GB&F October 2014

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OCTOBER 2014 / ISSUE 041 GH¢10.00

Bankin Wha g:

t future hthe olds

SPECIAL REPORT

Is child labour due a new look?

The next chapter Jon Benjamin on the Ghana - UK bond

USA..........................................$5.00 UNITED KINGDOM.....................£3.00 EUROPE....................................€3.50

AUSTRALIA.............................AS5.00 CFA ZONE...........................CFA 2,000 OTHER AFRICAN COUNTRIES.US$4.00

THE FIRST BUSINESS READ IN GHANA

Follow us online at www.ghanabizfinance.com

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The future is pan-African

CONTENTS ISSUE 041 / OCTOBER 2014

18 Despite grim news from various

quarters of the economy, banking remains a strong performer.

20 Economy

Front Cover: HIS EXCELLENCY, JON BENJAMIN British High Commissioner to Ghana

6

Briefs

The highlights of events and trends in business and finance in Ghana from the past month.

10 Word for Word

Farouk Khailann, the Chief Operating Officer of Royal African Holdings, discusses business in Africa, the ambitions of his company and why it took a chance on Ghana.

12 Trade

The government’s thirst for money has led it to increase and introduce taxes. How is that affecting those whose businesses rely on bringing products into the country?

Even amidst the bleak news on the economy, suspicions persist about the data that is turned out by official state agencies.

24 Cover

Ghana and Britain have much to keep them together, a situation neither is keen to change. At the start of his tour, Jon Benjamin, the new High Commissioner to Ghana, discussed the trade relations between the two and the scope for growth.

28 In focus

Africa is changing – mostly for the better – and nowhere is this more evident than in these ten cities.

30 Outlook

Ebola is not just a threat to the lives of West Africans, but to the collective health of its economies.

32 Despite the threat of Boko Haram,

birthday country Nigeria is on its way to becoming an economic player of global significance.

14 ICT

38 Special Report

Pede Hollist believes that in the African context and experience, there needs to be a new look at what defines “child labour”.

42 By Invitation

Selorm Branttie, country strategist at mPedigree, the Ghanaian company at the heart of the fight against the global drug counterfeiting scourge, discusses how innovation can benefit businesses.

44 Perspectives

How can a leader motivate his charges to take initiative for the benefit of the operation?

46 Jerry N Halm reflects on some

key considerations in managing customer expectations

48 Akua Nyame-Mensah, country

head of online property matching service Lamudi, proposes some solutions to Ghana’s perenial housing problems.

Some openings at the top levels of corporate Ghana.

52 Events

Mark these dates on your diary.

53 Stats and Indices

16 Banking and Finance

Ghana’s economy by the numbers

54 Commodities Outlook: Page 30

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.

4

The Jaguar XF, just launched in Ghana by Alliance Motors, is the ultimate carriage for the executive high flier, delivering comfort, safety, innovation and just as importantly, luxury.

50 Executive Selection

When a company banks on ICT – as it should – it also opens itself up to several risks. Some advice on how to stay secure in an increasingly mobile first world is essential.

The financial services industry in Ghana is one of its more robust challenges. How will the challenges of the future test its resilience?

36 Toolkit

GHANA BUSINESS & FINANCE

Market prices in September as compiled by Esoko linkedin.com/GhanaBusiness&Finance facebook.com/GBandF @ghana_business

OCTOBER 2014

Editor S. Kwame Appiah kappiah@ghanabizfinance.com Columnists Jerry Halm Yvonne MacCarthy Julius Caesar-Tokoli Contributors Martin Luther King Oppong Baah Anthony Sedzro Georgina Adjei Ayuureyisiya Kapini Atafori Art-Graphics Manager, Design Benjamin Tetteh Design & Production Daniel Sackey Yobo Circulation & Subscription Jeffrey Dapaah 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

GNA Daily Graphic radioxyzonline.com Mergermarket Group ghanabusinessnews.com

myjoyonline Bloomberg citifmonline Corporate Council on Africa

Ghana Business & Finance magazine is published by

EDITOR’S SUITE

General Manager Josiah Spio-Garbrah jspiogarbrah@ghanabizfinance.com adverts@ghanabizfinance.com +233 264 510 396

He who trades, wins It is a truth universally acknowledged that adversity can produce less than well thought out policies or at least, policy suggestions.

Faced with a falling currency and a grim balance of trade, the protectionists have been emboldened. We note that not only have calls for banning imports become more strident, attempts to prevent even some of our West African brethren from participating in the Ghanaian economy have been carried out.

As a growing economic player in the subregion and beyond, this is an unhelpful posture.

Despite what some might seek to convey, all countries depend on trade.

Despite many passionate declarations, we cannot produce all we need and use only that we produce. Despite what might seem ideal, economies survive on what they take in as much as what they give others.

Countries, just like human beings, have their strengths and weaknesses.

This makes some economic activity and production best suited for various countries. What this means is that countries may be better advised to take some things from others, even as those other countries, find that they are also best off taking from others. In practice, the effect is that Ghana may not need to actually produce match sticks but can spend a bit of energy getting its “nkatie burger” some new fans beyond its border. That is the delicate balance that global trade is built on.

Of course, we admit that Ghana imports rather a lot more than it exports.

We are even more worried that much of what we export is in its raw form. It is not acceptable that even those citizens in the diaspora, find that they must rely on Caribbean alternatives when seized by culinary nostalgia. Therein lies the unspoken solution – it is not that we import too much but rather that we export too little.

As we continue to seek sustainable solutions to our economic problems, our submission is that we should spend less energy bemoaning the success of others in selling to us and seek to find more and bigger markets for our products, too.

In this, we have much to learn from Britain, a country with whom we have had long and fruitful association. A noted trading power, Britain has navigated changing global conditions, including the loss of its empire, by adapting to the needs of the global marketplace and delivering those products and services that have currency, while also keeping its own markets open to foreign participation.

As our cover personality, His Excellency Jon Benjamin, High Commissioner to Ghana would tell you, the economically active Ghanaian diaspora in Ghana attest to this fact.

As Mr Benjamin undertakes his tour of duty, we are confident that local businesses and policy makers will take note of his work on behalf of his government and seek some advantage for our local economy through his activities.

Best wishes for October.

S. Kwame Appiah Acting Editor +233 0208 350555

Letters to the Editor send your letters to the editor at

editor@ghanabizfinance.com

OCTOBER 2014

GHANA BUSINESS & FINANCE

5

BRIEFS

Nedbank acquires stake in ETI

South African Bank, Nedbank Group, has taken a 20 percent stake in Ecobank Transnational Incorporated.

Nedbank Group will subscribe in cash for 4,512,618,890 new ETI shares for USD 493.4 million. ETI will repay Nedbank’s loan of USD285 million granted to ETI in 2011 out of the subscription proceeds.

In line with the agreement with ETI, the Nedbank Group will be afforded the right to representation on the ETI board. The Nedbank Group has nominated its Chief Operating Officer, Graham Dempster, to join the ETI board and ETI will exercise its reciprocal right to an appointment on the Nedbank Group board. Both board appointments are subject to regulatory approvals.

Commenting on the investment, ETI Group Chief Executive Officer Albert Essien said ETI welcomes “this important investment by Nedbank Group, which increases the ETI capital

base. It is a win-win for ETI and Nedbank Group. Our two institutions have been strong strategic partners since we formed our unique onebank alliance six years ago, and it is in our mutual interest to ensure that this alliance grows from strength to strength.”

He was confident the partnership “will remain steadfast as we continue to provide the best quality banking services to our numerous clients across the largest banking network in Africa.”

Mike Brown, Nedbank Group Chief Executive noted: “This shareholding represents an important step in the consolidation and deepening of the strategic and technical banking alliance we have with ETI. Nedbank Group’s clients are increasingly expanding their business operations into the rest of Africa, and Nedbank Group’s own operations in Southern and East Africa, combined with ETI’s unrivalled pan-African footprint and strength in West and Central Africa provides their clients with access to banking solutions across thirty nine African countries.

Nedbank is one of the largest banks in South Africa; however, it is one of the newest banks to be incorporated. It is headquartered in Johannesburg.

First Rand begins Ghana operations next year FirstRand Bank of South-Africa has said that it will begin commercial operations in Ghana early next year after securing a provisional banking license from the Bank of Ghana. FirstRand operations in the country will bring to twenty eight the number of banks operating in the country.

According to the Chief Executive Officer of the FirstRand, Sizwe Nxasana, the decision to open a branch in Ghana forms part of a 10 billion rand (USD 920 million) programme to expand its operations into other African markets that have prospects for the bank’s growth.

“We have Nigeria that now continues to grow. We have Ghana where we have a provisional banking licence. We are hoping we are going to be up and running there early next year.

Mozambique is doing very well for us.

It needs a bit of support,” he said.

FirstRand, which is currently South-African biggest bank by earnings

6

and market capitalization has targeted the Ghanaian market for a while leading to its unsuccessful attempts to buy Merchant Bank Ghana.

Last year, the Bank of Ghana approved the sale of Merchant Bank to private equity firm, Fortiz, enabling the indigenous company to acquire 90 percent stake in the bank for GHc 90 million after Social Security and National Insurance Trust, majority shareholder of Merchant Bank, rejected an offer from First Rand Bank of South Africa.

But the minority in Parliament objected to the deal alleging fraud and called for its abrogation. They questioned the rationale behind the rejection of a higher offer made by First Rand Bank in the value of GHc 176.4 million for a 75-percent stake.

However, Fortiz maintained that its purchase of Merchant Bank was transparent and that it is determined to turn around the fortunes of the bank.

