GB&F December 2014

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DECEMBER 2014 / ISSUE 043 GH¢10.00

Capital market innovates a expands nd

THE MOROCCAN ECONOMIC BOOM: USA..........................................$5.00 UNITED KINGDOM.....................£3.00 EUROPE....................................€3.50 AUSTRALIA.............................AS5.00 CFA ZONE...........................CFA 2,000 OTHER AFRICAN COUNTRIES.US$4.00

When development meets its roots

THE FIRST BUSINESS READ IN GHANA

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CONTENTS ISSUE 043 / DECEMBER 2014

26 Finance

Money’s origin, the exchange rate and the depreciating Cedi.

32 Aviation

52 What leadership model is the best

for your organisation? A blend of some leadership styles could be better for achieving results.

Despite the Ebola havoc in West Africa, Ghana`s airlines industry is witnessing growth in investment.

Front Cover: His Majesty King Mohamed VI, King of Morocco

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8

Briefs

Highlights of events and issues that trended the business and financial circles in Ghana and the world during the past month.

Economy

A cocktail of reactions from Ghana’s top think-tanks’ reviews of the 2015 budget. Is the budget growth-oriented? Is it for fiscal stabilisation? Find out.

12 Capital Market

Ten years of the Central Securities Depository’s (CSD) and 24 years of the Ghana Stock Exchange’s (GSE) operations are examined.

Their successes, challenges and plans for expansion are discussed.

34 Cover

Morocco`s economic up-swing is a marvel in Africa. The managers of the Maghreb kingdom’s economy expect better times.

What is the secret behind the boon?

38 Tourism

Increasing presence of hotels and restaurants is contributing positively towards tour and travel in Ghana.

40 Insurance

The second-tier pension brouhaha between government and public sector workers will not end now.

But a solution needs to be found, sooner than later.

48 Perspectives

When harnessed, the Odaw River and Korle Lagoon will modernise Accra, and transform the capital city beyond imagination.

The once vibrant textile industry is gradually heading towards its death despite the government’s attempts to resuscitate it.

Judicial independence is critical to a fair and just legal system.

But bad money is rearing its ugly head in United States courts to influence decisions.

56 Events

Mark these dates in your dairies and endeavour to attend these conferences.

57 Stats & Indices

Figures speak louder than words for the economy.

58 Commodities

Editor's Note:

20 Self-reliance would salvage the

struggling economy. Production of made-in-Ghana goods would generate employment, and their exports would rake in foreign exchange and help stabilise the Cedi.

22 Building & Construction

Insurance: Page 40

Find us online at www.ghanabizfinance.com All information contained within this magazine is the property of Ghana Business & Finance and is not to be used without written authorisation from the publishers. Although every effort is made to ensure the correctness of information submitted for publication, the magazine may inadvertently contain technical inaccuracies or typographical errors. Ghana Business & Finance assumes no responsibility for errors or omissions in this publication or other documents that are referenced by or linked to this publication.

DECEMBER 2014

54 Outlook

Watch market prices in November, as researched and compiled by Esoko.

18 Industry

The roles of the private sector and the government in solving the housing deficit.

Perpectives: Page 52

Our attention has been drawn to the fact that the article titled 'Spare Capacity in the Ghanaian Economy,' which appeared on page 10 in the November edition of GB&F, was written by KENNEDY ADDAI KUFFOUR and NOT by Martin Luther King as published. We apologise for any inconvenience caused.

Thank you.

linkedin.com/GhanaBusiness&Finance facebook.com/GBandF @ghana_business

GHANA BUSINESS & FINANCE

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EDITOR’S SUITE

We shy away from a long-term National Development Strategy to our own disadvantage So soon 2014 is drawing to a close. As we are about to welcome 2015, we wish our cherished readers, advertisers, subscribers, sponsors and partners a Merry Christmas and a prosperously Happy New Year.

Budget 2015 has been read and comments have been on its strengths and weaknesses, as reflected in pages 8-11. The budget cannot push development without a supra-structural framework that can galvanise the economy to remarkable growth. Based on this logic, we discuss the fundamental paramountcy of a National Development Plan, and the necessity for Ghana to have one.

That Ghana needs a long-term national development plan to direct and promote socio-economic growth and prosperity is indisputable. Indubitably, a long-term plan is the rock on which a whole economy is anchored. It is the vision that has led, nurtured and jet-propelled many countries to higher levels of development of their natural and human resources. The post-Second World War Marshall Plan propelled economic advancement of western Europe. Mao’s China adopted a long-term plan which made it the economic powerhouse that it is today. It is well known that Singapore and the other Asian Tigers developed to the level they are today because they had long-term visions which they adhered to.

To modernisation theorists, the take-off stage of the developing countries must be shepherded by a long-term strategy for the ultimate stage to be attained. When the Asian Tigers developed by using long-term plans (albeit with authoritarian rule), what cogent reasons does Ghana have for tarrying with crafting a Long-Term National Development Plan to guide it from its low middle income status to a higher income country? Since President Kwame Nkrumah’s Seven- and Ten-Year Development plans were torpedoed in 1966, all development planning in Ghana has been on ad hoc or medium-term basis. Vision 2020 came out under Rawlings’ regime, but it was not seriously stuck to. Then came Kufuor’s administration into power in 2001, and Vision 2020 was abandoned.

From 1966 to date, the country lost in terms of possessing an overarching, farreaching and cross-cutting strategy to drive its own development. That did not augur well for the country in its quest to utilise it enormous natural and human resources to become an industrial developed country in future.

The importance of a long-term development plan for Ghana cannot be overstated.

Article 35(7) of the 1992 Constitution provides: “As far as practicable, a government shall [our emphasis] continue and execute projects and programmes commenced by the previous Governments.” This implies we need a long-vision plan to ensure continuity. Also, section 21(3) of the Petroleum Revenue Management Act, 2011 (Act 815) requires the alignment of the spending of petroleum revenues with a long-term development plan. All the recommendations of the Public Interest and Accountability Committee (PIAC) have called for a long-term development plan.

Many prominent Ghanaians such as Prof. Kwamena Ahwoi, Prof. Joseph Ayee, Prof. Akilagpa Sawyerr and Prof. Miranda Greenstreet have, at different places and times, called for the long-term plan. The Senchi Consensus also recommended a long-term plan. The debate stills remains whether the plan should be entrenched in the Constitution as proposed by the Constitution Review Committee (CRC). The entrenchment was rejected by the government in a White Paper, and was supported by the New Patriotic Party (NPP) and other opposition elements. But PIAC and many civil society actors favour entrenchment.

Connectedly, in the 2014 budget, the government announced that the National Development Planning Commission (NDPC) had “prepared a draft vision document to provide a long term framework to guide development planning and strategy for the country.” But the draft is still work in progress as it has been slowed down by God knows what. Happily, Dr Nii Moi Thompson, Director-General of the NDPC, disclosed on December 4 that the government would be ready with a long-term development stratagem known as the Green Paper in the first quarter of 2015.

To GB&F, this is welcome tidings. But the Green Paper cannot succeed when it is not a flexible, pragmatic, bi-partisan and multi-stakeholder roadmap. That will make it to be accepted and continued even when there is a change of government.

GB&F believes that we must have a permanent National Interest, despite our political differences.

Ayuureyisiya Kapini Atafori

General Manager Josiah Spio-Garbrah jspiogarbrah@ghanabizfinance.com adverts@ghanabizfinance.com +233 264 510 396 Acting Editor Ayuureyisiya Kapini Atafori editor@ghanabizfinance.com Staff Writer Kweku Darko Ankrah Columnists Jerry Halm Yvonne MacCarthy Julius Caesar-Tokoli Contributors Martin Luther C. King Oppong Baah Anthony Sedzro Georgina Adjei Art-Graphics & Design Manager Benjamin Tetteh Photography & Production Daniel Sackey Yobo Circulation & Subscription Jeffrey Dapaah subscription@ghanabizfinance.com Editorial Committee Prof. Paul N. Buatsi Prof. Kwame Addo Ms. Johanna Awotwi Mr. Gaddy Laryea Mr. Ray de Bono Mr. Nana Robert Mensah Mr. Frederick Alipui Ms. Dede-Esi Amanor-Wilks Ms. Nana Spio-Garbrah Office Location Ghana Business & Finance African Business Media House No. 7 Lamb Street (off Farrar Avenue) Adabraka, Accra, Ghana Mailing Address P. O. Box O 772, Osu, Accra, Ghana Tel: +233 302 240 786 Fax: +233 302 240 783 info@ghanabizfinance.com Brand Advisor Dmax Studios in Malta, EU. (www.dmax.tv) Credits

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GHANA BUSINESS & FINANCE

DECEMBER 2014

From next year, thousands of entrepreneurs across the continent will benefit from a US$100 million PanAfrican Entrepreneurship Initiative.

This followed the launch of the Tony Elumelu Foundation Entrepreneurship Programme - a multi-year programme of training, funding and mentoring designed to empower the next generation of African Entrepreneurs. The programme would identify and help grow an initial 10,000 start-ups and young businesses in Africa over the next ten years, targeting one million new jobs and US$10 billion in annual revenues to the African economy.

It is the first such initiative to be launched by an African philanthropic

organisation, Tony Elumelu Foundation, and the largest targeting the entrepreneurial space. Addressing the launch, African business leader and the brainchild behind this initiative, Mr Tony Elumelu said “Entrepreneurship is the cornerstone to African development and the key to local value creation in Africa. I am determined to ensure that Africa’s next generation of entrepreneurs has the platform they need to turn their entrepreneurial aspirations into sustainable businesses that will drive economic growth and job creation across Africa.”

A selection committee of African business leaders will select the most promising 1,000 start-ups annually from across the continent. Successful applicants will participate in a comprehensive programme designed to equip them with skills needed to build a successful business.

GOtv launches “Gye Wodie” to reward subscribers

GOtv Ghana Limited has launched a mega-promotion to reward its existing and new subscribers at the Aviation Social Centre in Accra. The promotion, dubbed the ‘GOtv GYE WODIE PROMO,’ is the first of its kind to be out-doored by a pay-television (TV) service provider in Ghana.

The event brought together selected GOtv dealers, representatives of GOtv Ghana, sponsors and the media. The nationwide promotion is being carried out in collaboration with the National Lotteries Authority (NLA) on the Caritas Lottery Platform, and is supported by Hisense, Airtel Money, BUKA Restaurant and MasterAlarms.

Addressing the audience, the Business Manager of GOtv Ghana, Mr Kingsley Afful, said the next few weeks would see subscribers winning exciting GOtv branded souvenirs, Hisense LED TV sets, tablets and many fantastic prizes. “A new customer is required to buy a GOtv decoder, pay two months subscription and text the IUC Number to 0262611127 in order to be entered into a draw. Existing subscribers also can pay three months subscription, text his/her IUC number to 0262611127 to be entered into the draw,” Mr Afful said.

He explained that anyone who buys a GOtv decoder would be rewarded instantly with branded gifts.

Additionally, subscribers could join DECEMBER 2014

GOtv’s facebook competition on the social media platform to win other fabulous prizes. He said there would also be five exciting mini-draws across the country to enable old and new GOtv subscribers to be rewarded for their loyalty. The grand draw would be held at the end of the promotion.

After the draw, one lucky subscriber will drive a BRAND NEW SALOON CAR home.

The Director of GOtv , Madam Cecil Sunkwa-Mills, indicated that GOtv was uniquely placed to become the centre of quality digital television viewing with world-class channels like AfricaMagic, Channel O, Supersport, Telemundo, MTV, CNN, M-Net Movies Zone, Jim Jam, E! Entertainment, Discovery World, Vox Africa, Blackbelt and Nickelodeon.

Some sponsors of the promotion made contributions on why they were supporting the promotion. Mrs Yram Seinti, the Marketing Manager of Hisense Ghana, noted that the company shares the vision of GOtv, which is to enrich the lives of Ghanaians and bring happiness to their homes.

The M-Commerce Director of Airtel, Mr Luck Ochieng, highlighted the telecom company’s close partnership with GOtv over the years. Mr Ochieng stated that ‘Airtel Money’ was ready to partner GOtv to mutually benefit their respective businesses. He said the promotion was going to serve as a good platform for the targeted audience to use ‘Airtel Money’ as their reliable payment option.

BRIEFS

African entrepreneurs to benefit from US$100 million initiative

Public debt stock at 60.8 per cent of GDP Ghana's public debt stock as a percentage of Gross Domestic Product (GDP) as of September 18 stood at 60.8 per cent, largely on account of increase in external net disbursements for infrastructure projects and net domestic issuance, as well as the depreciation of the cedi. Finance Minister Seth Terkper announced this on November 19 when he presented the 2015 Budget Statement to Parliament in Accra.

Mr Terkper told the legislators that the debt stock increased from 36.3 per cent in 2009 to 48.03 per cent in 2012 and to 55.53 per cent in 2013.

"The provisional public debt stock as at end September, 2014 stood at GH¢69,705.90 million (US$21,733.51 million); this is made up of GH¢40,644.15 million (US$12,678.62 million) and GH¢29,041.75 million (US$9,054.89 million) for external and domestic debt respectively,” he said.

He explained that some of the loans contracted were used to finance major infrastructure projects including the Ghana National Gas Processing Plant to help solve the energy crisis, refurbishment and expansion of the Ridge Hospital, and the University of Ghana Teaching Hospital. The rest are the expansion of the Kpong Water Pumping Station, the Kwame Nkrumah Interchange, the Sofoline Interchange in Kumasi, the Tetteh-Quarshie-Madina road project as well as the AchimotaOfankor road project.

Other projects, he said, were the construction of affordable housing units by OAS Construction and Kumasi Central Market, the Kasoa Interchange, the purchase of 200 buses for the Metro Mass Transit, and an additional 295 Scania Buses for the Rapid Transport System and the Parliament House-Job 600 offices.

On the Eurobond issue, Mr Terpker said government achieved an impressive market result which was reflected in a competitive coupon rate of 8.125 per cent and an order book of US$2.9 billion, of which government accepted US$1billion.

GHANA BUSINESS & FINANCE

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BRIEFS

Ebola: World Bank lowers 2014 growth for worst-hit countries

The World Bank has revised downwards its 2014 GDP growth projections for the three nations worst hit by the current Ebola outbreak - Liberia, Sierra Leone and Guinea. “The Ebola epidemic continues to cripple the economies, the Bank said in a report.

The report came as World Bank President Jim Yong Kim begun a twoday visit to West Africa to assess the impact. The World Health Organisation (WHO) says 5,987 people have died from Ebola in the three nations. The latest World Bank report still shows positive projected growth there for 2014, but at much lower rates.

It said that “all three countries had been growing rapidly in recent years and into the first half of 2014”. The bank is now also projecting negative growth for two of the nations in 2015 Guinea and Sierra Leone.

In 2014 pre-crisis, Liberia`s growth estimates were 5.9 per cent; as at October 2.5 per cent; and currently 2.2 per cent. In 2014 pre-crisis, Sierra Leone`s growth estimates were 11.3 per cent; as at October eight per cent, and now 4 per cent, and in 2014 pre-crisis, Guinea`s growth estimates was 4.5 per cent; as at October 2.4 per cent; and now 0.5 per cent.

The Bank said: “In Liberia, where there are signs of progress in containing the epidemic and some increasing economic activity, the updated 2015 growth estimate is 3%, an increase from 1% in October but still less than half the pre-crisis estimate of 6.8%.” It said: “These latest projections imply forgone income across the three countries in 2014-15 totalling more than $2 billion.”

Mr Kim said: “This report reinforces why zero Ebola cases must be our goal. While there are signs of progress, as long as the epidemic continues, the human and economic impact will only grow more devastating.” The Bank said it was mobilising US$1billion in financing for the worst-hit nations.

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Union Savings and Loans boss receives award Managing Director of Union Savings and Loans, Mr Philip Oti- Mensah, has been awarded by the West African Nobles Forum for his high level of integrity and morals exhibited in his work.

Mr Oti-Mensah was among 24 high distinguished personalities honoured at the 20th West Africa Nobles Forum and awards night held at Akosombo under the theme: integrity your spring board for success.

Management members of Union Savings in picture with Noble Philip Oti-Mensah (second from right) after the awards night

In an interview with him, he thanked the management and staff of Union Savings and Loans for being the reason he is able to perform well. “Whether the award goes to an individual or the entire institution, it is an award for all of us because it is a team work,” he said.

The West African Nobles forum identifies and recognises men and women of with high personal, corporate and moral integrity. Mr OtiMensah thanked the board of directors, executive management and staff of Union Savings and Loans for their support. Union Savings and Loans is one of the oldest savings and loans in the country. In January 2013, Mr OtiMensah took over as the Managing Director, and has since transformed Union Savings and Loans in several ways, including strong brand visibility, human resource development and profitability.

IMF backs Ghana budget plan T h e International Monetary Fund (IMF) has endorsed Ghana’s budget for next year, which aims to cut the fiscal deficit by 3.5 percentage points. Following the visit of an IMF mission to Ghana, mission chief Joël Toujas-Bernaté said the Ghanaian authorities had made significant progress towards strengthening macroeconomic policies, and reducing the current account deficit.

“With projected arrears repayments of 1.2% of gross domestic product next year, the cash deficit will be equivalent to 6.5% of GDP in 2015, down from 9.5% in 2014,’ said Toujas-Bernaté. “The budget includes some important measures to increase revenues, to eliminate distortive and inefficient energy subsidies, and to contain growth in Ghana’s comparatively high public wage bill.

At the same time, the budget allows for maintaining public investment above 5% of GDP as well as increasing social protections spending targeted at the most vulnerable,” he noted

GHANA BUSINESS & FINANCE

Pledges to reforms public financial management, enhance tax administration and clean up the public sector payroll were also welcomed.

“These efforts, together with the implementation of appropriate pay and hiring policies, will help further control the wage bill, which has been a significant source of fiscal risk,” he added. He noted that once this work was completed, the IMF would agree a financial arrangement to support Ghana’s economic programme.

In his Budget statement, delivered on November 19, finance minister Seth Terkper restated the government’s commitment to strengthening expenditure management ‘notably in pay roll management which will reduce waste and corrupt practices’.

He added that state institutions would be strengthened and governance improved, 50 new secondary schools built, health facilities expanded, road and water systems completed and energy capacity boosted.

Terkper also reiterated that Ghana would shift from accounting on a cash basis to accounting on an accrual basis and would adopt International Public Sector Accounting Standards.

DECEMBER 2014

Zenith Bank wins Best Bank award Zenith Bank has been adjudged the “Bank of the Year, Ghana” at the 2014 Banker Awards recently held in London. Zenith Banks was adjudged the Best Bank in Ghana at the 15th edition of The Banker Awards held at the Intercontinental Hotel in London. The award came nine years after the bank commenced operations in Ghana.

Zenith Bank is listed in Nigeria and the United Kingdom with subsidiaries in Ghana, Gambia and Sierra Leone as well as representative offices in China and South Africa. Mr Daniel Asiedu, … said the award poses a new challenge to the bank to perform better.

“This award clearly tells us we are doing the right thing, it tells us we are on the right path and for me it adds a lot of credence to what we are doing in Ghana,” Mr Asiedu said. “In nine years we have won so many awards, including the Bank of the Year organised by Corporate Initiative Ghana…We dedicate this award to our cherished customers and it would encourage us to come out with more innovative products for our clients”, he added.

Mr Asiedu challenged his colleagues in the banking sector to commit to innovative banking practices in their delivery of services. According to him, the principle lies at the heart of a winning formula in the banking sector. He stressed the need for the highest standards of customer service to be maintained.

Editor of The Banker magazine, Mr Brian Caplen, said the global financial market was excited by the prospects of investing more in Ghana.

BRIEFS

UBA, Airtel to launch mobile financial services across Africa

United Bank for Africa (UBA) is partnering with telecoms company, Bharti Airtel, to provide mobile-based financial services across Africa through ‘Airtel Money.’ ‘Airtel Money’ is Bharti Airtel’s mobile commerce brand that enables subscribers to carry out financial transactions directly from their mobile phones.

Under the Memorandum of Understanding (MOU) signed, both companies will expand the range of innovative financial services to their customers in the 12 countries where they are both present within Africa. These include Nigeria, Ghana, Burkina Faso, Sierra Leone, Gabon and Kenya. The others are Uganda, Tanzania, Chad and Zambia, Congo Brazzaville and Congo DRC.

UBA operates in 19 African countries as Africa’s global bank, with over 10 million customers while Airtel has presence in 17 African countries with over 30 million registered mobile money customers.

UBA and Airtel will jointly launch new mobile based financial products and services that are relevant to customers with the objective of driving convenience to their combined over 30 million registered customers. These services include International Money Transfer services, Mobile Banking, Super Agency Services and Payment Cards for their customers.

The partnership will also facilitate cardless withdrawal services at ATMs, Mobile Savings and Loans. These initiatives are geared at improving convenience for their teeming customers across the continent while boosting intra-Africa trade and commerce. “We are very excited about this partnership with Airtel that will see the introduction of innovative solutions in the e-commerce space in Africa. The rich bouquet of mobile-based services, which we will be introducing under the partnership, will not only support financial inclusion across Africa, it will also improve trade and break barriers of doing business on the continent,” said Kennedy Uzoka, Group Chief Executive Officer, UBA Africa.

Lamudi to host global real estate conference Global property portal, Lamudi, held conference worldwide at the end of November. The focus of the event was to discuss how real estate was changing in the emerging markets. In Ghana, the event was held in Accra at the plush Holiday Inn. A number of individuals who work in the industry attended and they discussed key issues pertaining to the real estate industry. Notable among them were the Ministry of Water Resources, Works and Housing, an expert on lands and another expert on social housing.

Lamudi will release a paper

DECEMBER 2014

focusing on the property industry in these markets soon; how it has changed over the last year, and predictions for 2015. By speaking to top real estate professionals, and surveying developers, brokers, agents as well as customers, Lamudi has developed a research paper to help people better understand to what extent the real estate market is developing across the world.

