Economic Growth: Ghana and EU sign €42m grant to promote sustainable development
The Market Place with Daryl Kwawu (31-10-23)
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Transcript
00:00 Hi, good afternoon. Welcome to the marketplace. Coming up, Finance Minister Ken Ofueta
00:04 retraced that the economy is on a recovery path as Ghana signs 42 million euro financing agreement with the EU
00:11 to promote sustainable development.
00:13 Truly, Ghana has paid its dues. Our fiscal situation has improved.
00:19 Reviews with the IAM Nubanda program are being
00:24 completed successfully and on time and broadly speaking, we are making steady progress toward micro stability.
00:32 Also coming up, former British High Commissioner to Ghana Nicholas Westcott on Ghana's debt crisis, why he says Ghana's foreign loans have not been used
00:41 judiciously.
00:44 Has that money that has been borrowed been put into productive investment? Some of it, yes,
00:49 but clearly some of it has not and therefore there is an obligation on the Ghanaian side to say have we used this money well?
00:55 And I know there is public debate about that. Where has all the money gone that was borrowed?
00:59 Plus, government disburses
01:02 $315 million from foreign direct investments to support agri-sector.
01:06 We have disbursed a little over $350 million from our development partners to support on-the-moon agricultural projects.
01:19 My name is Daryl Kwah. Thanks for being with us. Details coming up.
01:22 Thanks for staying with us everyone. First up, Finance Minister Kenneth Uyata has
01:46 reiterated that the economy is on a recovery path, citing improvement in some macroeconomic indicators.
01:53 According to him, government is committed to working to improve on
01:57 the fiscals to achieve economic growth. He was speaking at a
02:01 42 million euro financing agreement signing ceremony between the EU and the government of Ghana for green transition in agribusiness and public
02:09 financial management.
02:11 The financial agreement is aimed at promoting sustainable development,
02:16 fostering economic growth, and strengthening key sectors critical for EU-Ghana partnership.
02:21 Finance Minister Kenneth Uyata said his outfit is committed to promoting sound public financial management to ensuring stability.
02:29 Truly, Ghana has paid its dues.
02:32 Our fiscal situation has improved.
02:35 Reviews with the IMF and our program are being
02:38 completed successfully and on time. And broadly speaking, we are making steady progress.
02:45 We are making progress toward macro stability and debt sustainability.
02:49 Additionally,
02:53 our focus now as a government is on securing an economic turnaround underpinned
02:59 by robust institutions and an active private sector.
03:03 Viewed within that lens, today's agreements are fully aligned with both our five-year
03:10 PFM strategy and the government's growth agenda, which are anchored in the themes of
03:15 1. Strengthening the macro fiscal framework, 2. Strong and ambitious structural reforms in tax policy,
03:23 revenue administration and public financial management, and 3. Reforms to encourage private sector investments,
03:30 strengthening growth and create more jobs.
03:32 European Union Ambassador to Ghana,
03:36 Excellency, Ichad Brazali said this will help foster fiscal discipline and increase investor confidence.
03:42 Additionally, the inclusion of agribusiness in this agreement
03:46 highlights our shared recognition of the crucial role that agriculture plays in fostering economic growth,
03:54 providing livelihoods and ensuring food security.
03:59 We aim to enhance productivity,
04:02 increase resilience to climate change,
04:05 and promote
04:07 sustainable agricultural practices that will contribute to the overall development agenda.
04:15 At this juncture, let me stress that the European Union is
04:22 unreservedly supporting
04:26 the
04:27 Planting for Food and Jobs
04:29 2.0 program
04:32 presented by the minister under the chairmanship of the president last week, 1st day it is, if I'm not mistaken.
04:39 Specifically, we shall support
04:43 four value chains,
04:45 sheep,
04:47 soybean,
04:48 vegetables and beekeeping. The agreement opens a new era of collaboration and progress focusing on private sector development and public
04:56 financial management. James Eshen's report for Joy Business.
05:01 Now, Ghana is among a number of countries in Africa facing a sovereign debt crisis.
05:06 Now, with a public debt stock of over 500 billion CEDs, the country was compelled to seek bailout from the
05:12 International Monetary Fund. Sharing his thoughts on the spiraling debt crisis, former British High Commissioner to Ghana, Nicholas Westcott, said the country's foreign loans are not being used
05:22 judiciously. The professor at the SOS University in London says more effective measures are needed to address this crisis.
