GB&F November 2014 by Ghana Business & Finance

NOVEMBER 2014 / ISSUE 042 GH¢10.00

EPA:

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DIPLOMATIC BLUES:

Ghana Cote d’Ivoire oil debacle

THE FIRST BUSINESS READ IN GHANA

BUSINESS & FINANCE MAGAZINE OF THE YEAR 2014

This award is dedicated to the Management and Staff of ABM, and their numerous patrons, advertisers, subscribers, readers and partners. Ghana Business & Finance magazine - Ghanaâ&#x20AC;&#x2122;s foremost source of credible intelligence, analysis and reports

CONTENTS ISSUE 042 / NOVEMBER 2014

22 Cover

As KLM celebrates its 95th anniversary worldwide, …

24 External Trade Front Cover: KLM celebrates its 95th Anniversary

The EU is far advanced in the functional areas in the EPA while Ghana is lagging far behind. That is why most CSOs were against the EPA.

34 Regional Integration 6

Briefs

Highlights of events that trended the business world in Ghana during the past month.

10 Economy

Spare capacity occurs when actual production is less than what is achievable or optimal for the economy or a firm.

12 Energy

Analysts agree that the low supply of, and high demand for, energy has led to the high cost of energy prevailing in Ghana.

18 Bank & Finance

The recurring border dispute between Ghana and Cote d’Ivoire brings to the fore the insecurity at the common maritime boundaries of West African states, and the need for more effective collaboration.

40 Outlook

An analysis of a basic global healthcare metric - doctor to patient ratios - may be the key in helping to identify the next West African states most vulnerable to the ongoing Ebola outbreak.

48 Doing Business

There are weaknesses and difficulties in starting a business, in addition to accessing finance.

In spite of the economic malaise, one sector that seems to consistently rise above the ashes is banking.

Businesses in Ghana need to start asking themselves some difficult questions. What expectations do they have?

54 Events

Make a date and attend important conferences globally.

56 Book Review

Read an appreciation of Nigerian Nobel laureate, Wole Soyinka’s, tail-spinning autobiography.

Figures speak louder than words for the economy

58 Commodities Regional Integration: Page 34

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.

NOVEMBER 2014

50 Perspectives

57 Stats & Indices

20 Agriculture

Despite its importance, sectoral growth has lagged behind that of other sectors and has been unpredictable, as most farming is reliant on rain.

Outlook: Page 40

Market prices researched and Esoko

in October compiled by

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

GHANA BUSINESS & FINANCE

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

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In contemporary times, there is no gainsaying that regional economic and political integration is a serious business that has been embraced by many countries grouped into geographical regions. What with the emergence of the European Union (EU), North America Free Trade Agreement (NAFTA), Association of South East Asian Nations (ASEAN), Caribbean Community and Common Market (CARICOM) and Economic Community of West African States (ECOWAS). Particularly in Africa, the existential significance of integration for the postcolonial modern nation-states has been underlined by many scholars, technocrats and politicians. In the 1980’s, the Berg Report recommended economic integration with its Lagos Plan of Action. “Regional integration in Africa has long been recognized as essential to address the issues of the small economic size of many countries and the often arbitrarily drawn borders that pay little heed to the distribution of natural endowments.” The latter part of this quote from ‘De-Fragmenting Africa: Deepening Regional Trade Integration in Goods and Services,’ a 2012 World Bank publication, hit the nail on its head as far as the current maritime border dispute between Ghana and her western neighbor, Cote d’Ivoire over hydrocarbon resources is concerned (See page 34 for details). The post-colonial arbitrary demarcation of the nautical boundary between the two fraternal West African countries is the main cause of the dispute. Besides the haphazard boundary delineation, the national interest of both countries accentuated the altercation over oil and gas. Being the fundamental raison d’être for the existence of Ghana and Cote d’Ivoire, national interest has undermined the good relations between the two countries. If not for what Professor Paul Seabury described in 1963 as the “purposes which the nation, through its leadership, appears to pursue persistently,” the historical, cultural and diplomatic commonalities between the countries are too glaring for them to clash. Both countries share ethnic and linguistic roots as the Akans, Nzemas and Lobis can be found within their jurisdiction. Both are members of the ECOWAS, African Union, Francophonie and the United Nations. The bilateral relations between both disputants are consolidated by the Ghana-Cote d’Ivoire Joint Commission for Technical Cooperation. So with these relations between the countries, why should they squabble over resources? The answer is obvious: National interest. This imperative is underlined by Professor Gilbert Bluwey in his ‘Understanding International Relations’ (2002): “[E]very government acts in the international sphere first, to preserve its national sovereignty, territorial integrity and prosperity of its people. This three-fold objective is basic and it is referred to as the objectives of national self-preservation.” Both countries’ national interests have subsumed the all-important role that ECOWAS was founded in May 1975 to play. According to Professor S.K.B. Asante, “ECOWAS was established to promote cooperation and integration, leading to the creation of an economic union in West Africa in order to raise the living standards of its peoples and to ensure growth and contribute to the progress and development of the African continent” (‘Ghana and the Promotion of Pan-Africanism and Regionalism’ – 2007). There is no doubt that the boundary dispute is a setback to regional integration. The countries’ resort to arbitration by international tribunals is better than aggravating the dispute with bellicose statements and belligerent actions. They must, therefore, respect the courts’ verdict without reservation. Presidents John Mahama and Allassane Ouattara should apply mature diplomacy to resolve the dispute. The plea of the peoples of these ECOWAS neighbors to their leaders is that they should not allow narrow national interest considerations ruffle the warm relations existing between Ghana and Cote d’Ivoire. The two countries should endeavor to strengthen their partnership with improved cooperation and collaboration. If co-ownership of the common boundary which contains oil and gas would help resolve the dispute, then the two countries should embrace it. After all, the destinies of both are intertwined. Thus, essentialistic humanism, not retributive legalism, should be the guiding principle of the countries.

Ayuureyisiya Kapini Atafori

Acting Editor (+233 024 2385374)

Ghana Business & Finance magazine is published by

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EDITOR’S SUITE

Resolve Ghana-Cote d’Ivoire oil border dispute with fraternal partnership

BRIEFS

Ghana’s first cross-sector e-platform for SMEs launched Invest in Africa (IIA), an organization focused on tackling shared private sector challenges, has launched the African Partner Pool (APP), Ghana’s first crosssector online business directory for Small- and Medium-sized Enterprises (SMEs). This directory, under the URL: www.africanpartnerpool.com, was created to simplify the local sourcing process by connecting independently validated Ghanaian SMEs with international and domestic companies. The directory aims to increase the visibility and credibility of the SMEs and support international and domestic companies who want maximize their local supply chains quicker and more cost effectively through its search functionality. Local businesses registered on the APP will have a profile page to promote

their business on, while international and domestic companies are able to use a search tool to help them find suppliers with the qualifications, experience and standards they need. A tender’s notice board also features buyers’ tenders, giving local businesses greater visibility of opportunities. A press release noted that APP was developed in response to a ‘David and Goliath: Creating a level playing field for Ghanaian SMEs’ survey, which the IIA commissioned in early 2014. The purpose of the survey was to understand the obstacles faced by local and international companies, and subsequently devise solutions to create and support local market growth. According to the research, international companies seeking local partners faced difficulty identifying

validated local SMEs from which to procure goods and services. Whereas, according to the survey, nearly eight in ten SMEs managers reported facing obstacles when trying to get contracts from international companies due to lack of access to timely information about the international companies’ procurement activities. “The African Partner Pool is the core of IIA’s work in Ghana. This directory will assist local suppliers promote their businesses and increase their ability to tender more competitively. It will also help them access training and support from Invest in Africa’s Partners and the African Development Bank to build capacity and grow their businesses,” said Sam Brandful, IIA’s Ghana Country Manager.

Access Bank wins best bank award Access Bank was adjudged Bank of Year for 2013 at the 13th Ghana Banking Awards held on November 1 at the Labadi Beach Hotel in Accra. Access Bank won from among 25 commercial banks at the annual awards that is usually based on the published financial statements by the competing banks.

The awards are based on a survey of the views and opinions of customers who use the services of the banks. Access Bank also won Best Corporate Social Responsibility Bank, first RunnerUp in Enterprise Finance and second Runner-Up in Household Finance. Standard Chartered Bank picked two awards on the night: Best in Trade Finance and Best Financial Performance. Zenith Bank emerged the Best Bank in Customer Care, while the Indian Bank BARODA came on top

in terms of Competitive Pricing. GT Bank was recognised as Best Bank when in Product Innovation. New entrant, Royal Bank, was honoured as the Best Growing Bank for last year. The Best Bank in Agriculture went to SG-SSB, while Best Long Term Financing was picked up by ADB. Fidelity Bank took the award for Best in Household Financing. UT Bank was adjudged the most active E-zwich Bank.

LAMUDI holds “sustainable real estate” roundtable Lamudi Ghana believes that the country should adopt pragmatic steps towards developing a sustainable real estate sector. In view of this, Lamudi is organizing a roundtable discussion in Accra on energy-saving systems and energy efficiency materials; sustainable materials and incorporating local materials into real estate; urban development and the future of housing; issues related to obtaining land; and the professionalism of agents and brokers. Members of the discussion panel include Kwame Ankapong of Land & Property Investment Consultant, Brandon Rogers, Design/Build Consultant, Akosua Obeng, AGIA, Architect Orthner of Orthner & Associates, and Narenth Tetteh, Sales Manager, Co-Owner Homes. 6

Ghana Gas plant to start operations this month The Ghana National Gas Company (GNGC), operators of the Atuabo gas processing plant, has confirmed that the gas plant would officially start operations this month. GNGC disclosed that the plant would be running on smaller volumes of natural gas at its initial stages. The plant would be in full production during the first quarter of 2015, ramping up its intake volume to 120 million standard cubic feet (SCF) of gas. The plant is expected to process an estimated 1.2 trillion SCF of natural gas from the Jubilee field.

GHANA BUSINESS & FINANCE

NOVEMBER 2014

President John Mahama has asked Minister of Trade and Industry Ekwow Spio-Garbrah to chair the Promotion of Made-In-Ghana Committee, according to a statement signed by Nana Akrasi Sarpong, acting director of communications of the Ministry. President Mahama asked Dr. Spio-Garbrah to take up the position “due to the importance of the initiative to Government.” At a recent meeting of the committee, he noted that the Promotion of Made-In-Ghana goods and services was very critical to the strengthening of the cedi, the country’s currency; increasing exports and narrowing the trade and budget deficits.

The committee is made of representatives from the Ministry of Trade and Industry, Ghana Trade Fair Company, Brand Ghana, Unilever, Gratis Foundation, Association of Ghana Industries, Nestle Ghana Limited, Council for Scientific and Industrial Research and Ghana Standards Authority. He called for the expansion of the committee to include representatives of the Advertisers Association of Ghana, Institute of Public Relations, Ghana Journalists Association, Chartered Institute of Marketing Ghana and Consumer Protection Association of Ghana. Their inclusion, he said, would help facilitate the committee’s work in the promoting the campaign for locally manufactured products. He directed the Secretariat of the committee to invite these associations to nominate their representatives. He said the promotion of MadeIn-Ghana goods was not a new initiative in the country, citing the ‘Operation Feed Yourself ’ programme in the Acheampong era and the late Dan Lartey’s ‘Domestication’ agenda. He added that it was now time all

Ghanaians put in more effort to help promote locally produced goods in order to create more jobs, grow local industries and increase Ghana’s export earnings. Dr. Spio-Garbrah, therefore, urged local manufacturers to improve their production capacities and the quality of their products so that they could become more competitive on the international market. Deputy Minister of Trade and Industry Kweku Ricketts-Hagan stated that the focus of the MadeIn-Ghana campaign would not be solely on clothing and textiles but on every product made in the country. Richetts-Hagan said the government was prepared to support Ghanaian industries to help promote locally manufactured products, increase jobs and improve the living standards of the people. Another Deputy Minister, Murtala Mohammed, stressed the fact that the President was serious about increasing the patronage of Ghanamade products and services, saying the campaign would not be a mere political gimmick but a sustainable, diversified and professional initiative.

UT Bank launches ‘Pledge Pink’ breast cancer campaign

UT Bank has launched the 2014 ‘Pledge Pink’ campaign at the bank’s Airport City branch in Accra. October is recognized worldwide as breast cancer awareness month. As part of UT Bank’s Corporate Social Responsibility (CSR) activities, the breast cancer campaign, dubbed ‘Pledge Pink,’ is organized every year to create awareness as well as raise funds for breast cancer prevention and treatment in order to support victims. Breast cancer is the leading cause of cancer-related deaths among women. UT Bank, through the campaign, seeks to emphasize the message of hope and survival by reminding people that breast cancer is preventable, treatable NOVEMBER 2014

and manageable. The purely-andproudly Ghanaian bank has lined up several exciting activities to create more awareness about the disease. This would give individuals and corporate bodies the opportunity to support the campaign. The activities included bazaars where food items would be on sale. A health walk would also take place while mobile vans would be positioned along strategic locations to provide free health screenings for various ailments. The other activities were seminars and meetings with ‘Pledge Pink’ patrons. The climax is the Pink Ball at the State House where funds would be raised

to support the campaign. The event would feature stories of individuals who have survived breast cancer. The testimonies would give hope to breast cancer patients. An enhanced ‘Pledge Pink’ website would be launched at the event to facilitate online donations and testimonies of survivors. “We are excited about this project and the enthusiasm shown is incredible. We are convinced that with the necessary education and support, our country will achieve major successes in the battle against breast cancer,” Mrs. Pearl Esua-Mensah, director of ‘Pledge Pink,’ said. The campaign was instituted by UT Bank five years ago to coincide with the global commemoration of breast cancer awareness every October. The campaign was to support organizations such as the Cancer Society of Ghana and other partners to bridge the information gap and dispel misconceptions about the disease through awareness creation. The initiative falls under the UT Cares Foundation which has the objective of supporting communities with their health and education needs, and alleviating poverty. The Foundation has made substantial cash donations to organizations such as the Ghana Heart Foundation, Ghana Blind Union, and Hope for Kids, among others, which work for the underprivileged in society. GHANA BUSINESS & FINANCE

BRIEFS

Trade Minister chairs Made-In-Ghana Committee

BRIEFS

Enterprise Life wins 2013 CIMG award

Enterprise Life was adjudged the life insurance company of 2013 by the Chartered Institute of Marketing Ghana (CIMG) at the just-ended awards ceremony held on 18 October, at the Banquet Hall of the State House, Accra. The award was conferred on Enterprise Life in recognition of its excellence in strategic marketing during 2013. The accompanying citation read: “Your ability to use the horse brand to portray cohesive and assuring force, an adoption of a service culture and approach, depicts your total knowledge and understanding of the market place, culminating into 26.5 percent share of the market” The citation also stated that Enterprise Life has presence in all the ten regions in Ghana, and expanded

beyond the country to Gambia. Enterprise Life remains the most decorated and awarded corporate life insurer in Ghana, having won the CIMG life Insurance company on two previous occasions in 2009 and 2011. The award-winning company’s Executive Director, Mr. C.C Bruce, Jr, was very grateful to policy holders for their support, and to the staff for their dedication and hard work. Mr. Bruce, Jr stated: “Enterprise Life will continue to churn out innovative and affordable life changing products for their advantage”. Enterprise Life currently has ‘Life Centre’ - mobile offices that are stationed at strategic areas within the country to serve policy holders who, by virtue of their work schedules, are unable to take time off work to check and update their policies. “Customer service delivery is on top our agenda as a company and we will continue to improve on our service delivery to our cherish policy holder,” the Executive director said.

Guinness Ghana sources 50% of raw materials locally Guinness Ghana Brewery Limited (GGBL) has disclosed that 50 percent of its raw materials are locally sourced, and it intended to scale it up to 70 percent by 2015. According to the GGBL management, the use of local raw materials, especially sorghum, maize and cassava, has recently been increased significantly. This was as a result of the passage of the Customs and Excise Act 855, an excise duty concession for breweries using local raw materials for the manufacture of excisable goods.

Pensions Authority wants monies with BoG transferred to fund managers The National Pensions Regulatory Authority ( N P R A ) has stated that pension contributions lodged at the Bank of Ghana (BoG) should be transferred to the private companies mandated to collect and manage the funds before the end of December. This involves the management of the Tier-2 contributions by the private fund managers, which are formally referred to as Corporate Trustees. The Tier-2 contributions, which are currently in the Temporary Pension Fund Account (TPFA) at the BoG, have so far yielded over 1.64 billion Ghana cedis after investments in government Treasury Bills and Bonds. The transfer would be good news for the fund companies, which have been awaiting this since they were licensed in 2012, and public sector workers, who have contributed to the Tier-2 pension scheme since the implementation of a new three-tier scheme in January 2010.

