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Chipper Cash gets Bank of Ghana approval for US remittances

by Radarr Africa
written by Radarr Africa

Chipper Cash, an African cross-border payments company, has received authorization from the Bank of Ghana (BoG) to provide remittance services from the United States of America to the country.

The approval follows on the heels of the fintech being granted an Enhanced Payment Service Provider License by the BoG to begin commercial operations in Ghana last August.

In an interview, the Chief Executive Officer of Chipper Cash in Ghana,  Mr Dion Jon Taylor Samson said his outfit was delighted to have received the approval.

He added that Chipper Cash would comply with all the regulations associated with providing the inward remittance service which was a major contributor to national income.

He said: “It is important for us fintechs to continuously work with the Central Bank not only to fully comply but also to make them aware of all our activities so that they may share in our vision and also provide advice and guidance”.

Source: Business Ghana

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Bank of Ghana to sell $420m to BDCs in the final quarter of 2022

by Radarr Africa
written by Radarr Africa

The Bank of Ghana will sell a total of $420 million to Bulk Oil Distribution Companies via banks in the final quarter of this year, in its Foreign Exchange Auctions.

This is higher than the amount it sold to the BDCs in the 3rd quarter of this year.

According to the auction calendar, $120 million each will be sold in October 2022, November 2022 and December 2022 respectively.

However, in the month of September 2022, only $60 million will be auctioned

As usual, there will be bi-monthly sale of $60 million each in October 2022, November 2022 and December 2022 respectively.

This improved sale of the American ‘greenback’ is expected to boost dollar supply in circulation and help slow down the depreciation of the cedi.

It will also boost supply of forex to BDCs and thus enhance supply of petroleum products into the market.

The cedi had been under severe pressure since the beginning of the year, following the downgrade of Ghana’s credit rating by rating agencies – Fitch, Moody’s and S&P.

However, the expected $1.5 billion Cocoa Syndicated Loan coupled with other measures by the Bank of Ghana had helped reduce the immense pressure on the local currency.

Already, the Central Bank had taken action against forex bureau operators flouting the foreign exchange law to curb illegal transactions by some operators.

The Bank of Ghana said in accordance with regulation, the Bulk Oil Distribution Companies (BDCs) Forex Forward Auction will be governed by the guidelines published and available on the Bank of Ghana website.

The Bank of Ghana introduced the sale of dollars to BDCs some months ago to avert the supply of dollar shortage to the firms, and consequently fuel scarcity in the country.

BoG sold $150m to authorised dealers in quarter 3, 2022

During the last quarter of 2022, the Bank of Ghana sold only $150m to authorized dealers.

This was far lower than the $350 million sold in the second quarter of 2022.

That was a period in which demand for dollars far outstripped supply, indicating dollar liquidity in the system.

Source: My Joy online

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Ghana dollar auction: demand exceeds supply by $84.5M

by Radarr Africa
written by Radarr Africa

Demand for dollars by dealers outstripped supply by $84.5 million, latest data from the Bank of Ghana has revealed.

This is a reduction of the $105.25 million recorded during the last auction a fortnight ago.

According to the result of the sale of dollars through the Forex Forward Rates Auction to dealers, the Central Bank was only able to supply $25 million to the dealers, largely the banks.

The bids submitted for the purchase of the American ‘greenback’ was estimated at $109.5 million, compared with $130.25 million two weeks ago (August 9th, 2022).

From the results, it appears the high demand for the US dollars will end anytime soon. This indicates why the cedi has come under severe pressure lately, losing more than 34% in value to the American ‘greenback’.

$56.25 million of the 7-day tenor was the highest bid by the dealers, followed by $30 million for the 15-day tenor.

The 30-day tenor received bids worth $18.75 million, whilst the 45-day tenor received bids amounting to $4.5 million.

No bids were received for the 60-day and 75-day.

The highest number of bids submitted by the dealers was for the 7-day bill in which 64 bids were made.

The least was the 45-day bill whereby 8 bids were submitted.

Source: My Joy online

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GUTA threatens to close shops over Cedi depreciation

by Radarr Africa
written by Radarr Africa

Members of the Ghana Union of Traders Association (GUTA) will on Monday close all shops in the Greater Accra Region to express their displeasure about the depreciation of the Cedi against other major trading currencies.