Mr Kian Moini, Global CoFounder and Managing Director at Lamudi, said: “After spending the last couple of months working on the paper, we realised that the best way to share this information with the local countries was through a conference.

“We want to ensure that our knowledge on the future of real estate in the emerging markets educates not

just our current clients but future customers too. We are lucky to have the opportunity to be present in over 27 countries worldwide, which means we have a great deal of local market knowledge. For us, it is important to share this with stakeholders globally.”

Managing Director of Lamudi Ghana, Madam Akua Nyame-Mensah, stressed the importance of networking and sharing data. “Our mandate is to provide a platform for information in the best way possible to transform the real estate industry. We look forward to welcoming all stakeholders at the conference and believe the only way we can take the industry to the next level is providing opportunities like these to network and share best practices and information,” Nyame-Mensah noted.

GHANA BUSINESS & FINANCE

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ECONOMY

Mixed outcomes:

Think-tanks review 2015 budget GB&F reproduces excerpts from statements by PricewaterhouseCoppers (PwC), the Institute of Economic Affairs (IEA) and IMANI Ghana Centre for Education Policy on the 2015 Budget and Economic Policy.

PwC’s commentary on 2015 budget ‘Transformational Agenda: Securing the Bright Medium Term Prospects of the Economy’ is the theme of Government’s 2015 Budget Statement and Economic Policy. The theme mirrors the persisting global and economic challenges and the effort required to weather the shocks while growing the economy. The Budget is a quiet admission by Government that the decades of economic development in Ghana has failed to sufficiently transform and diversify the Ghanaian economy. Amidst weaker global and national economic environments, Government seeks to continue with the transformation agenda despite existing vulnerabilities.

The Minister for Finance indicates that Ghana’s on-going fiscal consolidation and stabilization measures and policies, and a prospective International Monetary Fund (IMF) Program, will combine to enable a promising environment for inclusive growth, value addition and economic diversification. The Minister further indicates that challenges prevail, despite a bright future in the services, agriculture and industrial (notably energy) sectors. However, will the perceived transformation, with the looming scrutiny from the IMF, result in inclusive growth, value addition and economic diversification?

This year, we seek to contrast the proposed policy interventions with the initiatives outlined in the 2015 budget for key segments of the economy, with an emphasis on whether the interventions can unlock transformational tendencies. Transformation that leads to inclusive growth, which in turn, adds value and helps diversify the economy needs to be supported by effective structural policies that are informed by a good understanding of how they impact on the multi-dimensional stratification of the economy. A successful economic transformation that fosters inclusive growth requires policies that favor both raising income

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and lowering poverty. The April 2014 IMF Regional Economic Outlook for Africa suggests that, to promote structural transformation and inclusive growth, emphasis should be placed on maintaining a stable macroeconomic environment, including low and stable inflation, upgrading infrastructure, investment in physical and human capital, promoting financial inclusion, and raising productivity in agriculture, where most Ghanaians are employed.

The existing economic challenges which are further compounded by a weakened currency, increasing budget deficit and vulnerability to external shocks are key issues that need to be addressed in order to sustain economic growth in the medium to long term.

GHANA BUSINESS & FINANCE

Despite the prevailing economic challenges, Government realized a third quarter budget deficit reduction of 5.9% when compared to the same time of last year (6.9% in September 2013). Government plans to further reduce the budget deficit to 6.5% in 2015 from a projected outturn of 9.5% in 2014. In the medium term, Government aims to reduce the budget deficit to 3.5% by 2017. Significant reduction in the budget deficit is commensurate to significant growth and increased revenue mobilization.

With contracting economic growth, it will be ambitious to reduce the deficit to meet the target of 3.5% in the medium term without radical revenue maximization interventions.

The Minister mentioned some key policy interventions aimed at maximizing revenue while controlling expenditure. These are increment of excise duty on tobacco from 150% to 175%; reversal of excise tax on petroleum from ad valorem to specific with the intention of maximizing tax revenue from petroleum products regardless of shocks from the global environment; introduction of special petroleum tax of 17.5%; value-added tax (VAT) for fee-based financial services; 5% VAT on commercial real estate; and extension of the special

DECEMBER 2014

“...agriculture represents the only sector where a sustained increase in local processing is likely to add significant value to the economy.

However, there are no bold policy statements geared towards increasing the mechanization of agriculture�

Inclusive growth that unlocks value addition and promotes diversification will need more radical structural policy interventions that increase mechanization in agriculture as recommended by the Senchi Report, paving the way for more local processing of natural resources into exportable commodities. This will increase local employment and also contribute towards a reduction in the export deficit, further improving on the budget deficit. We welcome Government’s initiative to re-viewing the Ghana Free Zones Act for relevance of activities, with a focus on manufacturing and value addition.

Sustained capital infrastructural investments in key development areas, including a well-functioning infrastructure that meets the needs of the various economic agents, can accelerate growth and contribute to

DECEMBER 2014

ECONOMY

import levy of 1-2% to 2017.

For Ghana, economic transformation will entail firm and consistent policy interventions across agriculture, services and industry (with emphasis on energy), considered priority growth areas. Will the economy be transformed? As noted by the IMF, economic transformation in sub-Saharan Africa requires sustained investment in key sectors, including agriculture, manufacturing and infrastructure. In Ghana, for the current budget to be transformational, it would need to accelerate growth in the agricultural sector by increased mechanization.

The level of mechanization as proposed for new agricultural Mechanization Service Enterprise Centers (AMSECs) is not sufficient to spur meaningful growth within the sector for a transformation in the economy. The proposed mechanization is not likely to lead to meaningful diversification that could reduce the over-reliance on agriculture as a gross domestic product (GDP) contributor.

both healthier lives and improved job opportunities, according to the Organization for Economic Cooperation and Development (OECD).

Decreased funding for water supply and the shortfall in housing is likely to impact adversely on growth and reduce inclusivity. No medium term initiatives to the problem of road congestion within high economic activity areas of the country are likely to stifle economic growth and reduce inclusiveness. We welcome the 100% increase in funding to the health sector.

However, a significant proportion of this allocation will be deployed largely towards strengthening of the health systems, including employee compensation and not necessarily improving health care access and quality - a key aspect of economic transformation.

We are happy to observe that some attributes of the Senchi Report, with the emphasis on local manufacturing to increase exportation have been incorporated in the budget.

With the right policy interventions, this could lead to diversification of the economy from over-reliance on gold and cocoa. The creation of an Export Import (EXIM) Bank, if properly set up and funded, is likely to promote such diversification. However, policy initiatives as set out in the budget do not propose significant measures in the medium term that could radically diversify the economy, though emphasis on boosting poultry farming, production of rice and fisheries and aquaculture in the budget is likely to lead to some diversification.

Value addition to the economy would most likely be a product of a significant increase in local production, which means increasing the local manufacturing of goods for exportation. Across the high export commodities for Ghana, agriculture represents the only sector where a sustained increase in local processing is likely to add significant value to the economy. However, there are no bold policy statements geared towards

increasing the mechanization of agriculture to include local processing of key agricultural export commodities prior to exportation, especially for cocoa.

Overall, the budget statement reflects the constraints of balancing the national budget, reducing the deficit while sustaining growth amidst a sluggish global economy. Typically, further ambitious deficit reduction, if not properly balanced with sustained revenue maximization endeavors, is likely to further stifle economic growth.

Long term planning beyond the three to four years medium term plans of the National Development Planning Commission (NDPC), coupled with stable macro-economic policies, are instrumental to restoring economic direction and to revive private sector confidence in the economy. For growth to be inclusive and to unlock value addition, the macro-economic aspects, including the stabilization of the Cedi, lowering of interest rates and reduction of the budget deficit, will have to be tackled with a long term perspective.

Government is planning pro-poor initiatives to absorb the shocks from immediate fiscal interventions, but it is questionable if the right sectors of the population have been identified.

The sustainability of the safety nets is also in question, including the level to which these social protection programs can engender transitions to productive employment.

In conclusion, the budget statement lays out the framework for a transformational agenda. There are some attributes of specific interventions to spark transformational growth in line with the recommendations of the Senchi Report and the 2014 Article IV Consultation-Staff Report with the IMF. We, however, are of the opinion that the policy interventions, although well intended and timely, are not aggressive enough to sustain the economy and promote inclusive growth; unlock the potential for value addition; and accelerate the diversification of the economy: key pillars of the transformational agenda.

GHANA BUSINESS & FINANCE

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ECONOMY

Stabilisation budget won’t drive growth – IEA Below is an edited extract from a statement read by Dr John Kwakye, Senior Economist at the Institute for Economic Affairs (IEA), at a post-budget news conference in Accra.

The key underlying fundamental challenges facing the economy is characterised by: • Underlying weak structure of the economy characterised by overdependency on primary exports and weak industrial base and its associated high import dependence • Declining importance of agriculture and manufacturing, which potentially could generate more employment • Slowing growth, especially in the non-oil sector • High unemployment • High level of poverty and wide income disparities.

There is deep and pervasive macroeconomic instability manifested by high inflation, high fiscal deficits, high concurrent external deficits, exchange rate instability, high borrowing costs and high public indebtedness.

To address underlying fundamental challenges, the key objective of the 2015 budget is to stabilise the economy.

This entails reducing the deficit through tax increases and expenditure rationalisation. In its annual time frame, the budget cannot be expected to transform the economy and address the underlying structural weaknesses, although it may have such intentions in the medium-term.

Further, the focus on stabilisation means that economic growth will have to take secondary stage. Indeed, the targeted growth rate of 3.9 peer cent (inclusive of oil) for 2015 is disappointingly low. It is not clear what informed this target except that it is attributed to fiscal stabilisation. But we know also that public investment is low. In fact, it is lower than the amount that is spent on interest payment. This does not promote growth. The growth projection marginally exceeds the rate of population growth, implying that we are not adding much to our per capita income. While gas production is expected to give some impetus to overall growth in 2016 and 2017, the non-oil growth projections are still disappointingly low. The sources of growth remain mining, oil and services, which do not generate enough employment. The decision to freeze net public employment represents part of the stabilisation measures. But it is not good news for the teeming unemployed.

It is important, however, that the freeze 10

does not deprive the public sector of much needed skills and expertise.

The decision to establish an EXIM Bank to promote non-traditional exports is a good idea in principle because it should help to address a fundamental weakness of the economy, that is, over-dependence in low value primary exports. Also, the proposed Ghana Industrial Bank (GIB) to support local industries is a good idea in principle. Access to credit has been one of the key obstacles facing local industries and the IEA has long advocated for some kind of special financial scheme to support them so that they can be competitive. The National Investment Bank (NIB), Agricultural Development Bank (ADB) and Bank for Housing and Construction (BHC) were created for similar purposes. But they abandoned their original mandates and became typical commercial banks.

So how is the proposed GIB going to be different?

There is also the question of how the EXIM Bank and GIB are going to be funded. With these state-promoted financing schemes, there is always the risk of accumulating government contingent liabilities. It is important, therefore, to take appropriate steps to avoid this risk.

Macro-economic instability

Inflation is targeted at 11.5 per cent for 2015; and eight per cent (+/-2%) over the medium term. In setting the target for 2015, the budget seems to take a realistic, albeit less ambitious view.

While the medium term profile also seems realistic, taking us up to 2017 to bring inflation back to the level it was in 2012 would also seem disappointing.

If fiscal stabilisation takes hold, it would help to dampen inflation to the extent that it would contribute to hold down demand and pressure on the exchange rate. The other drivers of inflation like food prices, fuel and utility prices are, however, more difficult to predict.

The budget appropriately targets a lower deficit of 6.5 per cent of gross domestic product (GDP) for 2015 (and 3.5 per cent of GDP by 2017).

If adhered to, the reduction in the deficit should foster macro-economic stability. However, the big question is whether the targets would be religiously followed. We have a bad record of meeting fiscal deficit targets, and overruns tend to be the norm. Election

GHANA BUSINESS & FINANCE

years are particularly notable for budget overruns. There is a need for all to hold the fiscal authorities accountable to the proposed fiscal path.

It is for this reason that IEA has been calling for some kind of Fiscal Rule (such as budget balance or debt rule) and/or the passage of a Fiscal Responsibility Law to entrench fiscal discipline. There is also a need to strengthen parliamentary oversight of the budget, including establishing an independent and statutorilyresourced Parliamentary Budget Office, and making the Parliamentary Appropriations Bill [when it becomes an Act] enforceable and sanctionable.

Financing the deficit

The budget allocates a disproportionate share of the budget financing to domestic sources, quite a departure from the recent past when most of the financing came from external sources. While the move may not be unreasonable, the level of domestic financing would lead to further competition with the private sector for loanable funds and increase borrowing costs. This will have devastating effects on private businesses, including the shrinking manufacturing sector already reeling from high cost of credit. That said, it is important that resort to Bank of Ghana (BoG) financing is contained within statutory limits to avoid its adverse effect on inflation and the exchange rate.

IEA notes that government debt market is concentrated at the short-term end of the market. This puts pressure on the budget through the high rate of rollover. As stated in the budget, the authorities should endeavour to lengthen the maturity of the government debt. This could be done by deliberately issuing long-term debt and find some funds to pay down the short-term. This will ease pressure on the budget and drastically reduce lending rates.

Total domestic revenue is estimated at GHC30.9 billion (22.9 per cent GDP), of which tax revenue is GHC25.4 billion (18.8 per cent GDP).

The budget rightly seeks to increase Government Revenue. But doing so through numerous tax increases is not the right way. Ghanaians are already over-taxed. The 17.5 per cent Special Petroleum Tax, in particular, would appear to be ill-advised. In the past two months, crude oil price has dropped from US$100 to US$75. That necessitated reduction in pump prices, but it did not happen. The dollar has declined in value from GHC3.8 to

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Expenditure

Total expenditure is estimated at GHC41.2 billion (30.5 per cent GDP).

The wage bill, as usual, takes a chunk of revenue and accounts for nearly 30 per cent of total expenditure. There is a need to contain the wage bill through strict management of the public sector payroll. A deliberate process of rebalancing expenditure over the medium-term is called for.

The public debt as a ratio of GDP is reported to be 56 per cent in 2013 and 61 per cent in 2014 (GHC70 billion by September). Sixty per cent is considered by many analysts to be the sustainability threshold for Ghana.

Even where we are reducing the budget deficit, borrowing will still continue, but may be at a reduced pace. The debt can only be reined in through sustained fiscal prudence to reduce borrowing.

Further, it is important that we spend most of the loans on projects that enable the economy to grow to reduce the debt servicing burden.

Energy and cocoa bonds

The insurance of energy bonds is a good idea in principle as it would help develop the domestic capital income.

The principle could be extended to other key sectors such as railways, roads, other infrastructure and district assemblies. Who will guarantee the bonds? The issuance of cocoa bonds is also a good old idea. Since the bonds will be backed by tangible cocoa receipts, the risk of default is low.

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ECONOMY

GHc3.2. This necessitated reduction in pump prices, but it did not happen.

Then consumers are slapped with a 17.5 per cent special tax. Petroleum products are already overtaxed and pump prices are prohibitive. Imposing a new tax is, therefore, unwarranted, given the expected knock-on effects in the economy. Petroleum is being targeted ostensibly because it is easy to collect the related tax.

The decision to retain the five per cent National Fiscal Stabilisation Levy on financial and telecom companies also seems to be ill-advised. The levy is difficult to justify. Not only is it a disincentive to business, it can also be easily passed on and overburden consumers, given the oligopolistic nature of these industries.

There is the lingering question of how to rope the informal sector into the tax net. Do we have any initiatives to this end? Property tax is an area that has considerable potential but is not fully explored. There is the spate of tax exemptions. What are we doing to reduce them? The widespread tax fraud and corruption – what are we doing to stem them?

IMANI:

Good decision on two tax items but…

It is important to give credit to the government on two important matters IMANI raised before the reading of the 2015 budget. The Ministry of Finance has given its approval for a further imposition of 50 per cent of excise tax on the retail price of tobacco product taking the total excise tax on tobacco to 225 per cent in Ghana. The 225 per cent tax being contemplated exceeds the ECOWAS regulated 100 per cent limit on the Cost, Insurance and Freight (CIF) value. IMANI will soon publish a complete review of the budget statement.

IMANI highlighted last year that the United Kingdom government lost close to £2 billion after bringing in stricter laws to curb the uptake of cigarettes.

However, if taxes on tobacco become too restrictive on industry, it will lead to a growing underground economy for tobacco products that may be counterfeits.

A 225 per cent tax on tobacco in Ghana will expose the country to illicit trade in tobacco products, seeing as the excise rates in its neighbouring countries such Togo, Burkina Faso and Cote d’Ivoire are within the UEMOA limit of 45 per cent and are much lower than Ghana’s. It will defeat all our public health campaigns as one cannot guarantee the contents of illicit tobacco. Currently, the tobacco industry in Ghana generates a gross turnover of about GHC371 million per annum to Government revenue. And this is the case when cigarettes are not manufactured locally, but imported. The Government has kept the tax at 175 per cent. It is still high but commendable.

The removal of the 20 per cent tax will enhance affordability of the smart phones, facilitating its penetration and consequent economic development and poverty alleviation gains associated with it.

Government, through the budget, has extended the stabilisation fund of five per cent to 2017. However, the stabilisation fund would have exceeded the 12 months duration it was. There is clause that could add additional 6 months only when it can be demonstrated that there has been fiscal responsibility by the government. I doubt there has been much of fiscal prudence to warrant extended taxes on businesses that are already suffocating.

In spite of these obvious wise decisions, the raft of taxes on real estate, financial services, key utilities such as petroleum products and the extension of the stabilisation fund, among others, may significantly affect the outcomes of these events. The real test will be in making prudent use of these additional resources even if the idea behind the hike is to reduce the humongous debts which have now passed sustainable levels.

It is still important for the government to declare a moratorium on all the current projects. The government should list all the projects they are currently funding and submit them to a “Value for Money” review; value for money audits shouldn’t take more than three months to be completed. It must also conduct an immediate compilation of all fiscal responsibility related rules in existing legislation; and ask GOG to comply with them in order to control borrowing and expenditure.

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CAPITAL MARKET

Central Securities Depository

to expand functions The Central Securities Depository (CSD) is a specialist financial institution that holds securities such as shares and bonds in either certificated or uncertificated forms by maintaining records of ownership of securities. CSD ensures that ownership of securities is easily transferable through a book-entry process instead of by way of physical certificates. Securities are held at a central location to facilitate easy clearing and settlement.

CSD operates through a dematerialisation and rematerialisation process. Dematerialisation involves the conversion of physical shares into electronic accounts. Here, share certificates are surrendered and cancelled, and investors open security accounts with the depository and their securities are held at a central location to facilitate easy clearing and settlement.

The rematerialisation process involves the reissuance of certificates after withdrawal from the depository.

The flow of transactions to CSD occur by virtue of the Ghana Stock Exchange (GSE) through the: (1) primary market where the investor acquires securities from an issuer and pays the issuer; (2) secondary market where the investor sells securities to another investor on the stock exchange; (3) clearing and settlement process where the selling investor receives cash, and the buying investor receives securities.

First, in the primary market, the issuer issues securities to raise capital.

The investor acquires securities from the issuer by buying the securities and pays cash to the issuer and the issuer issues evidence of purchase to the investor. If one is speaking of registered securities, then the purchased securities are allotted in the name of the investor and the only evidence of this is a certificate or receipt only (book entry).

If unregistered (bearer securities), then it is not registered in the investor’s name. Only a certificate is issued but the bearer, at any point in time, is still entitled to the benefits of holding the securities. The investor holds evidence of purchase until subsequent sale.

However, in the secondary market, the investor sells securities to another investor. The previous owner of the securities presents evidence of ownership of the securities to a broker/ dealer to sell the securities and the

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broker/dealer in turn verifies the status of the securities and their ownership.

In fact, the broker/dealer executes the trade and sells the securities, ensuring post-trade clearing and settlement where the selling investor receives cash and the buying investor receives securities as ownership changes hands.

Before the emergence of the CSD platform in 2004, securities in Ghana were typically issued as registered securities and not as bearer securities.

Securities issued by companies were in certificated form as required by the Companies Code and the government`s own securities were mostly issued in book entry form. During the manual days of GSE operations, trading, clearing and settlement were performed by the GSE with the help of brokers, registrars and custodians, with no central depository facilities available (except for the government debt market).

Now, corporate securities are required by law to be traded in certificated form. The investor presents the certificate(s) to sell securities, then the broker/dealer verifies the authenticity of the certificate(s) and executes trade. The selling broker presents the certificates to the registrar to cancel and new certificates are issued in favour of the buyer (and also to the seller for the remaining securities, if any). At the end of the third day after trading, the selling investor’s broker receives a cheque and the buying investor’s broker receives a transfer receipt from the registrar, and then later the certificate.

Practical experience and research have clearly shown the problematic nature of the issuance and trading of securities in certificated form. It is costly for issuers to print certificates after Initial Public Offers (IPOs) and rights issues. Also, the dispatch of certificates is not always timely. This, therefore,

GHANA BUSINESS & FINANCE

engenders delays in the commencement of secondary market trading. Under the tenure of the manual process, not only did certificates get lost and make reprinting costly for issuers, but there were high possibilities of certificates being cloned or forged. This was due to situations where certificates would be cancelled and new ones issued every time a security was traded. Clearing and settlement of trades remained manual and exposed to settlement risks and ownership could change whenever payment is not received or cleared.

The CSD was a vision embodied in the Financial Sector Strategic Plan in 2000 which recommended the establishment of the depository. A Bond Development Committee was quickly established to spearhead the development, with Bank of Ghana (BoG) providing the funding. The CSD went live on November 4, 2004 and the GSE established a second depository in 2008. The CSD started as a department of the BoG and was incorporated in June 2010 as a wholly-owned subsidiary in line with the Central Securities Act, 2007(Act 733). It is well-capitalised over and above the requirement of the Securities Exchange Commission (SEC). The two depositories merged in January 2014, with an eleven member Board of Directors headed by the Governor of BoG. The Board members are selected based on areas of professional competence such as law, accounting, information technology (IT), economics, banking and finance.