05:30 More effective mechanisms must be developed by Ghana and other African countries to contain the effects of economic crisis.
05:36 Makes one slightly uneasy that despite doing all the right things,
05:40 countries are still not seeming to be able to emerge. So, there are two aspects of this. One, are they actually doing all the right things?
05:47 Ghana has borrowed very heavily, but has it invested wisely?
05:51 Has that money that has been borrowed been put into productive investment? Some of it,
05:57 yes, but clearly some of it has not. And therefore, there is an obligation on the Ghanaian side to say, "Have we used this money well?"
06:03 And I know there is public debate about that. Where has all the money gone that was borrowed?
06:07 So, that is quite right that there should be that debate, and it should be an economic debate as well as a political one.
06:14 It's not just about corruption. It's about how are we using the money in terms of investment.
06:19 I come back and still there is no good road from Accra to Kumasi. You know, this should be the M1.
06:25 This would be the major route.
06:27 There should have been a dual carriageway there, you know, 20-30 years ago. But still it is not built. Why, I ask?
06:33 So,
06:35 that is one question. But the other is that for many countries across Africa,
06:40 however much money you borrow, you're never going to be able to get out of the problems because the world is stacked against you.
06:46 It is and it isn't.
06:49 There are opportunities out there, and we've seen from the way that Asian economies grew that it is possible to get out of this cycle of poverty.
06:57 But Africa has not yet achieved that transformation which we are arguing for in asset.
07:02 And part of the problem is that for African countries to borrow, it is very expensive.
07:08 And it has been getting more expensive because there is a risk premium, and that's partly due to the political instability,
07:14 partly due to the lack of transparency of some of the financial transactions that go on. And there is therefore steps that can be taken
07:23 within African countries, including Ghana, to make it cheaper for them to borrow money and therefore have a better chance.
07:31 Secondly though, the international financial system needs to take more account of the African perspective.
07:42 Now government says it has disbursed
07:45 $315 million from foreign direct investments into the agri-sector.
07:49 The move follows recent complaints by agri-sector players that financial institutions provide very little support to them.
07:55 According to a Deputy Finance Minister, Dr. John Kuma, this is to support ongoing projects. Yes, Mo.
08:01 The agriculture sector has been witnessing a slow growth rate for the past decade.
08:07 This is mainly linked to a lack of financial assistance to the sector.
08:12 Many analysts have called for the implementation of schemes that will lend to players along the agricultural value chain.
08:19 Speaking at the Presidential Roundtable discussion with development partners on the planting for food and jobs phase 2,
08:27 a Deputy Finance Minister, Dr. John Kuma said the government has heard their pleas.
08:32 Hence, it has allocated fresh funds from foreign direct investments into the agriculture sector.
08:39 All of us, the private sector, government of Ghana, our development partners,
08:44 have certainly tried to play our respective parts and are encouraged by the feedback that came
08:52 from the previous panel discussion on the role of development partners.
08:57 I believe that as we act and work together, we can make tremendous progress working together.
09:05 We have displaced a little over $350 million from our development partners to support ongoing agricultural projects.
09:15 Projects like the $27 million Savannah Agricultural Value Chain Development,
09:22 $36.6 million Agricultural Sector Investment Program,
09:26 $1.3 million USD Ghana-Northern Asia Agricultural Projects, among others.
09:34 Meanwhile, President Ekufuadu has urged development partners and foreign investors
09:39 to tailor projects that work in tandem with government policies to ensure appropriate utilization of funds.
09:47 In spite of the productive collaboration that has taken place between government and Friends of Ghana over the years,
09:55 a matter of concern has been at times the misalignment of priorities
10:01 between the policies of certain international development agencies and national policies and strategies.
10:09 Government is concerned by this because projects designed by foreign governments
10:16 to support Ghana's agriculture should naturally align with government's priorities.
10:23 Any deviation from this can amount to misdirected investments in the country.
10:32 Minister of Food and Agriculture, Dr. Brian Echampong, was optimistic that if the sector worked together,
10:38 it would enable cost-effective use of capital to achieve common development objectives.
10:44 Without a doubt, the success of the Planting for Food and Jobs program will depend on several factors.
10:50 But for the purpose of today's discussion, I would like to focus on four.