Also, all clearing agents have been instructed, to halt clearing of goods at the ports on that day.

Announcing this at a press conference in Accra yesterday,the president of the group, Dr Joseph Obeng indicated that the rapid and continuous depreciation of the cedi, rise in interest rate and the high inflation rate, among others had caused the collapse of many businesses in the country.

He said the effect of inflation had also drastically reduced consumers’ purchasing power, adding that the inability of consumers to purchase more kept affecting business turnover, adding “we believe that with the mandate and resources given to the government to manage the affairs of the country, they can turn the economy around.”

“We as members of the business community are ever ready to avail ourselves to help government in its quest to find solutions to these myraids of problems,” he added.

Government, as a matter of urgency, he said, must inspire hope and confidence in the system, by way of appropriate policy direction that would improve productivity.

Dr Obeng further urged the government to focus on finding a means to control the excessive demand for foreign exchange in the country.

He explained that one major cause of the excessive demand for forex was the excessive importation into the country with the “overbearing” influx of foreigners in the country’s trading sector which the nation’s investment laws could be used to regulate the menace.

The GUTA president also called on the Bank of Ghana (BoG) to monitor and enforce its regulation of controlling trading with the dollar on the local market, while encouraging businesses to transact with the mainstream banks by relaxing stringent requirement on documentation.

This, he said, would control activities of the black market.

ALSO READ: BoG cautions public against engaging services of 19 unlicensed loan providers

“There should be a clear distinction between the forex bureau and what we call the black market since the forex bureaus are legitimate, we should do everything to streamline their activities to benefit the country. Our businesses are collapsing, we cannot take it any longer,” he stressed.

In furtherance, DrObeng dispelled rumours that traders were the cause of the rising cost of living in the country.

Among other things, he mentioned that the government must also ensure that the compulsory maritime insurance policy was withdrawn and also review a system targeted at increasing duties on the importation of second-hand clothing.

Source: Ghanaian Times

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BoG cautions public against engaging services of 19 unlicensed loan providers

by Radarr Africa
written by Radarr Africa

The Bank of Ghana (BoG) has warned the public not to engage the services of some 19 unlicensed entities for loans.

The Central Bank said the operations of these institutions are in contravention of the Banks and Specialised Deposit-Taking Institutions Act, 2016.

The BoG in a press statement issued on Monday, August 22, revealed that they mostly employ the use of mobile applications and social media in their operations.

The entities which are 19 in number include Sika Purse Quick Online loan, 4Cedi Instant Mobile loan application, Zidisha Online Loans, Ghana Lending Application, AdamfoPa Loan, CrestCash Loan, MobiLoan Application and Cedi Now – Cash Loans Application.

The Central Bank further said “the activities of these unauthorised entities amount to non-adherence of the consumer protection requirements and an abuse of customers’ data and privacy laws”.

ALSO READ: Fidelity Bank Ghana wins two international award

“The Bank of Ghana is taking steps to take action against these entities and hereby advises the general public to desist from doing business with all unlicensed loan providers. Banks and Specialized Deposit-Taking Institutions, as well as payment service providers are advised to facilitate the illegal transactions of the unlicensed loan providers,” it explained.

It advised the public to visit its website www.bog.gov.gh/supervision-regulation/all to see the list of licensed institutions.

Again, it urged the public to report such activities.

Source: Business Ghana

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Goldman Sachs expresses worry over Ghana’s delay in closing IMF deal

by Radarr Africa
written by Radarr Africa

Goldman Sachs, a global investment banking giant has raised concerns about what it describes as “No sense of urgency” by the Ghanaian government in closing a programme with the International Monetary Fund (IMF).

According to the Economic Research wing of the bank, the issue came up during their recent visit to Ghana to engage with authorities on status of a programme.

 “One notable observation was the authorities’ perceived lack of urgency in concluding a programme talks with the IMF,” Goldman Sachs said.

The Investment Banking giant is worried that despite the depleting Balance of Payment, weak cedi and the Fiscal Financing Pressures, experienced by the country, government is not pushed to fast track the discussions

Goldman Sachs in its report to investors according to Myjoyonline.com warned that this might come with some serious consequences for the economy going forward if a deal is not closed soon.

