capacity,” it said.
Recommendation
The source explained that privatising of the power producing countries was not the solution to the country’s power crisis, but instead managers of the economy must focus on signing agreements that would protect the interest of the nation.
“Privatising these companies is not a solution, because the private man will not send power to the rural areas where they know people cannot afford to pay for the power supplied, and he cannot recoup his investments,” the source said.
Instead, the nation he said must set the right priorities when it comes to signing agreements and prevent politics from dominating the discussions.
“I think as a nation we should have a holistic approach, to set our priorities right. We should not easily give in so much in signing these agreements. If the VRA or ECG was a private company, it would have closed down 30 to 40 years ago, because you cannot operate like that. You buy it and sell it at a lower rate, who pays for the difference?” it further quizzed.
It added that, “let’s assume they are not there to make profit but just to deliver service, at least they should be able to break even, or pay for the cost of producing the thing. Our interest should be well taken care of. We should find a way of supporting the social intervention programmes that help power supply such as the rural electrification programme.” - GB
writer’s email: ama.baafi@graphic.com.gh
PULLQUOTE
We are shedding power because the VRA has no money to buy crude or gas they need to power the plant. So if the VRA had all these money it is being owed you can imagine what it can do.
KEYNOTE:
- The VRA is an electric power utility corporation whose primary function includes power generation, transmission and distribution for industrial, commercial and domestic use.
- VALCO, located in Tema is a major producer of primary aluminium for the world market. Its establishment was a result of the vision of the first President of Ghana, Dr Kwame Nkrumah, to establish an integrated aluminium industry in the country.
VALCO, over a period had accumulated so much debt, which as at October this year stood at US$95 million, to which the government was supposed to pay US$42 million as per VALCO’s agreement with the government.
A highly placed source told the GRAPHIC BUSINESS that although VALCO’s debt may be significant, other debtors, including metropolitan, municipal and district assemblies (MMDAS) and ministries, departments and agencies (MDAs), had contributed to the current state of VRA and subsequently, the power crisis being experienced.
Although VRA does not sell power directly to MMDAs, it sells to the Electricity Company of Ghana (ECG) and the latter distributes so they are supposed to pay the ECG,which will in turn pay the VRA and other power generation companies.
The VRA is currently indebted to Nigeria Gas (N-gas), which supplies gas through the West African Gas Pipeline Company (WAPCo) to the tune of US$180 million and the Ghana Gas Company Limited, a total of US$148million, for gas supplied to power the VRA’s thermal plants for power generation.
“We are shedding power because the VRA has no money to buy crude or gas they need to power the plant. So if the VRA had all these money it is being owed you can imagine what it can do. It owes the West African Gas Pipeline Company (WAPCo) about US$180 million which has resulted in a cut of supply to Ghana. If all these debts were settled it could have defrayed if not all part of the cost,” the source said.
Impact on VRAs operation
According to the source, the major problem of VALCO’s debts and other debts to the VRA is the kind of agreement the country signs with some of these companies.
The power rate given to the various power generation companies vary and that the VRA is being less than what it costs to produce the power.
“This Kar Power thing they have brought, they are going to pay them about 55 pence or pesewas per kilowatt hour. If the VRA distributes and you are giving them about 12 or 14 pesewas per kilowatt how would it survive? Is it because it’s public? If the VRA or ECG were private companies they would have closed down 30 years ago,” it said.
The source said even if the VRA was not for profit at least they should be able to pay for the cost of production.
Power generation
Ghana has installed a capacity of 2,884.5 megawatts (MW) of power which is more than what the country needs yet it is unable to generate up to that capacity.
About 1,000 MW of thermal generation has been added in the past 15 years, bringing the country’s generation capacity to 2,125 MW, which is made up of about 50 per cent hydro and 50 per cent thermal plants.
However, inadequate and unreliable power supply remains a major challenge to economic growth.
The government has procured a 250 MW power barge by Kar Power from Turkey to augment the country's electricity shortfall.
The move has attracted several criticisms. The paper’s source said that the idea of going for the power barge was not a smart one because the barge would add just about 250 MW of power.
“How much are we spending to bring that barge and how much are we to pay for the gas so we can have power. The problem is that we are not able to generate up to our installed capacity,” it said.
Recommendation
The source explained that privatising of the power producing countries was not the solution to the country’s power crisis, but instead managers of the economy must focus on signing agreements that would protect the interest of the nation.
“Privatising these companies is not a solution, because the private man will not send power to the rural areas where they know people cannot afford to pay for the power supplied, and he cannot recoup his investments,” the source said.
Instead, the nation he said must set the right priorities when it comes to signing agreements and prevent politics from dominating the discussions.
“I think as a nation we should have a holistic approach, to set our priorities right. We should not easily give in so much in signing these agreements. If the VRA or ECG was a private company, it would have closed down 30 to 40 years ago, because you cannot operate like that. You buy it and sell it at a lower rate, who pays for the difference?” it further quizzed.
It added that, “let’s assume they are not there to make profit but just to deliver service, at least they should be able to break even, or pay for the cost of producing the thing. Our interest should be well taken care of. We should find a way of supporting the social intervention programmes that help power supply such as the rural electrification programme.” - GB
writer’s email: ama.baafi@graphic.com.gh
PULLQUOTE
We are shedding power because the VRA has no money to buy crude or gas they need to power the plant. So if the VRA had all these money it is being owed you can imagine what it can do.
KEYNOTE:
- The VRA is an electric power utility corporation whose primary function includes power generation, transmission and distribution for industrial, commercial and domestic use.
- VALCO, located in Tema is a major producer of primary aluminium for the world market. Its establishment was a result of the vision of the first President of Ghana, Dr Kwame Nkrumah, to establish an integrated aluminium industry in the country.
Tuesday, November 24, 2015
AMA's STORIES: Govt to expand LEAP coverage - Graphic Online
AMA's STORIES: Govt to expand LEAP coverage - Graphic Online: Govt to expand LEAP coverage - Graphic Online
Tuesday, October 13, 2015
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