10:55 The first one will require the active participation of the private sector.
11:01 Secondly, financing these value chain activities by banks and other financial institutions
11:07 and development partner programs will be critical.
11:11 The third success factor will be increasing investment in supporting agricultural infrastructure and technology.
11:19 The reason why we are gathered here is to refocus our partners in agriculture on the task ahead.
11:27 The Presidential Roundtable discussion attracted international partners such as the World Bank,
11:33 the Food and Agriculture Organization, the U.S. Agency for International Development,
11:39 AGRA, and the World Food Program, among others.
11:43 Now, GCB Bank PLC has attributed its impressive performance in the first nine months of this year
11:50 to a three-pronged strategy of revenue growth, operational excellence, as well as people and talent.
11:55 Speaking at the Ghana Stock Exchange's Facts Behind the Figures program,
11:58 Managing Director Kofi Adumaku said the focus of the bank is to achieve digital leadership in the banking industry.
12:06 According to the Managing Director of GCB Bank PLC, Kofi Adumaku,
12:11 the bank will remain dominant and resilient in the banking industry.
12:15 Speaking to Joy Business at the Facts Behind the Figures at the Ghana Stock Exchange,
12:20 Mr. Adumaku stated that they will enhance their technological drive to beat down operating costs.
12:26 Operating costs is high. You know GCB has 186 branches, so the OPEC is much higher than in other banks.
12:36 What are we doing to bring down operating costs?
12:39 We are ensuring that we involve technology in what we do.
12:44 The initial cost of technology is also high,
12:47 but in the long term, if technology is viewed as an investment,
12:51 in the long term it is expected to bring down that cost over time.
12:56 Also, putting in place a framework that enables banks like GCB to focus on value for money
13:02 will also ensure that our costs also come down.
13:08 Managing Director of the Ghana Stock Exchange, Abin Amwa, tells Joy Business,
13:13 the local bears is beginning to see some signs of recovery as most listed companies
13:19 are recording strong financial performance.
13:21 Realising again signs of recovery in the market and some of the signs we are seeing is that the
13:29 companies are bringing out strong financial performance. When you look at the half year
13:35 and then of course the nine months results that are coming out, many companies are growing at
13:41 double digits. Growth rates, we are seeing secondary trading on the market also picking up.
13:50 On the equities market so far this year,
13:52 composite indexes up almost 28 percent. The financial stock index which had recorded
14:02 significant losses are down. We've regained some of the losses and we are down about 3.5 percent
14:10 as of yesterday. And also companies are looking to come to the market to raise capital again.
14:17 Meanwhile, the bank recorded 21.51 percent year on year growth
14:22 in profit to the tune of 538 million Cities profit in the first nine months of 2023.
14:39 You are watching the Marketplace. Time now for the Joy Business Summit.
14:42 And recent reports, audit reports by the Auditor General on public accounts have revealed
14:47 significant financial irregularities regarding the conduct of procurement
14:52 in the public sector. For instance, the financial attributions to procurement irregularities, i.e.
14:57 procurement, stores and contracts in the 2022, 2021 and 2020, rather, AJ reports were 878,500
15:08 and 91 million and 947 million respectively. Joining us in studio now is Dr. Khan Sengpente,
15:17 procurement specialist, also lecturer at GIMPA Business School. Good afternoon to you. Thanks
15:22 for joining us as we look into procurement and how businesses can improve on the processes.
15:30 I want to start with the figures. I was trying to run some figures by our audience.
15:33 What do the figures tell us about how we are tackling procurement infractions in the country?
15:38 Are we improving? Yeah, I think that having gone through the AJ's report over the period that you
15:47 have mentioned, there appear to be a very significant reduction, which could be interpreted
15:54 to mean improvements in terms of the irregularities that have been reported over the period.
15:59 If you look at the figure that you mentioned, I was just trying to do some computations. 2021,
16:06 2022, there is a reduction by about in essence of 100%. So what it means is that there is some
16:14 level of improvement in terms of the manner in which procurement is conducted in the public
16:19 sector. The question is, what is the public sector doing or the respective MMDAs to which
16:27 these audits were conducted? What are they doing better resulting into this improvement?