This is because the companies, through their registered schemes, are expected to invest the funds to generate returns above the Treasury-Bill rate paid on the monies currently lodged at the central bank. The Acting Chief Executive of the NPRA, Laud Senanu, at a media briefing noted that an audit of the TPFA funds is being undertaken by Price Water House Coopers to reconcile information provided by employers to enable the generation of statements to members/contributors to the scheme. They auditors are due to submit their final report by 31October for the disbursement to the Trustees to be done by the end of the year. Senanu said the delay in the transfer of the funds from the BoG to the Corporate Trustees was in the ultimate interest of workers. “There have been some delays in the process but as they say, better late than never. If a delay would enable us do to the right thing so that when the workers get their statements, they are satisfied that it truly reflects what they have contributed to. I think it is better than rushing out to do something that the contributors would complain.

GHANA BUSINESS & FINANCE

Happily, we are coming to the end and by the end of this year, the transfer will begin.” About 12 public workers unions embarked on strike, demanding that they should be left alone to choose the entities that would manage the contributions. The NPRA CEO assured that measures have been instituted to ensure that the new timeline was met. “The board has established a committee. That committee is being assisted by a technical committee, made up of technical staff of NPRA, the fund administrator and representatives from the Corporate Trustees. They have started meeting. They are almost complete. So once the audit report is received and it is reviewed by the board and we are satisfied, then the process would begin.” Senanu urged workers to exercise restraint as the NPRA was working closely with the Auditors, the Fund Administrators, SSNIT, Corporate Trustees and the Controller to ensure a smooth transfer of the TPFA funds to the custodians of duly registered Occupational Pension Schemes.

NOVEMBER 2014

James Laar and Joyce Boeh Ocansey receiving the ISO Certifcation from Gauri Bhagwat

L’AINE Services Limited has organized an event to commemorate its 20th anniversary celebrations at the foyer of the Accra International Conference Center. The high-profile event sought to appreciate stakeholders’ contribution in making L’AINE Services the preferred human resources solutions provider in Ghana and for their support in bringing the company to its current rank as the 34th most prestigious company in the country, according to the Ghana Club 100 rankings. L’AINE Service’s 20th anniversary celebrations was dubbed “20 Years of Making a Difference in the World of Work.” Activities for the celebrations include a prayer session, career fair, street float, corporate dinner and thanksgiving church service. The company also had a family games event on 8 November at the Lizzy Sports Complex in Accra. Chairperson of the occasion, Rev. Dr. Joyce Aryee, congratulated L’AINE Services for aiding in national development by providing quality service to their clients. “L’AINE is a business that is not only relevant but necessary because when people understand where to go, apply their minds and think, then we will have a great nation,” she said. She encouraged the company to do more and consider the first 20 years as just the beginning. Kofi Amoabeng, Chairman of UT Group, who was the guest of honor, charged the HR company to help take away the unemployment woes in the country. Amoabeng commended L’AINE for believing in UT Bank when it first begun operations and for investing in the bank.

NOVEMBER 2014

Commenting on the role of L’AINE in the world of work, Mr. John Wilson, President of the Institute of Human Resource Management Practitioners, said the company has strategically positioned itself to partner with businesses to provide quality HR services. Wilson was confident that L’aine would continue to make a difference in the world of work and improve HR practices in the country. Dr. Ellen Hagan, Chief Executive of L’AINE acknowledged the contribution of stakeholders to L’aine’s , and commended its staff for their hard work. The high point of the ceremony came when L’AINE was presented with a certificate by Gauri Bhagwat, a lead auditor and trainer for Quality / Environmental and Occupational Health and Safety Management Systems for International Register of Certificated Auditors, United Kingdom (IRCA- UK), as evidence of being ISO 9001 certified with the International Organization for Standardization (ISO). Bhagwat, who applauded L’aine for maintaining quality practices in every facet of the business, revealed that organizations which establish and maintain internationally recognized management systems could be independently audited by certification bodies. She added that “true international recognition and trust that come from certification of your management systems make the organization more competitive.” She said by being ISO certified, L’AINE has distinguished itself as an organization that stands for quality and customer satisfaction.

Fidelity Bank boss adjudged 2013 CIMG Marketing Man

The Managing Director of Fidelity Bank, Edward Effah, was crowned the Marketing Man of 2013 at the 25th Chartered Institute of Marketing Ghana (CIMG) Awards held in Accra in late October. Effah told the media after the awards that entrepreneurship should be the engine of growth for the Ghanaian economy. “We need to develop entrepreneurs. The only real jobs which are created in Ghana are private sector jobs, which pay taxes, which are sustainable and we need to promote, develop and get as many SMEs as possible up and running because that is the only way we can grow the economy in my opinion,” he said. Other award winners are the CEO of Reroy Cables, Kate Quartey Papafio, who was judged the 2013 CIMG Marketing Woman, and the Head of Marketing and Communications at Stanbic Bank, Mawuko Afadzinu, who emerged as the CIMG Marketing Practitioner of the year.

SIC board chairperson resigns The State Insurance Company (SIC) has announced the resignation of the chairperson of its board, Mrs Felicity Acquah, on grounds of extensive commitments that would hinder her continued performance on the board. Mrs. Acquah’s resignation took effect from 30 September 2014. Meanwhile, the board, in its emergency meeting elected one of its members, Dr. Sydney Laryea, to act as the chairman.

GHANA BUSINESS & FINANCE

BRIEFS

L’AINE receives ISO 9001 certification

ECONOMY

Spare capacity

in the Ghanaian economy BY MARTIN LUTHER C. KING

Analyzing inflation in Ghana without assessing spare capacity is akin to evaluating the running of a village when there is no chief.

here has been much talk and analysis about how to identify and salvage inflationary pressures within the Ghanaian economy. However, one subtle and elusive component that has been left uninvestigated is that of spare capacity. Spare capacity occurs when actual production is less than what is achievable or optimal for the economy or a firm. At the microeconomics level, this often means that the demand in the market for a product is below what the firm could potentially supply to the

market. At the macro level, it is used to describe how far away an economy is from its full potential. Various indicators can be used to estimate the spare capacity of an economy such as the labor market, availability of capital, production infrastructure, and trade liberalization among others. With respect to the labour market, it is often found that in many developing countries there exists an enormous spare capacity due to exponential level of unemployment. A lot of research has concluded that too much spare capacity means low inflation

GHANA BUSINESS & FINANCE

and too little means high inflation. These research findings are based on the assumption that the eating up of spare capacity would inevitably result in falling unemployment indicating a more competitive labour market and resultant inflationary pressures from higher wages. These structural anomalies exist in the economy but somehow very little of the countryâ&#x20AC;&#x2122;s inflation is attributable to spare capacity, but rather from a myriad of other factors including the removal of subsidies on petroleum prices, gradual rise on electricity and water tariffs and

NOVEMBER 2014

“Ghana’s economy will need to add 6.7 million jobs by 2030, considering the population and economic activity projections. This means over 400,000 jobs have to be created annually.”

the depreciation of the Ghanaian cedi. In summary, much of Ghana’s inflation is policy-generated or imported. However, in line with the concept of excess capacity, the current ill health of the economy could potentially be averted or quelled through the gradual absorption of the huge spare capacity at Ghana’s disposal. A reduction in unemployment through spare capacity utilization in the specific sectors from which inflation is imported would culminate in a growth of wages and in turn the availability of disposable income without engendering a new waves of hikes in the Consumer Price Index. In other words, use the spare capacity of the economy to manufacture the goods the government is subsiding and importing. Inflation occurs when the general prices of goods and services in a country increases relative to the rate of growth in wages. With this in mind, one can discourse confidently that the optimum utilization of a country’s spare capacity can in part annul the cancerously high inflation in

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The antidote measures of the government are commendable particularly for the short to mediumterm but more crucially is the need for an irruptive medicine to suppress and subsequently uproot the yawning unemployment gap. A structural lack of jobs bring with it an attending multitude of social manifestations, from urban violence to riots to civil strife, and creates an environment which is unattractive for investment. According to the IMF, Ghana’s economy will need to add 6-7 million jobs by 2030, considering the population and economic activity projections. This means over 400,000 jobs have to be created annually. Currently more than 80% of the country’s jobs are in the

informal sector. Despite ministries and government agencies stuffed to the brim with employees, it is palpably clear the inability of the public sector to generate enough stable salary work to absorb this influx of new job seekers. One may argue that the estimation of spare capacity in Ghana has erred on the high side due to greater emphasis on the labour market, while ignoring other components such as the availability of productive infrastructure or openness of consumer markets. Notwithstanding these constraints, there still exist a greater potential for Ghana when spare capacity is concerned when looked at from the prism of the entire ECOWAS market. Compared to regional peers, Ghana has the industrial capabilities to export and drive regional value chains in ECOWAS countries. Ghana’s geographical proximity to ECOWAS markets, projected rise in consumption and lower standard requirements offer Ghanaian industrial firms opportunities to scale up and increase productivity. Though the measurement of spare capacity in any economy is painstakingly difficult and mostly theoretical, it behoves the Monetary Policy Committee of the Bank of Ghana to do so, preferably every quarter because of the instructive nature of this economic parameter particularly in these difficult times. As it stands now, there is a great uncertainty about just how much usable spare capacity exists in the economy, and where it should be directed. The absence of thorough questioning of spare capacity blurs projections of the economy’s ability to grow without generating inflation and further inflationary pressure in Ghana must be avoided at all costs.

GHANA BUSINESS & FINANCE

ECONOMY

the economy. For every one percentage point that unemployment is above its economic equilibrium (a certain minimum level of unemployment is expected in economic theory in any economy), average pay growth is 1.2% lower than it would otherwise be. Labour market slack has a negative impact on wage growth.

ENERGY

Energy deficit defies solutions but innovation may triumph (II) BY AYUUREYISIYA KAPINI ATAFORI

Given the persistent droughts and floods that encumber hydro-based electricity production, and the environmental pollution caused by fossil fuels, their rapid depletion and relatively exorbitant cost, renewable energy is now the ‘in’ thing all over the world. The Energy Commission of Ghana has therefore proposed that 10 percent of the national energy mix be sourced from renewables by 2020 – now just five years away. To prepare the ground for the exploitation and use of renewables, the Renewable Energy Act came into force in 2011.

he government’s policy direction is to focus on solar and wind in order to promote the exploitation and use of these renewable resources through favorable regulatory and fiscal regimes. Further, the purpose is to engage Ghanaian engineers and scientists and foreign experts to undertake research and development aimed at cutting the cost of renewable energy technologies. The Commission decided that 30 percent of the energy mix dedicated to renewables be targeted at solar photovoltaic (PV) power to be set up in the remote rural areas which cannot access grid power. Larger scale solar power generation is still a novelty but 12

the Volta River Authority (VRA) has commissioned a 2MW solar plant to augment the total national electricity output – a small start but a start nonetheless. In his book, ‘Generating Electricity from Sunlight: Global Trends and Developments in Ghana’ , published in 2007, Prof. Fred Ohene Akuffo observes: “Ghana receives abundant solar energy throughout the year that could be harnessed to generate electricity using photovoltaic technology to meet the basic electricity needs of a significant percentage of the unserved.” Prof. Akuffo argues that despite the free cost of sunlight for power generation, solar electricity is far

GHANA BUSINESS & FINANCE

more costly than grid electricity from traditional sources such as hydro, oil and gas, nuclear and wood mainly due to the high cost of the solar technology. “In spite of its relatively high initial cost, solar PV systems have steadily gained power generation market share due to their ability to produce electricity with no moving parts, no fuel requirements, zero emissions, no noise, and no need for grid connection,” the mechanical engineer says. He contends that the major goal of Ghana’s solar energy policy should be to attract private sector investment for further development and utilisation. Nevertheless, Prof. Akuffo also notes the hitches: “There are several barriers to be overcome to clear the way for NOVEMBER 2014

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activities, and reduced the quality of life of consumers. Several trend analyses show that the country’s energy demand is fast increasing and yet there seems to be no immediate or definite way out of the energy shortfall. Analysts agree that that the low supply of, and high demand for, energy has led to the high cost of energy prevailing in the country. According to Dr. Alfred Ahenkorah, the Executive Secretary of the Energy Commission, the demand for energy in the country is expected to increase to 24,000GWh by 2020. A 2013 World Bank report titled ‘Energising Economic Growth in Ghana: Making the power and petroleum sectors rise to the Challenge’ established that Ghana’s energy sector was performing below expectations. The report called on the government to fix the problems in the sector to ensure that energy problems did not hinder the country’s economic growth.

“Ghana’s power sector is expected to be the most efficient in Africa after the implementation of the Millennium Challenge Compact II” What are the factors responsible for the government’s inability to solve the energy conundrum effectively? One important factor is the longrunning issue of tariffs for energy. Unattractive tariff structures are a major disincentive for the exponential expansion of electricity production by the private sector. Energy economists say consumers pay far less than the cost of production of energy products. Some other challenges in the power sector particularly include the generation mix in favor of thermal, inadequate investment capital, unfavourable macroeconomic variables like the cedidollar exchange rate, high demand growth, which is about 10 percent per annum, and high system losses. Other hindrances are inefficient use of energy, increase in world market prices of essential materials, unavailability of natural gas, resulting in increasing costs of light crude oil, and theft of energy and network assets. Experts believe the supply situation over the short term will be tight, and therefore, the challenges will persist. However, planned and ongoing projects are expected to add about 2,300MW to the existing capacity in the long term. The expansion of the 38MW TT2PP will be done in the fourth quarter of 2015. The conversion of the 110MW TT1PP/CENIT plant is expected to be completed in the third

quarter of 2017. The government has awarded a company a contract to carry out the conversion of the 110MW KTPP in the fourth quarter of 2017. Projects at the procurement stage are the 180MW T4 plant, which will be commissioned in the fourth quarter of 2017, and the 450MW KTPP (Phase 2) scheduled for the first quarter of 2019. A contract will soon be awarded for the feasibility study on the 450MW Domunli thermal project, which is planned for completion in the first quarter of 2020. Feasibility studies are also ongoing for a 700MW coal power plant that will start operations in the first quarter of 2021. VRA has awarded a contract for feasibility studies on renewable energy projects as well. A 12MW solar power project is slated for the second quarter of 2016 as the feasibility study and Environmental and Social Impact Assessment (ESIA) have been completed. VRA is working on meeting the requirements of the financier on its 100MW wind energy project by the first quarter of 2017. The feasibility study for the ongoing 63MW Pwalugu Hydro Project is expected to be completed in the third quarter of 2022. Feasibility and ESIA studies are ongoing for the 67MW Juale Hydro Project which is scheduled for the first quarter of 2024. All these are expected to help resolve the energy supply challenges. The future of electricity supply requires the availability of investment capital for sufficient generation, reliable transmission and distribution networks, efficient and effective management structures, efficient operations and maintenance systems, effective electricity market structures and a costreflective tariff regime. All these can only be in place when independent power producers (IPPs) are supported under public private partnerships (PPPs) as envisaged in the new Strategic National Energy Plan (SNEP) that will be ready in the first quarter of 2015. Under the old SNEP, the total energy expenditure was expected to increase from about USD 4.3-4.6 billion, 13%14% of gross domestic product (GDP) in 2015, to USD 5.2-5.6 billion, 8%9% of GDP in 2020. Ghana’s power sector is expected to be the most efficient in Africa after the implementation of the Millennium Challenge Compact II, which will focus on power production, transmission and distribution, comes to an end. This is why President John Mahama is optimistic that the country is likely to become the most efficient power producer in Africa by 2020. Until then, consumers can only keep their fingers crossed – by candlelight.

