Monday, 8 February 2016

The New Income Tax Act (ACT 896) Reduces Your PAYE Burden


Amendments to The Income Tax Act, 2015 (ACT 896) was published by the Daily Graphic on Thursday February 4, 2016. This comes shortly after utility tariff hikes, fuel prices hikes and increases in other withholding taxes. Fortunately, the new PAYE (which is also a withholding tax), does not increase the tax burden of the Ghanaian income earner. For salaried workers, it actually increases their Take Home salary, other things being equal ... and of course, this has always been the case whenever there's an amendment to the Income Tax Act, just that most Ghanaians were not so certain if the rates on each threshold will be maintained in these "perilous times". The nontaxable chargeable income was increased from GHS 132 to GHS 216, and even though the subsequent thresholds on the table above sees increases, the rates are maintained.

Consider this example ... Koo Manu was employed by Abrabo Y3 Hard Company Limited on February 14, 2015. In his appointment letter, his gross monthly salary was stated as GHS 5,310.40 (subject to deductions for SSNIT contributions and income taxes). Under the old Income Tax Act, Koo Manu's take home salary was GHS 4,000, with a tax burden of GHS 1,018.33. This new income tax means that Koo Manu's income tax has reduced to GHS 948.96 ... his new Take Home salary should then read GHS 4,069.37 on his February 2016 payslip! What this means for Abrabo Y3 Hard is the obvious; SAME wage bill, but a reduction in the monthly statutory payments to the Ghana Revenue Authority (GRA) on behalf of Koo Manu IFO PAYE.

Demand a payslip from your company's accountant today! Make sure you're seeing some upward adjustment in your Take Home and if you have doubts, send me an email and I shall calculate your new PAYE and Take Home for you (for free). Times are hard Chaley, make every pesewa count!

Friday, 25 December 2015

Annus Horriblis: Ghana's Economy in 2015 & 2016

Thomas Sowell could not have said it any better … “It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong.” If this year the economy continually drifted from showing so much promise when Mills was in charge, then I cannot sincerely expect any better from our government - one which shows little commitment to administer any form of retribution to corrupt officials - in the coming year … an election year! I comment and predict those aspects of the economy which affected me the most. 

  •  Power & Fuel

Karpower’s 215.22MW addition to the national grid has stabilized the supply of electricity to my area for the past five days. I expect this to continue throughout the first quarter of 2016. Paying more for power is obvious now; mismanagement beckons, but the sight on elections will probably ensure that power supply is sustained. Why this government scrapped off subsidies on fuel when commodity prices were falling still baffles me (IMF can side-eye me all they want). It wouldn’t surprise me though if we see a sudden drop in fuel prices somewhere next year.

  •  Exchange rates

There were reports early this year that investors were not enthused about our bonds. Well, if anything at all, macroeconomic indices have worsened. When my best friend wanted to sell me some dollars somewhere in the third quarter of this year, our negotiations on rates turned out to be a full blown economic dialogue; I was firm about the depreciation of the Cedi by end of year even though we witnessed what seemed like a miraculous gain by the Cedi against the Dollar. I expect the Cedi to continually depreciate in 2016!

  • Inflation

“Inflation is taxation without legislation” we all know who said that, but taxation with or without legislation is still doom for us. The recently read Budget Statement forecasts some tax hikes, worse so in withholding taxes. I completely agree with Reagan … "we don't have a trillion-dollar debt because we haven't taxed enough; we have a trillion-dollar debt because we spend too much" and this coming year will probably witness an all-time high inflation in this country!

*drops mic*

[*thoughts* I'm no right-wing, not even low-key *pensive*]

Friday, 6 November 2015

Risky Sex: Shadow Banks & Conventional Banks

If you were born in the late 80's, then your childhood was inevitably garnished with the infectious "susu box savings" culture. Some of us though, preferred perforating an empty milk tin to serve the same purpose; we left the susu box for the dadabees. Adults around that period did their susu in groups: each member agreed to contribute a fixed amount monthly and a simple ballot determined who took the accrued sum each time the contributions were gathered.

Speaking of "susu," literature suggests that the term originated from Nigeria, but then in 1955, Canadian Catholic missionaries formed what became known as the first credit union in Africa in the Northern part of Ghana. The formalization of micro-finance in Ghana began in the 90's and since that period, the commercialization of MFIs (Micro-Finance Institutions) and other financial institutions (collectively referred to as Shadow Banks in recent times) red-blooded the growth of small businesses and sole proprietorships. However, when Lehman Brothers collapsed in September 2008, it brought the horrors of recession on the global economy, and fingers were pointed at shadow banks.