16:34 Exactly. A number of things I could think about. I believe that the Public Accounts Committee of
16:40 Parliament is doing pretty a good job. Their follow-up actions on the AJ's report year on year
16:47 seems to serve as a source of deterrent. It's actually deterring people to the extent that I
16:54 believe that is deepening the level of compliance in the manner in which procurement is conducted
16:59 in the public sector space. Again, as a result of this, there is a follow-up talk that I believe
17:06 practitioners in the public sector are giving some level of autonomy that is required to do their
17:12 job and to getting things done right, to the extent that the entity leads or in other words,
17:18 the entity heads are also empowering the team to do their job. The other reason that I think we
17:26 may have to investigate further has to do with the extent of the audit scope. Because if you look at
17:34 the level of reduction, 2021 was about 900 and mention the figure again, look at your report.
17:43 2021, just quickly do that for you, was 591 million. 2020 was 947 million.
17:53 Very good. And the current year 2022?
17:55 878,000.
17:58 That is very, very significant.
18:00 Incredible.
18:01 Very, very incredible. So the question in respect of my third point has to do with,
18:08 there is a need for us to understand the methodology that the auditor used this time
18:13 around in 2022 and also the audit scope. For instance, if you have about 1000 procurement
18:20 related transactions, both CAPEX and OPEX over that period, and the sample that was targeted
18:26 for the audit was 60, it will definitely have implications on the outcome. As against taking
18:35 a sample of about 250 procurement related transactions and auditing it, you will not
18:41 get this figure. So we need to understand the extent of the scope in terms of the audit,
18:47 the sample that was used to conduct audit, because this is a very significant improvement.
18:51 And if it is the case that the sample was significant, and they still got this result,
18:55 and if you look at the reason that was attributed to that particular infraction,
18:59 it is not a case that people were not doing things right. It is the case that one instance
19:07 in terms of the contract, the supplier has been given about 15% mobilisation,
19:12 and then he abandoned the project.
19:13 Because I was using the figures myself.
19:15 Yes, it is a very significant reduction.
19:18 It is so incredible.
19:18 Yes, so we need to know the scope of the audit and the methodology that was used.
19:23 You talk about some of the things that have been done over the last couple of years,
19:29 but I also want to find out what do we still need to do to drastically reduce these irregularities
19:35 and infractions that we have seen?
19:37 Sure, I believe that as a people we really know what we have to do. I always say that
19:43 we have quite a number of regulations that are self-empowering.
19:46 If you look at the Public Procurement Act itself, the amended version currently,
19:50 and other related laws that support financial discipline in the public sector space,
19:57 like the Public Financial Management Act, and then the regulation LI 2378,
20:04 these are self-empowering tools that technocrats and for that matter politicians
20:11 would have to just as a matter of continuing to empower practicing professionals in their space
20:16 to give them technical guidance in getting things done.
20:19 In terms of technology, I am happy, quite recently I chanced on a directive
20:29 from the Public Procurement Authority that is implementing the GANEPs.
20:34 And I think, kudos to them, it's a very fantastic initiative.
20:38 Try to ensure that we use that enterprise resource planning platform to execute procurement.
20:45 If we are able to give ourselves a target that year on year we would like to achieve,
20:50 by the next three years, achieve about 90% of every procurable activity in the public sector space,
20:55 leveraging on GANEP to do the sourcing within the procure to implement circle,
21:02 there's going to be significant reduction in these irregularities and its associated financial,
21:07 negative financial impact to public financial discipline and then the budget issues that we have.
21:14 I think PAC should continue to do their work and to the extent that they will follow up to
21:22 enforce the sanctions regime and get people punished and deepen the level of stiffness
21:31 of the punishment for non-compliance, this within the short term could resolve or reduce drastically
21:39 the level of infractions.
21:41 Yeah, I'm just looking at a story where it was reported that the PPA was looking at the end of
21:48 this year to expedite the fully digitised procurement system guidance that we've been
21:55 talking about today. The focus has been on the public sector most of the time, so I want us to
22:00 shift to the private sector and how they're doing when it comes to dealing with irregularities and
22:05 infractions. So, you see you can set yourself up to fail. In the private sector, procurement is
22:17 regulated by strategy and quite a number of private sectors, whether you find yourself in the small,
22:24 medium scale or large scale space, inasmuch as you recognise the fact that there are two sides
22:31 to your business, driving revenue and managing cost. 70% of your annual spend, whether in the
22:40 CAPEX or in the OPEX space, are attributed to procurement. So therefore, if you want to sustain
22:46 your revenue or ensure that you are growing profit year on year, you need to be managing cost. So,
22:52 the area to look at is procurement. So therefore, in the private sector space and for those entities
22:57 that have come to terms with the fact that to manage cost sustainably, they need to leverage
23:02 procurement, are actually leveraging strategy and instituting the appropriate operating model
23:09 and governance framework and they ensure strict compliance. If there are any incidences of non-
23:15 compliance, a sanctions regime applies stiffly and instantly. There is also a lot of empowerment.