Post-merger, the BoG has a stake of 82 per cent while the 18 per cent of the CSD is owned by the GSE Securities Depository. It now operates completely as a single entity managing both debt and equity securities.

The CSD has the mandate to reduce risks and improve the efficiency of securities settlement as well as provide a central depository for securities in Ghana where records of beneficial ownership of debt and equity instruments are kept in electronic form.

It is also to undertake clearing and settlement of book entry of debt and equity instruments, handle all forms of corporate action for debt and equity instruments, including maturities and interest payments. In order for the CSD to perform its functions and achieve its objectives, the CSD is backed by strong regulatory framework such as PNDCL 333 (1993), Securities Industry (Amendment Act), 2000 (Act 590), SEC Regulations, 2003 (LI 1728), Act

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DECEMBER 2014

participants. Currently, there are over 630,000 account holders (debt) and 80,000 participants for equity.

The agents of the depository are known as depository participants and they are made up of banks, brokerage companies licenced by the SEC, the Social Security and National Insurance Trust (SSNIT), BoG, and custodian banks licenced by the National Pensions Regulatory Authority and the SEC. Per the CSD regulations, certain criteria have to be met before an institution gains admission as an agent of the depository. The criteria include that the organisation be licenced by the BoG or SEC, and be in good standing, hold a financial position with the requisite technical capability as well as sign a participating agreement.

The CSD manages the electronic primary auction system closely in addition to the Depository. It receives electronic bids from individual investors through primary dealers, i.e.

14 banks licenced as primary dealers.

Securities are allotted at the primary auction and it flows smoothly into beneficiaries’ accounts after settlement.

The CSD engages in trade reporting and matching for debt securities by linking with the GSE. Clearing positions are generated and communicated at the participant level while ensuring repurchase agreements among banks by using securities holdings.

It also serves as collateral against lending facilities issuing statements on positions and other information to the market. The CSD in its capacity as a registrar of services also maintains the register of shareholders of companies,

matured securities are processed and paid through the bank accounts of investors, and an advice is sent through the banks.

In terms of the settlement of equities, the transactions done on the GSE are done through commercial bank funds, also using the DVP II settlement model.

The settlement cycle is T+3 rolling settlement. The CSD has reviewed the primary dealing system licences dedicated to institutions as primary dealers to underwrite government security issues, to make the market by means of two-way quotes on the secondary market and to buy bulk at the primary auction for redistribution.

It has reformed the interface between the CSD and RTGS leading to provision of STP and DVP . The CSD’s provision of data and information to the market has culminated in price discovery and transparency.

The CSD plans to expand the Guarantee Fund to cover debt securities, ensure mark-to-market price determination and install an integrated trading system for money market, securities and forex transactions.

The depository is poised to take on other value-added activities such as withholding tax collection, collateral management and securities lending and borrowing as well as acting as a registrar of services for unlisted securities, mutual funds and other collective schemes. Finally, the CSD is seeking to link up with other depositories across the globe to ensure smooth, reliable and faster cross-border transactions and settlement.

organises general meetings for the issuers, and also processes and pays dividends. The depository also acts as a settler of debts and the settlement of debt transactions is through the Central Bank funds via the DVP II settlement model. The settlement cycle is T+0 for secondary trades and T+1 for the primary auction. Interest and

This is an excerpt from a presentation made at the University of Ghana Business School (UGBS), Legon, by Mr Stephen Tetteh, Chief Executive Officer of the Central Securities Depository (CSD) Ghana Limited, on November 5, 2014 at the R.S. Amegashie Auditorium.

The presentation was part of a series of activities lined up to mark the 10th Anniversary of CSD.

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CAPITAL MARKET

733 as well as the CSD Operational Rules and Procedures.

Today,ecurities are deposited with the CSD to hold on behalf of the investor. The deposit is made by the issuer on behalf of the investor, or made directly by the investor, and the securities are held by the CSD in immobilised form or dematerialised form. Each investor has an account with the CSD which is credited and debited as transactions affecting securities occur. The CSD operates a clearing and settlement system that links to the trading platform ensuring that securities trades are cleared and settled with little or no risk to investors and the entire market.

The CSD currently provides reliable custody arrangements for the recording of securities ownership and for the transfer of ownership, while facilitating securities trading and efficient settlement of securities trades.

It has reduced settlement risk and provided more protection for investors (ensures “delivery versus payment”).

The costs of issuance and transfer of securities has been reduced and there is easier monitoring and surveillance of transactions that occur at the GSE. The CSD’s digital platform reduces the risks of bad deliveries and eliminates the problems of dealing in paper, loss andtheft, duplication, reprinting and authentication of certificates. It saves time in exchanging information on account holders while all securities are held in one place instead of keeping a number of certificates.

The CSD system is a web-based application that runs on both a Wide Area Network and via an Internet secured connection (https). It operates on VeriSign and now an Oracle certificate for point-to-point data encryption. Depository participants log onto the system from their offices via a web browser to work, and bulk files are exchanged between the CSD and depository participants via a secured file transfer protocol (SSH).

The software implemented by the CSD on its platform include server operating systems (OS) – Linux RedHat Enterprise Edition, internal server OS – Windows server 2003, PC OS – Windows XP, Report Generating Tool – Crystal Report, Jinitiator and Ipswitch WS-FTP Pro Software.

At the CSD, all domestic accounts for both individual and corporate investors are held at the beneficiary level. Foreign investors can hold accounts, both as beneficiaries or through nominees. The CSD acts as a transfer agent and registrar, and ownership is evidenced by statement of accounts from the depository.

The depository processes interest, maturities and other corporate actions and accounts are registered through

CAPITAL MARKET

The Ghana Stock Exchange So far so good

BY KWEKU DARKO ANKRAH

This year marks the 24th successful year of stock market trading and the 10th year since the introduction of Central Securities Depository (CSD) in Ghana, but financial analysts believe that the Ghana Stock Exchange is yet to play a prominent role in national economic development and growth. This sentiment came against the backdrop of the GSE`s 2013 impressive performance of listed equities since its establishment in 1990.

The GSE Composite Index which measures the performance of the entire market went up by 78.81%, obviously one of the best in Africa. In US dollar ($) terms it was up by 55% second to Malawi in Africa. The Exchange and its wholly-owned subsidiary, the GSE Securities Depository also recorded a surplus after tax of GH¢ 1.23 million. The volume of shares traded stood at 313 million shares valued at GH¢456.14 million, representing 43 percent and 355 per cent over the volume and value of 218 million shares. These exceptional 2013 performance was buoyed largely by increased investor awareness and good operating results of many of the listed companies supported by the renewed investor confidence in the Ghanaian market and economy.

To icing the cake of the capital markets, the GSE with the support of Government launched the Ghana Alternative Investment Market (GAX) in May 2013. This alternative market is fully dedicated to small firms and startups; with flexible listing requirements for Small and Medium Scale Enterprise (SME) to raise capital. Venture Capital expert are of the view that as the entry cost into the primary exchange is too expensive for smaller businesses, the GAX will offer a more accessible option for SMEs to attract investment and at the same time provide an avenue for Venture Capital Fund Managers to exit their portfolio investments.

Investors sustained their confidence in the Ghanaian stock market during the first quarter of 2014 as a result of expectations that the valuation of the market will be

14

boosted by impressive FY2013 earnings figures. The year to-date return on the benchmark index (GSE CI) hit a high of 13.7% in February 2014 before slowing to close the quarter at 11.2% on the back of profit booking by retail investors.

Many stock market gurus have painted bright and optimistic future for GSE`s operations and performance in the capital market claiming the trading of all sorts of securities has already facilitated the raising of long term capital for companies, establishments of Brokerage Firms, prominence in Asset Management and Corporate Finance Functions prevalence of Banks in Ghana including Ecobank Ghana Ltd, HFC Bank Ltd, Cal Bank etc, and

also making Ghana attractive to global investors.

WHY CAPITAL MARKET FUNDING?

It is an established fact that debt financing from banks is one of the most common sources of funding in Africa, however, it is quite unsuitable for entrepreneurs as a result of their business structures. Capital Market institutions such as mutual funds and other investment schemes, therefore represent another great avenue for financing big businesses and Small and Medium Enterprises (SMEs) in more innovative ways. Capital markets ensures the flow of funds between providers, and users, facilitated by intermediaries and regulatory bodies which are established to provide integrity to the financial markets – to protect consumers, to protect the national interest and to protect the integrity of the economy.

In his recent address to the students of University of Ghana Business School (UGBS) on the topic “The Role Of Ghana Stock Exchange In the Capital Markets” during an “Educational Outreach program” held at R S Amegashi Auditorium of the University

TABLE FOR MARKET ACTIVITIES - 1990 – SEPT 2014

GHANA BUSINESS & FINANCE

DECEMBER 2014

BEGINNINGS OF GHANA STOCK EXCHANGE

The idea of establishing a Stock Exchange in Ghana lay on the drawing board for almost two decades prior to its implementation. The Stock Exchange Act was enacted in 1971. The Accra Stock Exchange Company incorporated but never operated. In July 1989 Ghana Stock Exchange was incorporated as a private company limited by guarantee

under the Companies Code, 1963. In April 1994 Currently a public company Limited by guarantee.

The key requirements for listing on the main market stipulates that the listing entity must ensure a minimum public offer of GH¢1 million and public ownership of at least 25% of the issued shares.

Mr. Afedzie remarked that in November 12 1990, Trading commenced on the floor of the Exchange. The Establishment of GSE in November 1990 marked the beginning of the Development of Ghana’s Capital Market and the Financial Market as a whole. “It will interest you to know that GSE as a secondary market for trading of all sorts of securities has facilitated the raising of long term capital since its establishment, Brokerage Firms established. Asset Management and Corporate Finance Functions became prominent. More Banks established including Ecobank Ghana Ltd, HFC

Landmarks 1969

Pearl report by Commonwealth Development Finance Co. Ltd recommended the establishment of a Stock Exchange in Ghana within two years and suggested ways of achieving it.

Various committees established by different governments to explore ways of bringing into being a Stock Exchange in the country.

1971 The Stock Exchange Act was enacted 1971 The Accra Stock Exchange company incorporated but never operated Feb, 1989 PNDC government set up a 10-member National Committee on the establishment of the Stock Exchange under the chairmanship of Dr. G.K. Agama, the then Governor of the Bank of Ghana.

July, 1989 Ghana Stock Exchange was incorporated as a private company limited by guarantee under the Companies Code 1963 Oct, 1990 Executive Instrument No. 20 giving recognition to Ghana Stock Exchange as authorized Stock Exchange signed.

Nov. 1990 Council of the Exchange adopted operational regulations namely, GSE Membership Regulations L.I. 1510, Listing Regulations L.I 1509 and Trading and Settlement Regulations.

Nov.12, 1990 First Council of the Exchange with Mrs. Gloria Nikoi as Chairperson inaugurated.

Nov.12, 1990 Trading commenced on the floor of the Exchange Jan, 11, 1991 Ghana Stock Exchange was officially launched Sept. 1993 The Exchange moved to its present offices, 5th Floor, Cedi House, Liberia Road, Accra April 1994 A resolution passed at the AGM changed the Exchange from a private company limited by guarantee to that of a public company limited by guarantee under the Company Code 1963 (Act 179)

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Bank Ltd, Cal Bank etc. In fact, Ghana became attractive to global investors,” he explained.

OWNERSHIP OF GHANA STOCK EXCHANGE

GSE, popularly known as Accra Bourse is a public company limited by Guarantee and has No OWNERS OR SHAREHOLDERS. Its memberships comprise both corporate entities and individuals. There are three categories of members, namely Licensed Dealing Members, Associate Members and Government Securities Dealers (PDs). An LDM is a corporate body licensed by the Exchange to deal in all securities. An Associate member is an individual or corporate body which has satisfied the Exchange’s membership requirements but is not licensed to deal in securities. A PD is a corporate body, which is approved by the Bank of Ghana and registered by the Exchange to deal only in government securities.

“Currently, there are 21 LDMs, and 31 Associate members. An individual or corporate bodies which have satisfied the Exchange’s membership requirement, but is not licensed to trade on the Exchange were about 34 Members in 1990 and 31 Members in 2014,” the deputy GSE manager told the students.

In the words of Mr. Afedzie, LDMs also called Stockbrokers/Stockbroking Firms, etc which were licensed to trade on the Exchange during its inception in 1990 were NTHC Securities Ltd, EDC Stockbrokers Ltd, and Merban Stockbrokers Ltd, there are now 21 LDMs in Ghana. “These Stockbroking Firms introduced Investment Banking to Ghana, created various employment and Professionals, Research Analysts, Securities Analysts Asset Managers Brokers, Corporate Finance Experts, and facilitated the promotion of Ghana to the International capital Market through research publications and various public offers,” he explained.

REGULATORY FRAMEWORK

Securities and Exchange Commission (SEC) is the Regulator of the Securities Industry in Ghana and its regulate the Securities Market via The Securities Industry Law, 1993 (PNDCL 333); The Securities Industry (Amendment) Act, 2000 (Act 590); The Securities and Exchange Commission Regulations 2003 (LI 1728); and The Companies Code, 1963 (Act 179).

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of Ghana Business school, which was jointly organized by Central Securities Depository (CSD) and University of Ghana Business School and formed part of series of activities marking the 10th anniversary celebrations of CSD in Ghana, Mr Ekow Afedzie, the Deputy Managing Director of Ghana Stock Exchange (GSE) affirmed that the GSE was established with a Vision to be a relevant, significant, effective and efficient instrument in mobilizing and allocating long-term capital for Ghana’s economic development and growth. He said GSE is also to facilitate the Mobilization of long term capital

by Corporate Bodies/Business and Government through the issuance of securities (shares, bonds, etc) and provide platform for the trading of issued securities.

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To ensure easy access to funding by SME`s with high growth potential, in July 2013 GSE introduced and started operating an innovative market listing system, Ghana Alternative Market (GAX). The GAX is to accommodate companies at various stages of their development, including start-ups and existing enterprises, both small and medium. According to the 2011 IFC Enterprise Finance gap Database report,

MARKET CAPITALIZATION 1990-2014 - Equities (GHc m.)

70,000.00 60,000.00 50,000.00 40,000.00 30,000.00 20,000.00 10,000.00

Sep 2014

2012

2010

2008

2006

2004

2002

2000

1998

1996

1994

1992

Dec 1990

GSE All-Share-Index Value 12,000.00 10,000.00 8,000.00 6,000.00 4,000.00 2,000.00

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2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

Trading takes place daily on GSE Automated Trading System (GATS) and a Clearing House established at the Exchange undertake all clearing and settlement activities. Settlement period takes place in 3 business days (T + 3) after the trade date. The System allows for mutual settlement of trade on T+0 or T+1 basis. On settlement dates shares are moved automatically to client’s accounts in the depository system and the brokers settlement account debited. Ecobank Bank Ltd is the designated settlement agent. GSE also has Risk Management structures that includes Settlement Guarantee Fund andCredit Lines from Ecobank.

In November 4, 2004, GSE Securities Depository (GSD) set up a wholly -owned subsidiary called GSE Securities Depository Company Limited with the key objective of offering depository services to complement the Exchange’s automated trading, clearing and settlement systems. A second depository was also established in 2008 by GSE. As a result investors on the Exchange now open securities account with the Depository through their Stockbrokers. This is far-cry from the earlier manual system because under the automated trading and settlement system, an investor cannot sell nor buy securities on the market if he or she has no securities account.

The listings on the GSE comprise the main market and the recently introduced Ghana Alternative Market (GAX). The key requirements for listing on the main market stipulates that the listing entity must ensure a minimum public offer of GH¢1 million and

GSE ALTERNATIVE MARKET (GAX)

Nov - Dec 1990

GSE OPERATIONS

it is estimated that a gap in credit for formal SMEs in developing economies was about $0.9 trillion–1.1 trillion. The report as quoted by Financial Access in 2012, further estimates that SMEs in sub Saharan Africa require over 300 percent increase in outstanding SME credit compared with other parts of the world. It is in the light of this that GSE`s GAX introduction is quite laudable and timely.

The incentives to be derived from it include easy underwriting (directly or indirectly) by the sponsor, provision of GAX-SME Listing Support Fund to assist companies to meet the upfront cost of advisors and ensure a very low cost of listing.

In an order for an SME`s to be admitted to GAX, it must possess a stated minimum capital of GH¢250,000 at the time of listing, Public Floating of shares enjoins that the minimum number of public shareholders to be twenty (20).

public ownership of at least 25% of the issued shares. Ordinarily, the company must have been in existence for 3 years – 3 year audited accounts, the offer must be able to attract a total of 100 shareholders and the company must have made reasonable profits throughout the 3 years. After satisfying all these major requirements, the big companies are then allowed to be listed and start trading on the GSE.

Index Values

CAPITAL MARKET

With regards to rules regulated

by SEC, GSE is seen as an SRO which regulates its Licensed Dealing Members (brokerage firms), adopts and enforces rules for fair, ethical and efficient practices on the market and wield powers to sanction, reprimand, suspend or expel members for breaches of its rules.

All GSE Rules and Procedures require SEC approval before coming into effect.

Apart from these, GSE also have membership rules regarding Automated Trading Rules and Procedures, Clearing and Settlement House Rules and Procedures (which ensures electronic settlement of trades), Listing Rules, Exchange Traded Funds Rules and Surveillance Rules.

Year/Period

DECEMBER 2014

The rapid expansion of GSE since its inception has contributed to economic development in various ways.

Analysts opined that GSE has greatly assisted facilitating the privatisation process, diversifying the financial services, facilitating long term capital mobilisation, provision of alternative investment opportunities, attracting foreign capital inflows and serving as a signal of overall macroeconomic performance.Available market statistics from GSE shows Market Capitalization increased from GH¢3.05 million in 1990 to GH¢64,151.25 million as at September 30th, 2014. The Domestic Market Capitalization also saw tremendous improvement of GH¢12,071.12 as at September 30th 2014.

GSE All Share Index has also chalked many successes. By completing the year at 116% in 1993 the GSE was adjudged as the 6th Best Performing emerging Stock Market as well as one of the World’s best performing stock

markets, top IFC Frontier equity market in local terms in 1998. It has also been awarded as one of the Best Performing market in the world in 2003 and 2008 respectively and at 78.81%, GSE was recently declared as one of the best emerging market in terms Index Performance in 2013.

Despite the successes chalked

by GSE in its 24 years of operation, evidence from SEC`s 2011 Annual report shows that Ghanaian fund managers have over the years outperformed the local stock exchange and even their peers in other African markets. Fund managers, through directorships on investee companies ensure that funds are well utilized and also channeled towards areas where financial profitability alongside social or environmental impact can both be attained.

Fortunately, the Government extended the Stock Exchange tax holiday for another 5 years to improve the market’s capitalization in its 2012 national budget. In addition, exemption

from capital gains tax was also extended further for 5 years to promote investment and deepen activities on the Stock Exchange. Mutual Funds and Unit Trust Funds that invest in stocks on the Stock Exchange are also being exempted from VAT on financial services.

WAY FORWARD

In order to achieve greater success and bolster investor confidence in the GSE, Mr. Afedzie explained that his outfit is going to aggressively pursue more listings to increase depth and breath of market, and if possible lobby the government to come out with policy decisions to force the international Conglomerates operating in the country to list on the Accra Bourse.

“Bond Market is to be developed to ensure longer term instruments and improving secondary market and also position the Exchange as an attractive investment avenue to improve liquidity.” Mr Afedzie concluded.

STUDENTS LOAN TRUST FUND (SLTF)

NOTICE TO EMPLOYERS & BORROWERS The Students Loan Trust Fund (SLTF) is a public institution under the Ministry of Education and has since 2006 taken over from SSNIT the management of Students Loan in Ghana.

The Fund would like to remind all employers of their obligation under section 24 of SLTF Act 820, 2011 (Copy available at www.sltf.gov.gh).

Employers are also enjoined by section 69 (b) of the Labour Law to make such deductions on behalf of their employees. Kindly note, that the Students Loan Trust Fund will commence publication of the names of non-conforming employers as part of remedial steps to enforce its mandate amongst others.

The Fund would also like to remind all borrowers who are due or in arrears to start repayment immediately in compliance with their Students Loan Agreements that were signed in accessing the Loans. FAILURE TO REPAY WILL RESULT IN THE PENALTIES STIPULATED IN THE LAW.

BORROWERS SHOULD REPAY THEIR LOANS AT ANY BRANCH OF THE FOLLOWING PAY POINTS NATIONWIDE, QUOTING CLEARLY THEIR SOCIAL SECURITY NUMBERS (SSN)

1

4

NATIONAL INVESTMENT BANK (NIB) USING THE CUSTOMISED SLTF PAY-IN SLIP

SLTF HEAD OFFICE

2

ECOBANK GHANA LIMITED (EBG) USING BANKCOLLECT

5

ALL SLTF ZONAL OFFICES ACROSS THE COUNTRY (CHEQUE PAYMENT ONLY)

3

GCB BANK USING SMART PAY

BY THIS PUBLICATION DEFAULTERS WHO ARE SELF EMPLOYED OR EMPLOYED IN THE INFORMAL SECTOR SHOULD IMMEDIATELY TAKE STEPS TO START REPAYMENT BY CONTACTING ANY OF THE PLACES LISTED ABOVE, NATIONWIDE.

Contact the Students Loan Trust Fund (SLTF) on Tel: +233 (0302) 231 886-7 | 026 4043 072 Email: info@sltf.gov.gh Website: www.sltf.gov.gh

This notice is by:

Supported by: "Providing equal access to tertiary education",

"Your Business is our Business".

CAPITAL MARKET

MARKET PERFORMANCE SO FAR

INDUSTRY

Ghana’s textiles tottering to perdition?

BY OPPONG BAAH

Worldwide, the textile industry occupies an important place in the production of social goods, and the satisfaction of personal needs as a matter of necessary self-protection and fashion.

