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Gold, cocoa dip in revenues calls for focus on NTEs

23 Wednesday Oct 2013

Posted by theinvesmentman in ACCRA, Africa, AngloGold Ashanti, Bank of Ghana, banks, Business, Ecobank, Export, Get rich quick, Ghana, Ghana cedi, Gold as an investment, investment, Mining, Newmont Ghana, South Africa, Uncategorized, United States, usa, West Africa, World Bank

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Africa, AngloGold Ashanti, Bank of Ghana, Central bank, Export, ghana, Ghana cedi, Gold as an investment, Mining, Newmont Ghana, Price, Record producer, South Africa, United States, West Africa, World Bank

Reflex Eco Group – Africa News

Antony Sedzro (Ghanaian journalist)

sedtony@yahoo.com

This Blog is sponsored by http://www.reflexecogroup.com

The World Bank in its latest report is warning Ghana of huge drop in export earnings as a result of falling prices of gold and cocoa. The bank based its predictions on the huge fall in prices of the two commodities in the coming months.

The development has already affected revenue from these commodities. The Monetary Policy Committee of the Bank of Ghana, the country’s central bank, in July released figures to show that export earnings from gold for the first half of 2013 was estimated at US$2.7 billion, compared to US$3.2 billion in the same period in 2012, fall of about 16%. This fall is attributable to lower prices and volumes.

The price of gold on the international market has fallen from a high of about $1,700 in November 2012 to a low of $1,200 in the middle of this year. This is the highest fall in the value of the precious metal in thirty years.

Gold is Ghana’s main foreign exchange earner and the country is Africa’s second biggest producer behind South Africa. The fall in the world market price of the commodity has equally hit mining companies in the country.

Anglogold Ashanti, which operates one of the biggest mines in Ghana, has started the process of laying off about 430 of its mine workers. Newmont Ghana will cut at least 300 jobs in a bid to manage costs more efficiently, directors of the company said last month. Other mining firms have cut back on new mining projects in Ghana, West Africa’s second biggest economy.
During the boom in commodity prices, Ghana last year produced 4.3 million ounces of gold in 2012, a record for the country. Artisanal (small-scale) mining, which contributes about 30% to the country’s total production annually, also blossomed and saw the attraction of thousands of Chinese miners who mined illegally. A public outcry against the presence of Chinese miners led to a security crackdown on their operations. But even the artisanal miners have seen a sharp drop in their activities due to the steep fall in the precious metal’s price.

In a contribution on how this fall in revenue on the country’s economy can be remedied in the long term, respected Ghanaian economist, Dr. Joe Abbey, has revealed that concentrating on Non-traditional Exports (NTEs) could help address the expected challenge in the long term.

“So there is no choice for us but to look at the factors that determine the quality and cost of producing in this country. Oil may save something for us now, but we need to go beyond oil and get to non-commodity-based thing.”

Ghana produces and exports pineapples, oranges, bananas, cashew nuts, and others. These are normally produced by small-holder farmers with very low production capacity but with enormous potentially if supported financially.
For many years, the country has depended on hard currencies earned from exports from gold and cocoa to finance imports and shore up the local currency’s value.
The fall in price of gold and cocoa has also adversely affected Ghana’s currency, the Ghana cedi.
To stem this trend, Dr. Abbey, states that with less earnings from exports and an less controlled imports, “the Bank of Ghana would have to draw down on its holding of foreign exchange to meet the gaps”.
In spite of Ghana’s political stability, the Ghana cedi is currently the second most depreciated currency in Africa, according to the latest Ecobank report on the performance of currencies in Africa.
The report puts the cedi’s rate of depreciation at 14.5%.

Related articles
  • Ghana’s Terkper Seeks Budget Gap Below 9% of GDP in 2014 – Bloomberg (bloomberg.com)
  • Ghana cedi falls 3.9% in value in eight months of 2013 (ghanabusinessnews.com)
  • Ghana’s Biggest Cocoa Buyer Delays 150 Million-Cedi Rights Offer – Bloomberg (bloomberg.com)
  • Ghana Turns to Longer Term Debt After Fitch Cuts Rating – Bloomberg (bloomberg.com)
  • GNPA urged to publish names of debtors (modernghana.com)
  • Increase earnings of cocoa farmers to cushion them – Akrofuom MP (modernghana.com)
  • Ghana launches $1.2m cocoa platform (ghanabusinessnews.com)
  • Ghana cuts imports by $300m as trade deficit shrinks (ghanabusinessnews.com)
  • Fitch ratings doesn’t reflect true state of economy – Finance Ministry (modernghana.com)
  • COCOBOD forms committee to tackle cocoa farmers’ challenges (ghanabusinessnews.com)

Africa Focused News

14 Monday Oct 2013

Posted by theinvesmentman in ACCRA, Africa, Angola, Bank of Ghana, banks, Barack Obama, Barclays, Brazil, Business, Cape Verde, china, Emmanuel Armah Kofi Buah, EU, European Union, Get rich quick, Ghana, Government, investment, Kenya, Mozambique, Nigeria, Nkroful, Oil, Road Fund, Rwanda, Somalia, Sub-Saharan Africa, Tanzania, Turkey, Uganda, Uncategorized, United States, usa, World Bank, World Tourism Day

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REPORT OF LAST WEEK (from 07/10/13 to 11/10/13)

by Dario Galluccio

This Blog is sponsored by http://www.reflexecogroup.com

Kenya: CFC Stanbic Bank partners Aeolus to build wind power plant

Kenya’s CFC Stanbic Bank has partnered Aeolus Kenya (AKL) – a member of the Power Africa initiative led by the United States President Barack Obama- to build a Sh12.9 billion ($150 million) wind power plant in Kinangop, Kenya. The proposed power plant will be the largest wind power generation project to be built in sub-Saharan Africa to date, outside of South Africa. It is expected to come on line in mid-2015. The wind project has already been registered under the United Nations’ Clean Development Mechanism.

The Kinangop Wind Plant which will provide electricity to approximately 150,000 Kenyan households, will add a further 60MW to Kenya’s 1,672MW national power grid.

According to CfC Stanbic Bank’s East Africa Head of Debt Solutions and Infrastructure Finance, Kwame Parker, “The project is designed to provide a clean source of electricity to Kenya. It will not only contribute to the social and economic development of Kenya, but will also significantly help ease the energy supply deficit that the country is grappling with.”

Ghana: Improved energy will push forward growth

Mr. Emmanuel Armah Kofi Buah, Minister of Energy has said that the vigorous expansion of various energy programmes is to increase power production as well as support the growth and expansion of all the weak sectors of the national economy. He said government is rolling-out the various programmes and projects, particularly in the Western Region, as part of the energy expansion drive — which is geared toward positioning the sector to play the critical role expected for directing Ghana’s effort toward industrialisation.

Speaking at the World Tourism Day at Nkroful in the Ellembelle District of the Western Region, he noted that the country’s oil and gas sector is currently underdeveloped. According to him, the discovery of oil and gas in commercial quantities on the Western Region culminated in an influx of people — the stage is set for integrated tourism development in the region, so that instead of a potential threat from oil and gas activity to our environment, oil and gas activities will be made conducive to our situation and be a blessing to our environment.

Ghana: EU to support agriculture production

The European Union (EU) is to support Ghana to revolutionalise its agricultural production.

Mr Dacian Ciolos, EU Commissioner for Agriculture and Rural Development, who made this known in Accra, said the support would be in the form of financial and technical interventions.

Agriculture is not only an economic issue, but also a social issue and this calls for the support,” he said. Stressing that the EU would take Ghana’s agricultural development objectives into consideration.

Dr Yemi Akinbamijo, Manager of Forum for Agricultural Research in Africa (FARA) said the partnership between EU and Ghana, which is under negotiation would take place from 2014- 2020. He said, it is a period for the promotion of agriculture and security.

Dr Akinbamijo said : agriculture would provide greater help to reduce poverty if done properly; pointing out that production, trading, finance, as well as infrastructure, education, science and technology and regional integration; are the seven pillars of FARA, which would be used to develop Ghana.

Ghana: Oil production hits 115,000 barrels daily

Daily oil production hit 115,000 barrels per day in June 2013, significantly higher than the projected average for the year, the African Center for Energy Policy (ACEP) report on Government Compliance with the Oil Revenue Management Act in the 2013 budget has revealed. Total oil revenue of GH¢1.15 billion also far exceeded the projected target by GH¢362.3 million.

The report urged government to initiate discussions with Sabre Oil and Gas to recover the capital gains tax from the sale of its stake in offshore blocks. It also indicted the 2013 budget for failing to capture capital gains tax as one of the revenue streams. It added “the Petroleum Income Tax Law should be harmonized with the Internal Revenue Act.” Released by the Executive Director of ACEP Mohammed Amin Adam, the report also said the projected transfers to the Ghana Petroleum Holding Fund will be exceeded when the data on petroleum is released.

Ghana: Government commits GH¢350 million towards road sector

Government has since June released GH¢ 350 million for the road sub-sector out of the GH¢ 706 million allocated in the 2013 budget. Alhaji Amin Amidu Sulemani, Minister of Roads and Highways, said the Ministry has also improved upon revenue generation into the Road Fund for maintenance works. The total fund accrued from January to June was GH¢ 126 million, an increase of GH¢ 9 million over the amount recorded during the same period in 2012.

Alhaji Sulemani, who made this known during the inauguration of the Progressive Road Contractors Association (PROCA), urged members as well as the Association of Road Contractors to unite for the growth of the industry.

Alhaji Sulemani told members of PROCA: “As a result of the many interventions that have been made in the sector since the last couple of years, the condition mix of the road network has improved from 29% good, 27% fair and 44% poor in 2000, to 43% good, 25% fair and 32% poor as at end of 2012.

Mrs Joana Adjei, National President of PROCA promised to run an open door policy as well as an all inclusive administration to make the association stronger. She said the new administration would help revive the training programmes of the Association. Mrs Adjei said majority of contractors are suffering as a result of delayed payment for work done. Mr Michael Aidoo, the outgoing President of PROCA advised the new executives to take criticism in good faith.

Ghana: Omega Capital launches 2 funds

According to Nana Kumapremereh Nketiah, Chief Executive Officer of Omega Capital Limited, a private equity and investment management firm, the capital market is currently underserved and it behoves industry regulators and fund managers to adopt a results-driven approach in order to bridge the gap.

Speaking in an interview on the sidelines of the launch of the company’s twin funds — Omega Income Fund and Omega Equity Fund — in Accra, he said the capital market has huge potential which calls for result-driven measures in order for such potential to be fully tapped.

On the way forward, Nana Nketiah called for improved investor education to, among others, enlighten the public on the benefits of investment as a means to financial and socio-economic development. He said introduction of the funds onto the market is the company’s way of empowering the general public to secure their future: “The funds seek to empower investors to secure their future. By encouraging them to invest, we are helping them to link their future to investments.”

Omega’s income fund is a medium-term open-ended mutual fund that seeks to achieve growth in income while conserving principal by investing in a diversified portfolio of fixed income securities. The equity fund targets superior long-term returns by investing in stocks and fixed income securities. Both funds will be managed by Omega Capital Limited, which is a licenced investment fund manager, with HFC Bank as fund custodian. It targets individuals, pension and provident funds, and other corporate institutions.

Tanzania: It Is All Rosy for Tanzania

It is good news for Tanzania as the economy grows impressively above the region’s projected rates, inflation is well controlled and the foreign investments pour in thanks to macroeconomic stability maintained over almost a decade and institutional and policy reforms.

The 2013 African Economic Outlook report launched last week, confirmed the impressive performance of the economy which grew to 6.9 per cent in 2012 and is estimated reach seven per cent this year and 7.2 per cent in 2014. The projected rates of the sub-Saharan region are 4.8 per cent in 2013 and 5.3 per cent in 2014. Mining boom, particularly gold production, tourism, construction transport and communication activities have been the main drivers of the growth.

The future looks ever brighter, with an impressive series of offshore gas discoveries set to further boost the economy and propel the country into a middle income status by 2025 as envisaged in the national development roadmap, the vision 2025. The mining portfolio is performing equally impressive with gold production going on well despite a slump in price at the world market and uranium extraction set to commence soon. With this kind of picture, it is hard to complain about the economy. Everything looks so rosy, albeit at the face value, that it covers the weak areas.

Ghana: Mining sector to reach US$774m

The value of the country’s mining sector is anticipated to reach US$774million in 2017, up from US$669 million in 2012, as bauxite and gold production see substantial increases.

This is a significant break from the past decade, when the mining sector value barely rose as gold output declined — offsetting much of the increases in price. “We expect gold to be the main driver of growth, but see bauxite playing a growing role,” Ghana Mining Report quarter-four survey conducted by the Fast Market Research, an online aggregator and distributor of market research and business information has revealed.

Figures from the Minerals Commission indicate that the mining industry attracted US$1.0billion of total investment inflow into the country in 2012. These investments came from producing, exploration and support Service companies. The multiplying effect of this investment in the country’s economy cannot be overestimated. The Bank of Ghana also reported that the mining industry’s contribution to total merchandise export earnings was about 43 percent in 2012.