GHANA BUSINESS & FINANCE

ENERGY

uninhibited private sector investment. They include lack of an enabling environment, high initial cost, lack of a level playing field between renewable and conventional sources and lack of local manufacturing capacity.” Notwithstanding these challenges, many investors have shown concrete interest in exploiting the sun for electric power. One such investor is UK-based Blue Energy which plans to build a 155MW solar power plant in Ghana, a project that analysts say will be the largest of its kind in Africa. Blue Energy will finance, build, own and operate the plant in the Ellembelle District in the Western Region. The USD 400 million plant, built under Blue Energy’s local subsidiary, Mere Power Nzema Ltd (MPNL), is expected to increase the mix for renewable energy from 1% to about 6%. Apart from complementing the government’s renewable energy efforts, the project will provide employment for many Ghanaians. Unlike many other solar projects in Africa that use concentrated solar power, the MPNL project will use PV technology. Concentrated solar systems focus on a large area of solar thermal energy onto a small area, converting the concentrated light into heat in order to drive a turbine. The process requires a large amount of sunlight to generate power. Contrarily, the PV solar method converts sunlight directly into electricity. This allows a PV plant to generate far more electricity using the same amount of sunlight. Energy experts underscore that the base case energy demand for 2014 is 15,195 GWh, while projected energy supply for the year was only 13,965 GWh on top of which about 612 GWh of load is expected to be shed by the end of this year. Government energy experts suggest that a 200% increase in the current installed electricity generating capacity of the country would guarantee uninterrupted power supply. However, some are skeptical. The target of increased installed generating capacity by 200% is below the projection made by the African Centre for Energy Policy which insists that the country requires an additional 12,500MW by 2016 to say goodbye to power blackouts and rationing. In October, Dr. Kwabena Donkor, Chairperson of the Parliamentary Committee on Mines and Energy, however also stressed that the 5,000MW target for 2016 was inadequate, asking the government to aim at attaining at least 10,000MW installed capacity in the next 10 years. The drawback effect of the energy deficit on economic growth has been evident. The deficit has retarded industrial production and commercial

ENERGY

The IPPs Revolution begins to complement VRA It was recently heralded in the news that Cenpower Generation Company, developers of the Kpone Independent Power Plant (KIPP), had reached financial close for their nearly USD 1 billion power project. The 350MW combined cycle plant is expected to come on line by 2017. The financing is a mix of export credit cover and commercial financing led by a syndicate of South African banks, with Rand Merchant Bank sitting at the helm of the Africa-based private sector lender group. The Dutch development agency, FMO, was the mandated lead arranger for the transaction for concessional financing from Development Finance Institutions (DFIs).

The project was initiated in over 10 years ago by CenPower, then just a group of Ghanaian entrepreneurs with a forward vision for electricity production in Africa. After a few years of business, they got the opportunity to sell equity to InfraCo. In 2010, AFC acquired a controlling equity stake in Cenpower and become the main project promoter. InfraCo’s divestiture of its USD 250 million in equity recently opened the door for a recalibration of equity partners. The shareholders of the now closed deal include AFC Equity Investments (31.85%), Cenpower Holdings Limited (21%), a consortium of Ghanaian investors and Japan’s Sumitomo Corporation (28%). The construction contract for the power plant was awarded to South African construction company Group Five and will be located in Tema, adding an estimated 10% to Ghana’s generation capacity. Every Ghanaian everywhere is breathing a collective sigh of relief at this news. After watching, neighboring Cote d’Ivoire despite 10 years of civil unrest put up Azito and Ciprel power plants with private sector money and limited controversy, the lack of infrastructure public-private partnerships (PPPs) in Ghana continues to boggle the mind. Even Nigeria has embarked on an ambitious energy sector unbundling program which has created an avalanche of private sector investment and independent power producers (IPPs) all running to the National

Bulk Electricity Trader (NBET) - the newly established national power buyer - to negotiate Power Purchase Agreements (PPAs) and obtain partial risk guarantees from partners like the World Bank and African Development Bank. The power sector in Ghana was selected for a second Compact by the Millennium Challenge Corporation (MCC) and Ghanaian government based on the results of key studies that pointed to the power sector as the single most important bottleneck to economic growth. Every single study out there screams that economic growth depends on the quality of power and its affordability. World Bank studies indicate that a dysfunctional power sector typically represents a reduction in GDP growth between 2% and 5% per annum. And yet, we must ask ourselves whether Ghana will ever wake up to this reality. After all, it should not take a decade to reach financial close for one single 350MW private plant. In rhetoric, the government is increasingly considering the private sector as a significant partner in the financing and the delivery of infrastructure. This is reflected by the government’s approval of the PPP policy designed to provide guiding principles for PPP arrangements and attract private capital. Ghana’s 2011 PPP policy defines a PPP as “…a contractual arrangement between a public entity and a private sector party, with clear agreement on

GHANA BUSINESS & FINANCE

shared objectives for the provision of public infrastructure and services traditionally provided by the public sector. Usually, in a PPP arrangement, the private sector party performs part or all of a government’s service delivery functions, and assumes the associated risks for a significant period of time, in return, the private party receives a benefit/financial remuneration according to predefined criteria… user charges…Government budget… combination…” Nonetheless, there remains much controversy and sheer misunderstanding in the marketplace about what PPPs actually mean which is stalling the implementation of this very important project structure. A PPP can include a private entity taking a minority or majority shareholding in a government-owned utility. ECG’s performance to date would warrant such a possibility. The level of losses are up to 20% higher than they should be according to DFI due diligence reports on the company. ECG has not been reducing losses significantly in recent years although it is estimated that up to USD 200 million of additional revenue could be achieved if losses were reduced by just 20%. According to ECG’s own annual reports, its SAIDI or “System Average Interruption Duration Index”, which represents the average duration of interruptions suffered by customers in a year is 215 hours per year per customer. Although this shockingly

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ENERGY means a Ghanaian is only in the dark for about 2.5% of the year, this compares poorly to Umeme’s 4 hours in Uganda or 41.9 hours in South Africa or the 2.5 hours recorded by Mozambique’s utility EDM. The SAIFI or “System Average Interruption Frequency Index”, which represents the average number of interruptions suffered by customers in a year, also communicates deplorable figures. Ghana’s ECG clocks in 106 disconnections per customer per year versus only 2.2 in Uganda, 22.2 in South Africa and 2.81 in Mozambique. Things are likely worse for the Volta River Authority (VRA) and Northern Electricity Distribution Company (NEDCo), VRA’s little brother serving the Northern half of Ghana.

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NEDCo’s separation from the VRA points to a decentralization trend but the move will still require significant subsidies to NEDCo to ensure financial performance given Ghana’s single tariff policy and the nature of demand in the North, which is 99% residential. But back to ECG. ECG also features chronic underinvestment in distribution networks. Future investment requirements are substantially above current actuals. Over half a billion dollars, is required annually to be invested in capital expenditures particularly to support Rural Electrification Programs but only an annual average of USD 127 million is actually spent.

GHANA BUSINESS & FINANCE

ENERGY

Surely, the level of political influence and pressure on the Board and ECG contributes to the latent inefficiencies. The Board of ECG has been reshuffled five times in the period 2007-2013 and has nominated four different Managing Directors during the same period. To top off all this, like every other company in Ghana, access to cheap long-term credit is a unicorn. ECG has successfully grown its revenues on the back of customer growth and high demand but deteriorating profit margins and decreasing marginal revenue warrant a partial takeover by knowledgeable private investors.

That being said, it is important to keep in mind that a PPP is not privatization. Assets revert to the Government at the end of the PPP contract. A PPP is not the outsourcing of discrete services. A PPP is a long-term contract, which optimizes the allocation of risk to the party best suited to assume its cost and control. Unfortunately, Ghana’s experiences to date have been focused rather on technical assistance or contractor services and not PPPs. ESBI International provided ad hoc technical assistance as far back as the 1980s to manage specific technical projects, including the Customer Billing and Information System (CBIS) of Ghana’s ECG from 1994 to 1996. CBIS led to the successful implementation of ECG’s current billing system, which ironically is scheduled to be phased out this year. BXC, a Chinese firm is currently contracted to reduce losses in the LV network in the coastal areas near Accra through the installation of prepaid meters for LV customers at the poles and installation of energy meters at the MV/LV transformers. However, in such cases, the private sector party does not assume responsibilities on the overall results of the company to which it is providing services, does

not invest and has no risk on the financial performance of the company it is serving and has no authority to introduce changes in governance or management of his client. Seems like a wasted opportunity. In any case, a worldwide consensus in support of energy PPPs and independent power producers in particular has be achieved and the notions is encouraged all over the world. A 2009 World Bank study, Does Private Sector Participation Improve Performance in Electricity and Water Distribution? noted several undeniable performance gains. Private

sector involvement in power generation resulted in an average 29% increase in residential connections per worker for electricity distribution companies, 32% increase in electricity sold by workers, 45% increase in bill collection rates in electricity, 11% reduction in distribution losses for electricity. However, the paper also admitted that generation companies would likely suffer staff reductions as the study finds that average employment also falls by 24% in public generation companies following it being placed in private hands. However, this should not be a scary outcome or generate panic. Most observers agree that the Ghanaian public sector is bloated. Is retrenchment of ¼ of the utility’s staff in order to increase electricity production by the same percentage not worth it since those retrenched workers would be re-employable in all the sectors like manufacturing which would suddenly come alive? Granted we do not have many local IPPs on which to base a charge towards private provision of electricity but one can only hope that the Kpone IPP is the beginning of a dramatic turnaround in how Ghana perceives private infrastructure.

ECG Key Performance Indicators, 2013 Net Profit/Loss Margin

-9.50%

Operational Peak Demand

1,258.2 MW

Energy Purchases

7,944 GWh

Energy Sales

6,079 GWh

Number of Customers

2,211,195

System Losses

23.48%

Collection Losses

7.85%

Metro: 248 hours

SAIDI

Urban: 190 hours

Rural: 206 hours

Metro: 69

SAIFI

Urban: 88

Rural: 124

Length of 33 kV Network

14,924.1 km

Length of 11 kV Network

16,030.6 km

Length of LV Network

55,425 km

GHANA BUSINESS & FINANCE

NOVEMBER 2014

BANKING & FINANCE

Why your parents always wanted you to be a banker Ghana’s economy is notably down in the doldrums and in need of shock therapy. Commodity prices are slumping, alongside the cedi’s value against major trading currencies. The threat of Ebola’s economic impact is hovering on the country. The fiscal deficit will likely widen further with the onslaught of political campaigning, likely to begin in a few months, to determine the country’s next President. Yet, in spite of all the economic malaise, one sector seems to consistently rise above the ashes – the banking sector. Credit to the private sector took off in 2005 recording an over 40% growth rate by 2008 thanks to four main factors: additional capital injection from shareholders, increases in capital requirements, sheer intensification of competition in the sector and, of course, the never-ending rise of financing needs in the Ghanaian economy. Over the past ten years, the Ghanaian banking sector greatly metamorphosed. Firstly, it is substantially less concentrated. While the sector only comprised 17 banks in 2002, 27 banks were competing fiercely for deposits and projects in 2012, of which 15 were foreign-owned. That is a 60% jump in the number of banking institutions in ten years. Furthermore, it would seem that the market share of the top banks is being eaten away slowly by competing peers. While the top five banks ranked by total assets accounted for 66% of total assets in 2000, this share decreased to only around 50% by the end of 2012. In fact, the market share of the first six banks in the market is compromised continually by the new and shinier Nigerian banks.

1st QUARTILE Ecobank Ghana EBG 12.40% Ghana Commercial Bank GCB 11.00% Standard Chartered Bank of Ghana SCB 8.70% Barclays Bank of Ghana BBGL 7.30% Stanbic n/a 6.50% Agriculture Development Bank ADB 5.30% Total share of industry assets 51.20% 2nd QUARTILE Fidelity n/a 5.00% CalBank CAL 4.40% Societe Generale SG-SSB 3.90% Zenith Bank ZBL 3.60% UT Bank UTB 3.50% National Investment Bank NIB 3.20% Unibank Ghana Limited UGL 3.20% Total share of industry assets 26.80%

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NOVEMBER 2014

2.90% 2.70% 2.50% 2.50% 2.20% 2.10% 1.20% 14.90%

4th QUARTILE First Atlantic Merchant Bank FAMBL 0.90% Equity bank Ghana EBL 0.80% Sahel-Sahara Bank of Commerce BSIC 0.90% Baroda n/a 0.40% The Trust Bank TTB n/a IBG n/a n/a Merchant Bank of Ghana MBG n/a Total share of industry assets 3.00% However, even the lowliest of bank shareholders is happy despite fierce competitors. The economic challenges of the past two years has had an insignificant adverse impact on the banking industry as a whole with the sector recording an average of 23.8% return on equity. More specifically, return on equity for listed banks has been excellent, improving from 22.1% to 31.1% between 2011 and 2012 alone. Granted it has not all been a bed of roses. From 2009 to 2011, the Ghanaian banking industry noted a high level of non-performing loans (NPLs). The ratio of NPLs to the entire loan book was around 18.6% in June 2010, 16.4% in June 2011 and roughly 13% in June 2012 – therefore on a successful downward trend. Even here however, some would claim it was government policy rather than poor due diligence on the part of the banks that led to the high NPL level. Asset quality deterioration resulted from the increase in interest rates from the Bank of Ghana in 2008 – at the height of the financial crisis, arrears of payments by the state to its suppliers and a general tightening of credit supply. The high default rate of state owned entities from 2008 to 2010 also cannot be ignored as a culprit, partially attributable to the change in administration following the 2008 general elections and subsequent change in the Government. Nevertheless, the worsening asset quality mostly affected banks engaged in government patronage but overall the regulatory changes in the past five years have helped the NPL cleanup effort. For example, initiatives by Bank of Ghana to establish a Collateral Registry provides legislation to streamline borrower and lender activities. The licensing of the Credit Reference Bureau also eased the credit assessment process at the origination stage and the recovery of defaulting loans. The main challenges that could face the industry in the near term is further recapitalisation, given the arrival of the oil era. An increase in the stated capital of banks would be the right move as the current capitalisation of the industry is not sufficient to fund the type of infrastructure and oil or gas projects required to support future economic growth. Rumors are already abounding that central bank may be planning a second wave of recapitalisation following that of end-2012, and

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BANKING & FINANCE

3rd QUARTILE Access Bank ABG United Bank for Africa UBA Ghana Trust Bank GTB Prudential Bank Limited PBL House Finance Company HFC Bank of Africa BoA Intercontinental Bank ICB Total share of industry assets

Improvements to the Regulatory Regime over Time

• Rise of minimum stated capital to GHS 60 million against GHS 8 million in 2007 • Reinforcement of the credit supervision frameworks (in particular adoption of the Borrower and Lender Act in 2008) which introduced more transparency in the loan contracts and facilitated the recoveries. • The mandatory application of IFRS standards; • The Anti-Laundering Act of 2008 which defined the regulatory framework against money laundering and terrorism financing; • Establishment in 2010 of a Credit Reference Bureau to which every single bank has the obligation to communicate information on its loan book and creditworthiness of its counterparties. • Adoption of the Basel II standards in 2012 which promoted more thorough risk management practices • Revision in the application of the statutory reserve requirement of banks to include foreign deposit liabilities in Ghana cedis only. • Requirement that all banks to maintain the mandatory 9% reserve requirement in Ghana cedis only. Consequently, banks will no longer hold the reserves in different currencies. may be considering raising the minimum capital requirement from the current GHS 60 million to GHS 100 million. Among the listed banks, only Ecobank Ghana and CAL Bank currently meet such a requirement. Others would most likely resort to a combination of dividend payout freezes and rights issues as well as private placements. The oil and gas industry is circumventing the lack of access to finance through the international syndications market by tapping into banks in Europe and the US. As an example, the annual Ghana Cocoa Board (COCOBOD) loan syndication to raise pre-export finance for the cocoa crop season is traditionally managed outside the country, as the Ghanaian banking sector cannot handle the quantum. The Request for Proposals that went out in March 2014 was for a USD 1.6 billion pre-export finance facility for the 2014/2015 crop season. Meanwhile the Ghanaian banking sector’s total combined Single Obligor Limit (25% of stated capital) is only around USD 307.6 million for the cocoa aggregator. As such, the coordinating mandated lead arrangers were BTMU, Credit Agricole, Nedbank, Rand Merchant Bank and SocGen Paris. A minimum capital of the equivalent of GHS 100 million per bank will better position the Ghanaian banking sector to finance capital-intensive infrastructure projects. Thus, the prediction is an inevitable consolidation of the Ghanaian banking sector via increased M&A activity. An interesting alternative would be more providers of Tier II capital to Ghana’s banks. Tier II capital qualifies as capital for up to 50% of the loan provided, as long as the loan has a minimum of 5 years of grace period and no acceleration clauses. Tier II funding thus offers commercial banks the opportunity to strengthen their capital base and increase their single obligor limit and capital adequacy ratio, all while ensuring that there is no dilutive effect on their shareholder base. Whatever the future holds, the banking sector is always a fun one to watch and surely more excitement is in store for the 27 competing banking brands as we brace for 2015. Stayed tuned.