The textile industry involves the manufacture of clothing, footwear and other subsectors such as furniture, publishing and machine building. Ghana’s textile industry, which has been an important sector in the economy on account of its contribution to income generation, employment and exports, is now, to say the least, a dying industry. What remains of a once vibrant industry can, at best, be described as tottering on its knees, and in need of a push up.

In 1977, the textile industry made up 16 large- and medium-sized companies employed some 25,000 people. It then accounted for about 27 per cent of total employment in manufacturing.

By 1996, employment within the sector had declined to about 7,000, plunging further to 5,000 in 2000. The fortunes of the industry continued to deteriorate. In March 2005, the four major textile companies in Ghana employed only an estimated 2,961 persons. The current situation is still worse. In terms of taxes, revenue from the industry is shrinking at a time when the government is hard pressed for cash to accelerate its development agenda.

Available research ranks the low demand for textile products as the number one reason for the near collapse of the industry. Other factors militating against textiles are imitation of local brands from abroad, high cost of production, high wages that lead to 18

an inability to pay workers, smuggling, dumping and a lack of raw materials.

Lamenting the gloomy fate of textiles in the country, Mr. Lau Arthur, General Manager of Akosombo Textiles Limited (ATL), said at a stakeholders’ workshop recently: “The wide disparity in the product pricing was due to low energy costs and interest rates in other countries as against high costs of raw materials and high interest rates in Ghana.”

Manufacturers attribute the decline over the years to trade liberalization policies, which make it impossible for Ghana’s textile products to compete favorably with cheaper imports from Asia. Speaking at another recent workshop, Madam Edwina Assan, President of Spinnet Textile and Garment Cluster, said trade liberalization policies pursued by the country in the past decades had also led to the demise of large-scale domestic

GHANA BUSINESS & FINANCE

manufacturing of textile products.

Madam Assan noted: “Our local markets are flooded with cheaper textile materials at the lowest prices, which local producers are unable to compete with favorably.”

Local producers say the cause of their woes is China. The Asian economic powerhouse has gradually taken over the Ghanaian market, with a primary focus on the textile industry in which growth in exports from the country constitute sleepless nights not only to those in the industry but to the managers of the economy. Though Chinese textiles entering Ghana are not durable , they are highly patronized due to the fact that they sell far below local textiles. Consequently, most retailers now prefer to sell wax prints from China. Yet these prints are inferior compared to the made-in Ghana ones.

To address the situation, some industry watchers suggest a ban on DECEMBER 2014

foreign imports of textiles to protect the industry. Opponents of protectionism, however, say such practices go against the theory of comparative advantage, which suggests that opening up world markets, and reducing trade barriers, would lead to gains from trade for all parties. Again, they argue that Ghana is a member of World Trade Organization (WTO) whose policies encourage liberal trade and frown on protectionism. They suggest that the government should come out with policies to improve the skills and competence of manufacturers to make them more efficient. The textile

DECEMBER 2014

“Buying from the lowest-cost producer drove many textile manufacturers out of production into importation.

Manufacturing companies were transformed into marketing companies.”

Today, local companies have to compete with value-for-money and affordable products from foreign countries. Due to the present highly competitive global market, this means that local enterprises either have to reexamine their production process and pricing mechanisms or fizzle out. The proponents of the fizzle out doctrine point out that in the 1990s in the US when a new world trade order began to replace US dominance, buying from the lowest-cost producer drove many textile manufacturers out of production into importation. Former manufacturing companies were then transformed into marketing and distribution companies.

Market watchers say what Ghanaian manufacturers are losing sight of is that the cheap inferior South Asian textiles will continue to serve a purpose for the majority of consumers since affordability is their main concern. Ghanaian operators must address the issue of best practices and upgrading of the quality of their productive capacity in an effort to meet international standards. The watchers stress that instead of bemoaning their fate, domestic textile manufacturers must take the initiative of expanding

to Economic Community West African States (ECOWAS) countries and beyond. The danger, however, is that investing in another country has its intricate complexities based on the fact that international trade does not only have to do with finance and profits, but also with sociocultural needs and issues.

According to these industry insiders, the way forward for the industry is for the government to come out with pragmatic policies to reinvigorate the once viable sector.

The Ministry of Trade and Industry is at present embarking on a short-term program sponsored by the Ghana Union of Traders Association to protect the interests of its members. However, the joint taskforce has been accused of running after sellers of imitated wax prints in the markets, seizing their wares and burning them. This is tactically counterproductive. Observers contend that the real culprit for the decline of the industry is neither the Asian massproducers nor the market women but how to make Ghanaian clothes and other garments as competitive as possible.

Ghana’s textile manufacturers generally agree that the market for export is huge but have reservations about operating in some of these markets due to trade barriers. In addition, poor packaging by some manufacturers serves as a disincentive to exporting to markets such as those of the European Union and the US. Deterrents to exports include poor finishing of products, technical obstacles and the inability of some manufacturers to meet export orders on schedule. Moreover, high tariffs charged in some export destinations discourage Ghanaian textiles producers. Madam Assan put it aptly: “The local textile and garment industries lack the needed technology input that would enhance the quality of their output. Thus, the need for government interventions to help strengthen the industry to improve domestic output and diversify exports.”

For the resuscitation of the textile industry, analysts suggest the following, among others: the acquisition of advanced manufacturing technologies in vogue in Southeast Asia by Ghanaian operators; upgrading of existing technology; improvement of product quality; product innovation; cost reduction; competitive pricing of local textiles; waiver of duties on imported raw materials; critical examination of multiple taxation systems that encourage smuggling; and sustained exemplary leadership in the campaign to promote the patronage of “made-inGhana” products.

GHANA BUSINESS & FINANCE

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INDUSTRY

companies must be abreast of modern technology to become competitive and results-oriented. Leaning on the side of the anti-protectionism group, Mr. Ebenezer Kwasi Darko, Human Resources Manager of ATL, said “a ban does not give the consumer the right of choice and we also believe that it is not everybody who can afford every textile on the market because of the prices.

But let us have a fair competition.”

A third viewpoint in the debate suggests that the authorities should make a balance between absolute trade liberalization and trade protectionism.

According to this school of thought, the crux of the matter is that the competition in the textile industry in the past was among the local companies, but the situation has now changed.

INDUSTRY

Growth through Self-Reliance to Push the Economy Forward

BY MARTIN-LUTHER C. KING

Ghana’s economy looks set for a rebound borne on the wings of renewed domestic support for locally produced goods. Sugar imports will soon be reduced following the resuscitation of the Komenda Sugar Factory. The unfolding trend is a result of government’s recent bouquet of initiatives aimed at promoting made-in-Ghana products.

Built under the presidency of Dr. Kwame Nkrumah, the Komenda Sugar Factory had collapsed in the 1980s as a result of mismanagement, which ended in lack of funds. President John Mahama recently assured the population that government would not only resuscitate the factory but, in addition, make legislation to protect Ghanaian sugar producers from the huge cartels that exist abroad. The sugar factory, which will create 1,300 direct jobs and 5,000 auxiliary ones for sugar cane farmers, will produce three megawatts (3MW) of electricity, out of which 2MW will be used to run the plant while the remainder will be fed into the national grid.

Similarly, twenty-six local companies were recently recognized at the second Ghana Made Awards held in Accra for their consistency in producing quality products for the external and internal markets. These included Wilmar Africa Limited, the manufacturers of Frytol vegetable cooking oil, which was adjudged the overall Best Ghana Made Product of the Year. Held on the theme, ‘Industrialization, the Key Strategy to

20

Accelerated Economic Development and Job Creation’, the event was designed to celebrate distinguished local companies and products. It was also established to expose locally manufactured products to the local market by creating awareness and building product loyalty.

In the past, it was the norm for Ghanaian households to use mostly

made-in-Ghana products. But for some time now, that seems to have become an anomaly. Most Ghanaians would rather spending their hard-earned money on more expensive, foreign brands even if local cheaper options exist. They prefer to buy everything from shoes, bags, clothes and accessories when they travel, or from shops that exclusively sell foreign brands.

The extent of Ghana’s fall from selfsufficiency, even in staple foods, is clear from statistics from the Bank of Ghana and the Ministry of Trade and Industry.

Last year, Ghana spent US$467 million on rice, US$217 million on sugar and US$234 million on edible oil - all commodities that the country produces.

The country imported US$283 million of fish, US$226 million of wheat and US$169 million of poultry last year.

Yet cheap imports from the giant rice plantations of Thailand and Vietnam, despite attracting a 20 percent tariff, are easily outpacing local production. Rice imports in 2011 were 485.6 million kilograms, which was a 65.5 percent increase on imports in 2010. Perhaps surprisingly, given that it was an

Ghana Made Award Recipients • Electrical Product of the Year, Prefos Limited for their innovative street light; • Distribution Outlet of the Year, Fio Enterprises Limited • Retail Outlet of the Year, Melcom Group.; • Lifetime Product of the Year, Kama Group for Tres-Orix Forte syrup • Indigenous Product of the Year, Sekaf Ghana Ltd. for their Tama shea butter soap and body cream, • Emerging Product of the Year, Guinness Breweries Ghana Limited’s Ruut Extra Premium Beer; • Innovative Product of the Year, M&K Ghana Limited for their Vinymat insecticide; • Building Construction Product of the Year, Acaricide Paint; • Pharmaceutical Product of the Year, Ernest Chemists’ Auntie Mary’s Gripe Mixture • Herbal Product of the Year, Joy Industries’ Joy Ointment & Joy Soap; • Rubber and Plastics Product of the Year, Sintex Container Industry Ltd’s water tank; • Alcoholic Product of the Year, Kasapreko Alomo Bitters by Kasapreko Company Ltd. • Spring Mattress of the Year, Prestige Pocketed Spring Mattress, produced by Latex Foam Rubber Ghana Limited.

GHANA BUSINESS & FINANCE

DECEMBER 2014

The fact is that Ghana needs to emulate countries that have made the transition from primary commodity production to industrial value-addition by supporting, protecting and nurturing domestic industries that are considered strategic to national development.

However, other items continue the perennial dependence on foreign markets. Imports of fish and poultry have gone up by over 25 per cent from 2010 to 2013. This is probably due to the growth of the proteinhungry middle class. Similarly, edible oil imports have shot up by a third in the same period, most of it palm oil from Southeast Asian countries such as Indonesia and Malaysia, which studied and copied Ghana’s oil palm industry in the 1960s.

Turning around local production will take several years, which is beyond the electoral schedule. Government’s current campaign to encourage the patronage of made-in-Ghana goods, therefore, aims at promoting import substitution. However, it remains to be

DECEMBER 2014

INDUSTRY

election year, when rice imports often rise exponentially, Ghana rice imports grew by just 5.3 percent to 511.2 million kg in 2012 and a further 12.8 per cent to 576.9 million kg in 2013.

The US$467 million price tag of rice imported last year may be a future business opportunity for rice growers, but is a current vested interest for Ghana’s formidable import lobby.

With their powerful tentacles in both the major political parties, the ruling National Democratic Congress and the opposition New Patriotic Party, the import lobbyists have the resources and personal connections to scupper any attempt to reduce their imports.

For the past two decades, imports of foodstuffs that Ghana produces locally have risen inexorably. However, it seems the government wants to change all that. There are already some success stories, such as the case of sugar.

Imports of sugar fell to 215.8 million kg in 2013 from 283 million kg in 2010. That trend could be reinforced with the revival of the sugar project in Komenda.

seen how far its current efforts can go or whether it is sustainable. For instance, even in the thick of government’s ongoing campaign, Parliament went shopping in China for furniture.

Lawmakers imported over 275 chairs and tables for the chamber to use, claiming that local manufacturers could not have delivered the needed number of furniture in the required time.

The President of the Woodworkers Association of Ghana (WAG), Mr. Reynolds Debrah, quickly retorted that local manufacturers could not only have made the chairs, but would have made them even better. Further, according to Mr. Debrah, ordering the furniture from local producers would not only build local capacity but also rub off positively on the country’s economy.

“If they order these things from us Ghanaians, we create employment and the dollar, which is running away from us, will stabilize and come down,” he said. The recent decline of the cedi against other major world currencies had been traced to the Ghanaians’ craving for foreign goods and services.

It is expected that changing the public’s preference for foreign goods to that of goods and services made in Ghana would reduce the quantum of imports; lessen the pressure on the cedi against other currencies; and lead to the creation of employment for the people.

According to the President of the Ghana Chamber of Commerce and Industry, Dr. Seth Adjei Baah, the rising import bills that have already resulted in a large and growing trade deficit have been the direct consequence of policies which penalise domestic production and make imports super lucrative. He stressed that the implications for employment, in particular, were obvious.

While applauding President Mahama’s campaign on the patronage of made-in-Ghana goods, he cautioned that the campaign would remain an illusion if local industries could not produce to meet local demand due to rising cost of production as reflected in the soaring Producer Price Index.

“Indeed, our excessive consumption of imported goods has been cited as one of the main reasons behind the rapid depreciation of the local currency,” Dr. Baah stated. The fact is that Ghana needs to emulate countries that have made the transition from primary commodity production to industrial value-addition by supporting, protecting and nurturing domestic industries that are considered strategic to national development.

To build a strong industrial base that would churn out quality products that local consumers would find attractive, the country urgently needs to engender a business environment that would lessen the production costs of the domestic industry.

GHANA BUSINESS & FINANCE

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BUILDING & CONSTRUCTION

Solving the Housing Deficit

BY KWEKU DARKO ANKRAH

As I strolled in the serene and beautifully picturesque Airport Hills gated and resort-like residential community, currently the most affluent neighborhood in Ghana with an official of Finali Limited, developers of Airport Hills Estate, I was quickly teleported into Wisteria Lane of the popular television show, Desperate Housewives. I felt like I was not in Ghana. I could hear silence, which was only occasionally broken by the chirping of birds and rustling of wind through the leaves of trees.

My enchanted awe was abruptly curtailed when I saw industrious workers weeding, mowing and watering gardens as well as constructing aesthetically appealing buildings. I quickly realised the disparity in the housing situation in Ghana. The real estate company is contributing towards solving the housing shortage for a select group. The carpenters, masons and other menial workers who labour at the community would return home without a place to lay their heads.

Some of them live in slums, kiosks and uncompleted buildings, while others lodge with relatives. They do not have houses of their own. Nonetheless there they were, completing million-dollar houses for the affluent.

There is no shortage of houses in Ghana. There is an oversupply of expensive upper and middle class houses, which only the rich can afford. Middle East and North Africa (MENA) countries are experiencing the same situation. “While there is currently an oversupply of upscale or luxury housing in many markets, there remains a shortage of more than 3.5 million affordable dwellings across the major markets within MENA,� said international property agent Jones Lang LaSalle in a November 2011 study.

Government-led affordable housing projects are not really that affordable to even middle income earners. The poor majority cannot buy an average home. The yawning disparity impels the provision of adequate and suitable affordable housing for the middle and the lower classes. It goes without saying that housing is a crucial sector that plays an essential role in the sociopolitical, cultural and economic development of every country. As the existing stock of housing units in the country is inadequate, the sector suffers

22

from fragmented, uncoordinated and unsustainable efforts from individuals, private developers and successive governments to supply relatively affordable housing. This lack of concerted effort has culminated in a huge housing deficit.

Two million dwelling stocks

The estimated housing deficit, according to the 2010 Population and Housing Census, is over two million (2,074,391) dwelling stocks. The Ministry of Works and Housing put the housing unit deficit at 1.7 million in 2014. This means that as much as over two million housing stocks should have been provided as at 2010 in order to meet the deficit. The 2010 census also recorded a population of almost 25 million, showing that, on average, at least 1.5 million houses could have solved the housing conundrums in Ghana. The 2012 housing sector profile estimated that Ghanaians would need 5.7 million new rooms by 2020 and this supply can only be met if 3.8 new rooms are completed in every minute of every working day for ten years. This is a great challenge - one unlikely to be met.

Table 1: Historical Housing Stock and Deficit

Year 1970 1986 2000 2002 2010

Estimated Households 351,953 898,000 1,910,325 2,176,325 5,467,136

Estimated Housing Stocks 152,573 498,000 895,049 943,490 3,392,745

Estimated Housing Deficits 199,363 400,000 1,015,276 1,232,835 2,074,391

Household Per House 2.31 1.80 2.13 2.31 1.61

Source: 1970, 2000 & 2010 Population censuses, HFC (2002) and MWH (1986)

GHANA BUSINESS & FINANCE

DECEMBER 2014

Table 2: Regional Distribution of Stocks of Houses and Households (HH) Regions 2010 No. of No. of

Population Houses Households

All Regions 24,658,823 3,392,745 5,467,136 GT. Accra 4,010,054 474,621 1,036,426 Ashanti 4,780,380 574,066 1,126,216 Western 2,376,021 380,104 553,635 Eastern 2,633,154 431,697 632,048 Volta 2,118,252 399,953 495,603 Northern 2,479,461 257,311 318,119 Brong Ahafo 2,310,983 331,967 490,519 Central 2,201,863 346,699 526,764 Upper East 1,046,545 114,034 177,631 Upper West 702,110 82,293 110,175

% Pop. Avg. HH Dist. of Per HH Per Housing House Size House stock 100 7.3 4.4 1.6 14.0 8.4 3.8 2.2 16.9 8.3 4.1 2.0 11.2 6.3 4.2 1.5 12.7 6.1 4.1 1.5 11.8 5.3 4.2 1.2 7.6 9.6 7.7 1.2 9.8 4.0 4.6 1.5 10.2 6.4 4.0 1.5 3.4 9.2 5.8 1.6 2.4 8.5 6.2 1.3

Source: GSS 2010 Census Report (2012)

Residential towers in Tseung Kwan O, Hong Kong

the country (16.9%), corresponding with its high population. Although the Greater Accra region recorded a lower share of housing stock (14%) comparatively, its urban share of housing stock was about 80 percent.

As it has already been shown, the average household size in Ghana is 4.4, with persons with about 1.6 households per house, and a total of 3,392,745 housing units nationwide. So given the inter-census population growth rate of 2.7% per year, it is projected that Ghana’s population could reach 32,186,724 by 2020. This implies that a total of 6,303,919 housing units will be required to meet the population’s demand for housing by 2020, assuming a constant household per house ratio of 1.6.

What Must Be Done?

and containers. Admittedly, tents, kiosks and containers which are makeshift dwelling units are normally not classified under housing, and so technically, should be ignored. The makeshift dwellings such as tents, kiosks, containers and attachment to shops or offices together constitute 2.0% of the total housing stock, per the census. The housing stock provided in Table 1 is even less when these substandard and temporary make-dos are removed.

DECEMBER 2014

There is an uneven distribution of houses across the country as indicated in Table 2, with an arithmetic increase in the provision of housing against a geometric rate increase in the population. Total number of houses as at 2010 compared with a number of households indicates an acute overcrowding in most houses. As also shown in the data, on average, there are about 7.3 persons living in each house. Ashanti region recorded the highest percentage of housing stock in

Some data indicate that 44.5 percent of households occupy only one room, 24.8 percent occupy two rooms and 11.65 percent three rooms. The statistics also shows that more than half (54.4 percent) of household members sleep in single rooms, 24.3 percent sleep in two rooms and about 10 percent sleep in three rooms. Only 11.2 percent of households sleep in four or more rooms. According to experts, with every 1.61 household occupying one housing stock, and the majority of these stocks being single rooms, there is averagely seven people occupying a single room.

According to Dr. Frank Ametefe, a real estate and planning lecturer, an estimated 199,000 housing units are required annually to address the deficit in five years, but the actual delivery is only between 25,000 to 30,000 units. It is mostly provided by the informal sectors. Dr Ametefe advocates concerted efforts and policies such as public private partnerships (PPPs).

GHANA BUSINESS & FINANCE

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BUILDING & CONSTRUCTION

The 2010 census estimated the average household size as 4.4, with about 51.5 percent of these households occupying a single room in a compound house. An estimated 1.61 households occupying one housing stock in a system where majority of housing stocks are single rooms. It suggests that on average seven people occupy a single room in Ghana.

According to the most recent Ghana Living Standards Survey (2008), 62.9 percent of urban households sleep in single rooms. This is below the Habitat for Humanity standard of three rooms per household. It is important to note that the 2010 census survey defined housing to include separate houses, semi-detached houses, flats/apartments, compound houses, huts, tents, kiosks

BUILDING & CONSTRUCTION

Table 3: Futuristic Housing Stock and Deficit Year Population Households

2010 24,658,823 5,467,136 2011 25,324,611 5,614,749 2012 26,008,376 5,766,347 2013 26,710,602 5,922,038 2014 27,431,788 6,081,933 2015 28,172,446 6,246,145 2016 28,933,102 6,414,791 2017 29,714,296 6,587,991 2018 30,516,582 6,765,867 2019 31,340,530 6,948,545 2020 32,186,724 7,136,156

Estimated Housing Yearly Requirements Requirements 4,829,544 123,631 4,959,942 126,970 5,093,860 130,398 5,231,395 133,918 5,372,642 137,534 5,517,704 141,248 5,666,682 145,061 5,819,682 148,978 5,976,814 153,000 6,138,188 157,131 6,303,919 161,374

Source: 1960, 1970, 2000 & 2010 Population censuses and the writer’s projections

The past governments’ attempts to provide affordable housing alone were woefully inadequate, or ended in a fiasco. The Kufuor-led New Patriotic Party (NPP) government sought to reduce the housing shortfall by building about 20,000 affordable units in 2001 for civil and public servants. In 2007, the construction of about 4,500 units ranging from bed-sitter, single and two bedroom apartments had begun at Borteyman and Kpone in the Greater Accra region, Asokore Mampong in the Ashanti Region, the Akwadum site in Koforidua in the Eastern region, and Tamale in the Northern region. All were to be completed by June 2009.

Unfortunately, not a single unit has been completed. Now, most of the sites have been taken over by squatters.

This project was discontinued by the National Democratic Congress (NDC) government in 2009. President John Atta Mill’s administration signed a controversial deal with a South Korean company, STX, for the construction of 30,000 housing units for government security personnel at a cost of US$1.5 billion. That deal has since floundered.

