Ensure prudent use of tax revenues - GHAMFIN urges government

Yaw Gyamfi, Executive Director of Ghana Microfinance Institutions Network (GHAMFIN), has advised the government to ensure the judicious utilitisation of tax revenues.

That, he said, would ensure tax compliance and improve government’s revenue mobilisation drive in the future.

His call follows the recent passage of three new revenue tax bills by Parliament to help rake in some GHS4 billion annually to increase government revenue.

The tax bills included the Income Tax Amendment Bill, the Excise Duty Amendment Bill and the Growth and Sustainability Amendment Bill.

The new taxes have, however, been criticised by many, with business associations such as the Association of Ghana Industries (AGI) and the Ghana Union of Traders Association (GUTA), warning that the taxes would collapse businesses.

Speaking in an interview with the media on the sidelines of the 2nd Microfinance Forum in Accra, Mr Gyamfi said, it was not out of place for the Government to introduce new taxes as part of efforts to improve its revenue, adding that governments worldwide relied on taxes to shore up their revenue targets.

However, he explained that, ensuring an effective utilisation of revenues from such taxes was critical to ensure that the citizenry reaped the benefits.

“For me, I see these taxes as a way of supporting the economy, but you also ask yourself, what will be the effects on the business and the people. Those are the areas we must look at. I do hope that Parliament would not approve anything that will destroy the whole business community,” he said.

He added that “if you also look beyond Ghana, taxes are what every country use to develop, even those that are giving us support, the advanced countries, the number one thing that they do well is the taxes and we expect that we should have a better way of getting returns on the taxes.

“Once we get them from the people, what are we going to use it for, that is the most crucial aspect. You know where, once people pay taxes and they know that you are using it for a, b, c, d, everybody will be happy to pay the taxes, so, for me, that would be my little advice, that, once our authorities are getting all the taxes needed, they should make sure that we use it for the right purpose so that everybody can enjoy out of it.”

The theme for the forum was: “Building Resilient and Sustainable Non-Bank Financial Institutions’ Sector in the Wake of Current Economic Challenges.”

The purpose of the forum was to provide a platform for members of the Association to share achievements, experiences and discuss challenges confronting the sector, as well as provide feedback for policymakers and regulators.

Mr Bernard Joe Appiah, Board Chairman, GHAMFIN, said the role of microfinance sector could not be over-emphasised, especially in assuring financial inclusion.

According to him, in 2021, the microfinance sector contributed 3.96 per cent to the country’s Gross Domestic Product and employed approximately 340,000 people.

However, he noted that, recent developments such as the COVID, the Russia-Ukraine war and the local and global economic crisis had impacted negatively on the operations of microfinance companies.

He therefore emphasised the need for policymakers to put in place measures to make the sector thrive.

Dr Richmond Atuahene, Corporate Governance and Banking Consultant, said the current microeconomic challenges, including skyrocketing inflation, depreciation of the local currency against major trading currencies, posed major threats to the survival and growth of microfinance companies.

“The microeconomic challenges in Ghana can be best described as precarious. Why do I say that? We have rocketing inflation, hitting 54, currently dropping to 53.5, have experienced persistent currency depreciation over the last two years, not to say much,” he said.

“Monetary policy rates over two years now have jumped from 14.5 to 20.9 per cent, as the regulator is trying to tame inflation by inflation targeting.”

He advised microfinance companies to adopt good corporate governance practices such as effective board oversight, upgraded technological infrastructure and improving long-term investment human capacities to enhance their resilient and sustainability amid the current economic challenges.

Patience Yeboah-Nkansah, Deputy Head, Other Financial Institution Supervision Department (OFISD), entreated microfinance institutions to submit their annual returns to enable the Bank of Ghana to better advise them on best practices.