GHANA BUSINESS & FINANCE

AGRICULTURE

The neglected chicken that lays the golden eggs BY OPPONG BAAH

Ghana has an agrarian-based economy, but sadly is a large net importer of staple food crops. Agriculture is the country’s most important economic sector, employing more than half of the population on a formal and informal basis, accounting for almost half of its Gross Domestic Product (GDP) and export earnings. Ironically, the all-important agriculture is a neglected sector that needs much governmental attention. The country has a variety of vegetation, like the dry savannah and wet forest, and various climatic zones which run in eastwards bands across the country. Agricultural crops, including yams, grains, cocoa, oil palms, kola nuts, and timber, form the base of Ghana’s economy. The main food crops grown are plantain, banana, maize, yams, cassava, rice, sorghum, millet, and guinea corn. Yet, cocoa is the only crop with a specific framework for facilitating international trade. Despite its importance, sectoral growth has lagged behind that of other sectors of the economy and has been unpredictable, as most farming is reliant on rain water. In spite of various governments’ statements concerning the importance of food crops, almost all their policies are heavily oriented toward market production, heavy reliance on the private sector for the needed services and the reduction of the role of the public sector - a clear disadvantage for subsistent producers. But why blame post-independence governments for religiously towing the line of the colonialists to experience and enjoy the white man’s “Good Boy” tag? When the British took control of the Gold Coast, their agricultural 20

policy was to turn the colony into a producer of raw materials for export and an importer of manufactured goods for consumption. From the 1890s, the colonialists adhered strictly to an agricultural policy aimed at encouraging, educating, and advising farmers to produce crops for export, without much support for small-scale farmers to produce for the local market. The agriculture sector during the colonial days concentrated on rapid growth in production of export crops to meet the demands of colonial authorities and expatriate merchants. Non-export crops were ignored and relegated to the background, with no effort to enhance production. Small-scale farmers and peasants abandoned non-export crops in favor of export crops, particularly, cocoa, which by the 1920s, within 30 years of its introduction, was accounting for over 80 percent of exports. Expatriate merchants imported manufactured food. Gold Coast was to be a crop export colony and an import dependant economy. Ironically, with independence, political considerations set in to influence decisions regarding agricultural policies. The politicians,

GHANA BUSINESS & FINANCE

behaving like the proverbial ostrich, continued the colonial policy on agriculture with glee and imbibed the modernization and industrialization craze as the gateway to economic development. Thus, current small-scale rural farmers continue to suffer the same fate as those who farmed when the colonial authorities were at the helm. Although Dr. Kwame Nkrumah attempted to use agricultural wealth as a springboard for the country’s overall economic development, Ghanaian agricultural output had consistently fallen since the 1960s. Beginning with the drop in commodity prices in the 1960s, farmers have been faced with fewer incentives to produce as well as with general deterioration of necessary infrastructure and services. Last September, speaking to media practitioners at the sidelines of a policy dialogue organized by the Peasant Farmers Association of Ghana, Edward Kareweh, Deputy General Secretary of the Agricultural Workers Union, expressed dissatisfaction with the government for its policy posture which tended to promote importation rather than a policy of domestic production. “Imported food products NOVEMBER 2014

AGRICULTURE

quality of production in agriculture and aquaculture as an integral part of the country’s wider growth strategy.” She emphasized that “diversified agriculture with low capital requirements, linked to local marketing and access to loans under fair conditions, would offer small-scale farming families the greatest possible income security.” Analysts say little concerted effort has been made by governments over the years to significantly develop the nation’s agricultural industry.

“Agricultural growth and productivity remain central to poverty reduction in countries where a large share of the population relies on agriculture and agribusiness for their livelihood.”

are supposed to be supplements of local production, not the other way around,” he said. “Here is a country with massive agricultural potential. For many years we have had all the natural resources; the rivers, forests, minerals and land space, yet we are unable to feed ourselves. We depend on imports. This is unacceptable. Government policy on agriculture has not been encouraging to the extent that it does not allow us to produce the type of food we eat,” he noted. At the dialogue, Dr. Dorothy A. Effa, Assistant Director, Policy Planning Monitoring and Evaluation of the Ministry of Agriculture, stated with concern: “We know the statistics on hunger, nutrition and stunting, we know the condition of the climate. Talk is no longer enough. All of us know what needs to be done and we must do it. We need to adopt measures that will improve the productivity and NOVEMBER 2014

The effects of investing in a sustained manner in agriculture will have enormous multiplier effects on the economy of Ghana. It will spur growth in the services sector, as well as the manufacturing sector. Additionally, it will provide jobs for thousands of people, ensure food security and bring in much needed foreign exchange as the surplus of what is produced is exported. Experts say rural underdevelopment has been the main drag on the potential and prospects for growth in agricultural production and productivity in Africa, of which Ghana is no exception. In addition to inadequate infrastructure, there is a scarcity of a myriad of required direct farming inputs for productive and agricultural business. Supporting this stand, an African Development Bank (AfDB) official recently said that infrastructure that is supportive of agriculture is weak in Africa, stressing that heavy investments are needed in both on-farm and offfarm infrastructure along the agriculture value chain. Concerning youth unemployment, the AfDB official expressed the need for the sector to be made more attractive for youth participation and suggested that efforts be made to promote agriculture as the long term vehicle for driving inclusive growth and sustainable development. This would enhance the visibility of and bolster the commitment to agriculture and food and nutrition security. According to the Independent Evaluation Group (IEG) of the World

Bank, primary constraints for farmers are low quality of inputs, limited knowledge, low quality of land, policy environment, lack of post-production promotion assistance, and limited access to loans or insurance. To the IEG, agricultural growth and productivity remain central to poverty reduction in countries where a large share of the population relies on agriculture and agribusiness for their livelihood. Industry watchers believe that the basic ingredients of a dynamic rural farm-based economy are a rapidly growing agriculture and a good investment climate where the latter includes infrastructure, business services and market intelligence. For this to materialize, they task political authorities to support greater private investments in food processing to facilitate better storage, as well as to maintain larger buffer stocks than in the past, to ensure food security. The lack of policy focus on agriculture raises the question of the extent to which urban bias continues to affect policymaking in Ghana. Ghanaian farmers need support to enable them to access improved seeds and fertilizers so that they can rapidly raise their crop yields. Opportunities exist for importsubstitution and raising food output for consumption, even if exportation is out of the question in some cases like maize and rice. The bottom line, however, is that the government putting in place pro-poor policies will allow millions of farmers to produce surpluses for the market in the short, medium and long term. GHANA BUSINESS & FINANCE

COVER

KLM celebrates its 95th Anniversary: The Journey Continues: As KLM celebrates the worldwide commencement of its operation 95 years ago, the leading Dutch airline has chalked many inimitable successes which are the envy of many an airline. After plying in Ghana for nearly 54 years, KLM has warmed the hearts of its numerous customers with its spectacular services. GB&F seeks the secret behind KLM’s stellar achievements from Mr. Axel Metselaar, KLM Regional Manager for Ghana and Sierra Leone. KLM’s success story is underpinned by its dedication to complete customer satisfaction. Ghana Business & Finance: As you celebrate your 95 anniversary, can you share with us some of the key strategies that have led to the continuous growth of KLM? Axel Metselaar (AM): “Koninklijke Luchtvaart Maatschappij” or in English KLM Royal Dutch Airlines’ successes over the past 95 years cannot be expressed with just a few words. Our continued drive to offer our worldwide customers reliable and high quality products certainly has a lot to do with it. Innovation has been, and will remain, a crucial importance as we count down the years till we reach our centennial anniversary. When Mr. Albert Plesman founded our corporation on October 7th, 1919, he had a great vision to set up a Dutch airline to transport passengers, cargo and mail by air. At

that time, our then reigning Queen Wilhelmina awarded KLM a “Royal” (“Koninklijke”) predicate. Under the leadership of Plesman and with his pioneering spirit, KLM embarked on a journey that would take us to great heights from two passengers on the very first operated flight between London and Amsterdam to now over 26 million customers, as many as the population of Ghana. I always say that KLM is too big to be just a Dutch airline. With only 16 million inhabitants in The Netherlands, and no real distances to cover when one goes from north to south, or east to west, KLM has always focused on transporting customers, cargo and mail from point A to point B via Amsterdam. This so called hub-andspoke system was invented by KLM, and with this strategy of connectivity

GHANA BUSINESS & FINANCE

in mind, we developed our network of flying to over 135 destinations across the continents and countries. GB&F: What activities were lined up to commemorate KLM’s 95th anniversary? AM: Worldwide, in all countries and stations where we operate, festive activities took place to commemorate our birthday. If you allow me I will elucidate on what we did in Ghana. Starting with our customers, of course, as always they are first. So we offered every passenger flying from Accra to Amsterdam on October 7th specially made cookies and sweets. Those flying in our World Business Class received a special ceramic miniature replica of a Dutch house: A collector’s item for our loyal customers, as we issue a new

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its 95th celebrations will be shown. Our promotion team went out to offer a birthday cake to all travel agents who we work closely with as well as to KLM important corporate customers. All is done in the typical Dutch tradition: “Wie jarig is trakteert”, which translates into English as: “The one having his/ her birthday gives treats.” GB&F: How important is the Ghanaian market to the overall operations of KLM? AM: We really would not be flying continuously for almost 54 years to Ghana if it was not important to us. In fact, we are the only airline which, has been flying to Ghana through the good and sometimes not so good times, as we never suspended or interrupted our scheduled services to the country. And we would not be flying to Accra with the youngest wide body aircrafts we have in our fleet, if it was not important to us. We are happy to welcome Ghanaians and foreigners visiting Ghana on board of our flights, as this is what drives us and makes us passionate about what we do and who we are. GB&F: What can be done to improve the regulatory and operational regime in the aviation sector in Ghana to ensure the growth of both international and domestic carriers?

NOVEMBER 2014

AM: I think that there are great examples of airports and airlines already in existence and how their growth models have worked in close cooperation with governmental institutions. I will stay “close to home,” take Amsterdam Schiphol Airport and KLM as examples. Their development has gone hand in hand, working closely together as enterprises and supported by the local and national governments. These airport and airline have expanded their capacity beyond the needs of our country, and both are major employers in The Netherlands. GB&F: Any final words for your customers on your 95th anniversary? AM: Indeed, finishing where I started, with our customers: KLM is thankful to all those customers who have taken the journey together with us for 95 years now and KLM appreciates their continued loyalty and patronage of our brand. And for those who do not know us yet, KLM sends you an invitation to become one of our customers as passengers or as senders of cargo. We welcome all customers and potential customers on board our cozy state-ofthe-art aircrafts and look forward to serving you for many more years to come.

GHANA BUSINESS & FINANCE

COVER

miniature every year. For our future passengers, we had a spectacular one-day sale for those with travel plans to European and North American destinations. As we announced our anniversary sale in Business & Financial Times, among others media, customers were queuing up in our reservations and ticketing office at Kotoka International Airport to take advantage of this offer. As a tradition in line with what we have done in past anniversary celebrations, we presented Dr. Emmanuel EvansAnfom a birthday gift, as he was born, just like KLM, on October 7th, 1919. The celebrative event was aired on Ghana Television, in whose morning show program more about KLM and

EXTERNAL TRADE

Now that Ghana has signed the EPA,

what next? BY KWEKU DARKO ANKRAH & ANTHONY SEDZRO

After several years of political horse-trading, heated exchanges among academics, experts and economists and the outpouring of massive skepticism from the Civil Society Organizations (CSOs), the much-awaited Economic Partnership Agreement (EPA) between Ghana and the European Union (EU) has finally been signed into a binding contract. The Ghana government is bracing itself against all odds in order to gain from the economic windfall that the EPA is expected to bring. The government ratified the controversial trade pact, which many observers have described as inimical to the economic health of the country, before the EU’s 24th October 2014 deadline. The new agreement means, on one hand, that Ghana, through its companies, has 100 percent export access to the EU market duty-free, with the exception of rice and sugar. On the other hand, the EU now have access to 75% of the Ghanaian market duty- and tax-free. The EU already enjoyed a 35% duty-free access into Ghana’s market. So the new trade deal only adds 40% to that percentage. The EPA is an agreement between 16 West African states which make up the Economic Community of

West African States (ECOWAS) and the EU. In theory, the justification for EPA is to ensure comparative cost advantage, absolute cost advantage and accessibility to the geographic locations of natural resources. In order to make these advantages a reality, various methods such as structural, fiscal and monetary approaches are used. The structural approach deals with the contributions of the various economic divisions as an output, of which the traditional base has been the extractive industry, agriculture, industry and

GHANA BUSINESS & FINANCE

production as well as the services sector. Add the emerging information sector which does not sometimes require vast lands, machines, but can occur in the air and social media concept.

Central treasury The fiscal approach looks at the central treasury in the economy in terms of how value is created by a way of receipts, and payments to and from the government. It deals with taxes, revenues, fees and fines, donations and receipts vis-à-vis subsidies, prices,

NOVEMBER 2014

income policies and other social interventions. The monetary approach has to do with how money comes into the system and leaves at the micro-level rather than the macro-level. Examples includes money supply, interest rate, exchange rate, balance of payments budget discipline and availability or otherwise to support the financial side

(FTA), mandating that within a specified period, a certain percentage of signatory country’s market should open to European goods and services. It is in the light of these unfairness, especially in a situation where the EU is far advanced in the functional areas while ECOWAS, and for that matter Ghana, is lagging far behind. That is why most CSOs were against the EPA. What even accentuated the opposition to the EPA was when it was agreed that ECOWAS member-states should open 75 percent of their markets to European goods over 20 year-period instead of 80 per cent over 15 years. However in order to ensure that member-states have some edge in the partnership, ECOWAS has asked the EU, under the EPA Development Fund, for 16 billion Euros to finance infrastructural deficits before implementing the EPA. Both the EU and ECOWAS have reportedly agreed on priority needs that have been valued at 6.5 billion Euros – for trade, industries, agriculture, infrastructure, energy and capacity building.

Even the United Nations Economic Commission for Africa said Ghana could lose about US$300 million in revenue if it signed the EPA.

Economic transformation

The EPA is such that it will not use either FDI or FPI, but rather it is going to trade the goods and services using the best industrial practices and tools in all the functional area of management backed by the latest ICT tools. These functional areas include finance, marketing, logistics and supply, chain management, human resources and ICT. EPA creates a Free Trade Area

Despite the agreement by the EU to pump 6.5 billion Euros into the coffers of the West African countries which signed the EPA, “to help the economic transformation of the region,” in Ghana, influential CSOs such as the Christian Council of Ghana, Editors Forum, Private Enterprise Foundation (PEF) and the Trades Union Congress (TUC) protested vehemently against the signing of the EPA. ECOWAS Exports to EU

% of total trade

EU Exports to ECOWAS

20 15 10 05

40 30 20 10

0 Mineral Fuels

Machinery & transport equipment

Food & live animals

Chemicals

Products

Manufactured goods

Others

Mineral Fuels

Food & live animals

Crude Materials

Other

Products

Source: Data compiled from Eurostat cont’d on page 26 NOVEMBER 2014

GHANA BUSINESS & FINANCE

EXTERNAL TRADE

of business, and cut expenses and huge government expenditure. In general, economic approaches are the practices of giving business partners an unrestricted opportunity of making a global presence is through Foreign Direct Investments (FDIs) and Foreign Portfolio Investments (FPIs). FDIs involve physically and materially establishing a company’s industrial base or services delivery center in another country while the FPIs deals with investments evidenced by paper or ownership in the form of securities, normal joint ownership such as stocks and shares; or indebtedness such promissory notes, commercial paper, medium term notes, debentures and bonds.

EXTERNAL TRADE Their complaints were that the Ghanaian economy would lose millions of dollars in revenue from tariffs and duties. And also, the EPA would destroy Ghana’s manufacturing base and industry if the agreement was not renegotiated. Local manufacturers are few; and a handful of manufacturers who produce goods for export concentrate on the non-traditional agricultural produce industry. Some prominent local firms engaged in this export business into the EU market include Blue Skies Ghana Limited (pineapples and fruit juice) and Pioneer Food Cannery (tuna and fish). Even with these firms, the argument is that their capacity is low as they lack finance to produce and meet the demand from the EU market. They also grapple with high taxes and high cost of electricity which is necessitated by frequent power cuts. This is in sharp contrast to manufacturers and companies in the EU who enjoy large subsidies from their governments and are well-resourced technically and financially. They can produce in larger quantities and flood the African markets with cheaper goods. Ultimately, the experts say the EPA will be lopsided in favor of EU producers. Even the United Nations Economic Commission for Africa said Ghana could lose about US$300 million in revenue if it signed the EPA. Critics also averred that the EPA would further constrain the development of intra-African trade. Currently, trade among African countries stands at a paltry 12 percent, according to data by Ecobank Research. This contrasts with

Africa-EU trade which stands at over 70%. However, proponents of EPA assert that the agreement would involve reducing and removing import duties on European manufactured goods. It would also see the EU remove quotas and duties on African exports to the EU. Using an analogy of import trade in the EU region in 2010 which was over USD3 trillion, an equivalent of ninety-six times the GDP of ECOWAS. Pro-EPA advocates believe that being allowed to exchange access to 75% of ECOWAS market with better priced goods, and the opportunity to sell whatever ECOWAS members want into a more wealthy economy within standards and quality, is what every developing primary productsdependent desires.