23:25 You get the right skills there, continuous training, people are properly motivated and on top
23:32 of it, you have protocols that enable the kind of policies that you want to have in terms of
23:39 technology. So, quite a number of medium to large scale enterprises across our industry have taken
23:45 steps to actually implement ERP systems that they are using to conduct procurement. And so therefore,
23:51 they are getting the maximum benefit from this particular regimen. We just have about one minute
23:56 and I wanted to quickly share with us the recommendations you have for both the private
24:00 sector and the public sector in dealing with procurement infractions. Yeah, so I think,
24:05 thank you very much, I think in the very short term from the public sector space,
24:10 PAC should continue to do their work and enforce the sanctions. Two, within the very short term
24:19 to medium term, I believe that there should be a legislative instrument to redirect the reporting
24:26 command of public procurement authority to report to Parliament, rather than what Act 921 has
24:35 recommended wherein PPA reports to Finance Ministry. There are reasons for it, because of
24:42 time I will not go into it. Now, within, and again, they should continue to deepen the GANEP and then
24:48 how GIFMIS is being used from a technology point of view. This will significantly help.
24:53 In the very long term, I have suggested this over and over, that it is important that we reconfigure
25:01 how public procurement is orchestrated by deepening centralisation. Otherwise, having a
25:07 centralised entity that manages procurement as far as public procurement is concerned and spend
25:12 discipline is concerned, that entity should report directly to Parliament. In the private sector,
25:18 I would rather want to encourage enterprises that really want to deliver quantum performance and
25:27 growth year on year, to look at cost and the key tool to leverage on is procurement.
25:33 Plenty to talk about. I hope we have you in for a second day at Dr Kang's in-plantee,
25:38 the procurement specialist, also lecturer at the GIMPA Business School. Thank you so much for your
25:42 time with us this afternoon. And well, before we go on, I want to do one last story, because
25:47 it's the Start-Up Week, and so entrepreneurship and private enterprises remain vital in expanding
25:53 local economies, but many who venture the path fail to realise they need financial support.
25:59 To bridge the knowledge gap, they use the empowerment centre of SOS Children's
26:02 Villages Investing Resources to keep small enterprises afloat. Anaya Ojima has more.
26:08 Susanna Wezani, after completing senior high school, relocated to the Ashanti region for a
26:16 better life. Fortunately for her, she was enrolled into fashion designing, hoping to become a top one
26:26 in her community. But after the year's training, the journey has not been as smooth as expected.
26:31 It was not going well. The way I brand my business and the way I receive my customers,
26:43 it was making my work difficult. Susanna is just one of many dressmakers who are struggling to
26:53 keep a balance in their finances. Through soft skills training, she is imparted with knowledge
26:59 of the best business practices. A research by the Youth Empowerment Centre of the SOS Children's
27:06 Village has shown customer service and quality of job done are some key factors militating against
27:13 the growth of the fashion industry. Roberta Aite is project coordinator for the hub.
27:19 So she had been able to start her business, but when it comes to registering her business,
27:24 which system she needs to put in place to ensure that her business becomes sustainable,
27:30 something that she didn't know much about. All of them, most of them, she in particular had the
27:35 aim of training other people. But if she doesn't get a training, she needs to sustain the business
27:41 today. How does the business live long enough to benefit other young people? So in as much as we
27:46 are looking for people who had no idea what to do, there is the need to also support those who
27:53 have started something little so that they can expand their businesses and really keep their
27:57 businesses growing. Youth Empowerment Centre, they're investing resources in keeping small
28:06 businesses afloat. And that's the Marketplace. Thanks for watching everyone. More news on our
28:10 website, myjoenline.com/business. My name is Darrell Cloud. Thanks for watching. We'll be back
28:15 same time tomorrow.
28:29 Bye.
28:36 (Music)