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Ghana’s latest ranking on the World Bank’s ease of doing business report is an indication that the managers of the country’s economy are still on a honeymoon.
According to the 2018 report, Ghana ranked 120th position, dropping from the 108th position last year.
The ease of doing business index ranks economies from one to 190. For each economy, the ranking is calculated as the simple average of the percentile rankings on each of the 10 topics included in the index in Doing Business 2017.
The topics were: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency.
Out of the topics or areas, Ghana ranked 55th position out of the 190 economies in assisting businesses to obtain credit. It also performed well in protecting minority investors. But as for the other eight topics, the performance of Ghana is nothing to write home about.
While in the sub-Saharan Africa region, the country whose Economic Management Team is being headed by the Vice President, Dr Mahamudu Bawumia, a renowned economist, placed 12th position.
The region is well represented in this year’s global top 10 improvers, based on reforms undertaken, with Malawi; Nigeria; and Zambia. But Ghana missed out in the top 10.
Last year, Ghana moved impressive 13 places up on the Trading Across Borders in the report. This success was accredited to the Ghana National Single Window (GNSW) programme initiated by the previous government.
The 2017 report showed that Ghana was placed at position 108 out of 190 countries surveyed in the Overall Ranking of Ease of Doing Business – an improvement from 111 in the previous report.
In the sub-Saharan Africa sub-region, Ghana ranked in the Top 10, coming 9th, out of the 47 countries ranked in the region. This was evidence that the previous government was pursuing active reforms to ensure the Ease of Doing Business in Ghana.
In the “Trading Across Borders” Indicator, one of the 10 indicators measured, Ghana improved by 13 places, coming in at 154 from a previous ranking of 167. This indicator showed that the country recorded the most improvement in the ease of doing business reforms, compared with the other nine indicators, with the next improvement achieved by the “Resolving Insolvency” Indicator; an improvement of three places.
The “Trading Across Borders” rankings measure the time and cost (excluding tariffs) associated with three sets of procedures: documentary compliance, border compliance and domestic transport; within the overall process of exporting or importing a shipment of goods – One of the Key Performance Indicators (KPI) adopted by the Ghana National Single Window Programme.
“Ghana made trading across borders easier by removing the mandatory pre-arrival assessment inspection at origin for imported products,” the annual 2017 report stated.
According to the report, “Ghana is among the economies that heavily invested in electronic systems to facilitate trade. In September 2015, it implemented the first phase of its national single window and ended the contract with Destination Inspection Companies for its Pre-Arrival Assessment programme.
The certificate of valuation report, which previously was issued by Destination Inspection Companies after a documentary inspection, is no longer required to import goods into Ghana. Instead, the Customs Division of the Ghana Revenue Authority now processes the Customs Classification and Valuation Report (CCVR) through the Pre-Arrival Assessment Reporting System (PPARS), a component of the single window”.
“Through the PPARS system, customs brokers and freight forwarders can submit an application form online, attaching scanned supporting documents, and upon assessment by a customs official, the CCVR is approved electronically. Because imported products are no longer subject to documentary inspection at origin, documentary compliance time for imports decreased by 206 hours in 2016,” it reported.
Paperless system fails to shine
West Blue Ghana Limited, the company engaged for the provision of the GNSW whose impressive work had helped the country to perform well on the World Bank’s ease of doing ranking last year, was recently acquired by a Dubai-based firm mysteriously.
Customs World, a subsidiary of Ports Customs and Free Zones Corporation (PCFC) Dubai signed an agreement to take over West Blue Ghana Limited to implement the ongoing paperless system at Ghana’s ports which began on 1st September, 2017 following Dr Bawumia’s directive.
The paperless transaction in the clearance process began with plethora of challenges including low public education, low knowledge and unplanned implementation of the system.
As a result of the implementation of the system, the many decades practice of freight forwarding in the country had been removed from the clearing of goods. Over 5,000 workers are reported to be laid off because of the paperless system implementation.
Although Customs World is doing its best to improve the ease doing business in the country by cutting cost and time businesses take to clear goods, its impact is yet to be felt immediately.