ECOWAS) the opportunity to get into a far bigger market than you can ever expect,’’ Mr. Casely-Hayford notes. He says instead of looking at the negative sides, Ghanaians should look at the positive aspects and “grow our nontraditional exports as well as improving our export market.’’ His assertion seems to bolster the EU`s information bulletin accompanying the EPA when it was proposed: “imports from the EU are mainly goods which are not produced locally, notably inputs used by local industries, such as agricultural inputs, equipment and machinery. Therefore, the elimination of import tariffs will reduce the production costs of local companies and will also benefit Ghanaian consumers.” Brussels also says, to protect sensitive sectors in Ghana, a number of agricultural and non-agricultural products such as chicken, tomatoes, sugar, cereals and flour, frozen fish, tobacco, beer and industrial plastics have been excluded from the import liberalization. The EU further claims the reduction of duties by Ghanaian authorities will be done gradually.

Too much sentiment Mr. Sydney Casely-Hayford, a financial analyst and a proponent of the EPA, opines that the argument that the agreement will destroy Ghanaian manufacturing and industry is false. “’I think that there is too much sentiment surrounding all of this; if you look at it from a purely business point of view, somebody is offering (Ghana and

GHANA BUSINESS & FINANCE

Mr. Charles Mensah, the Tema Chapter Chairman of the Association of Ghana Industries (AGI), believes that embracing the challenges that the EPA will bring about and working towards it will engender a “win win” situation, and not a trap as some people would want us to believe. Mr. Mensah maintains that the EPA would not result in the flooding of the Ghanaian market with European goods. To him, it would rather help prevent the present incessant dumping of goods from the South East Asia and those who have virtually taken over the local market. “The EPA is a morale booster for exporters within

NOVEMBER 2014

Learn new technologies Ghanaian industries must position themselves to learn new technologies from the advanced EU to help them achieve their efficiency and survival. The problem is with the possibility of obtaining repair-less and maintenancefree technologies at the tertiary level. The learning curve must be smooth and short in such a way that local industries can leap-frog. This is where Mr. Mensah is right when he urged all captains of industries to put their businesses in proper shape to enable them respond quickly to the drive to ensure export growth.

There is a need for new legislations to protect the interest of the local industries against hostile takeovers and unrestricted competitions. Even some financial incentives to support the activities of local industries would give them respite. The local industries must also position themselves as dedicated agencies as a means of reaching mastership. This means learning technology as agents; and on reaching the mastership, create their own brand. This model is exemplified by Mr. Akoto Bamfo who is an agent of Akzo-Nobel paint, and has developed his own locally produced brand of paint, Syntax. There is also an urgent need for support services. Sometimes abandoning original research initiatives to support that which is ready and now selling in the market place to ensure survival despite one`s knowledge. This approach calls for new training in technologies, cultures and languages. For example, Rising Data, a Pilipino

NOVEMBER 2014

company in Ghana processes data for American companies. Its employees are trained to speak in American accent to make it easier to interact with its American clients. As a result of the hot competition from the financially well-oiled and established EU companies with track records in the production of goods and services in particular area for centuries, local companies and emerging ones are likely to collapse or underperform. For example, how can Rlg compete with an European company in manufacturing and maintenance of computer in Ghanaian market?

sex and harmful products that are legalized as a result of non-restriction and conformance to international standards as enshrined in the EPA in the country would be counterproductive. There is a need for new legislations to protect the interest of the local industries against hostile takeovers and unrestricted competitions. Even some financial incentives to support the activities of local industries would give them respite. This means providing specific contracts and production for local industries.

Import substitution

Policy makers must ensure that the people are giving quality education and communication skills for effective use in the changing global business. There is also the need for promulgating policies of collective social appeal to reflect the Ghanaian view-points in business ethics. For, every nation has unique cultural values and ethics that make what that nation represents to the outside world. Finally, there is a need to ensure strict punishment for infractions of the law and guidelines. In fact, if these policies are not made to work as a defense to the interest of Ghana and the local businesses, the implementation of the EPA will lead to instant reemergence of economic and cultural imperialism. This will be how the EPAs will nail the death knell of Ghanaâ&#x20AC;&#x2122;s economy, instead of boosting economic growth, leading to national prosperity.

There is also a problem of unsustainability of import substitution industries. The infant industry stage is not tolerable in the face of advanced goods rushing in and it is easier for people associated with the EU nations to be propped up as their local agents or new business partners to the detriment of non-aligned local businesses. For instance, Sir Sam Jonah and Mr. Ishmael Yamson are being propped up by the international community as the face of Africa business while local entrepreneurs like Apostle Kwadwo Safo, Mr. Kwabena Darko and others are left without help from the international finance companies. There is a possibility of exporting socially repugnant and opprobrious concepts and products into Ghana. The exportation of Genetically Modified Organisms (GMOs), gambling, explicit

GHANA BUSINESS & FINANCE

EXTERNAL TRADE

the AGI and, therefore, welcomed as a â&#x20AC;&#x153;bold step in the right direction. It grants them the maximum right of entry to the European market domain with their locally manufactured goods which would help them reap profits in foreign exchange,â&#x20AC;? he notes.

PHOTO GALLERY

24th National Awards for Export Achievement

1) Mr. Gideon Quarcoo, Chief Executive Officer of Ghana Export Promotion Authority (GEPA), speaking at the event 2) Hon. Ekwow Spio-Garbrah, Minister for Trade and Industry, receiving a citation on behalf of President John Dramani Mahama 3) Mr. Gideon Quarcoo (left) presenting an award to a representative of TV3 4) Mrs. Margaret Tweneboa-Boateng (right) of Excel Industries Limited, producer of Aluminum household utensils, won the Woman Exporter of the Year Award 5) Another well-deserved recipient of the Excellence Award 6) The Chinese Embassy in Ghana was recognized for Trade Promotion. Receiving the award from Mr. Kwesi Ahwoi is Her Excellency Sun Baohong, Chinaâ&#x20AC;&#x2122;s Ambassador to Ghana 7) Niche Cocoa Industry Limited was adjudged the Best Exporter of the Year 2013. Mr. Edmund Poku, (right) Founder and Managing Director of Niche Cocoa Industry, receiving the award being presented by Hon. Ekow Spio-Garbrah.

GHANA BUSINESS & FINANCE

NOVEMBER 2014

PHOTO GALLERY

Official launch of the Africa Partner Pool 1) A cross section of participants at the launch 2) Mrs. Mawuena Trebah, Chief Executive Officer of Ghana Investment Promotion Centre (GIPC) delivering the keynote address 3) Mr. Prince Kofi Amoabeng, Group President of UT Holdings, giving the endorsement address 4) Second endorsement address being given by Mr. Reginald Laryea, Board Chairman, Ogilvy Ghana and Ghana News Agency 5) Mr. Herman Chinery-Hesse, Chairman of SOFTtribe, making a few comments 6) Left-Right: Mrs. Mawuena Trebah, CEO of GIPC, Dr. Kwesi Botwey, Chairman of National Development Planning Commission, and a foreign dignitary in a chat 7) It was networking time for the attendees

GHANA BUSINESS & FINANCE

NOVEMBER 2014

PHOTO GALLERY

The 2nd edition of the Ghana-Made 1) Deputy Trade and Industry Minister Kweku Ricketts-Hagan making a speech 2) Inspection of Ghana made products 3)Display of Frytol Vegetable Cooking Oil which was adjudged the Overall Best Ghana-Made Product of the Year. Looking on is Mr. Sam Ato Gaisie, Executive director of Made-in-Ghana Foundation, Mrs. Mona Helen Quartey, Deputy Minister for Finance, Kweku Ricketts-Hagan 4) Other Made-in-Ghana products on display 5) Blue Skies was also awarded 6) The Business Development Manager of Coral Paints (M&K Gh Limited), Mr Luiz Carlos da Silva, received the awards from the Ambassador of Morocco to Ghana,

Mrs Nersha Alaoui Mâ&#x20AC;&#x2122;Hammdi 7) KAMA Pharmaceuticalsâ&#x20AC;&#x2122; Tres-Orix Forte Syrup was udged Lifetime Product of the Year. Receiving the award is Dr. Michael Agyekum, CEO of KAMA Group 8) Frytol is a product of Wilmar Africa Limited. Chief Financial Officer of Wilmar Africa Limited, Kossonou Bini, receiving the overall best award 9) Ghana Business and Finance was awarded the Business and Finance magazine of the year. Mr. Josiah Spio-Garbrah, General Manager of ABM, receiving the award from Mr. Ato Forson, Deputy Communications Minister

GHANA BUSINESS & FINANCE

NOVEMBER 2014

PHOTO GALLERY

Awards in Accra

NOVEMBER 2014

GHANA BUSINESS & FINANCE

REGIONAL INTEGRATION

Two West African neighbours in border conflict over oil BY MARTIN LUTHER C. KING

Tit-for-tat may well be the new name of Ghana-Cote d’Ivoire diplomatic relations as both West African countries initiate arbitration proceedings against each other at the United Nations Convention on the Law of the Sea (UNCLOS) over their oil-rich common maritime borders. At issue is a median line derived from the position of the end-point of the two countries’ land boundary that was defined in the AngloFrench agreement of 1893, based upon the position of a house occupied by British officials in the 1880s. For Cote d’Ivoire, the maritime demarcation of the two neighboring states had, since the start of decolonisation in the late 1950s, never been made official. Some Ivorian leaders go as far as to argue that the entire C100 bloc is actually located within Ivorian territory, a claim consistently decried by Ghana. The C100 bloc is in the Tano basin of the Dzata-1 exploration well, located 75 kilometres (km) south of Ghana’s Cape Three Points. The Ivorian part of the border appears unusual. Rather than continue on a vertical line, the country’s eastern frontier suddenly deviates west along its Aboisso Department, an area that is, itself, cut off from the sea by Lagune Juen and Ghana’s Jomoro

District. This delineation means that any big maritime discoveries situated directly southward of Cote d’Ivoire’s Aboisso Department, such as the Vanco or Tullow finds below the Jomoro District, are actually, on paper, Ghana’s. What this simply means is that, had Cote d’Ivoire’s borders continued uninterrupted south from the Aboisso Department, the contentious Dzata

GHANA BUSINESS & FINANCE

and Tullow oil finds by Ghana would likely have belonged to Cote d’Ivoire. Understandably, this argument has been met by deaf ears in Ghana, where some leaders claim that Abidjan’s UN petition is simply a poor attempt at an “oil grab.” Though both countries had agreed after independence to set up a joint commission to redefine their

NOVEMBER 2014

common border, unfortunately, that did not happen till five years ago when the current spate of misunderstandings began. Expectedly, Ghana’s discovery of oil was enough to demonstrate the inadequacy of a simple median line, with Cote d’Ivoire arguing that a precise maritime boundary must be delimited, and the boundary that is eventually constructed will pertain to the area that

NOVEMBER 2014

is the object of its current protests. Ghana was the first to strike oil in the disputed C100 area along the Tano Basin. The country believed it had exclusive rights over that maritime boundary until April last year when Cote d’Ivoire also announced that it had struck oil in a block off its shore adjacent to Ghana’s Jubilee Field. A joint committee subsequently visited the site to ascertain the geographic coordinates of the boundary post and subsequent meetings were held in Ghana and Cote d’Ivoire to study the options, after which various alternatives were weighed to help resolve the matter amicably. But now the expected amicable resolution is becoming harder to reach even after various overtures have been made. Ghana-Cote d’Ivoire relations have suffered from the same ups and downs that characterized GhanaTogo relations. In early 1984, Ghana’s government had complained that Cote d’Ivoire was allowing Ghanaian dissidents to use its territory as a base from which to carry out acts of sabotage against Ghana. Accra also accused Abidjan of granting asylum to political agitators wanted for crimes in Ghana. Relations, however, improved significantly in 1989 following the successful re-demarcation of the two countries’ 640 kilometre-long common border. The then government, thereafter, worked to improve the transportation and communication links with both Cote d’Ivoire and Togo, despite problems with both countries. But the rapprochement in Ghana-Cote d’Ivoire relations did not last. Following a November 1993 soccer match in Kumasi, Ghana’s second largest city, that had resulted in the elimination of Cote d’Ivoire

cont’d on page 36 GHANA BUSINESS & FINANCE

REGIONAL INTEGRATION

from the 1994 Confederation of African Football (CAF) championship, Ghanaian immigrants in francophone Cote d’Ivoire were violently attacked, with as many as forty killed. Scores of other Ghanaians lost their property as they fled the country while an additional 1,000 homes and businesses were looted. Some 10,000 Ghanaians, out of the approximately one million then living in Cote d’Ivoire, were eventually evacuated by the Ghanaian government, while more than 30,000 others reportedly sought refuge in the Ghanaian and other friendly embassies in Abidjan. A twentymember joint commission (ten from each country) was established to investigate the attacks, to recommend compensation for victims, and to find ways of avoiding similar incidents in the future. In October 1994, the two nations resumed soccer matches after a Togolese delegation helped smoothen relations between them. But in 2010, Cote d’Ivoire petitioned the UN to complete the demarcation of the Ivorian maritime boundary with Ghana. This occurred just days after the American exploration firm Vanco discovered oil in the Dzata-1 deepwater well. The issue attracted considerable media attention, and some Ghanaian media sources promptly dubbed the petition an attempt at oilgrabbing by Cote d’Ivoire. The Ghanaian authorities responded by passing the Ghana Boundary Commission Bill, establishing a commission with the purpose of undertaking negotiations in order to determine the country’s land and maritime boundaries. The boundary commission ultimately held a meeting with an Ivorian delegation led by Désiré Tagro, the Interior Minister. The two sides did negotiate on the delimitations according to international law. The results of the fourth meeting were not announced, and no meetings have occurred since then. However, the presidents of the two countries did meet at the Presidential Palace in Abidjan on 15 July 2010 and discussed the boundary dispute, amongst other bilateral issues. At the moment, progress appears to be slow, and the nature of the discussions is uncertain. Both countries have, however, expressed a desire to peacefully solve the dispute. The neighboring countries had previously submitted routine documents to the UN Commission on the Limits of the Continental Shelf in April–May 2009. Both countries’ submissions mentioned that neither has signed any maritime boundary delimitation agreements with any of its neighboring states.

REGIONAL INTEGRATION

President Alassane Ouattara (left) & President John Dramani Mahama (right)

The Debacle:

No winner, no loser

To date, there are no pending cases of open dockets on the case at the International Court of Justice or at the International Tribunal for the Law of the Sea. Incidentally, the recurring border dispute between Ghana and Cote d’Ivoire once more brings to the fore the growing insecurity at the common maritime boundary of a number of West African states and the need for more effective collaboration between affected states for mutually-beneficial solutions that would be salutary to integration efforts in the subregion. Like Ghana and Cote d’Ivoire, Nigeria and Cameroon clashed severally in the 1980s and 1990s over their oil and gas-rich Bakassi Peninsula common border. And just as in the current Ghana-Cote d’Ivoire tinder-box, the conflict emanated from, among other things, Nigeria’s and Cameroon’s need to keep their territorial sovereignty intact, ensure energy and human security, and gain economically. Nigeria eventually ceded the Bakassi Peninsula to Cameroon in compliance with the decision of the International Court of Justice at The Hague where both countries had resorted to for arbitration. Elsewhere, in the face of a rampaging threat by pirates on the Benin-Nigeria common maritime border, Beninoise President Boni

Yayi requested the UN’s assistance. However, Boni had first contacted Nigeria’s President Goodluck Jonathan for assistance in combating piracy in their shared waters. The two presidents, noting the serious threats that piracy and other illegal maritime activities were posing to both countries, decided to cooperate to address the danger. Collaboration between the two countries eventually gave birth to ‘Operation Prosperity.’ Hosted by Benin, ‘Operation Prosperity’ aims to secure the Nigeria-Benin maritime environment and strengthen the two countries’ close security cooperation by maintaining maritime domain awareness. In this collaborative arrangement, the Nigerian navy provides the vessels and most of the logistics and human resources for the operation; while the Benin navy opens it waters for Nigerian naval vessels to patrol. Three years after, ‘Operation Prosperity’ continues to be effective and successful. For Ghana and Cote d’Ivoire, therefore, effective collaboration is the key to unknotting a thorny and recurring common maritime border problem. The final decisions of the international tribunals of arbitration which the two neighbors seek must be respected by both countries for peace and economic prosperity to prevail in the subregion.

