DDEP: Quickly conclude all actions to restore investor confidence — Cobblah

The Chief Executive Officer of C-Nergy Ghana, Michael Cobblah, has asked the government to quickly conclude all discussions and negotiations on the domestic debt exchange programme (DDEP) in order to restore investor confidence in the country.

He said the DDEP has created a lot of uncertainties in the investor community and until it is completely concluded, it would be difficult to restore confidence in the industry.

As part of the prior actions to enable the country to get a deal with the International Monetary Fund, the government in December 2022 announced a DDEP programme with the aim of restructuring its domestic debt.

The first round of the DDEP saw the government swap 12 old bonds valued at GH¢82 billion for new ones at reduced coupon rates and longer tenors.

The second round of DDEP which involves the restructuring of local dollar denominated bonds and cocoa bills is also currently ongoing.

At the maiden Graphic Business Twitter Dialogue series, Mr Cobblah said the investor public was already deflated and a lot of people were looking for different avenues for investments.

He said some people have now resorted to buying forex as a form of investment, a situation which causes the cedi to depreciate.

“We need to conclude this DDEP immediately. The more it is in the faces or investors, the more we create a certain level of uncertainty.”

“People have lost monies so the earlier we get this off the table, the better. The more we keep talking about haircut and restructuring, that uncertainty makes it difficult for people to release money for investments,” he stated.

He said investments did not like uncertainties, so if there are inconsistencies in policy statements and haircuts, it drives investors away.

Revenue measures

Commenting on the mid-year budget, Mr Cobblah said the country could not continue to rely on taxes as a means of raising more revenue.

He said the country continued to spend more than it earned and therefore has to look at the income earning potential as a country and be drastic about it.

“Unfortunately, we have continued to resort to taxes which affects the private sector. We have to find other creative ways of improving revenue. This was not reflective in the mid-year budget,” he stated.

He said one area where the country could look at in raising more revenue was adding value to its natural resources.

“Industry has dipped consistently in the last couple of years and there are a couple of policies we have introduced aimed at adding value to our exports.

“We need to have a relook at some of these initiatives to see if they are indeed working because if they are, we should be able to reduce our import bill”.

“We cannot continue to do same things and expect different results. The solution is not taxes. We need to look at the real sectors and look at the value addition,” he advised.

Review of tax environment

Also speaking on the Dialogue series, Economist and Lecturer at the University Of Ghana, Professor Godfred Bokpin, urged the government to use the 2024 budget which would be presented in November to review the country’s tax environment.

He said the current tax regime was burdening businesses with excessive taxes, which is unsustainable and obstructive to their growth.

“We have configured our tax strategy and tax environment in a manner that is anti-growth and anti-business. And with that, there’s no way we can progress as a country,” he stated.

He asked the government to tailor its tax strategy to mirror the business model of the private sector.

He recommended the merging of the standard VAT rate of 15 per cent, with the straight levies.

When combined, he said, “this should not exceed 18 per cent,” noting that a VAT rate which exceeds 17 per cent would be counterproductive.

“The taxes are just too many. There is no way we can tax our way out of poverty. So that is something I think government should look at in the 2024 budget and specifically, to look at consumption-based taxes. There are too many of them.”

“If your Standard VAT rate is more than 17 per cent, any additional increase in that standard rate is counterproductive and it worsens inequality and poverty,” he said.

To offset any potential revenue shortfalls resulting from the proposed tax rate merger, Professor Bokpin suggests enhancing administrative and compliance measures by the GRA.

He said the enhancement of GRA’s E-VAT invoice system and digitisation of tax records could bolster tax collection efficiency.