Ghana Business News | 4/28/2021

Dalex Finance and Leasing Company Limited (DALEX) on Tuesday diagnosed the Ghanaian economy and affirmed that the bane of the country is “the injustice of Ghana’s Financial Sector”.

Mr Kenneth Kwamina Thompson Chief Executive Officer of Dalex Finance in an interview with the Ghana News Agency at Tema stated that: “…there is an injustice in the Ghanaian financial sector that has persisted for decades. Now it feels like a non-issue.

“It has become part of the status quo and people have accepted it as normal. This is a system that provides security with one hand and denies sharing of returns with the other hand”.

Mr Thompson described as financial injustice, a system which allows the banks to collect deposits, lend it to the Government – they buy treasury bills or to their customers at up to 35 per cent, per annum at the end of the month.

“Go ahead to charge the customers for the privilege of keeping their money and pay most of them nothing-most banks pay less than 5 per cent on savings account and nothing on current accounts or a few some coins at best, this is injustice which must stop,” he said.

Mr. Thompson said: “It is an insult to say Ghanaians are greedy, everybody wants good returns on their hard-earned cash”.

The Dalex CEO revealed that the banks could do better for their customers, “if they want to, stressing that “it’s quite sad that for decades, Ghanaians have settled for next to nothing from the financial institutions that they save with.

“The massive financial sector crisis and clean-up added fuel to the fire of this injustice and now people feel it’s more than enough to settle for just safe”.

He said despite the injustice, some financial institutions still offered safety, and high returns, stressing that there were credible players in Ghana’s financial sector.

He therefore advised investors and the public to seek financial advice before deciding whether to continue transacting business with their traditional bank or change direction, “the financial injustice must stop”.

The Dalex CEO said customers must look out for financial institutions with “the triple reward of safety, peace of mind, and high returns”.

Mr Joe Jackson, Dalex Finance Director of Strategy, also explained to the GNA that four years after the sector clean-up, the Bank of Ghana was exercising much tighter control over the financial sector, adding “Efforts to restore faith in the security of the financial system are important because confidence in the financial sector is key to its development.

Mr Jackson noted that the SME sector was the engine of growth, and growth could only be possible if there was a viable financial sector to support SMEs to deliver prosperity and create jobs.

He suggested that other means to address the financial injustice was for the financial institutions “to add perks like no charges on any transactions, wholly digitised systems for customer convenience and full transparency on all operations; it’s safe to say that Ghanaians don’t have to settle for just safe anymore”.

Dalex Finance is a wholly Ghanaian owned and operate Specialized Deposit-taking Institution (SDI) licensed by the Bank of Ghana (BoG) and has been in operation in Ghana since 2006.

Since 2013, Dalex Finance began the process of becoming a digital finance company with the objective of delivering its products and services with speed and convenience.

Currently, Dalex Finance is capable of originating and disbursing loans and investment products digitally and employs over 3000 persons through 102 sales points nationwide.

Strategically, Dalex Finance offers financial services in rural and peri-urban areas.

Economist Joe Jackson is concerned that Ghanaians at the lower level of the economic ladder will be the worst hit by the government’s proposed new taxes and levies.

He said while the taxes apply to every Ghanaian, they will come out as very harsh to the poor since the majority of them use consumables and the least change will significantly affect their personal economies.

Speaking on The Point of View on Monday, Joe Jackson said the proposed 30 pesewas increment of fuel prices as part of the new levies will consequently affect the price of goods and services.

“When you impose a consumption tax, it hits the poor harder than it hits the rich because as a percentage of my income, fuel does not constitute that importance [but] when you go down the bottom of the ladder, transportation to work and back is a major headache. Every cedi increase causes you [the poor] more trouble, and it affects everything and everybody– the cost of food, the cost of drinks, everything.”

The government, through the caretaker Minister for Finance, Osei Kyei-Mensah-Bonsu in delivering the 2021 budget last week announced the government’s proposal of introducing six new taxes.