Data from the Ghana Statistical Service show that the mining sub-sector grew by 23.5 percent in 2012. This compared favorably with the 18.8 percent it achieved in 2011. Furthermore, the Ghana Revenue Authority (GRA) has stated that the mining sub-sector maintained its position as leading contributor to the authority’s domestic tax contribution in 2012.

Africa: World Bank boosts outlook for Sub-Saharan African economies

Sub-Saharan Africa’s economic growth should increase to 5.3 per cent next year, with strong private and public investment underpinning the region’s robust performance, the World Bank said yesterday. The bank lifted its forecast for 2014 from the 5.1 per cent projected earlier this year. The region was expected to grow 5.5 per cent in 2015, up from a previous forecast of 5.2 per cent.

Growth for this year is forecast at 4.9 per cent, higher than last year’s 4.2 per cent. The figure is more than double the bank’s 2.3 per cent estimate for global growth in 2013, underscoring the attractiveness of the continent for investors. But African countries could be vulnerable to declining commodity prices and the eventual tapering of the US Federal Reserve’s bond-buying stimulus, the organisation said.

Although strong export growth has also contributed to the region’s economic advance, many countries are prone to major swings in their fortunes because they rely on a single commodity for more than 50 percent of export earnings.

Foreign direct investment flows to Sub-Saharan Africa are expected to rise 24 percent to around $40 billion in 2013. Governments in the region, such as Ethiopia, Ghana, Nigeria and South Africa, have also increased spending on public investment, much of it geared towards transport and power infrastructure.

Angola: Access to Banking Services May Reach 30 Percent By Year-Rend

The National Reserve Bank (BNA) pledges to work toward increasing the access to banking service rate among the Angolan population by at least 30% by the end of 2013, against 23% achieved in 2012, Angop has learnt. The information is expressed in a press release from the Southern Regional Delegation of National Reserve Bank, comprising the provinces of Benguela and Kwanza Sul. In order to achieve this goal BNA intends to resume in November its financial education programme, reads the document, signed by the regional delegate, Luis Henrique da Silva.

Mozambique: Investment to create 172,000 jobs over three years

Mozambique is to receive ten billion US dollars in investment over the next three years, creating 172,000 jobs, according to the government’s Investment Promotion Centre (CPI). CPI Deputy Director Godinho Alves explained that 900 projects have already received approval for implementation over the period.

The daily newspaper “Noticias” reported on Monday that foreign investment has stimulated economic development, with Mozambique being one of the world’s fasted growing economies.

Despite these positive developments, the Maputo Corridor Logistics Initiative (MCLI) has warned that investors continue to be concerned about minimising risk and maximising returns. This is because the country has a history of some projects not reaching their promised potential.

Sub-Saharan Africa: To attract 33.8 million visitors from tourism in 2012

Sub-Saharan Africa earned over $36 billion from tourist visits in 2012, a new World Bank report says October 3, 2013. According to the World Bank, the continent attracted 33.8 million visitors in 2012, up from a low 6.7 million in 1990.

The report, “Tourism in Africa: Harnessing Tourism for Growth and Improved Livelihoods”, indicated that the amount earned from tourism in 2012 was 2.8% of the region’s GDP.

The report showed that Africa’s tourism is set to boost economic growth, create new jobs and will “now outpace other regions for new tourism investment”. The report highlighted the potential of African countries to improve and expand their tourism sector, and suggested that 33 of sub-Sahara Africa’s 48 countries currently have the capacity for tourism success through establishing strong political support for developing the industry and attracting increased private investment to help finance and sustain it. The industry is expected to directly employ 6.7 million people in the region by 2021, according to the World Bank report.

Ghana: Pension savings seen rising fivefold driving sales

The end of a monopoly by Ghana’s state-owned pension fund is poised to boost savings fivefold by 2017, helping revive the nation’s corporate bond market and end a drought in initial public offerings.

According to Ekow Fynn-Aikins, regulations officer at the National Pensions Regulatory Authority in Accra, the retirement industry, with assets of 1.06 billion cedis ($484 million) in 2012, may jump to 5.5 billion cedis over the next four years. While the Ghana Stock Exchange’s Composite Index (GGSECI) has climbed 68 percent this year, the best performance in Africa, the bourse’s last IPO was more than two years ago. No company has sold bonds on the domestic market since 2008. 

There’s a perceived demand out there for new issues,” Sam Mensah, chairman of the Ghana Stock Exchange and an adviser at the Finance Ministry, said in an interview. “It’s still early days and we’ll have to wait for the pension industry to grow to know exactly what their impact can be.”

Since Ghana implemented a 2010 law in December compelling employers to commit more toward workers’ pensions and set aside contributions for private money managers for the first time, volumes on the bourse surged 75 percent as of June. The number of pension managers increased to 45 from zero when the authority began registering last year.

Tanzania: Isles courts Chinese investors

The Zanzibar First Vice- President, Seif Sharif Hamad, has asked investors from China to establish businesses in the Islands, saying there are ample opportunities in the tourism sector.

“We would love to have investors from China to invest in tourism including eco-tourism in Pemba Islands. The investment climate is conducive,” said Hamad to China Councillor General in Zanzibar, Mr Xie Yun Liang.

The Vice-President informed the ambassador that Zanzibar also welcomes investments in deep-sea fishing. Liang, who was recently appointed to the post, visited Hamad for familiarization.

“The government has been improving infrastructure which include expansion of the Zanzibar International Airport, roads, and having stable supply of electricity,” he said.

Ambassador Liang welcomed the offer saying that the historical relationship between China and Zanzibar would be further cemented by the coming of investors from China.

Uganda: To seek investor to build $2.5 Billion oil refinery

Uganda is looking for a lead investor to develop a refinery estimated to cost $2.5 billion, two weeks after issuing its first production license to China National Offshore Oil Corp. as it seeks to exploit reserves.

The investor, either a company or a group of them, will be named by April and will take an interest of as much as 60 percent in the facility, which is proposed to have capacity of 60,000 barrels a day, Robert Kasande, an assistant commissioner in the Energy Ministry, said today by phone from Entebbe, near the capital, Kampala.

Uganda, classified as one of the world’s poorest nations by the World Bank, discovered oil in 2006 and has an estimated 3.5 billion barrels of crude, according to the Energy Ministry. London-based Tullow Oil Plc (TLW), Cnooc and France’s Total SA (FP) are jointly developing the finds. The country has sub-Saharan Africa’s fourth-biggest oil reserves.

The government’s stake in the facility will account for as much as 40 percent, and the nation has invited Kenya, Rwanda, Burundi and Tanzania, which are partner countries in the East African Community, to buy an interest of as much 10 percent in the facility from Uganda, he said.

Tanzania: Inflation down to 6.1 percent

The inflation rate went to over two and half years’ low rate of 6.1 per cent last month, showing that the country’s economy is on the right track. National Bureau of Statistics (NBS) indicates that the inflation descended from 6.7 per cent of August to 6.1 per cent in September, this year. The decline, according to NBS, was supported by all four major measures of inflation index – energy, food and non-food and non-energy – that also decreased satisfactorily in September.

The new National Consumer Price Index released by NBS for September also indicated that the Annual Inflation Rate for energy and fuels has decreased to 9.6 per cent in September compared to 15.2 recorded in August.

While the Tanzania rate descends to a pleasing level, in Kenya and Uganda the inflation rate climbed up in September to 8.29 per cent and 8.0 per cent from 6.67 per cent and 7.3 per cent in August respectively.

Tanzania’s inflation rate averaged 7.72 per cent from 1999 until 2013. It reached an all time high of 19.8 per cent in December, 2011 and a record low of 3.4 per cent in February, 2003.

Nigeria, Brazil: To sign MoU on trade, investment

Nigeria and Brazil in Abuja signed a Memorandum of Understanding (MoU) to strengthen their bilateral cooperation on trade and investment. The Minister of Industry, Trade and Investment, Mr Olusegun Aganga, signed on behalf of Nigeria, while Mr Ricardo Shaefer, his Brazilian counterpart on Development, Industry and Foreign Trade, signed for his country. The News Agency of Nigeria (NAN) reports that the agreement aims at strengthening bilateral cooperation on the promotion and facilitation of trade and investment between the two countries.

According to Aganga, the agreement goes beyond trade and investment to include industrial cooperation and financing as well as how both countries can double their trade volume. The minister listed the sectors covered by the MoU to include infrastructure, power, automobile, agriculture and sugarcane to sugar among others.

“This agreement will cover cooperation in all these areas including how we double trade between the two countries, and of course how we attract investment into strategic areas of the economy.”

Nigeria: Dangote plans U.S.$34.7 Billion fresh investment in economy

The President of Dangote Group, Alhaji Aliko Dangote, has said that the Group is poised to make an additional investment totaling $US 34.7 billion in the economy by 2017. He also said the cement arm of the group will commission an additional 10 million metric ton capacity in Nigeria by mid 2014 with an additional plan to also invest US $4.7 billion over the next four years in order to ensure that cement supply stays ahead of demand.

In a keynote address during the just ended Nigeria’53rd Independence Anniversary Lecture, organised by the Lagos Chamber of Commerce and Industry, LCCI, Dangote said, the Nigerian financial sector has demonstrated its ability to support big ticket industrial projects – the most recent being the US$9 billion refinery project by Dangote Group and is poised to invest $US 34.7 billion by 2017.

Dangote said in setting an agenda for the next decade, government should improve the business climate and continuously benchmark our business environment against “best-in-class” investment destinations, implement the recently unveiled Nigeria Industrial Revolution Plan, support the new investors in the power sector to ensure they “hit the ground running” and provide the kind of outcomes Nigerians desire. He said their investment in agriculture is driven by our desire to create jobs for thousands of Nigerians and that It will increase their workforce from its present level of 26,000 employees to 750,000 employees .

Somalia: Oil and gas discovery offers ‘hope’ for investment

Somali Minister of Finance and Planning Mohamud Hassan Suleiman encouraged foreign investors to “seize the opportunity” to invest in Somalia during the Somalia Oil and Gas Summit in London Monday (October 7th).

“The discovery of oil and gas in Somalia opens up an array of hope and opportunities for the new Somalia, enabling it to influence the pace of economic recovery and the future stability of the country,” Suleiman said. “International investors and multi-national corporations are turning their attention to Somalia and we must now seize the opportunity and work with them.” Suleiman added that the government recently revised the Investment Law to make Somalia “investment friendly”, while at the same time ensuring that a fair portion of profits from the industry are re-invested in the country’s economic growth.

Ghana: Indonesian investors confer with Chamber of Commerce

A delegation of investors from Indonesia have held bilateral discussions with the Ghana Chamber of Commerce and Industry (GCCI), aimed at strengthening business relations cooperation between the countries. The delegation was led by the Director for African Affairs at the Ministry of Foreign Affairs of the Republic of Indonesia, Mr Lasro Simbolon.

Mr Lasro Simbolon underscored the need for the two nations to forge ahead in business by creating opportunities that can help increase cross-border investments.

He said was particularly impressed with the country’s development agenda, especially in areas such as infrastructures, agriculture, technological development and capacity building, which, he said are geared up to meet the expansion plans of the country.

The President of the GCCI, Hon Seth Adjei Baah, who received the delegation, said it is time to review and explore new areas of cooperation that the two countries can share experience and benefit from. He said the two countries’ interest should be in line with national development plans which are geared towards enhancing economic growth for the welfare of their people.

Nigeria: Barclays to expand operations ‘cautiously’

Barclays Bank CEO, Anthony Jenkins said the British banking group is planning to expand its footprint in Africa’s second largest economy, Nigeria without making a large or expensive acquisition in the country.

We have a rep office there. We do some business in Nigeria and we are going to grow that business and I think quite cautiously over time, and then we will see what opportunities present themselves,” Jenkins said.

Although Barclay does not have much representation in Nigeria, it is likely to launch corporate banking in Nigeria like it did with First Rand’s Rand Merchant Banking (RMB) in order to tap into the opportunities being presented by multinational companies looking to invest in Africa. RMB previously had a representative company but was awarded a merchant banking license in Nigeria last year.

Jenkins said all options are still open as the bank has not decided whether to apply for a license or acquire some business in the country. He also noted that there are opportunities for corporate banking. “We have quite a footprint from the African continent and so bringing our corporate customers to Africa is going to be a very important strategic focus for us and that’s the unique advantage of Barclays because we have got a global footprint and we have got the presence. If you put those two things together it’s a very powerful combination. So a lot of this is about execution and accelerating the pace of execution within the context of the aspiration to be the Go To Bank,” Jenkins said.

Ghana: Petroleum sector to see a $20 Billion investment over the next 5 years

Ghana’s Oil and Gas Industry is projected to attract a $20 billion investment in the next five years on the many discoveries that have been made. This was disclosed by the deputy Minister of Energy and Petroleum, Dr. Ben Dagadu, in Accra at the launching of a book titled ‘Oil and Gas Ghana’.

He stated that the government, since the discovery of oil, had taken measures to see to it that the petroleum sector was run efficiently to ensure that the resource benefits all Ghanaians.