Mid-last year, Water Resources and Works and Housing Minister Collins Dauda announced that there would be 9,120 housing units built after a deal was struck with Credit Suisse and Barclays Bank for a US$400 million loan for the project. A total of 5,000 units were to be built by Brazilian company Construtora OAS for US$200 million. The remaining 4,120 were to be constructed by Ghana’s ItalConstruct International for a total cost of US$200 million.

In an interview with Mr. Raymond Kugblenu, Director of Estate and External Affairs of Finali Limited, he opined that there is no way any private real estate company could provide affordable houses without government participation. “As for the housing for

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the upper class and some middle class people with high purchasing power and disposable incomes in our society, there are always plenty of houses to meet their needs. But for the ordinary Ghanaian, civil servants and other people in the lower income bracket, only the government can currently provide affordable housing for them,” Mr. Kugblenu told GB&F exclusively.

average house prices of GHS 950,000 (US$262,250). Other expensive areas in the capital include East Legon with the average home costing GHS 800,000 (US$220,842) and Spintex GHS 600,000 (US$652,632). The least expensive houses in Accra could be found in Madina, with averages price of GHS 200,000 (US$55,211), followed

by Kwabenya and Abokobi, with average house prices of GHS 245,000 (US$67,633) and GHS 210,000 (US$57,971), respectively,” he said.

Mr Kugblenu stated further that in the rest of Ghana, house prices remained cheap, at an average cost of GHS 280,000 (US$77,295) over the same period. In Kumasi, the average price of a house stood at GHS 220,000 (US$60,732) in mid-2013. In SekondiTakoradi, the average house price was GHS 180,000 (US$49,690) over the same period. Cape Coast has the least

“...but there are serious challenging factors such as high cost of land as a result of our land tenure system and its attendant acrimonious litigations, lack of access to sustainable finance, high interest rates, high and unstable cost of building materials and the absence of a clearly defined national housing policy,” he said.

Most expensive area in Accra

Mortgage companies estimated that most households in the country could only afford houses with prices ranging between US$10,000 and US$18,000.

Mr. Kugblenu explained that no real estate developer could construct a house for such low prices because the real estate industry is driven by location, the type of development and quality of finishing. “Going by these three factors an average house price in Accra was GHc 315,000 (US$86,957) in mid-2013, about 12% higher than in the rest of Ghana.

The most expensive area in Accra is the Airport Residential Area, with

GHANA BUSINESS & FINANCE

DECEMBER 2014

BUILDING & CONSTRUCTION

expensive houses in Ghana, at an average of GHS 120,000 (US$33,126).

The 2010 census revealed that nationally, 47.2 percent of dwelling units are occupied by their owners, 31.1 percent are rented out and 20.8 percent are occupied rent-free. In addition, 52.7 percent of dwelling units are owned by household members, while 26.3 percent are owned by other private individuals. Another 15.6 percent are owned by relatives who are not household members. Only 3.7 percent of the dwelling units are owned by employers (public and private).

Mr. Kugblenu said the factors that contribute towards the rising house prices are beyond the real estate developers. “There is cheap and available labour in Ghana and the corporate tax rate for companies in the real estate industry is 25%, quite low when compared to some other African

countries. This should have encouraged people to invest and develop affordable housing but there are serious challenging factors such as high cost of land as a result of our land tenure system and its attendant acrimonious litigations, lack of access to sustainable finance, high interest rates, high and unstable cost of building materials and the absence of a clearly defined national housing policy,” he said.

What should the government do to help the real estate companies to build affordable houses? Mr. B.D.K. Adu, former Greater Accra Regional Chairman of Ghana Real Estate Developers Association (GREDA) and Chief Executive Officer of AWET Group, said the government should release all the vested lands in its possession to GREDA at a lowcost, construct accessible tarred roads, and provide water and electricity to proposed building sites. Mr. Adu wanted the removal of taxes on cement and other building materials and the offer of soft loans to estate developers to stabilise price fluctuations. “We in GREDA have told the government many times that they should give us the land banks, take care of sites and services, offer soft loans and remove punitive taxes on buildings, and we shall build houses that will cost almost half of the current prices being quoted. We are very capable of building affordable houses for ordinary Ghanaians but the government seems not willing to forgo the land banks and taxes,” he said in a GB&F interview.

Experience has shown

Mr. Adu, a former Member of Parliament for Okere, said experience has shown that when government

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teams up with GREDA or private developers, they could build affordable houses. “GREDA provides about 2,500 housing units annually, other than that the housing deficit would have quadrupled. SSNIT should be commended for providing houses in conjunction with GREDA. It has been quite a success,” he intimated. The records show that governments and the private sector have collaborated to increase the housing supply. Some of the projects include the establishment of companies like the State Housing Company, SSNIT, Home Finance Company, First Ghana Building Society and the GREDA. However, the efforts of these entities are, so far, not enough.

Mr. Simon Ofori Ametepey, a realty specialist, said the governments and stakeholders have to look beyond the short term in formulating housing policies. It is most effective when the commitment is long term, independent, and support is bipartisan.

“To be successful, government should shift focus on full direct housing construction to that of providing the enabling environment for the sector.

For example, if there is the need to import housing materials, government can subsidise this by importing or reducing the import duties on building materials. The establishment of smalland medium-sized companies that export, manufacture and coordinate the distribution of building materials will greatly enhance housing delivery. In all, a workable national policy framework in which the duties and responsibilities of each stakeholder in the delivery of housing should be stipulated to assist sustainable public and private housing delivery,” he noted.

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FINANCE

Origins of money, the exchange rate, and the tale of the falling Cedi

BY AYUUREYISIYA KAPINI ATAFORI

Nowadays, every country, group, individual and organisation pays for goods and services with what is commonly known as money. Some scholars say ‘money’ comes from the Latin word ‘moneta’ - the temple of the Roman god, Juno, where what has come to be called money was first made. Before money was invented in the seventh century, people exchanged goods and services through a system known as barter.

Barter takes place when people directly exchange their goods for someone else’s goods. The problems associated with this system led to the invention and use of money.

Money can be defined by the functions it performs in the society. Money is a medium of exchange, a measure of value or standard unit of account, a store of value, and a standard of deferred payment. According to some books and other publications, some objects have been used as money in the past. Cowries and other shells, salt, cola nuts, silver and gold coins, paper (blank) and other items have been used as a measure of value for the exchange of goods and services. In ancient times, the standardisation of gold and silver was made possible through the minting of small pieces of these precious metals and stamping ‘face values’ on them.

The earliest known coins date back

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to the ancient Rome Empire of the sixth century. Paper money is believed to have started in China during the Ming Dynasty (1368-1399). Paper money and coins are collectively called currency.

Money is the life-blood of every economy. Money plays about four roles in the economic life of every society.

Firstly, money is used as a medium of exchange when it is used to buy something directly or indirectly. If you have a goat for sale, you expect to be given some cash or a cheque for it. A credit card is a form of money that can be used to buy goods and services. In that sense, credit is an extension of money. Secondly, money performs a very important function as a measure of value (standard unit of account) when it is used as a common denominator through which the relative prices of goods are stated.

Cynically, it is often said that money is the root of all evil. Granted that money is an evil, then it is a necessary one. Without money, measuring the value of all goods in terms of all other goods would be tedious because the

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relative prices among goods increase faster than the number of goods considered. Additionally, money as a unit of account greases the wheels of exchange by reducing costs.

Thirdly, money performs as a store of value as people prefer it as an asset because it is relatively less risky, or because they view the transaction costs of conversion into other assets as too high. You do not need to pay fees to own bank notes (or bills) and coins. However, you will have to pay transactions costs for the stocks, bonds or capital assets you own. There is an inherent risk in storing money because it may lose its value during periods of inflation and super-inflation. Lastly, money acts as a standard of deferred payment that allows inter-temporal contracts or transactions to go on smoothly. That simply means money is a link between the past, present and the future in the exchange of goods and services. For example, many types of production require times of completion and would not be done without a contract specifying future monetary payment arrangements.

There are many types of currencies in the world but some are more known than others. The major currencies include British pound sterling, the United States dollar, the euro of the European Union, French Franc Chinese yuan and the South African rand. In Ghana, the Cedi is the legal tender. The cedi comes from the Akan word sedie, which means cowry shells.

Examples of coin currencies include the British shilling, the Ghanaian pesewa and the US cent.

Exchange controls are the legal

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FINANCE

limits on your ability to buy or sell foreign currencies. Strong currencies such as the pound sterling, dollar, euro and yuan are easily convertible. When these controls are not properly in place or off balance, a parallel or black market for foreign monies occurs. The exchange rate is determined by the economic strength of the country of origin of a currency, trading in the international financial market and sustained trade flows. The exchange rate is defined as the price at which one currency can be bought with another. or with gold.

If there is no government involvement or interference, the exact rate will be determined by supply and demand in the foreign exchange market.

Supply and demand, in turn, would depend on the balance of payment position of each country and the demand for a currency in terms of both obligations incurred and speculators’ expectations about the future exchange rate. Such a rate is called a freely floating exchange rate. The other exchange rate regime fixes the rate of each country’s currency at a par value. This second type of rate is known as fixed or pegged exchange rate.

During the colonial period, the British introduced their currency, the Pound, into the Gold Coast (now Ghana). After Ghana got her independence, the Cedi (bank note) and Pesewa were introduced on 19th July, 1965. These currencies had the head of Dr Kwame Nkrumah, the first President, on them. The Government replaced the British pound, shilling and pence and the Cedi was introduced with an exchange rate of 100 pence (or 8 shillings and 4 pence at the time).

It is documented by economic historians that the value of the cedi first fell when the National Liberation Council (NLC) government introduced the new Ghana Cedi, which was exchangeable for 10 shillings. The value of the Cedi was further devalued by 44 per cent in 1971 by the Busia administration. The Cedi further cascaded after his overthrow in 1972.

Afterwards, exchange rate controls were introduced until 1983 when the Provisional National Defense Council (PNDC) launched the Economic Recovery Program (ERP).

The ERP allowed the Cedi to be freely traded at the interbank exchange market in order to eliminate the black market and profiteering. In 1983, one dollar was bought with 2.75 cedis. The cedi’s value fell to 29 cedis per dollar in 1986. From that time onwards, there has been an auction of the Cedi at the interbank market. Since then, the value of the Cedi has been falling almost every week. The black market still exists at Makola and Tudu in Accra, and at

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The rate of inflation is high because many cedis are exchanged for few dollars. As a consequence, the cost of living is rising while the standard of living is falling. Workers have a low purchasing power as a result of their low salaries and wages.

Kejetia in Kumasi where currencies sell higher than the interbank rates and those fixed by foreign exchange (forex) bureaus. Some industry watchers believe the black market was reborn in early 2000 when there was shortage of dollars and other hard currencies. The truth is that the market has been there since the eras of the ERP and Structural Adjustment Programs (SAP) under the PNDC. The falling value of the Cedi affects every Ghanaian in many ways.

Now, the prices of goods and services are increasing almost every other day.

The rate of inflation is high because many cedis are exchanged for a few dollars. As a consequence, the cost of living is rising while the standard of living is falling. Workers have a low purchasing power as a result of their low salaries and wages.

How can we rescue the Cedi from what some economists described as a free-fall? Several solutions have been suggested but the managers of the economy have not yet been able to apply them successfully. One suggestion is for Ghana to export more value-

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added goods and services to earn more foreign exchange. Another solution is the active promotion of the production of made-in-Ghana goods by Ghanaians and the conscious use of these goods

by Ghanaians. That way, Ghana will import less goods, and reserve more foreign exchange which would boost the value of the cedi. Other experts propose that fiscal discipline (i.e., cuts in public expenditure and increases in revenue) would help the Cedi to be stable. The Cedi can be saved from its prevailing free-fall through a mixture of several sound and prudent macro-economic, monetary and fiscal measures.

Frankly, the true state of the Cedi is desperate, and seems irredeemable.

The cedi has no bright future if we take its present state into consideration.

Many people think the value of the cedi will keep falling against that of the dollar and other convertible currencies. For such people, the Cedi will keep sliding until GHc 100,000 is exchanged for a dollar. Those who thought the country producing crude oil in commercial quantities would have bolstered the Cedi have so far been disappointed. Out of desperation, there have been suggestions that Ghana should abandon the Cedi and circulate only dollars since dollarisation is now pervasive. Others say Ghana should go the Zimbabwe way, with a multiple currency regime where the US dollar, UK pound, euro and rand are used.

Ultimately, when the eco takes off functionally, in God-knows-when, in the six Economic Community of West African States (ECOWAS) member countries, the Cedi will be dead forever.

When should we prepare a requiem for the Cedi? When will the eco rule in Gambia, Ghana, Guinea, Liberia, Nigeria and Sierra Leone?

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PHOTO GALLERY

2015 Post-Budget Highlights Breakfast Forum by PwC

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1.) Cross section of attendees at the event 2.) Some dignitaries during the discussions 3.) Mr Chinery Herman Hesse, Chairman of SoftTribe, posing a question to the panelists 4.) Mr Felix Addo, senior partner of Pricewaterhousecoopers 5.) Mr Evans Kwasi Okoh, Managing Director of Aluworks company asking a question 6.) Mr Millison Narh, Deputy Governor of Bank of Ghana addressing the gathering 7.) Some dignitaries at the conference 8.) Mr James Asare Adjei, president of AGI, speaking at the event

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PHOTO GALLERY

3rd AGI Ghana Industry Awards

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1.) Nana Owusu Afari (r), immediate past president of AGI presents award to OLAM Ghana Limited for being the fastest growing company of the year.

2.) B5 Plus Limited awarded for being the best company in the metal, building and construction sector.

3.) The Best company in the communication and technology sector went to Scancom Ghana Limited.

Presenting award is Mr Josef Cordier (r) co-ordinator of the Federation of Ghana Industries.

4.) Staff of Guinness Ghana Breweries Limited awarded Overall Best Industrial Company of the Year, pose with Mr Rashid Puelpo (second left), Minister of State at the Presidency.

5.) The award winners.

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AVIATION

Aviation Investment Soaring

BY KWEKU DARKO ANKRAH

Mid-October was scheduled for an African Air Expo in Accra. It has been postponed as a result of the ban on all international conferences in Ghana over the following three months due to efforts by West African countries to contain the Ebola virus. The ill-fated expo was billed to showcase Ghana as a fertile market for the growth of general, commercial and business aviation. It was also intended to help solicit investment to improve airport infrastructure and position industry players to network.

The cancellation is an indirect but clear example of how the ongoing health emergency continues to affect the aviation industry.

Despite the perceived and real risks of the aviation industry, Africa has 256 airlines with 1,302 aircrafts and 371 airports; coupled with 762,000 flights and 67 million passengers as at 2014.

The sector contributes about US$67.8 billion to Africa’s GDP and provides 6.7 million jobs. Airports Council International’s global traffic forecasts indicate that the number of African airport passengers will grow annually by 5.5 per cent by 2019, and plateau at around 4.2 per cent by 2029. Boeing is a bit more optimistic. According to its 2013 Current Market Outlook Report, Africa’s passenger traffic growth projections stood at 6.1 per cent. Ghana is part of a catchment of nearly one billion people who travel around Africa annually, of whom around 15 per cent currently utilise aviation services in doing so.

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Industry players opine that air travel is growing rapidly in Ghana, as a critical number of Ghanaians now travel by air and more tourists and businesspeople visit the country by air. Indeed, Ghana Airports Company Limited (GACL), which operates Ghana’s four airports located in Accra, Kumasi, Tamale and Sunyani (the last three being domestic airports only), posted GHC19.1 million (US$7.28 million) in profit in 2013, despite losing GHC84.2 million ($32.1 million) in 2012.

The 2013 performance is seen to reflect newly found confidence in and preference for air travel, as well as effective cost management. GACL’s aeronautical revenues grew 37 per cent to GHC287,525 ($109,605) in 2013, while non-aeronautical revenues rose less than three per cent to GHC25,062 ($9,554), which suggests that the company could make greater use of the retail and leisure potential of its airports.

The government wants to start a new a national carrier but experts doubt whether it would be competitive

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enough despite the booming market and find it may suffer the fate of its predecessors Ghana Airways and Ghana International Airlines.

Interestingly, at the forefront of Ghana’s aviation success story is the contribution of the younger domestic private airlines. With a total of only 85,166 passengers carried in 2007, the domestic airlines airlifting hit 600,000 in 2013. This comes as surprise in a country where less than five per cent of people travel by air. There are currently three domestic airlines operating in Ghana, including Antrak Air, Starbow, and Africa World Airlines (AWA).

The demand in the domestic aviation sector has seen some of these airlines increasing their frequencies to some of local destinations, especially Kumasi and Tamale, with Kumasi emerging as the second busiest airport after the Kotoka International Airport (KIA).

In August at a news conference, Mr. Charles Asare, the Acting Managing Director of GACL, noted that “Domestic air traffic continues to grow strongly. Aircraft movements rose 28.9% to 18,497 in 2013, from 14,352 in 2012 and 10,091 in 2011. Passenger numbers jumped 43.3% to 778,466 from 543,379 in 2012 and 199,073 in 2011”. He averred that internationally Europe remained the most travelled destination, with a market share of 33.1%, followed by West Africa, with 23.6%. The Middle East, East and

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continent will need to be expanded or supplemented by additional airports so as to handle the anticipated growth of 350% to 600% of current air passenger levels.

This is most evident in Ghana.

The country’s airports were built many years ago and poor infrastructure hampers the smooth operation of domestic and international airlines.

Domestic airlines, particularly, have registered their dissatisfaction with the state of runways at regional airports.

The Kumasi Airport has incessantly been cited for its absence of an Aeronautical Ground Lighting System, thus disallowing domestic airlines to operate in the night.

Capitalising on its central location, the Tamale airport might, over the longer term, be developed into a huge complex serving as a hub for West Africa and the Sahel.

In order to overcome its infrastructural deficit, GACL, as part of its mandate, and in line with its priority of improving aviation infrastructure, has embarked on expansion and renovation projects at most the airports. The KIA arrival hall expansion project is expected to enhance the passenger experience, by installing new check-in desks, baggage carousels, and screening and security equipment. Fuel mains have been extended to accelerate aircraft turnaround time, and guidance lighting started in 2013 is expected to be completed by end of this year.

In 2012, GACL sank US$173.2 million to upgrade the Kumasi airport to meet international standards and spent an additional US$17.5 million on a programme to rehabilitate parts of the airport to improve safety.

Though this project was scheduled for completion in November , but it did not materialise as planned. However, a recent Ghana News Agency (GNA) news feature noted that in December, night operations would commence at the Kumasi airport, following the installation of the Aeronautical Ground Lights.

In June 2014, work started on the US$21.4 million expansion of Terminal 2 at KIA, and it is expected to double the size of the terminal’s arrivals hall from 6,031 to 11,179 square metres. It is slated for completion by close of 2015. The first phase would be completed by this month, easing pressure in the short term. In addition to capacity increases, including expanding immigration and baggage handling facilities, there are also plans to upgrade the electronic systems and plumbing. Phase Two of the project will see office space expanded. The project is being funded on the balance sheet of GACL and executed by local contractor Amandi Holdings.

The Tamale Airport is also being upgraded to an international airport to serve as an alternate to KIA. Work at the airport started in November 2013, when Parliament approved a US$100 million contract for Brazil’s Construtora Queiroz Galvão to design and construct the new facilities. The project will take 18 months to complete and will significantly develop the airport, strengthen and extend the runway from 2,438 to 4,000 metres, as well as expand the aprons around it. Further, the aircraft standard model used in the runway design is the Boeing 747800, an intercontinental aircraft. The airport development will help support business activities and accelerate economic growth in Northern Ghana, and improve connectivity across the West African sub-region. The airport will also be used for domestic passenger travel, tourist access to the North and for the export of agricultural products.

Capitalising on its central location, the Tamale airport might, over the longer term, be developed into a huge complex serving as a hub for West Africa and the Sahel.

The government is also constructing a new international airport at Prampram, near Tema, the port city.

The government signed a memorandum of understanding with China Airport Civil Construction Company (CACC) to undertake feasibility studies for the new airport. In July 2013, CACC presented GACL with its preliminary designs, which would cater to 4.5 million passengers and 33,835 passenger aircraft movements a year, with a maximum of 12 movements an hour. Cargo capacity is expected to be at 30,000 tonnes annually, while the terminal area would be 45,000 square metres, and feature 7,000 square metres of warehousing.

Skies the limit.

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AVIATION

Southern Africa, North America and North Africa, in that order, comprised the remaining 43.3%.

To ensure that the airline industry continues to grow, roadblocks such as the high cost of operations, onerous taxes, burdensome regulation and tiresome bottlenecks in infrastructure development should be nipped in the bud. Recently both the international and domestic airlines faced their worst operational challenges, as the rising cost of operations fuelled by the depreciating cedi and a drop in passenger numbers due to the Ebola crisis has eroded their profits and earnings. This forced a few of the airlines to pull out of the market, downsize or diversify their operations into the sub-region in an attempt to contain the situation. “The steep decline in the value of the cedi from late last year through to the first half of this year meant that the cost of operations of the airlines almost tripled, although the cost of their tickets from which they earn their revenue remained relatively unchanged,” Mr. Apiigy Afenu, the Chief Operating Officer of AWA explained.

Virgin Atlantic and Air Namibia pulled out of the country mainly because of unsustainable cost of operations, fuelled by the high cost of aviation fuel. The situation is not different with the domestic carriers, given that fuel currently constitutes about 40 per cent of the cost of operations. Fly 540, which entered the industry four years ago, halted its operations indefinitely last May, amidst reports that it was unable to break even. The cost of aviation fuel is high. The three airlines contended that the impact of the incremental increase in fuel prices could have been minimised if the depreciation of the cedi was contained. Nonetheless, the recent catastrophic drop in oil prices to below US$65 a barrel may bring good tidings to those who stuck in the game.

Infrastructure is also a perennial challenge which operators complain about endlessly. According to the 2013 Programme for Infrastructure Development in Africa’s (PIDA) Study Synthesis, tourism and air passenger flows are set to increase, boosting Africa’s position as a tourist destination with major regional air transport hubs.