These taxes include a COVID-19 Health Levy; 1% increase in the National Health Insurance Levy and 1% increase in flat VAT rate as well as a 30 pesewas increase in fuel prices to take care of excess power capacity charges [20 pesewas] and Sanitation and Pollution Levy [10%].

The others include a gaming tax, review of existing road tolls and a financial sector clean up levy of 5% on profit before tax.

The 30 pesewas increase in fuel prices has been one of the most topical issues following the announcement with many Ghanaians expressing fears that it will lead to transport fares shooting up and consequently increase in the cost of other goods and services.

According to Joe Jackson, a better alternative could be targeting the rich with taxes such as property tax and luxury vehicle tax among others.

He said the government must be deliberate in targeting wealth and taxing wealth rather than introducing taxes that severely affects the poor.

“They [government] should tax wealth and not VAT,” he suggested.

Meanwhile, business journalist, Toma Amihere, who was also on the show on Citi TV warned that Ghana’s debt level was alarming and remains the major stumbling block preventing Ghana from developing at an expected pace.

He said he believes government must do more to collect taxes from those supposed to be paying taxes to free the poor from the burdens of additional taxes.

africa-investment-exchange.com | 9/22/2020

Kenneth Kwamina Thompson – Africa Investment Exchange (africa-investment-exchange.com)

Kenneth is the Chief Executive Officer of Dalex Finance and a Fellow of the Institute of Chartered Accountants in England and Wales. Dalex Finance is currently No. 17 in the Ghana Club 100. In 2016, Kenneth was declared Businessman of the Year and Dalex Finance, Business of the Year by the Ghana Economic Forum. He was given the award for leadership, innovation and business growth.

Kenneth graduated from the University of Ghana Business School with honours in Administration (Accounting Option). He trained with UHY Hacker Young, a top 10 firm of Chartered Accountants in the United Kingdom. He has served as head of venture funds management at Fidelity Equity Fund I and principal internal audit manager for Barclays Bank, UK.

Currently, he serves as a director on the boards of Unique Insurance, Reliance Personnel Services and RPS Engineering Services. He is a member of the Ghana Chamber of Commerce (GNCC), Central Executive Committee and Chairperson of the GNCC Think Tank.

Myjoyonline |10/6/2020

The Chief Executive Officer of Dalex Finance, Kenneth Kwamena Thompson has said that one of the guarantees for success for would-be entrepreneurs is to focus on solving problems rather than on making money.

According to him, the reason why most people, especially the young ones, are unable to get support from society for their businesses is simply because they fail to create value.

Speaking on JoyNews’ Personality Profile, Kwamena Thompson said: “When you’re in business – and that’s the mistake a lot of people do, especially a lot of the young ones – they say I have a service or product and nobody is supporting me. The most important thing is that you must provide value.

“Where is the value? I wake up every morning and say ‘how do I provide value to people? How do I solve problems?’ because if I solve problems, I’ll be successful.”

For him, going into business to make money “really for me that’s not business. You’ve got to go into business to solve a problem. By solving a problem you provide value.”

Citing his business as an example, Kwamena Thompson explained that he has been able to add value to people’s lives by allowing them make daily contributions to their investment account from the convenience of their mobile phones.

“For example, we have a programme called Dalex Swift. Dalex Swift has over 120,000 subscribers. Why? Because it allows you to make regular contributions to an investment account from the convenience of your phone.

“That’s value right there. So from your mobile money wallet, you can contribute as low as GHS1 every day if you want to. So I think of value; I’ve never ever said I want to make money.”

He advised the youth to work towards providing value in society and not to concentrate their energies on trying to become rich overnight.