Financial experts bemoaned the improperly regulated shadow banking industry, cautioning and reminding the global economy of how they bait growing economies with their undeniable advantages and their role in the fight against poverty. Then of course, CHINA! In 2013, more than half of all lending in the pork-eating capital of the world came from shadow banks. Relative to their share of the global economic pie, they have the biggest regulatory arbitrage when it comes to shadow banking. Simply put, they spoon-feed shadow banks. This is done by restricting banks from lending to specific industries and offering higher returns on savings. That technically opens the backdoor of the restriction to banks: it encourages them to lend more to the shadow banks. Because shadow banks are not properly regulated, losses are prevalent. When that happens, their inability to payback obviously hurts the lending banks. The good news for China though: conventional banks have kicked aside shadow banks and have established themselves as the go-to guys for corporate funding. A laudable achievement, and a huge turnaround from mid 2014.

In Ghana, shadow banks and commercial banks are also complements, call them Kim and Kanye, or better kokonte and groundnut soup, but unlike China, these two keep having risky sex. Banks have acknowledged how pleasurable it is to lend to micro-finance and financial institutions are doing it vigorously. As of October 2014, the country had a staggering amount of registered and active MFIs and Financial Institutions: 92 and 7 respectively. Reviewing the list made me realize that most of those I see around and in major markets are not in fact registered, even though they have intimidating signboards with "Company Limited" next to their names. The shadow banking industry in Ghana has "kume preko" interest rates and most accept every electrical appliance common to Ghanaians as collateral. Truth is, they process loans faster (some now give loans in less than 45 minutes), establishing themselves as the go-to guys when individuals are hard-pressed. The paid-up capital required to incorporate a MFI is no child's play, but those who pose the major risks are the new ones or those with little working capital to absorb losses resulting from individuals who default (recovery rate of the industry is still abysmal).

Soon, some will drown and that will cast a shadow on the books of commercial banks who have either lent them money or supported/financed their incorporation. That phenomenon beckons, as the shadow banking industry still remains an improperly regulated one, but the two will keep indulging for a long time until one obviously gives the other an incurable STD.

Wednesday, 3 June 2015

Integration: The One Thing Africa Needs

The first European Community, the European Coal and Steel Community (ECSC), was proposed by the French economist Jean Monnet  as a means of strengthening ties between France and Germany through the integration of coal and steel industries after WWII. This obviously successful plan of ensuring security in Europe was then opened up to other European countries with the Treaty of Paris being signed in 1951 (which expired in July 2002). This was profitable to all involved and further attempts at integration between the then member states were made and fast forward to now, the presence of the European Union. If European countries saw the need to integrate to achieve lasting peace and increase prosperity in a continent scarred by war, how determined are African countries to achieve political and economic independence after the shared pain of colonialism and slavery?

It certainly is asking too much of countries to offer up part of their sovereignty to an organisation (as is the case with the supranational organisation of the EU) to achieve common interests but it certainly will be for our own good. What does the continent of Africa lack? Technology? A thriving secondary market? How difficult will that be to achieve should we (all 54 countries) work together as a single force? Granted, integration of all 54 countries will not be an easy feat, even the EU has currently 28 member states but that is their issue.

Africa has a large and youthful workforce which when given proper education and training, will be more than able to develop ideas and develop technological know-how to process the vast primary resources we have. Our internal market looks very promising. Imagine if we, as a community, control prices of gold from South Africa and Ghana, cocoa from Ivory Coast and Ghana, crude oil from Nigeria, Libya and Cape Verde, timber, bauxite, aluminium, all resources from the North, West, East and South of Africa. How will our internal market look like should all 54 countries decide on import restrictions from the West. No longer will we be a dumping ground for second-hand clothes, because we have more than enough cotton produced in our backyard and more than enough designers who create styles which suit us (mind you, not of inferior quality either because I’ll be damned if Christie Brown doesn’t make clothes if not better than rival that of Prada and other houses). Neither will we have the need to import carrots from the Netherlands because South Africa produces more than enough and why ever import dairy products with our Fulani herdsmen?

