COCOBOD, Swiss Firm Sign Pact to Process Cocoa
The agreement also enables the country to tap into the expertise of the company in chocolate processing through training, product development and technology guidance to help build a robust local capacity in cocoa processing and value addition to meet both domestic and international consumption demands.
The agreement was signed at Buhler’s Abidjan office in Cote d’Ivoire last Sunday.
The Chief Executive of COCOBOD, Mr Joseph Boahen Aidoo, signed on behalf of the board, while the President of Buhler for the Middle East and Africa, Mr Heiko Feuring, initialled it for the company.
Impact
The CEO of COCOBOD said the agreement would deepen the strong relationship between Ghana and Switzerland, as well as enable them to share more experiences in cocoa processing, where both are significant players.
Mr Aidoo said Buhler was one of the top-class organisations in the world when it came to chocolate technology and expressed the hope that Ghana would leverage the agreement to also enrich its cocoa sector.
He said the country had begun a journey on the path of transformation in its cocoa sector and had been looking out for such partnerships to aid the process.
“We want to move from traditional cocoa production to a modern way of cocoa production. We also want to move from the supply of the mere primary commodity to value addition, and that is where we find you to be a partner,” the COCOBOD boss said.
He added that Ghana needed to build its capacity to add value to the cocoa it produced, and that meant it had to acquire the latest technologies for efficient processing, as well as chocolate and other cocoa product development.
“You have the technology and we need the technology, so we want to work together. This partnership we are forging today should continue to grow into the future and remain beneficial to the mutual interest of Ghana and Switzerland,” Mr Aidoo said.
Response
For his part, Mr Feuring commended the COCOBOD CEO and his management team for their efforts towards building a sustainable and prosperous cocoa value chain for Ghana through the introduction of farm improvement activities and the implementation of the Living Income Differential (LID).
“We hope this memorandum of understanding will be the landmark of a new fruitful and long-lasting collaboration to unlock the Ghanaian cocoa value chain potential.
“We want to support Ghana in its march towards a higher value creation for the benefit of all Ghanaians,” he said.
Mr Feuring gave an assurance that Buhler would offer its expertise to Ghana in its effort to build a solid local processing industry to tap into the $100 billion cocoa and chocolate industry.
source: graphic.com
Abolition of Unfair Fees, Charges and Other Practices in the Banking Sector
The Bank of Ghana has observed with concern, a trend where some Banks and Specialized Deposit-Taking Institutions (SDIs) impose certain fees and charges on customers. These practices are deemed to be unfair, inappropriate and detrimental to the financial inclusion agenda and the protection of customers’ interest.
source: graphic.com
Ghana To Be Removed From EU Money Laundering List by June 2021
Ghana is expected to be removed from the list of countries with high levels of deficiencies in Anti-Money Laundering (AML) and Counter Terrorist Financing (CTF) regimes.
The exclusion of Ghana from the list is expected to be announced in June this year.
Background
The European Commission in May 2020 listed Ghana and 11 other countries as having lapses in the country’s AML and CFT regimes, thus posing significant threats to the European Union’s financial system
The inclusion of Ghana in the blacklist meant that financial transactions from Ghana into the EU and vice versa received extra scrutiny to ensure that they did not escape the “deficiencies” identified to the benefit of money launderers and terrorist financiers.
A similar action was taken on Ghana in 2019.
The Decision to Remove Ghana From the EU Money Laundering List
A statement signed and issued by the Director of Communications at the Office of the President, Mr. Eugene Arhin, said the European Commission made the decision to take Ghana off the list following a meeting with President Nana Addo Dankwa Akufo-Addo in Brussels, Belgium.
According to the statement, at a meeting between President Akufo-Addo and the President of the European Council, His Excellency, Charles Michel, as well as at the European Commission, the European Union acknowledged the efforts Ghana has made in implementing the action plan of the International Country Risk Guide (ICRG) in record time.
“The Commission, thus, congratulated Ghana for the reforms embarked on, as well as the sustainable, robust systems deployed towards being taken of the list,” it said.
It added that it is expected that the Financial Action Task Force (FATF), the global money laundering and terrorist financing watchdog, will, in June 2021, announce that Ghana has been taken off its list of high risk, third-world countries with strategic deficiencies in Anti-Money Laundering and Countering of Terrorism Financing.
