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MAY 2014 / ISSUE 036 GH¢10.00
The five fabulousorate of corp a Ghan
Blazing an uncommon trail - Ghana’s only female actuary takes post
USA...........................................$5.00 UNITED KINGDOM......................£3.00 EUROPE.....................................€3.50
AUSTRALIA..............................AS5.00 CFA ZONE...........................CFA 2,000 OTHER AFRICAN COUNTRIES..US$4.00
THE FIRST BUSINESS READ IN GHANA
Follow us online at www.ghanabizfinance.com
24... Real Estate
GB&F
With houses being built and potential homeowners in search of cash to buy, the mortgage industry would have to step in. Sadly, Ghana does not really have one.
General Manager Josiah Spio-Garbrah kojosegu@yahoo.co.uk Editor Eric Kwame Amesimeku kwame.eric@gmail.com Deputy Editor S. Kwame Appiah
27... Infrastructure As a developing country, Ghana has big infrastructure needs. In public-private partnerships, has it found the ultimate solution?
Columnists Jerry Halm Yvonne MacCarthy Julius Caesar-Tokoli Contributors Martin Luther King Oppong Baah Anthony Sedzro Georgina Adjei Ayuureyisiya Kapini Atafori Art-Graphics Manager, Design Benjamin Tetteh Design & Production Daniel Sackey Yobo Circulation & Subscription Jeffrey Dapaah 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 ghanabusinessfinance@gmail.com Brand Advisor
Dmax Studios in Malta, EU. (www.dmax.tv) Credits GNA myjoyonline Daily Graphic Bloomberg radioxyzonline.com citifmonline Mergermarket Group Corporate Council on Africa ghanabusinessnews.com
Ghana Business & Finance magazine is published by
32... In focus MAY 2014 / ISSUE 036 Front Cover: Boatemaa Kakra Duffuor-Nyarko Executive Director - StarLife Assurance
Contents 6...
Briefs The people, companies and events that have shaped business in Ghana and Africa this past month.
15... Economy Ghana’s economy continues to face challenges on all fronts.
35... Agriculture
The Economic Partnership Agreement is yet to be ratified by West African countries. While it remains on hold, countries like Ghana may want to reflect on exactly how sectors such as Agriculture would manage under it.
37... Energy 18... Cover In this issue we feature on our cover a lady whose persistence and determination to succeed in a field where most have shunned, has earned her a quick rise up on the corporate ladder. Meet Kakra Duffuor Nyarko, Chief Actuary of StarLife Assurance Ltd.
The current administration has set itself a target of increasing Ghana’s energy capacity to 5000MW, up from 2,845 MW. With every new crisis however, citizens grow more skeptical of this ambition.
22... Banking and Finance Customers accessing financial services will now have to pay VAT on transactions. Can this be helpful to an industry that has notoriously low patronage?
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.
MAY 2014
Women have long been pillars of Ghanaian entrepreneurship. We look at five of the current generation who are building businesses that reflect their own personalities and the capabilities of their gender and generation.
Agriculture: Page 35 linkedin.com/GhanaBusiness&Finance facebook.com/GBandF @ghana_business
GHANA BUSINESS & FINANCE
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Letters to the Editor send your letters to the editor at kwame.eric@gmail.com
40... Insurance The insurance sector will soon have what every business must dream of – a government mandate to back it. But is it ready for the increased patronage?
42... Small Business SME banking in Ghana hardly deserves the name but at least one provider thinks there could be a better way.
44... Conferences and events A roundup of upcoming events around that the globe that you should keep an eye on.
45... Executive Selection
New opportunities and challenges in the upper echelons of corporate Ghana.
46... Global Outlook
With more African countries discovering the fiscal boost of oil dollars, aid from the West is no longer the king it once was. What does this mean for relations between the West and Africa and how will the new petro-nations handle their new “independence”?
Global Outlook: Page 46
48... Management To be able to convince your customers that you really care, you must first demonstrate that to your own employees.
50... Failure in business is attempting
to solve problems of today with the solutions of yesterday. The world of business has changed and so must you.
52... When is the salesman not a salesman? When he is feeling insecure and desperate to impress, perhaps?
Iain J. Martin’s insightful and fun guide on how to be a great leader, “Looking down on leaders,” is a must-read for executives.
57... Companies and Markets Forex, stocks figures.
and
trading
58... Commodities Latest commodity prices in Ghana as compiled by Esoko.
54... Tool kit Samsung’s new flagship, recently launched in Ghana could be the ultimate sidekick for the business professional.
Management : Page 52
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56... Recommended Reading
GHANA BUSINESS & FINANCE
Toolkit: Page 54
MAY 2014
EDITOR’S SUITE
Economy buckles under pressure, but labour demands more Ghana’s economy is in dire straits and in spite of assurances from the government to the effect that the country has a solid economic foundation, economists have warned of continued deterioration if there is no radical shift in policy. The signs of the strains on the economy are all too evident from country’s worsening economic indices - a 14.6 percent fall in the national currency this year; a budget deficit that stands at 10.8 percent of Gross Domestic Product; and a four-year high inflation figure of 14.5 percent as at March, 2014. At the core of the current economic difficulties is the ballooning wage bill. The 2010 Population and Housing Census indicates that there are approximately 740,000 workers in the public sector. On this less-than one percent of the nation’s overall population, the government spends over 70 percent of its revenue on salaries and wages. This would not have been a problem if there were enough resources to take care of the other pressing needs of the nation by way of health facilities, roads, educational infrastructure, etc. The lack of adequate resources to undertake developmental projects in the country as a result of the squeeze on the national purse means that government has to embark on a borrowing spree which has contributed to the high fiscal deficit. As a result of this, some development partners have held back budgetary support for the nation. The European Union, for instance, withheld around 64 million Euros in budgetary support in the 2013 fiscal year. And even for 2014, it is yet to disburse around 120 million Euros to support the country’s economy. The reason is simple - the body does not have faith in the country’s fiscal stabilization plan and its ability to tame the runaway deficit.
MAY 2014
Addressing Parliament recently, Seth Terkper, Minister of Finance and Economic Planning, announced plans to freeze any public sector wage increases this year as a way of managing the increasing debt burden. But the announcement has already elicited a strong response from organised labour with the Trade Unions Congress (TUC), the country’s main labour union, indicating its readiness to oppose any such measure from government. The TUC might have a point in fighting against any wage freeze especially as government’s policies in relation to the removal of subsidies are having biting effects on the lives of the general populace. The country has witnessed near-constant monthly increments in prices of fuel and other utilities. Meanwhile, workers have had no measures to cushion them from the effects of these increases. Inasmuch as government might have a genuine reason in implementing this measure, it also has to take into consideration the well-being of the citizenry. Such austere measures might benefit the nation in the long run, but have we not had enough of these already?
Eric Kwame Amesimeku Editor Tel: 0244 985 098 Email: kwame.eric@gmail.com
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BRIEFS
No end in sight for Ghana’s energy challenges
Ghanaian consumers and businesses may have to brace themselves for more load-shedding exercises in the future, according to the Chief Executive Officer of the Volta River Authority, Kirk Koffi. If challenges with gas supply from Nigeria persist, he said, there could be crises up to 2015 or 2016. Apart from that, the VRA has some of its machines down, he revealed at a business event in Accra. Mr Koffi said Nigeria is also facing similar problems so it’s unlikely it would be able to supply the country the needed amount of gas to stave off the occasional outages. Nigeria has recently appealed to Congo for help to deal with its own power problems. Ghana however, will continue to rely on its neighbour for gas. Sam Fletcher, head of communications at the VRA told newsmen that while the VRA had set out a ten-year plan to improve power supply, gas from Nigeria remained the cheapest option available to it. Given that Nigeria has started its Trans-Saharan project to enable it sell gas to Europe, supply from Nigeria, currently estimated at four percent, is likelier to get worse than better.
In the absence of stable supply of gas, the VRA has to turn to fuel-powered plants, which requires it to import fuel to the tune of USd 50 million a month. The energy sector, he said, cannot afford this and the VRA, which is the primary power generating body in the country, is constantly in debt as a result of this. Within the power ecosystem that includes players such as the Electricity Company of Ghana (ECG) and the Ghana Grid Company (GRIDCo), rising costs and poor revenue management mean that companies are often hobbled by debt. The ECG for example, has revealed that GRIDco currently owes it about GHs160 million. Demand for power is also growing. Last year, it grew by twelve percent, an increase on the annual seven to nine percent that the nation has been used to. To deal with this, government is negotiating with China to set up a clean coal plant in the country, a cheaper option than fuel and gas and would see tariffs reduced. Meanwhile, the authority has announced that work is ongoing at the Aboadze Thermal Plant that was shut down in 2013. Mr. Fletcher said that “we have done some work on the two gas turbines and the other ones that were broken down obviously have to be worked on. We are in the process of repowering the other two gas turbines and part of the steam turbines to be able to generate about 70 megawatts of power from it.”
World Bank comes down for EPAs The World Bank has stated its position in the ongoing debate over the Economic Partnership Agreement which has been proposed by the European Union to guide its trade relationship with West African countries. The bank is predicting a major boost for West African exports if the agreement is signed. Contrary to fears expressed by many, especially from civil society groups, that the EPAs would kill the manufacturing sector in the sub-region, the World Bank says that the sector could see a major boost. Chief Economist of the World Bank’s Africa Region, Francisco Ferreira, told a press briefing in Accra that the declining manufacturing sector could find a lifeline in the controversial free trade agreement. “I do think the EPA could help improve the manufacturing exports in the region. When we talk about the manufacturing decline in GDP, it is a share. Manufacturing has continued to grow but it is growing more slowly than other sectors. Particularly it is growing more slowly than other sectors and natural sources” he said. Under the EPA, Europe and West Africa would remove a substantial number of trade restrictions between the two
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GHANA BUSINESS & FINANCE
regions. In West Africa, about eighty percent of locally produced products would no longer be protected and competitors from Europe would be able to access the markets, tariff free. Even before the agreement comes into effect, Germany, the biggest EU economy, has named Ghana as one of its top export destinations for 2014, citing its above-average growth and a stable business environment. “Ghana is characterized by an above-average growth, a positive development in the core sectors of the German middle class and a stable business environment. Great opportunities also open up for mechanical engineering,” State Secretary for Economic Affairs Stefan Kapferer said in an April release that listed five other countries for increased export attention from Germany in 2014. The EPA faces considerable opposition from local activists and at Conference of Heads of State and Government in May, the Economic Community of West African States, deferred the ratification of the agreement at the instigation of Nigeria, Africa’s largest economy, which tabled its concerns. ECOWAS’ current chairman, President John Mahama of Ghana, has declared that he would seek an agreement that is beneficial to the sub-region while Ghana has long maintained, despite initialing an interim agreement in 2007, that it would not sign an agreement unless in tandem with all the countries in the ECOWAS block.
MAY 2014
BRIEFS
Ghana looking to earn big from tourism Ghana is set to earn about USD 8.3 billion from tourism by 2027 after topping USD 1.7 billion in earnings in 2012, when an estimated 993,600 visited the country. It is estimated that by 2027, some 4.3 million visitors would be visiting the country. Tourism, Culture and Creative Arts Minister, Elizabeth OfosuAdjare announced this at the launch of “Explore Ghana,” an initiative to encourage Ghanaians to visit the country’s many attractive sites. Ghana Tourist Authority, Graphic Communications Limited, Ghana Broadcasting Corporation (GBC), Voltic Mineral Water and others are partnering with the ministry in the initiative.
The ministry is hoping that local tourism could provide a vital economic boost for rural communities where such sites are located through sales of arts and craft items, provision of hospitality services, tour guiding services and others. To facilitate this, the ministry is working with Municipal and District Assemblies and other ministries to reconstruct roads leading to some of the potential attractions. One of such roads is the Fulfuso-Damango road in the Northern Region which is being upgraded to a first class asphaltic surface road to link the Northern and Upper West Regions through Damango for the benefit of people travelling to the Mole National Park. Another is the Eastern Corridor Road to facilitate travel to the mid Volta Region where Tafi Atome Monkey Sanctuary and the Tagbo Waterfalls are.
Lufthansa passengers to now fly Airbus A330-300
Customers of Lufthansa German Airlines will now have the pleasure of flying on the Airbus A330-300 that the airline has introduced on its Accra-Frankfurt route. The new aircraft has double the capacity of the previous aircraft – a Boeing Business Jet – which the company says demonstrates its commitment to and confidence in the country. The plane has a three-class configuration with eight seats in First, forty-eight in Business and one hundred and ninety-one in Economy Class. Lufthansa has been operating in Ghana since 1967, when Accra served as a stopover for flights to Johannesburg in South Africa. In 1975, flights were increased from two to four. Currently, a plane leaves Accra to Frankfurt five times a week, from where passengers can find links to locations all over Europe and beyond. In addition, travellers from Accra would also now have the chance to fly directly to Los Angeles on Lufthansa twice a week.
MAY 2014
The changes are part of an general upgrading of Lufthansa’s global operation, which include six new long-haul flights serving passengers in Asia and the Americas and two new Airbus A380 for its Frankfurt-New York route, Beijing and San Francisco. Overall, Lufthansa will now be operating a total of fourteen A380 airliners. Apart from new aircraft, travellers on Lufthansa will also have the benefits of an enhanced inflight service that the airline says will be reminiscent of a “top restaurant”. In addition, customers will have much greater choice in terms of in-flight entertainment. There will be twice as many movies to choose from, including some of the latest blockbusters and popular classics in eight languages. Television has also been improved, with over two hundred different offerings now available to travellers. For passengers from Accra, there is some especially warm news. New on the in-flight menu are Ghanaian dishes such as jollof rice and kelewele, which means that they can feel at home right until they step off the plain.
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BOG holds policy rate, increases bank reserve requirement The Bank of Ghana maintained its policy rate at 18.0 percent, following a 200 basis point adjustment in a bid to halt the slide of the cedi. The Governor of the bank and Chairman of the Monetary Policy Committee, Henry Kofi Wampah, announced this at its monthly briefing. “The committee is of the view that the impacts from the recent monetary policies are still working through the system and so it has decided to maintain the policy rate at 18 per cent,” he said. “In assessing the outlook for inflation, the Committee noted that inflationary pressures have heightened, driven by periodic increases in fuel and utility prices, currency depreciation and supply-demand gaps in the general economy,” he added. Ghana’s budget deficit stood at 10.8 percent in 2013 and its currency, the Cedi, slid around 20 percent last year and has lost around 10 percent since January. Inflation was running at 14 percent in February when the Bank raised rates by 200 points. Dr Wampah said at the MPC briefing that the bank had revised the 2014 target to around 12 percent, above the initial target of 9.5 percent (plus or minus 2 percent), target set in the government’s annual budget in November. Dr Wampah insisted that strict adherence to 2014 budgetary estimates is critical for macroeconomic stability. “We still believe that the major obstacle to bringing down the fiscal deficit is the large public sector wage bill and how the government deals with the wage bill,” he said. The bank also raised the minimum cash reserve requirement for commercial banks by two points to 11 percent, a move he explained was intended to be a temporary measure to curb liquidity and tackle inflation. This is in addition to the string of foreign exchange controls introduced by the central bank in February this year to halt the depreciation of the cedi, resulting from chronic trade and current account imbalances. Monetary aggregates show increased liquidity, reflected in higher currency in circulation and demand deposits, with
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IMF worried about African economies’ exposure to global shocks
Dr. Paul Wampah (Governor, Bank of Ghana)
the pace of growth in private sector credit steady at an annual 33.0 percent at the end of February. The ratio of nonperforming loans in the banking sector eased to 12.7 percent in February from 13.5 percent in February 2013, while money market rates have trended up with 1-year notes up to 22.5 percent in February from 17 percent in December, reflecting the higher policy rate. Ghana is struggling to curb inflation that’s surged to a four-year high, fueled by a currency that lost a fifth of its value against the dollar last year. Policy makers raised the key rate by 200 basis points on Feb. 6, a day after introducing limits on the use of dollars in the economy. Despite this, Fitch Ratings lowered Ghana’s debt outlook to negative from stable in March, five months after downgrading the rating by one level to B. “Ghana’s large budget deficit is adversely impacting economic stability, with the current account deficit and inflation firmly in double digits,” the ratings agency said in a statement. Standard & Poor’s and Moody’s Investors Service also lowered the nation’s debt outlook to negative in December. Dr Wampah said the findings of Fitch which led to the downgrade, did not reflect the true state of the economy. The rating agency, he said, based its assessment of the Ghanaian economy on long-term as against short and medium terms which had more positive prospects for the economy.