Director of Operations at the Dalex Finance, Mr Joe Jackson, has said raising revenue through increased taxes during this time of the coronavirus pandemic will not be the best of decisions to take by any government including the Government of Ghana.
He said such a decision will further aggravate the plight of the citizens and businesses, hence must not be taken.
Speaking on the Business Focus programme hosted by Alfred Ocansey on TV3 Monday, July 6, Mr Jackson said: “You cannot tighten the economy at this time, even though the government revenues are really challenged and there is very little room for manoeuvre you have got to throw that budget out of the window and then borrow some more.
“You have got to borrow and then stimulate your economy.
“You have got to find ways of growing your economy and one of the things that won’t fly is to raise revenue by taxing the exiting formal sector more.
“That won’t fly, that will actually deepen the challenges we have with the economy. you have to find ways of growing that tax net and, you have to go find ways of direct taxes and not indirect taxes.”
For his part, Dr Lord Mensah, a senior lecturer at the University of Ghana Business School, said he doesn’t foresee the government reducing taxes in the wake of the coronavirus pandemic.
Rather, he said, the government is expected to make funds available to the banks to make them more liquid a situation that will enable them to provide loans to businesses are reduced interest rates.
Dr Mensah told Ocansey that: “I expect that the government will find a way to reenergize the system, finding liquidity into the banks so that it can get to the various businesses. I don’t foresee taxes being reduced.”
He added : “Government is going to produce stimulus package, those packages will come through the corridors of the bank in the form of interest rates reduction, in the form of the banks having enough liquid to ensure that they distribute funds.”
Meanwhile, months after the government announced the stimulus package to support businesses in the wake of the COVID-19, Dr Edward Ackah Nyamike, President Ghana Hotels Association, has revealed no member of his association has yet received the stimulus package although they have applied to benefit from the funds.
He told Alfred Ocansey on the same show that the situation is negatively affecting their work since costumers are no longer patronizing the services of the hotels due to the coronavirus pandemic.
The government has made available GHS600million to be distributed to businesses by the National Board for Small Scale Industries (NBSSI).
The NBSSI subsequently, has developed an online portal to enable small and medium-scale enterprises (SMEs) across the country access the GH¢600 million stimulus package for businesses.

Executive Director of NBSSI, Esi Kosi Antwiwaa Yankey, said the portal was to ensure transparency and efficiency in the disbursement of the package to applicants.

Speaking at a press briefing in Accra, she explained that the Board was in discussions with concerned stakeholders to come up with eligibility criteria to ensure that viable businesses which were in need were supported.

She stated that more than 200,000 businesses would be supported under the coronavirus (COVID-19) stimulus package for SMEs adding that the NBSSI was further engaging traders and business owners to sensitise them on the package and how they could access it.

But Dr Ackah-Nyamekeh told Ocansey that: “Four months into the pandemic no hotel member has a pesewa from this stimulus package.

The government talked about GHS600million which the NBSSI has been tasked to disburse, that was opened to all small, medium and micro-size businesses.

“The last time I checked they have received almost about 200,000 applications. The NBSSI said when you send the application, two weeks’ time they will disburse the money to you but it has not happened.

“We understand that some SMEs have received theirs but we don’t know. We have been asking the NBSSI to tell us but they haven’t.”

myjoyonline | 10/6/2020

The show must go on… whether licenses are revoked or covid-19 is here to stay, we cannot stop. Ours is a market economy and the blood of any market economy is finance.

On August 16, 2019, the Bank of Ghana revoked the operating license of 23 Savings and Loans Companies and Finance Houses. Two and half months before that, 347 microfinance companies had been shut down.

Small and medium-sized enterprises (SMEs) are the backbone of the Ghanaian economy – they represent about 85% of businesses, largely within the private sector, and contribute about 70% of Ghana’s gross domestic product (GDP).

In terms of formal sector employment, they account for just over half of all fulltime employment.  This percentage is thought to be much higher in the informal sector.

Until the recent revocation of licenses and shutdowns, a growing finance sector had supported a sustained growth of SMEs. There are many stories of ‘table-top’ businesses, moving from one employee to full-fledged businesses that employ more than 50 people  A strong finance sector is therefore good for the Ghanaian economy.