GHANA BUSINESS & FINANCE

The 2013 announcement by France’s Total that it had struck oil on a block off Cote d’Ivoire adjacent Ghana’s Jubilee field was the beginning of the present dispute between the two nations. The Ivorians then claimed parts of the field. On 23 September, Ghanaian officials filed a suit at the UN Law of the Sea tribunal after 10 bilateral meetings failed to resolve the issue. Ivorian authorities had sent threatening letters to the operators of the Jubilee field to stop drilling oil. The threats are likely to deter future investments in Ghana’s hydrocarbons and petrochemical subsectors. Interestingly, when an educated Nzema from Ghana who has employable skills and is proficient in French crosses the border, he is called an Appollonian. He/she easily fits in as an Ivorian citizen. The same goes for an Ivorian Nzema who has skills and communicates effectively in English. He/ she is also tagged Appollonian and mingles seamlessly. Yet the post-independence leaders of the two countries, Presidents Kwame Nkrumah and Houphouët-Boigny, were Cold War ideological rivals who supported respective dissidents. Economically, the two countries have been competitors. Ghana first started the mass cultivation of cocoa in West Africa, becoming the largest producer. But in the 1980’s, Cote d’Ivoire overtook Ghana to lead in the production of the cash crop. Since then, the latter has been playing catch-up, without success. The worrying implication is how the loser in the ongoing dispute will handle the lost. In the fraternal fracas, however, there is no loser or winner.

NOVEMBER 2014

ADVERTORIAL

SOUTH AFRICA AIRWAYS REWARDS CUSTOMERS… With Best Loyalty Programs in Africa

South Africa Airways (SAA) has asked customers to access its loyalty programs, which are the best in Africa, at a dinner held at the plush Labadi Beach Hotel in Accra. Apart from feting the numerous customers, made up of the crème de la crème of captains of business and industry, with the mouthwatering food, drinks and souvenirs, SAA gave business and economy tickets through a raffle draw to two patrons to travel to South Africa. SAA launched its prestigious international program, Voyager, in 1994. Voyager has five-tier statuses, namely Blue, Silver, Gold, Platinum and Lifetime Premium. Making a presentation, Mahlatse Makwela, Voyages Relationship Specialist at SAA’s head office, said “Loyalty is really the revenue channel for our airline.” 1) A cross section of invited Loyal Patrons of South Africa Airways (SAA) at the dinner 2) Ms. Mahlatse Makwela, SAA Voyages Relationship Specialist who came from SAA Head Office in South Africa, making a presentation 3) Mr. Nico Van Staaldiunen, a Dutch Platinum Customer of SAA, speaking at the event 4) Mrs. Evelyn Acquah and Mrs. Essilful Boison, both of Barclays, Mrs. Anne Sackey of DSTV and Mrs. Sarah Asafu Adjaye of Savannah Properties 5) Picking of raffle for a lucky loyal voyager 6) Mrs. Gloria Akuffo Yirenkyi, Country Manager of SAA Ghana, awarding a ticket to a raffle winner 7) Mrs. Gloria Yirenkyi interacting with Burt Mensah of Prolong Oil & Lubricants 8) Ellen Thompson, Colette Muttoni, Riccardo Muttoni Director EXPRO subsaharan Africa, John Craig Thompson of Nestle 9) Ohis Ehimiaghe (right) presenting a ticket to another raffle winner 10) 7

GHANA BUSINESS & FINANCE

NOVEMBER 2014

ADVERTORIAL

GHANA BUSINESS & FINANCE

OUTLOOK

The Ebola pandemic shines light on African doctor exodus Ebola outbreak exposes catastrophic doctor-patient ratios in key African states. Why wonâ&#x20AC;&#x2122;t we care for our own?

GHANA BUSINESS & FINANCE

NOVEMBER 2014

An analysis of a basic global healthcare metric – doctor to patient ratios - may be the key in helping to identify the next West African states most vulnerable to the ongoing Ebola outbreak. Unsurprisingly, Liberia and Sierra Leone, which have remained the epicenters of the pandemic, have the worst doctor to patient ratios in West Africa, at over 86,000 patients per 1 doctor in Liberia, and 45,000 patients per 1 doctor in Sierra Leone. Nigeria, which has lately received a lot of media attention and acclaim to halting the hemorrhagic virus in record time, ironically has the best doctor to patient ratio of any West African state despite its population being over 4 times that of any of its regional peers. Therefore, it is probably among the least vulnerable countries to be affected by this outbreak. Due to climatic factors connected to the epidemiology of Ebola, the northern arid West African states of Mali, Burkina Faso, Chad or Mauritania are unlikely to see any major outbreaks. However, the tropical coastal states, whose porous land borders adjoin Liberia and Sierra Leone, remain very vulnerable. CNN and other channels are already suspecting cases in Ivory Coast although to date there has been no official confirmed victim of the disease. Total number Total Doctor to of registered Population Patient Ratio and licensed (million) (population doctors per 1 doctor) Liberia

4.4

86,275

Sierra Leone

136

6. 2

45,588

Burkina Faso

713

17.3

24,264

Togo

349

20,057

Benin

542

18,450

Senegal

741

12.8

17,274

1,346

20.3

15,082

124

1.75

14,113

Mali

1,291

15.7

12,161

Ghana

2,325

11,634

Guinea

940

10. 6

11,277

Gambia

175

1.8

10,743

2,746

23.2

8,449

Nigeria

58,363

168

2,879

South Africa

39,541

1,366

Cameroon Guinea Bissau

Cote d’Ivoire

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DaMina Advisors is a preeminent independent global frontier markets political risk research, due diligence, educational and M&A transactions consulting firm - with a special focus on Africa. DaMina provides bespoke risk analytic services to firms with significant frontier markets investments. DaMina Advisors has offices in London, New York, Toronto, Melbourne and Accra. For more information: www.daminaadvisors.com

GHANA BUSINESS & FINANCE

OUTLOOK

Many complex “push” and “pull” factors account for the large exodus of African doctors, nurses, pharmacists and other healthcare personnel out of Africa to greener financial pastures in Europe and North America. While both western anti-HIV and anti-malaria campaigns funded by the likes of the Bill and Melinda Gates Foundation have done wonders in helping stem the tide of disease in several African countries, the gravitational pull to migrate remains. Pull factors include the prospects of a financially better, more politically peaceful and the less ethnocentric discriminatory social atmosphere in the West. Strong domestic push factors include corruption, low salaries and the lack of adequate health infrastructure and appropriate medical accoutrements and devices. The Ivory Coast for example frustrates many well-intentioned private sector investors in the healthcare sector by mandating that only medical professionals can invest in healthcare facilities or open clinics. Surely, any investor should be able to do so and thereafter hire the required personnel to staff the facility. Although likely purposed to protect and support doctors and nurses, these are not necessarily entrepreneurs and what results is an underdevelopment of the healthcare system. Strangely, in recent years, despite Africa’s much vaunted economic growth and new nouveau-riche class, the level of emigration has accelerated. With shortages of healthcare workers in Europe and in North America, and an ageing western demography, some western hospitals now recruit directly out of Africa with the support of their respective governments who grant favorable visas to highly skilled medical personnel. After Ebola will likely come other contagions pandemics unless these negative underlying structural trends in the healthcare services are reversed.

OUTLOOK

International travel bans

to the region threaten fledgling airlines Africa’s struggling airlines face possible insolvencies if the US and EU enact strict travel restrictions to Ebola affected West African nations. Africa’s airline industry, which supports over 7 million jobs and contributes USD 80 billion to GDP, is already struggling financially. Now it may witness several financial insolvencies if the US and EU impose strict travel restrictions to West Africa. With continued cases springing up weekly in the US – the latest in overpopulated New York City, and growing public pressure on the Obama administration to restrict US airline travel to West Africa, the financial viability of a number of already struggling domestic

African airline carriers may be under threat. The financial viability of several domestic African airlines such as Asky Airlines (Togo), Senegal Airlines (Senegal) and Air Cote d’Ivoire (Ivory Coast) among others could be imperiled if air transportations services within West Africa becomes severely restricted due to the Ebola pandemic. Foreign airlines such as KLM-Air France, Lufthansa, British Airways, Turkish Airlines, Emirates, Royal Air Maroc, TAP, South African Airways,

GHANA BUSINESS & FINANCE

Kenya Airways, Ethiopian Airlines who operate dozens of lucrative daily flights to key West African hubs of Lagos, Abidjan, Accra and Dakar will also see a sharp fall in patronage as business passengers postpone trips, tourists look elsewhere for pleasure and diaspora returnees stay home until the pandemic has subsided. While a US and EU airline travel ban on flights from Guinea, Liberia and Sierra Leone may not materially affect the financial viability of the struggling West African airline companies, any flight bans on travel from larger economies of Nigeria, Ghana, Senegal and Cote d’Ivoire has the real potential of financially crippling several domestic African carriers and negatively impacting West Africa’s GDP for 2014.

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Association (IATA). African airlines are projected to return a profit of just USD 100 million combined in 2014, with a net profit margin of only just 0.8%, the lowest of all aviation regions globally. Given the President Obama is now hugging ex-Ebola patients in the oval office, perhaps the national panic in the US will subside and avoid imposing further financial pressures on Africa’s airline industry.

Air Passenger Movements by Country, 2011 40 35.9 35

Total Passenger Movements (millions)

25 22.4 20

14.9

8.0

6.8

6.5

5.2 2.4

1.8

1.7

Ghana

Senegal

1.1

0.9

Uganda

Namibia

0 South Africa

Egypt

Nigeria

Tunisia

Algeria

Kenya

Ethiopia

Angola

Source: “2011 World Airport Traffic Report” , Airports Council International, 2012.

African airlines that could suffer from travel ban to West Africa • Asky Airlines (Togo) • Senegal Airlines (Senegal) • Air Cote d’Ivoire (Ivory Coast) • CAA (DR Congo) • Camair (Cameroon) • Afric Aviation • Rwandair (Rwanda) • Starbow (Ghana) • Equajet (Congo, Brazzaville) • Mauritanie Airlines (Mauritania) • DanaAir (Nigeria) • Medview Air (Nigeria) • First Nation Air (Nigeria) • SN2AG (Gabon) • Africa World Air (Ghana) • CEIBA Intercontinental (Equatorial Guinea) • Discovery Air (Nigeria) • Overland (Nigeria)

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Source: forbes.com

GHANA BUSINESS & FINANCE

OUTLOOK

If the US imposes a flight ban on the affected West African states, the EU is likely to follow suit. Africa’s airline companies continue to be constrained by a variety of bottlenecks such as poor airport infrastructure, high cost of operations and high insurance premiums. These factors have made them the least profitable aviation companies globally according to International Air Transport

OUTLOOK

Global oil industry’s winter of financial discontent

GHANA BUSINESS & FINANCE

NOVEMBER 2014

OUTLOOK

Global oil companies face a winter of discontent as, similarly to the mining industry, multibillion-dollar write-offs, bankruptcies and forced M&A consolidations loom for the oil sector. The global mining sector and natural resources investors are still uneasily digesting the USD 80 billion in writeoffs and bad debts they have had to endure recently. While they languish in the doldrums searching for a new way forward for their beleaguered sector, the global oil industry and its many debt and equity partners also face a similar winter of discontent as oil prices skid downwards past USD 80 per barrel. With many of the world’s latest oil production costs reflecting breakeven points above USD 80 per barrel, any continued slide in the price of the commodity will imperil dozens if not hundreds of oil companies and energy projects across North America and Europe. However, this bodes well for the continent as it might encourage relocation of projects to Africa, as the continent’s breakeven point is significantly lower. The West African offshore oil production break-even cost per barrel is only USD 41 per barrel. Oil Producing Regions Breakeven cost per barrel ($/bbl) Russian Arctic $119 EU Biodiesel $110 EU Ethanol $102 Canada Oil Sands $93 US Ethanol $84 US Shale Oil $74 Brazil Ethanol $66 Deepwater Offshore $57 UK North Sea $50 West Africa Offshore $41 Central and South America $32 Central Asian Republics Onshore $22 Russia Onshore $18 Middle East Onshore $14 Source: IEA/ EIA/ DaMina Advisors calculations

NOVEMBER 2014

Recognizing the significant geopolitical and severe externality effects of a possible crude oil price collapse on investors, pension funds and deflation, nearly a year ago in December 2013, DaMina Advisors in its annual ‘Periscope 2014’ forecasted a likely 2014 oil price collapse below USD 80 per barrel as the as #1 global risk for the year. (http://daminaadvisors.com/admin/ documents/DaMina%202014%20Periscope.pdf ) While the budgets of many major oil exporting nations such as Iran, Nigeria, Libya, Iraq and Venezuela may suffer as oil prices slide further, the immediate investor impacts of a sliding oil price complex will be the companies whose operations can only be sustained at high oil prices. American shale oil and Canadian tar sands companies are particularly vulnerable. Europe’s attempt to move away from fossil fuels into biodiesel, ethanol and other sources of renewable energy will also become imperiled by a collapse in the global oil price. While Rosneft will still get the strong financial support from the Kremlin, backed with loans from China, to accelerate the Russian Artic exploration and production despite its high breakeven costs, financially independent private American, Canadian, Australian and European shale and oil sands companies may be in for a very tough winter of financial discontent as their company stocks fall making it harder to raise financing, bank credit lines are pulled, and debtors bay to push many into bankruptcy and to get a hold of some assets before it is too late. Energy sector equity investors, banks, pension funds and other asset managers with high exposure to shale, renewables and tar sands energy companies will also share in the oncoming pain. Once shunned, cheaper onshore production looks poised to make a comeback.

GHANA BUSINESS & FINANCE

ADVERTORIAL

Nespresso expands into Ghana with a new boutique in Accra

Nespresso, the worldwide pioneer in premium portioned coffee, continues to meet rising consumer demand for the highest quality coffee with the opening of its first Boutique in Accra at the Marina Mall. The opening which was well attended by the media had the invitees and public at large indulged in a multi-sensory journey into the world of Nespresso premium portioned coffee. The Nespresso story began with a simple but revolutionary idea - enable anyone to create the perfect cup of espresso coffee – just like a skilled barista. From its beginning twenty-eight years ago, the Nespresso brand concept has redefined and revolutionized the way millions of people enjoy their coffee today and has shaped the global coffee culture. The brand has evolved from their beginnings as pioneers and trendsetters, becoming the reference point in the portioned coffee segment through a singular focus on delivering the ultimate coffee experience to consumers, cup after cup. Although coffee is at the heart of all they do, consumer pleasure is why producers do it. The Nespresso history is marked by the passion for perfection and track record of continuous innovation to consistently deliver the highest quality coffee tasting experience to consumers worldwide. From the range of their Grand Cru coffee to the unique Nespresso system, and from the brand to their commitment to service and their sustainability approach, they have been

constantly enhancing and reinventing how consumers experience their coffee through every facet of their business. Nespresso is expanding its expertise by opening the first Boutique in Ghana. Located at the Marina Mall shopping, the new Nespresso Boutique will provide a unique opportunity for Nespresso Club Members and Boutique visitors to indulge in a multi-sensory journey into the world of Nespresso. This 21 square meter space will immerse you into the Nespresso universe, from the tasting of the entire range of the 22 permanent Grands Crus with each of their aromas and profiles to the discovery of the latest machines and accessories, conveniently presented in dedicated areas, every need will be met in a unique and personalized way, with unrivalled customer service, advice and guidance from specially trained Nespresso Coffee Specialists. Addressing the press, Pierre Debayle Regional Manager of Middle-East, Africa and Caribbean, said, “It is really exciting to have opened in Ghana this year after the opening of Ivory Coast last year. Ghana has convinced us by its potential as by the quality of the commercial structures. With the help of our partner Ghadaba, and the support of the Nestle local presence, we intend to develop our business model in Ghana. We have started in Marina Mall with this innovative Pop-up Boutique, offering a first level of retail experience to Nespresso fans. In the next few months we will open a Boutique in one of the malls of Accra. We are evaluating the different options that have proposed to us.” Also, Country Manager of Ghadaba in person of Ekow Otoo, added that, “We are absolutely thrilled to continue expanding in Africa; the new Boutique in Marina Mall in Accra shows our commitment to growth by offering premium coffee to customers in this continent, We aim to meet the expectations of both B2B and B2C customers with our range of Nespresso products and services to satisfy all their needs. We invite all coffee lovers to visit us in our Boutique in the Marina Mall.”