It also argued that the “delayed conclusion creates the risk of further deficit monetisation by the BoG, Cedi depreciation and a decline in foreign exchange reserves, implying that the macroeconomic outlook may deteriorate further in the near term”.

ALSO READ: Fidelity Bank Ghana wins two international award

Goldman Sachs was however quick to add that the concerns namely, currency pressure and the inability to finance the deficit — may serve to increase the sense of urgency and ultimately prompt the authorities to accelerate IMF talks.

Finance Minister, Ken Ofori-Atta, in a recent interview with JOYBUSINESS expressed government’s commitment to an IMF programme as fast track discussions.

Again the Deputy Minister of Finance, Abena Osei Asare, also revealed that Ghana is set to commence discussions with the IMF for a programme from the beginning of September.

Source: Ghanaian Times

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Fitch projects Ghana’s interest cost to exceed 45% of revenue till 2024

by Radarr Africa
written by Radarr Africa

Fitch, a global rating agency, is projecting an interest cost of more than 45% of revenue for Ghana from now till 2024.

It says government interest costs reached 47.5% of revenue in 2021, considerably above the current ‘B’ median of 10.7%.

“Interest costs largely reflect high yields on domestic debt. Yields have climbed higher in 2022, following inflation spikes and monetary tightening by the Bank of Ghana (BoG)”, it mention.

Furthermore, it said “yields on the 91-day treasury bill reached 26% in July 2022, up from 12.6% in July 2021. Moreover, the government has reported under-subscribed yields, necessitating the tapping of existing medium-term issuance”.

It also said the government has increased its outstanding advances with the Bank of Ghana, providing some additional domestic financing and could conduct another private debt placement with the Central Bank as it did in 2020.

However, the rating agency said, such a measure would necessitate parliamentary approval.

Indeed, yields on T-bills have surpassed 27% and that could increase interest cost further.

Interest payments for first 5 months hit ¢17.84bn

The government in the first five months of this year spent ¢17.84 billion to service interest and amortisation on debt, the Bank of Ghana indicated in its July 2022 Monetary Policy Report.

This was higher than the envisioned target of ¢16.54 billion.

Domestic interest payments as of May 2022 accounted for 76.7% of the total interest payments.

Source: My joy online

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Bank of Ghana dismisses reports about freeze on new dollar accounts

by Radarr Africa
written by Radarr Africa

The Bank of Ghana has dismissed reports that it has banned the opening of new dollar accounts in the country.

In a public notice, the Central Bank said it had not issued any directive to local banks in that regard.

ALSO READ: Bank of Ghana raises interest rate to 22%, the highest since 2002

“Public Notice: Bank of Ghana has not issued any directive to local banks to stop the opening of new dollar accounts,” the bank tweeted.

Reports

The reports had claimed that the Bank of Ghana had in a last-ditch measure halted local banks from opening of new dollar accounts for customers without written express permission from the Central Bank.

Source: Business Ghana

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Bank of Ghana raises interest rate to 22%, the highest since 2002

by Radarr Africa
written by Radarr Africa

The Bank of Ghana (BOG) has increased its monetary policy rate (MPR) from 19 percent to 22 percent in a bid to curb inflationary pressures and halt the depreciation of the cedi against the US dollar.

The country’s Central Bank announced the decision in a statement issued after its emergency monetary policy committee (MPC) meeting on Wednesday.

The monetary policy rate (MPR) is the baseline interest rate in an economy, every other interest rate used within an economy is built on it.

The BOG also raised the primary reserve requirement of banks from 12 percent to 15 percent as part of efforts to mop-up excess liquidity in the banking system.

It further announced plans to purchase all foreign exchange arising from the voluntary repatriation of export proceeds from mining, and oil and gas companies to help shore up FX liquidity.

“The committee decided on a 300 basis points increase in the monetary policy rate to 22 percent,” the BOG said in a statement.

“The committee also took the following additional measures: raise the primary reserve requirement of banks from 12 percent to 15 percent to be implemented in a phased manner: 13 percent from 1st September, 2022; 14 percent by 1st October, 2022; [and] 15 percent by 1st November, 2022.