GHANA BUSINESS & FINANCE

Positive outlook for global oil and gas industry in 2015 Robust oil prices and major upcoming projects would boost the global oil and gas sector earnings by five to six per cent in 2015. The sector however faces increasing capital intensity and execution risks as it shifts from traditional to more costly and complex oil and gas resources, a report from Moody’s Investors Service has said.

The report, titled: “Global Integrated Oil and Gas Industry: Crude Prices Bolster Oil Majors with New Production Capacity Coming On-stream,” said although oil prices had recently retreated, it was still expected to remain relatively strong.

“A string of major projects are due to come on stream and ramp up in 2015-16, which will deliver volume and cash flow growth,” Thomas Coleman, Moody’s Senior Vice President, said. “However, companies still face production growth challenges because of the sheer volume that companies must replace and the shift to resource developments in harder to drill areas,” he added.

The industry’s shift to more costly and complex developments like deepwater and pre-salt projects, heavy oil and synthetic crudes, large integrated liquefied natural gas projects and unconventional shale, reflects the companies’ exclusion from many of the most attractive oil provinces.

Sector operating and capital costs have also increased dramatically over the past few years, pressuring capital returns, despite fairly robust upstream profits and relatively stable unit cash margins. Rising unit costs reflect increasing project complexity, longer cycle times and higher maintenance and safety requirements, as well as sector inflation in the face of rising oil prices and labour and equipment shortages. Integrated oil companies also face heightened political risk, with major regional conflicts ongoing in the Middle East and in Ukraine.

However, the integrated companies generally have scale and good geographic diversification to help offset the political risk. As a result, Moody’s sees the conflicts primarily affecting long-term growth opportunities rather than near-term cash flow and production, the report said.

OCTOBER 2014

Bulk Oil Distributors say any further delay in the payment of the debts government owes them could bring the economy down to its knees. The Bulk Distribution Companies say the total debt owed them by government is approaching a billion dollars. This includes subsidies, forex losses and the

Real Value Factor (RVF’s) premium.

Senyo Hosi, Chief Executive of the Ghana Chamber of Bulk Oil Distributors says that any further delay or possible non-payment of the debts would have far-reaching economic implications beyond fuel-shortages.

“Subsidies as at the end of July was around GHc 420 million Ghana cedis.

For the forex losses, we made a claim of about USD 450 million out of which government has already paid USD 150 million and so it means technically, we will have about USD 300 million save whatever reduction will come as a result of the audit,” he explained.

“The implications you have here are on the entire economy – we’re going

to start moving some number of years backwards for every single gain we’ve made so far. It’s Ghana at stake. You don’t have a billion dollars in credit and crush that industry and think that your economy is going to run well,” he emphasized.

The commercial banks which provide Letters of Credit to the BDC’s for their imports have also confirmed that further delays or non-payment could have dire consequences for the country’s financial system. According to them they may be forced to completely withdraw their services to the companies within the next 6 months if the debts are not paid.

GRA to review tax exemptions for companies

Collapse in timber industry costs 70,000 jobs About sixty timber companies have collapsed, resulting in 70,000 job losses in the past few years due to the dwindling fortunes of the industry, the Ghana Timber Millers Organisation (GTMO) has said. The group says high costs of operation resulting from the high cost of electricity, fuel and high interest rate on bank loans are responsible for the decline.

Dr. Kwame Asamoah Adam, Chief Executive Officer of the GTMO, in interactions with journalists in Accra, said “the future of the industry is very gloomy”. Among other effects, he said, was the loss of revenue to the economy from the timber industry, which remained one of the main export revenue earners for the country, contributing between Euro 120 million and 200 million annually.

He said the forty-five compa­ nies remaining, with a total employee population of about 30,000, were also struggling to survive, and could collapse if the chal­ lenges facing the

OCTOBER 2014

industry were not ad­ dressed. “Any collapse would open the flood­gates to illegal loggers, who will plunder the forest resources and massively de­grade our lands,” he warned.

He lamented that despite the high electricity tariff, power supply remained irregular, leading to loss of production time and equipment breakdown, “al­ though salaries are paid when there is no production”. The industry, he said, was worried about fuel cost increases, which in turn increased field operations, compounded by the high interest rates of between 27 and 30 percent, against a profit margin of between five and 15 percent, adding that under these conditions, it takes a miracle to keep head above board.”

To address the situation. Dr. Adam called for a favourable inter­ est rate arrangement for the industry, introduction of modern tech­ nology, and an aggressive pursuit of a national industrial timber plantation policy.

The Ghana R e v e n u e Authority has said it will soon start implementing proposals to review tax exemptions granted to some companies operating in the country. This follows a call for a review by the International Monetary Fund (IMF) in their staff report after concluding the first round of negotiations with government over the bailout requested by the country.

Despite concerns that the country could be adversely affected, George Blankson, Director General of the revenue body said the benefits of implementing the review would be overall, positive. He said the only way revenue can improve is to limit the scope of exemptions. “We have no choice but to go into the direction of limiting the scope of exemptions if we want revenue collection,” he said.

This he says will strengthen the tax system and raise the kind of revenue that is required for improving the economy to attract more investors. According to Mr Blankson, an expanded tax base will make it possible to bring down the tax rate and enable the country to raise the same level of revenue. “If in the long term we aim at bringing down the tax rate, then we should be able to limit the scope of exemptions and expand the scope of tax”.

GHANA BUSINESS & FINANCE

7

BRIEFS

BDCs fear further payment delays could cripple economy

BRIEFS

Sustained cedi stability could lead to lower cement prices

GHACEM has promised to reduce the prices of its products if the current stability in the cedi is sustained.

The rapid depreciation of the cedi compelled GHACEM to increase its cement prices - currently ranging between GHc 32 and 35 in the capital, Accra. That is because the company required more dollars to import its raw materials, leading to an increase in its cost production.

Morten Gade, managing director of the country’s largest cement manufacturer, says the prices should be dropping soon if the prevailing stability in the cedi continues.

“The cedi has started appreciating and getting stronger, but that’s only for the last two to three weeks. The prices of cement were however only increased after about three months of seeing how the currency developed. Now, we have seen the cedi appreciating, not for three months but three weeks. So we need to see a time span similar to what we had earlier to see that it actually stabilizes at this level. And if it does, cement prices will come down. If it stabilizes at a relatively high level, then the reduction would not be that great but if it goes down to a significant level, then we’ll also see a significant reduction in the cement price,” Morten Gade noted.

Mr. Gade however says the current economic situation is really affecting GHACEM’s operations.

“It’s been tough because GHACEM as the quality supplier of cement in Ghana, depends also on the purchasing power of Ghanaians and it’s with a heavy heart we’ve been forced to increase the prices of cement three times this year. We’d have liked to avoid it if we could. We didn’t increase the prices from May 2012 until January 2014 because we had a stable environment - and a stable currency - and we’ll like to continue that practice if we can,” he said.

8

Leapfrog to invest in Ghana’s financial service industry Leapfrog Investment Fund is expected to inject some GHc 375 million into Ghana’s financial services industry.

The fund, backed by some of the world’s leading development financiers, insurers, reinsurers, pension funds and assets managers is expected to invest into high growth companies in Ghana’s financial services industry.

LeapFrog is the world’s largest dedicated equity investor in emerging markets financial services with over half-a-billion dollars in assets, and with partner companies serving over 22.7 million people across 16 countries, including Ghana.

Doug Lacey, a partner at the fund commended Ghana for its liberal, stable markets and forward-looking investments which he believes is a regional leader worth investing in.

He said that given the vast number of consumers demanding financial tools for the first time, the Ghanaian financial services sector is an exceptional investment opportunity.

He said though Ghana’s economy is growing fast, less that than 16 percent of Ghana’s 25 million consumers save at a financial institution and only 5

percent have been insured.

According to him, recent regulatory reforms have helped to make these products available to the majority of the population for the first time and as a result, there is a rapidly expanding demand for financial services.

Mr. Lacey mentioned that “the pension market for example, is expected to expand by 400 percent in the next four years” and added that Leapfrog would continue to invest in financial services businesses.

“LeapFrog’s fund will make equity investments of up to GHc 180 million in any company. These must be established businesses that deliver insurance, savings, pensions, investments, credit, remittances or payments,” he said.

Kofi Fynn, Managing Director of Petra Trust, said LeapFrog is an expert in operational support especially in emerging consumer markets adding that the company’s distinctive Profit with Purpose investment philosophy has attracted many of the world’s leading insurers, reinsurers, global asset managers, pension funds and development financiers.

Bank earnings to slow down Banks’ earnings are expected to slow down in the third and last quarter of this year, Ecobank Research analysis has revealed. In the second quarter of 2014, profit for the top six listed banks including Ecobank, GCB and Stanchart rose by 5 percent quarter-on-quarter.

However, the report says the weak second quarter growth quantum in net earnings points to further weakening in 2015 on account of rising balance sheet funding costs and elevated provisioning. “As Ghana’s economy remains weak, overall bank lending is likely to tighten in the last three months of 2014 on account of high lending rates and rising obligor risks,” it said.

“Industry gross non-performing loans (NPLs) rose by 34 percent at the close of May 2014, while second quarter credit loss expenses for the top six listed banks rose by 2 percent,” the report stated.

As a result, the report said it expects banks’ risk appetite to remain low.

“We expect supply as well as demand for consumer lending products to remain weak in the last quarter of 2014.”

At the same time, banks’ appetite for lending products linked to government payments is also expected to remain weak.

This will have a great potential to weaken the growth momentum in banks’ earnings especially in the first half of 2015 when the lag begins dissipating.

