Multilateral debt component of the external debt stood at $7.9 billion at the end of September 2020, data from the Bank of Ghana.
This is an increase of $117.31 million (1.5%), compared to the level of $7.81 billion recorded at the end of the second quarter of 2020. The debt was expected to have shot up in the full year of 2020 due to the covid-19 impact on the economy, which resulted in increased borrowing from the bretton wood institutions
The multilateral institutions include the World Bank, the International Monetary and African Development Bank.
According to the Bank of Ghana, the multilateral debt accounted for 32.7% of the total debt stock at the end of the third quarter of 2020.
However, debts owed the International Capital Market stood at $10. 2 billion, representing the highest percentage share of 42.1% of the total external debt stock as of the end of September 2020.
This is compared to 37.9% for the same period in 2019. This stock position depicted a marginal decline of $15.99 million (0.2%) compared to the level of $10.2 billion registered at the end of the previous month.
The bilateral component of external debt stock for the third quarter of 2020 was $1.23 billion and represented a share of 5.1 percent of the total external debt stock, compared with 5.9% for the same period in 2019.
On the other hand, commercial debts at the end of September 2020 totalled $2.2 billion, and constituted 9.4 percent of the total external debt stock.
This was $57.87 million, 2.6% higher than the level of $2.2 billion recorded in the second quarter.
Other concessional debts totalled $1.62 billion at end of the third quarter and constituted 6.7% of the external debt stock.
This indicated a decline of $26.69 million (1.6%) compared with the previous quarter’s position of US$1.65 billion.
Covid-19 spending pushes Ghana’s debt to GH¢286bn
Ghana’s public debt stock jumped from GH¢274.1 billion in September 2020 to GH¢286.9 billion in November 2020, according to the latest Bank of Ghana’s Summary of Economic and Financial Data.
This is equivalent to $50.2 billion and represents 74.4 percent of Gross Domestic Product (total value of goods and services produced in an economy within a period).
According to the data, the external component of the debt stood at ¢139.6 billion ($24.4 billion), about 36.2% of GDP.
Ghana and the United Kingdom have signed a new interim Trade Partnership Agreement after days of negotiations, ending the Transition Period following the withdrawal of UK from the European Union
The agreement is expected to provide for duty free and quota free access for Ghanaian goods to the UK market and preferential tariff reductions for UK exporters to the Ghanaian market.
According to a statement released by the Ministry of Trade and Industry, “the agreement will enter into effect following the completion of relevant internal procedures required in both Ghana and the UK”.
Earlier this year, UK companies threatened to reject imports from Ghana as the country and Britain failed to reach a trade agreement, post Brexit.
Banana farmers were the hardest hit, losing about 20% of their exports to the UK and could have lost about 70% more if the agreement was not finalized.
The new agreement is said to reaffirm the deep interest of both Ghana and the UK to strengthen their longstanding trade and economic relationship.
The agreement also reflects the importance of integration between the West African States within the context of the Economic Community of West African States (ECOWAS) and amongst African States within the context of the African Continental Free Trade Area.
More than 15,000 direct and indirect jobs are currently being affected negatively due to the failure of Ghana and UK to sign a post Brexit trade agreement that allows Ghanaian fruit producers’ tariff free access to the UK market as exists under the Economic Partnership Agreement (EPA).
Ghana and UK failed to finalize a trade agreement before the end of the BREXIT transition on December 31, 2020. This means exorbitant tariffs for Ghanaian banana, cocoa and other fruit exporters who are now trading under the Generalised Scheme of Preferences (GSP).
For the banana sector, exporters who were previously trading under the Economic Partnership Agreement (EPA) with the EU, without payment of tariffs, now have to pay 95GBP tariff per ton of banana Affected companies that are Fairtrade Certified producers and members of Fairtrade Africa (FTA) namely the network of all Fairtrade Certified Producer Organisations in Africa and the Middle East are: Golden Exotics Limited (GEL), Volta River Estates Limited (VREL) and Blue Skies Company Limited.
These Fairtrade Certified Producer organisations together employ over 5,000 direct workers and create more than 10,000 indirect jobs.
As Fairtrade Certified organisations, these fruit producers ensure safe working conditions, fair wages, protect workers’ rights, and most recently the Banana producers have committed to working progressively towards paying living wage to workers in the next 3 to 5 years.
The banana producers’ association of Ghana comprises of 3 companies; Golden Exotic Limited, Musahamat Farm Limited and Volta River Estates Limited situated in the Greater Accra and Eastern regions with a surface area of about 2,500 hectares and a workforce of about 4500.
These companies also provide an additional 10,000 indirect employment. The industry has been actively exporting bananas for the past 26 years to the EU market to which the UK belonged until BREXIT came into force as from 1st January, 2021.
Two of these companies are Fairtrade certified and altogether, the three companies export about 85,000 MT of bananas annually with about 60% of exports going to the UK market. Fairtrade bananas exported to the UK are considered a premium product that allow companies to earn social premiums that help to improve infrastructural development in local communities where the companies and its employees are located.