Where did we come from and how did we get here?

 Non-Bank Finance Institutions (NBFI’s) have been in business since the early 90s. But the early successes of UT Financial Services, co-founded by Joseph Nsonamoah and Prince Kofi Amoabeng in 1997 as Unique Trust Financial Services accelerated the sector’s growth.

Private capital, sensing an opportunity, ‘poured’ into the sector. Other institutions, for example, those licensed by the Securities and Exchange Commission also ‘stretched’ the scope of their license and joined the ‘party’.

Over time, look and feel became ‘more’ important than substance. Many people became ‘wall street’ bankers with Saville Row suits and monogrammed shirts.

Limousines, first-class travel to chase ‘non-existent’ deals, high salaries, and perks with luxurious offices became de rigueur. Meanwhile, most transactions were either directly or indirectly linked to the government, and others simply ‘fueled’ delusions of grandeur.

 As the sector got crowded, the economy slowed down, the government was unable to pay its debts in full and/or on time, and transactions dried up, competition amongst financial institutions for business and deposits to refinance their exposures grew.

Firms took more and more risk and the cost of funds kept rising as the need to shore up ever-dwindling reserves rose. Some executives went rouge, concocting credit files, and coaching borrowers to steal from their employers and clients.

As if that was not bad enough, the recovery of loans was made torturous by systemic weaknesses. A crumbling land registration system, defunct address system, diversion of funds by SMEs, and a weak contract enforcement infrastructure contributed to a rise in loan defaults. The rest they say is history.

So what is the role of NBFI’s?

 Commercial Banks tend to focus on government business, large corporates, and multinationals, for a variety of reasons. One of the main reasons they do this is their lack of confidence in the SME’s ability to manage their operations effectively to be able to repay the loans they access.

In some cases, this is a genuine concern. But the main reason is that banks can make money more easily. ‘Breathing’ down the neck of an irrepressible entrepreneur to ensure they repay their loans is too stressful in a suit and tie. In a high-interest rate environment, the incentive for Commercial Banks to fund SMEs is even much less.

It is easier for Commercial Banks to purchase government bonds or lend to the government indirectly through parastatals and watch their money grow. Government business is good business. The government will always pay and hardly complains!

Why the show must go on.

 Despite the challenges, SMEs – ‘the engine of growth’ still require financing. Investment in the non-bank sector is dominated by Ghanaians and control of the financial sector by indigenous companies is a matter of National Security.

There are certain risks a foreign financial institution will never take. And lending to SMEs is a frisk that foreign financial institutions will never take. We put a great deal of premium on foreign financial institutions, forgetting that those institutions that we admire have been in business for over 200 years.

These institutions have survived many storms, battered and bruised, and have approached the shore, masts broken, sails torn and taking in water by the ship full.

As recently as 2007–2008, during the global financial crisis, some of them had to run for cover and have not recovered. But that is how institutions are built. It takes time, patience, and fortitude.

We must grow our financial institutions to support SMEs. One day, these institutions will be financing Ghanaian companies in cross-border transactions. The South African and Nigerian banks have done a great job of that in Ghana.

Payroll lending is great, but if all NBFI’s become payroll lenders, there would be no development. Who would finance our SMEs? What our NBFI’s require is tough love, not vilification.

 A lot has been done and a lot more can be done to strengthen NBFI’s, the Bank of Ghana Corporate Governance Directives, calibrated over time, will strengthen corporate governance in the financial sector. Institutions must also work extra hard to get rid of the perception that they are run by rouges.

The judicial system must dispatch commercial cases expeditiously. The Bank of Ghana should introduce a Bank Verification Number (BVN) system as in Nigeria. The BVN is an 11-digit number that acts as your universal ID in all commercial banks in Nigeria.

The Central Bank of Nigeria implemented this biometric system which helps to prevent issues of identity theft, reduce fraud, enhances the banking industry’s chances of being able to fish out blacklisted customers, and encourages standardisation of banking operations across the sector.