Banks profit for the first five months of this year inched up despite the harsh economic conditions facing the country, the Financial Stability Report released by the Bank of Ghana revealed.

According to the report, the banking industry’s net profit after tax grew by 51.1 percent in May 2014 compared with 48.8 percent in May 2013.

However, industry net interest income registered a growth of 41.5 percent in May 2014 compared with 57.7 percent growth in May 2013.

GHANA BUSINESS & FINANCE

OCTOBER 2014

Government has announced plans to establish two refineries to process and add value to the country’s gold. One of the refineries will be funded by the Precious Minerals Commission and the other through foreign direct investment.

Addressing the Ghanaian community at Massachusetts, USA President Mahama said the gold refineries would not only create jobs but reduce the risk of losing millions of cedis in the event of any fall in gold prices on the international market.

Ghana is Africa’s second largest gold producer, producing 80.5t in 2008.

Export earnings from minerals averaged 35 percent and the sector is one of the largest contributors to Government revenues through the payment of mineral royalties, employee income taxes, and corporate taxes. In 2005, gold production accounted for about 95 percent of total mining export proceeds.

Despite this, the country does not have a gold refinery. President Mahama said the setting up of these refineries will

give Ghana the opportunity to market its gold like other African countries do.

“It is my belief that if we are able to set up these refineries then we will also be able to market gold like South Africa does. I am looking forward to the day where we will have a gold bar that has the ‘Gye Nyame’ stamp on it saying 99 percent pure” he declared.

The mining industry of Ghana accounts for five percent of the country’s Gross Domestic Product (GDP) and minerals make up to 37 percent of total exports, of which gold contributes over 90 percent of the total mineral exports.

However, the fall in gold prices on the international market in recent years has had adverse effects on the Ghanaian economy with some mining companies closing down while others are retrenching their staff.

President Mahama said the refineries when set up would encourage mining companies to carry out their activities throughout the year, unlike the current state where most of them are compelled to shut down anytime the price of gold falls on the international market.

Mainstream Energy acquires 225MW wind farm project

Mainstream Renewable Power has signed an agreement with Switzerlandbased wind energy project developer NEK Umwelttechnik to acquire a 225 MW wind energy project in Ghana.

The project is still under development, with financial closure expected next year. The project would form 10 percent of Ghana’s installed power generation capacity.

The project, expected to be commissioned in 2016, will be located on the east coast of Ghana and cost an estimated USD 525 million. Ghana currently has an installed capacity of 2,000 MW, so the wind energy project acquires significant importance to the country’s power sector. Mainstream and NEK Umwelttechnik will co-develop the project until financial closure is achieved, after which Mainstream will take over the operations for the lifetime

OCTOBER 2014

of the project.

Mainstream Renewable Power has been aggressively investing in developing renewable energy projects in Africa. The company developed and commissioned the continent’s largest operational wind energy project in South Africa. A total of three wind and solar power projects have been developed by the company in South Africa, while three wind energy projects are currently under development.

Several African countries are seeing significant investment coming into their renewable energy sectors. A number of these countries have relatively small installed capacity and, thus, any small renewable energy project tends to result in a noticeable boost to their energy mix. Recently, Norwegian company Scatec Solar announced that it would soon commission Rwanda’s first utilityscale solar power project. Even with a small generation capacity of 8.5 percent, the project would increase Rwanda’s generation capacity by 7 percent.

Chicason Group’s A-Z Petroleum secures USD 80m Afreximbank deal for Ghana expansion The Chicason Group of companies using its A-Z Petroleum Limited has secured an African ExportImport Bank’s (Afreximbank) USD 80 million dual tranche loan and credit facility to finance the company’s expansion activities in Ghana, with the importation of a lubricant blending plant, a plastic making equipment and the construction of a 40-metric ton tank farm.

The leading indigenous West Africa oil and gas sector operator would receive the first tranche of the facility, structured as a USD 30 million fiveyear term loan.

The second tranche, a USD 50 million standby letter of credit facility, is for the importation of petroleum products under petroleum products supply contracts between A-Z Petroleum and approved sellers.

Jean-Louis Ekra, president of Afreximbank, said during the signing ceremony at the Bank’s headquarters in Cairo, Egypt that the transaction demonstrated the institution’s continued commitment to championing the promotion of trade across Africa, in line with its trade finance and development mandate.

Responding, Chika Okafor, chairman of A-Z Petroleum Limited, said, the transaction marked the beginning of a new relationship between Afreximbank and the Chicason Group, of which A-Z Petroleum is a subsidiary, as it opened up enormous opportunities for the Bank to work with the Group.

Afreximbank is the arranger, agent, security trustee and issuing bank for the facility while Diamond Bank of Nigeria Plc is the designated local administrative agent and risk participant.

A-Z Petroleum (Ghana) Limited is the corporate guarantor and Ace Audit & Expertise Nigeria Limited is the collateral manager.

The Chicason Group is an African indigenous conglomerate with operational presence in countries across the continent, including Nigeria, Ghana, Sierra Leone, Burundi and Guinea.

GHANA BUSINESS & FINANCE

9

BRIEFS

Government proposes two refineries for Ghana

WORD FOR WORD

Harmonising business practices across Africa could transform the continent

-Farouk Khailann

Farouk Khailann was recently appointed as Chief Operating Officer of Royal African Holdings, a Pan-African investment firm with interests in real estate, energy, media and entertainment and now financial services. Among his tasks is overseeing the USD 1.7 billion investment in Prampram and the entry of the conglomerate into financial services. A recipient of the ‘Global Youth Touch Bearer Award for Business Leaders under Forty,’ he sat with us to discuss the ambitions of his company, business and leadership in Africa and what he hopes his appointment will mean for others on the continent.

Ghana Business and Finance: What led Royal Africa Holdings, which is based out of Gambia, to make such a huge investment in Ghana?

Farouk Khailann: We are a pan African brand and our presence in Ghana is part of our strategic plan to become the most diversified company on the African continent. Ghana is a great country to invest in - it has very stable and democratic government, infrastructure is improving and economic indicators moving in the right direction.

GB&F: Has the confidence in the Ghanaian economy paid off, considering that this is a very turbulent time for it?

FK: Absolutely. We have absolute confidence in the economy and its potential. We think that the difficulties are temporary and the managers are committed and capable. We are not ones to cut and run. Investments such as what we are making will actually help to rectify some of the challenges so we are very happy to be here. Our intention is to contribute whatever the circumstances and not just when times are good.

GB&F: Despite the difficulties, you are currently investing in a 1.7 billion dollar real estate project in Prampram. What considerations informed that decision?

FK: We are in Ghana for the long haul. Our commitment to contributing to the development requires that you are part of the solution in difficult times. Problems are opportunities and we believe the economic difficulties confronting the country 10

are temporary and will be resolved. As I have already said, investment like ours is required to get the economy on track.

We want to be part of the solution.

GB&F: At what stage is that project currently and what is the big vision behind it?

FK: With investment of such nature you need to get the fundamentals right so currently we are working with local stakeholders such as chiefs, community leaders and local government authorities in and around Prampram to also make their inputs into the development. Even prior to the launch there is light construction going on at the project site. Palm Groove city is a 3,000 acre development with sections such as commercial, residential and a mega mall. We currently sorting out the layouts and putting up various entry points.

GB&F: Given that such projects in Africa and elsewhere have had a less than tremendous success rate, what is Royal Africa Holdings doing to guarantee its success?

FK: One major reason why such big ticket projects fail is the funding approach. When you borrow money to undertake huge projects, the dynamics of an economy can hit you really hard. This project does not have that challenge; the funding is sitting in the bank. We also believe holding a project to your chest can affect its success. This project is not for Royal Africa Holdings alone, it is for the continent and world. Our multi stakeholder approach is going to ensure it succeeds -

GHANA BUSINESS & FINANCE

OCTOBER 2014

have offices in Birmingham, London and Manhattan, Wall Street, are all critical to our African operations due to the market these countries presents to our brands.

GB&F: You are also currently on the verge of launching a financial service institution. Isn’t it a crowded field already and what new approaches are you bringing to the sector?

FK: Through our day to day business in commodities and other ventures, we have been confronted with the realities and challenges facing the average African business man and community. Our decision to branch into financial services is to help. Of course, we want to stay profitable as a business but our financial service institution will be quite revolutionary. Interest rates are stifling our farmers and business people, making it very difficult to compete and even survive. We are here to challenge the status quo. We will charge the lowest interest rates the continent has ever seen. Above all, we will be partners with our clients. We want to see the businesses we support grow and not be brought to their knees by our terms and conditions.

GB&F: Would you say leadership is as huge a problem as it is generally made out to be?

FK: One cannot down play the assertion that there is a problem of leadership on the continent. I believe that the missteps that sometimes characterise leadership on the continent are invaluable because they provide us with the experience to make informed decisions moving forward. Some mistakes made by leadership in the past have helped inform decisions in our current dispensation. The important thing, I believe, is for the current leadership to take those lessons seriously and be committed to improvements going forward.

GB&F: Do you expect at some point in the future to secure a universal banking license or do you expect to fulfil your ambitions at this level?

FK: Well, our focus as a financial institution is pro-poor financing. We are looking at rural communities and people within the low income bracket. Universal banking is not our priority for now. We think there is a mass of people out there who are either not being served by the conventional banks or have to settle for substandard alternatives. This is unacceptable, not only for those people but for the fact that the economy suffers from this exclusion. The strategic importance of financial inclusion can not be over emphasized in the development agenda on the continent. Financial inclusion can be transformative, as it allows poor people to build a more secure future. The ability to save and borrow at low interest rates allows them to build assets, start businesses, invest in education, establish a credit rating and eventually own homes.