GIPC’s reaction to poor showing
Reacting to the country’s poor showing on the latest World Bank’s ease of doing business, the Chief Executive Officer of the Ghana Investment Promotion Centre (GIPC), Yofi Grant underscored the need to facilitate the implementation of the new set of reforms being undertaken by government.
“It is a strong reminder to all actors and agencies that the new set of reforms that have started in the 2017/2018 period, which Government expects will be accounted for in the next report, should be implemented effectively and with speed. This is necessary to ensure that their full effects are felt in the shortest possible time”, he said in a short press statement.
But earlier before the release of the 2018 report, Mr Grant told members of the American Chamber of Commerce Ghana in Accra that Ghana was eyeing the number one spot on the World Bank’s annual Ease of Doing report in Africa, following a revelation that the country which ranked 108 in last year’s report, was going to embark on sweeping reforms, this year.
In his own words: “We are targeting Mauritius and Georgia on the Ease of Doing Business report”.
“We intend to displace Mauritius as the number one country in ease doing business in Africa. We have the advantage because of our natural resources but we need to embark on aggressive reforms to enable us achieve this dream”, he stated.
To this end, Mr Grant revealed that the GIPC under his watch had started working with the Registrar General’s Department (RGD) to ensure that businesses are registered within a day. Currently, it takes more than 14 days to register a business in Ghana.
He added that the GIPC was going to reactivate the one stop-shop business registration centre which was in operation in 2005.
This centre is expected to make registration of investments faster and more effective and give better co-ordination between the administration authorities and investors.
The core institutions involved in the centre will be RGD, GIPC, Bank of Ghana (BoG), Ghana Immigration Service (GIS), Customs Division of the Ghana Revenue Authority (GRA). The other supporting institutions are the National Communication Authority (NCA), Environmental Protection Agency (EPA), utility providers, Ghana Ports and Harbors Authority (GPHA), and Accra Metropolitan Assembly (AMA).
He noted that the GIPC was considering plans to review the cap for investments into the country in a bid to attract more investors into Ghana. In this regard, the Centre is planning to review its laws to accommodate global standards.
It therefore appears that all the above-stated reforms announced by Mr Grant were not factored into the 2018 report , hence the country’s poor showing.
Figures from the Ghana Statistical Service (GSS) indicated that Ghana’s Gross Domestic Product (GDP) for the first quarter of 2017, grew by 6.6 percent as against 4.4 percent in the same period of 2016.
In monetary terms, the country’s GDP at constant prices including oil shut up to GHC 8, 557.8 million compared with GHC8,028.4 million in the same period of 2016. While the 2017 first quarter GDP at constant prices excluding oil was GHC7,931.0 million down from the 7,634.0 million cedis recorded last year, according to the first quarter GDP data.
However this impressive growth does not reflect in the pockets of many Ghanaians except the few government appointees especially the 110 ministers.
Furthermore, government expenditure on public sector wages, interest on debts, and transfers to statutory funds consumes virtually all domestic revenue collected, leaving very little to transfer to Ministries, Departments and Agencies (MDAs) and Metropolitan, Municipal, and District Assemblies (MMDAs) to meet their goods, services and capital expenditures.
The government thus has to resort to borrowing, or it uses the strategy of not transferring the required payments to the statutory funds, or the required allocations to the MDAs in a bid to reduce the pressure on its finances.
This is what is responsible for the cash crunch in MDAs, some of which owe electricity and water bills, as well as other debts to contractors and suppliers.
Despite all the talk by the government about reducing the pressure of wages, interest and statutory transfers on its finances, it has achieved little so far, and the high expenditure on these items is still continuing.
In addition, the corruption in the system is causing massive leakages of revenue, as various reports of the Auditor-General have shown.
In the midst of the challenges, Ghanaians are wondering whether Dr Mahamudu Bawumia, the Vice President and the head of the Economic Management Team is not around to turn things around.
His countrymen and women are also expected him to salvage the country’s image in the 2019 rankings of the World Bank’s ease of doing business report by undertaking urgent sweeping reforms.