Ghana’s drive to digitisation

How do you view the economic environment for investors in Ghana?
Overall, the macroeconomic environment is stable. When it comes to Ghana’s S&P rating, we have moved from B- to B. The IMF’s support programme for Ghana just ended last April, and that pushed the government to be responsible spending-wise, to look out for increased revenue and to stay within budget.
Inflation has dropped from about 15% to 7.8%, and for 2020 the government projects 8%. The country’s deficit financing moved from 10% to below 5%, and the government enshrined a budget deficit ceiling of 5% in law. Our 2019 GDP shows one of the fastest rates of growth in the world at 7.6%. These indicators will create confidence for economic activities and give businesses a sense of economic predictability.
On the fiscal side, the government has no plans for introducing new taxes in 2020 but will look for innovative ways of increasing tax revenue, including digitising its processes. The government will consolidate existing ones and increase its net tax income. On the monetary policy side, the exchange rate is one of the major issues. We import a lot and borrow in forex to do so, which tends to affect the stability of the cedi. But interest rates from commercial banks have come down from 18% to 16%, which increases lending opportunities for businesses.
In the last two years, Ghana has also implemented banking reforms and the licences for banks that could not meet the minimum capital were revoked.
A new company’s act has been passed. This is to streamline business operations in the country and to ensure current trends in the business environment are captured in legislation.

How strong and resilient are Ghana’s institutions today?
Strong institutions need strong leadership. The decision by the central bank to revoke the licences of nine banks and to close 347 savings institutions and 23 micro-finance institutions was not an easy one. Having done that, they are now looking at the issues that caused these problems within these institutions. A law has also been passed to oversee the operations of the central bank. Those bold steps will build stronger institutions and that will create continuity.
In other areas of governance, we realised that we need to make changes to leave a sustainable legacy. The vice-president decided that we should enhance efficiency at the ports so we could bring in goods faster, so he led a digitisation effort there. In the 2020 budget, the government will look at technology, efficiency and transformation of the Ghana Revenue Authority. These are examples of what the government is trying to change.

What measures have been taken to attract financial sector players to the energy industry?
There were two major factors restricting local financial institutions from getting into oil and gas. One was the required capital levels, which stand at around GHC 120 million, equivalent to about USD 25 million. By law, companies cannot invest more than 25% of their total capital as part of one deal, which may not be sufficient for oil and gas-related projects.
Financial institutions had to adapt by partnering with other players in the industry in order to take on big ticket transactions. But the central bank has increased the minimum capital for banks to about USD 80 million and now participation in the sector has become more attainable.
Another bottleneck involved government subsidies, debt and energy sector levies. The government’s energy sector reforms of 2015 addressed these problems, and the combined effect of these measures enabled banks to extend more credit and to support larger transactions.

How developed is Ghana’s infrastructure?
Our infrastructure is moderate, but we are tackling it in bits and pieces. In transport infrastructure, Kotoka International Airport in Accra is easily accessible. For roads, there is an emphasis on the highways linking the main cities to facilitate the movement of goods and people, while rural community roads remain very rudimentary. The challenge is that rural roads are the responsibility of the local authorities, but they do not have the skills and capacity to raise funds.
In terms of railway infrastructure, the government has begun revamping the railways as an alternative to roads. The old railway had broken down, but if we are consistent with this new focus on rail, we should start to see an improvement in this area.
When it comes to telecommunications, this area has been opened up to allow the private sector to come in, and today you have MTN running 4G, two others running 3G and access to the internet almost everywhere. The government is working with the World Bank to get a grant to build infrastructure in almost every part of the country, and last year [in 2018] banks partnered with the government on an interoperable e-business platform to support mobile financial transactions.
Regarding our hydrocarbons infrastructure, we continue to face challenges in terms of costs. Ghana is exporting power to neighbouring countries, but the distribution lines and infrastructure still need to be enhanced. In the area of gas, we are not fully benefiting from the gas coming from the Takoradi enclave because the infrastructure needed to bring this gas to market is not available.

How important is the Ghanaian oil and gas industry for KPMG?
Oil and gas in Ghana is here to stay and it is going to be an important sector for us. Within KPMG, we have set up an energy and natural resources unit that covers oil and gas, energy and mining. A lot of what we do is related to financial statement audits, tax advice and compliance and advisory services on strategy and cost optimisation. We also do a mix of audit and tax advisory work with subcontractors, and we even work with downstream players such as Total.

What is KPMG’s intermediate-term strategy in Ghana?
We aim to increase our stake in oil and gas activities. Business models are changing, and our clients are not waiting. We are driving that change through technology, digitisation and innovation. Just in 2019 in Ghana, we have conducted two digitisation seminars for the market.
Related to technology and digitisation, there is also cyber crime and security, and we are leading in that area too. We have well equipped and trained staff in the different areas of oil and gas operations so we are market-ready. We also have support from our member firms in oil-rich countries to support any transactional advisory work.
The last area we are focusing on is cost optimisation. Every CEO talks about efficiency, and we are servicing our clients accordingly. We want our clients to see the difference in us and we are working with our people to make them extraordinary. We are training them to be more insightful and to get ahead of the market in order to bring insight, innovation and curiosity to everything we do.