 These actions will increase investor confidence, attract funds to the financial sector to reduce the cost of operations and funds. Ultimately this will deliver the crown jewels, a reduction in the cost of loans.

If the cost of loans falls to less than 10% per annum, long term investments will become attractive, SMEs will flourish as they can afford to borrow for investment in their businesses, and the economy of Ghana will boom.

It is our financial system, and the more we work together to strengthen it, the better for all us.  Strengthening our financial system is the only way to deliver prosperity for all Ghanaians. What is crystal clear is that “…the show must go on..!”

3/24/2020 | Myjoyonline.com

The Chief Executive Officer of Dalex Finance, Ken Thompson has described the rate cut by the Bank of Ghana (BoG) as not enough to deal with the liquidity challenges in the banking and non-bank sector.

But Mr Thompson believes this will only affect the banks and exclude other players such as the specialized deposit-taking.

He said, “Unfortunately, our central bank is in a bit of a tight spot, especially since we are coming just out of money being provided to support financial institutions that collapsed. So it’s not able to do as much as probably it should. I don’t think those that are there are not mindful of the things that they need to do because already it is liquidity…so unless you provide liquidity, you have not started.”

Speaking to JoyBusiness Mr Thompson said, “…you have reduced the monetary policy rate; that monetary policy rate has no bearing on the real interest rate. The government itself is borrowing at 20 per cent, so in a worse possible case I’ll give my money to the government.”

They reduced some reserves that the commercial banks are allowed to hold. So technical the commercial banks have more money to lend. Commercial banks never lend to SMEs.”

In a surprise move last week, the monetary policy committee of the Bank of Ghana cut its policy rate by 150 basis points to 14.50% from 16% in a bid to support the economy.

This is the first time since 2019 that the central bank has lowered the policy rate.

Before this reduction, the Bank of Ghana has since January last year kept the policy rate unchanged six times.

Ghanaweb.com | 3/24/2019

Chief Operations Officer of Dalex Finance, Joe Jackson, has accused the two leading political parties in the country for deliberately working towards sabotaging the economic fortunes of Ghana.
According to Mr. Jackson, both the National Democratic Congress and New Patriotic Party have failed in finding long term solutions to the yearly depreciation of the cedi against major international trading currency, particularly the dollar.

“I know that the two parties have conspired to sabotage the economy,” he said.
He made this observation on TV3 news analysis show, the Key Points on Saturday, and accused the parties of politicizing the cedi issue to gain political points instead of coming up with long term measures to deal with it.

The Dalex Finance COO further stated that the two parties are always quick to speak through the media on issues of the depreciating cedi instead for coming together to dialogue and come up with plans with which the issue can be solved to prevent further recurrence.
“Each time the cedi depreciates in value, it is a signal telling us that there is not enough dollars to fund what we want do, so it is either we export more or we consume less dollars each time that signal happens.

“…both sides [NDC and NPP] are quick to use the cedi as the barometer or thermometer for political performance, the action is to jump in support of the cedi and sabotage that economic signal that goes to all investors, producers, consumers to take decisions that will fix this in the long term,” Mr. Jackson noted.

According to him, investment decisions and issues bordering on the cedi cannot be taken within two months or short term as is done by the two parties, indicating the NPP and NDC must pay attention to cedi signals and plan along those lines.

“So I think that by jumping and celebrating any time the cedi slides, they are actually sabotaging our long term existence, and I want all of them, whether the script was read by Dr. Bawumia a year ago or the script is being read by Honourable Forson this time or whoever it is, it is the same script, and the script tells us that we are ignoring the economic signal that the cedi value is passing, and it totally ignores how to fix this in the long term.”

Joe Jackson was speaking on the back of a news conference organized by the minority on the economy, as well as the response from government on the issue.

