A total of GH¢48.9 million is required to set up and run the proposed Ghana Export-Import (Ghana EXIM) Bank in the first 12 months of its operation, the Presidential Task Force on the establishment of the bank has estimated.
Of the estimated amount, GH¢41 million will be expected to finance the bank’s current and recurrent expenditures in the first year of operation, while GH¢1.5 million will be used to secure the services of a transaction advisor.
The remaining GH¢7.4 million will be used to serve as severance package and the cost of staff rationalisation for some 74 employees of the Export Trade, Agricultural and Industrial Development Fund (EDAIF), the Export Finance Company Limited (EFCL) and the Eximguaranty Company Ghana Limited (ECL), who will be losing their jobs as a result of an integration process, a report by the 13-member task force revealed.
The cost estimates are based on an initial staff strength of 100 employees, comprising 75 people from the three existing companies to be integrated and 25 “new staff with specialised banking and trading finance expertise.”
A transaction advisor is needed to advise and guide the government on the integration of the existing three export-oriented financing institutions into the proposed Ghana EXIM.
The integration is one of many proposals by the task force, led by Mr Steve Williams, a banker and Chief Executive Officer of Treasury Warehouse Ghana Limited.
“The integration of the EDAIF, EFCL and ECL into the Ghana EXIM should take into consideration the ownership structure of the institutions,” the report said, advising that government buys the minority shareholders out of the three companies.
Apart from EDAIF, which is a public-owned company, the ECF and EFCL are partly owned by private investors and the government.
Sources of funding
The report is the outcome of three months of deliberations and consultations by the special task force of bankers and entrepreneurs set up by the President in February, last year, to advise the government on the establishment of an EXIM Bank.
The bank is envisaged to be an autonomous institution that will specialise in trade and development finance as well as the issuance of insurance and guarantees for credit for export-oriented businesses.
On the sources of funding for the proposed bank, the task force said “it was motivated by the stance of creating an independent institution that can access funds from in and outside Ghana.” That search for funds, it said should be based on the strength of Ghana EXIM’s “own books and with an independent international rating.
“Additional sources of funding for Ghana EXIM are borrowing from the domestic and international money and capital markets, budgetary allocations and reinvestment of returns from investments,” the report, which was submitted in June, last year, said.
These sources are to add to the 0.5 per cent levy on non-petroleum imports, which is the traditional source of funding for the EDAIF.
The task force, however, recommended that 75 per cent of total collections from the levy should be given to the bank and 25 per cent of the proceeds used to augment the operations of the GEPA.
Expanded mandate for GEPA Building on its recommendation that the EDAIF, ECF and EFCL should be integrated to form the EXIM Bank, the task force recommended that the grant window of EDAIF should be transferred to the Ghana Export Promotion Authority (GEPA) to help insulate the bank from “additional responsibilities.”
It, however, explained that the GEPA should be empowered to undertake this additional duty of disbursing grants to exporters.
“The GEPA should benefit from an allocation of resources directly from the import levy that is currently earmarked for EDAIF. GEPA should be represented on the Board of Ghana EXIM and a comprehensive review of the GEPA Act should also be undertaken,” the report said.
“It is intended that five per cent of the levy allocated to GEPA should be used for administrative expenses. The remaining 95 per cent is to be used for grant funding activities and programmes under GEPA’s export promotion and development mandate,” the report said.
Missed targets
The task force’s report includes the bill that is to be developed into an Act to guide the operations of the Ghana EXIM Bank.
Although the task force had envisaged that the bill would be passed into law between September and October, last year, to pave the way for the coming into being of the bank, checks by the paper showed that it was currently before Parliament.
The delayed passage of the bill has affected other dates, resulting in general delay in the establishment of the bank.
Things such as the appointment of a transaction advisor, board members, management executives and transfer of liabilities of the EDAIF, ECF and EFCL, which were to be done in 2015, have all been missed.
It is not clear if the same will not apply to the recruitment of staff and the subsequent inauguration of the bank, envisaged to take place in the first quarter would be met.
Source: Graphic