In this wise, the deputy Minister said several legislations such as the Petroleum Revenue Management Act and the Petroleum Commission Act had been worked out to provide direction and clarity for the management of oil revenues and for regulating the sector. The Minister noted that in order to build the capacity of Ghanaian entrepreneurs, small and medium scale enterprises – which form major stakeholders in the industry – for the realization of this goal, the Ministry together with the Jubilee Partners had established the Enterprise Development Centre (EDC).

Rwanda, Uganda: Ties Stronger

Uganda has made economic progress over the years both as a country and as a core believer in the region’s integration process, especially as its ties with Rwanda gets ever stronger, Amb. Richard Kabonero has said.

The Ugandan High Commissioner to Rwanda was hosting his compatriots working and living in the country as well as well-wishers at his residence in Nyarutarama, Kigali, to celebrate Uganda’s 51st Independence anniversary.

“We have been growing despite some shocks and challenges. We have made tremendous investments in infrastructure and energy. At regional level, Uganda has played a big role in promoting peace in the region, including hosting nine summits that seek peace in the DR Congo,” Amb. Kabonero said.

He said bilateral ties between Uganda and Rwanda will always remain strong through collaboration on several development projects.

Nigeria: To plan regular Bond sales in bid to build yield curve

Nigeria is planning to raise debt abroad regularly as Africa’s largest oil producer seeks to develop a benchmark for borrowers, Finance Minister Ngozi Okonjo-Iweala said.

The government returned to international debt markets for the first time in two years in July, issuing $1 billion in five-year and 10-year Eurobonds. The country now plans to raise $100 million by selling so-called diaspora bonds targeted at citizens living overseas.

If it succeeds, we’ll do more,” Okonjo-Iweala said, adding that the sale will take place in the first quarter of next year. “We intend to enter the market on a regular basis because we’re trying to build a yield curve.”

Nigerians abroad would have sent $21 billion home by the end of 2013, according to World Bank figures, and the government wants “to tap some of that,” Okonjo-Iweala said. The nation is stepping up debt sales to finance infrastructure as it faces inadequate budget allocations for capital spending.

The yield on Nigeria’s $500 million in Eurobonds due July 2023 dropped 18 basis points this month to 5.94 percent yesterday, the lowest level since July 23, according to data compiled by Bloomberg.

The Nigerian economy may expand 6.75 percent next year, compared with an estimate of 6.5 percent in 2013, Okonjo-Iweala said. The budget deficit will stay little changed at 1.9 percent of gross domestic product, she added.

Ghana: Turkey to build industrial parks

Turkey is to construct two industrial parks at Accra and Kumasi respectively beginning next year at a cost of over $300 million.

Outgoing Charge d’Affairs of Turkey Embassy in Accra, Simay Erinoglo, speaking to journalists in Accra, said the two projects, which are designed to attract many Turkish investors into Ghana would be funded by the Turkish Exim Bank.

The Ankara Chamber of Industry and the Ghana National Chamber of Commerce & Industry signed an agreement to that effect recently. Ms Erinoglo said Turkish exports to Ghana last year recorded $223.5 million while it imported $303.5 million worth of goods from Ghana. For the first six months of 2013, Turkey exported $103.6 million worth of goods to Ghana while it imported $128.9 million worth of goods from Ghana.

Ms Erinoglo said Turkish investors were eyeing a number of projects in the various sectors of Ghana’s economy, including construction. Also, it intends to help with the construction of an international airport. In the health sector, Turkey wants to assist with the construction of eight pre-fabricated hospitals at a cost of $118 million.

The Turkish Development Agency (TIKA) is working on a lot of projects in Ghana, she indicated. Turkish investors are hesitant to come over to Ghana to invest because of the monstrous land acquisition challenges, she stated.

Cape Verde: AfDB approves $24m budget support loan

The Board of Directors of the African Development Bank Group, approved a €15-million general budget support loan for Cape Verde, to help the country finance its Public Corporate Governance and Investment Promotion Support Programme (PAGEPPI). The Programme aims to help Cape Verde consolidate its macroeconomic framework and foster growth by improving public corporate governance in State-owned enterprises and promoting private investment.

The PAGEPPI’s operational objectives are to improve public corporate governance so as to streamline public expenditure and promote private investment to spur economic growth and foster job creation.

On completion, the Programme is expected to strengthen public corporate governance and improve the operational and financial performance of State-owned enterprises. This will help to reduce the burden on the State budget and corresponding risks on public finances. The Programme is also expected to clarify the State’s role as both a shareholder and a regulator as well as to implement international and local investment promotion measures that will create a more attractive environment for economic activities and private sector development. The Programme will enhance Cape Verde’s overall development strategy which rests on economic diversification based on competitive clusters. In particular, it will support governance and private sector development reforms that constitute two main pillars of the government’s Growth and Poverty Reduction Strategy Paper (GPRSP) 2012-2016.

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  • GMOs Are “Neo-Colonialist”, Security Threat To Ghana – Group (modernghana.com)
  • Ghana to boost economic cooperation with Indonesia (spyghana.com)
  • Ghana to become hub of drug production in Africa (ghananewsagency.org)
  • EU urges Ghana to step up agricultural production (ghanabusinessnews.com)
  • Road Fund Jumps Up By GH¢9m Within Six Months (thechronicle.com.gh)
  • Ghana achieved first MDG ahead of deadline: Lessons for other African Countries (mdginafrica.wordpress.com)
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Africa Focused News

07 Monday Oct 2013

Posted by theinvesmentman in ACCRA, Africa, Angola, Bank of Ghana, banks, Barack Obama, BoG, Botswana, Business, china, Debt, Egypt, Ethiopia, Foreign Direct Investment, GDP, Get rich quick, Ghana, investment, Ireland, Mozambique, Nigeria, Petroleum, Reykjavik Geothermal, South Africa, Tanzania, Treasury bills, Uganda, Uncategorized, Unilever, United States, usa, World Bank

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Africa, Angola, Bank of Ghana, Barack Obama, BoG, Botswana, China, Debt, Egypt, Ethiopia, Foreign direct investment, GDP, ghana, Ireland, Mozambique, Nigeria, Petroleum, Reykjavik Geothermal, South Africa, Tanzania, Treasury bills, Uganda, Unilever, World Bank

REPORT OF LAST WEEK (from 30/09/13 to 04/10/13)

by Dario Galluccio

This Blog is sponsored by http://www.reflexecogroup.com

Ghana: GIPC is working to promote the growth of local businesses

The Ghana Investment Promotion Council (GIPC) has explained that the centre is not only interested in Foreign Direct Investment but is also seriously interested in promoting Ghanaian businesses to attract investment and grow the economy.

Speaking at a general meeting of the Sekondi-Takoradi Chamber of Commerce and Industry (STCCI), he explained GIPC is providing direct promotion support to identified local investment project sponsors to solicit international as well as local investment partnerships.

>Our mission is to attract private domestic and foreign investments and to transform Ghana into a broad-based industrial and export-led economy through aggressive investment promotion activities,” said Mr. Isaac Ebo Newton, an Official of GIPC.

Ethiopia: Reykjavik Geothermal to build 1000MW power plant

US-Icelandic geothermal development company, Reykjavik Geothermal (RG), has agreed to build a 1000MW geothermal plant in Ethiopia to help the East African nation harness its energy potential. The power plant which will be built in Ethiopia’s Corbetti Caldera region is part of President Barack Obama’s $7 billion Power Africa initiative which seeks to double electricity supply on the continent. The geothermal plant will be Ethiopia’s first independent power plant project and it is expected to be one of the world’s largest geothermal power plant.

The deal will also make Reykjavik Geothermal Ethiopia’s first independent power producer, while the Corbetti project will be the largest single geothermal plant ever built in Africa, RG Chairman, Michael Phillip said.

Reykjavik Geothermal, a company that has helped build power plants in about 30 countries globally expects to invest $4 billion over an 8-10 years period. It has been working with Ethiopian Electric Power Corporation (EEPCO) and various government ministries for the past two years to finanlise the purchase agreement. The geothermal development company will build and operate up to 1000Megawatts of geothermal in two 500MW phases. While the first 10MW of power will be online in 2015 with an additional 100MW in 2016; the full 500MW will be operational in 2018.

Ghana: Industrialization process depends on energy sector

Government intends to use the energy sector as a springboard to develop other sectors of the economy, Mr Armah Kofi Buah, Minister of Energy and Petroleum, has stated. Mr Buah was speaking at a durbar to celebrate this year’s World and National Tourism Day at Nkroful in the Ellembele District of the Western Region at the weekend. The celebration was under the theme: “Tourism and Water: Protecting our Common Future”.

Mr. Buah said the tourism sector must take advantage of the numerous oil and gas projects in order to strengthen its position as a critical sector of the economy. He said the hospitality industry could take advantage of the oil and gas projects to expand and create jobs for the country’s teeming youth.

Nigeria: China to build $1.3 Billion Zungeru power plant

Nigeria has signed a $1.3billion deal with two Chinese state companies, China National Electrical Equipment Corporation (CNEEC) and Sinohydro Consortium, to build the Zungeru power plant. The deal will help to put an end to the chronic electrical power supply shortages that continues to slow growth in Africa’s second-biggest economy. The plant, which is scheduled for completion by 2018, will help add 700 MegaWatts (MW) electricity to Nigeria’s current 4600MW.

The Zungeru power plant in Niger state (about 150km to federal capital, Abuja) was first conceived in 1982, but was abandoned due to lack of funds. Now, 75 percent of the fund needed for the project will be supplied by China’s Exim bank while Nigerian government will foot the rest of the bill.

This project will create thousands of jobs for Nigerian engineers, technicians and artisans during the construction phase…. it will also boost the economy,” Nigeria Finance minister, Ngozi Okonjo-Iweala said at the signing of the deal.

According to Nigeria’s Finance Minister, Ngozi Okonjo-Iweala, the loan being finalised was part of the $3bn approved by China at interest rate of less than 3 percent.

President Jonathan and Chinese president, Xi Jinping had met in July 2013 over the signing of the accords between the governments to facilitate $1.1 billion in low interest loans for infrastructure projects in Nigeria.

Uganda: China wins $2 billion oil deal

China’s state-owned CNOOC has secured a $2-billion deal to develop a petroleum field in Uganda and help propel the east African nation into the club of oil-producing countries, an official said Friday. “This is a major breakthrough as a country,’ Uganda’s junior energy minister Peter Lokeris told AFP, confirming that a deal had been reached earlier this month with the China National Offshore Oil Corporation.

Uganda has oil reserves estimated at 3.5 billion barrels but the path to production has been a bumpy one since deposits were discovered in 2006 near its border with the Democratic Republic of Congo. Such reserves have the potential to radically alter Uganda’s economy and could eventually as much as double the national income.

Ghana: Petroleum prices to go down

Motorists will experience a little over 4 percent decrease in the price of fuel at the pumps. Diesel users will save a little over 2 percent at the pumps. The latest move follows a revision of the prices of petroleum products by the National Petroleum Authority (NPA). Petrol is now GHC 2.22 a lite while Diesel is going for GHC 2.18 a lite.

However prices of premix fuel and kerosene have been revised upwards. A litre of premix fuel is now going for about 98 pesewas which is up by almost 23 percent. While kerosene is now GHC 1.59 up from the GHC 1.28 leading to almost an 8 percent increase.

Ghana: GDP Pegged At 7.4%

Ghana’s economy is expected to grow provisionally at 7.4 percent for the year, the Ghana Statistical Servic (GSS) said. Speaking at a media conference, Dr Philomena Nyarko, Government Statistician, said it is likely government could achieve its target growth in 2013 due to expected increases in oil production.

Dr Nyarko stated that the real quarterly Gross Domestic Product (GDP) growth for the second quarter of the year was 6.1 percent year-on-year. Non-oil GDP was 5.8 per cent while the total value and services amounted to $44.2 billion with a per capita income of $1,667, she said.

Dr Nyarko added that the services remain the largest sector, contributing about half of the GDP. The services sector growth rate however fell to 9.2 per cent from 10.2 per cent in 2012 on the account of positive increases in information and communication activities, real estate, professional, administrative and support service activities. This was followed by the industry sector 2.5 per cent while the agriculture sector showed a negative growth of 3.9 per cent.

Meanwhile, the annual producer price inflation fell for the fifth consecutive month to 4.7 per cent year-on-year in August from 5.0 per cent in July.

Tanzania: Northern Zone invites investors

Tanzania Investment Centre (TIC) has reaffirmed its continued commitment to support local and foreign investors who want to invest in Northern Zone regions and other places in Tanzania. The TIC Executive Director, Ms Juliet Kairuki told journalists during a recent Northern zone Investment Forum that her centre is ready to receive and help all those with interest to invest in the Northern regions of Manyara, Tanga, Kilimanjaro and Arusha.