At Royal Africa Holdings the economic development of the African continent is our priority. Our commodities division, Atlantic Pelican which is involved in export of farm produce will ensure that we work in partnership with individual farmers and groups to undertake various farming projects where we provide machinery for mechanized farming, build capacity of farmers and provide ready markets for their produce GB&F: After real estate and financial services, what other areas in the Ghanaian economy do you hope to make an impact in?

FK: We are a major player in the entertainment industry for Africans in the diaspora, through our firm, Touba Entertainment and PR. One of the objectives of Touba Entertainment is to help our African artistes get that global exposure for their music and as brands. Quite recently, we were able to get Wizkid, one of Africa’s fastest rising stars to be a headline act at one of the biggest music festivals in the world, the Essexfest Music Festival in London. We also facilitated Ghanaian act Bisa Kdei’s work with Lola Rae, who is huge in the United Kingdom. Touba Entertainment’s headquarters in London is strategically for growth and exposure of African acts. We will have the African Peace Festival in London next year and annually after that.

Twenty top African acts and footballers such as Emmanuel Adebayor, Samuel Eto and a host of others will be taking part in the event.

GB&F: In which other African countries are you currently represented?

FK: We are in Gambia and Ghana currently. Work has commenced on our Liberia, Nigeria and Sao tome offices. We OCTOBER 2014

GB&F: In what ways do you think African economies can grow to host huge investment vehicles such as yours?

FK: Infrastructure is very critical to attracting the right investment. In Ghana for example, our investment code is quite helpful but the big money may be difficult to attract if problems in power generation persists. We need to do much more to improve infrastructure. The great thing is that that is a problem that can itself be solved with investment. There are positive moves in Ghana, for example to facilitate PPP projects.

Other African countries must take a cue to help bridge the infrastructure gap.

GB&F: How can we stimulate cross-continental investment such as what you are undertaking?

FK: Inconsistent tax regimes across the continent are unhelpful.

This is a major challenge for the continent. There is the need for harmonizing the tax system in Africa. This will significantly leap frog the continent into economic prosperity. Africans should trade among themselves. We have the numbers to compete on the global level. Business is about numbers and we have that.

What we need to do is get rid of all bottle necks, harmonise the different tax systems and business codes to facilitate crosscountry investment.

GB&F: As a young man operating at the executive level in corporate Ghana, would you say your age has been a bane or boon?

FK: Leadership is not about age and it has clearly manifested in a lot of sectors - sports, business and various facets of life. As young people we are always been told we are the future leaders; that we should wait till our time comes. I have never believed in that school of thought. The future is built and the earlier you start the journey, the better.

GB&F: What impressions have you formed from your experience that you think others can benefit from?

FK: It has been a tremendous experience for me. I am very grateful to His Royal Highness, Prince Ebrahim and the board of Royal African Holdings for the confidence and the opportunity. At this stage, I believe I am still learning from them and from many of the business leaders that I am privileged to interact with, both in Ghana and beyond. I can only recommend hard work, single minded dedication and a willingness to learn.

GB&F: What impact do you expect to have made on corporate by the time you exit or move on?

FK: I think what will be great is if my appointment and performance opens the door for many of the capable young men and women all over Africa to also be given the opportunity to prove their worth. That is what I wish for above everything else.

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WORD FOR WORD

our strategic partnership with government, banks, insurance companies and major construction companies with solid track records.

TRADE

The burden of tax

BY OPPONG BAAH

The government in its attempt to deal with its fiscal gaps has had to increase and introduce new taxes, some of them on import activities. Owing to the import-heavy nature of Ghana’s economy, this can be felt in every household in the country.

P

resenting the 2014 Budget Statement to Parliament last November, Seth Tekper, Finance Minister, said the emphasis of the government was to improve revenue mobilization through tax effectiveness and efficiency.

There was the need to extend the tax net to include businesses that he said were making huge profits but were operating outside of the tax bracket.

The Finance Minister announced that the Ghana Revenue Authority (GRA) would continue its tax modernisation programme to ensure the recovery of uncollected taxes – measures including plugging leakages and loopholes in tax administration.

Industry players were not enthused about the multiplicity of taxes put in place and warned that the move could cripple their businesses. The Private Enterprises Federation (PEF) cautioned that the new tax hikes would increase the corporate tax rate for businesses and seriously reduce their ability to raise internally generated income for expansion.

“The levies will increase the cost of doing business and negatively affect the operations of businesses, as they reduce the amount of returns to finance business expansion and create jobs,” PEF noted. The Federation emphasised that ”several studies have concluded that high taxes on business in the long term result in shrinkage of the economy, less investment, and ironically, lower tax revenues of government”.

In April, an perturbed, defended the new taxes in his “Policy Statement On The Economy” to the Parliament of Ghana, pointing out that “the revenue measures sought to broaden the tax

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base and thus spread the burden of national development on all of our citizens rather than the few who meet their obligations”. “Clearly the tax measures go beyond the sole objective of raising revenue or even addressing the current challenges exclusively.

As noted, they broaden the tax base, remove inefficiencies and make the regime fairer to all tax payers,” he argued.

In August, the Association of Ghana Industries, in its quarterly report however said that business confidence had been hit rather badly. The results of the survey showed worsening business sentiments in the country. From 90.13 in the first quarter, business confidence dropped sharply to 22.42 in the second quarter of 2014.

According to the association, the findings were consistent with the prevailing developments in the economy, with the depreciation of the cedi, availability of power supply and the multiplicity of taxes, emerging as the top three challenges business faced.

Analysts say when a government funds itself through taxation; it causes effects that affect everyone. Many businesses go bankrupt because they cannot afford to operate after the government takes its cut. Others flee the country to escape the high taxes while other businesses cut their pay rolls to stay within their incomes. The result in each case is the loss of jobs that those businesses provide in the economy.

Again, due to the fact that many people cannot afford to live on their incomes, the poverty rate goes up.

Many poor people, unable to find jobs because the government overtaxes the economy, turn to crime to get money

GHANA BUSINESS & FINANCE

needed to support their families.

An overzealous tax regime can also lead to high prices and low wages as businesses raise prices to pay these taxes with the resultant effect of inflation; while these taxes take away some of the money otherwise used to pay wages making employers unable to pay good wages.

Experts believe that since trade plays a vital role in the lives of Ghanaians the government should take a second look at the tax regime and make the necessary input to make life bearable for the ordinary Ghanaian.

Prof. Kwame Boasiako OmaneAntwi, Vice Rector of Pentecost University College (PUC), is of the view that the government must adopt cost-effective and humane measures to encourage people to honour their tax obligations, especially, at the nation’s ports and bonded warehouses to boost revenue.

At the PUC Graduate School’s Mid-Year Review of the 2014 Budget Statement, Prof. Omane-Antwi who doubles as the Dean of the School,

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“In a tax regime whereby an imported product worth GHC 70,860.13 attracts GHC 37,002.23 tax tends to woo all sorts of under-cuts at the hands of dishonest people.”

weakening cedi, who have to bear the brunt of these increases.

The current tax policy, according to industry watchers, seems to reward unscrupulous importers, traders and their collaborative corrupt GRA officials

called for more training for the staff of the GRA to prevent loss of revenue from dubious and fraudulent transfer pricing practices by multinational organisations. “Government must enhance tax incentives to curb tax evasion and abusive tax practices in the country,” he urged.

Currently, the tax regime seems to have the intention of getting companies to pass over some of their profits to a desperate government. In effect, it is consumers, already dealing with increasing utility prices and a

OCTOBER 2014

GHANA BUSINESS & FINANCE

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TRADE

and agents because if one has to pay so much duty or excise to government, then paying bribe to revenue officers becomes an attractive option.

A high percentage of revenue generated at the ports goes into pockets of individuals who aid importers to avoid high fees and bureaucracy.

This means that in increasing fees, government actually gets less.

According to Mr. Asaki Samson Awingobit, Executive Secretary of Importers and Exporters Association of Ghana, the multiplicity of taxes and the continuous depreciation of the cedi are greatly impacting negatively on members of the association with devastating effects on the incomes of consumers.

He explains that numerous taxes put on imports always bring in their trail smuggling, folding up of companies, unemployment, and falling standards of living for citizens. To discourage smuggling and evasion of taxes and enhance government’s revenue mobilization efforts, he advocates for the making of the tax regime more flexible and less cumbersome.

Mr. Awingobit states that the Association is not against taxation but is not comfortable with the multiplicity of taxes which is leading to the collapse of many businesses. “The government must take a critical look at the situation and explore other areas like the mining sector and also make judicious use of collected taxes to fund its developmental agenda,” he suggests.

ICT

Enterprise mobility:

Security is essential

BY DARRYL LININGTON

Enterprise Mobilty holds many benefits; however, there are several things that need to be considered when venturing into it.

Whether your company is based in Nigeria, Ghana, Kenya, South Africa, USA, or even the United Kingdom – becoming a mobile enterprise will offer many benefits and opportunities for your company. Employees are essentially happier when they know they have access to a variety of job critical tools that will help them get the

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job done. These tools include mobile apps, smartphones, tablets, laptops, access to email and more importantly, access to software and data that will ultimately allow them to seal a business deal within the very meeting they are attending.

While Enterprise Mobility not only assists the employee, it also gives your company a competitive advantage over your competition. However, security can be a major concern when venturing into Enterprise Mobility. There

GHANA BUSINESS & FINANCE

are many factors to consider when venturing into Enterprise Mobility. The security concerns range from password enforcement, encrypting devices, data leaks, theft of devices, and unauthorised access to business critical documents.