We have it all right here. Our focus should be on our comparative advantages as individual states and with that the improvement of the integral market. Perhaps this is far fetched, given our record of corrupt leaders, but the upcoming generation are frustrated so it is not exactly improbable. Only if we will be willing to identify the laws of whatever organisation it will be as sovereign and its laws supreme over the laws of the individual member states. An attempt to make this possible will mean we no longer have to seek out help from countries which put us at an unfair disadvantage and take our primary resources at a steal and sell us the processed materials at outrageous prices plus incredulous interest rates and conditions on loans when they owe us reparations!

We were not as integrated before colonialism but we sure were productive and we have not lost that touch. We have only been made to believe our output is not on par with theirs, which is not true but for our lack of technology which can be fixed. Integration, and with a supranational organisation which will not only enhance economic growth but political security and whatnot, will only push us from developing economy to a developed economy.

By @ayawuku (

Wednesday, 5 November 2014

Impossible!: Christianity & Feminism ...

The Christian today is either confused, doesn't read his/her Bible, or is probably following some atheist on twitter. But Christians fighting for gender equality simply don't read their Bibles. But thank (insert the name of your God here ... ) for today. This is a Wednesday sermon, enjoy!

An old man, returning from his work, raised his eyes and saw a traveler in an open square of the city (that's exactly how the Bible puts it in Judges 19:16-30). He asked where he was going and where he came from. The stranded stranger elaborated and indicated that no one was willing to house him. The old man took him into his house to spend the night. Now, this is what happened that evening after the old man took the stranger into his house ...

"... suddenly certain men of the city, perverted men, surrounded the house and beat on the door. They spoke to the master of the house, the old man, saying, “Bring out the man who came to your house, that we may know him carnally!”

But the man, the master of the house, went out to them and said to them, “No, my brethren! I beg you, do not act so wickedly! Seeing this man has come into my house, do not commit this outrage. Look, here is my virgin daughter and the man’s concubine; let me bring them out now. Humble them, and do with them as you please; but to this man do not do such a vile thing!”

In other words, the total stranger is worth more than his own daughter! His own daughter (just by virtue of being a woman, and oh, the man's concubine also) deserve any inhumane treatment, but not the man, why?! This text broke my heart as a Christian, but it crushed me, and shrank my testicles when I read it from the perspective of someone who will one day have daughters. If this is what pleases God, then please, "let this cup pass me by!"

Israel had an interesting way of treating women who gave birth, as the Bible gives account of it in Leviticus 12. Women were considered to be unclean after childbirth (is this not nonsense?). To prevent their uncleanliness from spreading, they were isolated for 7 days (you see, they treated women who have given birth like they had contracted Ebola). Now, whats even more absurd is the fact that, if the child is a boy, isolation lasted for 7 days, but if the child was a girl (the text refers to a girl as a maid child in some Bible versions), she was to be isolated for 14 days, plus some special rituals. Israel nie! God's people nie! (Ah well, they were obeying God and his priest bia?!)

Speaking of priests, God through Moses told his priests to burn their daughters if they indulge in sex before marriage (Leviticus 21, Captioned, Regulations For The Conduct of Priests). Here also, the Bible, or God, makes no mention of what ought to be done to the son of the priest if he indulges in premarital sex (If you are the daughter of a man of God, give thanks to civilization and the heathens who propelled it, because we know you're not a virgin). And oh, the Bible says a man can rape a virgin and just walk away, by paying the dowry for virgins in Deuteronomy 22:28-29. This is the text which classifies the woman among a man's property. Elaborating on this will make this text too long and I am trying very hard to prevent that. Another sermon will be devoted to that soon.

Let us end today's sermon with this text ... "For man is not from woman, but woman from man. Nor was man created for the woman, but woman for the man - 1 Corinthians 11:8-9" so why worry yourself as a Christian, fighting for gender equality? The Bible is very emphatic, that "the head of every woman is the man" (this is the word of the Lord). 1 Timothy 2, from verse 8 downwards is unnecessarily absurd! "Let a woman learn in silence with all submission. And I do not permit a woman to teach or to have authority over a man, but to be in silence. For Adam was formed first, then Eve. And Adam was not deceived, but the woman being deceived, fell into transgression" Ah?! So which part of the Bible teaches you (yes you!, the christian feminist) to fight for gender equality? It has never been the will of the Lord your God, and it will never be!