She noted that the forum has enabled investors, business community and entrepreneurs to learn about the investment opportunities available in the Northern Zone and the government’s role in initiating investment projects. She said that during the past 12 years, Tanzania has performed well in attracting huge investment projects in agriculture, tourism, industries, communication, infrastructure and transport. Within that period, a number of those projects have risen from 178 to 869 in 2012; 53 per cent of these projects are wholly owned by Tanzanians. The projects have contributed on the increase of capital from 874 million US dollars up to 12 billion dollars within that period.

The two-day forum that was opened by Premier Mizengo Pinda attracted over 1,500 international and local investors plus officials from the government, private sector, religious leaders, ambassadors and high commissioners and other development stakeholders.

Ethiopia: Premier called Western companies to invest

PM Hailemariam Desalegn has called upon western companies to take part in the positive investment regime in Ethiopia. Noting that investors from Africa, Asia, and the Middle East have already established themselves, the PM urged representatives of American businesses he met in New York to consider investing in Ethiopia’s untapped investment potential.

Prime Minister Hailemariam has also explained Ethiopia’s investment policies, regulations and incentive; and responded to questions raised by the attendees of the event regarding ICT, banking services and privatization of state owned public enterprises. In a study presented in Prime Minister Hailemariam’s meeting with representatives of American businesses, manufacturing, mining, construction, hotel and tourism, and healthcare were identified as areas of engagement promising to the American businesses.

Routinely praised for its pro-poor development policies, Ethiopia has been one of the fastest growing economies in the world for the past ten years. And although the share of Foreign Direct Investment to as a share of the GDP growth has not been satisfactory, recent trends have shown a significant hike in the amount of annual foreign direct investments. The government’s focus on attracting FDI as a means of stocking up capital and technology transfer has paid off dramatically. FDI stood at 300 million USD in 2010, and three years on it has now reached at an incredible 1 billion USD, making Ethiopia the second biggest destination for FDI in Africa, next to South Africa.

Among the countries of origin in Ethiopia’s inflow of foreign investment, emerging economies and other countries from Africa, Asia and the Middle East hold the lion’s share. And western companies are expected to enter Ethiopia and invest in the numerous possibilities shortly.

Mozambique: Government open to French investment

Mozambican President Armando Guebuza declared in Paris on that Mozambique is open to new French initiatives in various spheres of cooperation, particularly in economic matters, and in security in the Mozambique Channel.

Briefing the Mozambican journalists accompanying the visit, Deputy Foreign Minister Henrique Banze, said it had been agreed at the meetings to deepen cooperation between Mozambique and France in various spheres. ‘This is a very fruitful and promising visit’, said Banze. ‘Our President has shown openness and the two sides have agreed that cooperation should be deepened. The assessment is that relations are good, but there is space to expand them’.

During his meeting with the business representatives, Guebuza praised the work of some of the French companies already operating in Mozambique, said Banze. He also noted that others want to enter the Mozambican market, including Air France. Should Air France decide to re-open the Maputo-Paris route, this will give travellers to Europe a convenient alternative to the current routes (via Lisbon, Johannesburg, Nairobi or Addis Ababa).

Ghana to net-export power in four years

The President of the republic of Ghana, John Dramani Mahama has revealed that, Ghana will become a net-exporter of power within the next four years given the pragmatic and practical measures the government is putting in place to solve the energy crisis in the country. The President assured the Independent Power Producers, willing to invest in the energy sector of his unflinching government commitment to create an enabling environment for their business to flow efficiently, which would help mitigate the current energy crisis the country is facing.

The President made these remarks at a town hall meeting hosted for him at his hotel in New York City, to interact with Ghanaians across the United States. Speaking on the current state of the various sectors of the Ghanaian economy President Mahama noted that, the Ghanaian economy is moving at a faster pace, hence the government is targeting 8 percent growth rate per year. And expressed hope and optimism that, “Ghana will progress to a middle income status in the next eight years.” Touching on the transport sector, he disclosed that, “95 percent of our transports are dominated by the road sector, and there is the need for the government to revamp the rail sector, which adds to the GDP of any country.” He noted that the government has taken over the Tema Shipyard from the Malaysian investors, with the intention to revamp and re-invigorate it, so that all the ships in West African will use it to dry-dock in Ghana.

He also expressed government commitment to revamp Tema Oil Refinery to enable Ghana’s crude oil be refined right within the Ghanaian shores which will create more jobs for the unemployed youth.

Angola: To lead investment attraction in SADC

Angola is in a privileged position as compared with the other countries of the Southern Africa Development Community (SADC) regarding attraction of Foreign Direct Investments (FDI), as it combines its economic potential with political stability.

This was said Tuesday, 1st of October, in Luanda by the economist Fiel Constantino.

Speaking to Angop, Fiel Constantino, who was speaking about the country’s FDI, said Angola’s political stability places the Democratic Republic of Congo in a second position, despite the neighbouring country’s huge economic potential. As to the continent’s strongest economy, South Africa, with an also stronger political stability and recognised established democracy, the specialist said it has not an economy as great as the above mentioned countries, as it is nearing exhaustion and more and more becoming an FDI emission economy.

Nigeria: Irish firms to invest in Nigeria

Various Irish companies would soon invest in Nigeria, Irish High Commissioner to Nigeria, Mr. Patrick Fay has said. Fay, who disclosed this during a recent launch of a premium product – the Irish Mayor – in Abuja, said efforts are being made to boost commerce between Nigeria and Ireland. He stressed that, as part of efforts to enhance the economic ties between both countries, the Irish Minister for Trade and Development would, in November 2013, lead a trade delegation to Nigeria.

He said: “We are trying to develop the link and make it stronger. To do that, we are working closely with the Nigerian Ambassador in Dublin and the Department of Foreign Affairs to work together to develop our trade.”

Africa: India wants early trade pact with African nations

India has pitched for early conclusion of the preferential trade pact with African nations, which is expected to help enhance business ties between India and minerals rich countries of the continent. Commerce and industry minister Anand Sharma urged his South African counterpart Rob Davies to expedite the much delayed India-SACU preferential trade pact that will reduce tariffs on several key products. Sharma is in Johannesburg for the third Indo-Africa Trade ministers meet. The Southern African Customs Union (SACU) consists of Botswana, Lesotho, Namibia, South Africa and Swaziland.

India has been waiting for the response from the African side on its proposal of an average margin of preference of 70%. This means imports from SACU will be subject to a tariff 70% lower than the most favoured nation rate.

The bilateral trade target of $100 billion by 2015 and $200 billion by 2020 is a modest one and is certainly achievable, Sharma said. Air connectivity and visa related issues were the two other concerns raised at the second India-Africa Business Council ( IABC) meet here, co-chaired by Bharti group chairman Sunil Mittal. Indian business chamber FICCI is the institutional partner of the council.

Sharma assured that the air connectivity issue has been taken up at the highest level and that Air India will resume its flights to Africa from 2014 onwards.

South Africa: Debt could grow to 63% of GDP by 2020

South Africa should set a debt target to improve the credibility of its fiscal policy as slower economic growth makes it difficult to keep the budget deficit under control, the International Monetary Fund said.

Government debt may stabilise at about 47% of gross domestic product in five years, with a 10% chance that the ratio can reach 63% by 2020, the Washington-based lender said in its annual Article IV country report, published on its website today.

Determining an appropriate debt benchmark remains highly controversial,” the IMF said. “Given South Africa’s outlook, the magnitude of macroeconomic and fiscal shocks, and cross- country comparisons, reducing the debt-to-GDP ratio to around 40 percent by 2020 would allow the country to rebuild adequate fiscal space.”

Falling tax revenues and spending pressures contributed to a widening in the budget deficit to 5.1 percent of GDP in the year through March, prompting the government to increase borrowing. Finance Minister Pravin Gordhan forecast gross debt will reach 45 percent of GDP in the year through March 2016 from an estimated 42 percent last year.

While the state’s agreement to limit wage increases for the next three years to 1 percent and to set explicit expenditure ceilings were positive, “the government’s poor record in controlling the wage bill and potential spillovers from high wage demands in other sectors represent downside risks,” according to the report.

Angola: Huila invests AKZ 950 Million

The government of southern Huila province will invest in 2014 roughly AKZ 950 Million Kwanza (about 10$ million) for construction of cultural and religious infrastructure in the municipalities of Lubango, Chicomba, Chibia and Caluquembe. The information is part of a report from Huila government that reached Angop on Thursday, 3rd of October, which says that the construction of this infrastructure is part of the Public Investment Programme.

The report adds that 60 million Kwanzas will be spent on rehabilitation of the head Office of Evangelic Church Sinodal of Angola (IESA) in Lubango and the construction Catholic Church in Kola, Caluquembe Municipality. It is also part of the Public Investment Programme for 2014, the construction of regional museum of Huila/Lubango), house of Culture, as well as the rehabilitation of boarding school from catholic church in Chicomba.

Nigeria: FG, World Bank Micro Projects gulp N28.7 Billion

The federal government has revealed that it has spent over N28.72 billion in the execution of micro-projects, under a joint partnership programme with the World Bank and twenty six state governments in the country. The National Coordinator of the Federal Support Unit, an arm of the Presidency supervising the implementation of the scheme, Mr. Chidi Onuoha, while giving a recent update on the performance of the development initiative in Abuja, said about 5,464 community-driven projects have been completed since the inception of the programme in 2009.

He listed some of the benefiting states to include, Kogi, Benue, Imo, Abia, Ebonyi, Enugu, Cross River, Akwa Ibom, Edo, Bauchi Adamawa, Ekiti, Kwara and Ondo. Onuoha said the projects were executed based on eight sectoral interventions, including education, water supply, transport, health, rural electrification, socio-economic, gender and vulnerability, and environment.

According to Onuoha, the micro project initiative had received a start-off fund of $200 million from the World Bank, and it has since committed 98 per cent of the amount as part of the Bank’s counterpart funding of the various community development projects in the participating 26 states. Also as at June this year, contribution from the 26 states is N5.8 billion out of the expected N13 billion counterpart funding obligation.

Ghana: To rank first with highest yield on Treasury bills

Investors looking for higher return on their investment could turn to Ghana’s securities market. This is because the country has been ranked number one with the highest yield on its 91-day and 182-day Treasury bills among 12 countries surveyed.

Out of the 12 countries surveyed by Ecobank Research, Ghana recorded an interest rate of 21 and 21.34 percent respectively on its fixed income securities. Malawi and The Gambia followed suit with interest rates of 14.92 and 20.17 percent and 14.76 and 16 respectively on their 91-day and 182-day Treasury bills. Sierra Leone and South Africa recorded the least rates of 3.36 and 7.05 and 5.05 and 5.31 percent respectively on their 91-day and 182-day Treasury bill rates.

Meanwhile, the Bank of Ghana is expected to issue a new 7-year bond next month. This underlines the Central Bank’s aim of extending the yield curve to develop the bond market.

Interest rates remain high particularly at the short end of the yield curve, at around 22 percent for the weekly Treasury bills.

Ghana: Digicraft to explore new markets

Digicraft, an indigenous advertising and marketing communications company, has expressed its commitment to explore new markets beyond the boundaries of Ghana. According to the founder and Chief Executive Officer of the company, Mr Kwaku T. Danso-Misa, the move forms part of the company’s resolve to face new challenges and to increase its profitability.

‘We are willing and ready to take up the challenges of this new age, one that defines competition in a global setting and not just a local one. In moving forward, we will spread our wings wider and totally consolidate our gains or equity we have as a brand’, he said.

Mr Danso-Misa admitted to the competition within the industry but noted that the company only saw competition as one ‘for space in people’s minds. It is about creating something that is memorable, sustainable, coherent, flexible and ultimately adds value and we are ready for that at all times’.

On his part, the General Manager, Mr Kwasi Danso-Misa, attributed the company’s growth since its inception to hard work, dedication and teamwork. ‘Our strategy has always been aligned with the thinking of their client and their consumers. In effect, it explains simplicity and effectiveness in communication, as well as quick turnaround time is what separates Digicraft from the rest,’ he said.

Botswana: London-based De Beers Operation moved to Botswana

World’s biggest Diamond miner, De Beers, will move its entire $6 billion-a-year “sales operation” from London to the Botswana capital of Gaberone. The global newswire reported that this meant that 85 workers out of 300 staffers based in London would be moved to the country with a 230 000-strong population. The decision, taken almost three years ago, cost the company over $120 million, which included the construction of flashy offices in Gaborone.

This comes after many years of talks between the government of Botswana and De Beers, which is owned by the mining giant Anglo American.

The Southern African country of Botswana is the biggest producer of gem diamonds and it is where the world’s richest mines are located including the famous Jwaneng. It is believed that the move to Botswana will put to trial Botswana’s capability to advance people expertise and reduce jobless rate in the country. Unemployment rate stands at about 18 percent in Botswana.

Africa: Godrej to expand business In Africa with more acquisitions

Indian-based international conglomerate, Godrej Consumer Product Ltd (GCPL) has announced that it is in discussions to take over more businesses in Africa as part of its expansion plan on the continent. Godrej which already has manufacturing plants in four African countries including Nigeria, South Africa, Kenya and Mozambique wants to expand its manufacturing footprint to Tanzania and Uganda. GPCL Chairman, Adi Godrej confirmed this move saying the firm is in talk with some local firms in the country.