The loss of a mobile phone or laptop, for instance, can be costly if these devices fall into the wrong hands.

Not only is the businesses placed at risk, but the employee too. If not secured correctly, devices can be accessed within minutes. By gaining access to unsecured

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What can you do to protect your data and devices?

Secure it

Technology has always moved at an extremely fast rate; however, no matter whether you are using a Nokia 3210 or an Huawei Ascend P7 smartphone, chances are you have activated the devices security pin or pass code. Passwords have always been at the forefront of mobile security. As a standard, any company that ventures into the world of Enterprise Mobility should always secure any device given out to an employee with a unique password. These passwords should be monitored and changed every 30 days.

If a device has been stolen, chances are that the individual who stole the equipment won’t have the time nor the patience to try “crack the code”.

However, they will essentially try and wipe the device. Without a pin or password, the individual who has stolen the device will have access to every file, social media account, as well as potential access to bank accounts.

Cloud is critical

While a device wipe will essentially be a major blow to any corporation that may have recovered a stolen device, there

are ways to backup your data. Many smart devices and laptops come with Cloud-based storage. Employees who upload crucial data to the company’s Cloud server can potentially avoid losing critical data and information.

While many companies are wary of the Cloud, it can essentially save your data.

Employees should be asked to backup any critical data to the Cloud at regular intervals, or even save their documents directly to the cloud. By utilising cloud storage, a company can easily recover data that was lost in the event of theft or damage to a device.

– without the user being aware. Hackers can attempt to access financial records, social media accounts, and personal files and folders. Bank accounts can be emptied in minutes and files stolen in seconds. Without the proper online and anti-virus protection, your device can be attacked within seconds of connecting to an internet connection.

When equipping an employee with a mobile device or laptop, a business should always ensure that those devices are protected. Each device should be scanned once a week as well as have its security systems updated on daily basis.

Remote device wiping could save your business

Personal Wi-Fi is better than public Wi-Fi

Apple introduced us to a very important app called “Find My iPhone”. While the app could be used to locate the device by GPS as well as allowing the device to sound off an alarm, its key feature is one that essentially wipes all the data off of the device. Most laptops and smartphones can now have similar software installed on the device. Once a device has been lost or stolen, users can log into the system remotely and wipe the device clean. It is software like this that will essentially save your business from having crucial data accessed.

Online security and virus software is essential

While an individual who has stolen a device can cause irreparable damage, so can online threats. Viruses, Trojans and Malware may sound like gibberish to some; however, they can not only cause damage to a device, but they can also be used to gain remote access into a device

Just about every coffee shop, corner store and restaurant has Wi-Fi that is widely available to thousands of people each day. In a recent survey, conducted

by Kaspersky Lab, 70 percent of tablet owners and 53 percent of smartphone/ mobile phone owners stated that they use public Wi-Fi hotspots. However, because data sent through public Wi-Fi can easily be intercepted, many mobile device and laptop users are risking the security of their personal and business information, digital identity, and money. Furthermore, if their device or computer is not protected by an effective security and anti-malware product, the risks are even greater.

Thankfully, mobile operators have designed personal Wi-Fi hotspots.

These devices can be loaded with data bundles, which will allow employees to access the internet in a more secure way. By equipping your mobile staff with these devices, your company can drastically lower the risk of having data intercepted over public Wi-Fi hotspots.

Here are some useful tips from Kaspersky Lab’s team of Internet security experts: Be aware Public Wi-Fi is inherently insecure – so be cautious.

Remember – any device could be at risk Laptops, smartphones, and tablets are all susceptible to the wireless security risks.

Treat all Wi-Fi links with suspicion Don’t just assume that the Wi-Fi link is legitimate. It could be a bogus link that has been set up by a cybercriminal that’s trying to capture valuable, personal information from unsuspecting users. Question everything – and don’t connect to an unknown or unrecognized wireless access point.

Try to verify it’s a legitimate wireless connection Some bogus links – that have been set up by malicious users – will have

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a connection name that’s deliberately similar to the coffee shop, hotel, or venue that’s offering free Wi-Fi. If you can speak with an employee at the location that’s providing the public Wi-Fi connection, ask for information about their legitimate Wi-Fi access point – such as the connection’s name and IP address.

Use a VPN (virtual private network) By using a VPN when you connect to a public Wi-Fi network, you’ll effectively be using a ‘private tunnel’ that encrypts all of your data that passes through the network. This can help to prevent cybercriminals – that are lurking on the network – from intercepting your data.

Avoid using specific types of website It’s a good idea to avoid logging into websites where there’s a chance that cybercriminals could capture your

identity, passwords, or personal information – such as social networking sites, online banking services, or any websites that store your credit card information.

Consider using your cell phone If you need to access any websites that store or require the input of any sensitive information – including social networking, online shopping, and online banking sites – it may be worthwhile accessing them via your cell phone network, instead of the public Wi-Fi connection.

Protect your device against cyberattacks Make sure all of your devices are protected by a rigorous anti-malware and security solution – and ensure that it’s updated as regularly as possible.

Credit: www.itnewsafrica.com/

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ICT

devices, individuals can access company documents, email accounts, social media profiles and a variety of personal and business related data. This is where security becomes absolutely essential, especially when it comes to Enterprise Mobility.

BANKING & FINANCE

Future of

Banking

BY MARTIN LUTHER C. KING

Buffeted by rapid changes in technology, customer behavior and regulatory demands banks now face a future wherein the current industry shape and operating models may no longer be sustainable.

The combined power of these three drivers of industry is increased by the fact that they are often closely interwoven.

Technological change, for instance, creates new categories of customer utility, which in turn fuel further technological investment.

Similarly, regulatory changes prompt both service and structural innovations, which together change the nature of the activities or entities that need regulating. Meanwhile, shifting attitudes and expectations keep redefining the reality and perceptions of the industry’s role and purpose in society.

Given the necessary interplay of these forces, and as the contours of the emergent industry reality become clearer, leadership in banking services is bound to be taken up by a new generation of customer-focused, technology-savvy enterprises. Although the field is open to incumbents and challengers alike, without investment and adaptation in customer service, operational

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efficiency and agility, some of the present incumbents could find that they are not among the winners.

Part of the result of this reshaping would be a new era of specialization where customer service and operational specialists are connected through a network of alliances and business-to-business service provision, replacing the traditional vertically integrated model. This scenario presents both opportunities and threats for incumbent banks, depending partly on whether their instinct is to embrace and lead this transformation or resist it. Either way, the decision will shape their future.

The challenges and dilemmas posed by the parallel changes in technology, customers and revolution are not confined to the incumbent banks or even the non-bank pretenders.

The banking policy and regulatory community will face its own challenges and struggle for relevance.

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OCTOBER 2014

evolving with increasing speed. These changes are challenging the business models of today’s banks as alternative providers emerge across almost all aspects of the banking spectrum. The only exception is insured deposits, which are still the exclusive domain of the licensed banks. But even here the central role in the economic system played by bank deposits is vulnerable to the growth in money market funds, peer-to-peer lending, crowd-funding and so on.

These shifts in the environment are seeing new entrants come in to compete with different areas of banking. In some emerging markets, notably in Ghana and many other African countries, payment systems and lending activities have emerged outside traditional banking structures led by mobile phone operators such as Vodafone, MTN and Airtel.

“...though diminished in the post-crisis world, banks are not dead yet. Their trust and brands actually remain powerful assets, as do their customer relationships”.

There is the expectation, therefore, that the barriers to entry for non-banks to provide formerly core banking services will overall continue to decline.

The only question is how much of the banks’ traditional territory the new entrants can and will occupy.

The second scenario warns that for banks to be part of the future, they must begin now to invest heavily, rediscover and reassert their core role in society, and secure the ongoing support of policymakers.

Banks, despite the growing threats to their existence in the traditional sense, still do have advantages. Pity, though, that a high proportion of the decision-making power about their future currently lies with regulators who are understandably focused on making sure banks are not too big

to fail. But at times regulation itself appears fragmented and scattered in nature, spawning a mass of tactical, massed-up regulation that is no longer aligned across territories, or sometimes even within territories and driven by economic forces.

For regulators, this noxious blend of diversity and complexity raises a risk of overstretch and counter-productive outcomes. To mitigate this, they need to draw the regulatory strands back together and make regulation manageable for firms.

While the pendulum of political power is with the regulators there may be insufficient pressure to do this.

But regulators should care about this, as their own purpose is best served through simplicity and focus.

Moreso given that if transition does take place to a system where banking services are more dispersed and diffuse, then it would be logical for regulation and policy to move towards focusing on products and services rather than institutions. And in that case, conduct regulation becomes the primary firm-level regulation, with a much more limited form of micro and macro-prudential regulation increasingly focused on system-wide issues rather than on firms themselves.

Scenario three envisages radical re-orientation of both regulators and regulation, from policing to protecting; and with public policy shifting its focus, to some extent, from institutions to markets and services.

Adapting to this, however, will not be a straightforward matter.

Ongoing regulatory change, and the legacy of challenged assets and tarnished reputations, will still tie up a high proportion of banks’ resources and management attention, distracting them from the longer-term challenge of repositioning themselves for the future.

Yet the changes needed to compete and stay relevant cannot be left until after the regulatory and legacy issues have been dealt with.

In sum, though diminished in the post-crisis world, banks are not dead yet. Their trust and brands are actually powerful assets, as are their customer relationships. But unless they bring more traction to their role as positive contributors to economic growth, they will continue to look very different post-crisis from how they looked precrisis and risk having a perpetually shrinking space.