Nano Foods Opens its Pineapple Processing Factory
Nano Foods Limited, formerly ASTEK Refresh Pineapple Juice Company has been revitalized. At the inauguration of the food processing company situated in Nsawam, a call was made on Ghanaians to explore all opportunities in the traditional sector of the economy to accelerate the national economic transformational agenda.
The project, which is under the One District, One Factory (1D1F) programme, brings to 77 the number of factories in operation since the inception of the initiative in 2017.
Nano Foods Limited, which came out of the defunct ASTEK Refresh Pineapple Juice Company in the 1980s and 1990s, had only been producing ASTEK Nsu sachet water since it was revived in 2014.
It presently provides about 100 direct jobs for Ghanaians, with hundreds of indirect jobs in the Eastern and the Central regions.
In December 2018, the Ghana Exim Bank approved a capital expenditure loan and a working capital facility of $1,067,600 for the company, which went on to acquire and install a complete pineapple processing and canning line, together with a modern and efficient quality control laboratory.
Economic Transformation through Agriculture and Exports
This comes as part of the government’s efforts to transform the economy through agriculture. Nano Foods Limited would be processing pineapples from farms located mainly in the Eastern and the Central regions. Its products would be exported to the United States, Western European and Middle East markets to meet the constant demand primarily from Spain, Hungary and Cyprus.
The export-driven aspect of the project would help consolidate the successes achieved so far in improving the country’s trade balance and its foreign exchange reserves.
“For the first time in over two decades, the trade balance, which is the difference between what the country exports and what it imports, recorded a surplus for four consecutive years from 2017 to 2020. Ghana’s Gross International Reserves had also increased from $6.1 billion (3.5 months of imports) in 2016 to $8.6 billion in 2020 (4.1 months of imports),” the Vice-President stated at the inauguration.
Industrial transformation
The revamping of the defunct ASTEK Refresh Company into Nano Foods Limited is designed to add value to the natural resources at the grass-roots level to provide decent job opportunities for the youth and women. It is also geared towards reducing the importation of goods through import substitution in order to provide opportunities for export.
Future Plans of Nano Foods Limited
The company is expected to re-introduce the ASTEK Refresh juice drinks as part of its second phase of development. This would require a further investment of $2 million. With the further investment, it would be able to achieve a turnover of over $10 million with a labour force of about 300 working for the company in the next two to three years.
The Managing Director of Nano Foods Limited, Mr. Albert Anti Owusu, added that the company also had plans to increase its production line by introducing tiger nuts, cocoa beans, snails and garden during the second phase for export
source: graphic.com.gh
Ghana’s novel zero-coupon bond: Dr. Gideon Boako’s take
Ghana is the first Sub-Saharan African country to issue a foreign currency-denominated zero-coupon bullet tranche to its bond financing mix, enabling it to create fiscal space to build its financial resilience.
Ghana’s debut 4-year zero-coupon bond was two times oversubscribed, despite being the first of its kind to be issued by a West African sovereign, further demonstrating investors continued support for Ghana’s transformation story and strong fiscal consolidation efforts.
Zero-coupon bonds are bonds issued without any interest, hence trades at a discount till maturity. Thus, unlike other traditional coupon-bearing bonds, Ghana will not pay any interest on the four-year zero-coupon bond. The only debt obligation that the government of Ghana would have to honor will be the face value of $525 million on maturity.
The practical mechanics of a zero-coupon bond
For the purposes of illustration, let me apply some indicative figures and later crown them with the actuals from the 2021 issuance.
Assuming Ghana issues a $500 million zero-coupon bond at a discounted rate of 20% ($100 million), Ghana will receive $400 million in cash today but pay back $500 million when the bond matures in four years. However, in the interim, Ghana will not pay any interest over the four (4) years.
This bond structure means the government can use the money it would have used in making interest payments over the next four (4) years for other productive opportunities. In the case of Ghana for this bond, the government has the intention of using the proceeds to refinance more expensive domestic debt, which attracts an average of 19% interest rate.
So Ghana is borrowing at no interest and using the proceeds to pay existing debt with higher/expensive interest rates.
How does this benefit Ghana?
Ghana’s existing domestic bonds attract an average interest rate of about 19% (make it 20% for ease of analysis). So here, Ghana issues a 20% discounted zero-coupon foreign bond at $500 million and receives $400 million. If the $400 million is converted to Cedis, say at a cedi-dollar exchange rate of 6, that is equivalent to approximately GHc2.4 billion.