The currently delay by the Ghanaian and UK governments in concluding and signing an agreement to allow tariff free access of these producers to the UK market means an increase in the cost of their business resulting from significantly high tariffs they have been required to pay since 1st January, 2021.
The Golden Exotics Limited (GEL), which exports around 45,000 tonnes of Fairtrade and organic bananas to the UK each year, had to pay a £17,000 duty on its first post-Brexit shipment to arrive in the UK this year. Ghana’s Volta River Estates Limited (VREL) plantation exports around 9,500 tonnes of Fairtrade-certified bananas to the UK each year for sale at Co-op and Waitrose supermarkets.
Banana is a perishable product with a strict weekly export regime – Fairtrade members are bound to pay these exorbitant tariffs on a weekly basis. It had to pay a duty of £16,000 on weekly shipments of nine containers of bananas.
An additional £53,000 has been paid for three more deliveries since then. The introduction of these new tariffs therefore puts a heavily unsustainable burden on these companies.
Anthony Blay, Director of Agric, VREL said: “Volta River Estates exports about 85% of its volume to the UK, having developed long term trade relation with the COOP and Waitrose supermarkets. The company cannot survive this level of tariffs even in the short term, putting the jobs of its 700 direct employees at risk”.
George Kporye, Golden Exotics’ Corporate Affairs Manager added that the tariffs should be waived in the interim and the deal concluded in days, rather than weeks. “We had to reduce the volumes because of the uncertainties of reaching a deal on time,” he said.
Ghanaian banana exporters risk losing their market to other African exporters who were able to broker some transitionary agreement with the UK before the deadline and are therefore not subject to duty payment. Most Latin America banana exporting countries also reached a deal with the UK.
Exports from Ghana can therefore not compete with these other origins at the current rate of tariffs, needlessly threatening the survival of an otherwise successful industry. This situation is applicable to related industries like canned tuna, cocoa processing, processed fruits/salads, pineapple etc., with the UK being a major destination.
The resultant effect of the rising cost of business for these companies as a result of these tariffs is that new jobs would not be created, some current jobs would be lost and efforts made towards ensuring workers in Fairtrade farms earn a living income would be thwarted.
This situation coupled with the impact of Covid19 makes the situation even precarious Fairtrade Africa welcomes the joint announcement by the Ghanaian Ministry of Trade and the UK Department of Trade earlier this month that an agreement has been reached to allow tariff free access, however we call on both the UK and Ghanaian governments to immediately sign an agreement to bring this into effect.
Fairtrade Africa also requests that exporters be compensated for the tariffs already paid as it will be unfair for them to bear the brunt of the two governments delay in finalising an agreement.
Thirdly, Fairtrade Africa requests that the government of Ghana involves all key stakeholders especially the producers in the negotiation process and ensure they are fully and speedily informed on the negotiation process.
These requests will collectively ensure that jobs are not only protected or secured but that new jobs are created and that Fairtrade plantations can keep to their commitment to paying workers a living wage.
Fairtrade Africa is committed to supporting its members by advocating to remove bottle necks in trade that impact negatively on livelihoods. Working together with all stakeholders across different sectors both in public and private sector, we ensure that our member organisations thrive in order to support their workers and communities.
The African Union has transferred all functions related to the African Continental Free Trade Area (AfCFTA) Agreement from Addis Ababa, Ethiopia to Accra, Ghana.
The decision of the 13th Extraordinary Session of the Heads of State and Governments, positions Ghana as a gateway to trade and investment in Africa.
Secretary-General of AfCFTA, Mr Wamkele Mene, speaking at a Business Forum at the commencement of AfCFTA Trading in Ghana: Implementation Arrangements, said the AfCFTA Secretariat in Ghana was not only a symbol of confidence in the country but also signalled that Ghana was the commercial and trade Centre of Africa.
The transfer was recommended by the Secretary-General of AfCFTA.
We now have 54 countries out of 55, who have signed the Agreement with 34 depositing their instruments of ratification, Nigeria being the 34th country on the morning of December 5, 2020. Ghana was one of the first countries to sign and ratified the Agreement.
AfCFTA is a free trade area founded in 2018, with trade commencing as of 1 January 2021.
It was created by the African Continental Free Trade Agreement among 54 of the 55 African Union member nations.
The free-trade area is the largest in the world in terms of the number of participating countries since the formation of the World Trade Organization.
Accra, Ghana serves as the Secretariat of AfCFTA and was commissioned and handed over to the AU by President Nana Akufo-Addo on August 17, 2020 in Accra.
He said through the AfCFTA, Accra, Ghana had been established as a trade and commercial diplomacy capital of the Continent.
He said the Secretariat gave practical meaning to Ghana’s long standing ideals to Pan-African.
“I am truly proud to be part of the historic journey that Ghana has begun to pioneer for the African continent,” he said.
He informed that the Secretariat was determined to eliminate tariffs and non-tariffs barriers on trading in Africa, because African countries were collectively undertaking commitments to liberalise significantly by eliminating tariffs by 97 per cent.
Mr Mene commended government and the people of Ghana for their commitment and dedication to the implementation of the Agreement.
He said by organising the forum, Ghana continued to lead and to affirm her commitment to an integrated market on the African continent.