GPCL is betting on the African continent to drive its international sales via acquisition.

Africa accounts for majority of GPCL international revenue. In the year ended June 30, its revenue from Africa stands at R214 Crore. As at 2012, Godrej said the group is growing at 25-30 percent rate in Africa with an investment worth over $3.3 billion.

With presence across 14 African countries, Godrej has over 10,000 employees on the continent.

Ghana: BoG predicts 6% inflation in March 2014

The Bank of Ghana is projecting inflation within the band of 6 and 10 percent by the end of March next year. It has already projected 11.5 percent end year inflation while government is targeting between 7 and 11 percent rate. The Central Bank’s latest forecast is based on the exchange rate, energy prices, crude oil assumptions and the fiscal policy stance.

Inflation dropped for the first time this year to record a rate of 11.5 percent in August. The relative stability of the Ghana Cedi to the US Dollar appeared to have impacted on the decline of the price levels. This is because the non food inflation went down from 15.4 percent in July to 14.2 percent in August. However, the food inflation went up despite the beginning of the food harvest season. The monthly change for August was -0.7 percent.

Nigeria: World Bank approves $300m mortgage facility

The World Bank has approved a $300 million International Development Assistance (IDA) credit facility for Nigeria to aid low-income citizens own homes, through affordable mortgages. The World Bank, which disclosed this at its Abuja office, said the project would support the establishment of a mortgage liquidity scheme that will generate long-term funds for borrowers who fall in the middle and lower class categories in the country, guardian reported.

This project will directly benefit new home owners who struggle to find available cash to purchase long-term mortgage” said World Bank’s task team leader Michael Wong, adding that the project was expected to also create jobs in construction, designs, finance and other sectors throughout the country. Adding to this was Marie Francoise Nelly, World Bank’s Country Director for Nigeria who said; “The Nigerian financial system has quickly grown and is becoming increasingly integrated into a global financial system.

The coordinating Minister and Minister of Finance of the federation, Dr Ngozi Okonjo-Iweala had in April revealed that the Global body had agreed to assist Nigeria reintroduce mortgages and was ready to lend the Giant of Africa up to $300 million to realise the goal.

Kenya: To diversity exports to Egypt

The Exports Promotion Council (EPC) now plans to diversify the country’s exports to Egypt in order to increase trade and investment in both countries. Exports Promotion Council Director Bramwell Simiyu says Egypt is a medium sized economy and there is need to leverage on other opportunities available. Simiyu says tea accounts for 95 percent of exports to Egypt and the council is looking at introducing horticulture, livestock, beverages and services to export to Egypt’s exports.

“With the instability in Egypt in the recent past, unless we are able to diversify the product menu, we stand a risk of losing out on other opportunities that are there,” he said.

Simiyu says currently, Kenya’s imports almost double exports to Egypt, and the council is working to reverse the trade imbalance.

He says the council’s new strategy is to take advantage of the local and regional markets, pointing out the nearer markets are better, and expanding away from the traditional goods to products like human resources as well as sports tourism. He says the entry conditions for the regional market are much more flexible and by focusing on products produced by Small and Medium Enterprises (SMEs) achieving a 20 percent increase in exports every year will be realized.

Nigeria: Foreign investors plan U.S.$16 Billion investment in Delta

The Delta State government has attracted more than 16 billion dollars worth of investment for its export free zone, which is expected to create some 500,000 jobs. The state governor, Dr Emmanuel Uduaghan, said in Warri, Delta State that investors from Saudi Arabia and India are ready to invest in petrochemical and fertiliser plants. He also said that the Koko Export Free Zone had been approved by the Federal Government and the issue of approval for Warri Export Free Zone was still being pursued.

He said that it was the nature of Koko as an export free zone that attracted the investors since the Federal Government/NNPC Master plan approved three states, namely, Rivers State, Delta State and Akwa Ibom State for such projects.

The governor said that the Delta State government has done much in Koko by ensuring the approval of its status as an export free zone, ensuring peace and following closely the gas master plan. He said that already, the state government has prepared grounds for the free zone by putting in place the Asaba Airport, which would assist investors to fly their equipment into the state.

Uduaghan said that the strategic location of Koko also would assist cargo shipping through the Benin River. Uduaghan said that the Federal Government would tackle the dredging of the Benin River to allow bigger vessels to get to Koko, adding, “‘transport infrastructure is very critical”.

Kenya: Unilever plans Sh17 Billion investment

Unilever, the Anglo-Dutch manufacturer, plans to invest €150 million (Sh17.6 billion) in a new manufacturing plant in Kenya, global chief executive officer Paul Polman has said. Polman told President Uhuru Kenyatta at State House Nairobi that the planned investment will cater for the company’s expanding interests in the greater eastern African region, including in Ethiopia and Tanzania. The investment will also result in skill and technology transfer opportunities, as well as creating hundreds of jobs for Kenyans, he added.

The CEO said the company also planned to expand its existing factories in the lush hill-top farmlands of Kericho, to increase the amount of teas processed there to 50,000 tonnes per year from the current 30,000 tonnes. Unilever was also working with researchers on how to raise tea yield on Kenyan farms by up to 40 percent.

Related articles
  • GIPC investment drive gets results (cliffordagyemang.wordpress.com)
  • Ethiopian Government and Reykjavik Geothermal Announce 1,000 MW Geothermal Power Agreement (virtual-strategy.com)
  • Reykjavik signs agreement with Ethiopia to build 1GW geothermal project (geothermal.energy-business-review.com)
  • 1,000 Megawatts in Ethiopia over Next 10 Years (grapheners.com)
  • Djibouti has geothermal EOIs out; KenGen, USEA, UNEP seek candidates for positions in African geothermal development (geoenergist.wordpress.com)
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  • Nigeria signs agreement for Zungeru hydro plant development (hydro.energy-business-review.com)

WHY GHANAIAN BANKS CAN’T FUND MAJOR OIL AND GAS DEALS

16 Monday Sep 2013

Posted by theinvesmentman in ACCRA, Africa, Amalbank, Bank of Ghana, banks, Business, China Development Bank, Get rich quick, Ghana, Ghana Commercial Bank, Ghana National Petroleum Corporation, investment, Jubilee, Minimum capital requirement, Nigeria, Shell Nigeria, Uncategorized

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Reflex Eco Group – Ghana News

Antony Sedzro (Local journalist)

sedtony@yahoo.com

Introduction

Ghana discovered oil in 2007 and actual production started in 2010 at Jubilee field in the Western Region, which is about 290km from the capital, Accra. The lead operator on the field is Tullow Ghana Limited with other partners being Kosmos Energy, Anadarko Corporation, Sabre Oil and Gas (a wholly-owned subsidiary of PetroSA) and GNPC. The field currently produces about 110,000 barrels per day (bpd) with one vessel-the FPSO Kwame Nkrumah.

Since then, a lot of other discoveries have been made on the Jubilee field. The Ghana government in May this year approved a second field-the Tweneboa-Enyenra-Ntomme (TEN) project. It will also be operated by the Jubilee partners and when it comes on stream, the partner’s estimate it will produce 80,000 bpd.

According to the lead operator in the field Tullow Ghana Limited, the development of the TEN Project will require the drilling and completion of up to 24 development wells which will be connected through subsea infrastructure to a Floating, Production, Storage and Offloading vessel (FPSO).

All these upstream activities require heavy project financing before the first oil from the field is poured in 2016, as planned. It is reputed that the Jubilee partners will spend a total of $4.6billion dollars before the first oil can be poured from the TEN field. If true, this figure could be far more than the total asset base of Ghanaian banks put together. The Jubilee field infrastructure was secured mainly through international banks and other finance sources.

Secondly, Ghana whose economy is set to grow at around 7.5% this year, is building a Gas Processing Plant in Atuabo in the Western Region, about 290 miles from the capital, Accra. The total cost of the project is put at $980million and is being funded by the Chinese government through the China Development Bank (CDB). The project has delayed many times due to funding issues. Ghanaian banks were not involved in the financing ostensibly due to the substantial amount involved.

Funding infrastructure in the hydrocarbons industry (oil and gas) is very capital intensive. For instance, Shell Nigeria projects to

Banking Sector

There are 27 universal banks in Ghana at the moment with fewer than ten being Ghanaian-owned. The rest are from other African countries notably Nigeria with the rest of the banks being foreign owned.

The Bank of Ghana increased the minimum capital requirement for all banks to GHC60million ($29.4million) in 2012. The foreign owned banks easily met this requirement because they received money from their parent banks. Although some of the indigenous banks met the minimum requirement early, others struggled and had to fall on capital placements from foreign sources before satisfying the requirement. A few takeovers and mergers took place like Access Plc acquiring Intercontinental bank, Ecobank Transnational took over TTB and Bank of Africa buying out Amalbank.

But Ghanaian banks lose out on big-ticket deals in the oil and gas industry due to their smaller scale and size.

Indigenous banks do not have bigger scale in terms of capital and asset size. This means whenever there is the need to undertake big-ticket transactions like funding the annual Ghana COCOBOD cocoa purchases or the mining sector or energy projects, the foreign-owned banks dominate.

Some of the reasons so far available for this problem are:

  • Low capital base/capacity of the indigenous banks
  • Capital-intensive nature of the oil and gas sector, especially Deepwater exploration. Jubilee partners’ supposed $4.6billion investment on the TEN project is an example.
  • Long lead time/gestation period between licensing, exploration and actual production of oil discourages banks from long-term project financing. Shell Nigeria estimates that it takes between 10-50 years between when a company is licensed to when actual oil production takes place.
  • Banks have short term focus and cannot fit in with oil sector’s long gestation period. They thus focus on government securities like bonds and treasury bills, and secured commercial loans to the formal sector.

 

What is being done about it?

The Bank of Ghana, the industry regulator, last month announced that the minimum capital requirement for new banks will be increased from GHC60million ($30million) to GHC120milion ($60million) henceforth.

This year, major international banks such as Citibank and JP Morgan indicated that they will open office in the country. This is a good development but these international banks should also invest in local banks or takeover some of them. This is because the banking industry is one of the most profitable industries in the country. The annual results of many banks released this year showed that many banks made over 100% profits. Ghana Commercial Bank for instance made a record 500% profit in the past year.

As the country’s economy, the second biggest in West Africa, starts to grow, the financial sector will play a major role and banks with big balance sheets stand to be the biggest beneficiaries.

 

Related articles
  • FPSO shutdown to cut Ghana oil production to 95,000 barrels – Tullow (ghanabusinessnews.com)
  • Tullow Ghana likely to takeover Tema Shipyard (ghanabusinessnews.com)
  • Jubilee Oil Field Shuts Down (modernghana.com)
  • Ghana Needs Robust Regulations For Its Financial Market (spyghana.com)
  • Bank of Ghana announces new minimum capital requirements for new entrants (ghanabusinessnews.com)
  • Bank of Ghana to raise minimum capital requirement for rural banks (ghanabusinessnews.com)
  • GH¢120m required to establish a new bank in Ghana (spyghana.com)
  • Rural Banks Minimum Capital Requirement To Shoot Up To 100% (spyghana.com)
  • Agotime celebrates annual Kente festival (modernghana.com)
  • BoG to set modalities for 100% hike in rural banks minimum capital requirement (ghanabusinessnews.com)

Africa Focused News

27 Tuesday Aug 2013

Posted by theinvesmentman in ACCRA, Africa, Angola, Bank of Ghana, banks, Beijing Capital International Airport, BRIC, Cameroon, china, China Development Bank, China-Africa Development Fund, Congo, Democratic Republic of Congo, DHL, Diamonds, East Africa, Equatorial Guinea, Ethiopia, Germany, Get rich quick, Ghana, gold, International Finance Corporation, investment, Ivory Coast, Kenya, Made in Ghana Solo Exhibition, MoneyGram, Nairobi, Nigeria, Oil, Sierra Leone, South Africa, Sudan, Tanzania, Uncategorized, West Africa, World Bank, Zambia

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REPORT OF LAST WEEK (from 19/08/13 to 23/08/13)
by Dario Galluccio – This Blog is sponsored by http://www.reflexecogroup.com

Ghana: Non-traditional export to hit 5.0 billion dollars
The Ministry of Trade and Industry (MOTI) is to increase the country’s non-traditional export from the current export value of 2.64 billion dollars to 5.0 billion dollars by 2017. This will enhance the Gross Domestic Product to increase the national income. The country also aims at generating considerable number of jobs and incomes, which will be translated into improved standard of living and welfare of the people to consolidate the middle-income status.
Mr Gerald Nyarko-Mensah, Director of Export Trade of MOTI said the strategy formed part of the national strategy for the non-traditional export sector from 2013 to 2017.
He said the country needs an investment capital of 600 million dollars to implement the National Export Strategy document, which among other things, would build the capacities of the Ghana Export Promotion Authority and the Metropolitan, Municipal and District Assemblies to enable the country achieve the goal. He also said the country would no longer depend solely on the export commodities but would over the period invest in fresh and processed fish, vegetable oils, root crops, grains and legumes, natural rubber and products of the creative arts.
Mr Nyarko-Mensah said the strategy would put Ghana on the global map as a world class exporter of competitive products and services to reduce poverty promote sustainable environmental development and improve the balance in spatial and regional development. He indicated that the strategy would strengthen and resource export development related institutions to ensure that the export culture is imbibed nationwide so that every district would be able to have at least one significant commercial viable agro-based export product.