This can be used to retire existing domestic bonds, which currently pay an interest of 20%. This will save Ghana GHc480 million Cedis in interest savings a year {that is 20% multiplied by GHc2.4 billion).
Multiplying the GHc480 million a year by four years gives GHc1.92 billion (the equivalent of $320 million) in savings over the four years. If we deduct the $100 million we pre-paid upfront on the zero-coupon from the $320 million, we get our net savings which come to $220 million in savings over the four years.
Actual computations from the 2021 Zero-coupon bonds.
- Ghana issued the zero-coupon bond for $525 million and received a discounted value of $409.5 million. Meaning the discounted value forgone for Ghana is $115.5 million.
- Converting the $409.5 million to cedis at the prevailing cedi/dollar exchange rate of 5.71 gives GHc2.338 billion.
- Existing local bonds for which we will use the zero-coupon bond proceeds to finance, attract an average interest rate of 18.3% (0.183).
- Multiplying 0.183 by 2.338 by 4 (years) gives GHc1.712 billion.
- Converting the GHc1.712 billion to dollars gives $299.7million
- Now, if you subtract the discounted $115.5 million from the $299.6 million, Ghana is making a net savings of $184.2 million, the equivalent of GHc1.1 billion
- Thus, based on what Ghana will use the zero-coupon bond for (financing existing expensive local bonds), Ghana will make savings of $184.2 million (GHc1.1 billion).
Why this $3 billion zero-coupon bond is a novelty worth celebrating
Coronavirus more than calls on all national economies’ managers to devise innovative financial engineering techniques for accelerated recovery and Ghana is doing something unique. It is a plus for all Ghanaians and the managers of the economy.
source: myjoyonline.com
The author, Dr. Gideon Boako is a Financial Economist with years of experience in academia, public policy formulations, and governmental and non-governmental consultancies. Currently, he serves on Ghana’s Economic Management Team (EMT) as Technical Advisor at the Office of the President, as well as, the Spokesperson to the Vice President of the Republic of Ghana, who chairs the Economic Management Team.
More on the zero-coupon bond: Koranteng & Koranteng Advises on Issuance of 2021 $3 Billion Eurobond
Navigating the Tightrope of Administrative Compliance under the New Anti-Money Laundering Act, 2020 (Act 1044)
Koranteng & Koranteng Legal Advisors is hosting a zoom webinar on the topic:
Navigating the Tightrope of Administrative Compliance under the New Anti-Money Laundering Act 2020 (Act 1044)
The panelists are …
- Godwin Kwame Tamakloe (Senior Manager -Compliance, AML & Risk, MobileMoney Limited)
- Maame Saah Oduro-Frimpong (Bank of Ghana Stability Department)
- Kojo Dougan (Senior Consultant on Digital Finance & Open Banking at Kyrios Dougan Inc)
And the discussions will be moderated by our Managing Partner, Afua Adubea Koranteng
Date: Friday Apr 23, 2021
Time: 2:00pm-4:00pm Greenwich Mean Time
Register in advance here: https://us02web.zoom.us/webinar/register/WN_RWBOw4a_QDKxv5LICfN7OQ
After registering, you will receive a confirmation email containing information about joining the webinar.
Watch Video
Koranteng & Koranteng Legal Advisors Acts as Joint Local Counsel on Landmark $3 Billion Eurobond Issuance by the Republic of Ghana.
Koranteng & Koranteng Legal Advisors is proud to have advised the Ministry of Finance on the Republic of Ghana’s Landmark 2021 $3 Billion Eurobond issuance. The landmark transaction was in excess of $3 billion and involved a 4-year zero-coupon tranche of $525 million. This is the first of its kind to be issued by a sub-saharan African sovereign. The transaction also comprised US$1 billion 7-year notes at 7.75%, US$1 billion 12-year notes at 8.625% and US$500 million 20-year notes at 8.875%. Investors have demonstrated a continued confidence in the Republic of Ghana with such a positive market response amidst the Covid-19 pandemic, with its attendant virtual roadshows and investor presentations. Ghana intends to use the proceeds to support its budget deficit by funding growth-oriented expenditures and conducting liability management.
