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Business News of Sunday, 22 December 2019


Top business stories of 2019

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It’s been a momentous year for business news in Ghana, from boardrooms to courtrooms and pulp mills to fishing wharves.

These are the top business headlines of 2019 that continue to be read, shared and talked about.

Some of these high-profile stories filled the business pages for weeks. Others promise to continue dominating the news in 2020.

Below are trending business stories:

Introduction of new banknote denominations

The Governor of the Bank of Ghana (BoG), Dr Ernest Addison explained that the introduction of a new GH¢2 coin as well as GH¢100 and GH¢200 banknotes into circulation.

This the BoG says is to ensure customer convenience and bring about efficiency in the printing of currency to generate savings for the country.

Addressing the press in Accra, Mr Addison disclosed that new coin and notes were decided upon after a review of the structure, acceptability and use of the individual currency which begun in March 2017.

The new banknotes have enhanced security features in line with evolving changes in the technological landscape.

PDS-ECG Scandal

Earlier in October, government made the decision to terminate its concessionaire agreement with Power Distribution Services (PDS) after a careful review of demand guarantees.

Following that, government then announced that the Electricity Company of Ghana Limited (ECG) assumed full operational and financial control of the electricity distribution.

Following that, a statement issued by the US Embassy on Wednesday, October 23 noted that the “United States of America notes this decision [termination of the PDS contract] with regret based on the conclusions of the independent forensic investigation, the U.S. position is that the transfer of operations, maintenance, and management of ECG to the PDS on March 1, 2019, was valid, and therefore the termination was unwarranted.”

Director of Research at the Institute of Economic Affairs (IEA), Dr John Kwakye, earlier projected that Ghana will lose close to US$2 billion after government made the decision to terminate the concessionaire agreement for Power Distribution Services (PDS)

Communication Services Tax

On October 1, many Ghanaians raised concerns over the upward adjustment of the Communications Service Tax (CST) from 6 percent to 9 percent – affecting all communication service provides across the country.

The decision which was announced by the Finance Minister, Ken-Ofori-Atta during the 2019 mid-year budget review indicated that for every GH¢1 of recharged purchased, a 9 percent CST fee will be charged to the consumer leaving GH¢0.93 for the purchase.

Shortly after, the sector Minister, Ursula Owusu-Ekuful revealed that she was receiving the end of personal attacks following the mode of the implementation of the CST. She noted that she was being accused of being a “wicked witch” for the decision but to her defense, she said the increase in the tax were imposed by parliament on request from the Ministry of Finance.

Financial sector clean up

Recently, President Akufo-Addo granted an executive approval for the expenditure of GHS15.6 billion to save the funds of depositors who had their monies locked up in the collapsed of some financial institutions two years ago.

In a press release signed by the Presidency, it pointed out that the money released is expected to improve the liquidity of the financial sector. Earlier, the banking sector reforms carried out by the Securities and Exchange Commission (SEC), spearheaded by the Bank of Ghana cleaned up affected a total of 420 institutions.

Though some banks, including, Construction Bank, Beige Bank, Royal Bank, uniBank and Sovereign Bank had their license revoked, some were fortunate to be merged to operate as the Consolidated Bank with Government of Ghana having 100% shares in it.

Tullow Ghana production challenges

Tullow Oil Plc’s Chief Executive Officer and Exploration Director quit after the company cut its production outlook and suspended the dividend. The shares tumbled, deepening their loss for the year to more than 60%.

CEO Paul McDade and Exploration Chief Angus McCoss resigned with immediate effect, marking the exit of Tullow’s old guard after founder Aidan Heavey departed last year. Both had been stalwarts at the company for over a decade, presiding over discoveries from West Africa to Guyana, but also a slew of recent operational setbacks.

“Whilst financial performance has been solid, production performance has been significantly below expectations from the group’s main producing assets, the TEN and Jubilee fields in Ghana,” London-based Tullow said Monday. Group output next year is forecast at 70,000 to 80,000 barrels a day — down from the 87,000 a day expected for this year — and production for the following three years will hover around the bottom of that range.

“This is likely to have a negative impact on the valuations of Tullow’s key assets,” Al Stanton, an analyst at RBC Europe Ltd., said in a note. “We expect the pace of exploration activity, and therefore news flow, to be reined in.”

The executive departures come after a year of disappointments at Tullow, where technical difficulties have hampered output in Ghana, projects in Uganda and Kenya have faced delays and results from wells in Guyana missed expectations. The company reduced its 2019 production forecast several times as the glitches in Ghana dragged on.

US$2 billion Sinohydro deal for bauxite mining

Next is the Atewa Forest reserve which has mainly been stirred by a lot of controversies with some section of the public decrying a depletion of the natural resource.

The world-renowned forest reserve, Atewa, hosting three major rivers - Densu, Birim and Ayensu which serves over 5 million people in the community also house an estimated 165 million tons of bauxite, a sedimentary rock used to create aluminum products such as aircraft parts, kitchen utensils and beer cans.

In this particular case, Ghana signed a memorandum with China as part of its US$2 billion Sinohydro deal with Ghana government paying back with proceeds made from the sale of refined bauxite.

Though it seems the forest is under a threat because Bauxite, typically found in the topsoil is extracted through strip mining, which requires removing layers of soil and rock to access the minerals below.
Environmental campaigners are however calling on the government to rescind its decision to mine in the aAtewa forest because, they are of the view that the mining, toppled with the bauxite dust will tend to contaminate the Densu, Birim and Ayensu rivers.