Pres. Mahama Fact-Checked: Cedi Stabilisation, Domestic Borrowing and Pharmaceutical Sector Claims – True

Pres. Mahama addressed the 12th edition of the Chief Executive Officers’ Breakfast Meeting, organised by the Ghana Investment Promotion Council on November 14, 2016. At the event, he touted the stabilisation of the Cedi and reduction of domestic borrowing as recent achievements. Both these claims were found to be mostly true when fact checked. He further claimed that his government has provided the local pharmaceutical manufacturing industry with incentives to make it one of the biggest in West Africa. This claim was also found to be entirely true. Below are the specific claims he made, the fact-checking verdicts and the bases for the verdicts.

Claim 1: The Cedis has stabilised quite comfortably.

Verdict: Mostly True

Explanation: Pres. Mahama’s claim of the stabilisation of Ghana’s currency (Ghana Cedi) was found to be mostly true. This is because the Cedi has recently experienced much less depreciation against major currencies and even recorded some appreciation, against some major currencies. This is according to the recent Monetary Policy Report released by the Bank of Ghana.

Cum. Change (%) Jan-Aug 2015 -18.4 -17.4 -11.3
Cum. Change (%) Jan-Aug 2016 -3.8 8.8 -6.0

Source: Bank of Ghana

Between January and August, 2015, the cedi depreciated by 18.4, 17.4 and 11.3 percent against the US dollar, the pound and the Euro respectively. Over the same period (Jan-Aug) in 2016, though the Cedi depreciated, it did so by 3.8% and 6.0% against the US dollar and the Euro respectively, whiles appreciating by 8.0% against the pound sterling. The Cedi in 2016 has therefore seen more stability than it did in the previous year.

However, experts claim the relative stability of the Cedi in recent times is precariously reliant on foreign direct investments and inflows.

Claim 2: Government is reducing continuously its domestic borrowing.

Verdict: Mostly True

Explanation: Government has been criticised of borrowing heavily from the domestic banking sector to the detriment of the private sector who also have to compete with it for credit. However, upon analysing the Financial Stability Report for September 2016 released by the Bank of Ghana, Pres. Mahama’s claim has some evidence. The report indicates an increase in domestic banks’ loans to private enterprises from 77.3% in July 2015 to 78.8% in July 2016, whiles loans to government and public institutions declined from 5.0% in July 2015 to 4.3% in July 2016. Also, credit to public enterprises represented 1.4% of gross loans and advances in July 2016, a reduction from 2.4% recorded in July 2015.

Furthermore, according to the 2016 Mid-Year Budget Review, the Net Domestic Financing (NDF) of Ghana’s budget amounted to a provisional estimate of GH¢ 2,882.4 million in 2015. This was considerably less (49.2%) than the GH¢ 5,676.5 million recorded in 2014.

At least on the basis of these indicators, the government has been less active in terms of borrowing from the domestic market, preferring more external sources of borrowing.

Claim 3: We have also given them (pharmaceutical sector) incentives by reducing the taxes on their raw material so that they can be more competitive. In West Africa, Ghana and Nigeria are the two biggest pharmaceutical manufacturers.

Verdict: Entirely True

Explanation: A number of incentives has been provided to the pharmaceutical industry in Ghana. President Mahama was reported to have announced US$45 million facility to the pharmaceutical industry through the Export, Trade, Agricultural and Industrial Development Fund (EDAIF). Also, government has amended the Value Added Tax (VAT) Law, to increase the number of active pharmaceutical ingredients, inputs and pharmaceuticals on the tax exemption list from 66 to over 510 in 2015. Again, some US$27 million has been made available to some local pharmaceutical companies to help them re-tool to acquire World Health Organisation (WHO) certifications. All these interventions are helping boost the pharmaceutical sector in Ghana.

Finally, according to the Pharmaceutical Manufacturers Association of Ghana, several local pharmaceutical companies actively export their products to other countries in the West African sub region. They also state that, “apart from Nigeria, Ghana is the only country in the West Africa Region with significant pharmaceutical manufacturing industry.”


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