As a result, there is a need to address gaps in the air transport systems, particularly in the areas of air passenger service, air navigation systems, human capital development and airport capacity.

The report stated that major airports are currently under development in Africa and by 2040, all airports on the

COVER

“Africa should learn to trust Africa … and the continent’s wealth should benefit African peoples.”

His Majesty King Mohamed VI at the Moroccan-Ivorian Economic Forum in Abidjan, Cote d’Ivoire, on 23th February, 2014

THE MOROCCAN ECONOMIC BOOM:

When development meets its roots Morocco’s recent economic transformation has kept many wondering how the Maghreb kingdom managed to make it to that level. The Moroccan economy was resilient in 2013 with a growth rate of 4.7 per cent, buttressed mainly by domestic consumption, and public investment, as well as a good agricultural year. Though 2013 was not so good for the upper middle-income North African country, one of Africa’s oldest kingdoms has seen a boom in previous years.

King Mohamed VI

The country faces the future with hope, believing that the national strategy for accelerating economic growth will see it through to a higher state of industrialisation which will bring prosperity that will rub off other African countries. Hence, Morocco is spreading to other African countries like Cote d’Ivoire, Gabon, Ghana, Guinea, Senegal, among others. Currently, Moroccan companies are the second largest African investors in Africa, after South Africa. Moroccan companies direct two thirds of their Foreign Direct Investment (FDI) intra-Africa.

According to Foreign Direct Investment Intelligence, Morocco was the second most attractive country for FDI in Africa in 2013-14, attracting 8.3 per cent of all such flows to the continent. Yet, the need for more cooperation across the continent, as well as private-sector investment, to spur development, was clearly highlighted

by His Majesty King Mohamed VI,

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in various fora, both African and international.

Regional and global dynamics create a new urgency for Morocco to diversify its economic ties, boost multilateral security co-operation, and play a more active diplomatic role. While Morocco enjoys some competitive advantage in sub-Saharan Africa, it faces several challenges to transforming its presence there.

Diplomatically, it must strengthen its ties with larger African economies.

Economically, the challenge will be to restructure its nascent manufacturing base and diversify its products in order to meet growing African consumer demand.

Given this reality, a more effective strategy to promote economic growth and job creation should focus on expanding Morocco’s presence in subSaharan Africa. In Africa, Morocco has a comparative advantage, a history of close ties, and the potential to play an active economic, security, and diplomatic role. Morocco urgently needs to diversify its economic base and expand its network of trading partners in order to meet the growing socioeconomic demands of its population, at the height of its African relationships, through economic, political, cultural, and religious links.

To diversify the engines of growth in Africa

Sub-Saharan Africa has great potential as a market for Moroccan goods and services. Although the continent accounts for only three per cent of the global economy, it has a large population and is an attractive

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emerging market which is expected to see an uncertain growth’s pace over the next decade.

While mining and resource-based industries attract the most attention in sub-Saharan Africa, demand for consumer goods is rising due to the growth of a middle class, particularly in the larger African economies. The most promising areas of growth include the agricultural sector, infrastructure, banking services and consumer goods.

Moroccan exports to sub-Saharan Africa are expanding, though they still make up less than five per cent of Morocco’s total exports. Between 2000 and 2010, Moroccan exports to sub-Saharan Africa more than tripled, rising from US$248 million to US$849 million (approaching Moroccan exports to the United States, which stood at roughly US$995 million in 2011).

Morocco’s manufacturing sector has grown over the last decade, going from US$5.9 billion in 2002 to US$14 billion in 2011. The major target for Morocco will be to expand its manufacturing base to produce goods beyond the agricultural sector that can compete in sub-Saharan African markets, by using its comparative advantage in West Africa.

For one, its firms have been less risk averse than some European companies, which have sold large stakes in the region over the last five years.

This drive has been accelerated by maturing Moroccan companies seeking higher growth and margins than they could find in domestic markets. In some industries, tougher domestic competition also forced companies to pursue new markets. Morocco’s labour costs and cost structures are also lower

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African banks during the 2008-2009 financial crisis. Banking and other services such as insurance will remain an important component of Morocco’s more diversified economic strategy.

Morocco’s advanced banking industry puts it in a strong position to emerge as a banking and services hub for North and West Africa. Companies such as IBM already see Morocco as an important hub and gateway for access into other francophone African countries.

Banking has helped pave the way for other Moroccan industries to expand into Africa. Agricultural products currently represent the largest share (37 per cent) of Moroccan exports to sub-Saharan Africa. As in banking, there is potential for expanding Morocco’s exports, especially by providing a steady supply of fertilizer, which is crucial for expanding subSaharan Africa’s agricultural sectors

In addition to diversifying its partners, Morocco needs to diversify its products for export away from the natural resources sector if it is to capture a share of Africa’s future consumer goods markets.

Banking, fertilizers, real estates, agricultural products and pharmaceuticals are well-established Moroccan industries that have significant growth potential in subSaharan Africa. Morocco’s banks have led the way in establishing the country’s economic presence in sub-Saharan Africa. Morocco’s banking industry went through a series of reforms in the 1990s and is increasingly professional and transparent.

Today, three Moroccan banks rank among the top ten banks in Africa, with over US$90 billion in assets. Fifteen Moroccan banks have a presence in 22 African countries. The expansion into African banks has been driven in part by acquisitions, including from European financial institutions that sold stakes in

and access to locally-grown food.

Only one-tenth of African land is cultivated, and crop yields are among the lowest in the world. Morocco is a leading producer of phosphate, a key ingredient of fertilizer, and as it expands its downstream fertilizer industry, it is well positioned to emerge as a key supplier to Africa. Morocco’s stateowned fertilizer company, OCP S.A, is already working with African nations to produce adapted fertilizers for specific crops (such as cocoa, cotton and maize) to meet the needs of specific soil and climatic conditions.

Morocco has also developed Africa’s second-largest pharmaceutical sector. Though exports represent about 10 per cent of production, most of that is sold in North and West Africa.

SOTHEMA (Société De Therapeutique Marocaine), one of Morocco’s largest pharmaceutical companies, operates a subsidiary in Senegal called West Africa Pharma, which is focused on producing generic drugs for West African markets.

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Africa’s pharmaceutical market is expected to reach US$30 billion by 2016, and jump to US$45 billion by 2020, making it a potentially valuable market for Moroccan drug companies.

Reality and perspective

Today, Moroccan companies are the second largest African investors in Africa, after South Africa.

The level of investment is kept at one billion a year, which is a meaningful performance regarding the economic size of Morocco.

The most influential Moroccan companies in Africa, both private and parastatal, like Ittisalat al Maghrib, OCP, Attijari Wafa bank and Addoha are now familiar in the African countries, which are politically and historically closed to Morocco.

The various agreements signed between the Moroccan companies and their counterparts in Gabon, Senegal, Mali and Côte d’Ivoire led to boost the key strategic sectors in the economy and to raise the Small Medium Enterprises (SMEs) as the main spearhead of development.

Morocco’s geographical location, and the Tangier Mediterranean port in particular, offers the benefit of close proximity to key African markets and low labor costs. It is thus also worth examining Morocco’s other growing industries, which could help in building Morocco’s manufacturing base for future export to nearby markets.

Aircraft manufacturing is one such area.

Canadian aircraft manufacturer Bombardier, recently began construction of a US$200 million plant to be opened to produce parts for its CRJ aircraft and Learjets. Boeing and France’s Safran SA already operate facilities in Morocco that assemble cables and wire bundles for Boeing, General Electric, Dassault Aviation and Airbus. In addition to manufacturing aerospace parts, Morocco operates an airplane maintenance and servicing facility known as Aerotechnic Industries which opened in 2005, servicing Airbus A320 and Royal Air Maroc’s fleet of Boeing 737s. Morocco’s government has opened an institute to train workers for its aerospace industry.

Yet taken together these industries can lay the foundation for a broader manufacturing base which has a lower cost structure than European manufacturers and closer proximity to emerging markets in Africa.

The peculiarity of Morocco’s economic development is that, not only is it endogenous, but extends its engines of national growth to the rest of the African continent.

Data was from the Centre for Strategic and International Studies - Middle East Programme - for this article

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than Europe’s (though generally high for the region), making its services and products more competitive than those of European firms.

More broadly, Morocco’s advanced economic sectors complement the sectors in sub-Saharan Africa which promise the most growth and demand in the next decade, most importantly the agricultural, pharmaceutical, telecommunications, service and real estates sectors.

Morocco’s exports to Africa, however, are distributed unevenly across the continent. Over 60 per cent of its exports go to West Africa, nearly 28 percent to Central Africa, and less than three per cent to Southern Africa.

As Morocco diversifies its economic ties away the European market, more exports and trade ties are expected to occur in Africa, in particular with the larger economies that promise the most growth, such as Ghana.

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It also provides chartered flights on demand that include Hajj services. In the 57 years of its existence, RAM has invested considerably in the renewal and modernization of its aircrafts. It has strengthened its fleet by the addition of four Embraer E190 aircrafts in November/December 2014 bringing the total number to 52 aircrafts, with a mean fleet age of 7.2 years. It will also receive the first of two Boeing 787 Dreamliners in January 2015.

Royal Air Maroc is among the top 10 airlines in terms of punctuality with

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In September 2013, the International American Academy of Hospitality Sciences (AAHS) awarded the carrier the coveted International Five Star Diamond award. In July 2014, it was also rated a Three Star Airline in terms

of quality of service by Skytrax at the 2014 World Airline Awards.

RAM is Africa’s second largest carrier company in terms of turnover and is a leader in West Africa; the company is also ranked third in Africa in terms of number of passengers transported. The Casablanca hub is ranked first in Africa, second only to Paris in terms of linking Europe to

West Africa. The carrier has an exciting network of routes worldwide with over 80 locations, 1,500 weekly flights worldwide; 32 direct flights from Casablanca, with over 4,200 weekly connections from Casablanca between Africa and the rest of the world. Nine in every 20 passengers pass through RAM’s Casablanca hub to Africa.

R o y a l Air Maroc confirms its dynamism by amplifying the actions of partnership with some countries of sub-Saharan Africa and becomes official carrier of Biennial of Contemporary African Art in Dakar (Dak’art), MASA (Market Performing Arts African) in Abidjan, and the FESPACO (Ouagadougou Panafrican Film Festival).

Language is not a barrier on RAM flight thus making RAM the true continental Airliner in Africa by all standards and providing the best air travel into and from Africa.

ROYAL AIR MAROC The Wings of Morocco soar even higher

CIMAF Expands into Ghana With New Cement Plant

Ciments de l’Afrique (CIMAF) has signed an agreement with the government of Ghana to build a one million tonne capacity cement plant in the country. His Excellency President John Dramani Mahama and the Chairman of CIMAF, Mr. Anas Sefrioui laid the first stone of the 60 million Euro facility on the 9th of July 2014. The Plant, which would be located in the Free Zone Enclave in Tema, is scheduled to begin production in March 2016.

The new facility will create about 1000 direct and indirect jobs during its construction and about 200 during the production phase. The plant will be fitted with the latest and most innovative technologies in the production of cement to ensure environmental protection and production efficiency.

Addoha Moroccan Group, a sister company, is a leader in property development in Africa has also signed a Memorandum of Understanding with the government of Ghana for the construction of social housing units.

The development in the real estate industry in Ghana has led to an increase in the demand for cement in the country. CIMAF is poised to contribute to meeting that demand on the Ghanaian market.

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Mr Mohamed NACIRI, General Manager explaining the details of the project to President Mahama. With them are Mr Anas SEFRIOUI (right) president of CIMAF and Madam Ambassador of the Kingdom of Morocco.

GHANA BUSINESS & FINANCE

DECEMBER 2014

PROFILE Moving forward is believing in your projects, In your dreams, In you, In tomorrow.

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Saham Insurance Group has been in the Insurance and Reinsurance business for over thirty-four (34) years through the acquisition of Colina Group. We currently operate in twenty (21) countries in Africa with forty-six (46) subsidiaries and employ approximately 6,000 workers.

Saham Group has mostly operated the in francophone countries of Africa and Europe, and recently in Anglophone countries of Africa notable among these are; Angola, Ivory Coast, Cameroun, Senegal, Togo, Benin, Burkina Faso, Mali, Gabon, Morocco, Madagascar, Niger, Nigeria, Guinea, Congo, Ghana, Kenya, Lebanon and France just to mention a few.

And Ghana happens to be the first Anglophone presence of the Group followed by Kenya and Nigeria.

The Insurance business of the Group covers all forms of insurance including General Insurance, Life Insurance, Health Insurance and a strong Reinsurance package with the worldly reputed reinsurers such as MUNICH RE, SWISS RE, SCOR AND LLYDOS. Saham entered the Angolan and the Kenya markets in 2010 and 2013 respectively through the acquisition of Global Alliance Seguros, the second biggest Insurer of Angola and Mercantile Insurance in Kenya. In 2014, Saham Group acquired in Nigeria, 40% stake of UNITRUST Insurance Co. Ltd, one of the major players in the Nigerian non-life insurance market.

Saham Insurance Ghana and Saham Life Insurance Ghana are coming from the acquisition of Beacon Insurance and Beacon Life Insurance in 2010. Both companies have experienced significant growth over the past 4 years with staff strength of 158 Ghanaian employees. Our innovative products and solutions do not only provide the most appropriate solutions, but are structured to contribute to the development of Ghana and Africa as a whole.

DECEMBER 2014

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GHANA BUSINESS & FINANCE

37

TOURISM

Hospitality propelling tourism

to high heights

As we enter the festive December season, players in the hospitality industry are busily preparing to make the best financial returns of the year. Visits to hotels and restaurants in Accra, Kumasi, Takoradi, Tema and the major towns reveal that most of these players are planning specific holiday programmes for their customers. Events featuring celebrity dance shows, exquisite band performances, Ghallywood personality appearances and special dinner menus, all with accompanying freebies, are the top offers.

Movenpick Ambassador Hotel’s Sankofa all-day restaurant is offering multiethnic cuisine with sumptuous flavours.

This enables Movenpick customers and occasional holidaymakers to enjoy a variety of mouth-watering live cooking complemented by an a la carte menu that features international specialties and fresh local seafood as well.

According to the World Travel and Tourism Council’s (WTTC) 2014 report, the tourism sector contributed 9.5% (nearly US$7 trillion) to the global economy, thereby outpacing the wider economy’s growth rate.

It grew faster than other significant industries such as financial services, retail and distribution, public services, and transport and manufacturing.

The report revealed that 4.7 million new jobs were created from tourism activities, supporting nearly 266 million jobs. The WTTC Economic Impact Report this year found that the sector is expected to generate around 6.5 million new jobs .

Visitor exports, the measure of money spent by international tourists, exceeded expectations internationally, rising by four per cent to US$1.3 trillion and by more than 10.2 per cent in South East Asia alone. It is said that Travel and Tourism (T&T) investment

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grew by 2.9 per centbut globally, South East Asia leads the pack in terms of both total T&T economic and employment growth at 7.9 per cent and 4.1 per cent respectively. In Europe, both total T&T gross domestic product (GDP) and employment growth have exceeded expectations, boosted by strong demand from long-haul markets.

The sector is expected to continue to outpace overall growth in the whole global economy (4.3% vs. 2.8%) and investment is forecasted to increase by 5.6 per cent, and anticipated visitor export increment at 4.8 per cent.

Accordingly, Ghana’s hospitality

GHANA BUSINESS & FINANCE

industry is becoming very vibrant and is poised to achieve greater successes.

In line with positive global trends, the local hospitality industry, which usually combines hotel and tourism industries, is booming due to admirable and pleasant tourist sites as well as the proliferation of businesses because of the new oil and gas industry. Mr. Joseph Aidoo-Taylor, a restaurateur at the Aviance Company at Kotoka International Airport (KIA), argued that because the hospitality industry is performing its role effectively, there has been an unprecedented increment in the number of tourist arrivals in the

DECEMBER 2014

TOURISM country. “I am not surprised that receipts obtained from international tourist arrivals has more than doubled since 2005 as ISSER’s [Institute of Statistical Social and Economic Research at the University of Ghana] 2010 Report reveals. In 2010, US$1,875 million was received. Similarly, employment in the tourism sub-sector has been on the increase. These phenomena would likely have a good impact on the growth our national economy,” he concluded.

The growth of tourism has expanded activities in the hotel and restaurant business specifically.

According to 2014 data from the Ghana Statistical Service (GSS), the contribution of hotels and restaurants to GDP at current market prices, is 3,877 , or 3.4 per cent of GDP as of 2013.

The number of hotels licensed by the Ghana Tourist Board (GTB) has been on the increase, and as a result, the number of hotel rooms and beds.

However, the industry is made up of many agents and organisations besides the GTB, one of the most prominent being the Ghana Hoteliers Association (GHA). The GHA champions the interests of hotel operators as it promotes and regulates the operations of its members to ensure effective delivery of services. Membership of the GHA consists of owners of hotels, motels and guesthouses certified and licensed by the GTB. The GHA has over 1,000 registered members.

In an interview, one official of the GHA indicated that, “Despite the concerns of high visa, hotel and travel costs for both international and local leisure travellers, Ghana’s hotel supply grew at a compounded rate of 18% annually from 1998 to 2011. There is major resilient growth in the number of hotels, restaurants and other lodging outlets in Accra,” he noted. He further explained that currently, apart from major international 5-star hotels namely La Palm Beach Resort, Movenpick, Golden Tulip, Holiday Inn, Novotel, Amber Sun Hotel and others, the sector is characterised by strong local brands like Fiesta Royal, African Regent Hotel, Labadi Beach Resort, Alisa Hotel and others. “Every now and then our sector receives both international and local investors who are looking for sites all over the country to put up new hospitality centres ranging from hotels, beach resorts to exotic restaurants.

Currently, international hotel brands like Kempinski, Marriot, Radisson Blu, Hilton, Traders Shangri-La, Ibis and others are busily putting up hotels in Accra to augment the number of hotels chains in Ghana. They are also adding value to the service delivery system,” he explained.

The enormous growth of the hospitality industry in Ghana has been attributed to the increased visits by foreigners and investors. According to the London-based hospitality consulting firm, HVS, given Ghana’s growing economy, political stability

New Hotel Supply in Accra Future Openings No. of Rooms Category Opening Date Kempinski Accra 269 Luxury 2014 Marriot Accra 200 Upscale 2014 Radisson Blu (Accra-Airport) 200 Upscale 2017 Hilton Airport City 186 Upscale 2017 Traders Shangri-La 350 Luxury 2018 Express by Holiday Inn N/A Mid-scale N/A Ibis Accra N/A Mid-scale N/A Source: HVS research

DECEMBER 2014

Status Under Construction Under Construction Early Development Early Development Early Development Rumoured Rumoured

and conducive investment climate, a considerable amount of new supply is expected to enter the market over the coming years. HVS observed that hotel growth seemed to mirror economic growth. “The rise in RevPAR is attributable mainly to hoteliers pushing rates ahead of occupancy as demand in market remained high,” HVS noted in a 2013 report.

However, in the pursuit of service sector growth and success, much depends on the quality of service.

Though there is an increment in the number of hotels in the country, some of the indigenous hotels and restaurants’ services delivery leaves much to be desired.

As competing hospitality firms expand, all operations at a given price level tend to become similar, and thus, service quality and management become the key differentiation factor.

Industry experts averred that in order to enhance and improve the provision of services, hotels have to employ efficient and effective Customer Relationship Management (CRM) techniques through Information and Communication Technologies (ICTs) in order to satisfy and retain guests and customers.

“The GHA has done a yeoman’s job in working hand in hand with the Ghana Tourism Authority to penalised hotels that are notorious for poor service delivery and unhygienic conditions,” a GHA official told GB&F. Recently, the government warned that it would prosecute unlicensed eateries and accommodation facilities parading as hotels and inns . The GHA believes that if this warning is carried out there would be a positive impact on the performance of licensed hotels, resorts, inns and restaurants.

Nonetheless, challenges remain on the horizon for tourism investors.

The hospitality operators are in the medium term, for example looking to the government to significantly reduce the corporate tax in order to attract more investment.

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INSURANCE

When will the second-tier pension tango end?

BY OPPONG BAAH

Pension reform happens all over the world and Ghana is no exception. In terms of general economic benefits, pension schemes are a significant source of investment capital for national economic development. Experience in other countries shows that resources accruing from pension schemes have contributed immensely to national savings and investment, and Ghana stands to benefit similarly.

A strong and well-regulated pension sector facilitates the development of financial markets, in particular local capital markets, by diversifying sources of funds, mobilising long-term savings for productive purposes and broadening the investor base.

Over the years, concerns have been raised and agitations made by public servants over inadequacies of the level of pension resources to sustain a respectable life for retired public servants. Of particular concern to most workers’ groups has been the low pensions received by workers under the Social Security and National Insurance Trust (SSNIT) Pension Scheme compared to those still under Chapter 30 of the 1950 British Colonial Ordinances (Pension Ordinance No. 43), popularly known as CAP 30.

To address the imbalances in the system, the government introduced a new three-prong pension scheme in 2010. The National Pensions Act, 2008 (ACT 766) which brought in the three-tier pension scheme took its root from the T.A. Bediako

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Presidential Commission on Pensions set up in 2004. The main objective of the three-tier pension scheme is: (a) to provide pension benefits that will ensure retirement income security for workers and a better standard of living; (b) to ensure that every worker receives pension benefits as and when due, and; (c) to establish rules, regulations and standards for administration and payment of benefits.

The new contributory threetier pension scheme comprises two mandatory schemes and a voluntary scheme. The first tier is a mandatory basic national security scheme, which will incorporate an improved system of SSNIT benefits, mandatory for all employees in both the private and public sectors. The second tier is an occupational (or work-based) pension scheme, mandatory for all employees but privately managed, and designed primarily to give contributors higher lump sum benefits than presently available under the CAP 30 or SSNIT pension scheme. The third tier is a voluntary provident fund and

GHANA BUSINESS & FINANCE

personal scheme, supported by tax benefit incentives to provide additional funds for workers who want to make voluntary contributions to enhance their pension benefits, and also for workers in the informal sector.

