Home / Business / We Need Convergence Of Efforts To Change Base Of Economy
maxresdefault

We Need Convergence Of Efforts To Change Base Of Economy

The CEO of Beige Capital, Mr Mike Nyinaku, believes that opportunities abound in Ghana, in spite of the obvious odds.“The trend that we see with currency depreciation is not new. We are going to have a challenge with the depreciation of our currency for a long time because we simply import more than we export. It’s fundamental,” Mr Nyinaku said in an exclusive interview in Accra.

The value of imports was $17.6 billion, compared with $17.8 billion in 2012.

As of June 2016, merchandise exports amounted to $5.08 billion, against imports of $6.48 billion, leading to a negative trade balance of $1.39 billion, according to the Bank of Ghana.

Mr Nyinaku would not blame the economic challenges and business climate on any particular government, regime or entity; he rather stressed the need for all persons and institutions with capacity to influence decisions impacting on the destiny of this country to concertedly work towards changing the structure of the economy.

“I don’t think that was caused by any particular political regime. It is something that has bedeviled us for a long time and cannot be wished away by mere talk. We know what we have to do but do not have the guts to do so for fear of counter actions by our trade partners and the rest of the world. Having said that, the longer we wait, the more difficult if would be for us to reverse this trend,” he explained.

Economic fundamentals

His comments come at a time when the economy has seen some stability after the economic fundamentals took a nosedive over the past three to four years.

Inflation had gone up from 9.08 per cent in January 2011 to 13.80 per cent in January 2014. It peaked at 18.9 per cent in May this year before easing down to 16.7 per cent in July.

The local currency, the cedi, has also experienced volatilities over the period, before depreciating at a slower pace in 2015. It averaged GH¢3.2 to the dollar in 2014 but ended 2015 around GH¢3.8 to the dollar.

The cedi now exchanges for GH¢3.94 to the dollar as of September 1.

Cumulatively, the cedi depreciated by 3.3 per cent against the US dollar in the year to June 2016 on the interbank market, compared with 26.1 per cent over the same period in 2015.

The cedi’s instability is partly caused by higher imports over exports. In 2013, the overall balance of payment deficit remained largely unchanged at US$1.2 billion. The current account deficit widened to US$5.7 billion from US$4.9 billion recorded in the corresponding period of 2012.

These have impacted negatively on interest rates as well. The benchmark 91-day treasury bill was sticky at 25.8 per cent in December 2014 and dropped marginally to 24.41 per cent in December 2015. It stood at 22.86 per cent as of August 29.

Base rates of banks range between 16 per cent for the Bank of Baroda and 33.4 per cent by the Capital Bank. The banks’ annual percentage interest rates also range from 15 per cent by the GN Bank to 40 per cent by Barclays Bank.

Mr Nyinaku was of the belief that turning things around would take more than eight years to achieve.

“We need an uninterrupted period of at least 10 years to undertake, manage and sustain the interventions that could turn our fortunes around. It could be very expensive, as it would be at the expense of the political aspirations of some interest groups, but if well managed, an opportunity like that could see us achieving some consistency in the social and economic development process of our country,” he added.

BEIGE

For now, BEIGE Capital is positioning itself as a financial services provider with service channels including banking  finance, insurance, asset management, pensions and private equity.

The Group CEO said due to BEIGE’s historical background and unique experience with the informal sector, it was well placed to be the partner of choice to any government institution or agency that required the services of a financial institution with reach among the informal or small and medium enterprises (SME) sector.

“We work with what we have and for now I think there is opportunity for all,” the man who built the BEIGE brand after stints with several endeavours, including working with the accounting firm Deloitte and Touche, said.

Mr Nyinaku said the regulator of the banking sector – the Central Bank – had been effective in its management of the financial services sector, despite the inherent challenges.

He opined that the choice of policies adopted by the regulator were informed obviously by its long period of experience in what it did.

“For now, I cannot have any backlash for the BoG. They’ve regulated the industry to ensure fairness, openness and opportunity for growth for all of us,” he stated.

 

Source: radioxyzonline.com

 

 

Leave a Reply

Your email address will not be published. Required fields are marked *

*