ALSO READ: Ghana emergency MPC meeting: Goldman Sachs predicts 200bp hike in policy rate

“To boost the supply of foreign exchange to the economy, the Bank of Ghana is working collaboratively with the mining firms, international oil companies, and their bankers to purchase all foreign exchange arising from the voluntary repatriation of export proceeds from mining, and oil and gas companies. This will strengthen the central bank’s foreign exchange auctions.”

The bank added that its ongoing policy discussions with the IMF are expected to address the underlying macroeconomic challenges, restore fiscal and debt sustainability, and provide a sustainable balance of payments cushion.

Source: Thecable

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Ghana emergency MPC meeting: Goldman Sachs predicts 200bp hike in policy rate

by Radarr Africa
written by Radarr Africa

Goldman Sachs, a global investment and research firm, has predicted that the Bank of Ghana (BoG) will raise its policy rate by 200 basis points (bp) on Wednesday when it concludes an emergency Monetary Policy Committee (MPC) meeting called to respond to the current economic challenges.

The firm said in a research update issued today (August 16, 2022) that the central bank would raise the rate from the current 19 per cent to 21 per cent in an attempt to calm the turbulence in the foreign exchange (FX) market and help ease inflationary pressures.

It said the cedi had so far lost more than 50 per cent of its value and a rate hike could help ease the pressure.

The seven-member MPC, chaired by the Governor of BoG, Dr Ernest Addison, last stayed the rate at 19 per cent in July 2022, citing the need to stimulate growth at a time when inflationary pressures were easing.

Emergency meeting

The Goldman Sachs update was in response to an earlier notice from BoG that it will undertake an emergency MPC meeting Wednesday (August 17, 2022) to review recent developments in the economy.

The notice, issued last Monday, said the meeting would conclude with the announcement of the decisions of the committee.

Cedi’s challenges

In its research update, Goldman Sachs said the meeting came after an acceleration in the pace of depreciation of the cedi in the past two weeks.

It said the local currency lost almost 10 per cent of its value to the United States (USA) dollar in the past two weeks, amounting to a cumulative 50 per cent currency depreciation year-to-date.

“In our view, inflation and financial stability risks, stemming from this FX weakness, combined with the challenging domestic financing environment for the government, which has led the BoG to begin monetising the deficit have prompted the call for this meeting.”

“We expect the MPC to announce a 200bp policy rate hike to 21 per cent,” it said.

‘Dovish surprise’

Goldman Sachs said it noted a meaningful upside risk to its forecast, given the extent of FX and domestic financing pressures. It recalled that the MPC maintained the policy rate at 19 per cent at its July meeting, on account of growth headwinds and slowing sequential inflation prints.

It described the decision as “a dovish policy surprise.”

According to the firm, the consensus at the time was for the rate to be hiked to 20 per cent minimum or 21 per cent maximum.

“Since then, headline inflation (year-on-year) surprised to the upside in July and was stable in sequential terms at plus 3.1 per cent on month-on-month (37.2 per cent in annualised terms), a very elevated rate relative to the BoG’s target or eight per cent or 10 per cent.

Lack of urgency

Goldman Sachs also said it noticed some lack of urgency on the part of the government in clinching a deal from the International Monetary Fund (IMF) quickly to stabilise the economy.

“In our recent trip to Accra, one notable observation was the authorities’ perceived lack of urgency in concluding programme talks with the IMF (with locals expecting a six to nine-month timeframe), in spite of intensifying balance of payments (BoP), FX and fiscal financing pressures.

“We have argued that a delayed conclusion creates the risk of further deficit monetisation by the BoG, cedi depreciation and a decline in FX reserves, implying that the macroeconomic outlook may deteriorate further in the near term,” the investment and research firm said.

ALSO READ: Bank of Ghana convenes emergency MPC Meeting

Accelerate IMF talks

It, however, noted that the currency pressure and the inability to finance the deficit could serve to increase the sense of urgency and ultimately prompt the government to accelerate IMF talks.

“In this regard, we will look for any update from BoG on IMF talks in its communique following tomorrow’s unscheduled rate-setting meeting,” the update concluded.

Wednesday’s emergency MPC meeting will be the second of its kind since 2020, when an earlier-than-usual one was called in March for the bank to respond to the emerging economic disruptions that followed the emergency of COVID-19 cases in the country and Africa as a whole.

Source: Business Ghana

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