Ghana: World Bank says economy is expected to grow
Mr. Jean Phillipe Prosper, the Vice-President of the International Finance Corporation for sub-Saharan Africa, Latin America and the Caribbean, says the current glitch in government’s finances is only temporary as the country’s economy is expected to continue its growth in the coming months. Government is aiming to cut the fiscal deficit from 12 percent of Gross Domestic Product in 2012 to 9 percent in 2013, through a combination of revenue and expenditure measures.
“Africa is turning heads around the world, while developed countries still find their footing after a devastating crisis and emerging markets in other parts of the world face new challenges after years of torrid growth. Ghana is leading the way. Ghana’s growth in the first decade of this century averaged more than six percent. Today that growth is even higher and expected to continue,” he said.
The World Bank has provided about US$10billion in funding to the government of Ghana since it joined the Group in 1957; with most of the funds coming from the Bank’s facility for the world’s poorest nations — the International Development Association (IDA). About US$8billion of the total funding came as grants and interest-free credits to the government.

Kenya: President Kenyatta arrives in China on first state visit
President Uhuru Kenyatta arrived in Beijing on Sunday morning on his first State visit to China, which will focus on growing Kenya’s business and investment with the East. African ambassadors accredited to China greeted President Kenyatta and First Lady Margaret Kenyatta on arrival at Beijing Capital International Airport. They told him Kenya’s agenda of seeking transformational projects in infrastructure, technology, agribusiness and finance resonated with the continent. Discussions this week with Chinese President Xi Jinping and other government officials, as well as the China business community will focus on investments mainly in infrastructure, energy, technology and protecting Kenya’s wildlife. President Kenyatta will also press for greater market access for Kenyan exports.
He said his visit would cement and deepen the strategic partnership between Kenya and China.

East Africa: China tops Kenya’s FDI sources
China has become Kenya’s biggest FDI source with 474 million U. S. dollars invested in the East African country, as a result of the development of bilateral trade and economic cooperation, according to Chinese Ambassador to Kenya Liu Guangyuan.
Statistics from the Chinese Embassy in Nairobi show that the bilateral trade has boomed in recent years with an annual surge of 30 percent to 2.84 billion U. S. dollars. China has become the second largest trade partner to Kenya.
Meanwhile, Kenya has become more and more popular with Chinese tourists, whose arrivals hit 40,000 in 2012 and are expected even higher in years to come.

Ghana ranked 10th export country to China
Ghana has been ranked second after Nigeria as an ECOWAS country whose exports is in higher demand by China. It was however ranked 10th among sub-Sahara African countries that export to China.
Angola, South Africa, Congo, DR Congo and Zambia were the top five countries that China imported from. The rest were Sudan, Equatorial Guinea, Nigeria, Cameroon and Ghana.
According to Ecobank Research, sub-Saharan Africa has emerged as China’s biggest bilateral trade partner. The export trade rose to $1.2 billion last year, up from $945 billion in 2008.
Ghana’s exports to China reduced from 2008 to 2012. The country mainly exports minerals and cocoa to one of the fastest growing economies in the world. China has increased its investments in Africa in mining, energy, construction and manufacturing. However, there is an increasing move towards investments in the services sector particularly finance and tourism.

Ethiopia hails Dangote’s investment in cement plant
Nigeria’s Dangote Group has seen rapid expansion across the continent and has received yet another commendation, this time by the Ethiopian government, after the establishment of a new cement plant in the East African country.
The commendation, conveyed through a letter, acclaimed the effort of the President of the conglomerate, Aliko Dangote and promised to provide the enabling atmosphere for the success of the venture.
Dangote Cement had launched a 2.5 million metric tonnes per annum plant in Mugher, Adaberga District in Ethiopia with a pledge by the company to ensure that it was completed on schedule.
Dangote, Africa’s richest man, has pledged to spend up to $15 billion pursuing investment opportunities around the continent in the next 4-5 years. He earlier revealed that his company has invested approximately $8 billion in an oil refinery and another $2 billion in fertilizer in Nigeria alone, aside other billion dollar investments outside the country.

Nigeria: Apex Bank launches $1.2m MSME fund
The central bank of Nigeria has launched a N220 billion ($1.2 million) Micro, Small and Medium Enterprise (MSME) development Fund to fill the vacuum accessed in the small business sub-sector. The Fund, which would be given to Micro Finance Banks (MFBs) and Micro Finance Institutions (MFIs) to strengthen their operations (the credit component, the guarantee component and the refinancing component for the sector to work) will provide wholesale funding requirements in their operations and ensure that the un-served and under-served clients in Micro, Small and Medium Enterprises (MSMEs) sub-sector are now covered.
The fund was set up in accordance to Section 6.10 of the revised Microfinance Policy, Regulatory and Supervisory Framework for Nigeria which stipulates that “a Microfinance Development Fund shall be set up, primarily to provide for the wholesale funding requirements of MFBs/MFIs.”
The development fund will be available for disbursement as from next year. 60 percent of the fund has been earmarked for the provision of financial services to women entrepreneurs. This is as a result of the challenges they faced in accessing financial services in Nigeria.
Special consideration will also be given to institutions that will provide financial services to graduates of the CBN’s Entrepreneurship Development Centers (EDCs).

Kenya: from nowhere plans East Africa’s first Oil exports
Kenya is headed to become the first oil exporter in East Africa, moving in less than five years from being a have-not nation to the regional leader in cutting reliance on energy suppliers such as Royal Dutch Shell Plc.
After Tullow Oil Plc (TLW) discovered oil last year, Kenya is set to start shipments in 2016, overtaking neighboring Uganda, where Tullow found crude more than seven years ago. The U.K. explorer plans to start pumping in Kenya as soon as next year, Chief Operating Officer Paul McDade said in an interview. Kenya’s deposits may top 10 billion barrels, according to the company, more than three times the U.K.’s remaining reserves.
Oil will allow Kenya to “diversify export earnings and act as a catalyst for infrastructural spending, especially on the transport network,” Phumulele Mbiyo, regional head of macroeconomic research at Nairobi-based CfC Stanbic Bank Ltd., a unit of Standard Bank Group Ltd., said . “The shilling is expected to benefit from inflows of foreign exchange and reduced spending on fuel imports.”

Sierra Leone: Diamond exports sees 43% increase in H1
African diamond exporter, Sierra Leone says it shipped out diamonds worth $102 million in the first half (H1) of the year, a 43 percent rise as compared to the $71 million gained from exports during the same period last year. According to the country’s National Mineral Agency (NMA), the increase – which provided the government with a tax windfall in excess of $5 million – was largely influenced by the improved level of productivity from its major diamond miner, Koidu Holdings and further highlights the growing advancement in channeling diamonds through the government.
“At the end of the first half of 2013, exports exceeded those of 2012 by 42.95 percent, an improvement of $30.71 million,” Ibrahim Mohmed, who oversees the diamond sector at the NMA, told. “The total diamonds exported amounted to 331,471 carats valued at $102 million,” he added.

Kenya: International acquisition of local firms profit entrepreneurs
Recent acquisition of Kenyan companies by foreign multinationals will provide multi-billion-dollar windfalls for local entrepreneurs, experts reveal.
Findings suggests that several billionaire entrepreneurs are selling their stakes in local companies to foreign firms eager to tap into the East African market and have a preference for acquisition as a faster and cost efficient medium of entry into the region.
According to Business Daily, sporadic deals in the past year have attracted multinationals from across Africa, Asia and Europe with concluded acquisitions involving firms such as Fina Bank, Mercantile Insurance, Kenya Data Networks (KDN) and Swift global. Other potential buyout deals include that of AccessKenya, Scangroup, KenolKobil, CMC Holdings, and Resolution Insurance.
Analysts have noted that most agreements are aimed at generating capital for cash-strapped firms or at providing expertise in resource and operational management to ensure sustainable business development for the growing economy.

Ghana: Trade between Ghana-Germany is pegged at €1.25b for 2013
Trade between Ghana and Germany currently stands at €1.25 billion as at the end of March 2013. This was made known by President John Mahama last week when he hosted the outgoing German Ambassador to Ghana, Dr. Renate Schimkoreit.
Germany is one of Ghana’s biggest trading partners in the European Union.
According to President Mahama, Germany has given Ghana €132 million out of the total portfolio of €184 million support pledge it made for the period between 2012 and 2015, reports the Ghana News Agency.
Germany’s funding in Ghana has been in major areas such as renewable energy, health, agriculture, land administration project among others.

Nigeria: To Sign $3.7bn coal project deal with Chinese firm
Nigeria’s president, Goodluck Jonathan says nothing stops the country from exploiting its abundant coal reserves for quality power generation if properly harnessed.
“Nigeria is endowed with abundant coal reserves of the required quality necessary for power generation. And so there is no reason why we should not exploit that sector.”
Nigeria’s coal reserve is put at about 360 metric tonnes.
The president also stressed on the importance of the solid mineral sector and the need to harness it in order to create jobs, wealth and increase the foreign direct investments in the economy.
During the workshop, HTG-Pacific Energy Consortium and Ministry of Mines and Steel Development signed a $3.7 billion deal for a coal to power project at Ezimo Coal Block in Enugu State and a 1,000 megawatts coal power generating plant. The MoU represents the first step to building plants that will generate additional 1200 mega watts of electricity to the national grid.
Nigeria’s Minister of Power, Prof. Chinedu Nebo, said a greater part of the funds required to carry out the project will be borrowed from foreign banks.

Africa: Standard Bank will open offices in Ethiopia, Ivory Coast 
Standard Bank, Africa’s biggest lender by assets, is poised to open up representative offices in Ethiopia and the Ivory Coast, it merged earlier this week. Banks first open representative offices in the targeted countries before setting up shop and opening up a branch network offering a suite of their products.
By the time Standard Bank decides to go full steam ahead and start full-suited operations in the two countries, the lender would have increased its African operations to 20. It currently has operations in 18 African countries.
The lender is paying more attention to Africa because it is planning to take advantage of opportunities that will be proffered by the growing middle class in the continent. Standard Bank has disposed of its operations in the United Kingdom, Russia and Argentina to focus on the African continent.
In the past couple of years, Ethiopia has been seen as having great prospects for foreign banks. This is in view of the fact that it is Africa’s second most populous country.

Ghana: DHL to expand in Africa
Leading international express and logistics company, DHL Express has stated that it will continue to invest in Sub-Saharan Africa. To strengthen its 32-year relationship with Ghana, DHL’s Sub-Saharan Africa Managing Director, Charles Brewer last Friday met key stakeholders, customers, employees and the media to explain the company’s future direction.
“Despite the current global economic uncertainty, DHL expects the African region to deliver,” said Mr. Brewer.
He also said “As we see the continent ‘surge’ as a result of sector investment, increased consumer spending and economic activity, the future is still bright for the continent. Ghana is an attractive market for us and with the GDP growth rate 7 percent presents a major opportunity. The opportunity for us is to expand our footprint within the country and service semi-urban and rural areas so that anyone-from a student to a small business- can access our network and the over 220 countries and destinations that we serve.”

Ghana: 1st Made in Ghana exhibition in Nigeria
The first ever Made in Ghana Solo Exhibition to be hosted in Nigeria, which is part of efforts aimed at strengthening the bi-lateral trade relations between Ghana and Nigeria as well as introducing Ghanaian manufacturers to the largest market in Africa was declared launched in Accra by the President of Ghana Manufacturers Association, Nana Owusu Opare. The press briefing which was held in the boardroom of First Atlantic Bank; the major sponsor of the program, was said to be the first solo exhibition platform that will be strictly for Ghanaians to showcase their products in Nigeria.
First Made in Ghana Solo Exhibition which is under the theme: “Promoting Ghana’s Export Potentials To West Africa’s Largest Market” was put together by Vintage Visions, Ghana.
The exhibition is expected to take place at the LTV. Ikeja, Lagos, from 2nd of September to 7th.

Nigeria: Nigerians abroad, biggest investors
Nigerians abroad have been identified as the biggest investors into the country’s economy, which is seen as one of the fastest growing in Africa.
The chairman, House of Representatives Committee on Diaspora, Hon. Abike Dabiri-Erewa disclosed this at the just concluded Nigerian Diaspora Direct Investment Summit in London where she urged the Nigerian government to ensure that Nigerians abroad are given the necessary support needed to have a smooth inter-business transactions in their various countries of abode.
Moreover also the Secretary to the Government of the Federation (SGF), Senator Anyim Pius Anyim, has lauded the contributions of Nigerians abroad to national development, saying, ” Remittances of over $21 billion in the last one year, appears the highest so far in Africa.