GHANA BUSINESS & FINANCE
The International Monetary Fund (IMF) has warned that African countries including Ghana are vulnerable to global financial shocks due to their over-reliance on foreign investors. The warning comes as frontier markets in Africa such as Ghana, Nigeria and Kenya fret about the side effects of tighter monetary policies in the US. The Resident Representative of the IMF in Ghana, Samir Jahjah, who issued the warning at a meeting with officials of the Bank of Ghana and other senior government officials in Accra said managing capital flows had become “a bigger issue than [it] has ever been” for sub-Saharan states. He said countries such as Ghana are becoming vulnerable to financial shocks as they rely more on foreign investors who can pull out their capital at short notice if they feel the economic situation is deteriorating. In 2012, Ghana attracted high levels of foreign direct investment of about eight per cent of GDP, which was underpinned by the commencement of commercial production oil in 2011. In August 2013, Ghana sold a bond of US$1 billion with a 10-year maturity potential at a yield of eight per cent. The yield was higher and the excess bids were lower than those in other African countries that issued Eurobonds earlier in the year, perhaps partly reflecting the deteriorating financial conditions. Ghana’s first 10-year Eurobond, which was issued in 2007, was four times oversubscribed but yielded as little as 4.5 per cent in April 2013. The IMF is warning that African countries should anticipate “continuing volatility and increasing funding costs” as advanced economies’ central banks gradually move away from their unprecedented accommodative policies.
MAY 2014
Again, higher global interest rates are expected to increase the debt-servicing burden, while a longer-lasting loss of global appetite for “frontier market” debt could create significant challenges for the country. African countries have benefited for the past three years from investors’ hunger for yield due to ultra-loose monetary policies in the US, Japan and Europe. Although portfolio flows are supported by strong growth prospects, the fiscal developments shows a deteriorating economic and current account deficit positions of the country and global push factors, which caused emerging market bond turmoil in mid-2013. High domestic interest rates have sustained the interest of foreigners in the medium-term domestic market; about one-third of domestic debt is held by foreigners. African governments, including Ghana, have raised a record USD 8billion in global sovereign bonds – including from several debuts – this year, up from just USD 1 billion a decade ago. In the past, countries in Africa relied heavily on aid from donor countries to finance their needs. Since 2010, however, easy global financial conditions, combined with sustained high growth, have led to a significant increase in private capital inflows.
Producer price continues upward trend Ghana’s annual producer price inflation rose sharply for a second month in February to 27.1 percent year-on-year from 23.3 percent in January, due mainly to utility price hikes and the depreciation of the cedi currency. The producer price inflation has nearly doubled over the two months from 15.3 in December. In her monthly press briefing, Government Statistician Philomena Nyarko said “the utilities sector recorded the largest increase of 55.7 percent, followed by manufacturing at 27.2 oct”. She said that producer prices increased by 2.9 percent month-on-month, marking a slowdown from a 7.2 percent monthly rise in January. Ghana has posted rapid economic growth after starting offshore oil production in 2010, but the IMF estimated growth slowed to 5.5 percent last year, below the government’s estimate of 7.4 percent. The cedi has depreciated around 12 percent so far this year on strong dollar demand by local firms and trading companies’ import operations. With interest rates running high, the government cancelled a $114 million 5-year domestic bond this month and put on hold plans to issue a $1 billion Eurobond. The producer price inflation is watched as an advance indicator of Ghana’s consumer price inflation, which rose to a fresh three-year high of 14.0 percent in February.
Ghana’s economy grew 7 percent in 2013 Ghana’s Gross Domestic Product (GDP) expanded by 7.1 percent in 2013, according to the latest figures released by the Ghana Statistical Service. This figure fell short of government’s target of 8 percent. Oil GDP for 2013 was at GHs 93.4625 billion, up from 2012’s Ghs 74.959 billion, while non-oil GDP for 2013 was at Ghs 89.545billion, increasing from the Ghs 1.6269 billion recorded in 2012. Per Capita GDP for 2013 is at GHS 3,529.6 (USD 1,799.39). The greatest growth was recorded in the services sector, which grew by 8.9 percent. Industry recorded the second highest expansion of 5.2 percent on 2012 figures. Agriculture’s decline continued, with a percent decrease from 2012 to 22 in 2013, comparing poorly with services which increased its share of GDP from 48.4 percent to 49.5 percent. Industry’s contribution now stands at 28.57 percent. Non-oil GDP growth recorded was 8.1 percent. Year-on-year, agriculture showed strong growth in fishing (9.6 percent); crops and cocoa, (6.0 percent); and livestock, (5.2 percent) in the fourth quarter. Forestry and logging however contributed -25.6percent to the sector. In services, the fourth quarter showed growth of 18.3 percent in financial and insurance activities, 12.8 percent in information and Communication and 11.1 percent, in transport & storage and 10.8 percent in public administration.
MAY 2014
Industry had electricity growing by 16.3 percent, construction by 5.3 percent and while mining and quarrying, including crude oil production, by 1.3 percent. However manufacturing and water subsectors contributed negative growth rates of 14.7percent and 0.8percent respectively to the sector. GDP growth figures for the third quarter of 2013 were revised from a provisional figure of 0.3 percent to 4.9 percent. Government Statistician, Philomena Nyarko explained that the huge deviation was a result of more data being received between the two announcements. “We received improved data from the data collection sources including the Ministry of Agriculture, fisheries commission, forestry commission, minerals commission among others,” she said. Dr Nyarko indicated the data received from those agencies initially were not complete. According to her, “some districts and regions had not sent their data and so after the release we had to follow up”.
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BRIEFS
Further, “given the trend toward deeper integration with global financial markets, sub-Saharan African frontier markets are likely to become increasingly vulnerable to global financial shocks,” Mr Jahjah added.
BRIEFS
Local content legislation ready
Zimbabwe’s U.S coins deal collapses
The law on local content in Ghana’s oil and gas industry has come into effect. The Petroleum Regulation on Local Content and Participation was approved by parliament last year after lengthy debate, and is intended to boost local capacity and participation in the burgeoning sector. Ghana is keen to ensure that the oil and gas sector employs more Ghanaians and does not become the typical enclave industry that extractives usually become. As is the case in many resource-rich countries, the country is faced with the faced with the challenges in ensuring the gains from its 2007 discovery of the roughly 100,000 barrel per day (bpd) Jubilee field translate into domestic jobs and spending. Under the new law, local businesses will be given first preference in bids for petroleum licenses, while Ghanaian companies must have at least a 5 percent stake in every contract awarded to an international investor. The government has said it is aiming to achieve 90 percent local participation by 2020, an ambitious target that will require significant investment in human resources and local capacity in the short and medium term. Many stakeholders in the industry however view a gradual implementation of local content as the best way forward. Ken Keag, Vice President and Country Manager for Kosmos Energy, operator of the Jubilee Field, has said that “oil field service firms will be more willing to establish a presence on the ground once additional exploration activity yields new commercial discoveries along with a longer-term continuum of exploration, appraisal, and development and production activity.” Sanmi Longe, Country Manager of local firm International Energy Services, also thinks that the new regulations need to be implemented in phases and should be based on capacitybuilding efforts already in place. According to Mr Longe, the industry can build local capacity in a few ways. The first is for international companies to subcontract smaller jobs to domestic companies. The second is for specialist local firms to pool their resources and join forces when applying for a big job. At the moment, however, there is a tendency for local start-ups to operate alone, he said. Domestic businesses in the sector are typically service providers, sometimes operating in partnership with foreign firms. A number of Ghanaian companies are already engaged as sub-contractors in a host of activities, including construction and site preparation work, logistics, engineering, geotechnical investigation, topographic surveys, environmental studies and security services. In November of last year, Nutley Adlerian, the Executive Director of the Ghana Oil and Gas Service Providers Association, told local media they had more than 60 members providing jobs for more than 12,000 people.
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Robert Mugabe (President of Zimbabwe)
Zimbabwe’s plans to import coins from the United States to alleviate the shortage of coins for small denomination change has collapsed, meaning the country will continue to depend on South African Rand coins in a predominantly US dollar economy. A Ministry of Finance senior official, Eria Hamandishe, said the plan came off the rails because of Zimbabwe’s sour relations with the US. The US imposed economic sanctions against Zimbabwe through the Zimbabwe Democracy and Economic Recovery Act of 2001, restricting access to financing, debt relief and rescheduling, forcing President Robert Mugabe’s government to operate on a cash only basis. The sanctions, together with those imposed by the European Union, resulted in the country’s economy sliding into an unprecedented economic crisis, characterised by hyperinflation, which eventually forced Zimbabwe to abandon its own currency in 2009 in favour of a multi-currency regime anchored around the US dollar. Use of the multiple currencies has had its own challenges, including shortages of small denomination coins for change in transactions. Mr. Hamandishe indicated that delegations from Zimbabwe had over the past three years travelled to America in the hope that the coins deal would materialise. On average, coins make up 13 percent of a nation’s currency and this is usually about 10 percent of Gross Domestic Product (GDP), according to experts. At Zimbabwe’s current GDP of above USD 10,8 billion, the value of circulating coins should be at USD 180 million. Zimbabwe has been saddled with change problems since the introduction of multi-currencies in February 2009. Retailers had been offering consumers credit notes, tokens, bubble gums or sweets to settle small change. Mr Hamandishe said with increased circulation of coins from South Africa, the availability of change in small denominations had improved. “Had the situation not improved, the other option would have been to mint our own coins,” he said.
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MAY 2014
BRIEFS
Vodacom and MTN to buy “unsustainable” Nashua’s subscribers South Africa’s Vodacom Group Ltd. (VOD) and MTN Group Ltd. (MTN) will buy mobile-phone subscribers from Nashua Mobile (Pty) Ltd. USD 215 million after the service provider deemed its business model unsustainable. The country’s biggest wireless operators will take on customers who signed up to their networks and services through Nashua Mobile, its Johannesburg-based owner Reunert Ltd. (RLO) said in a statement. Nashua finds South African mobile-phone users packages to suit them from the nation’s network operators. “The boards of Reunert and Nashua Mobile were required to consider the long-term prospects for Nashua Mobile” after a service-provider agreement with Vodacom and incentive deal with MTN expired, Reunert said. “After careful consideration, the boards concluded that it is unlikely that this business would generate acceptable returns.”
Domestic voice revenue for South Africa’s largest phone companies is being squeezed after the country’s communications regulator cut the fees mobile carriers pay competitors to access their networks. Nashua Mobile, which sells products for South Africa’s wireless operators, has more than 897,000 contract subscribers and about 700 employees, according to Reunert. Reunert’s shares have declined 1.9 percent this year to 67.22 rand a share, while Vodacom, which has the largest number of South African mobile-phone customers, has gained 3.4 percent to 137.50 rand through April 11’s close. Nashua Mobile hasn’t agreed a deal with closely held Cell C Pty Ltd. for South Africa’s third-biggest mobile subscriber base and is seeking alternatives, according to Reunert.
Rebased Nigeria poised for renewed investor attention Investors are expected to pay Africa’s newly crowned largest economy, Nigeria, closer attention on the back of the rebasing of its economy which saw its stated Gross Domestic Product increase by nearly double. According to the revised figures, the size of the Nigerian economy outstripped that of South Africa by nearly USD 200 billion, with an estimated size of USD 509.9 billion for 2013. The rebasing, first since 1990 for the country, gives greater weight to such fast growing sectors such as telecoms, music and the local film industry, Nollywood.
an annual rate of about five percent between 2005 and 2008-9 and has struggled to go beyond 3.5 percent since.
With 170 million people, Nigeria is about three times the size of South Africa but its economy has long lagged behind South Africa. Despite widespread corruption, poor governance, rampant oil theft and a raging Islamist insurgency in the north, Nigeria has enjoyed high rates of growth, averaging 6.8 percent from 2005 to 2013. South Africa on the other hand, grew at
Analysts are indeed cautioning against misconstruing the new figures, pointing out that South Africa is still ahead of Nigeria in terms of GDP per capita, infrastructure and governance. Despite its vast oil wealth, the last available World Bank figures from 2010 indicated that a staggering 84.5 percent of Nigeria’s 170 million people lived on less than US$2 a day.
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The figures have brought renewed interest in the oil producing giant with investors keen to participate in the high-growth areas of the economy that have been identified. Francisco Ferreira, Chief Economist (Africa Region) of the World Bank, believes that the exercise would not only attract investment into high performing sectors but would also focus investor interest in areas of potential that might be performing poorly due to lack of investment. While the rebasing itself is not an indication of significant change, it will improve the country’s image and credit rating and more importantly, signal to investors that the economy is ready for even greater commitments.
GHANA BUSINESS & FINANCE
MAY 2014
Sowah out; Quist in at Airtel
Airtel Ghana announced that its Chief Executive Officer, Philip Sowah, will be leaving the company, to be replaced by Lucy Quist, currently Director of Business Solutions at rival telecom provider, Vodafone. Mr Sowah was Airtel Ghana’s first CEO, having been poached from One Touch, the mobile division of Ghana Telecom, which has since been acquired and rebranded as Vodafone Ghana. It is not immediately clear which role Mr Sowah would take on next but it is thought that he would be exploring something outside the country, even though Airtel has asked him to play a governance role in its Ghana CSR Foundation. Ms Quist will be the second Ghanaian and the third woman to head a telecommunications company in the country. After successful stints at the Ford Motor Company and the Royal Bank of Scotland, she joined Millicom where she worked as Head of Business Development for Africa and later as Chief Marketing Officer in the Democratic Republic of Congo. She joined Vodafone Ghana in 2011 as Head of Strategy & Planning and Managing Director of Vodafone’s Wholesale Business.
New helmswoman at Tigo Ghana
Millicom announced the appointment of Roshi Motman of the Kinnevik Group as the new General Manager of Tigo Ghana. Ms Motman has previously served in various management roles at Tele2 and at Modern Times Group, parent company of TV channel Viasat. She studied Electrical Engineering and Business Development at Chalmers University in Göteborg, Sweden. Ms Motman says she is looking “forward to joining the team in Accra to help make Tigo an even stronger brand that offers attractive digital services to Ghana’s consumers”. She replaces Adil El Youssefi who is off to join Airtel Kenya as Managing Director.
Gayheart makes a move
Gayheart Mensah is joining Vodafone Ghana to take up the position of Head of External Affairs. Vodafone said Mr Mensah will be responsible for regulatory affairs, business continuity, corporate security and the anti-bribery and compliance agenda of Vodafone Ghana. Mr Mensah was until his appointment, External Affairs and Communications Manager at Tullow Oil Plc. He has previously been Communications Manager for Barclays Bank Ghana and Unilever Ghana, following a career in journalism that saw him in various roles at the Ghana Broadcasting Corporation, the Graphic MAY 2014
Communications Group and the New Times Corporation. He holds a Masters in Business Administration from the Paris School of Graduate Management and has post-graduate diplomas in Marketing and Organisation Development.
Aubyn changes sides
Tony Aubyn, Chief Executive Officer of mining interest group, Chamber of Mines, replaced Ben Aryee as head of the regulatory body, the Minerals Commission. Dr Aubyn had been leading the Chamber of Mines since 2011, prior to which he had been Director of Corporate Affairs at Tullow Oil. He has worked in the extractives industry for over two decades, a decade of which was in various positions at leading gold producer, Gold Fields Ghana, rising to Head of Corporate Affairs and Sustainable Development before his exit. He has been involved in a number of mining initiatives both in Ghana and internationally, including serving as the Chair of International Council of Minerals and Metals (ICMM) Artisanal and Small-Scale Mining (ASM) Working Group, Chair of the Association and Commodities Group (AGC) and is a long-time member of the Strategic Management Advisory Group of the World Bank and the British Department for International Development sponsored Community and Artisanal Small-scale Mining (CASM).
Khailann joins the C-suite
Farouk Khailann was appointed Chief Executive Officer for the Royal African Holdings’ Ghana operations. In his new role, Mr Khailann will oversee Royal Africa Holding’s real estate, financial services, travel, farming, logistics, commodities, entertainment, sports, media and energy functions in Ghana. Mr. Khailann holds a Bachelor of Education in Social Science from the University of Cape Coast and has also received training from the Ghana Stock Exchange. He served in the past as marketing manager at Finlite Group, where he led the team to successfully launch FinMock, the first online examination technology in Ghana.