With the introduction of the new pension scheme in 2010, it was envisaged that it would enhance pension benefits and increase the retirement income comfort and security of workers both in the formal and informal sectors. Four years on, the new system has turned into a raging bullfight between the government and the workers the new system is supposed to protect.

A demand was made by twelve public sector workers’ unions to have the right to appoint their own trustees to oversee the management of the 5.5 % taken in deductions from workers’ salaries. This request resulted in a standoff between the Government of Ghana and public sector workers, followed by strike action by workers, government going to court to force workers back to work, government suing workers and seeking court interpretation of the Pensions Law, and workers countersuing government to hand over their funds to their own appointed fund trustees.

The implicated unions were Health Services Workers Union (HSWU), Ghana Registered Nurses Association (GRNA), Ghana Medical Association (GMA), Ghana Physician Assistants Association (GPAA), Government and Hospital Pharmacists Association (GHPA), Ghana Association of Certified Registered Anesthetists (GACRA), Coalition of Concerned Teachers (CCT), Ghana National Association of Teachers (GNAT), Teachers and Education Workers Union (TEWU), National Association of Graduate Teachers NAGRAT),

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INSURANCE

Judicial Services Staff Association of Ghana (JUSAG), and Civil and Local Government Staff Association of Ghana (CLOSSAG). These groups justified their actions by pointing out that they had on several occasions complained to the government on the release of their funds but to no avail.

On September 3, 2014, a press release signed by Reynolds O. Tenkorang, Coordinator of the Joint Forum of the Public Sector Registered Pension Schemes made it clear that the unions notified the government on June 30, 2014, and September 10, 2014, about their intended strike action to back their demand for the operationalisation of their pension schemes but the notices expired without any resolution of the issue by the government. “At all material times prior and leading to our declaration of strike on October 22, 2014, our action was legitimate, lawful and in the best interest of the future of workers in Ghana”, the release noted.

The workers who want to select their own fund managers to manage their 5.5 % deduction under the tiertwo scheme claim government is acting in contravention of the Pension Law. They argue that the National Pensions Act gives contributors the liberty to choose their own trustees to operate their second tier pension scheme. They also accuse the government of not properly managing workers’ funds in the past.

Speaking on a radio programme, Christian Addae Poku, NAGRAT President, said: “We have a suspicion because we have received a publication from SSNIT that indicates clearly that the Government of Ghana owes SSNIT to the tune of GHC 800 million and this is pension money. And so what guarantee can the government give us that, our portion of that money (tiertwo funds) is also not in arrears?”

Thy government in turn is seeking legal interpretation from the court on whether as the employer to the workers; it has the right to select a fund manager to manage the tier-two pension scheme.

The government, per Honorable Haruna Iddrisu, Employment and Labour Relations Minister, described the strike by organised labour as unnecessary. The Minister insisted that the government has a responsibility to protect workers, especially when they go on retirement.

Austin Gamey, a labour expert, believes the government should not have taken a unilateral decision to appoint a fund manager to oversee the

42

management of workers’ contributions and suggests the appointment of an arbitrator to a find solution to the impasse. “The appointment of a fund manager should have been done with consensus of the workers”, he says.

He slammed the entrenched positions taken by the government and organised labour and wondered how a simple issue like the management of workers’ pension funds could degenerate into a strike and court action.

“The first beneficiaries of the tier-two pension scheme are supposed to receive their lumpsums effective January 2015, but public sector workers across the country are in a fix as to where to claim the second tier pension benefits.”

According to some legal experts, the strike was most unfortunate, besides its claimed illegality, for the singular reason that it could not solve the problem. The strike, which to the government was an avoidable action, was a waste because a negotiated settlement of the impasse which involves a compromise to the clear terms of the new Pensions Law cannot be a solution.

“Such action is certain to breach the law and yet provide no permanent solution. Any dialogue that compromises the law about whose job it is to appoint a trustee is also not the

GHANA BUSINESS & FINANCE

solution. The only solution to the over two year [old] fight is a legal solution”, they claim.

Others contend that the appointment of the corporate trustee should be the job of the Board of Trustees which has at least one-third employee representation and which is formed by each company or group of companies, to initiate all processes of managing the second tier occupational scheme.

In February, this year, a Switzerland-based consultancy HSP, under the mandate of the Swiss Government to assist the National Pensions Regulatory Authority (NPRA) cautioned that, “In addition to basic organisational issues like housing, staffing, training, communications and funding, the NPRA has to deal with discussions on interpretation of the legal and regulatory services.”

To Yaw Antwi, a specialist in pension administration, what could stand in the way of the multi-tier pension scheme as it takes off is public confidence. “Wrecked confidence has emanated from inefficiencies in record management, processing and payment of benefits especially in the initial stages of retirement.

The present state [of affairs] should only show players the enormous nature of the task, and how large the room for improvement is”, he says.

The first beneficiaries of the tiertwo pension scheme are supposed to receive their lump-sums effective January 2015, but public sector workers across the country are in a fix as to where to claim the second tier pension benefits. Hence, the labour unions agitation for the release of their tier-two pension funds into their own selected asset management companies.

DECEMBER 2014

ADVERTORIAL

MELCOM’s Made-In-Ghana Fest endears itself to producers & customers Melcom Ghana Limited, a subsidiary of the Indian retail giant Melcom Group, has fast endeared itself to customers to become the number one shop in Ghana, serving the rich, the middle-income earner and the poor alike. To promote made-in-Ghana products, the country’s leading supermarket has, since last year, offered indigenous manufacturers the opportunity to sell their products and has increased the presence of locally made goods on the shelves of all Melcom outlets. Mr Godwin Avenorgbo, the Director of Communications of Melcom Group, spoke to GB&F, and threw light on Melcom’s Made-in-Ghana Fest.

GB&F: What inspired the made-inGhana campaign by Melcom?

Godwin Avenorgbo (GA): Our group Chairman has nurtured the desire to increase the percentage of locally made goods in Melcom shops as part of our contribution to the nation's attempt to conserve foreign exchange. ‘Madein-Ghana Fest’ by Melcom, therefore, serves as a mobilisation platform for a one-on-one meeting by the local producer and the customer to create awareness about the benefits of buying made-in-Ghana products.

GB&F: Was there a particular reason why the month of August 2014 was chosen?

GA: It was a convenient month and suited our calendar of events. August will not be the permanent month every year for ‘Made-in-Ghana Fest.’ It may change due to various factors.

GB&F: What features characterised the campaign and how did it differ from normal business in your shops?

GA: An invitation was extended to as many local manufacturers as possible, including those whose products do

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not form part of Melcom’s regular retail list. This was to encourage smallscale manufacturers to exhibit their products alongside the well-established companies for equal access and opportunity.

In order to make the made-inGhana products stand out as distinct, an exclusive made-in-Ghana stand was

GHANA BUSINESS & FINANCE

created on the ground floor visible to all customers for easy identification of local brands manned by sales assistants who answer questions by customers.

GB&F: How did you find the response from companies and customers?

GA: The response from companies has been good. The second ‘Made-inGhana Fest’ recorded more exhibited items than the first one, and even as the exhibition of goods continued, more products were being introduced by manufacturers. We had over thirtyfive participating companies in our 2013 ‘Made-in-Ghana Fest.’ This year we recorded over seventy participating companies.

Customer response was an exciting experience. They were pleased to have dedicated sales assistants for various brands to answer their questions and draw their attention to new products on show at the festival. At the end of the campaign, customer response was measured by the sales figures. It’s easy to see their appreciation by the frequency of new stocks added daily.

DECEMBER 2014

national ‘Buy Made-In-Ghana Goods’ campaign to succeed.

GB&F: Will your campaign be an annual or repeated feature? If so, what will be different about the next one?

GA: This year marked the second edition. So for now, it is an annual campaign until it is otherwise determined by management. The prevailing market conditions will play a role in the form of each ‘Made- inGhana Fest.’

GB&F: What message do you have for Ghanaian consumers regarding made-in-Ghana products?

GA: Be proud to be a Ghanaian.

Support local industry to generate jobs, increase incomes, save foreign exchange by buying made-in-Ghana products for the sake of our children and their children's children, and for the sake of Ghana, our happy home, land of great resources. God bless our homeland Ghana and make our nation great and strong.

GB&F: As a supporter of local producers, what does Melcom think they need to do in order to compete with international producers who dominate local shelves?

GA: What we do in retail is to source, stock and sell quality goods that are in demand, that is both local and foreign and we will continue to do so in order to satisfy our cherished customers’ needs.

As a company, we provide our customers with what is available on the market. We do not exercise control over foreign goods, and therefore, cannot limit their availability or import. What we can do is to increase our stock of Ghana-made goods as a demonstration of our belief that the economy of Ghana can grow when we produce what we consume locally.

GB&F: After the campaign period, how will Melcom continue to support local industries?

GA: We plan to bring on board more local manufacturers and producers, thereby creating a broader base for the distribution and sale of made-inGhana products in our over thirty Melcom branches nationwide. By so doing, we create the opportunity of a ready market to motivate the local manufacturers to produce more and create more employment.

GB&F: Is there a possibility that other big retailers could adopt your marketing strategy, and how would Melcom feel about that?

GA: Good question. This made-inGhana campaign is critical to Ghana's economic growth. It is a solution to cutting back and avoiding foreign exchange expenditure and can lead to employment generation. The madein-Ghana movement should not die the usual “lip service death”. It is incumbent on all of us - manufacturers, wholesalers, retailers and consumers to lend a helping hand and give support to all sorts of private entrepreneurs for the

DECEMBER 2014

GHANA BUSINESS & FINANCE

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ADVERTORIAL

GB&F: What were the lessons learned from the campaign, both by Melcom and by the companies that participated?

GA: The first lesson is that we should not only talk about buying made- inGhana goods but make the effort to do so because our experience has shown that given the availability of madein-Ghana products, customers will patronise them. They like made-inGhana products. We have also learnt that customers love the interactive nature of the festival, which helps them to understand the manufacturing process of the various brands they ultimately patronise.

EDUCATION

ABCDE holds first mentorship programme African Business Centre for Developing Education (ABCDE), as part of its efforts to bridge the gap between industry and education, organised its first school mentorship programme at Ghanatta Senior High School in Dodowa, Greater Accra Region on 14th November. the vision of ABCDE and its aim to bridge the gap between industry and education.

Mr Acquae also touched on the need for the educational structure of the nation to be reformed in order to be able to meet the current demands of the economy.

The headmaster of the school also made a presentation about the history of the school and how they are delighted to be part of the ABCDE project.

The programme ended by 3:30pm after a question and answer time and a photo session with the students and staff of the school.

Addressing the students, the Minister for Trade and Industry, Hon. Dr Ekwow Spio-Garbrah, asked them to think like entrepreneurs in order to help solve the unemployment problem in Ghana. Dr Spio-Garbrah, who is also the Chairman of the ABCDE Board, stressed the urgent need to bridge the gap between industry and education, adding that the disconnect between the two sectors was the cause unemployment in the country.

The special mentor for the occasion, Dr Mike Agyekum Addo, CEO of KAMA Group of Companies, shared his experiences with the about 1,900 students. Dr Agyekum Addo told them about how he went through a grammar-type educational system and had to struggle to come out successfully.

46

He, therefore, encouraged the students to think entrepreneurially in order to achieve their dreams.

The national co-ordinator of ABCDE, Mr Felix Yirdong talked briefly about what ABCDE is all about and how the students could benefit from ABCDE projects.

Present were Mr Emmanuel Acquah, a Board member of ABCDE, the headmasters of Ghanatta and the teaching staff of the school.

Four volunteers of ABCDE, a staff from ABM, Mr William Obour and Mr Stephen Kwaw from Global Entrepreneurship Initiative were also present.

The meeting started with ABCDE volunteers sharing their individual experience with the students about

GHANA BUSINESS & FINANCE

DECEMBER 2014

PERSPECTIVES

Modernising Accra:

Harnessing the Odaw River & Korle Lagoon for economic gains

BY T. TETTEH-QUAYNOR

The Korle Lagoon is in one of the low-lying areas of the Greater Accra Region. The Korle Lagoon in Accra, Ghana’s capital city, forms part of the Odaw River which stretches about 14 kilometres (or about 10 miles) from Dome through Achimota to North Kaneshie Industrial Area and Adabraka, and flows into the Atlantic Ocean. The Odaw River is joined by tributaries from Shiashie to Maamobi, Nima, Asylum Down and other parts of the city. The Accra Metropolitan Assembly (AMA) is duty-bound to stop the silt, plastic waste, excreta, debris and cocktail of other types of horrible garbage that are being dumped daily into the river in order to permit the free flow of usable water into the lagoon.

When the dumping of all sorts of waste ends, the much-abused Odaw, and the beautiful but bastardised lagoon, could be economically exploited for the benefit of individuals, groups, central government, and Ghana as a whole. The lagoon has enormous and varied economic potentials that can be harnessed. It is, therefore, suggested that conscious effort be made to undertake projects under the supervision of the administrative and legally-sanctioned albeit subverted body known as the Korle Lagoon Development Authority (KORDA). There should be sufficient subventions to support the implementation of KORDA’s strategic plan in order to modernise the lagoon for economic gains. When the Odaw and Korle Lagoon stretch is modernised, Accra too would be modernised. The implementation of the Korle Lagoon Strategic Plan should be achieved within a stipulated timeframe as a matter of urgency. The US$660 million Korle Lagoon Ecological Restoration Project (KLERP) being undertaken by the Conti Group of Companies of the United States (US) has stalled for long.

In any case, the KLERP would not be

48

far-reaching. KORDA could do better than that one project.

There has been an improvement in the original structure of the Korle Lagoon since the 1960s. The proposed studies supporting the rejuvenation and redevelopment of the lagoon must go on in earnest. The occupiers of lands for the lagoon project must be cleared.

Their illegal structures and economic activities impede the development of the lagoon.

The lagoon has its own historical, sociocultural and religious activities requiring evidence, facts and figures to support future and further academic work. There was oral tradition on the Korle Lagoon. The estuary was enlarged by the First Republic administration of Dr. Kwame Nkrumah. Oral history provides that the area near the Korle Bu bridge was earmarked as an industrial area. There was a plan for a landing site near the estuary to transport raw materials to the Tema harbour for export.

One of the economic values of this natural water body is its use for transportation. It may look like a dream. The idea of the modernisation

GHANA BUSINESS & FINANCE

of the Odaw and the lagoon could appear unrealistic to residents and workers along the stretch of the river and the lagoon. However, vessels can commute between Avenor, near the Kwame Nkrumah Circle, and the Korle estuary, near Lavender Hill. Boats could cruise with stops at selected places on the Odaw River and on the lagoon.

Landing sites could be constructed along the river and the lagoon. The breadth and deepness of the river and lagoon need to be constructed to suit commercial ferries. When the KORDA is better established, much economic gain could be garnered.

Strategically-sited bridges

By dredging, widening, deepening and cleaning the plastic waste-choked river and lagoon, much value could be gained from the water bodies.

Strategically sited bridges could be constructed to levels that would fit the movement of vessels. Landing or boarding and disembarking stations could also be constructed at Avenor, Nkrumah Circle, Adabraka Sahara, the bridge near Graphic Communications, Agbogbloshie and near the Korle Bu

DECEMBER 2014

Hospital. Communications could open up through the riverine route from Avenor to Korle Gonno, and into the sea, and vice versa. There would not be traffic to slow down commuters.

Human beings and their luggage would be transported. The Authority would create jobs. Boat captains and their

assistants, ‘kaya yei,’ insurance agencies, banks and microfinance institutions, shoe-shiners, restaurants, the Police, engineers, technicians, administrators, cleaners, marketers and fishers would all be engaged. Many businesses could evolve to produce goods and provide services.

An artists impression of the soon to be completed El Harrach River Restoration Project in Algeria

DECEMBER 2014

GHANA BUSINESS & FINANCE

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PERSPECTIVES

A second route on the Odaw could be from the Accra main railways station, Fadama and Galloway areas to the Korle Bu mortuary, leading to the terminal near Lavender Hill. The third tributary which begins from the Awudome Cemetery through to the central mosque at Abossey-Okai and Christ Temple of International Central Gospel Church joins the lagoon near the mortuary interchange.

This tributary is not immediately recommendable for transportation because of its narrowness and lack of depth. The main water routes have the potential of hosting hotels, chalets and restaurants. Some boats could be built with beds, washrooms, halls, bars and ballrooms to serve as accommodation and for leisure.

The ecological value of the lagoon is another potential gain. Ecology is the way and means by which humankind relates to the natural environment within a geographical area. The lagoon has unique ecological habitats for flora and fauna. The creatures in the lagoon depend on this flora and fauna for survival. Pollution is taking a toll on the river and lagoon. Some aquatic life is now extinct. Certain birds cease to exist in the vegetation near the lagoon and its environs. The large highly toxic waste being dumped into the lagoon from the light industrial area must cease to avert any environmental disaster. White crabs, snakes, ducks, seagulls and others are a few creatures still residing within the catchment area of the lagoon. With the improvement in the quality of water, the depth, width and aquatic value, the oldest occupational pursuit on the river and lagoon could be restored.

PERSPECTIVES

The fishing of tilapia, mudfish and craps was the daily task of the original inhabitants of the river and lagoon. The fish caught could support the nutritional requirements of the residents near the two water bodies. Currently however, there is little record or data on the animal life. Proper research could lead to well-documented evidence of the animal life in and around the lagoon.

The medical and pharmaceutical values of the flora and fauna in and about the lagoon should be tapped. With the full operation of KORDA, the creatures and plants could be documented and used for economic purposes.

Tourist attraction

Logically, the ecology of the lagoon could serve as a tourist attraction.

Domestic and international tourists would provide revenue to the Authority and the central government. Various innovative leisure activities could be organised to attract sightseers and swimmers to the lagoon. Thus, the tourist attraction of the Korle Lagoon and its tributaries must be invoked evidentially and purposefully. Tourists want to see, admire, be amused and learn from interesting sources. Linked to tourism is sporting events. The lagoon and its tributaries could be well developed to cater for various water sports which could be held at regular intervals. The sporting activities could be advertised at the local, regional, national, sub-regional and international levels. Even training, for regular water competitions on the lagoon could be of interest to some people. Water sports such as water polo, long and short distance swimming and yachting would be the envy of many.

Water hovers and light aircraft competitions are exceptional sports which could generate a lot of investment from foreign companies and local businesses. One may wonder how these sporting activities can go on when the lagoon is being used for commercial travel and hospitality purposes. The tributary of the two branches of the lagoon around Fadama (Ayalolo) and near the Christ Temple, near Abossey Okai, after the dredging, cleaning and the enlargement could serve such purposes.

Socio-cultural aspects

The sociocultural aspects of the lagoon are replete with legend. The Korle shrine is said to have a goddess at Gbese in Accra Central, and this reveals the spiritual occupant of the lagoon. Researchers could enquire into the spirituality of the lagoon. Legend has it that the goddess has been of great use in times of war, illness and

The Cheonggyecheon River in Seoul is almost like a narrow park that slithers through the city

50

GHANA BUSINESS & FINANCE

for other spiritual purposes. However, in the currently Christian and Islamic dominated era, little is heard about its present supernatural purposes.

Where from here

The Korle Lagoon has little, or no, research documents, revealing the lack of viable literature ready to support academic endeavours. The lagoon can be of much educational advantage when its full purpose has been researched and documented. This piece is to record the socioeconomic advantages of the river and lagoon. The oral records could be redocumented in line with high academic standards. The bacteriological content, microscopic life and pharmaceutical properties of the lagoon have not been fully researched. These must be studied and documented for further academic purposes. When completed, the results should be shared with all through various means. The findings and recommendations of the research could serve as a foundation for further research work in the near future.

The abovementioned activities cannot be achieved without proper care, initiative, cost-effective spending and legal support for their development.

The government should constitute a team of experts to work out a blueprint for the commencement of the KORDA activities immediately. The budgetary allocation must be sufficient for a calculated take-off. One suggests that funding for the agency could be raised from within the country. A government and private sector joint venture and partnership could be of great assistance for the practical implementation of this dream.

The writer is a lecturer at Regent University, Accra, Ghana

DECEMBER 2014

PERSPECTIVES

Pros and Cons of Organisational Leadership Styles

BY EBO BHAVNANI

There is no doubt that leadership plays a pivotal role in offering direction and purpose to a group of people or an organisation. That is why it is often said that leadership is cause, and the rest is effect. Leadership is considered the live wire of every organisation.

Leadership, when correctly and expertly applied, enables each employee to enjoy a feeling of strong commitment towards achieving organisational goals. Consequently, using a leadership style that matches the needs of an organisation improves employee morale and satisfaction, reduces staff turnover and ultimately maximises profits.

A

mong Among the varied definitions of leadership is a simplified version which describes leadership as “a process of influencing the activities of an individual or a group towards the attainment of set goals.” This “process of influencing” often emanates from the leader’s traits and behaviors which are frequently displayed in everyday interactions with the employees.

Many researchers and experts on leadership, including Kurt Lewin,

52

Ronald Lipitt and Ralph White, have identified a number of leadership styles. These include the authoritarian, democratic and laissez faire types of leadership. Over the years, other authorities in leadership have classified other forms of leadership, namely the situational, charismatic, paternalistic, transactional, transformational, pacesetting and coaching types, among others. Some of these types will be discussed, taking into consideration their pros and cons.

One of the most dominant types

GHANA BUSINESS & FINANCE

of leadership is the autocratic style, or what is termed the classic “do as I say” approach. Such a type is often referred to as authoritarian. This leader requires little input from employees, and he/she gives them less autonomy. Such a leader exerts rigid control over employees and relies on the threat of negative consequences to ensure compliance.