Kenya: Kidero signs Sh90 billion deal with investors
Nairobi Governor Evans Kidero has signed deals worth Sh90billion with Chinese investors to be used for infrastructure development. Speaking in China yesterday, Kidero said that he had held a fruitful meeting with the executive chairman of China Investment Bank, on the prospects of funding the urban re-generation of Eastlands housing estates, Nairobi’s transport system and nine transport corridors to open up traffic in the county.
“The China Investment Bank is willing to invest in Nairobi county. Its chairman Hu Huai Bang will soon visit Kenya,” he said. He said some Chinese investors want to fund the second phase of the Digital Traffic and Security Control where cameras will be installed in 253 major junctions in Nairobi from Mowlem area in Embakasi West to Karen. We also got commitments for the health care sector where statistics show that there are 7.6 million hospital visits per year in Nairobi while there are 83 hospitals, clinics and dispensaries. This will be upgraded to digital imaging systems,” Kidero said.

Nigeria: MoneyGram, eTranzact sign money transfer deal
International money transfer company, MoneyGram, has finalised agreements with electronic transaction and payment platform, eTranzact’s PocketMoni, that will allow accessibility to Nigerian mobile users all over the world.
PocketMoni – which works on all GSM networks the partnership – would enable customers carry out their transactions with ease, without having to face the often “touted inconvenience” of funds transfer.
The companies said the deal which would allow 24/7 access to money transfer transactions is a step in building a comprehensive suite of mobile services.
The Regional Director for North West Africa MoneyGram International, Mr Francois Peyret noted that the partnership was another effort aimed at driving the cashless policy directive of the Central Bank of Nigeria (CBN).

Ghana: Reserve stands at $5.7billion
Dr Kofi Wampah, the Governor of the Bank of Ghana (BoG), has announced that Ghana’s external reserves stood at $5.7 billion as of August 20, 2013.
This translates into more than three months of import cover, meaning that the country’s external reserves can pay for more than three months of imports.
Dr Wampah added that the current reserve level was an appreciation of the one recorded last month; in july the country’s external reserves were $4.9 billion but rose to the current level due to the various gains chalked up in the economy over the period.
The governor attributed those gains to the numerous interventions the government introduced into the economy, such as the Eurobond and improvement in the energy sector.

Ghana: To save $279 million from crude oil revenue
Ghana has been able to save close to $279 million from revenue earned from crude oil export for the first half of 2013. This is contained in the Ghana Petroleum Funds report on the country’s earnings from crude oil export since it started exporting crude.
According to the report, $77 million will be set aside for future generations in the Heritage Fund, while $202 million has accrued to the Stabilisation Fund to cushion the country in times of crude oil price volatility.

Africa: CDB invests $2.4 Billion in infrastructure projects
China Development Bank (CDB), the largest policy lender in the country, has invested over $2.4 billion in Africa’s infrastructure development, the bank’s president, Zheng Zhijie, has revealed.
According to the president, the bank, through its wholly owned subsidiary fund, China-Africa Development Fund, has financed several economy-enhancing projects in mineral resources development, power generation, agriculture and machinery manufacturing across 30 African countries, and has also offered loans worth a reported $18.9 billion.
With the economic crisis threatening Europe and parts of North America and a quest to find cost friendly markets for trading and business development, western countries have started turning their attention towards African nations, with predictions that the continent will be the next region to enjoy an economic boom. Top economic giants including the US, UK, Japan, Russia, France and Germany are all pushing for investment opportunities in the fast growing continent, but China seems to be leading the pile.
In 2009, China became Africa’s biggest trading partner, with trade deals from $10 billion in 2000 to over $200 billion this year, thereby outdoing the US.

Nigeria: IFC invests N60bn in infrastructure development
International Finance Corporation, IFC said it has invested 25 per cent, about N60 billion of its 2012 total investment in Nigeria on infrastructure. Vice President, Sub-Saharan Africa, Latin America and The Caribbean, Jean Philippe Prosper stated this in Lagos while interacting with news men during his visit to Nigeria.
He said that IFC has invested a total of $1.5bn in Nigeria within the organization’s last fiscal year that ended in June, 2013.
According to him, the infrastructure and natural resources sector got 25 per cent, about N60bn, while manufacturing and agribusiness got 25 per cent. The financial markets got N120bn about 50 per cent of the total investments.

Tanzania: Dar es Salaam Business prospects attract Singaporeans
Prospective investors from Singapore are in the country to explore business opportunities, thanks to President Jakaya Kikwete’s recent tour of the Asian nation. The visiting Singaporeans have expressed interest to invest particularly under the Export Processing Zones Authority (EPZA) managed Export Processing Zone (EPZ) and Special Economic Zone (SEZ) programmes.
The arrival of the strong business delegation from Singapore is linked to President Kikwete’s tour of Japan and Singapore early last June to lure prospective investors from the highly industrialised Asian nations.

Angola: To urge diversification amid stable oil prices
Angola, Africa’s largest oil producer after Nigeria, needs to cut its reliance on crude to buffer the economy as prices for the commodity are set to remain stable over the next three years, a central bank official said.
The economy is forecast to expand 6.5 percent this year and between 7 percent and 8 percent in 2014, while oil trades at about $106 a barrel, Antonio Andre Lopes, a vice-governor of the Banco Nacional de Angola, said. Crude oil makes up 97 percent of the country’s exports and 80 percent of tax revenue.
“The price of oil is a big threat so we need to diversify the economy to mitigate this,” Lopes said. “However, the economy is getting better and I think the oil price will be stable.”
The government is seeking to increase lending from banks to businesses in industries including construction, mining and agriculture as the southwest African country recovers from a 27-year civil war that ended in 2002.
Angola’s $116 billion economy is forecast by the World Bank to expand 7.2 percent this year. Crude oil has gained 12 percent in New York in the past six months and was trading as high as $104.72 a barrel today.

Ghana can generate power for West Africa
Alhaji Inusah Fuseini, Minister for Lands and Natural Resources says Ghana has the potential to establish power-generation plants to feed the West African sub-region.
He said investment in relatively cheap gas-fired power plants through gas that would be made available by the Ghana Gas Company ‘would significantly enhance the competitiveness of products of Ghanaian companies and facilitate the generation of the targeted 5,000KV by 2016 for export to countries in the sub-region.’
Alhaji Fuseini made the observation when Mr. Kimihiko Inaba, Executive Director of Japan External Trade Organization (JETRO) led a three-man South Africa-based team comprising himself, Mr. Yasuto Suzuki, Deputy General Manager of Toshiba and Mr. Nozomu Sasaki, General Manager of Mitsubishi Corporation to pay a courtesy call on the minister. The three-member JETRO delegation is currently in Ghana to explore investment opportunities particularly in the natural resource and power generation sectors in a bid to boost investment of Japanese companies in Ghana.

Ghana: BoG issues 7-year bond
The Bank of Ghana on Thursday, 22th of August, issued its first seven year Government of Ghana bond. Proceeds from the 100 million Ghana Cedi bond is expected to be used to settle maturing debts as well as finance some infrastructure projects. This is contained in the Government of Ghana’s Securities Calendar from July till the end of the year.
A total of 1.7 billion Ghana Cedis will be raised this month from short and long dated instruments. This will bring to a total of 14.7 billion Ghana Cedis of debt instruments raised by government this year.
The Central Bank will also issue a 600 million Ghana Cedis bond next month. Another seven year bond will be issued in November

Tanzania: Vodacom will invest $124m for network expansion
Tanzania’s largest mobile network operator, Vodacom, said it is investing 200 billion shillings ($124 million) to develop and grow its business in Tanzania, but complained that rising taxes could stifle the sector.
Vodacom spent 230 billion shilling ($142 million) last year to build over 890 network sites.
Vodacom hopes the service expansion will help pull more subscribers despite stiff competition from the likes of Airtel Tanzania, India’s Bharti Tigo Tanzania, Millicom International Cellular and Zantel.
Telecommunications is the fastest growing business sector in East Africa and the government is determined on getting a bigger share of revenues. However, taxation in East Africa’s second-largest economy had become difficult for mobile phone operators.

South Africa: Gold Fields acquires Barrick’s interests in Western Australia
JSE-listed gold miner, Gold Fields, said it had acquired Barrick Gold’s interests in Yilgam South Assets in Western Australia for $300 million. Gold Fields’ purchase of these assets will give the South African gold miner an extra 452.000 ounces in yearly gold production. The transaction will also offer the gold miner 2.6 million standby ounces for $115 an ounce and 1.9 million reserve ounces.
It has been disclosed that Gold Fields may pay for these assets in cash or partly in shares offered to Barrick Gold. If Gold Fields opts for cash payment for these assets, it may use its money generated in Australian operations. It may also use money from its bank facilities. And perhaps obtain funds from the capital markets.
The purchase is dependent on a number of conditions being met, one of them being the approval by the South African Reserve Bank for the transaction. The deal will have to get the blessing of Australia’s Federal Treasurer. Lastly, the Western Australian Minister for Mines will also have to put his signature to the transaction.
Barrick Gold is the world’s biggest gold producer which has been struggling in recent years.

Nigeria: Shekau’s death excites BRIC investors
According a report published in Forbes the death of Abubakar Shekau, the leader of the Boko Haram insurgency, is making foreign investors look favourably towards investing in Nigeria. Such investors are said to be frustrated by the low level of profit they are currently making from the BRIC nations of Brazil, India, Russia and China.
The report said success in cracking down on security threats in the Niger Delta is also changing the security situation for the better. And while terrorist disruption recedes, money keeps flowing into Nigeria.
In the last six months, U.S. corporations like Procter & Gamble PG -have committed at least $700 million to build new factories and agricultural facilities in the country while the Nigerian government itself announced a $1 billion fund to nurture the local software industry, which officials think can ultimately capture $20 billion a year from rivals like India.
Forbes also said Nigeria was one of the world’s four best-performing markets last year with a 35.45 per cent gain and is the biggest and most dynamic frontier economy in Africa, with a GDP at par with global capitals like Hong Kong and Singapore.
Moreover the Nigerian economy is growing at an annualised rate well above six per cent, faster than any of the top-tier emerging markets.

Ghana: First seven year bond oversubscribed by 170 percent
The country’s quest to raise funds for development through the issuing bonds has received massive interest from investors. The Government of Ghana through the Ministry of Finance and Economic Planning sold its first seven-year bond and it was over-subscribed by 170%.
Government received GH¢ 270 million Ghana cedi offers from local and foreign investors but took GH¢102 million cedis. It would be paying those who participated in the bids, an interest or a yield of 17.5%. Most of the bids that government is likely to accept are from local investors.
Proceeds from the bond, would be used to finance infrastructure projects and settle some maturing debts. Government is however expected to receive the money by next Monday, 26th of August. Some analyst says this would encourage some corporate institutions as well as government agencies like Volta River Authority (VRA) to issue long-term bonds to finance their operations.

Related articles
  • President Kenyatta arrives in China on first State visit (capitalfm.co.ke)
  • From Indian Ocean to Uganda: China will build Kenya’s new rail line (csmonitor.com)
  • Why China is investing $5 billion in Kenya’s infrastructure (smartplanet.com)
  • Ties with Kenya ‘not just about resources’ (chinawatch.washingtonpost.com)
  • Kirubi joins Uhuru’s business entourage in China (capitalfm.co.ke)
  • Africa Attracting Technology Firms (voanews.com)
  • China’s Trade with Ghana Eclipsed that of the US (atlantablackstar.com)
  • Uhuru says China to help Kenya combat poaching (capitalfm.co.ke)
  • Ghana-US trade equals $817m in first-half 2013 (ghanabusinessnews.com)
  • IFC to Expand Nigeria Investments to $2 Billion by 2014 – Bloomberg (bloomberg.com)

Common Currency By January 2015

08 Thursday Aug 2013

Posted by theinvesmentman in ACCRA, Africa, African Development Bank, Bank of Ghana, banks, Business, Currency, Get rich quick, Ghana, investment, Uncategorized, West Africa

≈ 2 Comments

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ACCRA, Africa, African Development Bank, Bank of Ghana, Central bank, Economic Community of West African States, ghana, West Africa

Reflex Eco Group – Ghana news

by Samuel Boadi (Local journalist)

Central Bank Governors in the ECOWAS sub-region have announced that they would introduce a common currency for member countries by January 1, 2015.

Dr Kofi Wampah, Governor of the Bank of Ghana, who delivered a speech at the opening of the meeting in Accra yesterday, said for over 15 years, countries in ECOWAS have chosen the path of monetary cooperation.

He said commendable efforts were being made by member countries to achieve the requisite macroeconomic stability despite the difficult international economic environment.

He admitted that pursuing the integration agenda would be challenging.

“Fellow Governors since 2007, the world has experienced various forms of economic crises which have mutated from financial crises, to sovereign debt crisis and a general downward spiral that is undeniably affecting each and every economy, big or small.

“Africa has fortunately been affected to a less extent and has remained one of the rapidly growing regions of the world. This has been achieved through a blend of good policy actions and well-structured and sequenced market reforms undertaken in the past. These have paid off and have provided Africa with some buffers and policy space that have helped to dampen the impact of the crises.”