Carmen off to pursue “other interests”
Carmen Bruce-Annan resigned from her position as Vodafone Ghana’s Head of Brand and Corporate Communications. Ms Bruce-Annan had been with the telecom company since 2010 when she was poached from Airtel Ghana. She is seen as a bold innovator who is impatient with the ordinary. Though she has, as at press time, refused to officially reveal her next move, it is widely believed that she would be taking on the role of consultant, advising companies in the area of communications. A firm has already been incorporated bearing her surname and industry watchers are quite certain that that will be her next step.
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BRIEFS
CORPORATE MOVEMENTS
ECONOMY
Economy still in difficulty Martin-Luther King
Ghana’s economy continues to look vulnerable, three months after the Bank of Ghana (BoG)’s February directives on foreign currency trading. The central bank had, in a bid to shore up the value of the local currency – the Cedi – banned commercial banks and other financial houses from issuing cheques and cheque books on foreign exchange accounts (FEA) and foreign currency accounts (FCA); directed that no bank should grant a foreign currency-denominated loan or foreign currency-linked facility to a customer who is not a foreign exchange earner; and prohibited offshore foreign deals by resident companies, including exporters in the country.
BoG also barred banks from honouring over-the-counter cash withdrawals from foreign exchange and foreign currency accounts exceeding USD 10,000 except for travel purposes outside Ghana or its equivalent in convertible currency per person per travel. The quotation and transaction of goods and services in foreign currency was also banned by the central bank. For exporters, particularly, the regulations are overly drastic. Under the new regulations, any export proceeds they receive would have to be converted into the local currency. Thus, to recapitalize for their next export, they would need to buy foreign currencies with the fast declining local currency. Months after the bank’s directives, the tighter monetary policies may have rather dampened economic growth, increased cost of living and heightened inflation, experts say. For instance, the Cedi had depreciated by 17.6 percent against the United States Dollar in the first quarter of 2014, compared with 1.1 per cent in the corresponding period in 2013.
Seth Terkper (Minister, Finance and Economic Planning)
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According to the World Bank capital flows to Ghana are to reduce in 2014 as result of rapid and disorderly rise in interest rates or pull-back in capital flows. It said simulations conducted for the January 2014 Global Economic Prospects Report suggest that a sudden 100-basis-point increase in U.S bond yields, as observed in summer 2013, could be expected to lower capital inflows to developing countries by about 50 per cent for several months.
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we project the cedi to weaken further to about 2.90 to the United States dollar by year-end,” said the bank’s ‘Testing the Boundaries’ report, warning that nothing short of a significant turnaround in policy would be required for foreign investor sentiment to turn more positive again. Concerned by the negative reactions from the business community in reaction to the directives, the International Monetary Fund (IMF) has also called on the BoG to review the measures.
Indeed, despite BoG’s best efforts, the Cedi, currently seen as Africa’s worst-performing currency, risks depreciating another 20 per cent this year as foreign-exchange reserves recede and inflation accelerates. Increased risk of outflows from local bonds predominantly held by foreigners, uncertainty around commodity prices and fewer signs of a real turnaround in the country’s fiscal situation add to the Cedi’s weaker outlook, JPMorgan Chase & Co has said. Also, lower growth will affect revenue generation and widen the budget deficit to 10 per cent of GDP against the government’s target of 8.5 per cent, predicts the U.S. investment bank. It has already cut Ghana’s gross domestic product forecast for 2014. Inflation quickened to 14 percent in February, climbing for a sixth consecutive month, as the government stopped utility subsidies and the cedi weakened further. It climbed from 13.8 percent in January, above the central bank’s target of 9.5 per cent. Worse, government has not implemented any policies to impress the markets that it is in control of the prevailing economic situation in the country even as the country’s debt, which stood at 55 percent of GDP at the end of 2013, is now racing towards the 60 percent mark, according to a new Barclays Bank Ghana report on the economy. Ghana’s credit metrics show little sign of improvement as the country’s fiscal and external imbalances increasingly fuel concerns about debt sustainability; the country’s intentions to seek additional non-concessional market financing in international markets may also weigh on investor appetite in secondary markets. Also of concern is the international investor exposure in Ghana’s local markets. Investors have earned less from trading in Ghanaian instruments than the sub-Saharan average. “Heightened US dollar demand means that recent regulatory changes have had limited impact in easing pressures on the currency. We believe weak fundamentals will continue to weigh on the currency despite tighter monetary policy. On balance,
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“Are these measures hurting the economy or not? Are they affecting capital flows? We [IMF] don’t have that response. That is why it is important that after a while they look at the impact of these measures on the various sectors of the economy - not only the financial sector but also the real sector - and based on this review, reassess these measures if needed,” said IMF Ghana country representative Samir Jahjah. Ghana’s economy, the IMF also observed, slowed down on the back of sizable external and fiscal imbalances and energy disruptions in the first half of the year. On the fiscal side, revenue shortfalls, overruns in the wage bill and rising interest costs pushed the 2013 deficit to 10.9 per cent of GDP as against a target of 9 per cent. Specifically, the large fiscal deficit, coupled with a weaker external environment, led to a widening of the current account deficit to 13 per cent of GDP and further put pressure on international reserves. The overrun would have been higher in the absence of significant revenue measures, elimination of fuel subsidies, large increases in utility prices and compression of other expenditure, noted Christina Daseking, leader of a recent IMF Mission to Ghana. Currently Ghana’s account deficit has widened to USD 5.7 billion from USD 4.9 billion recorded in the corresponding period of 2012. Earnings from gold fell to USD 5 billion from USD 5.6 billion and exports earning from cocoa also declined from USD 2.2 billion to USD 1.6 billion, due to lower export volumes. Similarly, provisional estimates of the trade balance for the first two months of 2014 was a deficit of USD 294.3 million compared to USD 232.3 million in the corresponding period of 2013; gross international reserves as at March is USD 4.7 billion, compared with USD 5.6 billion at the end of 2013, representing 2.6 months of import cover. Further, the weakening growth momentum and inflationary pressures are expected to continue into 2014 and urgent measures are needed to address macro-economic imbalances, failing which the fiscal deficit target of 8.5 per cent of GDP would be at risk. ‘This, combined with a weak outlook for gold prices, would also keep the current account deficit at high levels,” the fund warned.
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COVER STORY
Beauty with brains
- the budding young woman with the rarest job in corporate Ghana
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COVER STORY
A bubbly lady sitting behind a desk packed with files and a number of mementos. She has just joined an elite rank of women with highly demanding and technical corporate responsibilities. Her confident smiles help immensely in covering up any signs of strain, though she knows she has been handed a tough job and given charge of the rarest profession on this side of the world. he is shy and would rather be spared these prying attempts into her life. Maybe that is because she spent more of her time cracking numbers and being engrossed in her books instead of spending time partying - as most young ladies will do. But she just might be helpless in fending off any attempts at getting to know her. Because, to the enormous burden that Boatemaa Kakra Duffuor-Nyarko carries as the Executive Director, has been added another more important and uncommon portfolio - the Chief Actuary of Starlife Assurance. As uncommon as the name sounds, this field of science, which applies mathematical and statistical methods to assess risk in insurance and finance, is hardly the preferred path of study for even the most ardent of male savants. That is why it is news that a woman, from a cultural background where the female specie has mainly suffered a stereotypical upbringing and only made to do household chores, has successfully charted a path in this unusual field to become one of the few actuarial managers in Ghana, and perhaps the only woman with that profession in the country. This breakthrough is particularly refreshing for Ghana as it comes on the back of recent spate of high-level female appointments in the public service and the corporate world in the country. At least, if for nothing at all, the country seems to be giving credence to its acceptance of affirmative action as the only way to engendering equality in the Ghanaian society. A mother of two, Kakra’s new position could be as “demanding but rewarding” as she says, and even as we start our chat with her, her phones keep buzzing and breaking into her thoughts showing the tough challenge that lies ahead of her. But she takes it cool, choosing to trust in her knowledge and experience to succeed in her new role.
Making an uncommon choice In this side of the world, choosing to pursue an academic path in Mathematics is like rolling rocks up a hill. It is even more arduous for a woman to choose this path, as one, there is hardly any role model to look up to. And secondly, the educational system influenced by the cultural mindset, would rather assign women to such easier fields of study as the vocational skills. But for Kakra Duffuor-Nyarko, she never thought twice about her decision to study Maths as the inkling was innate and thus came naturally. “For me it is something I have always been interested in, I find it easier as well, as opposed to reading” she says with
a whiff of fulfillment. Having started her education from the prestigious Ghana International School where she obtained both her ordinary and advanced level certificates, majoring in mathematics, chemistry and biology, she proceeded to the University of Warwick (United Kingdom), obtaining her first degree in Economics. She then continued to the Cass Business School, City University also of the United Kingdom for her Postgraduate Diploma in Actuarial Science and an MSc. in Actuarial Management.
Harnessing her knowledge and experience for growth Kakra’s new role in Starlife means that she serves as an important cog in the operations of the company. Her calculations and projections ultimately inform the sort of products to roll out on the market and the premiums to charge on such products, for instance. In traditional life insurance, actuarial science focuses on the analysis of mortality, the production of what is termed “life tables” and the application of compound interest to produce life insurance, annuities and endowment policies. Luckily for her, she has had time to practice and hone her skills after school. Before her current appointment, she had spent several years working with QED Actuaries and Consultants (Aon Hewitt) in South Africa, where she provided actuarial consulting services for clients in South Africa, Zambia, Kenya, Malawi, Mozambique, Namibia, Mauritius and even Ghana. Armed with such insight into the field, she believes she is best-placed to offer an even more qualitative service to help grow the life insurance industry in Ghana. Though she says that “Different demographics and economic circumstances mean that it is always difficult to export actuarial experiences from one geographical location to the other”, she believes her knowledge and insight into the Ghanaian market is her best asset. “It is always difficult when you know you are coming from someplace where everything works to a new terrain where things are difficult to push, but it is rewarding when you succeed” she contends. “The challenge” she continues “has always been that life insurance companies in Ghana have over the years been outsourcing their actuarial services to outsiders and these people, due to their scanty or total lack of knowledge of the Ghanaian socio-economic system have not always gotten it right with their calculations and projections.” cont’d on pg 20
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their employees, Kakra supports the NIC’s moves (less surprising though). But more importantly, as she puts it “Every Ghanaian needs to think of what happens when they are not around.” If for nothing at all, these directives akin to prevailing ones in the general insurance industry that, for instance, make motor insurance compulsory for vehicle owners, will help offset some huge burdens on Ghanaian families when it comes to providing for the education of the wards of beneficiaries or making arrangements for the homecall of beneficiaries.
“... in most developed countries, life insurance is not just an insurance cover in case of any eventuality, but it is an investment as well”
One has to, for instance, have a full grasp of the health and economic lives of a people in order to come up with insurance premiums. As Kakra says “What might be a killer disease in one geographical jurisdiction, might not be in another place.” This is where her advantage lies - being a Ghanaian with in-depth knowledge of the Ghanaian lifestyle, she is well placed to come up inputs to develop tailormade products and services for her customers.
The life Insurance industry in Ghana The life insurance industry in Ghana is a relatively underexplored area in the insurance sector as compared to general insurance. A couple of factors have led to this, according to Kakra. One is the seeming lack of any governmental directive or policies making it mandatory for people to have personal insurance cover. The other factor is the general Ghanaian apathy to buying insurance for themselves, which might be due to the inadequate disposable income in the economy. “Only 1 percent of the Ghanaian population has some sort of life insurance and that needs to change because in most developed countries, life insurance is not just an insurance cover in case of any eventuality, but it is an investment as well” Kakra intimates. This pitiful life insurance coverage in Ghana, coupled with her desire to see more people taking on life insurance to lessen the burden on their families and dependents in case of eventualities, means that Kakra subscribes to a new set of directives being contemplated by the National Insurance Commission (NIC). Whilst most employers dread the thought of these NIC directives, which among other things, will make it mandatory for employers to provide life insurance cover for
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The StarLife advantage
StarLife Assurance is the third largest life insurance company in Ghana and to continue to occupy this enviable position and to grow to be the largest in the country, the company has consistently innovated to provide tailor-made solutions and products to the market. One key distinguishing feature of the company is the fact that it does not believe in proving a one-size-fits-all solution to its customers and thus customers are assessed based on their needs and products designed to suit them. One of its flagship products, the Family Protection Plan, for instance is unique in the industry as it covers subscribers and their dependents and takes care of all sorts of eventualities including retrenchment or redundancies, death and dreaded disease. To grow and to continue to extend its services to the Ghanaian market, the company says it “invests in its operations on constant basis” whilst using education as an added tool to sensitize the market on the need for life insurance.
Inspiring the girl-child Kakra shares the view that women tend to be good managers when entrusted with the responsibility and she hopes to draw an inspiration or two from this belief and the confidence reposed in her. She would not say she has achieved her ultimate goal in life yet (brushing off such a suggestion with a childish smile), but she would want young girls in the Ghanaian society to take inspiration from her appointment and other recent high-level corporate appointments. For her, the decision to study Maths and excel in it means that it is easy after all and any girl can do it.
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BANKING & FINANCE
Taxing matters:
how will financial services cope with VAT? Anthony Sedzro
The past twelve months have seen the introduction of taxes on various economic activities and products including farm inputs, fishing gear, imports and even condoms.
In the 2014 budget statement presented to Parliament in November 2013, Finance Minister Seth Terkper announced an increase in the Value Added Tax (VAT) rate from 15 percent to 17.5 percent. The new VAT Act 2013, (Act 870) received Presidential Assent on 30th December and was subsequently gazetted the next day. Mr. Terkper also announced that the scope of the tax was to be extended to some economic activities which were not covered previously. These new areas are sales of real estate, financial services, domestic aviation, haulage services, auctions, pharmaceuticals, spas and gymnasia. It is not difficult to see why government would do this. Its revenue sources have fallen drastically over the past few years. This is due mainly to the fall in the price of its major exports - gold and cocoa – while expenditure, particularly the public sector wage bill, continues to rise. As a result, the government’s budget deficit has widened to 11.8 percent to the country’s
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Gross Domestic Product (GDP). The Finance Minister is determined to cut the budget deficit from 11.8 percent to 8.5 percent this year. Taxation, specifically the new VAT rate of 17.5 percent is just one of those measures intended to raise revenue to close the fiscal deficit. The circular from the Ghana Revenue Authority (GRA) giving the details of the tax explained that the Act extended coverage to “the supply of financial services that are rendered for a fee, commission or a similar charge”. “Financial Services means provision of insurance; issue, transfer, receipt of, or dealing with money whether in domestic or foreign currency or any note or order of payment of money; provision of credit; or operation of a bank account or an account of a similar institution. Life insurance and reinsurance services are however exempt from the tax whether or not such services are rendered for a fee, commission or a similar charge,” it clarified.
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Financial inclusion – or access to financial and banking services for citizens – is quite low in Ghana. Less than 30 percent of the Ghanaian population have bank accounts, according to the International Monetary Fund (IMF). Thus, the fear of the banking community is that a higher cost of keeping a bank account will discourage people from patronizing banking services and lead to a reduction in savings mobilisation.
A lot of open markets have been burnt by fire last year and this year as well. Many of the traders in those markets were not insured. Many of these affected traders had to appeal to government for financial bailout. The response of the government was to establish a GHc 2 million fund to compensate traders nationwide for their loss. According to Agbenyadzie, an increase in insurance in premiums will not encourage uptake in insurance policies and this will have social consequences.
“if you increase corporate tax from, let’s say, 20 to 40 percent and the company’s profit falls from 50 million to 5 million, do the math. Government would be making less money; not more money.”
“Insurance has an elastic demand and we have very low insurance penetration rate in this country. We are now trying to get people to buy non-life insurance products because we believe that if people insure their own assets, in the event of any misfortune they can be compensated adequately instead of them appealing to government for help - which creates a social burden for the state”.
As expected, bankers and other analysts are not happy with their services being captured by VAT. When the new tax rate was announced, bankers complained of not being consulted. The President of the Ghana Association of Bankers, Simon Donoo-Nartey said that the association will meet with the Ministry of Finance to deliberate on the issue. The insurance industry has been particularly vocal in their opposition. If access to banking services is low, patronage of insurance policies is even lower. Presently, insurance penetration in the country is less than two percent in a market with 43 insurance companies in both the life and non-life insurance sectors. In a country where many people use majority of their income on basic commodities, insurance products are seen as a luxury. Although the new VAT exempts life insurance and re-insurance policies, non-life insurance products, especially motor insurance premiums will be hit. Kwame Agbenyadzie, President of the Ghana Insurers Association (GIA), the trade association of insurance and reinsurance companies, has said that the new tax will see not only an increase in insurance premiums but it will have a wider effect on the economy as a whole. “The likely effect we will see is that if the VAT is implemented and charged on the premium, we’ll pass it on to the final consumer. Motor insurance, for instance, is compulsory and that is where a lot of people will be affected; because if motor insurance goes up it is likely that the transport unions will adjust transport fares accordingly to reflect the increment, and that will impact on the cost of transportation and food as well as other fast-moving goods”.