Find out more on Government of Ghana Eurobonds at gse.com.gh
Penalty and Interest Waiver Act 2021 (Act 1065)
Introduction
The Penalty and Interest Waiver Act 2021 (the “Act”) was passed by Parliament and assented to by the President on the 31st March, 2021. The scope of the Act is to “grant a waiver of penalties and interests on accumulated tax arrears up to December 2020 for persons who make arrangements with the Ghana Revenue Authority for payment of the principal tax by 2021and to provide for related matters.” This document will outline the key provisions in the Act.
Application and Grant of the Waiver
To obtain this waiver, persons who qualify under the scope of the waiver must between 1st April, 2021 and 30th September, 2021, submit a written application to the Commissioner-General in a form so prescribed by him, and submit outstanding returns in respect of previous years up until the 31st December, 2021.
Within 30 days of this submission, the Commissioner-General is required to serve the applicant with notice of the Commissioner-General’s decision regarding the application. Where the application for the waiver is refused, the Commissioner-General is required to outline the reason for the refusal in writing.
An applicant who is dissatisfied with the decision of the Commissioner-General may lodge a written complaint with the Commissioner-General within 30 days of receipt of the decision. The Commissioner-General is required to make a determination and notify the applicant accordingly. Where the applicant is dissatisfied with this subsequent determination, he may pursue the matter in a court of competent jurisdiction.
Terms of Payment and Remission of Taxes
Terms of payment of an assessed amount and outstanding tax arrears may be granted and determined by the Commissioner-General. Importantly, the Act does not derogate from the power of the Commissioner-General to remit taxes under an enactment administered by him.
Conclusion
The Act provides relief to taxpayers who for one reason or the other were unable to pay taxes, been in arrears or have not yet registered with GRA. With the enactment of this Act, individuals and companies with the assistance of their legal and tax advisors determine their tax liabilities and negotiate a payment plan for such outstanding taxes. This will draw more individuals and companies into the tax bracket while existing taxpayers will be able to meet their tax obligations in a manner that is convenient for them. Ultimately, if this process is well managed it will be a “win-win” situation for both the taxpayer and the tax collector.
A Summary of Ghana’s Development Finance Institutions Act 2020
The Development Finance Institutions Act, 2020 (Act 1032) (the “Act”) was passed by the Ghanaian Parliament and received Presidential assent on 27thOctober, 2020. The Act establishes a framework for the licensing, regulation, and supervision of Development Finance Institutions (DFI’s) within the country.
Development finance business is defined in the Act to mean the “provision of short, medium and long term funding, guarantees and other credit enhancement structures to key sectors of the economy in a financially sustainable manner.” Any person that intends to engage in this business must be a body corporate registered under Ghanaian law and must obtain a license from the Bank of Ghana (BoG).
Persons intending to obtain a license must send a written application to the Bank of Ghana accompanied by several stated documents and the particulars of the company, proposed directors and key management staff in addition to paying the relevant processing fees. There are four license classes available namely: (Class 1 license) -DFIs which provide for wholesale development finance; (Class 2 license) -DFIs which provide retail development finance; (Class 3 license)- DFIs which provide guarantee development finance; and (Class 4 license) -DFIs which provide a combination of any of the three.
Requirements for Foreign DFI’s under the Act
Notably, the Act does not apply to DFIs governed by a multilateral treaty or under sovereign bilateral agreements such as the World Bank and the African Development Bank.
The Bank of Ghana is assigned the role of regulating and supervising DFIs in the country and is responsible for issuing licenses as well as granting approval to foreign DFIs to set up representative offices in Ghana.
Permissions of Engagement and Product Offerings under the Act
While DFIs are permitted to engage in direct and indirect debt or equity financing, refinancing and loan syndication amongst other related activities, they cannot engage in the acceptance of any type of deposits. DFIs must comply with the liquidity and minimum paid-up capital (i.e., initial funds required to start-up a DFI and the operational start-up costs prescribed by BoG) requirements and accompanying calculations prescribed for their license class by the Bank of Ghana. They are also required to set up a Reserve Fund where a portion of their net profits for the year are transferred, calculated based on the proportion of the amount in the fund to their paid-up capital. Notably, DFIs must invest a minimum of 75% of loanable funds in medium (3-7years) and long term (exceeding 7 years) loans and no more than 25% in short term (less than 3 years) loans. A breach of the above requirements, following a notice by the BoG, would attract a penalty.