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BANKING & FINANCE

The starting point here is a regulatory model based on the regulation of a defined set of institutions and an obsession with ensuring that those institutions are not too big to fail.

Rolling forward, the provision of banking services may no longer be restricted to a set of regulated banking institutions, but could be opened up instead to a more diffuse set of commercial enterprises that would extend into other financial and nonfinancial service domains.

The effect of all these is that the scope of the regulatory challenge will widen and become more complex; and the core focus will become the resilience of the network rather than of a set of institutions within it. In this scenario, the job of ensuring financial stability, protecting customers, maintaining competition and so on would change almost beyond recognition. With that, regulatory bodies would also need to reinvent themselves.

While banking as presently defined will not totally disappear, the new reality will mean an end of banking and banks as currently understood. A failure to adapt could also mean the end of some regulatory bodies and instruments. Ironically, the substitution of non-bank providers of banking services is a challenge which at this point is neither reflected in banking regulatory frameworks nor yet fully thought about, at least, in policy and regulatory change agendas, as it needs to be.

Now what all these lead to is three scenarios of an emergent reality.

First is of a future where core banking services are delivered outside of the regulated banking industry.

The global financial crisis may have undermined trust in banks and spawned extensive regulation, but now this cozy environment has become heavily disrupted, with the crisis having challenged the public and official trust previously placed in banks and opened the system up to radical challenge. Not least, it has helped make transparent the cost of implicit state guarantees and subsidies. While less evident in emerging markets, the resulting regulatory changes worldwide are introducing a set of frictional costs and diseconomies of scope and scale.

Together, these factors are disturbing and undermining the economic model for the traditional, regulated, part of the industry. Parallel to these changes, technology and capital markets are

BANKING & FINANCE

Economy stumbles,

banking rides on

BY ANTHONY SEDZRO

The financial sector plays a key role in any economy.

A country with a strong financial sector is likely to have a strong economy. This is because if the financial sector is healthy and profitable, it can fund other productive sectors of the economy and stimulate growth.

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GHANA BUSINESS & FINANCE

OCTOBER 2014

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of Ghana reported that “the banking industry continued to experience steady growth in both nominal and real terms, evidenced by trends in total assets as well as branch expansion across the industry. Total assets increased by 39.7 percent to GHc 44.2 billion in July 2014”.

Reasons for growth One main reason for the growth in profitability is that many banks invest their funds in government treasury bills and bonds. The government has been borrowing domestically to close the fiscal budget. Interest rates on government treasury securities have increased from an average 19 percent to more than 25 percent as at August this year, helping banks to earn a lot of interest on government paper.

Despite the fall in economic growth rate from the record levels, the growth rates in other sectors like oil, telecoms, construction and so on has helped the financial sector continues to ride on the back of that growth.

Additionally, banks have continued to increase their credit lending to the private sector. Credit to the private sector was 46.2 percent in July 2014, compared to 28.1 percent in the same period last year.

Keen competition among the 27 universal banks means that many run promotions to increase deposits. Much of the lending has been possible due to an increase in deposit mobilisation efforts through their promotions and offers of attractive rates on term deposits. This has increased the asset size of many banks although it will be fair to say that market share of the banking industry is controlled by a few big banks at the top. “As at the end of 2013 the ten biggest banks, adjudged by assets accounted for 69.74 percent of the entire industry’s total assets (with the exception of 4 banks),”Toma Emihre, editor of the Business Finder newspaper reveals.

The profitability of the sector has not escaped the prying eyes of cashstrapped Ministry of Finance. The

ministry announced a 17.5 percent VAT on banking activities earlier this year, ostensibly to cash in on the profitability of the sector. The negative reactions of the banks and customers have forced the ministry to temporarily shelve the policy.

Brand positioning The universal banks have also been re-inventing themselves through marketing and brand positioning activities in the last few months to be more appealing and to capture market share.

Ghana’s biggest mortgage lender Home Finance Company Bank (HFC) re-branded to HFC Bank with new colours and brand identity. First Atlantic Merchant Bank changed its name and corporate identity to become First Atlantic Bank. ADB changed its brand identity to give it a positive image in the minds of consumers and Merchant Bank re-branded to UMB after it was acquired by local equity fund, Fortis. Not to be outdone, SahelSahara bank changed its corporate colours from green to blue. Nigerianowned Access Bank is currently engaged in a re-branding exercise to change its dominant corporate colours from navy blue to white.

Many banks have also responded to the competition by increasing their financial muscle through capital placements and mergers. First Bank of Nigeria acquired Malaysia-owned ICB; The Republic Bank of Trinidad is in the process of acquiring HFC Bank while the announced takeover of Procedit Savings and Loans by indigenous bank, Fidelity, indicates its intentions to break into the top 5 banks in the country.

The country’s economy may be going through tough challenges but this has not diminished the growth and profitability of the financial sector.

The sector has remained buoyant, suggestive of the fact that if the fortunes of the economy improve, the sector may actually experience unprecedented growth.

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BANKING & FINANCE

In Ghana, the economy has been facing difficult challenges in the past 18-24 months after record-breaking growth of 14.4% in 2011. After the 2011, when high growth occurred mainly due to the start of commercial oil production in late 2010, GDP growth fell to 7.9 percent in 2012 and 7 percent in 2013. The IMF projects the economy will grow at 4.8 percent this year and 5.8 percent in 2015. The rest of the statistics are not impressive either. Budget deficit has shot up to 12.8 percent this year despite a promise by the Finance Ministry to cut it to 9 percent. Inflation that hovered around 9 percent two years ago has jumped to a whopping 15.9 percent as at August this year, a four year high. The currency has depreciated by more than 30 percent, making it the worst performing in Africa.

In the midst of the economic difficulties, the country’s financial sector has remained profitable. The nation’s twenty-seven banks showed a rise in profit before tax (PBT) margin from 30.5 percent in 2011 to 37.3 percent in 2012. Overall the industry showed a good operating performance for the year ended 31 December 2012, according to the 2013 Ghana Banking Survey report released last week by PricewaterhouseCoopers.

The report further explained that “profit before tax (PBT) increased by 73 percent from GHc 720m in 2011 to GHc 1.2b in 2012 driven by a growth in the key income streams; net interest income, fees and commissions”.

The annual performance data released by the banks in March this year also showed strong growth as well with some making over 200 percent profit.

At its Monetary Policy Committee (MPC) meeting in September, the Bank

ECONOMY

Figures of

controversy

BY MARTIN LUTHER C. KING

Increased lending to government by the Bank of Ghana (BoG), doubts over credibility of the bank’s exchange rates regime as well as inflation figures from the Ghana Statistical Services (GSS) respectively threatens to further deepen the confusion already swirling around the country’s parlous economic fortunes.

BoG had set the average exchange rate of the local currency, the cedi, at GHc 3.03 to a dollar while the Statistical Service said inflation, as of the end of July, had risen to 15.3 percent.

The central bank had also financed 70 percent of the government’s GHc 4.8 billion budget deficit in the first half of the year, continuing a trend of excessive lending to the government which analysts warn could harm the economy.

Analysts say the exchange rates and inflation figures are not credible, warning of the damaging consequences this could have on Ghana’s economy given the sensitive nature of the two institutions.

‘From January to May, there wasn’t so much of a wide variation, but then from June to July, the disparity between the Bank of Ghana’s official rate and the interbank rate jumped.

For instance, the percentage difference between the two rates from July was almost 23 percent’ said economist and head of finance department, Ghana Business School, Godfred Bokpin.

Similarly, former deputy governor of the central bank Dr. Mahamadu Bawumia questioned the credibility of

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the exchange rates and inflation figures describing them as a ‘deliberate attempt by officials to massage the true state of inflation and depreciation of the Ghanaian cedi.’

Interestingly, the central bank has in the last five years spent a whopping USD 6.5 billion in a bid to stabilize the value of the Ghana cedi. However, the cedi continues to lose value against major international currencies, and is now officially, the worst performing currency in the world.

Analysts say Central Bank lending to government appears immoderate compared to previous years.

Whereas in the first quarter of 2013, the BoG financed 38 percent of the deficit, in the first quarter of 2014, virtually all of the deficit was centralbank financed, prompting Fitch ratings agency to warn that the BoG’s increased lending to government will worsen the economic situation.

“Printing money to finance the deficit will aggravate already high inflation and contribute to further cedi weakness,” Fitch warned. Ghana’s currency, the cedi, has seen its steepest fall to the dollar in 14 years, depreciating by almost 30 percent since

GHANA BUSINESS & FINANCE

the beginning of this year.

Defending itself, however, the central bank said the cause of its high lending to government is seasonality in revenue flows, “such that usually in the first and second quarters, government receipts fall short of expenditures as happened in the first quarter of this year”.

But the real cause of the high central bank financing is weak lending to government by commercial banks and the non-bank community, analysts say.

Interestingly, size of the deficit stood at 4.2 percent of GDP in the first half the year compared to 3.9 percent in the same period of 2013. The government’s target was 4.1 percent of GDP, but lower- than-expected

OCTOBER 2014

and regulations that impact the industry come at no cost to the Bank of Ghana, while only banks entirely shoulder their impact. They therefore want BoG to also start bearing part of the burden.

For instance, the recent increase in primary reserves from nine per cent of deposits to 11 percent, not only came at no cost to the regulator, but actually also handed free money over to the BoG. In February this year the Bank of Ghana introduced what it called ‘comprehensive measures’ aimed at stabilising the currency which at the time had depreciated by 7 percent from January. In the measures, businesses were not to withdraw more than USD 10,000 on the counter.