The minority at the said news conference accused government of failing to stabilize the economy, thereby scaring investors away from the country.
Addressing the issues raised by the minority, Information Minister Kojo Oppong Nkrumah said they are nothing new, and that government was already working towards resolving them.

3news.com | 10/13/2018

Chief Operations Officer at Dalex Finance Joe Jackson says gold investment company Menzgold was running a Ponzi scheme on the blind side of its customers and regulators. Joe Jackson noted that most of the customers who invested with the company have no or little knowledge about how investments work, hence, the company took advantage of them all. According to him, although there had been several warnings from the Bank of Ghana over the company’s operations, customers were attracted by the interests promised. Menzgold was on September 12, 2018 asked by the Securities and Exchange Commission (SEC) to suspend operations because it did not have the required license to operate.

SEC orders immediate shutdown of Menzgold
The suspension caused panic among customers, who expressed worry over their investments despite several assurances from the company. The gold-trading firm, subsequently, came out with communication that they would pay customers their capital within a period of 90 days, but this did not see the light of day. Some aggrieved customers threatened legal action with Menzgold suing the Bank of Ghana and SEC for the actions taken against its operations.

But speaking on TV3‘s New Day on Saturday, the Dalex Finance COO said Menzgold led everyone into believing it was running a genuine business, hence the decision by its customers to do business with them “There had been repeated warnings that this Menzgold issue look like a duck, walk like a duck, swam like a duck, and that the returns being paid, everything smacked of a Ponzi scheme.”

“One of key characteristics of a Ponzi scheme is that it needs constant infusions from new members to keep the scheme running. The challenge we have is this, as soon as Menzgold was asked to stop taking new contracts, the returns stopped, which is a very bad sign. “Remember the regulator did not say stop trading, they said don’t take new contracts,” Mr. Jackson noted.

He further tasked customers of the dormant company to seek legal redress to retrieve their monies. “I say to anybody who has his money there, if you have any issue, take it to court, because it is scary that they have unilaterally decided not to pay any returns.

“They have unilaterally decided that they will pay the principal after sometime.” Mr Jackson also said regulators ought not to be blamed for Menzgold’s issues, since they issued warnings on countless occasions. By Irene Amesimeku|3news.com| Ghana]]>

3news.com | 7/17/2018

Chief Operation Officer of Dalex Finance, Joe Jackson has tasked Finance Minister, Ken Ofori Atta to take hard decisions in stabilizing the Ghanaian economy. Speaking on TV3 New Day ahead of the midyear budget review, Joe Jackson said government ought to take tough and bold decisions regardless of the backlash it may come with. “I do not see any way out, we need to face our reality and take hard decisions. I am expecting hard decisions… We seem to think there is a free lunch somewhere and that we can have everything without paying anything.” According to Joe Jackson, government is broke, and they must admit it and work towards stabilizing the economy. He noted that the challenge with government’s plans to introduce new taxes has to do with the way government communicates its plans. The Dalex Finance COO said government has failed to properly coordinate and implement the projects and policies outlined to generate revenue, and this has led to the poor performance of the economy. “Go back to the first State of the Nation Address in 2017; the President said we need to formalize the economy, but look at the National ID, we are still playing hide and seek. Ghana post has been done, but  it is a silo. It has no bearing on anything we do,” he stated. He noted that a lot of the projects implemented by government have been rendered meaningless because of the lack of proper integration. “Let us see some hard decisions, let us see an integrated plan to fix the economy. The problems have been diagnosed, but who is sitting there and integrating all those projects.” “When we talk about widening the tax, what does the TIN for instance do, what is the link between my TIN and what I do with my businesses?” Joe Jackson questioned. According to Joe Jackson, government’s disjointed initiatives as well as its approach to implementing them form part of problems hindering economic growth. “What I expect to happen is that there are a few projects that have been announced, bring them together and execute them.” Joe Jackson also expects the midyear budget review on Thursday, July 19, to contain some tough decisions and clearly cut out plans to stabilise the economy.