GHANA BUSINESS & FINANCE

NOVEMBER 2014

ADVERTORIAL NOVEMBER 2014

GHANA BUSINESS & FINANCE

DOING BUSINESS

The travails of

business registration in Ghana

Taking that leap of faith as an aspiring entrepreneur to move from talking about a dream to making it a reality is an exciting and precarious time full of hope, fright and loneliness despite incessant praise from friends about your bravery. One of the first steps to take once you have decided that the intrepid path of self-employment is your destiny is to register your company. For the private sector, the Ghanaian government has been active in building a policy and a regulatory environment that is more conducive to private enterprise development. Ghana has ranked twice as a top 10 reformer globally by the World Bank’s Doing Business Report, rising in the rankings from 106th worldwide in 2006 to 63th in 2012. However, the strongest weaknesses noted are the difficulties to start a business in addition to access to financing and the infrastructures systems (energy, transport and telecom). While the latter two are debated very often in various public and private circles, the travails involved in actually just building the necessary legal backbone of a company is rarely openly discussed. The first port of call is the National Registrar’s Office. The agency’s website is very straightforward and provides you with all the necessary forms needed to incorporate a company and obtain the critical Tax Identification Number (TIN). The registration form even asks for the date you started operations, which clandestinely takes into account that you may have been in business in the informal sector for some time but now want to be formally registered. However, you may have to unfortunately go through several iterations when filling out the required forms simply because some information, which could easily feature on Frequently Asked Questions (FAQs) page, are only revealed to you when your forms are rejected. For example, in Ghana you cannot register a company with the word ‘Africa’ in it as a sole proprietorship. This seems nonsensical. If one is exporting products made in Ghana to other countries in Africa and is owned wholly by a single individual surely the addition of the word ‘Africa’ to the brand would make sense. However, according to the National Registrar, ‘Africa’ can only be used in registrations of partnerships, that is in the case of companies that are owned

by more than one person (ironically, it does not matter whether the partners are Africans or not). Another anomaly is that the National Registrar does not recognize spacing in the names of registered companies. For example, a company called View Point Services could not be registered if a company called Viewpoint Advisory is already in existence. This presents a quandary to any business owner who has already successfully run a business using a specific brand name. In the US and other developed markets, there are hundreds of companies with the exact same business name, differentiated only by registration numbers or other parameters. Yet, this is just Step 1. Following a successful completion of the forms for incorporation of the business, you will need to complete GIPC registration forms which can cost up to GHS 7,000 for foreign owned companies. Thereafter, there will also be Ghana Revenue Authority (GRA) registration, Corporate Tax Department registration, Value Added Tax (VAT) registration, registration with Social Security and National Insurance Trust (SSNIT) in the case you employ anyone, Local Government Registration and Petroleum Commission Registration, if engaged in any business having to do with the upstream oil sector. The fees of the latter two required registrations are not provided up front and are only known on an ‘application by application’ basis. Faced with this myriad of forms and agencies to comply with, should one be outside of Accra, one might weigh the opportunity cost of taking a short holiday and traveling to Ghana for a week to register his or company versus hiring a local agent or lawyer to do it. In order to register a wholly Ghanaian owned company, outside of the trade sector, it is only GHS 650 (USD 200) which seems very reasonable. Unfortunately, should you wish

GHANA BUSINESS & FINANCE

to recruit a law firm for instance to assist you to properly engage with the National Registrar’s Office and the other public agencies, you better be well capitalized. For simple registration or incorporation of an SME in Ghana, which only requires USD 200 in actual fees, professional law firms quoted between USD 650 to USD 1,500 for the service of doing it on behalf of a client. In fact, the services of top local firm Oxford and Beaumont in Accra were in the environs of USD 10,000 for all the required registrations exclusive of “disbursements” which are costs associated with telephone calls, transportation and other out of pocket incidentals. When a Diaspora client pushed back on the pricing a senior lawyer from the prestigious firm replied, “We note your comment that you do find our fees prohibitive for a start-up but unfortunately, our fees are what they are – it doesn’t change for start-ups. Our fees are also competitive for the Ghanaian market.” Local and diaspora budding entrepreneurs find some of these fees high but know for the most part that they are reflective of the brand name of the firm. Yet, it is also quite difficult to identify freelance lawyers, accountants, website designers in Ghana though a local equivalent to the US-based www. elance.com where you can find up to 2 million capable professionals without the expensive overheads and fancy brand names. This is also why registration in other markets is much more attractive such as in Mauritius or even the UK where company registrations for more complex private equity funds are as low at USD 50 and done in a one-stop shop fashion. A Ghanaian entrepreneur who started his own healthcare services company three years ago recalls his early days: “My company is registered here in the UK, has an office in London as well as one in Johannesburg, South Africa. Even though we are working with a Ghanaian firm at the moment,

NOVEMBER 2014

Registration fees by business Category

DOING BUSINESS

the need has not yet arisen for us to register in Ghana. Our Memoranda of Understanding [MoUs] are written using English Law and the website, registration, and setting up offices in both countries probably cost me circa £5,000. I was quoted USD 350 per month for an office in Airport, Accra, and USD 80 per month for a similar office in upmarket Johannesburg. Never could get my head round that.” Entrepreneurship is already hard. Entrepreneurship in Africa is harder. To the extent that Ghana can facilitate the process and the cost for SMEs who have their ideas as their only currency, it would reduce the inclination of some of them to reach out to other jurisdictions to have their dreams met.

Gh¢

a) Wholly Ghanaian Owned Business (Trading)

6,480

b) Wholly Ghanaian Owned Business (Others)

648

c) Joint-venture (i.e. $200,000 minimum foreign equity)

3,600

d) Wholly Foreign (i.e. $500,000 minimum foreign equity)

9,000

e) Manufacturing / Export Trading

18,000

f ) General Trading (i.e. $1,000,000 minimum foreign equity)

18,000

g) Renewal (Every 2 years) – Joint Venture & Foreign Owned

1,800

h) Renewal (Every 2 years) – Wholly Ghanaian Owned

360

NO. STEPS TO REGISTER A LIMITED LIABILITY COMPANY

OFFICIAL FEES (USD)

TIME

1. 2.

Incorporation : • Company name search; • Obtain Tax Identification Number (“TIN”); • Obtain and Complete incorporation forms; • Receive Certificate of Incorporation and Certificate to Commence business. $200 and 0.5% of the stated capital of the company

$200 and 0.5% of the stated capital of the company

14 to 21 days

GIPC Registration: • Open an account with a bank in Ghana; • Obtain confirmation of funds transfer from the Bank of Ghana (BoG); • Obtain GIPC Registration Forms from GIPC and complete same; • Submit GIPC Registration Forms to GIPC and pay relevant official fees; • Issue GIPC Certificate.

Joint venture = GHC3,000 30 days from Foreign = GHC6,800 incorporation. General Trading = GHC13,500

3. GRA Registration, Corporate Tax Department. • Obtain and complete GRA registration forms

A provisional tax is paid, based on an assessment of the projected earnings of the company. This counts towards the company’s tax for the year.

14 days from incorporation

4. VAT Registration: • Obtain and complete VAT registration forms. NIL

14 days from incorporation

5. Registration with Social Security and National Insurance Trust (SSNIT) • Obtain and complete SSNIT registration forms. NIL

5 days from incorporation; however the company must have an employee before SSNIT registration will be required.

Local Government Registration: • Obtain Business Operating Permit from local governing body; • Obtain and complete and a form given by the local authority.

Depends on the objects of the entity.

14 days from incorporation

Petroleum Commission Registration • Pick up application pack from the Petroleum Commission (Application pack Costs GH¢ 100) • Complete and submit application forms • Petroleum Commission assess the application and determines the official fees to be paid.

Determined by the Petroleum Commission after the application has been submitted.

15 to 25 days from the day of submission of application.

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GHANA BUSINESS & FINANCE

PERSPECTIVES

Stop giving advice. Sell Expectations BY YAW ASAMOAH

Hypothesis Listening and reading the media in Ghana, the theme for discussion is usually one fold: advice. Everybody tuning in, making a contribution or calling in has an advice to give. Hardly do you get the sense of what is expected of the recipient of the supposed advice. My ultimate assertion is that advice does not change or shape people, it is rather what they expect of themselves or society expects of them.

Case Study In Ghana, while the United Gold Coast Convention (UGCC) was fighting for self-government in the shortest possible time, Dr. Kwame Nkrumah and the

Convention People’s Party (CPP) was crying “self-government now.” For Dr. Nkrumah, the expectations he had was that Ghana was made up of competent people who could automatically assume high roles with little or no supervision. His reasoning was similar to the business executive who takes a loan for the first time to expand his business. It is a gray area, unchartered waters. But with the right attitude, diligence and associations, he is confident that his expectations of creating a profitable company and paying back the loan are achievable. So contrary to popular advice at the time around, Dr. Nkrumah’s decisions were shaped by his expectations, and probably that of his supporters.

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At the height of the cold war, the United States of America (USA) and the then Union of Soviet Socialist Republics (USSR) were not just at war politically and economically but also on issues of outer space. USSR had beaten USA to launching the Sputnik, the first satellite in 1957 and the Yuri Gagarin mission in 1967 when the first person was in space. President Richard Nixon was determined to give the Americans something to cheer and celebrate and put their country’s name up there as world leader. So it came as a major victory when Neil Armstrong and Edwin “Buzz” Aldrin on 20th July 1969 landed on the surface of the moon. But the odyssey was not ended. President Nixon wanted

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Expectations of Our Dreams The theory of expectations rests in the unseen and unknown, which is akin to the vision and mission statement of a

also to prove to the world that the US has the sanctity of mind to explore further expeditions by using the one value they, as a people, believe in: TEAM COLLABORATION. When the president realized that the US did not have the capability to build a spacecraft, he visited Moscow to sign an agreement for a joint venture with the Russians, their supposed arch enemy. Here also, the expectations of the people of the US for their president were to be a bold and become a world leader compelled President Nixon to do the unusual. In the 1884 English case of Mignonette (Queen V Dudley), though the judges did not sentence the culprits to death, they asserted that human

NOVEMBER 2014

company or organization. However, the benefit expectations have over advice is that the individual determines them, or the larger group, in electing its leader, instills that in him or her. In dreaming Ghana, the governed needs to voice out what they expect of their leaders. These can be done through the social contract they have with their leaders through how they engage issues in the media. If somebody campaigns to over 25 million people and wins an election but cannot lead, then what he or she needs is the exit, not advice. The throne of leadership is not the place to gather advice; it is the place to rule to achieve your expectations and that of the populace.

A Business of Expectations Forging ahead as businesses in Ghana, we need to start asking ourselves some difficult questions. What are our expectations of ourselves as individuals and our stakeholders? This is what should compel us to break the glass ceiling, think outside the ‘house’ not ‘box’ and create the next beautiful and darling solutions. The expectations of businesses are not to be selfish, crookish, cunning, disorganized, destructive and treacherous. It is in our right to think pure, to set golden examples through innovation and planning. To conclude, as bosses of businesses, we need to constantly manufacture our dreams and expectations. Advice cannot be our benchmark. Based on our ethics and what the larger community expects of us, we can create and build a business around it. Our expectations will give us the guiding path for the journey. So search for your expectations internally and externally.

Yaw Asamoah work’s at Creative Trends, the organizers of the African SME Summit. Comment on the article at African SME Summit on facebook. Email - dreamingafrica@africansme.org. Follow us on whats app on 0243288505

GHANA BUSINESS & FINANCE

PERSPECTIVES

beings could not use necessity as an excuse to underperform. This case is a bizarre story of four people who were stranded in the deep seas. After 19 days of starvation, they decided to kill and eat the least among them, Dick Parker, who was the cabin boy of 17. The three killed and cannibalized Parker’s blood and body. When they got to England, they were charged for murder against the protest of the public who thought the crew deserved celebration, commendation and empathy instead of persecution and prosecution. During their trial, it was established by the judge that nobody can use necessity as a defense and an excuse. Lord Denning in 1979 made this famous quote: “If hunger were once allowed to be an excuse for stealing, it would open a door through which all kinds of lawlessness and disaster would pass… If homelessness were once admitted as a defense to trespass, no one’s house could be safe. Necessity would open a door which no man could shut.” In the above case law, the judges sought to position human life as more important than hunger or distress. In that vein, it was expected that no matter the circumstance, nobody can arrogate unto himself the life of another at the person’s detriment.

PERSPECTIVES

Why should I invest in an automated time & attendance system? BY ANGELINA LAZAR

Isn’t it better I just save some money on extra expenses, especially in these difficult economic times, and just do it the old fashioned way? Any way, it has been working perfectly well for me for the past 20 years! Why change now? I don’t compete with the Joneses, you know, and couldn’t care less what others are doing. I have my priorities and my budget for expenses, but it’s just another latest gimmick to try and get me to spend money for something I don’t need from yet another provider. I won’t allow anyone to sell me something I don’t need. I’m smarter than that! Well, your proverbial Kwame may feel falsely empowered with his bold soliloquy; and may even feel better about himself, speaking his mind adamantly, but is it true that he is saving money, utilizing a manual timekeeping system? Let us see ascertain. An organization’s workforce is more often than not its largest expense. This expense impacts both your production and bottom line; thus inaccurate time-keeping can lead to unnecessary and slothful expenses with nothing to show for it. Maintaining

accurate, reliable and digital time and attendance records renders labor management much more manageable, saving you both time and money. We will prove this. Let us look, first, at the surface, before delving deeper. The first thing we think of when we hear someone speak of an automated time and attendance system is that it thwarts the abuse that a manual process breeds; namely payroll inflation. Time card punching relies heavily on the honor system, which is not overly prevalent

GHANA BUSINESS & FINANCE

in West Africa in general, and Ghana in particular. With time cards or other manual systems, inaccurate hours can be bogusly logged by less than honest employees (via “buddy-punching”). This results in time theft which eats away your bottom-line, whether you are aware of it or not. And you are probably not as you have no data that you can cross-check, which allows you to see this clearly. Nonetheless, come payroll time, you will to proceed to collect all the time cards of all your employees, then

NOVEMBER 2014

1) CONVENIENCE:

commence to do a re-entry of the very same data into your payroll solution. Please note, you need all the time necessary to process this information for your entire organization. So permit me to say, and be forewarned, this is an extremely tedious, laborious and timeconsuming process. But if you wish, you may continue as you have now for 20 years just because this is always an option. And options are good. They allow us to make the most, or the least, of ourselves as we choose and see fit. Such manual re-inputting of data, checking and cross-cheking, trying to decipher illegible hand-writing and collecting cards from those who are absent can add up (and does) to a lot of unproductive hours that have tagged to them a definite direct expense (first and foremost that of your book keeper). With electronic data, though, fed to Human Resource and Payroll, time can be saved drastically, saving you productivity hours along with related personnel wages. Would you rather like to continue with your beloved familiar system? Certainly, no because of the spare time you get. Furthermore, automated data collection ensures that your time records, which are in electronic form,

NOVEMBER 2014

With manual processes, the HR Department needs to keep massive amounts of timesheet data files on each employee; stored, maintained and archived. This is hugely inconvenient and cumbersome, especially when you need to access files immediately. Trying to find the file of a non-active employee, for instance, as requested by some manager can prove to be a serious bottleneck instead of conveniently and securely relaying it to that relevant department on demand with a simple click of a mouse. Very soon, running around collecting paper time cards at the end of each pay period will be a thing of the past.

2) INSIGHT:

Without accurate time and attendance data, your organization has very little insight into its true labor costs. Only if your income and expense numbers are accurate do they give you valuable insight concerning the productivity of each employee and department, vital to the success of any large, serious or national organization. An electronic system gives you far better perspicacity into your employees’ work habits and stresses, and the time they spend on particular jobs, including the return on investment on their work. This information allows you to tweak things more appropriately, and perhaps more proportionately allocate labor across your workforce, if necessary. Let us say, for example, an employee claims overtime on a regular basis. How do you know whether he is utilizing his time wisely or is merely experiencing a temporary surge of additional work that season, legitimately warranting overtime pay? Perhaps, it may be better to reallocate the project across multiple employees, redistributing the workload more fairly, effectively and efficiently. An electronic time and attendance

system offers you this invaluable insight to make such prudent, effective and economic business decisions which will inevitably enhance your bottom line.