Ownership and Control as prescribed by the Act
The DFIs are required to bi-annually furnish the BoG with a report on its organisational structure. Any transfer of shares in the DFI which would affect significant shareholdings must be done with prior approval the BoG. In the same vein, a person cannot sell or transfer the whole or part of the business, undertake a merger or engage in the reconstruction of a DFI without a formal application to and approval from the BoG.
The Act also provides for governance of DFIs, stating that a DFI shall have a Board of Directors, Chief Executive Officer and any other necessary staff. The Board is responsible for the overall corporate governance of the institution and members are to serve for 4 years with the option of re-election for another term. In addition, the Act provides for the composition, qualification, meetings, and performance evaluation of board members. DFIs are also required to have Audit and Risk Committees to oversee audit and risk management functions. Provisions are included to address conflict of interest scenarios and to secure compliance with their disclosure. Notably, the DFI must seek prior written approval from the BoG in the appointment of a CEO, director and any key management personnel.
With regard to restrictions on lending and investment, the Act contains provisions prohibiting an advance or loan against the security of the DFI’s own shares, limiting the DFI’s financial exposure, restricting transactions with an affiliate or insider, restricting lending to staff, and limiting the scope of the DFI’s equity investments.
The Act likewise provides guidelines on accounting standards and disclosures in financial statements for the DFIs. In addition, the BoG may require the submission of information and data it requires relating to the DFI’s affairs and has the power to carry out an examination of its operations.
The Current Situation in Ghana
Ghana has a number of foreign DFIs which are set up under bilateral arrangements, however, there are currently no local development finance institutions registered as such with the Bank of Ghana. Entities like the National Investment Bank and Agricultural Development Bank started out as development banks but have since taken on commercial activities. Similarly, the Export Development and Investment Fund (a statutory corporation that provides grants and loans for the development of agro-processing and exporting) was not registered as a financial institution with BoG. The Ghana Infrastructure Investment Fund, also a statutory corporation, similarly offers funding for infrastructure development projects but is not registered as a financial institution with the BoG.
The World Bank provided funding for the establishment of the Development Bank of Ghana in 2020. This will be the first properly registered DFI under the Act and we expect that their specific focus on development projects will set the pace for other institutions to follow.
Conclusion
The Act is a recognition by the Ghanaian government of the growing structural and demographic changes and a new industrial revolution with its attendant impact on human capital. This requires Ghana and Africa to find innovative mediums of financing and generating capital in order not to be left behind.
Ghana seeks to open up to international DFIs while it mulls the idea of a Government- owned DFI which will help channel private investments into productive sectors, new technologies and help accelerate market efforts to achieve the sustainable development goals.
Written By: Prince Ogunlana, Legal Intern, Koranteng & Koranteng Legal Advisors
Registrar-General To Delete Dormant Companies From Register
From 1963 till date, the Registrar-General’s Department has registered over 1.2 million companies. Over time, some of these companies have become dormant or have ceased operations altogether. However, their names remain in the Register of Companies. The Department estimates that there may be up to 740,628 inactive companies on their roll. It has therefore decided to embark on a cleanup exercise to delete dormant companies from the Register.
On 18th March 2021, The Registrar-General’s Department issued a Final Notice to all Directors, Shareholders, and Company Secretaries of Public/Private Companies Limited by Shares, Private Unlimited Companies, Companies Limited by Guarantee and External Companies on its intended delisting dormant Companies from the Companies database. This notice comes on the heels of two earlier ones published on 12th May and on 1st December, 2020 in the National Dailies and the Department’s website respectively. Companies therefore have between now and 30th June, 2021 to comply with this directive.
Apart from the dormant companies that were registered before 2011, there are some companies that were registered more recently who have never filed their Annual Returns before or re-registered with the Department since the new Company database (eRegistrar) was created. Those companies are also not in good standing with the Department.
Under Section 289 of the Companies Act 2019, (Act 992) a company can be stricken off the Register due to the failure to its Annual Returns on time or due to a change in the Company’s Registered Office and Principal Place of Business without notifying the Registrar of Companies timeously.
After the expiration of the 3 month from the date of the Notice, i.e by 30th June 2021, the names of the Companies/Partnerships that have still failed to comply with the moratoriums granted would have their names stricken off the Register and the company dissolved.
Find the full press release on RGD’s notice to delete dormant companies from the Register of Companies here Press Release
Find the list of impending companies to be deleted at www.rgd.gov.gh at the bottom of the news page