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On the wider implications for the financial sector, the new VAT will lead to lower tax revenue for the government, according to Toma Imihre, editor of the Accra-based Business Finder newspaper. Mr Imihre said “if you increase corporate tax from, let’s say, 20 to 40 percent and the company’s profit falls from 50 million to 5 million, do the math. Government would be making less money; not more money.” Taxes serve as a key source of revenue for governments. However, extending VAT to financial services may actually end up reducing receipts for government rather, if the views of the stakeholders above are anything to go by.
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BANKING & FINANCE
VAT is a consumer tax in that the final consumer is the one who will bear the increase. Some of the services from the financial institutions (universal banks, micro-credit institutions, insurance firms, forex bureaus, etc) that will be affected by VAT are cost of issuing cheque books, service charges on operating bank accounts, Automated Teller Machine (ATM) services, insurance premiums, foreign currency transactions and others.
REAL ESTATE
Picking up the tab How housing could benefit from a mortgage boost S. Kwame Appiah
It is not uncommon for locals to question the veracity of Ghana’s newly minted lower-middle income status. However, for anyone struggling for proof, the changing skylines of its major cities could be a handy aid in a difficult argument. The Ghanaian real estate sector has been in something of a decade-long boom. Everywhere one looks, concrete is being poured down wooden apertures and blocks are being placed on blocks. The frenetic activity in the sector however obscures a less palatable fact: real demand is weak. to reduce its direct role in financial services, the now defunct ome acquisition is very much a rite of passage in Bank for Housing and Construction was established to provide Ghanaian societies, typically following marriage concessionary construction finance and credit to homebuyers. and child bearing on the to-do list of the average Ghanaian. Traditionally, the path to home Over the years, there have been other attempts to stimulate a ownership has been to acquire land, procure mortgage market in order to sustain real demand in the housing a plan and hire some builders to construct it under direct market. This is important to policy makers for a number of supervision of the owner-builder. Buying already-built homes reasons. is a relatively new phenomenon. While generally seen as less stressful, buying already-built homes does have a significant A vibrant housing market is a fillip downside – one has to come up with for the economy, boosting jobs the money quite readily. Under the “Since the failures of earlier and services and providing use for old – and still existent – practice, attempts, government has related industries such as cement, one could build at a pace that was steel, woodwork transportation and convenient for the pocket. It was chosen the path of regulator others. The natural consequence quite normal for buildings to be and is concentrating its of this is additional revenue for abandoned mid-construction, only government by way of income for activity to resume with renewed efforts on stimulating the taxes, stamp duty, excise and other fury sometimes years later. Signs of taxes. Even after a house is sold, it the builder’s changing economic industry”. continues to fuel economic activity circumstances. in ancillary services such as interior decoration, plumbing and other maintenance areas. With house prices increasing rapidly in the country, many potential home owners find themselves unable to get on the Again, a robust housing market itself can build confidence in an housing ladder. Ideally, a mortgage market would provide economy as it not only provides impetus for fresh construction the vital clutch that facilitates the entry into homeownership, and the positive effects of it, but also is a store and indication particularly for Ghana’s rising middle class, some of whom still of household wealth. find it a struggle to acquire their own homes. Unfortunately, the Ghanaian mortgage industry is barely alive. Indeed, activity in the housing industry affects the very wellbeing of a people in terms of size and composition of Though weak as an industry, mortgages have been available household wealth, access to credit, labour to Ghanaian buyers for a while. The First Ghana Building productivity, employment and Society(FGBS), which was in operation as far back as 1956, is known to be the earliest provider of mortgage services, empowered by the Building Society Ordinance, 1955 (Act 30) and the Mortgages Decree, 1972 (NRCD 96). The FGBS was a government backed service which relied on short-term deposits and direct government soft loans. As the state sought
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A fully developed mortgage industry would have the primary and secondary markets. The Primary Mortgage Market (PMM) hosts transactions between companies that originate and service mortgage loans (banks, savings & loans, credit union, mortgage bankers, institutional lenders), while the the Secondary Mortgage Market (SMM) is where existing mortgages are bought and sold. Players in the SMM include mortgage bankers, mortgage brokers, mortgage insurance companies and regulatory institutions. These markets are inter-twined and are affected by both domestic and foreign monetary developments. Since the failures of earlier attempts, government has chosen the path of regulator and is concentrating its efforts on stimulating the industry. These efforts however, have yielded only modest returns.
Typically, the client will need to put up some money to consummate the purchase. For many buyers, this is often a tall order. For many, the average monthly repayments are also prohibitive. For a GHs 120,000 home (which is at the lower end of pricing), the buyer may need to come up with monthly payments in excess of GHs 2,000 over a repayment period of about fifteen years. And that’s only the demand side problem. Industry players say the macro-economic environment is particularly unfriendly. High interest rates and an unreliable currency have priced many buyers out of the market and deprived service providers of custom. For many, the solution was to price in United States Dollars to borrow some stability but that door has also been shut by the Bank of Ghana’s recent directives on dollar-denominated transactions in the country. If government is keen to reap the benefits of a fully functional housing sector backed by a vibrant mortgage industry, securing fiscal stability, stable inflation and low interest rates should be the first step.
Currently, Ghana Home Loans is the only dedicated mortgage provider in the country. The Home Finance Company, which was set up as a mortgage service, has since acquired a universal banking service albeit with a strong suit in mortgages. In addition, banks such as Fidelity, Barclays and SG are known to provide clients with mortgage assistance.
Another step would be to address legal and regulatory issues in the sector. Ghana’s land tenure system is notoriously labyrinthine; the court system is no less friendly. All of these build into the price of homes and by extension, mortgages and deprive ordinary Ghanaians a share of its potential benefits.
Between these, the Ghanaian customer can access services such as Home Purchase Mortgages to enable them buy house, Home Equity Mortgages that release equity in their already-owned home to improve liquidity, Home Completion Mortgage to help them complete and Home Improvement Mortgages when some work is needed.
Of course, nothing beats wealth creation as a solution to demand side problems. As the nation’s collective and individual bank balance improves, mortgages will become more accessible a greater numbers of people, houses will be bought quicker and those people on construction sites across the country would have a little bit more to look forward to on completion.
While the services are available, it is not always easy to access them.
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other macroeconomic variables. All this, of course, would be impossible without a viable mortgage market.
INFRASTRUCTURE
A slice of the action
Under PPP, private capital finds its biggest ever role Oppong Baah
Since it achieved independence in 1957, Ghana has sought, with varying degrees of success, to improve infrastructure through various policies and schemes to achieve, ultimately in its bid to boost economic growth and improve livelihoods. Up until 2001, when the government declared a golden age of business, government’s relationship with the private sector had been largely ambivalent. Seen as exploitative, subversive and quite often, politically inconvenient, the private sector had been left to face their challenges without deliberate support from the government. Worse, despite a liberalization programme in the 1980s that helped pass some power to private business, attempts to bring them to the table in the effort to seek solutions to national problems were at best, half-hearted. The last two decades have however seen a growing acceptance by government of the contribution that the private sector can make to various national efforts. One of such areas in which the private sector could be key, is the delivery of national infrastructure. In recognition of this potential role, the government presented the revised Public Private Partnership (PPP) Draft Bill to parliament in 2013.
The bill is to facilitate the development and implementation of PPP projects in Ghana with the view to accelerating the delivery of public infrastructure and related services through partnership arrangements between the public and private sectors, establish institutional structures for the regulation of PPP arrangements, provide the general principles for the identification, structuring, procurement, award, implementation and management of PPPs and to provide for related matters. PPP, as explained by government, is a contractual arrangement between a public sector entity and a private entity for the delivery of public services with a significant transfer of risk to the private sector over a period of time. It enables government to provide better infrastructure and services through the use of the private sector’s financial, human and technical resources, thereby freeing government resources for other equally important uses. The Ministry of Finance and Economic Planning has said that, “the PPP initiative provides a lifeline for government in the face of its depleting resources. It also offers business opportunities for the private sector to be involved in the provisioning of social services. PPP redefines a government service or private business venture, funded and operated through a partnership of government and one or more private companies”. The ministry further points out that “government’s contributions to a PPP may also be in the form of transfer of existing assets. cont’d on pg 28
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With projects aimed at creating infrastructure, government may provide a capital subsidy in the form of a one-time grant; to attract private investors in other cases, government may provide revenue subsidies, including tax or guaranteed annual revenues for a fixed period”.
national and local government officials must be receptive to finding alternative mechanisms to traditional public service provision and be willing to accept private sector participation. “They must choose appropriate projects that are conducive to private sector management, and properly package the projects in order to avoid disproportionate transaction costs,” it said.
At a stakeholder Consultation Forum on the draft law last year, Seth Terkper, Minister of Finance and Economic Planning said that over the years, government had been grappling with the As it stands now, the bill seems to have all the needed ingredients provision of timely, adequate, and to make private sector participation reliable infrastructure and services to in the infrastructural development “The PPP policy seeks to facilitate the economic development of the country a reality. However, a increase the availability of of the country. much overlooked condiment is the public infrastructure and issue of trust. At the same forum, P. V. Obeng, also encourage and promote chairman of the National indigenous Ghanaian private For example, measures have been Development Planning Commission put in place in the bill to ensure sector participation in the and Senior Presidential Adviser, fairness in case of dispute but like delivery of public infrastructure observed that “the essence of the his counterparts in other countries, PPP law, rather than being a strategy and services,” the Ghanaian private sector operator to offload the financial burden on is concerned about the inherent government, was to empower the private sector to play its uncertainty that attaches to any legal rule – one never knows appropriate role in the socio-economic development of the for sure how a court will interpret it. country”. Again, many laws in the country are passed with little or no consultation with the people the laws are supposed to benefit or affect. As a result, policies that look good on paper often fail to have the needed impact from the day they take effect. This is particularly important if the PPP is to make the expected impact on the Ghanaian economy.
P. V. Obeng He added that “Ghana had attained the status of a lower middle income economy which required a certain level of infrastructural stock to drive the economy further to a higher level, and that the philosophy underpinning the PPP Law was to make the private sector the engine of economic growth and take the PPP to another level and to ensure policy stability.” The provision of public infrastructure and services is one of the prime mandates of governments all over the world and the government hopes to achieve this by partnering with the private sector. “The PPP policy seeks to increase the availability of public infrastructure and also encourage and promote indigenous Ghanaian private sector participation in the delivery of public infrastructure and services,” Mr Obeng noted. The United Nations Development Programme (UNDP) has come out in support of the programme, recommending that
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Building trust by recognizing private sector representatives as partners and consulting with them early on and throughout the policy formulation process, would allow those entities to point out problems and concerns to suggest workable solutions. The experience in the United Kingdom shows that for PPPs to work effectively, the state must retain responsibility and accountability for deciding among competing objectives; set standards, criteria, and output targets; and safeguard the broader public interest. It is thought that despite potential problems and complexities, public private partnerships that are carefully planned and implemented can help governments to improve the quality, reduce the price, and extend the coverage of services and they can accelerate the construction of infrastructure and facilities that are crucial for economic development and social progress. Partnering with the private sector gives the government the ability to take advantage of economies of scale. However, the success or otherwise of the partnership will depend on the nature and caliber of operators in the system.
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PHOTO GALLERY
The Fifth Ghana Summit on oil and Gas 1) Mr Alex Mould (CEO of Ghana National Petroleum Corporation) addressing the summit. 2) Delegates in attendance 3) Dignitaries at the high table: l-r Dr Kwabena Donkor (Chairman of the Parliamentary Select Committee on Mines and Energy), Mr Alex Mould, Charles Darku (General Manager of Tullow Ghana Limited) and Theo Ahwireng (Chief Executive, Petroleum Commission). 4) Theo Ahwireng presenting to the audience. 5) First session in progress. 6) Cross session of delegates. 7) Exhibition time. 8) Patronage at the GNPC cubicle. 1
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Media launch of Samsung GALAXY S5 1) Mr Harry Park (MD of Samsung Electronics West Africa) speaking to the media. 2) Jasprpet Singh (Business Director) speaking at the event. 3) Cross section of the media personnel during the launch. 4) Tetteh Akornor, product manager answering questions from the media. 5) The preview of Samsung Galaxy S5. 6) The media as well as customers having a feel of the product. 2
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IN FOCUS
Glamour in the boardroom Corporate Ghana’s fabulous five
Despite the make-up of the average boardroom, entrepreneurship is not an alien pursuit to the Ghanaian woman. At various levels, Ghanaian women have drawn on their unique qualities to build successful businesses that have supported their families and helped their communities. We find these qualities of perseverance, uniqueness, innovation and of course charm present in many of the budding women entrepreneurs that are competing on an equal level with their male counterparts in every section of the Ghanaian economy. And none more so than the five we profile below who have achieved individual and corporate success borne of instincts that have guided Ghanaian women for ages. In a sense, these five ladies are not charting new territory; they are merely claiming it back.
Miss Constance Swaniker (Accent and Art) Sculpturing probably doesn’t feature often on many dream lists drawn up by girls. Or even boys. But Constance Swaniker is not conventional. A bold innovator, the Kwame Nkrumah University of Science and Technology (KNUST) graduate has made waves right from her maiden exhibition, “Passage of Discovery”. She has since built a glamorous business out of what many others would have found slightly frightening. Her company, Accents and Art, uses creative arts to capture and translate the essence of various themes using wood, wrought iron, metal, glass and other materials. Accents and Art trains and employs 50 artisans mainly welders, sprayers, and carpenters in its workshop at Bubiashie in Accra. Ms Swaniker herself is one of Accra’s leading sculptors and undoubtedly the leading metal works entrepreneur. Her products can be found in a wide range of offices, upscale homes and diplomatic missions. Her work has been recognized the world over and she has been honoured with several awards such as the “Outstanding Industrial Metal Furniture Firm” in Ghana Award by wAi Africa; The Network Journal Africa 40-under Forty 2010 Achievement Award; and Best Entrepreneur SME Innovation 2010. These are in addition to being named a nominee in the “Vlisco Be Your Dream Promotion” celebrating women who have lived their dreams. She also won the Investor Excellence Award in 2007 and was named as one of the Network Journal of New York’ Achievers in 2010.
Gloria Buckman Yankson (PlanIt Ghana) Gloria Buckman Yankson’s company PlanIt Ghana, may be best known for the weddings that it organizes for grateful clients and its Harvest Praise series but it is actually a full service agency that delivers professional event management and integrated communications services. After a Diploma in Public Relations from the Ghana Institute of Journalism and a Degree from the London School of Public Relations, Gloria took a Masters’ in Public Relations from the University Of Stirling in Scotland, going on to work for some blue chip firms such as SKY TV, Hilton Plc and Morgan Stanley, all the while plotting her return to Ghana and an entry into entrepreneurship, a natural fit for her enthusiastic and daring personality. Indeed, her company, PlanIt, is said to have been born unofficially in Scotland before its formal registration in Ghana in 2009. PlanIt is widely acknowledged to have disrupted the events-for-hire space, particularly in the area of weddings and is now the standard by which others in the industry are judged. Relentlessly optimistic, Mrs Buckman has a towering social media presence and is in high demand on the speaking circuit in Ghana and across Africa. Her hard work and dedication to service quality has won her several awards including the Global Professional Achievers’ Awards, 2011; Ghana UK-Based Achievement Awards (GUBA) 2012 and the Young Creative Star of The Year at the 10th Annual Global Professional Achievers’ Awards, 2011.
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IN FOCUS
Renee Q. Boateng (ReneeQ ) Renée Boateng is an international make-up artist, image consultant, entrepreneur and fashion stylist. She is the owner of RenéeQ, a company she founded and incorporated in Ghana in 2006 after leaving a lucrative corporate job at Gillette UK as an Assistant Human Resource Information Systems Specialist. Renee holds a Bachelor’s Degree from the University of Kent, England as well as certificates from the London School of Beauty & Make-up, Beauty Base London and the London College of Fashion. Before setting up ReneeQ, she worked in the banking sector briefly as Total Quality Manager at Zenith Bank Ghana. Today, ReneeQ provides professional make-up artistry, styling, and unique accessories made from freshwater pearls, crystal, Ghanaian traditional and/ or contemporary beads. The company has also branched into the design world with the launch of the Bespoke designs. Renee’s lack of formal training in it did not stop her from starting an accessories line that is now accepted by women across all ages. She also runs seminars on “self-image and confidence” to corporate and educational Institutions.
