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Ghana's debt restructuring talks heighten as official creditors convene on Monday

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Running a small business is demanding. Each day presents challenges that can affect your cash flow, your customers, and your ability to grow. Amid these demands, it is easy to lose sight of long-term financial priorities. However, businesses that last are not only those with good products or strong customer service. They are often the ones with better financial habits. This article outlines seven essential points that will help SMEs manage their finances more effectively, reduce risk, and plan for growth. 1. Start with a Clear Financial Plan A good financial plan gives direction to your business. It helps you set targets, allocate resources, and make informed decisions. Start by defining your financial goals. These should be SMART - specific, measurable, actionable, realistic, and tied to timelines. For example, you should determine how much revenue you need each month, what level of production or service delivery is required to meet that target, and how you intend to achieve it. Once your targets are clear, you will need a working budget. A good budget helps you monitor income and expenses, manage cash flow, and ensure that your business remains on track. It also provides a basis for deciding what to prioritise and what to postpone. At its best, your financial plan should help you answer key operational questions such as what resources are required to operate or grow, where those resources will come from, what they will cost, and whether your business is in a position to take them on. Planning in this way reduces uncertainty and allows you to run your business with greater clarity and confidence. 2. Maintain Accurate Financial Records Accurate financial records are essential for any business. Whether you are managing day-to-day operations, planning for future growth, or applying for funding, clear and reliable financial information allows you to make sound decisions. Many small businesses struggle in this area due to time constraints, limited expertise, or a lack of systems. However, proper record-keeping should never be overlooked. It supports internal decision-making, strengthens external credibility, and improves your ability to respond to opportunities or risks. Business owners can start by gaining basic knowledge of accounting principles and tools. Training employees in simple record-keeping practices also helps to build internal capacity. In some cases, it may be worthwhile to engage professionals who can help you put the right systems in place and prepare essential reports at a cost that makes sense for your business. 3. Choose a Banking Partner Aligned with Your Goals The right banking relationship can make a real difference to your business. A bank like Absa Bank is more than a place to keep your funds. It is a partner that can support your operations, guide your financial planning, and help you take advantage of growth opportunities. Begin by understanding your business needs. These might include working capital support, payments and collections services, or trade finance. Once your needs are clear, assess whether your bank offers the right mix of services, accessibility, and expertise. Your banking partner should make it easier to run your business, not harder. They should share your ambition to grow, be responsive to your concerns, and provide solutions that are tailored to the stage your business is in. A strong banking relationship will give you confidence and peace of mind as you build your enterprise. 4. Deploy Effective Payment Solutions Revenue is the foundation of every business and the way you go about collecting it is key. In today’s economy, customers expect fast, simple, and secure payment options. If your business only accepts cash, you may be turning away potential sales without realising it. Providing customers with flexible payment options is no longer a luxury. It is a necessity for growth and long-term relevance in a digital economy. Offer customers alternatives such as instant bank transfers, mobile money, card payments through point-of-sale devices, or more innovative solutions like Absa Mobi Tap to improve your customer experience and increase your reach. These methods reduce delays, enhance transaction security, and demonstrate professionalism. 5. Meet Statutory Obligations Promptly Every business has legal and regulatory responsibilities. These include filing and paying taxes, submitting Social Security and National Insurance Trust contributions, and meeting other sector-specific requirements. Complying with these obligations on time helps you avoid penalties and disruptions. It also builds your business’s reputation and improves your standing with financial institutions and regulators. To stay compliant, you should adopt a legal structure that suits your business model and goals. You may also wish to seek legal or tax advice at key points in your journey. Planning ahead for obligations such as annual tax payments or quarterly filings ensures that you are not caught off guard. Meeting your statutory responsibilities consistently is a mark of a well-run business. 6. Manage Your Risks Running any business involves risk. These risks may include delayed payments from customers, unexpected costs, economic downturns, or even natural disasters. For small businesses operating with limited resources, such events can be difficult to absorb. This is why risk management must be part of your financial routine. Start by identifying the main risks that could affect your business. Put in place basic measures to protect your operations. This could mean setting aside emergency reserves, purchasing insurance, or diversifying your income streams. Being proactive about risk does not eliminate uncertainty, but it helps you stay in control when challenges arise. It also signals to lenders, partners, and customers that your business is prepared and resilient. 7. Separate Business and Personal Finances It may be tempting to treat your business account as your personal wallet, especially in the early stages. However, failing to separate your business and personal finances can lead to confusion, tax problems, and credibility issues. As a business owner, you should pay yourself a fixed salary. Avoid withdrawing funds at random or covering personal expenses with business income. If you invest personal funds in the business, document it properly as a loan or equity contribution. Keeping your finances separate helps you maintain clear records, assess business performance accurately, and present your enterprise in a more professional light to partners, banks, and regulators. At Absa Bank, we believe that strong financial habits form the backbone of every successful enterprise. Our commitment is to walk with our clients and customers at each stage of their journey, providing guidance, tools, and solutions that help SMEs grow sustainably and with purpose.

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Ghana’s debt restructuring talks heighten as official creditors convene on Monday

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Ghana's debt restructuring talks heighten as official creditors convene on Monday

Ghana's debt restructuring talks heighten as official creditors convene on Monday

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In a pivotal step toward securing its next tranche of funding from the International Monetary Fund (IMF), Ghana’s official creditors are set to gather on Monday, January 8, for crucial discussions on the restructuring of approximately $5.4 billion in loans.

The meeting, which involves bilateral lenders such as the governments of China and France co-chairing the Official Creditor Committee (OCC), holds significant weight, constituting around a quarter of Ghana’s $20 billion external debt earmarked for restructuring.

Reuters have revealed that the primary focus of the meeting is expected to center on reaching an agreement on a “cut-off date.” This date signifies the point after which new loans from bilateral creditors will not be subject to restructuring. However, defining this date has proven to be a challenging hurdle in Ghana’s debt rework.

Conflicting preferences among creditors have emerged, with some advocating for a cut-off date of December 31, 2022, linked to Ghana’s default earlier that month.

Conversely, others argue for March 24, 2020, as it marks the initiation of the Group of 20’s debt service suspension initiative (DSSI) to assist the world’s poorest countries in mitigating the impacts of the COVID crisis. Notably, Ghana did not participate in the DSSI.

In anticipation of the OCC meeting on January 8, the Paris Club of major creditor nations, excluding China, is slated to convene on Friday. The club has reportedly shared a technical note on Ghana with other bilateral creditors and multilateral lenders, proposing December 2022 as the cut-off date.

However, sources indicate that an agreement on the cut-off date remains elusive, emphasizing its critical role in paving the way for a broader consensus on debt restructuring.

The spokesperson for the Paris Club declined to comment on upcoming meetings, and Ghana’s finance ministry did not respond immediately to requests for comments.

Ghana must navigate through these debt restructuring talks to secure the IMF executive board’s approval for the next $600 million payout from a $3 billion rescue loan.

This approval is contingent on financing assurances, affirming that bilateral creditors are actively participating in debt relief as outlined in the IMF program.

Having requested bilateral debt restructuring under the Common Framework a year ago, established during the COVID-19 pandemic by the G20 leading economies, Ghana is concurrently engaged in talks with overseas bondholders to restructure its international debt exceeding $13 billion.

Major global asset managers such as BlackRock, PIMCO, Vontobel, AllianceBernstein, and Neuberger Berman are among the bondholders involved in these negotiations.

The outcome of these discussions holds significant implications for Ghana’s economic recovery, given the deep economic crisis characterized by escalating inflation and surging government debt servicing costs.

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