2019 has turned out to be a most eventful year, for both good and bad reasons. Since far too much happened to recount at once, GOLDSTREET BUSINESS’s editorial team is serializing some of the key things that happened during the year. In this first part we recount significant happenings with regards to the aviation sector, tourism, financial services, tax administration and free trade. We will continue at the start of 2020.
Aviation Sector
Ghana continues partnership with Ethiopian Airlines
Following the March 10, 2019, airplane crash involving Ethiopian (ET) Airlines 737-Max 8, government assured that the country would still continue in its partnership with ET on setting-up the home-based carrier.
In December 2018, the government had signed a Memorandum of Understanding (MoU) with ET on the establishment of a home-based carrier, which would eventually see ET with about 49 percent shareholding in the Airline, if no other investor approaches.
Gov’t further renegotiates T3 interest down
Following the successful renegotiation of the loan secured for the construction of Terminal 3 (T3) at the Kotoka International Airport (KIA), government in March 2019 resolved to further reduce the cost of the loan, even as those who contracted it in the first place were defending the rate at which it was originally taken.
Construction of Northern Apron and GCAA Headquarters begins
The construction of a new the Kotoka International Airport’s (KIA) Northern Apron project as well as the headquarters for the Ghana Civil Aviation Authority (GCAA) kickstarted following the groundbreaking ceremony by the Aviation Minister, Joseph Kofi Adda, in March 2019.
The two projects are expected to be completed within 24 months.
Ghana achieves highest aviation safety rating in Africa
In April 2019, Ghana obtained a provisional Effective Implementation (EI) rate of 89.89 percent, the highest to be scored by an African country.
This followed the successful conclusion of the Coordinated Validation Mission (ICVM) on 3rd April, in line with the United Nations Aviation Agency’s Universal Safety Oversight Audit Programme (USOAP).
T3 Departure Hall restricted to travelers, official business
In May 2019, the Ghana Airports Company Limited (GACL) issued a statement restricting access for only travelers and official business to the Terminal 3 of the Kotoka International Airport.
This meant that passengers with valid traveling documents, their escorts, and persons intending to do formal airport-related business were allowed access to the Terminal 3 of KIA.
Gov’t moves to protect consumers of air transport services
To ensure the safety and protection of the right for airline passengers, the government in June 2019, issued the Consumer Protection Directives and Passenger Rights.
The directive covers the rights of passengers in cases of Delays, Cancellations, Denied Boarding and Baggage Liability for both domestic and international flights.
Consumer rights generally and traditionally have been about ensuring fairness between the consumers and the service providers, as this is an important function of the government.
Ghana, Ivory Coast collaborate on aviation front
In August 2019, the Minister for Aviation, Joseph Kofi Adda revealed that Ghana and Ivory Coast are collaborating to address major impediments in the area of aviation, that will bring about a major change in the operations of aviation in the sub-region.
This collaboration is in a bid to ensure a comprehensive approach to resolve a key issue of fuel cost, as well as other taxes that impede on opening up the aviation sector across the region.
Air Namibia suspends operations in Ghana
For a second time, Air Namibia suspended its operations in Ghana. This was revealed by the High Commissioner of the Republic of Namibia, Charles B. Josob.
This followed barely five months after when the Airline announced its return to the country aviation sector in March 2019.
AWA-ASKY-Ethiopian bring seamless travel to Ghanaians
Africa World Airlines (AWA), ASKY Airlines and Ethiopian Airlines teamed-up to provide passengers with seamless and stress-free air travel within the West Africa sub-regional and various international routes they serve.
Ghana receives 2 ICAO prestigious awards
In September 2019, Ghana was awarded two International Civil Aviation Organization Council President certificates for maintaining one of the highest aviation safety and security standards Globally at the ICAO 40th assembly in Montreal.
The safety award was in recognition of Ghana obtaining Africa’s highest score in Aviation Safety Oversight after scoring a provisional Effective Implementation (EI) rate of 89.89 percent.
Commercial flights to Wa Airport commence
It was announced that commercial flights were to commence at the Wa Regional Airport on October 15, 2019, following completion of the airport in 2018.