Ms. Eunice Ogbogu (Eugo Terrano) Eunice is the Chief Executive Officer (CEO) of Eugo Terrano, a fast growing company in Ghana’s construction and engineering industry. After graduating from the Kwame Nkrumah University of Science and Technology (KNUST) with a degree in Civil Engineering in 2004, she worked with Contera Ltd., an engineering consultancy firm in Accra. After undertaking a course in entrepreneurship to prepare her for her next step, she set up Eugo Terrano Limited, December 2004. Based in Tema, Eugo Terrano Limited, coined from her names Eunice and Ogbugo (EUGO), began actual operations in January 2005. In less than 10 years of operation, the clientele of Eugo Terrano has expanded and currently includes the Department of Urban Roads, the Department of Feeder Roads, the Ghana Highway Authority and the Ministry of Water Resources, Works and Housing, with contracts scattered in regions such as the Eastern, Volta, Brong Ahafo and the Greater Accra. The company also performs contracts for the European Union and the African Development Bank (AfDB). Some of its current projects include the GHs 7-million upgrading of the Techimantia-Akomadan road in the Brong Ahafo Region. Eunice has successfully steered the affairs of the company from a Small to Medium Enterprise (SME) to a middleweight division company that is impatiently and confidently knocking on the doors of the Ghana Club 100, demanding entry. Ms Obogu plans to take her company public, listing on the Ghana Stock Exchange to raise the capital necessary for expansion and capacity for much bigger projects.
Shirley Frimpong Manso (Sparrow Productions) Shirley Frimpong Manso is the Chief Executive Officer of Sparrow Productions, a movie production and advertising firm. As a producer/writer/director she has emerged as one of the biggest forces in contemporary Ghanaian film making, setting standards for the rest of the industry in terms of script quality and technical detail. By far one of the most talented and highly ambitious young women in Ghana today, Shirley seeks to raise the standard of film production in Ghana and Africa by telling progressive African stories as seen through the eyes of Africans. Shirley is a product of the National Film and Television Institute (NAFTI) where she graduated with first class honors in Film Directing. Shirley has written, produced and directed marque television offerings such as ‘Different Shades of Blue,’ a television serial; and ‘Personalities Kitchen,’ a cooking program that hosts two personalities. She has also produced and directed several movies including “A Sting in a Tale” which received an award at the 18th Annual Pan African Film & Arts Festival in the category ‘Audience Favorite-Narrative Feature’. Other movies from her stables include ‘Life And Living It,’ ’Scorned,’ ‘The Perfect Picture,’ ‘Check Mate,’ and ‘6 Hours to Christmas’. She won the ‘Best Director’ at the African Movie Academy Awards in 2010. Her collaborative work with Yvonne Okoro - ‘Contract’ - scooped four awards at the recent Africa Magic Viewers’ Choice Awards held in Lagos, Nigeria.
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AGRICULTURE
Can Ghana handle effects of EPA on agriculture? Ayuureyisiya Kapini Atafori
For some experts, including academics, international and local civil society organizations (CSOs) and independent think tanks, the final signing of an Economic Partnership Agreement (EPA) by the European Union (EU) and Economic Community of West Africa States (ECOWAS) spells the doom for the sub-region. In the April 2012 edition of New African magazine, Professor Chukwuma Charles Soludo, former Governor of the Central Bank of Nigeria, likened the EPA to the Berlin Conference of 1884-1885. Writing under the headline ‘From Berlin to Brussels: ‘Will Europe underdevelop Africa again?’ he observed that “in order to continue to have access to European markets (on the terms that it had enjoyed for more than three decades), Africa is now required to eliminate tariffs on at least 80 percent of imports from the EU; in some cases, abolish all export duties and taxes … and meet all kinds of other intrusive and destructive conditionalities that literally tie the hands of African governments to deploy the same kind of instruments that all countries that have industrialised applied to build competitive national economies”. The global campaign against the acceptance of the EPA paints a grimly negative picture of the effects of the EPA on key sectors of each ECOWAS member’s economy. Optimists envision a curate’s egg scenario, however and argue that there can be some
good to be had out of the deal. Thus, no matter how deleterious some analysts and organizations believe the EPA is, proponents of the multilateral pact think it can help both partners. Due to the raging controversy over the effects of the EPA, Heads of State and Government at the 44th Ordinary Session of ECOWAS deferred the signing of the agreement held in Cote d’Ivoire last March to enable a technical team to review the details of the EPA. West African leaders are expected to convene for a final decision on the deal sometime before the EU-chosen deadline of October 31. If ratified, West African countries would have to open up between 70 to 80 percent of their markets to the EU while gaining complete access to EU markets. cont’d on pg 36
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However, many believe that West African countries are so competitively disadvantaged that they may not be able to fully take advantage of the new opportunities. In Ghana, individuals and CSOs like ActionAid Ghana, the Integrated Social Development Centre (ISODEC) and Third World Network-Africa (TWN-Africa) have raised serious concerns over the ill consequences of the EPA on the economy in particular, and the country as a whole.
livelihood security and food security in Ghana. If forced to liberalize, agricultural producers would be adversely affected by cheaper and (often heavily subsidised) EU agricultural exports. For example, in 2002 the EU spent over USD 1 billion subsidising dairy exports, over USD 39.4 million in export subsidies for 132,2000 metric tonnes of milled rice and roughly USD 11.1 million on subsidies for wheat exports. In the context of an FTA [Free Trade Agreement], these subsidised agricultural exports would lower the price of these products in Ghana, pushing domestic producers out of the market.”
What would be the effects of the EPA In a June 2007 study titled ‘Economic on Ghana’s agricultural sector? Nancy “...these subsidised Partnership Agreements between the Kachingwe of the TWN-Africa observes agricultural exports EU and African Countries: Potential that agriculture is the largest economic would lower the price Development Implications for Ghana,’ sector, but the government has not drafted Dr Patel said “exports of cocoa beans, an agricultural policy which would work of these products hardwood lumber, gold and diamonds in concert with a watertight trade policy; in Ghana, pushing would be unaffected by changes in tariffs. which is non-existent. “It has however domestic producers However, there would be losses for about adopted a posture – which is that of out of the market.” a third of Ghana’s exports. For example, opening up the sector to imports. The leading exports of tuna would face tariff problem for the Ghanaian agricultural increases of between 18 percent and 20 percent, fruit and sector is that the playing field is not level, particularly because vegetables exports (2-8 percent), and cocoa butter and paste so many agricultural imports entering the market enjoy (4-6 percent).” He notes that with the EPA, the government subsidies. Obviously our hopes of influencing change in global might be prevented from using certain development tools trade rules to tip the scales in favour of Ghana’s producers are it currently employs such as the requirement that foreign slim, but we can find ways to work around the rules through investors engage local partners in certain key sectors like the well thought domestic policies so that the agriculture sector can fishing sector. Currently, non-Ghanaians can currently only thrive,” Kachingwe wrote in a briefing paper. own a maximum of 75 percent interest in a tuna-fishing vessel, for example. Dr. Mayur Patel, an academic at the Oxford University’s Department for International Development, whose research ActionAid Ghana contends that the Interim EPA (IEPA) focuses on the EU-ACP EPAs has written that “like many has affected the country’s policies on smallholder agriculture other African countries, agriculture is the mainstay of Ghana’s development and food security. “There has been no drastic economy. It sustains the livelihoods of millions of small-scale alteration in Ghana’s socio-economic development policies in farmers and supports part of the country’s industrialization relation to agricultural development and poverty reduction efforts through forward linkages into the agro-chemicals and before and during the period of IEPA,” it states. In line with food processing sectors. Agriculture ought to be considered a the schedules of the IEPA, all exports from Ghana entered the sensitive sector due to its contribution to rural development, EU market duty and quota free since 1st January 2008, with the exception of rice and sugar which had a transitional period of 2010 and 2015. In return, the country agreed to liberalize 80 percent of its imports from the EU, representing 81 percent of tariff lines over the next 15 years from January 2008 to 2022. There seems not to be any concerted steps devised by the government to counteract the potential ill-effects of the EPA on agriculture. With the seeming unconnected implementation of several agricultural policies and programs by the government – with a special preference for cash crop-oriented agriculture – it is not immediately clear if the country’s agricultural sector would be able to offset the dangers that the EPA poses to its survival and sustenance.
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ENERGY
Ghana’s energy challenges
- can government achieve its 5000 MW mark by 2016? Eric Kwame Amesimeku
Ghana’s economy has seen tremendous growth over the last decade and the demand for energy to power industries and homes has risen exponentially. However, the supply side of the energy equation has not seen a corresponding increased level of investment leading to production shortfalls and its accompanying effects on the nation. As a result, the country has been experiencing some challenges in the energy front which have necessitated periodic load shedding and power rationing programmes to manage the problem. Against this backdrop and with a view to tackling this challenge, the government has set itself an ambitious target of increasing the country’s energy generation from the current 2,845 MW to 5000 MW by the year 2016. Questions have been asked about the feasibility of such a projection in light of the time and resources needed to put up or build power generating plants. Experts believe the likely source that the government will be looking at in seeking to achieve this target is thermal, but even here, it will take not less than two years to put up one thermal power generating plant. Whilst achieving such an appreciable level of energy generation capacity would be good for the nation’s economy, the real issue at stake has really been: where will the financial resources needed to invest in such a capital-intensive venture come from? This question is especially important as Ghana’s economy in itself is going through some fiscal challenges and government, for that matter, might not have the necessary financial muscle to venture into any project in the energy production front.
The hope to achieving this target or increasing the country’s energy generating capacity seems to lie with the private sector. At least, looking at the country’s current economic circumstances and the bigger financial picture, government does not seem ready or have the capacity to invest in energy generation. Already, there have been some collaborations between the government and the private sector in the energy production business. The Takoradi International Power Company (TICO) and Sunon Asogli Thermal plants which produce power and sell to government are examples of this. With a Public Private Partnership (PPP) Bill to be passed into law before the end of year, government looks set to explore this model of partnership further to foster a closer relationship with the private sector to achieve its goals. Indeed, according to Emmanuel Armah-Kofi Buah, the Minister of Energy and Petroleum, government sees a need for the private sector, both local and international, to strengthen their partnerships with the government to make that vision of attaining sustainable levels in energy production a reality. In a speech delivered during the recent Ghana Oil and Gas Summit held in Accra, he observed that “issues of energy in Ghana have posed one of the biggest challenges in our economic forward march.” In spite of this frank admission, the Minister believes that the country can deal with the challenges if stakeholders work collectively. Several Independent Power Producers (IPPs), have heeded to the government’s call for partnership and have come on board to augment government’s efforts in the energy generation sector. Currently, there are seven IPPs producing power in Ghana.
Credit: Volta River Authority cont’d on pg 38 MAY 2014
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Most of these operate in the thermal generation spectrum and thus fit into government’s future scheme. Government’s plan to increase generation capacity to 5000 Mega Watts (MW) by 2016, according to the Minister, will be through the combined use of thermal, hydro and renewable energy. The country’s current energy mix is made up of 52 percent hydro, and 48 percent thermal but the story could be different by 2016. Before end of year 2014, the Ghana Gas Infrastructure Project will be completed and gas from Jubilee oil fields will begin flowing through to the processing facility onshore to Atuabo where the gas will be processed and transported to Aboadze to power a number of thermal power plants currently cited there. The optimism of the Ghana Gas officials is shared by Mr Armah-Kofi Buah who has expressed his satisfaction that the country’s gas infrastructure project “was progressing steadily.” In his view “our thermal plants should be able to use gas from our own fields by the end of the year.” Government, according to the Minister, is aiming at achieving gas-based generation of up to 50 percent of the thermal power plants production by 2015 and develop a non-congested transmission system by 2015. This will drastically reduce the cost of energy generation in the country and help in adding an extra 342 MW to the country’s installed-capacity by the close of this year, a target government has set itself.
The Volta River Authority (VRA), the country’s major power generation company, on its part, is undertaking more generation projects, and is planning to add about 1,000 MW of generation capacity over the next 5 years. This, according the authority, includes the upgrading of simple cycle plants to combine-cycle to reduce cost of supply. It is also pursuing Solar and Wind energy projects in a bid to diversify the generation mix and more importantly, branch into renewable energy. The VRA, bent on exploring other cheap source of energy production for the country, is also looking into establishing coal-powered plants in the country. At a recent luncheon event in Accra, Kirk Koffi, the Chief Executive Officer (CEO) of the VRA indicated that the government was negotiating with China to set up a clean coal energy plant in the country. According to him, the use of clean coal in producing energy for the country would result in a sharp fall in electricity tariffs, stressing that clean coal was much cheaper than fuel and gas. On the renewable energy front, government’s plan is to increase the renewable energy supply in the national energy mix to 10 percent by 2020 from its current 0.1 percent. On the back of this projection, the Public Utilities Regulatory Commission (PURC) in collaboration with Energy Commission and Ministry of Energy & Petroleum have rolled out a plan to operationalise the Renewable Energy Feed–in–Rates Scheme under the Renewable Energy Act 2011 (Act 832). This, it is hoped, will encourage investments in the Renewable Energy Sector. The Renewable Energy Act 2011 (Act 832) mandates the PURC to set preferential guaranteed rates for renewable energy known as Feed-in-tariff (FIT). The FIT rate shall be guaranteed for a period of 10 years in order to enable investors recoup costs associated with construction, commissioning, operations and maintenance of plants and subsequently be reviewed every two years.
Credit: Volta River Authority
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INSURANCE
The joy of compulsion Government mandate to boost life insurance industry Georgina Adjei
At the launch of a new life insurance company in Accra recently, Lydia Bawa, head of the National Insurance Commission, announced that government would soon pass a law making it compulsory for employers to take out life insurance cover for their employees. he commissioner later told Citi FM, an Accra radio station that “workman compensation is compulsory in this country. Every employer is obliged to compensate an employee who is injured in the course of employment. The insurance of it is however not compulsory, so most employers do not insure that liability”. She added that “we want to make that compulsory so that instead of retaining that risk, the employer transfers that to an insurance company so that when there is an injury to anybody the insurance company is called upon to meet the obligation on behalf of the employer.” According to her, her outfit is in talks with the sector minister and “hope to have it by the end of the year.” Life insurance is a unique form of insurance due to the certainty of payout. Currently, local insurance companies provide policies to cover funeral, education, child health policy and many others. Many insurance companies have separate divisions dedicated to it. Despite this, it is widely thought that the life insurance sector has vast potential that is yet to be fully utilized. The introduction of a law making it mandatory for employers to provide life assurance for their employees could thus be an important fillip to the industry. To predict the impact of the law, Ghana can look to Nigeria, which fully implemented the law some years ago. In the latest report released by the National Pension Commission (PenCom) in Nigeria, the commission stated that “the pension
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industry recorded an increase in the number of organisations implementing the group life insurance policy as the number of complying organisations increased by 564 from 858 as at the end of the second quarter of 2012 to 1,422 in the third quarter. This represented an increase of 65.73 percent.” Currently, group premium income from business constitutes about 80 percent of Nigeria’s total insurance premiums, whereas in Ghana, group insurance accounts for only about 15 percent of the total premiums collected annually. The Life Insurance Council says the discrepancy can be attributed to employers in Nigeria being obliged to pay employee life assurance. In response to the announcement, the Ghana Insurers Association engaged key stakeholders at its Second Life Insurance conference on its feasibility and effective implementation. The Chairman of Life Insurance council, Cleland Coffie Bruce, who is also the Managing Director for Enterprise Life Assurance Company said employers already have some form of moral obligation to compensate their employees in the event of death or incapacitation resulting from work. Making it compulsory only insures them of that risk. “Whenever you have a financial obligation in the future, it pays to start planning for it now. That is what pensions are all about. That is what a life insurance scheme does. It is an obligation you face already. You will attain sixty years, you will go on retirement. A pension scheme is a contributory scheme where both the employer and the employee contribute. So it
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Insurance companies are however bracing themselves for greater scrutiny. The National Insurance Commission will take a keener interest in their operations in order to certify their operations and weed out any dubious operators. The upshot of this is that the sector as a whole would be given a more credible image. Issues of dubious policies and refusal to pay claims on time and refusal to pay claims will “Issues of dubious policies now be given greater attention and media coverage. This would be good and refusal to pay claims for both insurers and the insured.
