SOME multi-national companies in the country have expressed interest to invest in the government’s vision of building an integrated aluminium industry, the Minister of Finance, Mr Ken Ofori-Atta, has disclosed.
Although he did not reveal the identity of these companies, he said they would carry out these investments in the sector in partnership with local Ghanaian investors, as prescribed by the new local content law.
Mr Ofori-Atta disclosed this at an economic forum, which was organised by the Danquah Institute in Accra. The forum was held on the theme: ‘Bridging the Gap between the Formal and Informal Economy: The Role of Domestic Revenue Mobilisation in an Era of Ghana Beyond Aid’.
He said efforts to establish an integrated aluminium industry formed part of the government’s strategy to industrialise the economy.
“Lifting ourselves into the next phase of our development by focusing on industrialisation is non-negotiable and we are bent on changing the structure of the economy through industrialisation,” he noted.
About integrated aluminium industry
The government has outlined its intent to develop an Integrated Aluminium Industry which will be one of the major pillars to drive the industrial transformation and accelerated development of the Ghanaian economy.
To this end, the Ghana Integrated Aluminium Development Corporation (GIADEC) was established through an Act of Parliament to focus on leveraging Ghana’s bauxite reserves, and allied aluminium assets, including the strategically aligned businesses, VALCO Aluminium Smelter at Tema, and a minority stake in Ghana Bauxite Company, to drive the full commercial exploitation of the bauxite deposits.
Tax revenue consumed by interest on loans
The Finance Minister also indicated that about 55 per cent of country’s tax revenue was being consumed by interests on loans alone.
In 2018, he said GH₵21.1 billion of the GH₵37.8 billion tax revenue which were raised was used to service interest’s on the country’s loans.
Mr Ofori-Atta also disclosed that Cabinet was in the process of reviewing the country’s tax exemption policy.
He said it had become necessary for the country to relook its tax exemption policy, especially at a time where revenue mobilisation had become a challenge.
“It's really a matter of worry but I must say we're assessing it and there is a Cabinet document that is supposed to be in Parliament so that we recalibrate the exemptions,” he said.
Banks in better shape
The Finance Minister also pointed out that banks in the country were now in a better shape, following the clean up by the Bank of Ghana.
Although the decision was a tough one, which cost the nation about GH₵13 billion, he said it was necessary as it saved the deposits of more than 15 million Ghanaians.
"Today, we can say with confidence that our banks are in much better shape than they were yesterday. They are better capitalised with more robust governance structures, smaller bad loan portfolio, and much safer for depositors,” he stated.
He said the broad liquid assets of banks had also grown from GH₵43 billion in 2016 to GH₵68 billion by February this year, with growth in non-performing loans (NPLs) also shrinking to 14.6 per cent (as of February 2019).
He said credit to the private sector had also increased over this period.
Mindful of concerns
Mr Ofori-Atta said the government was mindful of the concerns that depositors went through last year as the central bank embarked on the radical clean-up of the banking sector.
He said the exercise cost the taxpayer about GH¢13 billion, which could have been used to fix more roads, build more hospitals and schools.
He noted that upon assuming office, the government decided that it was going to confront the harsh truth of the situation of distressed banks.
He said the livelihoods of millions of depositors were at stake as the banking sector of the economy headed for imminent collapse.
"We could not do what others did by pretending that all is well. We could not stand by and watch a few people enrich themselves at the expense of over 15 million hardworking Ghanaian depositors who had saved for a rainy day,” he stated.
“So we tackled it. Our decision to go ahead with the clean-up was a difficult one and we brazed ourselves for another bumpy ride, but we have pulled through with your understanding and patience. Today, we can say that our banks are in a much better shape,” he added.