This follows the rehabilitation of the airport and associated works that seek to open up the country for effective movement of people, goods and services as well as tourism.
Financial Sector
New forex market directive takes off
In an era when the Cedi is struggling to stabilize with the US dollar, the Bank of Ghana (BoG) issued a directive on how participants in the forex (FX) market should conduct their operations, effective from February 25, 2019.
These rules were issued under Section 92(1) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), the Foreign Exchange Act, 2006 (Act 723).
Stock market performance remains sluggish for most of 2019
Performance of the Ghana Stock Exchange (GSE) in most of 2019 was unimpressive compared against the performance in 2018.
Both the GSE Composite Index (GSE-CI) and the GSE Financial Stock Index (GSE-FSI), used to measure the performance of the market recorded a continuous downward movement until the last month of the year.
BoG holds policy rate at 16%
The Monetary Policy Committee of the Bank of Ghana in its latest review of the economy in January reduced the policy rate by 100 basis point to 16 percent from 17 percent.
This has been maintained throughout the rest of the year.
BoG completes banking sector clean-up
In August 2019, The Bank of Ghana (BoG) announced that it had completed the clean-up of the banking, specialized deposit-taking (SDI), and non-bank financial institutions (NBFI) sectors which began in August 2017.
This followed the revocation of the licenses of nine universal banks, 347 microfinance companies, (of which 155 had already ceased operations) 39 micro credit companies or money lenders, (10 of which had already ceased operations) 15 savings and loans companies, eight finance house companies, and two non-bank financial institutions that had already ceased operations.
The central bank noted in a statement assured that it is committed to ensuring that the banking, SDI, and NBFI sectors remain resilient, inclusive, and supportive of Ghana’s economic growth trajectory.
It also revealed that there would no mass liquidations in the rural and community banks sector. Rather, the BoG is collaborating with the ARB Apex Bank to clean up the balance sheets of the existing RCBs.
Tax collection in 2019
Several tax initiatives intended to protect revenue and to broaden the scope of tax were included in Ghana’s budget for 2019.
The tax measures in the budget include the following proposals:
- The highest individual (personal) income tax rate band would be reduced from 35 percent to 30 percent; however, the threshold subject to the highest rate would increase from GHc10,000 to GHc20,000.
- The band for tax-free individual (personal) income tax would target income earned by certain minimum wage earners.
- To simplify the collection of withholding tax for both small-scale mining operators and the tax authorities, the point of collection of the tax would shift to the point of export.
- The tax authority could implement enhanced revenue mobilisation.
- Actions would be brought against habitual defaulting taxpayers.
- Use of automated tax collection systems would effectively enhance the collection of certain indirect taxes.
The initiatives proposed by the budget in 2019, were aimed at creating a conducive atmosphere for businesses to operate in order to boost the Ghanaian economy. There are six strategic pillars on which the budget was underpinned:
Facilitating infrastructural expansion with a focus on land, sea and air transportation systems, water, health infrastructure, housing, communication facilities, and educational infrastructure, among others.
Modernising agriculture aimed at boosting production and reducing dependence on imports for food. A significant programme is the ‘Rearing for food and jobs’ with the objective of increasing the production of selected livestock. There were proposals to invest in increased irrigation, adding value to cocoa, as well as establishing the Ghana Commodity Exchange aimed at linking agricultural producers to traders. The Exchange was indeed established during the year.
Industrialisation plans targeted at value-added to agricultural
produce and natural resources, developing agro-processing through the 1D1F. The plans also include developing bauxite reserves to build the aluminium industry and developing a petrochemical industry.
Entrepreneurship aimed at boosting the private sector and creating an enabling environment for businesses to thrive. This includes easing the process of doing business in Ghana, attracting foreign investment and strengthening Ghana’s trade links.
Strengthening domestic revenue mobilisation by enforcing the Tax Identification Number (TIN) system, revamping operations of the Ghana Revenue Authority and ensuring that revenues are collected efficiently.
Strengthening social intervention by continuing with the free Senior High School policy, and including informal workers in the social security scheme.
Tax Initiatives
Several tax initiatives were introduced, aimed at protecting the public purse and broadening the tax net.