Mr Bruce thinks that the compulsory payment would increase the total premium income collectable which could be used in infrastructural on time and refusal to pay developments in Ghana. “If we have group business from 15 percent as it claims will now be given For the insurance sector as a whole, stands now to about 50 percent, it greater attention and media the increased attention would means we could grow up our income coverage.” promote other policies they have on from the current GHs 350 million offer. Currently, most Ghanaians’ to about GHs 500 million and this could be converted to experience with insurance is via motor insurance, which like life investable funds. That is what drives most developed markets.” insurance will soon be, is compulsory. With this new change, the industry will be centre of renewed attention which it could President of the Ghana Insurers Association, Kwame Gazo be leveraged by companies to promote their other policies. Agbemyadzie also believes the move will significantly boost the financial sector and make more funds available for investors. Workers – and employers – will ultimately, however, be the “It is a positive development. It will create a large pool of greatest beneficiaries. As Mr Coffie puts it, life insurance funds for the insurance industry and these funds could be represents planning for an inevitable future expense and even available to industry and the economy and will help in long though it would have taken a government mandate to get there, term infrastructure development.” According to Kwame Gazo they would finally be doing the right thing. Agbemyadzie “because we don’t have long term funds, we use short term funds to finance long term projects which is putting a lot of strain on the financing of projects.”
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is something which has been adopted and we want to move a step further. What happens in the event of the death of the employee? What happens in the event of total incapacity of the employee? What happens to his family? This is something which should be covered,” he added.
SME
A question of capacity Why financing SMEs requires new thinking S. Kwame Appiah
There are few more discussed issues in the Ghanaian economy than Small and Medium-sized Enterprises and the need to turbo-boost their performance. This is for good reason as the bulk of Ghanaian economic activity is carried out at that level.
ecords at the Registrar General’s department show that some 90 percent of all registered companies are micro, small and medium-sized enterprises. To put this in further context, available data also suggests there are some 80,000 limited liability companies and 220,000 registered partnerships that make up the Ghanaian private sector. Out of these, the sector can be broken down further. Companies that employ less than five people and have fixed assets of less than GHc 20,000 are described as micro enterprises.
inadequate professional managerial competence. Growth in these companies is often impeded by lack of expertise and inability to deploy modern technology and make use of data. Policy makers and analysts make much of the role that SMEs play and can play. Much of the conversation revolves around the lack of financing that most observers believe, weighs down the sector and prevents it from achieving optimum growth. A closer look at this sector shows that many of the banks and non-banking institutions, despite corporate statements that declare the opposite actually do little for SMEs.
Around ninety percent of private sector operations in Ghana are run with twenty-strong workforce or oft-times, less. These companies contribute about 40-50% to the Ghanaian economy.
The reasons for this are not far-fetched. For financial institutions, it is a stark choice between serving large clients with track histories, established and well defined corporate practices, coherent record keeping and above all, big demands that yield big dividends on one hand; and on the other hand, small, poorly managed operations that require small amounts and return so little on the investment that some question whether it is an efficient use of their human and financial resources.
A common thread runs through the operations of companies in the small and medium end of the Ghanaian economy. They are typically dominated by the owner-manager who takes decisions on his own, despite being in possession of largely
While one would think that the boom in micro-finance services would address this, the reality is different. A large majority of the micro-finance companies do not have the capacity to serve growing firms and duly concentrate on micro-enterprises that
Small enterprises are those with employees between six and twenty-nine and fixed assets under GHc 200,000, while operations that have up to GHc 2 million in fixed assets and a payroll of between twenty-nine and two hundred are in the medium enterprise category.
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Philip Oti Mensah, Managing Director of Union Savings and Loans, a rapidly growing brand in the financial service sector, refers to such companies as being the “underserved middle”. “Large companies form the bulk of the portfolios for banks. Then we have the very small businesses that due to the growth in numbers of micro-finance companies are probably overfinanced now. So while everyone feels that everyone is there, no one is actually serving them,” he notes.
need a short-term overdraft. That way, you don’t end up paying for the loan at a time when you don’t need it.” Mr Mensah says while the natural reaction from business owners is hostile to what they deem to be unsolicited interference, they are eventually grateful for the advice. Given the typical structure of SMEs, it is unlikely that such insight comes naturally to them; even less likely that they would employ the professionals that would make such advice available to them. “We think they need that even more,” he says. In the search for solutions to the SME funding problem, little is said about what SMEs themselves have to do. The onus is largely placed on financial service institutions to make it happen. As profit-oriented organisations financial service companies are naturally loth to take on more risk than can be objectively justified So the missing corollary to the conundrum is for SMEs to find that capacity. Mr Mensah thinks that because financial service companies themselves have a lot to gain from the success of SMEs, it is a matter that should concern them. So Union Savings and Loans, for example is pioneering an SME clinic service for its clients in that bracket. Under the programme, small business owners are equipped with skills in cash flow management, record keeping, human resource management, branding among others.
Philip Oti Mensah
The free service is meant to help sustain small businesses and by that, secure its own investments. “You don’t want to “...it is easy to overlook, for deal with clients who don’t know example, the potential deposits what they are doing,” he says.
While not yielding the right results by way of actual support, the talk about SMEs that could be mopped up from is at least, in part, for good For financial service institutions, reason. SMEs are difficult to small businesses to help financial this could be an innovative way understand, and even more service institutions to serve, to tap into a potentially lucrative so to work with. Due to their ironically, some of their bigger market. With all the talk of nature and structure, they financing, it is easy to overlook, require specialized skill to help clients”. for example, the potential deposits them shape up and deliver the that could be mopped up from small businesses to help returns that financial service firms will find worth their while. financial service institutions to serve, ironically, some of their bigger clients. This means that while access to credit is important, the capacity to utilize that credit is just as important. Mr Mensah sees a lot of As margins reduce at the higher end of the market due to companies that are fatally weakened by the lack of institutional the power of large corporate depositors, the SME field could and managerial capacity. Many SME businesses take up loans become a very interesting arena. If SMEs themselves take the they do not need, harming their long term prospects in the opportunity to shape up their operations, there may well be an process. “We have clients who come here looking for loans who end to the cash drought. This means that initiatives such as the we find, do not actually need the loans. For example, if you are SME clinic from Union Savings and Loans could prove vital. expecting money in two weeks, it’s not a loan you need; you
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SME
require amounts ranging from GHc 200 to GHc 2000. Apart from concerns about killer interest rates, it is clear that the typical SME requires more in order to grow and play a significant role in the economy. The result is that while SMEs get the most mentions, they actually receive precious little attention.
CONFERENCES & EVENTS
ROGE-2014 (London): International Conference of Restructuring of the Global Economy
Ecosystems, Economy and Society: How large-scale restoration can stimulate sustainable development
The basic objective of the conference is to expose participants to the challenges that lie ahead as a result of the shift in the purchasing power of countries in the east and the west. The conference will bring together experts from various fields academics and professionals- to discuss and evaluate the options opening up on a common platform. It is expected that at the end of this exercise, the participants would be in a position to develop actionable strategies to put their organisations on a higher gradient of growth. Date: 23-24 June, 2014 Venue: University of Cambridge, Murry Edwards College, Trinity Hall, Huntingdon Road, Cambridge CB3 0D Contact: Call +0044208-8689883 or email info@abrmr.com
The aim of this high-level forum is to analyse how large-scale restoration can stimulate sustainable development. It will provide an international platform for scientists, practitioners, NGOs, business leaders and policymakers to discuss remarkable case studies, best practices and share better insights on the potential of large-scale ecosystem restoration for the improvement of people’s livelihoods, jobs creation and socio-economic development, together with the recovery of ecosystems functionalities, continuity and biodiversity. Date: 29-30 May, 2014 Venue: U.S. National Academy of Sciences, Washington DC, USA, 2101 Constitution Avenue NW, Washington, District of Columbia 2041 Contact: Visit www.ecosystems-economy-society.org for further details
International Conference on Advanced Trends in E-Learning System and Computer Applications (ICATESCA 2014 ) ICATESCA 2014 invites researchers, practitioners and academics to present their research findings, works in progress, case studies and conceptual advances in areas of work where education and technology intersect. Date: 4-5 July, 2014Venue: Frankfurt, Germany Contact: Visit http://www.icatesca.com/ for further details.
2nd Annual International Successful Leadership Summit Building on the inaugural conference, which took place in 2013 – the 2014 International Successful Leadership Summit aims once more to bring together leaders from around the globe and across different sectors to share leadership best practice and gain the roadmap and tools in the area of leadership to increase business productivity and create a facilitated forum to generate new business opportunities. Date: 17-18 June, 2014 Venue: London, United Kingdom Contact: Call Sam Atanda on 01895546238 or email 2014@successfulleadersconference.com
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International Conference on Emerging Trends for Sustainable Development and Human Capacity Building in the Third World Nations (ICETSDHCB 2014) The ICETSDHCB 2014 aims to bring together academics and professionals to share their ideas and recent findings on all aspects of Emerging Trends for Sustainable Development and Human Capacity Building in the Third World Nations. The conference will discuss relevant research topics in order to provide a broad vision on sustainable development of agricultural sector as a vital part of the rural economy, with emphasis on food security, environmental conservation, resources and economics management, and alternate renewable energy sources as well as oil and gas. Date: 28-31 May 2014 Venue: Legon, Accra, Ghana Contact: Call Jonathan Akuamoah on +233 23 044 1106 or visit http://sric.scholarlinkresearch.com for further details
APRIL 2014
Corporate Affairs Manager (Standard Chartered Bank - Ghana) The successful candidate will support the Regional Head of Sustainability Africa (RHSA), by effectively and efficiently working with both internal and external stakeholders to deliver the bank’s Sustainability agenda and initiatives for the Africa Region. As a key member of the Ghana team (and West Africa CA team), your duties will also include ensuring that the bank’s agenda in the areas of Public Affairs, Internal and External Communications, Sustainability and Issues Management are well implemented in order to support staff engagement and profile the bank as a market leader. Location: Accra Minimum Qualification: Successful candidate must have proven experience of managing NGO relationships; an existing network of sustainability contacts and the ability to combine rigorous internal management of legislative compliance with external policy development and communications. Contact: Visit www.standardchartered.com to apply.
To contribute to sustainability at an end market level by shaping the business environment through the planning and execution of campaigns designed to deliver the preferred regulatory future as defined through the strategy and budget cycle. To drive and manage the continuous development of BAT’s regulatory engagement with a view to promoting tobacco regulation which balances the interests of consumers with the interests of society Location: Accra Minimum Qualification: Educated to degree level with a minimum of 5 years experience in either marketing management (including brand campaign development and execution), CORA/Legal (with a government/regulatory aspect) or political affairs Successful candidate must also have excellent communication skills and a thorough understanding of the business including the wider industry. Contact: Visit krb-xjobs.brassring.com/TGWebHost/home. aspx?SID to apply.
Director of Finance & Administration, Ghana (WASH) Tetra Tech ARD, headquartered in Burlington, Vermont is currently accepting expressions of interest from qualified candidates for a potential upcoming project in the USAID funded WASH project in Ghana. The objectives of this project are to provide improved water, sanitation, and hygiene services; strengthen the regional WASH institutional capacity; improve the management of drinking water source quality; and improve the sanitation service delivery. Local and regional candidates are encouraged to apply. Location: Accra Minimum Qualification: A minimum of a Master’s degree in Finance, Accounting or a related field of expertise; he/she must also have a minimum of 10 years of progressively responsible financial experience managing the accounting and finance component for large donor-funded programs. Contact: Visit careers.tetratechintdev.com/ARDCareers to apply.
International Base Manager (FMC Technologies Inc) FMC Technologies, Inc. is a leading global provider of technology solutions for the energy industry. The company currently has an opening for a Subsea Services International Base Manager. The key responsibilities of the successful candidate will be to manage and prepare the Takoradi Service base and personnel for service projects and minor assembly operations in Ghana. His/her primary support functions will be the management of personnel, setup of operations and processes to effectively manage a service base. Location: Ghana Minimum Qualification: Successful candidate must posses a B.Sc. in Mechanical/Electrical/Business discipline or equivalent. Can be compensated with proven field or managerial experience. A Minimum of 10/15 years FMC experience or equivalent technical experience in drilling, completion, or intervention operations or management/ industry experience is also required. Contact: Visit careers.fmctechnologies.com/JobPosting to apply.
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Banking Technology Strategy and Transformation Consultant (IBM) IBM is looking for a Strategy Consultant for its Ghana operations. The successful candidate will work directly with clients to determine their business issues and recommend solutions that drive business value. As the Strategy Consultant you will use your in-depth consulting skills, analytical expertise and business knowledge to determine business objectives, as well as processes, measurements and appropriate tools for formulating hypotheses and testing conclusions that result in the best solution for business needs. Location: Accra Minimum Qualification: Successful candidate must have at least a Bachelor’s degree with at least 8 years experience in Strategy and transformation expertise in the banking sector. Contact: Visit jobs3.netmedia1.com/cp/faces/job_summary? to apply.
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EXECUTIVE SELECTION
Regulatory Affairs Manager - Anglophone Market (BAT)
OUTLOOK
Aid and Oil - can new oil discoveries reduce the need for foreign aid?
The International Monetary Fund (IMF) predicts that growing oil discoveries in developing economies like Ghana could reduce the dependence of such countries on aid from developed economies. A recent report authored by and published in Finance & Development, a quarterly publication of the IMF identifies some key features that donor aid frameworks should have in order to ensure that foreign aid flows continue to nudge recipients toward economic efficiency and better governance led by democratic institutions, and not retard the development process. The following is the introduction to the report. oreign aid has long been a sizable source of funding for developing economies. In 2012, major donors disbursed $127 billion, two-thirds of it to low-income countries in Africa and Asia. Foreign aid—more precisely official development assistance—is a drop in the bucket for donor countries, about 0.3 percent of their combined GDP. But it is a major source of funding for some developing economies— amounting to 15 percent of Liberia’s GDP and 5 percent of Burundi’s, for example. The general long-run objective of development aid is the alleviation of poverty and promotion of welfare in low and middle-income countries through budgetary assistance and access to technology—although there is no clear evidence yet to support a relationship between aid and economic performance. In recent years however, many developing economies, especially in sub-Saharan Africa, have found a new source of homegrown wealth that offers the same type of budgetary assistance as development aid—with none of the strings that donor countries often attach. Across Africa, discoveries of large oil fields are changing the financial picture for many developing economies.