Unfortunately, he said, uncertainty continues to weigh heavily on the outlook of monetary integration as downside risks increase as a result of the global economic crises.

“For us in Ghana, the recovery in the US economy for example, which should normally be good news, is rather impacting negatively on us; with the worsening of the world market price of gold, one of our main foreign exchange earners.”

At the 48th annual meetings of the African Development Bank held in Marrakech, Morocco in May-June 2013, participants stressed the need to expedite action on the integration process.

They also discussed issues relating to the transformation of West African economies.

During the Dakar 2000 meetings, it was agreed that macroeconomic convergence should precede monetary union, and further conditions were set for phases of monetary union in ECOWAS.

Related articles
  • Common currency for West Africa: Only “political will” will do the trick (spyghana.com)
  • 29th WAMZ Meeting Held (modernghana.com)
  • Ghana gets two positions on ECOWAS Commission (modernghana.com)
  • Innovation needed in financing projects – Amissah-Arthur (ghanabusinessnews.com)
  • Millison Narh elevated to First Deputy Governor of Bank of Ghana (ghanabusinessnews.com)
  • WAMZ Confirms BoG Governor As Chairman (spyghana.com)
  • Food Price Drop Provides Relief in Brazil Inflation Fight – Bloomberg (bloomberg.com)
  • Zimbabwe sticks with USD $ (thenetworkoneafrica.wordpress.com)
  • Millison Narh Promoted To First Deputy Governor of BoG (spyghana.com)
  • US economy recovery hurts Ghana’s gold sales – Dr Wampah (ghanabusinessnews.com)

Gov’t Revenue, Expenditure Hit Below Target

02 Friday Aug 2013

Posted by theinvesmentman in ACCRA, Africa, banks, GDP, Get rich quick, Ghana, investment, Uncategorized

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ACCRA, Bank of Ghana, Central bank, Finance, ghana, Gross domestic product, Monetary Policy Committee, Wampah

Reflex Eco Group – Ghana News
Cephas Larbi (Local journalist)

BOTH REVENUE and expenditure recorded for the second quarter of the year hit below their respective targets.

Dr Kofi Wampah, Governor of the Central Bank, who disclosed this at the close of a Monetary Policy Committee meeting with journalists in Accra yesterday, said Government’s budget recorded an overall deficit (cash basis) of 4.5 percent of GDP.

He said total revenue and grants recorded GH¢9.5 billion, against a target of GH¢10.6 billion, adding that of the outturn, domestic revenue amounted to GH¢9.0 billion, below the target of GH¢9.8 billion.

He said total tax revenue amounted to GH¢6.7 billion, compared to the target of GH¢7.7 billion.

Dr. Wampah said that the foregoing was as a result of underperformance of almost all the tax types which reflected lower imports and energy sector challenges, stating that grant disbursements amounted to GH¢507.6 million, 41.8 percent below target.
Non-tax revenues for the period amounted to GH¢2.2 billion, higher than the budgeted target of GH¢2.0 billion while total expenditures, including payments for the clearance of arrears and outstanding commitments for the first half of 2013 amounted to GH¢13.5 billion, compared to a target of GH¢14.6 billion.

Dr. Wampah said the deficit of GH¢4.0 billion was financed mainly from domestic sources, resulting in a net domestic financing (NDF) of GH¢3.0 billion. This was lower than the budget target of GH¢3.2 billion, adding that foreign financing of the budget amounted to GH¢1.0 billion.
The stock of public debt also increased to GH¢39.1 billion (43.9 percent of GDP) as at the end of June 2013, from GH¢35.1 billion in December 2012.

“Out of the total public debt stock, the domestic component amounted to GH¢20.9 billion compared to GH¢18.5 billion in December 2012. External debt stock also stood at US$9.3 billion up from US$8.8 billion over the same period”, Dr. Wampah said.

The Governor added that the BoG has maintained its policy rate at 16 percent for the first time this year. The policy rate is the price commercial banks can borrow from the central bank.

Related articles
  • Ghana records 4.5% budget deficit as public debt widens to GH¢39.1b in 2013 first half-year (ghanabusinessnews.com)
  • Ghana government spends GH¢4.7b on salaries in six months (ghanabusinessnews.com)
  • Public debt stands at GH¢39.1b with a budget deficit of 4.5% (spyghana.com)
  • US economy recovery hurts Ghana’s gold sales – Dr Wampah (ghanabusinessnews.com)
  • BOG HINTS OF PRICE HIKES ..In Fuel And Utilities ; Ghana’S Debt Stands At GH¢39.1bn (modernghana.com)
  • WAMZ Confirms BoG Governor As Chairman (spyghana.com)
  • UPDATE 2-Bank of Ghana leaves prime rate unchanged at 16.0 pct (xe.com)
  • Ghana inflation to fall to mid 7-11 pct band by early 2014 – cbank (xe.com)
  • $750 million 10-year Eurobond Sold (spyghana.com)
  • BOG HINTS OF PRICE HIKES ..In Fuel And Utilities ; Ghana’S Debt Stands At GH¢39.1bn (thechronicle.com.gh)

REPORT OF TUESDAY 09/07/13

10 Wednesday Jul 2013

Posted by theinvesmentman in Africa, banks, Get rich quick, Ghana, investment

≈ 12 Comments

Tags

$1billion, Africa, Bank of Ghana, Eurobond, ghana, Ghana Revenue Authority, Nigeria, Yaw Osafo Maafo

Reference – Reflex Eco Group news desk

REPORT OF TUESDAY 09/07/13

  1. To response to critics, the Minister of Finance and Economic Planning, Mr. Seth Terkper, said Ghana is not broke, but the economy is facing some challenges. He admitted that there were some slippages in the economy in respect of the wage bill and corporate income tax, particularly in the petroleum sector, and the government had discussed that.

The wage bill was a major source of the fiscal slippage of 5.1 per cent of Gross Domestic Product (GDP) in 2012, as it constituted 2.7 percentage points of the slippage and the increasing of that could be eroding the gains of the economy, which grew by 6.7 per cent in the first quarter of last year.

To arrest the situation the government had made some significant interventions, such as the adjustment of the subsidy on petroleum or the re-introduction of the five per cent national fiscal stabilization levy on the profit before tax of selected companies, such as banks, insurance companies, non-bank financial institutions, breweries, mining, tobacco and communication companies.

Furthermore the government had placed a moratorium on the award of contracts and tasked the Ghana Revenue Authority (GRA) to take administrative measures that would help shore up its revenue collection.

Moreover the $1 billion Eurobond came in handy as a critical resource to undertake development projects; the government would not use the entire money for public debt financing, but also a part of the funds would be used to finance the amortization of domestic bonds, pay for counterpart funding for some identified projects and meet capital commitments in the budget.

  1. Mining companies in the country will begin a massive downsizing of their operations from next month as renewed pressure to cut down on cost heightens with falling gold prices; more than 3,500 permanent jobs will be lost.

Gold prices, which at the beginning of April, was hovering around US$1,600 an ounce has now crashed to low record price of below US$1,200 and if gold remains at current price levels it will be imminent job losses.

Moreover several big companies have canceled or delayed projects, closed mines, and put assets up for sale and fired several workers as the outlook for major commodities worsened.

  1. The United Kingdom’s Minister for Africa, Mark Simmonds has completed a successful two-day visit to Ghana. Discussions focused on building mutual prosperity and boosting trade, investment, growth and jobs through a new high-level UK-Ghana partnership.

Mr Simmonds said that Ghana is an ideal partner for the UK not just because of the strength of our existing relationship and the ties between our people but because of Ghana’s impressive economic success and stability.

During his visit to Ghana, Mr Simmonds met Vice President Paa Kwesi Amissah-Arthur, Ministers for Foreign Affairs and Regional Integration and Trade & Industry; he also visited the UK agri-business, Blue Skies, where he set out how £10 million of DFID funding for agricultural investment in northern Ghana would be channeled through the Agricultural Development Company. The funding will help boost investment to boost production and economic growth in some of the country’s poorest areas.

  1. Nigeria, Africa’s most populous country and the continent’s largest frontier market on July 2, raised $1billion from the global capital markets in two Eurobond issues – a $500 million 5-year bond at a yield of 5.375 per cent and a $500 million 10-year bond with a yield of 6.625 per cent. The offering was four-times oversubscribed due to Nigeria’s strong fiscal position, structurally sound macroeconomic fundamentals and low debt-to-GDP ratios.

Despite Nigeria’s success, Ghana who is looking to tap the increasingly volatile international debt markets for cash in coming months may be in for a rougher and more costly ride. Ghana has a budget deficit of almost 12 per cent and its current president has a legal cloud hanging over him. Moreover complicating Ghana’s scheduled July Euro-bond issue is the changing outlook for the government’s near-term revenues, GDP growth and forex reserves.

The gold mining sector, the country’s second largest export earner, is facing imminent contraction due to falling gold prices. In 2012, Ghana’s mining sector contributed 42 per cent of total merchandise exports and it was the leading contributor to domestic tax collections in 2012, with a total approximate revenue of GH¢1.5 billion ($737million).

With gold prices plunging towards $1,000/ ounce, FDI inflows into Ghana’s gold mining sector and new investments by gold companies will be likely significantly cut back to 2008/2009 levels by about $600million as all global gold companies re-align country units, shut down costly mines, lay off staff and cut back on rising production costs. Total gold mining sector revenues in Ghana in 2012 was over $5.3billion, it is now expected to plunge towards $3billion – a difference of almost $2.3billion.

If the Eurobond scheduled for issuance in July is delayed for whatever reason, the Cedi will plunge and a supplementary budget may have to be laid before parliament to raise extra revenues from energy telecommunications and banks companies and importers.

However in recent years the country’s debt-to-GDP load has risen again and is nearing 60 per cent of GDP. By contrast, Nigeria’s debt-to-GDP ratio is 17 per cent and its budget deficits are around two-three per cent In 2017 Ghana will also have to rollover its $750million 2007 Eurobond issue.

With US monetary authorities in disarray and the squabbling on the FOMC likely to increase rather than abate ahead of Chairman Ben Bernanke’s 2014 exit, Ghana may yet still plunge ahead with a July Eurobond issue even if it means that it pays eight per cent and subscription for the issue is somewhat tepid.

  1. According Yaw Osafo Maafo, the former Finance minister, under the Kufuor-led NPP administration, Ghana’s economy under the John Mahama-led National Democratic Congress government is facing a myriad of problems including the huge public debt, the lamentable fiscal deficit, the humongous arrears, unbridled overspending, worsening unemployment, deteriorating utility services, and failing social services.

He explained further that the problems confounding the economy were expressly stated in the Bank of Ghana’s Monetary Policy Committee (MPC) report of 22nd May 2013, where the governor of the Bank of Ghana admitted that “Economic activities have slowed down, and both business and consumer confidence have weakened”; moreover on the report it explicitly clear that lending rates are hovering around 30 percent because of excessive domestic borrowing by government; there is rising cost of business as a result of erratic electricity and water supply; and the inability of business to borrow and grow their activities due to the drying up of credit.

Moreover to alarm the country’s economic situation is that public debt, that under the Mills-Mahama administration it was grown, within 4 years and a half, from GH¢9.5billion at the beginning of 2009 to GH¢38.5billion, meaning that under the NDC, Ghana is adding GH¢6.4billion every year to its public debt.

  1. Investors on the Ghana Stock Exchange are expected to adopt a ‘wait and see’ attitude in the next couple of weeks before buying or selling shares on the capital market; the investors are curious about the half year results of the listed companies, that are expected to be released from now till the end of July.

The market had looked good this year, recording an annual return of 57 percent for investors so far.

Meanwhile, the oil and gas sector ended the first half of the year as the worst performing sector on the Ghana Stock Exchange; the major cause of this performance is caused by the poor performance of Tullow Oil, which its annual return was negative 15.9 percent, whereas there was a good performance by Total and GOIL.

However, the insurance sector accrued a 77 percent return for investors to become the best sector followed by the Fast Moving and Consumer Goods Sector.

Related articles
  • Ghana to Offer First 7-Year Bonds With Two Second-Half Sales – Bloomberg (bloomberg.com)
  • Ghana’s Cedi Falls Again Before Second Eurobond Sales (spyghana.com)
  • Ghana’s Foreign Exchange Market Dries Up Before Bond Sale – Bloomberg (bloomberg.com)
  • Transaction advisors for Ghana’s $1b Eurobond auction to paid $2.1m (spyghana.com)
  • Ghana to pay transaction advisers $2.1m for $1b Eurobond auction (ghanabusinessnews.com)
  • Ghana’s Parliament approves $1b Eurobond (ghanabusinessnews.com)
  • Ghana’s economy at “critical stage” in middle-income status – IMF (ghanabusinessnews.com)
  • Ghana’s consideration for a coal-fired energy plant – Some issues (spyghana.com)
  • Joe Ghartey concludes testimony in Ghana Telecom case (modernghana.com)
  • Ghana’s Terkper Plans to Halve Wage Burden in Budget – Bloomberg (bloomberg.com)

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