Review of the Personal Income Tax Band –The highest personal income tax rate band was reduced from 35% to 30%. The threshold of monthly chargeable income affected by the highest tax band was increased from GH¢10,000 to GH¢20,000 respectively.
Relief from Tax for Minimum Wage Earners – The tax-free personal income tax band was increased to rope in income earned by minimum wage earners, which hitherto exceeded the tax-free band.
Withholding Tax on Small Scale Mining: In order to simplify the collection of withholding tax for both small-scale mining operators and tax authorities, the point of collection of the tax has been shifted to the point of export.
Prosecuting tax defaulters: Punitive actions were introduced against habitual defaulting taxpayers in order to retrieve unpaid taxes.
Facilitating implementation of automated systems: Accelerating the implementation of automated systems such as the Fiscal Electronic Device (FED) to enhance the effective collection of Value Added Tax (VAT) and the Excise Tax Stamp Policy in order to minimize human interference in tax administration.
Broadening tax net – Leveraging on enforcing the Tax Identification Number (TIN) by making it mandatory for state and private entities to administer this measure. Enforcement measures include ensuring that TINs are prerequisites to accessing social services like free healthcare, free SHS policy, and others like vehicle licensing and registration, passport services, banking services and mobile money services.
Review of tax exemptions and reliefs – Embarking on reforms to ensure that tax benefits and reliefs are beneficial to the country, both immediately and in the future.
Tourism
The Year of Return
The “Year of Return, Ghana 2019” has been a major landmark spiritual and birth-right journey inviting the Global African family, home and abroad, to mark 400 years of the arrival of the first enslaved Africans in Jamestown, Virginia. While August 2019 marks 400 years since enslaved Africans first arrived in the United States, “The Year of Return, Ghana 2019” has celebrated the cumulative resilience of all the victims of the Trans Atlantic slave Trade who were scattered and displaced through the world in North America, South America, the Caribbean, Europe and Asia.
The Ghana Tourism Authority(GTA) under the auspices of the Ministry of Tourism, Arts, and Culture has led the project in collaboration with the Office of Diaspora Affairs at the Office of the President the PANAFEST Foundation and The Adinkra Group of the USA.
One of the main goals of the Year of Return campaign was to position Ghana as a key travel destination for African Americans and the African Diaspora as in this considerable success was achieved. In 2019, the events held throughout the year served as a launch pad for a consistent boost in tourism for Ghana in the near and distant years. Beyond tourism, this initiative has supported one of the President’s key developmental agendas in Ghana Beyond Aid by proving that tourism can be a leading indicator to business and investment.
Free Trade
The Gambia was the 22nd country to ratify the Africa Continental Free Trade Area (AfCFTA) agreement in April 2019 which officially brought the agreement into fruition, setting the grounds for processes to start for implementation.
This set the ground for implementing the agreement and in July this year, the African Union (AU) Commission, stakeholders and Member Countries converged in Niger to launch a five operational instrument to govern phase 1 of the agreement.
The five operational instruments are Rules of Origin, which will determine the eligibility of goods to be traded under AfCFTA as well as modalities such as protection of infant industries and an online negotiating forum to enable member States spearhead the success of the policy.
The remaining are: an online mechanism for monitoring and elimination of non-tariff barriers and AfCFTA mobile application for businesses; digital payments system for goods and services; a Pan-African payment and settlement system; and dashboard of the AU Trade Observatory all of which are expected to accelerate the implementation of the AfCFTA.
In August 2019, the AU and its stakeholders met in Accra and developed three protocols needed to be implemented to safeguard the second phase of the agreement. The protocols are investment policy, competition policy and intellectual property.
Most importantly, African Ministers of Trade and key stakeholders in December in Accra finalized processes to be implemented in phase one roll out of the agreement. This was during Specialized Technical Committee (STC) of Ministers of Trade, Industry and Mineral Resources (TIM), of the African Union who discussed key issues on areas such as trade in goods and services protocols as well as dispute settlement mechanisms.
Once in force, the AfCFTA aims to increase intra-African trade by 52 percent by the year 2022, remove tariffs on 90 percent of goods, liberalise services and tackle other barriers to intra-African trade, such as long delays at border posts.