Oil finds
Although there have been some important finds in south Asia and Latin America, the discoveries have been largely in subSaharan Africa. Some analysts have concluded that within a decade most African countries will be oil producers. Large discoveries—oil or gas fields that contain at least 500 million barrels of ultimately recoverable oil or gas equivalent—have already been made in such countries as Ghana, Kenya, Liberia,
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Mozambique, and Tanzania. Income from those discoveries can amount to a large percentage of a country’s GDP. That in turn eases spending constraints on governments. But the discovery of oil is not an unmixed blessing. Oil-rich countries have not all prospered, leading many to talk of the curse of oil, much as some analysts warn of aid’s potential to retard growth. Indeed, over the past few decades, economic growth in resource-rich countries (especially those with large hydrocarbon deposits) has, on average, been lower than in those that are resource poor. Whether there is a negative statistical relationship between resource richness and economic growth is widely debated. But even if oil wealth does not have a negative effect on growth there is still no strong evidence that the relationship is positive. There are a number of reasons why an oil discovery can have deleterious consequences. It can lead to strong currency appreciation that leaves other parts of the economy, especially manufacturing, uncompetitive. In other words, the oil sector prospers while other sectors falter. In addition, the riches tossed off by the oil sector lead to political and public administration corruption of individuals who may borrow lavishly to finance pork barrel projects and income transfers to curry favor with voters. If the oil boom goes bust then heavy borrowing can become a severe drag on the economy. The discovery of oil or other resources can also lead to an internal struggle over which region or branch of society deserves the benefits. Oil may also lead to interstate conflicts when oil reserves are near borders. Properly addressed aid programs can help countries—especially those with weak institutions and limited ability to use the newly found resources productively—
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Sudden wealth
Announcements of giant oil discoveries signal that a country is suddenly richer than before. To some extent, then, an oil discovery should diminish the rationale for continued aid aimed at supporting a country’s economic and social development. In other words, the often sizable stream of income from the exploitation of natural resources will relax developing economies’ budget constraints and they will need less foreign aid. At the same time, there are many strategic reasons why donors may wish to continue providing aid. One is to ensure access to oil and energy produced by the recipient nation. After all, oil and gas imports are essential to the smooth functioning of most advanced economies, which are the major providers of development aid. Toward that end, maintaining the flow of development aid helps bilateral relationships and facilitates access to those resources. And because major Western oil companies stand to win contracts to extract the oil, aid is a way to ensure hefty profits for companies in donor countries. To test whether the announcement of giant oil discoveries affects development aid, we looked at their timing. Data from Horn (2011) and the OGJ Databook (2013) document the precise time of discoveries and where and how much ultimately recoverable oil was found. Our calculations suggest that for the 170 countries we sampled over the period 1970 to 2012, the median net present value of the oil discoveries was 5 percent of GDP. Giant oil field discoveries are unevenly distributed across the world. As a result, we were able to examine the effect of the timing of a discovery on development aid in a large number of countries. In addition, using econometric techniques we can capture the effect of discoveries on development aid over the typical five-year period between announcement of a discovery and the start of production (and, therefore, revenue). Our results show no significant relationship between giant oil discoveries and changes in development aid. To test the robustness of our main result, we explore whether the results hold only for low-income countries or only for Africa. In order to reduce the possibility of measurement error, we also use data
for giant oil discoveries from different sources and reexamine the relationship. Results are robust and do not point to any significant change in aid after a recipient country announces a giant discovery. Moreover, there is nothing to suggest that donors maintain the level of aid until production begins and then scale back—there is no statistically significant difference five years after an announcement. Because studies have found that democracies are likely to receive more aid, we test whether the political characteristics of recipient countries—such as their level of democracy—induce more aid after giant oil discoveries. We find some evidence that among low-income countries, democracies receive more aid than non-democracies following a giant oil discovery. This result suggests that oil discoveries further deepen relationships between donors and recipient countries when political systems are considered viable over the long run.
Aid and Governance
We found little change in foreign aid to countries that discover oil. If the only goal of aid is to ease budget constraints on developing economies, then aid could be reallocated away from those economies to others that have not found new resources. But that would be a short-sighted approach. For example, shutting down foreign aid flows could undermine efforts to improve governance in recipient countries. As we discussed, oil discoveries can lead to corruption, conflict, pork barrel spending, and the withering of an economy’s non-oil sectors. Donors could use the incentive of foreign assistance, for all its flaws, to help recipients avoid these pitfalls, improve governance, and manage the economy to offset the fallout from a rising currency. To ensure that foreign aid flows continue to nudge recipients toward economic efficiency and better governance led by democratic institutions, the aid framework should include these features: • Incorporate a robust mechanism to build capacity for enhanced macroeconomic management of oil revenue. This will enable countries to tackle instability caused by oil price volatility and manage uncertainty about the value of the resource—two crucial elements of oil revenue management. The mechanism should also incorporate a government’s nonoil budget balance (before any interest payments) as the main metric to assess the scale of government expenditure and the injection of oil revenue into the economy. This will increase fiscal sustainability in the long run and reduce vulnerability in the short run. • Help ameliorate the problems in manufacturing caused by currency appreciation and enable the economy to diversify. The World Trade Organization leads an Aid for Trade program aimed at helping developing economies remove supply-side and trade-related obstacles, such as low safety standards and poor regional economic integration. Donors could direct recipients to take some of the steps in the program—for example, developing trade-related infrastructure, such as ports, to improve the competitiveness of non-oil sectors. These steps should help eliminate one of the major problems in small economies with big oil finds—the crowding out of other sectors. • Ensure that democratic institutions in the recipient countries are strengthened. Putting conditions on aid appears to be the main way donor countries can promote democratic, and therefore more legitimate, governance (Knack, 2004). Researchers have found that oil discoveries are often associated with an increase in authoritarianism (Ross, 2001; Tsui 2011). Tying aid to improvement in democratic institutions following oil discovery should be an important component of the larger policy framework guiding aid disbursement.
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OUTLOOK
deal with these problems. It is important, then, to examine the oil-aid relationship and the effects of supplanting foreign assistance with oil revenues.
MANAGEMENT
Selling customer service from the inside
How to please your customers by pleasing your employees Yvonne MacCarthy
Customers may be pleased to know that their service providers are doing the best for them and they expect all service providers to do their best in providing excellent customer service whether it is through their face to face, telephone or online transactions. The customer’s expectation is that a hundred percent of the time customer service has to be exceptional or at least, at its possible best. he reverse, however, seems to be the norm. The honest truth is that employees are the first to know whether a company is committed to their promise to deliver good service, owing to their own, intimate experiences with their employers. The customer is second when it comes to knowing whether an organization is committed to providing excellent customer service.
Once employees, especially customer service staff realise or feel that they have little ability to influence what happens during planning and production cycles, they stop offering the sort of information or feedback which could have led to solutions to some of the customer service problems the organisation has.
The quality of products and services received is the best index of the effectiveness of any company’s customer service. Better yet, customers will always find a way of telling you when they’re not satisfied or when they are disappointed with a product or service. That is of course, granted that you give them a chance to; make it easy for them to freely speak their mind; and as an organization, make a conscious to listen to and understand the customer.
It happens because they do not feel a part of the team and are not interested in being a part of any possible solutions. This same problem persists within different industries and companies. Most employees are quick to learn when managers and organizations as a whole don’t want their input. Who amongst us would continue to do something for which there was no appreciation or value?
Oftentimes, especially in our part of the world, we as customers don’t bother to express our dissatisfaction or disappointments for various obvious reasons. We just take our business elsewhere because usually, it’s because we have tried in various ways to convey our dissatisfaction and disappointments and the following happened: no one listened (though they heard us clearly); we were treated rudely or not given the chance to complain at all; or even that we had wonderful, meaningful conversations about our problem but nothing happened afterwards. There are logical reasons why this kind of customer frustrating breakdown occurs. One is that the employees who constantly talk and serve customers are not heard when they make their in-company contributions. They are treated like outsiders who have no connection with the business apart from being frontline staff. Customer service in this case is said to be bad internally.
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Why does this happen?
In most instances, selling customer service needs to begin first inside the organisation, to the people whose preferences and practices must yield to better, faster, cheaper ways of doing what they do. Internal customer service is key and absolutely necessary if employees are expected to contribute their quota in the perfect customer service scenario. As is often said, charity begins at home. Some organizations and managers are difficult to reach. They are inaccessible on a daily basis, distancing themselves from the feelings and feedback of their employees. They show absolutely no interest in the general welfare of their employees, sometimes even when it affects the role and output of the employee. The very people employed to sell good customer service to external customers are the ones being neglected internally. This experience can affect how those employees handle their customer service duties – they give only as good as they have experienced it. Consider the effects of abuse and neglect on
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So how can an organization get its employees to treat customers fairly and professionally through their interactions with their employees? First, have an open arm policy as an organization and have a management system where employees can feel comfortable to communicate with top management as often as possible without feeling like a bother. Some of the best ideas put out by organisations have emanated from lower level employees who were given the chance to make contributions to the organizations. Second, involve employees in decision making processes, especially if it has a lot to do with their responsibilities or roles in the organisation or if it directly affects their overall output. There is nothing scarier to an employee than being confronted with decisions which affect them but to which they contributed little. The employee feels straight away that the organisation doesn’t care about them or how they execute their duties. so guess what? They stop caring too. When employees are made to feel like a vital part of the organization, the organization thrives.
They should ask themselves however whether it is better to have a well-trained, knowledgeable and receptive employee for just a few days or an untrained and unreceptive employee for a much longer period? The latter is sure to alienate your customers and run down your business. Any serious organization, entrepreneur, manager or well-trained employee understands the importance of the statement, “happy employees make happy customers”. Such organisations make a conscious effort to maintain and improve customer service standards within their organizations so that their employees would have no difficulty delivering superior customer service to customers.
Yvonne MacCarthy (CSP, Cert FPC) is a customer service and interpersonal skills consultant and the Chief Executive Officer of Service Care Solutions and Client Service Institute, Ghana, providing practical customer service solutions for businesses as well as training in customer care for individuals. She is a member of the Personal Finance Society and the Institute for Customer Service, UK. She is a resource person on various media platforms including Citi FM, Multi TV, TV3, ETV and Radio Universe and also hosts a monthly show on TV Africa, “How are you doing, Ghana business?”
Third, invest in your employees. These investments can be through continuous training and development, providing incentives, reward and recognition schemes. Most organisations do not appreciate the enormous benefits that they would enjoy if they invested in their employees; they fear the employees would leave once they are well trained.
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MANAGEMENT
a young child from parents or friends at school. The abused victim eventually adapts to their situation and ends up as an abuser or a bully. This is what happens to unhappy, demotivated and undervalued employees; they go out there and give customers a taste of what they are feeling in the exact manner that their manager or organisation makes them feel. If an employee feels demotivated, undervalued and unhappy, so will your customers.
MANAGEMENT
Times have changed!
Will management change? Julius Ceasar-Tokoli
Will management change? That is a billion-dollar question that I’m afraid I cannot answer. But one thing is for sure, times have indeed changed! No one disputes that. Yet management has not changed very much to match or reflect the times, which leads me to the question, why does management still operate by principles that can best be described as relics best kept in the museum? Those principles were designed for an industrial age. Today, in the knowledge age, we need new principles to go by.
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Classical economics holds that the factors of production are land, labour and capital. Some add entrepreneurship. An entrepreneur must organize all those resources in order to manufacture. That was the case centuries past when production was conceived mainly in terms of physical products. While all such factors are still relevant for the production of physical goods, an entrepreneur no longer needs to acquire land, build a factory and employ labour by themselves as prerequisites to production. In the modern world where manufacturing can easily be outsourced to a foreign company on a different continent thousands of miles away, all the manufacturer needs to do is design the product; nothing more. Secondly, in many cases today, most of those factors of production are eliminated. In the knowledge economy, all the knowledge worker needs is a computer and a smartphone to run a multi-million dollar company. Labour is not an issue since he can sub-contract aspects of a project he can’t handle due to time or competence constraints to a partner anywhere in the world and work over the web. Thus in his case, land, labour, and to a large extent capital are totally ruled out of the equation of production. Hence, in light of realities as these, why should management continue to operate as if such so-called factors of production are cast in stone? In classical economics, scarcity is the problem of economics— land is scarce, skilled labour is scarce and capital is scarce. In the modern world, the opposite is the truth. Land is not a strict requirement, as argued above, to begin with. Skilled labour is plentiful (granted, quality may be an issue in certain instances but that is for another discussion and another time). And with the abundance of skilled, knowledge workers comes a huge pool of human capital which is more resourceful than material capital. Scarcity is thus a figment of the retrogressive economist and manager’s imagination. Instead, preservation and conservation of resources, knowledge management as well as curbing the tendency to be greedy are the real problems of modern economics. To the orthodox economist, competition is a catalyst for development since to them, it engenders creativity, innovation, quality products and services as well as customer satisfaction. But in the modern world, competition is archaic and is being exposed for what it actually is—a corrosive influence on humanity, while collaboration holds sway. Rather than stimulate creativity and innovation, competition in reality stifles them. In what sense? Instead of viewing the limitless universe for limitless opportunities, ideas and ways of doing things, competitors make benchmarks of each other, trying to out-do one another leaving all the plethora of opportunities untapped. As an example, a leading car
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manufacturer introduces a smart key. Suddenly, every other manufacturer panders towards the technology. Meanwhile, it’s possible to develop biometric access and start. Thus rather than relentless competition, the interests of the customer would be better served in collaborations such as is happening among airlines, financial institutions and hotels. So much technology is now available for business. One of such very potent technologies is the web. Through this and allied technologies and devices, the virtual workplace has become a reality. Properly harnessed, such technologies would not only save costs, but would increase productivity, improve work-life balance and enhance the general well-being of employees and managers alike. Such technologies thus render obsolete, the physical 9-5 workplace tradition that we have known all this while. In most brick-and-mortar offices, many employees undertake routine work that can easily be done from home. Yet, in the name of supervision, simplistically, management still requires employees to be physically present at the workplace. Meanwhile, if management were to allow employees to work virtually, it would drastically reduce operational costs in lighting, cooling/ heating as well as rent. Meanwhile, employees would also have the comfort of working from preferred locations conveniently and more productively. Along with technology, especially the web, comes knowledge. This phenomenon has become so pervasive and readily available that it is no longer the preserve of the privileged few. Management can tap into the knowledge of its employees and properly manage it to enhance brand identity and improve production. Thus, it is high time management stopped deluding themselves that they have all the information and knowledge. To make the most use of knowledge available to the organization requires revising the organization structure and re-engineering the assignment of roles and responsibilities. Understandably, this is challenging, but anything worth doing is challenging. And unless management does that, knowledge will continue to be wasted. The results would be deeper impoverishment with attendant social vices that would boomerang at management. Among others.
A unique workforce
With the influence of technology and knowledge, a new, enlightened, daring and ambitious workforce has emerged. While this is viewed by many employers as a bane, it is really a blessing in disguise. The problem then is for management to adapt rather than expect the workforce of today to display the same qualities of yesterday’s workforce. These are just but a few changes that have occurred which impact management. And these require management to unlearn the past and relearn the present. Unless that is done, there would be no significant improvement in the world’s economy. The writer is the CEO/Managing Partner at Soleil Consults; a Management, Strategy and IT firm located in AccraGhana (mlt@soleilvision.com)
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he changes in the structure of global trade and business have rendered many long-held and cherished principles and assumptions irrelevant. It is important that managers begin to do things differently immediately. Several theories that underpinned economics in centuries past are no longer relevant.
MANAGEMENT
Tagging the sales professional:
an identity crisis J. N. Halm
The gentleman was confused as he was introduced to the ‘Sales Manager’. This was not the young man who had come to his office selling life insurance. There had to be a mistake somewhere. Or had he been tricked by a con artist? In fact, he had given his business to that person because he preferred to do business with someone of a certain standing in the company. He would not have given the business to that life insurance salesperson if he had been aware that he was just sales representative. he Manager, sensing what had happened, perceptively took the man into his office and asked for the description of the said ‘Sales Manager’. The description given by the customer was exactly that of one of his sales representatives. In a calm and professional manner, he allayed the fears of the customer and explained that truly the gentleman who had sold the insurance to him was one of the firm’s ‘Sales Managers’. He then went ahead and provided him with all the assistance the man needed. The customer was glad and left with a very positive impression about the company and promised to bring more business their way. After the customer left, the Manager was left in a deep dilemma. What was he supposed to do? The sales representative had falsely presented himself to a customer but by so doing had gotten a deal which he otherwise could not have gotten. Should this matter be reported to Management for sanctions to be meted out to the offending sales representative? Or should this be handled at the branch level?
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I have always appreciated the importance of names, titles and all forms of nomenclature in any given profession. However the dilemma facing our manager in the opening vignette clearly illustrates the gravity of the issue, if not handled properly. As a matter of fact this story was narrated by an attendee to a recent sales training seminar I facilitated. An interesting debate ensued among the other participants after that and I believe readers will hold discussions in that direction after reading this piece. How important is the title given to a sales professional or to any professional for that matter? Does it matter what appears on your complimentary card? Do the designations we give ourselves improve our chances of making a sale? These are some of the issues I would love readers to think through. I would present the two sides of the debate – from those who believe professional sales has nothing to do with the title given to the sales professional and from those who think otherwise. Being in sales consulting and training has brought me into contact with many business professionals. One thing I have always found interesting are the titles on their call cards. Some titles require some effort to decipher what they actually stand
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I personally have had experiences in my days as a Customer Relationship Officer (see my title?) of a bank, when some managers of companies I had called on refuse to do business with me because I was not designated as ‘Manager’. Some customers I interviewed for this article suggested that they would much rather happier dealing with whoever the sales representative was ‘representing’.
