The strategic Ghana-Ivory Coast partnership to produce and market cocoa jointly is a watershed moment. File picture: Ange Aboa/Reuters
The strategic Ghana-Ivory Coast partnership to produce and market cocoa jointly is a watershed moment. File picture: Ange Aboa/Reuters

Ghana urged to consider tax breaks to ease blow from virus

By Moses Mozart Dzawu Time of article published Apr 7, 2020

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INTERNATIONAL - Republic Bank Ghana Ltd. is urging the government to cut tax rates to cushion the economy from the fallout of the coronavirus.

The government should consider easing corporate-income tax to 20% from 25% and give workers relief, Benjamin Dzoboku, the Accra-based lender’s general manager for finance and strategy, said by phone. Banks, insurers, telecommunications firms, breweries and miners pay an additional 5% levy on pretax profit, making their effective rate 30%.

“If you don’t do that, businesses are going to suffer, every sector is affected by this Covid-19,” he said.

Ghana’s government has cut its forecasts for economic growth this year to a 37-year low of 1.5% with a partial lockdown underway. It is also trying to help small businesses, while seeking to boost maximum borrowing levels and secure extra funds from the International Monetary Fund. The central bank has cut interest rates to an eight-year low and eased capital rules to free up money for lending and to increase liquidity.

Other views from Dzoboku:

  • Manufacturing, agriculture, hospitality and airline industries to suffer most.
  • Sees higher risk of loan defaults, rise in non-performing loans.
  • Customers’ increased use of digital channels is helping avoid liquidity problems.
  • Republic Bank giving clients six months suspension on loan repayments.
  • Victor Yaw Asante, managing director of FBN Bank Ghana Ltd.:
  • Profitability to decline this year as banks become more cautious on providing loans.
  • An industrywide waiver of charges on digital channels is reducing fee income, while lower interest rates will also weigh on revenue.
BLOOMBERG 

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