3) INCREASED SECURITY:

Biometric data collection devices eliminate buddy-punching, helping to reduce your unnecessary and invariably costly liabilities, and theft of expensive equipment. Everything and everyone are held accountable when you have an electronic system in place, with no loopholes, snags or question marks. So a time and attendance system serves much more than a mere electronic clock.

4) COMPLIANCE:

Another important advantage of implementing an electronic time and attendance system is that you already have ready and waiting the required information by law to comply with labor regulations or union rules, concerning proof of attendance and other complex compliance requirements. Your electronic time tracking data will allow you to breathe a huge sigh of relief. It is an invaluable tool that you have should the Department of Labor decide to audit you on the spur of the moment.

5) EMPLOYEE SATISFACTION:

Employees will actually be not as offended as you think, but much more pleased and satisfied because time and attendance software guarantees timely and accurate pay for them, putting a smile on their faces all the way to the bank. It also gives them access to their own records when they wish, which boosts their morale, resulting in better productivity and enhancing their loyalty to the organization. In conclusion, a time and attendance system that integrates with HR and Payroll systems leads to a high return on employee investment and an overall positive effect on one’s business culture, employee performance and loyalty, including a host of other peripheral benefits. It is not just about the time or even the savings! It is about the overall effectiveness, efficiency, productivity and profitability of your organization. Can 20 years of perpetuating the same methodologies compete with this? If so, perhaps you should continue! Angelina Lazar is an Economist, Business Consultant, Global Investment Banking Analyst and Certified International Project Manager

GHANA BUSINESS & FINANCE

PERSPECTIVES

allow for a seamless transference of data to be automatically sent to your payroll solution for immediate, prompt and effective payroll processing in as little as 20 minutes. So, let us recap: we have said that the more obvious benefits are: • Data Accuracy; • Savings in Cost; • Savings in Time; • Efficiency and Effectiveness; • Improved Workforce Productivity. But beyond that, there are much more far-reaching, vast and profound benefits than these inherent in implementing an electronic solution. I should focus on these.

EVENTS

8th Worldwide Annual Airline & Travel Payments Summit

Made in Ghana Summit

Made in Ghana Summit’s main goal is to redress the balance of trade deficit by strengthening local content and creating in-country value in the Oil & Gas and Mining industries. Taking that into consideration, the government decided to create Local Content and Local Participation Policy that stipulates that Ghanaians should be prioritized in terms of employment in the petroleum industry, and should benefit from the country’s resources. The implementation of this new policy is expected to ensure that Ghana’s natural resources benefit Ghanaians, while the foreign oil companies also get fair returns on their investment. Made in Ghana will gather several stakeholders involved in local content strategies and policies to discuss current challenges in the Ghanaian community. The summit will cover current challenges that Ghanaian organisations are facing, including developing a sustainable framework for the Mining industry through the implementation of Ghanaian workforce, delivering quality training to enhance skills and capabilities and establishing Ghana as a hub for the oil & gas industry in Africa through the implementation of Ghanaian professionals. Our goals are to strengthen local content and create in-country value in the Oil & Gas and Mining industries. The summit will serve as an ideal platform to showcase success stories and, most importantly, provide opportunities for collaboration and cooperation. Date: 2th – 4th December Venue: Kofi Annan International Peacekeeping Center, Accra, Ghana Website: www.madeinghanasummit.com

3rd Annual Legal Compliance of the Total Tendering Process

This platform will highlight the importance for government to strengthen its tendering policies. The conference will equip delegates with which systems to use in an attempt to circumvent challenges such as bid rigging or any other misleading corrupt activities that negatively impact the tendering process. The event is organized by Intelligence Transfer Center. Date: 2nd -3rd December Venue: Johannesburg, South Africa Website: www.atnd.it/15414-0

Airlines and travel companies are paying billions of dollars every year to collect payments. With an increasing shift of bookings to the online channel, as well as to mobile, will these costs increase or decrease? Will these changes in payment channels increase fraud? The 8th annual Airline & Travel Payments Summit will be co-hosted with UATP. It will offer three conference tracks in a single conference: 1) Payments Track; 2) Fraud Track; and 3) Travel Agency & OTA Track. Many of the organizations which have registered to attend the summit include Association of Canadian Travel Agencies, Air China, Amadeus, Amazon. com, American Airlines, Arik Air, Delta Air Lines, Google, IATA, KLM, MasterCard, Qatar Airways, US Bank, Virgin Atlantic Airways and VISA. Date: 3rd - 4th December Venue: San Francisco, USA Website: http://www.airlineinformation.org

9th North Africa Oil & Gas Summit

The premier meeting place for North African natioan oil organizations and their partners. Officially supported by Sonatrach, the 9th edition of the summit is the most well-known and respected regional platform for high-level representatives of all the national oil and gas companies, governments and their international partners. Commit to improving regional oil and gas affairs and addressing the most pressing challenges, experience genuine debate, meaningful conversations, access to knowledge of best practices and unrivalled networking with your peers. The summit is organized by the Energy Exchange. Date: 7th – 9th December, Venue: Algiers, Algeria Email: www.northafricasummit.com

Future iGaming

Future iGaming is Europe’s only event addressing future innovations in marketing for the Gambling/ Gaming sector. It is the only event that addresses innovations in marketing for the gambling/gaming industry. Future iGaming provides a fresh look at the future of gambling. This event will offer you the opportunity to discuss innovations in gambling and give you insight into how the gaming industry and the most progressive companies are influencing customer betting behavior. Over 120 heads of digital marketing, mobile and eCommerce from the leading European gambling operators will be debating the best strategies to maximize mobile and social gaming opportunities as well as assessing new solutions and gambling industry trends. Date: 3rd – 4th December Venue: America Square Conference Centre, London, UK Website: www.igaming.wbresearch.com

Outsourcing, Procurement and Project Planning, Implementation and Monitoring

This event is organized by University of Botswana’s Center of Specialization in Public Administration and Management (CESPAM) which was established in 2000. CESPAM is specifically mandated to provide training for senior executives in the Southern Africa Development Community (SADC) public sector. CESPAM has since offered 20 short term executive (STEP) training courses for senior officials in the SADC region on a variety of public administration and management topics which are of particular relevance to the public sector in SADC. Courses have been undertaken on Public Private Partnerships, HIV/AIDS, Leadership, Performance Management, Application of ICTs in SADC governance, the Political Administrative Interface, Management and Negotiation, to name a few. CESPAM works with a number of strategic regional and supporting partners. Date: 9th-11th December Venue: Francistown, Botswana Website: www.ub.bw

GHANA BUSINESS & FINANCE

NOVEMBER 2014

BOOK REVIEW

You Must Set Forth at Dawn ‘You Must Set Forth at Dawn’, an autobiography, chronicles the adult life of Wole Soyinka as a political activist, playwright and poet. In reading this book one gets caught up in the tragedy of Nigeria’s history of coup d’états, dictatorships and the threat to democracy through the actions of sycophants and despots. It echoes what most Nigerian historians and observers have reiterated over the years being Nigeria’s problems was birth at Independence; merging the north and south into a single country was not in the best interest of Nigerians. The pages of this book will take you on a journey into the dreams and aspirations of the young Wole Soyinka who follows the events of the oppressive white minority rule in Southern Africa thus his resolve to join the liberation movement. Ironically while Southern Africa was being oppressed by white minority his own country Nigeria was being oppressed by its own elected brethren post independence; an oppression which continues presently in Nigeria and in most African nations. It is no wonder that his writings and advocacy have been centered on human rights and the promotion of civil societies. With humor and wit he lightens the dark days of the Biafra war and other senseless massacre that gripped Nigeria. For a man who has immensely contributed towards the arts and governance of his country and beyond, his strong dislike for fame is paradoxical and almost comical evidenced to his reaction in winning the 1986 Nobel Peace Prize in Literature. Foolhardy as it may appear one learns of his bold and daring decision to enter Lagos via Benin in June 1993 to lend support for the mass uprising and street protests that ensued after Ibrahim Badamasi Babangida’s annulment of elections which was followed by a deadly crackdown by the military led by Sani Abacha.

Wole Soyinka also recounts the occasional offers to take on political positions in governance. Among such offerings was the persuasion of General Joseph Garba to accept candidateship for presidency which he aptly recounted with “There is only one person in Nigeria for whom I am prepared to sink my own ambition and that’s you. You should run. My real preference – I’ll be sincere with you – is to have you run” an offer, which he turns down. For one to occupy such a position will obligate him to serve the interests of undemocratic forces he reasoned.

“Foreign interests in pre-independent Nigeria are no different from postindependent Nigeria - same villain, different approach.” Wole Soyinka’s work furthermore offers parallels and insights by capitulating readers back into time to witness the turmoil and confusion that grasped the people of Nigeria which further offers the opportunity to understand the present social and political turmoil being experienced in the country.

GHANA BUSINESS & FINANCE

Nigeria is blessed with vast oil wealth yet the livelihood of the average Nigerian cannot speak of such affluence. This comes as no surprise as the forces orchestrating this paradox perseveres to date. Foreign interests in preindependent Nigeria are no different from post-independent Nigeria – same villain, different approach. The opportunity to return to Nigeria after Sani Abacha’s mysterious demise offers a window of hope as Wole Soyinka returns to actively move his country towards a habitable environment through his literal works and activism. It is not easy to read ‘You Must Set Forth at Dawn’ at the beginning of the book due to the complex writing style used. As the book progresses however, one gets used to Soyinka’s writing style to appreciate this piece of work. With satire, humor, creative use of words yet seriousness, ‘You Must Set Forth at Dawn’ will draw you into a turbulent live of prison, exile, risk taking, courage, success, failures, pessimism and probably some hope; hope in the comfort that there exist passionate advocates who are courageous enough to risk being persecuted yet persevere to see a better Nigeria and Africa.

NOVEMBER 2014

STATS & INDICES

Trading Results - GH Cedi as at Friday 24th October, 2014 Share Code

Daily Interbank Forex Rates as at Monday 27th October, 2014

Year High (GHS)

Total Shares Traded

Last Transaction Price (GHS)

AADS 0.52 0 0.53 ACI 0.06 0 0.03

Currency

Pairs Code

Buying

Selling

U.S Dollar

USDGHS

3.1937

3.1963

Pound Sterling

GBPGHS

5.1374

5.1419

AYRTN 0.18 0 0.17

Swiss Franc

CHFGHS

3.3551

3.3570

BOPP 3.84 0 3.84

Australian Dollar

AUDGHS

2.8107

2.8152

Canadian Dollar

CADGHS

2.8459

2.8474

Danish Kroner

DKKGHS

0.5437

0.5439

CPC 0.02 0 0.01

Japanese Yen

JPYGHS

0.0295

EBG

7.98 100 7.12

New Zealand Dollar

NZDGHS

2.5096

2.5139

EGL

2.50 16,200 1.64

ETI

0.43 36,400 0.35

Norwegian Kroner

NOKGHS

0.4848

0.4850

FML

7.55 84,100 4.90

Swedish Kroner

SEKGHS

0.4404

0.4406

GCB

5.69 30,500 5.19

S/African Rand

ZARGHS

0.2905

0.2906

GGBL 6.20 0 3.12

Euro

EURGHS 4.0471 4.0497

Chinese Reminbi

CNYGHS

BCEAO

GHSXOF 161.98 162.08

GWEB 0.04 0 0.03

Dalasi

GHSGMD 13.52

13.53

HFC 1.60 0 1.30

Ouguiya

GHSMRO 91.63

91.71

Naira

GHSNGN 51.52

51.56

Leone

GHSSLL 1366.65 1367.76

PKL 0.06 0 0.06

WAUA

WAUGHS 0.1460 0.1460

PZC

0.79 600 0.40

SCB

20.56 2,660 18.60

SCB PREF

0.58

SIC

0.52 500 0.42

0.5222

0.5225

Treasury Bill Rates

AGA

37.00 0 37.00

ALW

0.06 800 0.04

CAL

1.04 300 0.97

CLYD 0.04 0 0.03 CMLT 0.16 0 0.12

GLD

26.13 0.00 23.00

GOIL

1.00 1,500 0.99

GSR 2.75 0 2.34

MAC 3.59 0 3.59 MLC 0.39 0 0.26 PBC 0.17 0 0.14

0.55

SOGEGH 1.17 2,100 0.83

as at Monday 27th October, 2014 to Friday 31st October, 2014

SPL

0.04 200 0.03

SWL 0.04 0 0.04

Period

Discount Rates Discount Rates

TBL 0.35 0 0.30

91 - Day

24.1965%

25.7544%

TLW

182 - Day

23.3277%

26.4079%

1 - Yr Note

22.5000%

2 - Yr Fixed Rate Note

23.0000%

NOVEMBER 2014

36.00 0 36.00

TOTAL 6.57 1,200 6.10 TRANSOL 0.03

0.03

UNIL 18.31 0 14.00 UTB

0.35 8,600 0.25

GHANA BUSINESS & FINANCE

COMMODITIES

Month ending Oct 2014

Wholesale Prices (GHÂ˘)

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

Cassava(Fresh Tubers) Bag 91kg 40.20 N/A 24.00 70.00 36.00 63.80 33.80 44.63 44.26 0.85 Cassava (Gari)

Bag 68kg 100.00 135.00 177.00 117.40 68.40 132.00 96.00 117.97 116.20 1.52

Cowpea (White)

Bag 109kg 421.60 227.00 241.20 208.80 254.80 343.80 296.00 284.74 279.96

Groundnut (shelled)

Bag 82kg 418.00 435.00 337.80 270.00 318.00 370.00 348.00 356.69 369.50 -3.47

Maize (white, grain)

Bag

Millet (grain)

Bag 93kg 170.00 167.00 158.80 136.40 167.80 194.00 120.00 159.14 151.82

100kg 114.60 90.20

128.20 93.80

76.80

110.60

96.00

101.46

111.48

1.71 -8.99 4.82

Rice (imported-unclesam) Bag 50kg 198.00 N/A 253.00 N/A 281.60 268.40 N/A 250.25 246.75 1.42 Rice (local-white) Soya Beans Tomato (cooking) Wheat (Grain)

Bag 100kg 388.40 245.00 277.60 276.00 262.60 155.60 260.00 266.46 260.44

2.31

Bag 109kg 390.00 235.00 235.00 181.00 273.60 290.00 196.00 257.23 237.51

8.30

Crate 72kg 177.40 105.00 143.60 146.00 200.20 257.00 149.00 168.31 222.44 -24.33 Bag 50kg 150.00 195.00 312.80 143.20 260.00 202.40 N/A 210.57 186.58 12.85

Yam (pona-medium) 100 tubers 250kg 304.00 N/A 205.40 158.20 255.80 361.00 200.00 247.40 263.33 -6.05

NB: * Accra market is Agbogbloshie ** Kumasi is the Central market. To receive prices update and agric tips on your phone dial 1900 or visit www.esoko.com.

Maize

The average price of 100kg bag of maize in the month of October dipped by 8.99 percentage points to close the month at GHS 101.46 from the previous months GHS 111.48. A bag sold averagely on the Techiman market for GHS 76.00 being the lowest and on the Kumasi market for GHS 128.20 being the highest for the month. On the various markets there are a lot of maize being traded. A lot more farmers have harvested and there are enough maize on the markets. This has brought down the price of the commodity.

Soya

In the month October, the average price of 109kg bag of soya beans sold between GHS 181.00. in Tamale and GHS 390.00 in Accra with Tamale being the lowest and Accra the highest. The average price of the commodity shot up by 8.30 percent to close the month at GHS 257.23 from the previous months GHS 237.51. Soya beans has been in high demand for most parts of the year, this has affacted the supply and has kept the price for the commodity relatively high.

GHANA BUSINESS & FINANCE

Tomato

An average price of crate of tomato for the month of October dipped by 24.33 percent to close at GHS 168.31 from the previous months price of GHS 222.44. The commodity sold between GHS 105.00 in Bawku and GHS 257.00 in Takoradi. The highest was recorded in Takoradi and the lowest in Bawku. The dip in price of the commodity is attributed to the glut of the commodity on the market because the local ones from Akomadan, Tuabodon, Ada etc are been traded on the market.

NOVEMBER 2014

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21st January 2015 Best Western Premier Hotel, Accra