He said January 1, 2021 was a historic day for the African continent and that day the Continent took a step closer to a vision of an integrated Africa and boosting intra-African trade and eventually creating a single market.
“We have embarked on a journey of making the AfCFTA work for Africa and make it work for small businesses, women in trade and young Africans,” he added.
Mr Alan Kyerematen, Minister of Trade and Industry, commended President Akufo-Addo for his commitment to the implementation of the Agreement.
He said as a Ministry, they had built a solid and sound foundation for the operationalisation of AfCFTA in Ghana.
He informed that the Ministry had conducted a series of sensitization and orientation programmes for the private sector to take advantage of opportunities.
He said the Ministry had established the National Coordination Office to provide management support for the implementation of the programme.
“We have also developed a National Action Plan or Programme, which provides detailed activities to support the private sector,” he said.
Mr Kyerematen said they had also under the direction of the President installed an institutional support structure to ensure the success of the programme.
The Minister said at the base of this structure was the technical working groups to assist the private sector in various areas of implementation.
Participants were taken through topics like Exporting and importing under AfCFTA-Process Flow, Opportunities for AfCFTA Trading for SMEs in Ghana using E-Commerce and Market Opportunities under AfCFTA
The World Bank has revised Ghana’s growth rate, cutting it to a staggering 1.4% for this year, according to its latest Global Economic Prospects Report.
According to the Bretton Wood institution, the expected resilience in agriculture will not be sufficient to offset the covid-19 pandemic’s lingering adverse impact on the oil and other sectors of the economy.
“In Ghana—the region’s fourth largest economy—the expected resilience in agriculture will not be sufficient to offset the pandemic’s lingering adverse impact on oil and other sectors. As a result, the growth forecast for 2021-22 has been downgraded”, it emphasised.
The Gross Domestic Product (GDP) growth rate will be lower than the expected 2.7% rate for Sub Saharan Africa.
Though it had earlier forecast a growth rate of more than 4.0% for this year, the staggering sharp review of Ghana’s growth rate will come as a major concern to policy makers and businesses.
It is however not too surprising because of the existence of the coronavirus pandemic, which many were expecting to have lessen drastically by this time around.
The other worry for Ghana is that all its neighboring countries will grow strongly with Ivory Coast expected to record 5.5% GDP.
The World Bank also reviewed the country’s GDP for last year to 1.1% despite the economy entering into a mild recession in the third quarter of this year.
The economy is however expected to grow at a modest rate of 2.4% next year.
Additionally, the World Bank said the coronavirus pandemic caused an estimated 6.1% fall in per capita income last year in Ghana and many Sub Saharan Africa nations, and is expected to lead to a further 0.2% decline this year, before firming somewhat next year.
The resultant decline in per capita income is expected to set average living standards back by a decade or more in a quarter of Sub-Saharan African economies.
Sub Saharan Africa growth rate
Output in Sub-Saharan Africa contracted by an estimated 3.7 percent—a per capita income decline of 6.1% and the deepest contraction on record—as the COVID-19 pandemic and associated lockdown measures disrupted activity through multiple channels.
The World Bank said “the hardest hit countries were those with large domestic outbreaks, those heavily dependent on travel and tourism—which virtually slowed to a near complete halt—as well as commodity exporters, particularly of oil. Although a few countries have managed to slow some large outbreaks (Ethiopia, Kenya, South Africa), outbreaks persisted in the second half of 2020 in several countries with little sign of abating.
Excluding Nigeria and South Africa, growth in these economies is forecast to average 2.8% in 2021-22, following 3.4% contraction last year.
“Although metals prices recovered somewhat in the second half of 2020, oil prices remain well below 2019 levels, weighing on the pace of recovery in oil-exporting economies (Angola, Chad, Republic of Congo, Equatorial Guinea, Gabon, Ghana)”, the report emphasised.
Economy contracted in Quarter 3
Ghana’s economy contracted again for the second consecutive period in the third quarter (-1.1%) of 2020, but at a lower rate than in the second quarter.
This is however compared with a Gross Domestic Product (GDP) growth rate of 5.6% the same period last year. The Agriculture sector recorded the highest growth of 8.3%, whilst Industry and Services sectors contracted by -5.1% and -1.1% respectively.
According to figures from the Ghana Statistical Service, the economy with oil contracted by 1.1%, but grew by -0.4% without oil.
The Agriculture sector recorded the highest growth of 8.3%, whilst Industry and Services sectors contracted by 5.1% and 1.1% respectively.
President Nana Addo Dankwa Akufo-Addo has said he will work with all stakeholders to protect the peace of the country following the December 7 elections.
Speaking at a Thanksgiving service organized by the NPP today, Sunday, December 27, 2020, the president said looking beyond party affiliations is one of the major avenues by which this feat can be achieved.
“I want to thank the people of Ghana for maintaining their confidence in the leadership of our nation,” he said on Sunday.
He further promised to pursue a path of an all all-inclusive governance in developing the nation regardless of political differences.
“I also want to assure the 6.2 million people who didn’t vote for me that I will have their interest at heart and in mind in all that I do,” he said.