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IMF LAUNCHES APRIL 2018 REGIONAL ECONOMIC OUTLOOK REPORT ON SUB-SAHARAN AFRICA

The International Monetary Fund’s (IMF’s) April 2018 Regional Economic Outlook Report titled: Sub-Saharan Africa: Domestic Revenue Mobilization and Private Investment has been released.

 

Abebe Aemro Selassie, Director of the IMF’s African Department, launched the Report in Accra on Tuesday.

 

The Report projects economic growth in sub-Saharan Africa to pick up modestly from 2.8 percent in 2017 to 3.4 percent in 2018. According to the Report, several economies—Côte d’Ivoire, Ethiopia, Ghana and Senegal— are expected to maintain robust growth at about 6 percent or faster.

 

The Report notes, however, that debt vulnerabilities in the region are rising, particularly at the risk of distress.

 

The Report identifies domestic revenue mobilization as one of the most pressing policy changes facing the region and calls for increased private investment to achieve sustainable strong growth and improve social outcomes over the medium-term.

 

The Report indicates that growth performance has been far from uniform and cites 12 countries which saw their per capita incomes decline in 2017 with prospects of further declines for most of them in 2018.


Burundi, The Democratic Republic of Congo and South Sudan have been cited by the Report as conflict zones, resulting in record levels of refuges and internally-displaced people—with adverse spill overs to neighbouring countries.


The Report  also identifies Nigeria and South Africa, the two largest economies in sub-Saharan Africa, as having their main economic engines stuck in low gear which  weigh heavily on the region's overall growth.

 

Delivering the key note address at the launch of the Report, the Vice President of the Republic of Ghana, Dr Mahamudu Bawumia, noted with concern how Ghana’s 10 per cent ‘carried interest’ in mining operations in the country had, over the years, accrued a zero per cent dividend and deprived the people of Ghana of considerable amounts of domestic revenue.

 

Dr Bawumia said the old paradigm of natural resource exploitation and exports of unprocessed agricultural products and raw minerals were no longer acceptable as that could not grow our economies, create jobs and meet social expectations in the provision of basic public amenities.

 

He, therefore, called for a re-examination of Ghana’s natural resource control and governance strategy from exemptions to carried interest, and how to use her natural resources to build a better and prosperous economies.

 

Dr Bawumia said a regional strategy to mineral resource development, including gold, bauxite, manganese and iron, among others, was also required in order to move up the global value chain for each of these minerals.

 

In a panel discussion, Mr Yaw Osafo-Marfo, Senior Minister, identified improvement in property rates mobilization as an area that could help improve domestic revenue.

 

Mr Osafo-Marfo cited mining and telecom companies for under-declaring profits and depriving the state of the substantial amounts of money in tax revenue and appealed to the IMF to strengthen the capacity of Ghanaian auditors to be able to efficiently audit the accounts of these companies.

 

The Senior Minister also called for a re-examination of the tax exemption regime of the Free Zones in order to seal the loopholes that deprive the state of revenue for development.

 

Dr Maxwell Opoku-Afari, Deputy Governor, Bank of Ghana, called for improvement in the administration of Value-added Tax (VAT). Dr Opoku-Afari noted that improvement in domestic tax revenue would require transformational policies, such as the institution of a National Information Technology system and a payments system architecture.

 

He said Ghana should, therefore, take advantage of the digital revolution.

 

On his part, Dr Tony Oteng-Gyasi, Managing Director of Tropical Cables and Conductors, and a former President of the Association of Ghana Industries, reiterated the call for are-examination of the tax exemptions regime which, he said, was depriving the state of substantial amounts in domestic revenue.

 

Dr Oteng-Gyasi noted that some of the Business models advanced were fraudulent and aimed to evade tax, taking advantage of the weak regulatory and economic governance system.

 

In a welcome address, Ghana’s Minister for Finance, Ken Ofori-Atta, said Ghana sought to grow her domestic resources and invest same into growth driving initiatives in the real sector to create jobs and improve incomes.

 

Mr Ofori-Atta gave the assurance that the Akufo-Addo administration's recent high levels of growth recorded would be maintained.

 

Source: ISD (G.D. Zaney, Esq.)