Michael Germano, in his article ‘Leadership Style and Organisational Impact,’ notes that autocratic leaders can damage an organisation irreparably when they force their ‘followers’ to

DECEMBER 2014

DECEMBER 2014

Charismatic leadership assumes the existence of persons with charisma to lead the organization. These leaders have immeasurable personal charm and vision to motivate their followers to execute the organization’s mission and vision. This leadership approach has traditionally been regarded as more valuable as it provides a fertile ground for creativity and innovation.

This leadership model has its own shortcomings. Once the leader is no more, the organisation can appear visionless and directionless if a good succession plan is not implemented effectively.

An interesting style often adopted by organizations is transactional leadership. Transactional leaders are always prepared to offer a reward in return for following them or buying into their vision. The reward could include a good performance review, salary raise, promotion, bigger responsibilities and a desired upgrade of duties. The problem with transactional leadership is that employees often find it difficult meeting the expectations of management for rewards. This could be demoralizing.

From the varied leadership styles discussed, it is reasonable to conclude that the best leaders are the ones that constantly adopt different leadership styles to achieve organizational goals.

Often linked to transactional leadership is the transformational type which seeks to change the leader’s followers dramatically.

Typically, transformational leaders also have charisma and are known for their ability to develop a vision and inspire others to follow them. It is argued that this leadership style is not effective in situations where followers do not have the skills or experience necessary to complete a task or when they lack the motivation to perform their duties. The difference between these two leadership types is that while transformational leaders use knowledge, expertise

and vision to transform people, transactional ones use tangible rewards to motivate employees. The followers of these leaders embrace their visions; and they continue to imbibe the visions long after the leaders have left the scene.

The paternalistic kind of leadership offers a more subtle form of managing people whereby leaders pay attention to the employees’ social and recreational needs in the decision-making process.

The leaders are more of servants who focus on the needs of their employees and try to consider the best interests of employees when making decisions.

They, however, retain control over all decisions. This leadership style is very effective in raising morale and gaining employee loyalty but does not empower employees to work independently.

Instead, it makes them dependent on the leaders.

The coaching style of leadership is comparable to the paternalistic approach. With this form of leadership, the manager sees his/her role as a guide or coach to the employee. Managers who adopt this style of leadership like to make their employees responsible for their own actions and permit them to demonstrate initiative, contribute ideas and make decisions. They offer encouragement, guidance and a pat on the back for doing well, and are not too concerned about how the job is done so long as the desired outcome is achieved. Unfortunately, the coaching style of leadership is not effective in crisis situations or with employees who do not recognize the need to improve.

From the varied leadership styles discussed, it is reasonable to conclude that the best leaders are the ones that constantly adopt different leadership styles to achieve organisational goals.

Perhaps, instead of concentrating on a single leadership style, leaders should vary their approach to suit any given situation. This requires the adoption of the “situational leadership” approach which suggests that the best leaders adopt different leadership styles to meet different situational needs to achieve maximum results.

The writer is the Head of Public Sector at Guaranty Trust Bank (Ghana) Ltd. He is a Chartered Marketer and an alumnus of Cambridge University and Leeds University Business School.

GHANA BUSINESS & FINANCE

53

PERSPECTIVES

execute strategies in a very narrow way based on a subjective idea of what success is. In Germano’s opinion, this style of leadership demonstrates no shared vision and little motivation. It eliminates the desired commitment, creativity and innovation from members of the staff, as they do not identify with the organization. This, thereby, creates a gap between the leader and the staff.

Furthermore, Tara Duggan, a project management professional, explains that autocratic leaders establish a clear distinction between subordinates and superiors. They make decisions without input from workers, which ultimately leads to low employee morale, increased employee absenteeism, decreased staff retention and poor results. Duggan, nonetheless, agrees that this style of leadership succeeds in crisis situations and in environments where quick decisions are needed from management to resolve emergencies and unexpected eventualities.

The opposite of the aforementioned style is democratic leadership which encourages employee input in decision-making. With this management style, everyone is involved in the decision-making process, with an emphasis on harmonious and collaborative interactions. With this type of leadership, communication flows in a two-way direction, consequently improving job satisfaction and productivity. Employees feel they are part of the process and are motivated to live up to the organization’s expectations. Due however, to the underlining assumptions that everyone has an equal stake in the decisionmaking process that leads to consensus, this leadership type is often slow even in taking the most mundane decisions.

More often than not, there is no clearcut direction and control, and it takes skilled and experienced management to achieve organizational goals.

The laissez-faire style of leadership, on its part, adopts a hands-off, laidback approach and allows employees to make decisions with very little guidance and interventions. The laissez-faire leaders delegate responsibilities to subordinates, trusting their abilities and competencies to deliver on set objectives and targets. This management approach could nonetheless, be interpreted by employees as lacking the needed seriousness because of the minimal supervision from management.

OUTLOOK

Justice on the take in the US

Bad money is seeping into United States (US) courtrooms, threatening judicial independence in its wake

BY CHRISTOPHER MORAFF

O

utside groups helped make the 2014 elections the most expensive midterm campaigns in U.S. history. But it was not just aspiring governors and legislators who benefited from the flood of dark money unleashed by the 2010 Citizens United vs. Federal Election Commission decision, which prohibited the government from restricting campaign contributions by nonprofit corporations and other independent groups.

Since 2011, special interest groups have significantly increased their targeting of judicial campaigns in the United States. Groups such as the Americans for Prosperity and the Center for Individual Rights — which are funded by conservative billionaires Charles and David Koch and exist largely, as Andy Kroll put it in Mother Jones, to “keep dark money in the dark” — have committed unprecedented sums to influence state judicial elections, including a number of key state supreme court retention races.

While overall spending declined from the last elections — in part due to the absence of contested races in the expensive states of Pennsylvania and Alabama — the 2014 electoral cycle broke several state spending records, according to the Brennan Center for Justice.

In Tennessee a record $2.4 million, mostly in television advertising, was funneled into three state Supreme Court retention races. Similarly, outside groups helped push fundraising for judicial candidates in North Carolina

54

to $5.2 million — more than double the previous record. This comes barely a year after the state’s Republicancontrolled legislature defeated a publicfinancing program designed to limit the influence of special interests on judicial elections.

Nearly all the outside spending was contributed free of disclosure

requirements, and a large percentage came from conservative groups based in Washington, D.C. Not a single outside group targeting state judicial elections this year was aligned with the Democratic Party, according to The Wall Street Journal.

The Republican State Leadership Committee (RSLC) purposely targeted judicial elections in several key states.

But its efforts were largely unsuccessful.

GHANA BUSINESS & FINANCE

In at least four states (including North Carolina) RSLC-backed candidates failed to unseat incumbent justices.

In Tennessee, voters retained three Supreme Court justices despite an RSLC-funded ad campaign that called the court “the most liberal place in the state.” Slate’s Mark Stern opined that conservatives’ costly failure is proof that American respect for the sacredness of the courts is too great for voters to be influenced by baseless attack adverts.

Even if his optimistic assessments are true, the rush to throw undisclosed money into state-level judicial races signals that a dangerous movement has been taking shape since the Citizens United ruling. And its potential to corrupt is not limited to the voting booth or to one political party. To make matters worse, last month the U.S. Supreme Court agreed to hear a First Amendment challenge to a Florida law that bars judicial candidates from personally soliciting campaign contributions.

Given the court’s track record of applying speech protections to the movement of money, the outcome does not bode well for judicial independence.

Mounting concern

Before the November 4 midterms, a number of prominent voices from across the political spectrum weighed in on the effects of the increasing flood of money into judicial elections. The editorial boards of The Washington Post and The New York Times raised alarms about the influence of unregulated dark money in judicial elections. Last month

DECEMBER 2014

Constitutional right

“As more national players seek to bully and buy the courts, our constitutional right to a fair day in court is in jeopardy,” warned Bert Brandenburg, the executive director of Justice at Stake, a nonpartisan coalition seeking

DECEMBER 2014

The study found that at least 6 percent of prison time, or an average of 2,000 additional years of incarceration, can be indirectly attributed to judicial elections.

However, as impartial arbiters of the law, judges should be free from direct accountability to those who may one day find themselves before them.

They should be dedicated instead to the conscientious application of the Constitution and of statutes adopted by elected representatives of the people. Judges who abuse that privilege should face impeachment, but leaving something so critical to the whims of the electorate is a dangerous experiment.

Our founders understood this, which is why they believed judges should be insulated from the political process and favored permanent appointments for jurists who remained in good behavior. It wasn’t until the populist Jacksonian reforms of the 1830s that voters began choosing judges. Those who believe in direct public accountability for judges would do well to consider that most citizens do not contribute to judicial campaigns. Rather, business interests

OUTLOOK Eric Holder, US Attorney General

John Glover Roberts, US Chief Justice

The Wall Street Journal noted that the rash of spending is “eroding traditions under which judges could avoid [the] ethically tricky process of stumping for votes.”

Norm Ornstein, a resident scholar at the American Enterprise Institute for Public Policy Research, has argued that unlimited campaign spending threatens to “undermine the whole idea of an independent judiciary” by making jurists indebted to parties with an invested interest in their decisions.

The intangible effects of highstakes campaigning on the judicial process are alarming. A recent report from the progressive American Constitution Society linked the negative ripple effects of ad spending with tough-on-crime jurisprudence.

The correlation was subtle, but direct: The more television adverts aired during state Supreme Court elections, the less likely justices are to vote in favor of criminal defendants. Citizens United exacerbated the influence of money on judicial decision-making.

The researchers found a measurable decrease in justices voting in favor of defendants in the 23 states that had bans on corporate or union independent expenditures prior to 2012.

to reduce special interest influences on U.S. courts.

The well-documented effect of Citizens United on judicial elections has reenergized a decades-long debate over whether judges should be elected at all.

Today 32 U.S. states hold competitive elections for at least some appellate and major trial court judges, and seven other states hold retention elections for sitting justices.

Ornstein calls judicial elections an “abomination.” He blames the increasing politicization of the judiciary on conservative activists such as James Bopp — who made dismantling even the most rudimentary campaign finance restrictions his life’s work and insists that judicial elections make sitting judges accountable to everyday citizens. These activists assume that judges should be directly accountable to citizens.

and lawyers account for nearly twothirds of contributions to state Supreme Court candidates. Average citizens, on the other hand, are most likely to suffer under the status quo.

In 2004, Gregory Huber and Sanford Gordon analyzed more than 20,000 criminal cases over a decade in Pennsylvania and found that judges imposed higher sentences on defendants in election years. The study found that at least 6 percent of prison time, or an average of 2,000 additional years of incarceration, can be indirectly attributed to judicial elections.

There are better ways than popular election to select jurists. The rest of the world knows this, which is why the U.S. remains an outlier in its reliance on judicial elections. The last thing judges should be thinking about in the minutes before sentencing a defendant is how the ruling could be portrayed on television the next time they are up for re-election. Since the Supreme Court shows no signs of stanching the flow of unrestricted money in electoral campaigns, it is time to start pressuring our state legislatures to heed the founders’ call and divorce the judiciary from the political process.

Christopher Moraff covers politics and policy for a number of media outlets, and is a regular columnist for PennLive. He is a recipient of a 2014 H.F. Guggenheim Fellowship for criminal justice reporting from John Jay College.

Source: Al Jazeera America

GHANA BUSINESS & FINANCE

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EVENTS

3RD Ghana Economic Outlook & Business Strategy Conference

The Ghana Business Outlook & Business Strategy (EOBS2015) Conference is the premier avenue that offers top government officials, policy and decision makers, business leaders and investors the platform to examine the way forward for the Ghanaian economy, share ideas, network together and seal transactions. The annual event aims to generate ideas and suggestions from government and stakeholders on the role that the export sector could play in the efforts to promote and sustain the growth of the economy. In attendance will be His Excellency John Dramani Mahama, President of the Republic of Ghana, Ministers and heads of state institutions, captains of industry, heads of bilateral and multilateral support agencies, foreign and local investors, leaders of civil society organisations, members of the diplomatic corps as well as various players in the economy and beyond.

EOBS2015 is under the theme “Diversifying Ghana`s Economy Through Sustainable Export Trade” and is organised by Africa Business Media (ABM), publishers of Ghana Business & Finance (GB&F) magazine and their partners.

Date: 21st January 2015 Venue: Best Western Premier Hotel, Accra Website: www.ghanaeconomicoutlook.com

The 19th Annual Offshore West Africa Conference and Exhibition

The annual Offshore West Africa conference and exhibition is the premier technical forum focused exclusively on West African offshore exploration and production, and attracting NOCs, IOCs and suppliers from all over the world. This 19th Offshore West Africa conference and exhibition will yet again provide a platform for technology exchange and new business development. Offshore West Africa is the region’s premier technical forum focused exclusively on West Africa’s offshore Oil and Gas market.

The conference will provide the latest technological innovations, solutions and lessons learned from leading industry professionals and will focus on the process of managing major projects with its inherent cost implications. Offshore West Africa Conference and Exhibition remains the leading source of information on new technology and operating expertise for this booming deep-water and subsea market. Sponsorship and exhibiting opportunities offer a great way to enhance the profile and awareness of your company. Whether you are well established in the region or seeking new business opportunities, we can tailor a unique sponsorship package to meet your needs.

Offshore West Africa, presented by Offshore Magazine and supported by Oil & Gas Journal, is the only conference and exhibition dedicated to the offshore oil & gas industry in the region. More than 1,500 offshore professionals and key decision makers will attend the three-day conference and exhibition.

Date: 20th-22nd January 2015 Venue: Eko Hotel & Suites, Lagos, Nigeria Website: www.offshorewestafrica.com/index.html

17th Annual Global Airfinance Conference

This summit is the most important event in aviation industry especially, Airfinance. This conference will draw the attention of the leading experts related to the aircraft financing. They will get a scope to share their knowledge and experience with the representatives of airlines, leasing companies, commercial banks, export credit agencies, private equity firms, investment banks, manufacturers, law firms and many other organizations.

Global Airfinance Conference Dublin will provide accurate and adequate information to the key industry players and Airline representatives. They will also get an opportunity to get familiar with the improvements which are taking place in the sector of aircraft financing by taking an active part in this conference.

Date: 20 - 22 January 2015 Venue: The Convention Centre Dublin, Dublin, Ireland Website: www.euromoneyseminars.com/global-airfinancedublin/details.html

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GHANA BUSINESS & FINANCE

The 17th Exhibition and Forum of CSTB

This Exhibition and Forum has long been recognized as the pre-eminent electronic media event of Russia and CIS countries. This year on year success can be directly attributed to the dynamic and foresighted nature of an organization that has ensured that the fast developing technologies and opportunities relevant to this industry, are readily absorbed and placed at the forefront of all aspects of the exposition planning. This has gained CSTB the acclaimed status of being the “window” from which to learn and see what will influence the suppliers, implementers and users in both the immediate and longer term future.

CSTB`s target Audience include ministries and agencies, regional administrations, telecommunication companies, telecom operators, IT companies, operators of multiservice networks, pay-TV operators, equipment manufacturers, distributors, dealers, system integrators broadcasters and content providers, television and radio broadcasting companies, internet providers, financial and investment companies and corporate customers.

Irrespective of whatever the trends and developments are, you can be assured that CSTB will be the place to see and learn what is new.

Date: 27th-29th January 2015 Venue: Crocus Exhibition Centre, Moscow, Russia Website: en.cstb.ru/main.php

World Economic Forum Annual Meeting 2015

This annual meeting programme of the World Economic Forum is line with the organization`s mission of improving the state of the fastpaced and interconnected world, where breakthrough technologies, demographic shifts and political transformations have far-reaching societal and economic consequences.

More than ever, leaders need to share insights and innovations on how best to navigate the future.The Annual Meeting in Davos-Klosters remains the foremost creative force for engaging the world’s top leaders in collaborative activities focused on shaping the global, regional and industry agendas.

Date: 21-24 January Venue: Davos-Klosters, Switzerland Website: www.weforum.org/events/ world-economic-forum-annualmeeting-2015

DECEMBER 2014

STATS & INDICES

Trading Results - GH Cedi as at Thursday November 27th, 2014 Share Code

Year High (GHS)

Total Shares Traded

Last Transaction Price (GHS)

AADS

0.52

0

0.53

ACI

0.06

0

0.03

AGA

37.00

0

37.00

ALW

0.06

0

0.04

Daily Interbank Forex Rates as at Friday 28th November, 2014 Currency

Pairs Code

Buying

Selling

U.S Dollar

USDGHS

3.1942

3.1967

Pound Sterling

GBPGHS

5.0341

5.0386

AYRTN

0.18

0

0.17

Swiss Franc

CHFGHS

3.3219

3.3214

BOPP

4.02

100

4.04

Australian Dollar

AUDGHS

2.7335

2.7380

CAL

1.05

724,000

1.05

CLYD

0.04

0

0.03

Canadian Dollar

CADGHS

2.8288

2.8307

CMLT

0.16

0

0.12

Danish Kroner

DKKGHS

0.5365

0.5369

CPC

0.02

0

0.02

Japanese Yen

JPYGHS

0.0271

0.0272

EBG

7.98

42,100

7.40

New Zealand Dollar

NZDGHS

2.5155

2.5203

EGL

2.50

0

1.61

ETI

0.43

1,000

0.30

Norwegian Kroner

NOKGHS

0.4635

0.4636

FML

7.55

0

5.00

Swedish Kroner

SEKGHS

0.4308

0.4311

GCB

5.69

129,500

5.46

S/African Rand

ZARGHS

0.2911

0.2912

GGBL

6.20

100

3.19

Euro

EURGHS 3.9924 3.9942

GLD

35.80

0

35.80

GOIL

1.00

2,400

0.99

Chinese Reminbi

CNYGHS

GSR

2.75

0

2.34

BCEAO

GHSXOF 164.23 164.30

GWEB

0.04

0

0.03

Dalasi

GHSGMD 13.48

13.49

HFC

1.60

0

1.35

Ouguiya

GHSMRO 91.62

91.69

MAC

4.50

0

4.50

MLC

0.39

0

0.25

Naira

GHSNGN 54.58

54.62

PBC

0.17

0

0.14

Leone

GHSSLL 1372.73 1373.81

PKL

0.06

0

0.06

WAUA

WAUGHS 0.1460 0.1460

PZC

0.79

0

0.38

SCB

20.62

30,380

20.64

SCB PREF

0.58

0

0.55

SIC

0.52

500

0.37

SOGEGH

1.17

0

0.92

SPL

0.04

0

0.03

SWL

0.04

0

0.04

0.5203

0.5207

Treasury Bill Rates as at Monday 24th November, 2014 to Friday 28th November, 2014

Period

Discount Rates Discount Rates

TBL

0.35

0

0.24

91 - Day

24.0280%

25.5636%

TLW

36.00

0

36.00

182 - Day

22.9998%

25.9884%

TOTAL

6.57

700

6.12

TRANSOL

0.03

0

0.03

1 - Yr Note

-%

22.5000%

UNIL

18.31

0

12.37

UTB

0.35

0

0.24

2 - Yr Fixed Rate Note

DECEMBER 2014

GHANA BUSINESS & FINANCE

57

COMMODITIES

Month ending Nov 2014

Wholesale Prices (GH¢)

Unit Weight Accra* Bawku Kumasi** Tamale Techiman Takoradi Dambai this month last month Avg% Change

Cassava(Fresh Tubers) Bag 91kg 40.00 N/A 25.25 70.00 36.00 67.50 32.00 45.13 44.63 1.10 Cassava (Gari)

Bag 68kg 100.00 135.00 164.50 116.00 69.75 133.25 96.00 116.36 117.97 -1.37

Cowpea (White)

Bag 109kg 400.00 173.25 233.50 204.00 183.50 345.75 296.00 262.29 284.74 -7.89

Groundnut (shelled)

Bag 82kg 410.00 435.00 327.00 278.00 307.00 361.25 356.00 353.46 356.69 -0.90

Maize (white, grain)

Bag

Millet (grain)

Bag 93kg 209.25 151.75 160.25 146.50 165.75 180.00 176.00 169.93 159.14

100kg 119.00 83.00

119.00 85.00

83.75

123.75

96.00

101.36

101.46

-0.10 6.78

Rice (imported-Uncle Sam) Bag 50kg 200.00 N/A 248.25 N/A 286.75 273.50 N/A 252.13 250.25 0.75 Rice (local-white) Soya Beans Tomato (cooking) Wheat (Grain)

Bag 100kg 405.00 255.00 268.25 285.00 259.00 179.50 236.00 269.68 266.46

1.21

Bag 109kg 400.00 215.25 217.00 176.00 190.00 310.00 196.00 243.46 257.23 -5.35 Crate 72kg 126.25 105.00 117.00 110.00 87.50 247.00 150.00 134.68 168.31 -19.98 Bag 50kg 150.00 195.00 307.75 135.50 262.00 245.00 N/A 215.88 210.57 2.52

Yam (pona-medium) 100 tubers 250kg 300.00 N/A 196.75 200.00 281.50 387.50 200.00 260.96 247.40

5.48

NB: * Accra market is Agbogbloshie ** Kumasi is the Central market.

To receive prices update and agric tips on your phone dial 1900 or visit www.esoko.com.

Maize

The average price of 100kg bag of maize in the month of November dropped by 0.10 percentage points to close the month at GHS 101.36 from the previous months GHS 101.46. A bag sold averagely on the Bawku market for GHS 83.00 being the lowest and on the Takoradi market for GHS 123.23 being the highest for the month. The price for the commodity seem to be fairly stable on the various markets and this is evident in the slight drop in the price of the maize on the markets.

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Soya

In the month November, the average price of 109kg bag of soya beans sold between GHS 176.00 in Tamale and GHS 400.00 in Accra with Tamale being the lowest and Accra the highest.

The average price of the commodity fell by 5.35 percent to close the month at GHS 243.46 from the previous months GHS 257.23.

GHANA BUSINESS & FINANCE

Tomato

An average price of crate of tomato for the month of November dipped by 19.98 percent to close at GHS 134.00 from the previous months price of GHS 168.31. The commodity sold between GHS 87.50 in Techiman and GHS 247.00 in Takoradi. The highest was recorded in Takoradi and the lowest in Techiman. Enough of the commodity is still been traded on markets.

DECEMBER 2014