“The local currency was adjudged as the worst currency in the world. Year-on-year inflation rate has risen up to 15 percent, heralding widespread macroeconomic deterioration unseen in the last 30 years.”

Wampah is also accused of kowtowing to every directive from leaders of the ruling National Democratic Congress (NDC) rather than following laid down procedures of the bank; and, of adhering to every order of the president of Ghana, without considering their implication on the wider economy.

Perhaps adding to the antiWampah groundswell, bank chief executives complain that legislations

OCTOBER 2014

In the new measure, businesses needed special permits to transact more than USD 10,000 or do foreign transfers.

Also businesses were to repatriate all the proceeds of their exports to their local banks within 60 days of shipment in the new directives.

The measures were largely criticized as ad-hoc and counterproductive.

And few weeks later, the Bank relaxed some of the measures as they obviously did not stop the continuous slide of the cedi.

Within the period of the new regulations, the local currency was adjudged as the worst currency in the world. Year-on-year inflation rate has risen up to 15 percent, heralding widespread macroeconomic deterioration unseen in the last 30 years.

Eventually last month, the entire list of foreign currency regulations was completely scrapped.

But to stem Ghana’s tide of economic decline, the government urgently needs to adopt a trade and economic policy that advocates replacing foreign imports with domestic production. Such a policy must be buoyed by a stimulus package part of whose component should be incentive programs to attract more firms into exporting.

Government also needs to take practical steps to promote export and implement import-substitution measures, as well as provide incentives to programs designed to attract more investment into exports.

Additionally, entrepreneurs need to develop detailed analyses of the turbulent situation and adopt strategies that grow their business to create more jobs.

But most importantly, the Bank of Ghana must begin to assert its independence by following its own laid down procedures.

And while government may be involved in setting monetary policy goals the central bank, however, must have the freedom to implement those goals.

Further, monetary policy and fiscal policy are complementary, and the two policies interact at the point of financing of the budget. When the fiscal is solvent, monetary policy is truly independent in achieving its stated objectives. However, when government runs a large fiscal deficit, monetary policy is dominated by the fiscal such that achieving its objectives becomes secondary to meeting the financing needs of the government.

At such times and for political reasons, governments tend to exploit the short-run trade-off between output and inflation by running large budget deficits that they fund by borrowing from the central bank, thereby creating inflation and generally plunging the country into macroeconomic instability.

But such a practice an independent and longsighted central bank needs must resist.

GHANA BUSINESS & FINANCE

21

ECONOMY

revenues and grants put pressure on the projection.

In July the government lifted its target for the full-year deficit by three percentage points to 8.8 percent of GDP, after voting more money for subsidies and workers’ salaries.

Alarmed at the BoG’s inability to halt the sharp macroeconomic deterioration, business and civil society leaders have called for the resignation, or dismissal of the bank’s governor, Dr. Henry Kofi Wampah for allegedly shirking his and the central bank’s cardinal responsibilities of ensuring general price stability in the economy, and protection of fixed income earners as well as small businesses.

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

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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

OCTOBER 2014

ADVERTORIAL OCTOBER 2014

GHANA BUSINESS & FINANCE

23

COVER

IN HER MAJESTY’S SERVICE

ON DEEPENING UK-GHANA RELATIONS Jon Benjamin, British High Commissioner to Ghana and representative of Her Majesty, Queen Elizabeth II comes to the job at an interesting time for both countries.

Ghana’s development is at a critical stage, years of growth have been endangered by a fiscal dragon that has grown despite several attempts to slay it. The heavily import dependent nation is looking to diversify its exports not only to boost local production and economic activity, but also to limit its exposure and vulnerability to price shocks for its main, traditional exports.

For the United Kingdom, changing global economic conditions mean that the former colonial power must seek and strengthen alliances and trade associations with countries far and away from its natural and major partners. Historically a major trading nation, the UK has a lot that its partners can learn from, which means that the next epoch in the association between the two countries, could be of great significance.

When we sit down with Mr. Benjamin, some eight weeks into his stay and tenure, he is keenly aware of the links between the two countries. “We are one of the biggest donors, if not the biggest,” he says of his country’s support to Ghana. “Not only do we have a bilateral programme worth around GBP 90 million a year, but we also account for about 5 percent of all

24

World Bank funding and 15-16 percent of EU funding. If you add all that up, that makes us one of the biggest development partners for Ghana.”

The UK, through its agencies such as the Department for International Development (DfID) pursues social goals such as gender issues and poverty alleviation schemes. There is cooperation in defence and security through training in areas such as peace-keeping and defence management. This also extends into the fight against drug and people trafficking, piracy and maritime security. For many Ghanaian students, the UK is the preferred destination for further studies.

Associations also run on personal levels. There is a huge Ghanaian Diaspora in the UK that plays, to varying degrees, active parts in Ghanaian affairs, both public and private. “And that is before we come to all the Ghanaians who watch the Premier League,” Mr. Benjamin reminds us.

Relations between the two countries have evolved over time.

When on the eve of 5th March, 1957, Dr. Kwame Nkrumah, Ghana’s first post-independence leader announced the country’s new status; he was not just announcing the end of British colonial rule, but also the beginning of a new era of association between the two countries.

Prior to that heady night, British association had come in the form of trade and later, deeper political relations. Following Portuguese and Danish explorers and traders, British citizens had found a home in the then Gold Coast, introducing new products to the locals and picking up lucrative minerals and during a darker period, slaves. To its credit, the United Kingdom took the lead in the fight against the slave trade, outlawing it ahead of its European counterparts and pouring resources into the enforcement of the ban.

Trade relations would continue at an even more robust rate during the period of colonisation. The colonial period was also one of great infrastructural growth for the country. From train systems through ports to housing estates, vestiges of the colonial power remain to this day in the country. As do several cultural, political, legal and administrative traits that are direct reminders of the extended British presence.

GHANA BUSINESS & FINANCE

OCTOBER 2014

COVER OCTOBER 2014

GHANA BUSINESS & FINANCE

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COVER Since independence, relations between the two countries have flourished. The UK remains one of Ghana’s most dependable bilateral partners and through the Department for International Development, the UK exerts a positive influence on Ghana’s development effort. Ghana, of course, remains an active member of the Commonwealth, the club of nation previously under British colonial administration.

Trade between Ghana and the UK has also grown steadily.

In 2012, the UK exported goods to Ghana worth around GBP 516 million, up from GBP 426 million in 2011. The UK for its part imported goods worth some GBP 341 million from Ghana in 2011, consisting largely of cocoa, canned fish, fruit and vegetables and petroleum products.

Whereas UK’s exports of goods to Ghana went up by 21 percent in 2012, compared with the performance the previous year, her imports from Ghana went down by 36 percent in 2011.

This figure, however, does not include bilateral trade in services for which the UK exports in 2011 stood at GBP 298 million, representing a 36 percent increase over the 2010 period.

Top exports from the UK to Ghana in 2011 included vehicles, textiles, industrial machinery, specialized machinery, electrical appliances and petroleum products.

In 2012, Ghana was UK’s sixth largest export market in Africa and third in SubSaharan Africa.

To this comes Mr. Benjamin, a career diplomat since 1986, who has served the Foreign and Commonwealth Office the New York, Washington, Ankara and Jakarta. Prior to Ghana, he represented his country as Ambassador in the Southern American country of Chile.

On home postings in the Foreign Office in London, he has also been Policy Officer for Burma and Laos, Lead Policy Officer for Central Asia and Caucasus, Chief of Staff to FCO Minister responsible for EU and Latin America, Head of Zimbabwe Emergency Unit, Deputy Head of Drugs and International Crime Department and Head of the Human Rights Policy Department.

Mr. Benjamin’s role, which he defines as “representing UK interests in Ghana, first and foremost,” places him right in the middle of the controversy over the Economic Partnership Agreements, the free trade deal that have since been agreed between West African countries and their counterparts in the European Union. Despite the ratification by the Economic Community of West African States, the EPAs continue to attract some apprehension. Mr. Benjamin believes that these fears are misplaced.

“This is an asymmetric agreement that gives Ghana complete access to the EU - quota free - for a hundred percent of its goods, whereas in other direction, even in twenty years, only seventy-five percent of EU goods will have duty free access to Ghanaian markets and it will be up to the Ghanaian government to determine what those goods are,” he argues.

Mr. Benjamin says products such as the popular “Blue Skies” fruit drink, the result of a Ghanaian-British collaboration, could suffer in the absence of the EPAs, threatening over 1500 jobs that already exist and a lot more that could potentially flourish with the opportunities that come with the free trade agreement.

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Of course, not all businesses will thrive. Competition will kill some businesses, he admits, but ultimately, the consumer should be allowed to choose.

“This is a globalised, competitive world. The move towards free, competitive trade, which is by no means complete, has hugely improved the quality of goods and services available to people. In the long term, the Ghanaian consumer also deserves the right to freely choose from the goods and services that are available to him, rather than have this choice made by others,” he observes.

A similarly liberal attitude defines the diplomat’s approach to international affairs. Global competition is not only for consumer’s attention but also for countries’ doors. With new powers growing in the East and South, Western nations have found the attention of some of their partners in the developing world waver, as countries such as China; offer no frills billions and bridges. To Mr. Benjamin, this is not a negative thing for traditional powers like Britain.

“I don’t subscribe to this view of international relations as a zero-sum game where you can only do well at the expense of someone else. I think it is only right at this stage that Ghana seeks to have beneficial relations with as many countries in the world as possible. It is not to our disadvantage if Ghana’s relations with another country are going well. It only reflects the fact that Ghana’s economy is doing well and attracting a lot of interest and investment.”