What about the common term ‘sales agent’? By common knowledge, a sales agent is someone who buys or sells for Rod McKinnis Chief Executive Officer/Founder of the another in exchange for a commission. Therefore customers McKinnis Consulting Group argues that designations such are justifiably suspicious of sales agents when they come across as Business Development Officer and Business Procurement as being over-persuasive. Customers will begin to suspect that Specialist can ultimately rob an organisation of potential sales. the agent is only in it for the commission, and not for the He is of the opinion that a refusal to place the word ‘sales’ on customer’s welfare. This will ultimately result in a loss of the one’s card is a sign of a lack of pride in the sales professions. sales opportunity. How about Customer Representative? A He further argues that this affects business partner of mine will prefer the sales identity which is a measure that term since it indicates to him that of a salesperson’s pride of the sales “I believe one factor in the person is his link to the company profession. If a person views selling that the person’s primary job considering what a company and as noble, they are considered to have is to make sure he, the customer, is a strong sales identity. The opposite should call its salespeople always happy! Another term such as is true for those who view a sales ‘Company Representative’ changes position as something to be ashamed is what its competitors are the focus from “I’m here to sell you of; they are considered to have a calling their salespeople.” something” to “I’m here to make weak sales identity. sure our company is meeting all your needs.” To McKinnis, salespeople with weak sales identities will underperform within 6 months of joining an organization and What is the appropriate name to give to sales professionals? ultimately “self select” out of the sales profession within 18 Some companies consider what their competitors are calling 24 months. He reveals that “we found people with weak sales their salespeople. I have heard of direct competitors whose identity prefer to apply for “sales” positions with deflected titles salespeople carry different titles for the same job specifications. because they insinuate less sales accountability.” Whilst one company calls its direct salespeople ‘sales reps,’ the competitor refers to their salespeople of the same status as According to this sales consultant, unless detected, salespeople ‘sales counsellors’; even others refer to theirs as ‘sales managers’. with weak sales identity will struggle and steal valuable resources Another company refers to its salespeople as ‘relationship from the organization via increased turnover, higher training officers’ whilst a direct competitor calls its salespeople ‘client costs and poor sales results. His averments call for serious advisors’. thinking, especially on the part of sales managers who regularly witness high staff turnovers within six months of training. If you decide to go for a name change here are a few of my favourites. You are free to choose from Solutions Analyst, At the sales training seminar I referred to at the opening, there Relationship Manager (or Relationship Specialist), Business were some brilliant opinions from the participants on the need Development, Account Executive, Community Relations, for a change in the titles of the sales representative. Though Customer Relations, Marketing Consultant, Vice President, these professionals were speaking as regards the company they Loan Officer, Mortgage Originator, Solutions Engineer, worked for, I believe their opinions are representative of some Solutions Specialist, New Business Director, etc. views in the sales profession. According to one participant, there are customers who are not comfortable dealing with ‘small Of all the titles I have come across in my sales consulting career, fishes’ and prefer someone with some clout in the company. these however are my personal favourites: Results Specialist, This was the case in the opening vignette. Such customers will Results Expert, Results Producer, Results Developer, Results refuse to strike a deal with someone they believe is not in the Manager or Results Supervisor. The choice is yours! position to solve problems decisively were they to arise.
The writer is the CEO and Principal Consultant of Exsellers International, LLC, an avant-garde sales training and consulting firm involved in turning around and improving the sales fortunes of its partners through cutting-edge training seminars, recruitment and placement of highly trained sales professionals, and the provision of state-of-the-art sales-boosting products and services. He blogs at www.exsellers.blogspot.com. You can reach him on 233-24-3157948/233-27-4930493 or exsellersghana@yahoo.com
MAY 2014
GHANA BUSINESS & FINANCE
53
MANAGEMENT
for. Personally, I believe that among those of us who make a living selling, it matters little what appears on your call card, desk-top label or door signage; all you are really doing is selling. Why then do we give ourselves all those fanciful titles? A few interesting titles or designations I have come across are Account Manager, Business Manager, Account Executive, Account Representative, Team Manager, Area Representative, Account Specialist, Customer Representative, Territory Manager, Business Development Manager, etc.
TOOL KIT
Innovation packed into elegance
-the Samsung Galaxy S5 Samsung’s Galaxy S5 evolves from the Galaxy S4 and adequately captures Samsung’s production concept of providing users of its gadgets with trend-setting features in stylish designs. The Galaxy S5, compared to the Galaxy S4, is more solid and looks more well-packaged thanks to the wider back and the grippier battery cover. The camera has been upgraded to give clearer, faster snaps. The fitness-tracking abilities of the S5 run on its powerful all-new S Health 3.0 app that allows users to monitor their daily exercises and keep track of their health data, while its embedded Heart Rate sensor enables one to check one’s heart rate at any time. Clearly, Samsung has packed into the S5 beneficial features that go beyond sleekness and durability. The Galaxy S5 also comes with a fingerprint scanner making it, undoubtedly, the most secure Galaxy phone Samsung has ever
made. The S5 has a larger battery with a bigger, brighter screen and a fast processor. The phone even comes with a functionality that enables users to prolong battery life by turning into the Ultra Power Saving Mode. This mode turns the screen black and white and shuts down all unnecessary features to minimize battery usage. This feature makes the Galaxy S5 an excellent choice if you want to spend some time away from the charger every so often. On a closer look at the specs sheet of the S5, one can easily place it at par with the best smartphone on the market. The S5 has a 2.5GHz quad-core CPU, with a 2GB of RAM and a 16 / 32GB of memory (with up to 128GB extra through microSD). Its screen of 5.1-inches comes with added biometrics, and could easily pass as one of the most vibrant screens on the market. One of the key features of the Galaxy S5 is the fact that it is water-resistant with IP67 rating, meaning you can literally dunk it into water for a short while. It is also dust resistant which makes the uncovered headphone port all the more impressive as it makes the S5 much easier to use without having to pull open a flap to listen to some tunes. The S5 is currently available on the Ghanaian market and at a recent media event to introduce the phone onto the market, Mr Harry Park, the Managing Director of Samsung Electronics West Africa reiterated Samsung’s responsiveness to the needs of its customers. The company has thus arranged with a number of local banks to provide credit lines for customers to purchase the Galaxy S5 on credit. The launch of the Galaxy S5 also coincided with the opening of Samsung’s newest Premium Experience Shop at the plush Icon House in Accra.
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GHANA BUSINESS & FINANCE
MAY 2014
RECOMMENDED READING
Looking Down On Leaders Iain J. Martin provides a bird’s eye view of business and boss Barry Silverstein but is “innocent and ignorant about doing business in Asia,” is a classic case of one not being prepared for cultural differences. Unaware of Asian customs, Cyril is put into uncomfortable social situations and encounters foods that, to a Westerner, seem downright repugnant. But these experiences pale in comparison to the roadblock Cyril faces when he tries to sell a division he runs to Asian buyers. Cyril finally understands that the sale can occur only if he follows the unwritten law of backroom bribery.
Iain Martin’s unusually titled leadership book, Looking Down On Leaders, is smart, insightful, and just plain fun. A Scottish executive coach who counsels CEOs around the world, Martin wanted to write a different kind of book about how to be a leader from his unique perspective. The result is a loosely organized work that is stylish and delightful to read, offering wise and witty observations about leadership rather than championing a particular method. Martin’s approach is a breath of fresh air in the business leadership category. First and foremost, his book brims with personality. Rather than adopt the more traditional, serious business tone associated with most volumes on leadership, Martin’s freeflowing prose sparkles. Utilizing a strong first-person style, the author recounts numerous entertaining and educational stories about his business experiences and the leaders he has met. Of particular interest are his interactions with leaders who face the challenges that often arise when working with people from other cultures. For example, Martin’s story about Cyril, a European manager who works for an Asian company
56
Martin does more than tell engaging stories; he uses them to discuss various aspects of leadership, including practices and principles that he invariably gives memorable names, such as “The Morale Curve,” “The HollowCube Organisation,” and “Excel Leadership.” The author explains these concepts along the way and illustrates a number of them with hand-drawn charts, a perfect complement to the informal, down-to-earth text. Chapter titles and subheads are also quirky and pun-filled in keeping with the book’s light tone. Martin employs another creative technique as well: he introduces “MacMentor,” a kind of alter-ego character who offers wise commentary at the end of each chapter. MacMentor’s observations summarize and punctuate the content with key takeaways that provide the serious foil to Martin’s high-spirited, humorous voice. With its discrete chapters, Looking Down On Leaders is the type of book that can be enjoyed in one sitting or in segments, a delicious little bite at a time. However one decides to devour it, this amusing guide to leadership elicits laugh-out-loud moments while imparting a true sense of what it takes to be a great leader.
GHANA BUSINESS & FINANCE
MAY 2014
STATS & INDICES
Trading Results - GH Cedi as at Wednesday 16th April, 2014 Share Code
Year High (GHS)
Total Shares Traded
Last Transaction Price (GHS)
AADS
0.52
0
0.52
Daily Interbank Forex Rates as at Monday 14th April, 2014
ACI 0.06 0 0.06
Currency
Pairs Code
Buying
Selling
U.S Dollar
USDGHS
2.7442
2.7468
Pound Sterling
GBPGHS
4.5913
4.5965
AYRTN 0.18 500 0.17
Swiss Franc
CHFGHS
3.1364
3.1388
BOPP 3.30 0 3.00
Australian Dollar
AUDGHS
2.5799
2.5841
Canadian Dollar
CADGHS
2.5043
2.5065
Danish Kroner
DKKGHS
0.5109
0.5113
CPC 0.02 600 0.02
Japanese Yen
JPYGHS
0.0270
0.0270
EBG
New Zealand Dollar
NZDGHS
2.3834
2.3874
Norwegian Kroner
NOKGHS
0.4630
0.4632
Swedish Kroner
SEKGHS
0.4205
0.4207
GCB
S/African Rand
ZARGHS
0.2621
0.2623
GGBL 6.20 0 5.80
Euro
EURGHS 3.8143 3.8174
Chinese Reminbi
CNYGHS
BCEAO
GHSXOF 171.83 171.97
GWEB 0.04 0 0.04
Dalasi
GHSGMD 14.41
HFC 1.25 0 1.25
Ouguiya
GHSMRO 108.44 108.54
Naira
GHSNGN 58.57
Leone
GHSSLL 1574.72 1576.22
PZC
0.79 300 0.63
WAUA
WAUGHS 0.1978 0.1978
SCB
20.56 100 19.02
SCB PREF
0.52
SIC
0.52 1,200 0.46
0.4418
0.4422
14.42
58.62
Treasury Bill Rates
AGA
37.00 0 37.00
ALW 0.06 0 0.06
CAL
1.04 1,900 0.88
CLYD 0.04 0 0.04 CMLT 0.16 0 0.16
7.98 100 6.20
EGL 2.50 0 2.35 ETI
0.24 300 0.22
FML 7.55 0 7.52 5.05 44,600 4.01
GLD
26.13 0 23.00
GOIL
0.89 4,800 0.89
GSR 2.75 0 2.75
MLC 0.39 0 0.35 PBC 0.17 0 0.17 PKL 0.06 0 0.06
0
0.52
SOGEGH 1.17 14,300 0.79
as at Monday 14th April, 2014 to Friday 18th April, 2014
SPL 0.04 0 0.04 SWL 0.03 0 0.03
Period
Discount Rates Discount Rates
91 - Day
22.7032%
24.0693%
182 - Day
19.2125%
21.2542%
1 - Yr Note
-%
22.5000%
UNIL
2 - Yr Fixed Rate Note
-%
23.0000%
UTB 0.49 0 0.44
MAY 2014
TBL 0.35 0 0.25 TLW
34.98 5,610 30.09
TOTAL 6.56 0 6.55 TRANSOL 0.03
0
0.03
18.31 600 18.08
GHANA BUSINESS & FINANCE
57
COMMODITIES
Wholesale Prices (GH¢) Average Unit Weight Accra Bawku Kumasi Tamale Techiman Takoradi Dambai this week last week Cassava(Fresh Tubers) Bag 91kg 60.00 N/A 35.00 80.00 35.00 70.00 50.00 55.00 54.33 Cassava (Gari) Bag 68kg 100.00 115.00 170.00 116.00 82.00 135.00 116.00 119.14 119.14 Cowpea (White) Bag 109kg 290.00 195.00 170.00 200.00 180.00 290.00 196.00 217.29 217.29 Groundnut (shelled) Bag 82kg 340.00 315.00 280.00 236.00 250.00 320.00 276.00 288.14 289.57 Maize (white, grain) Bag 100kg 90.00 70.00 95.00 56.00 62.00 100.00 76.00 78.43 77.71 Millet (grain) Bag 93kg 140.00 115.00 115.00 96.00 100.00 200.00 116.00 126.00 124.14 Rice (imported-unclesam) Bag 50kg 190.00 N/A 200.00 N/A 190.00 210.00 N/A 197.50 197.50 Rice (local-white) Bag 100kg 290.00 195.00 200.00 156.00 170.00 120.00 196.00 189.57 187.57 Soya Beans Bag 109kg 210.00 95.00 115.00 96.00 160.00 220.00 116.00 144.57 145.29 Tomato (cooking) Crate 52kg 220.00 75.00 90.00 100.00 120.00 300.00 108.00 144.71 148.00 Wheat (Grain) Bag 50kg 150.00 115.00 130.00 125.00 150.00 160.00 N/A 138.33 135.00 Yam (pona-medium) 100 tubers 250kg 300.00 N/A 230.00 160.00 310.00 380.00 220.00 266.67 263.33 Week ending 11th April. 2014. Retail Prices (GH¢/Kg) Average Accra Bawku Kumasi Tamale Techiman Takoradi Dambai this week last week Cassava (Fresh Tubers) 0.84 1.20 0.56 0.90 0.60 1.00 0.30 0.77 0.76 Cassava (Gari) 1.59 1.76 3.00 1.76 1.30 3.00 1.76 2.02 2.02 Cowpea (White) 2.80 1.85 1.92 2.20 2.00 3.50 1.83 2.30 2.28 Groundnut (shelled) 4.34 3.90 3.85 2.92 3.50 4.00 3.41 3.70 3.70 Maize (white, grain) 1.00 0.80 1.15 0.60 0.80 1.20 0.80 0.91 0.89 Millet ( grain) 1.60 1.29 1.54 1.07 1.30 2.10 1.29 1.46 1.44 Rice (imported-unclesam) 4.00 N/A 4.80 N/A 4.80 5.00 N/A 4.65 4.65 Rice (local-white) 3.00 2.00 2.77 1.68 2.00 3.20 2.00 2.38 2.32 Soya Beans 2.00 0.91 1.40 0.91 1.50 2.40 1.10 1.46 1.47 Tomato (cooking) 4.12 1.50 2.50 2.00 3.30 8.00 3.00 3.49 3.60 Wheat (Grain) 3.50 2.50 3.00 2.52 4.00 3.80 N/A 3.22 3.09 Yam (pona-medium) 1.28 N/A 1.30 1.20 1.50 2.50 1.40 1.53 1.51
NB:Retail Prices are provided in standard measures (Kgs or Litres) as local measures tend to change for each market. * Accra market is Agbogbloshie * Kumasi is the Central market. Visit www.esoko.com or call 1900 to get prices by SMS
Maize White Maize white in Bawku experienced 18percent increase on the retail market from 68pesewas to 80pesewas. Prices remained stable on the other markets over the week. The wholesale price of the commodity per 100kg bag also went up from GHS 65.00 to GHS 70.00 representing an 8percent increament in the price of the commodity.
Fresh Tomatoes
The price of fresh tomatoes dropped slightly by 10 and 8 percent in the Kumasi and Accra markets over the week. A crate of the commodity which sold for GHS 100.00 and GHS 240.00 the previous week closed this week at GHS 90.00 and GHS 220.00 in Kumasi and Accra respectively. Prices on the retail market also showed a similar trend as it dipped in Kumasi by 13 percent from GHS 2.86 to GHS 2.50, and 15percent in Accra also from GHS 4.83 to GHS 4.12. In Techiman, the price of the commodity went up from GHS 3.00 to GHS 3.50 denoting 10percent increament.
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GHANA BUSINESS & FINANCE
Market Profile
Tamale is the administrative capital of the Northern region. It has a projected population of 600,000 according to the 2010 census. The town is located 600 km north of Accra. Due to its central location, The Tamale metro serves as a hub for all administrative and commercial activities in Northern region. It is one of the regional markets on the Esoko platform and also one of the most important markets for the commodity index. The market attracts lots of people from the three (3) Northern Regions, the Southern sector as well as people from neighboring Burkina Faso and Togo. Visitors to Tamale are generally made up of traders and businessmen. This trend has resulted in the establishment of two (2) markets in Tamale, one being solely for retailing and the other being a wholesaling market. The retail market attracts residents in Tamale, while the wholesale market attracts traders and businessmen from other regions and neighboring countries. On the average about 50,000 traders and businessmen visit the market. Some of the commodities that are traded on the market include soya beans, sorghum, millet, tomato, cowpea, maize, yam etc.
MAY 2014