The UK, then, is ready to “compete,” a concept that Mr. Benjamin rejects. But while competition may not quite describe affairs at the state-bilateral level, that is exactly what British companies, goods and services must do. Already, there is a strong representation of British companies and brands locally. With the approval of the Atuabo port, Lonhro, no stranger to big ticket African investments, will be making another foray into the country.

Mr. Benjamin believes there are opportunities to be tapped at the lower rungs of business as well. “What we have failed to do, as a country, is to get enough of our small and medium scale companies, also establishing a presence in other markets. A lot of our SMEs do not export anywhere. So a big part of what we will be doing is to get our smaller companies to get out here.”

Another objective will be to get the UK-Ghana Chamber of Commerce to be active again, facilitating business between the two countries.

Ultimately, Mr. Benjamin hopes that his tenure will see trade between the two countries increase, moving towards the target of a hundred percent boost. What that means, he says, will be an increase in jobs in both countries, furthering the “Prosperity Partnership” which is a major strand of the continuing dialogue between the two countries.

“And what we have done, in terms of the EPA, is to make a commitment to ensure that for the foreseeable future, whatever enters the UK from Ghana does so without any taxes and tariffs attached to it. Whether it’s through trade, investments or economic assistance, what we want to do is accompany Ghana on the journey that it is on to become a fully developed country. Our vision is to play a positive part in that journey.

That is the vision I have and I believe that is shared by every High Commissioner who has represented the UK here.”

In particular, Mr. Benjamin would like to see UK companies adding value to products locally, rather than just exporting raw materials. The limitation to that, however, that government’s best intentions can only be reflected in the conditions of the market. That is a challenge to local industry to actively seek and take advantage of the opportunities that the association with the UK - and indeed any nations - make available.

Away from business and trade, the High Commissioner hopes that cooperation in areas such as the successors for the Millennium Development Goals and peace-keeping around the world. He would also love to have a feel of the local football scene and perhaps, may share his candid views on the game on his twitter page - @jonbenjamin19.

GHANA BUSINESS & FINANCE

OCTOBER 2014

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IN FOCUS

The 10 African cities

BY MARK BRADFORD

Africa is on the move – economic growth is robust, foreign investment is growing and its expanding urban middle classes are creating an internal market of global scale. The continent is actively harnessing its natural resources, but Africa is not just about the commodities boom: growth in manufacturing, technology and telecoms, finance and business services, outsourcing, retailing and hospitality are all changing the face of the continent’s cities.

S

ub-Saharan Africa’s commercial real estate sector has many of the ingredients for “lift-off”. Unencumbered by a legacy of existing stock, the continent has a real opportunity to “leapfrog” the normal stages and build high-tech buildings. Africa’s lead in mobile banking illustrates that it has the potential to be a ground-breaker.

The reality, however, is that the future shape of Africa’s real estate market will be determined by its ability to tackle poor transparency, which will continue to be a major barrier in this sector.

Which cities offer the best opportunity will clearly vary by industry sectors – but at a composite level my company has identified 10 cities from a list of 40 that are likely to have the combination of critical mass of commercial activity and underlying growth factors to push them to the top of the continent’s city hierarchy.

The 10 African Cities on the international radar are: � Mature: Cape Town, Durban, Johannesburg � Emerging: Accra, Cairo, Casablanca, Lagos, Nairobi � Early Adopter: Addis Ababa, Luanda

Looking at the bigger picture, these are the 12 factors that we believe will underpin growth in Africa’s commercial real estate industry:

1. Sustained Economic Growth

The past decade has been a major turning point for the African economy.

Economic growth in sub-Saharan Africa has matched or exceeded 5% for nine out of the last 10 years, and is expected to continue to exceed 5% per year over the next five years as the internal market expands. The balance of economic activity within the continent is shifting southwards into sub-Saharan Africa, home to some of the world’s fastest-growing economies, such as

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Ethiopia, Ghana, Nigeria and Angola.

In terms of economic performance, subSaharan Africa holds up well compared to other emerging markets: eight out of the world’s top dozen fastest-growing countries over the next five years are expected to be in Africa.

2. Favourable Demographics

Africa is becoming a market of global scale – its population, currently in excess of 1 billion, is expected to double over the next 25 years, the fastest growth rate of any continent.

Its working-age population is growing especially vigorously, with 70% of the total population aged under 30, delivering a potentially huge demographic boost. By 2040, Africa’s working-age population will be larger than either China or India.

3. Rapid Urbanization

The real estate sector will play a major role in shaping Africa’s urban future as city infrastructures strain under the pressures of “flash urbanization”.

Africa is urbanizing more rapidly than any other continent, with its city-based population expanding by 3.5% per year. Some cities are growing considerably faster (such as Abuja at 9% and Luanda at 6% a year). Sixty cities across Africa have a population of more than 1 million; a total of 170 million city dwellers whose incomes are typically nearly double their respective country’s national average.

The continent is also home to four of the world’s megacities – Cairo, Lagos, Kinshasa and Johannesburg each providing huge population catchments.

Many African cities are showing remarkable economic dynamism. Accra and Addis Ababa are booming, and are among the world’s fastest-growing city economies. Luanda, Maputo, Lusaka, Lagos and Abuja are also expanding rapidly, while Kigali (in Rwanda) has ambitious plans to transform itself

GHANA BUSINESS & FINANCE

into “the centre of urban excellence in Africa”.

4. Expanding Middle Classes

Sustained economic growth is creating an expanding urban middle class with growing discretionary income. Africa’s middle classes have been estimated at around 350 million people, although a more conservative estimate suggests that the total is closer to 150 million.

The highest concentrations of middleclass populations are in South African cities (Johannesburg, Cape Town and Durban) and in North Africa’s main urban areas – Cairo, Alexandria, Casablanca, Rabat, Algiers and Tunis.

But the most rapid growth in the middle-class population is occurring in sub-Saharan Africa in cities such as Lagos, Abuja, Luanda, Accra and Nairobi. Sub-Saharan Africa has, to date, been “off the radar” of most international groups (with the notable exception of South African retailers); but this is beginning to change as international retailers, developers and investors seek to tap into the fastgrowing consumer markets.

5.Commodities and Energy Resources

Africa has an abundance of natural resources, and the continent will continue to benefit over the long term from the growth in global demand for its oil and commodity resources. But, more significantly, recent evidence indicates that several African countries are capturing greater downstream value from their resources, which will have a more direct impact on the demand for industrial and commercial real estate.

Africa’s proven oil and natural gas reserves have grown strongly. Nigeria, Angola and Algeria top the ranks of oil and gas exporters, but recent finds of offshore natural gas in Tanzania and Mozambique and the development of oilfields in Uganda and Kenya will

OCTOBER 2014

result in East Africa also becoming a major exporting region.

6. Innovation and Technology

Many African cities have strong entrepreneurship, and several innovation sectors are performing well.

Some cities are positioning themselves as centres of technology andresearch on the continent. The rise of mobile telephony and mobile banking is creating pockets of excellence, with Nairobi – Africa’s “Silicon Savannah” – emerging as a regional powerhouse in mobile technology. Elsewhere, Accra is witnessing strong growth in its ICT sector, while Addis Ababa is emerging as a hub for IT start-ups.

7. Increasing Foreign Direct Investment (FDI)

International investor perceptions about potential opportunities in Africa are slowly improving. The global search for commodities, a growing internal consumer market and better macroeconomic fundamentals have helped to boost foreign investment.

FDI volumes into sub-Saharan Africa have risen by 41% since 2007 (bettered only by Latin America), although volumes have fallen equally sharply in North Africa.

High flows from China have contributed to FDI growth as it seeks to tap into Africa’s natural resources and contribute to infrastructure development. Malaysian, Indian and South African investors are also active.

FDI from developing countries is growing, as well as from private equity funds, and there is a shift towards FDI directed at African consumers. Nigeria has become Africa’s favoured location for investment as the continent’s largest consumer market.

8. Service Sector Growth

As Africa’s internal market expands, a huge requirement is building for personal banking services, business finance and microfinance. Currently, only one-quarter of the continent’s population has a bank account, presenting a significant growth opportunity. Retail banking in subSaharan Africa is expected to achieve 15% per year growth for the remainder of the decade.

New forms of banking, such as mobile banking, are emerging. This

OCTOBER 2014

is being driven by platforms such as m-pesa in Kenya, which is now used by a reported 70% of Kenya’s adult population. Similar systems have been set up throughout Africa, working with major banks such as South Africa’s First National Bank. Johannesburg will remain the continent’s leading financial centre. Casablanca, Lagos and Nairobi are consolidating their positions as regional banking hubs, while Port Louis (in Mauritius) is evolving as an offshore banking centre.

9. Offshore Jobs

In comparison with the more established offshoring markets in India, Central Europe and South-East Asia, Africa is a relatively recent entrant to the offshoring sector. The continent has, however, seen a strong uptick in activity in recent years, driven primarily by its low-cost proposition, ready availability of talent, English and French language skills, and favourable time zones for Europe.

Johannesburg, Cape Town, Cairo and Casablanca have evolved as the leading cities in terms of a critical mass of offshore services, while Nairobi and Accra are also developing in this area.

Several African governments, such as Ghana and Kenya, are making concerted efforts to improve the attractiveness of the operating environment by creating technology parks and developing their skills base.

10. Improving Governance, Economic Management and Transparency

In a global comparison of transparency indicators for property investment and operational environments in 97 countries, South Africa ranked 21st, ahead of its fellow BRICS members and alongside countries including Italy, Austria, Malaysia and Poland. The fact that South Africa ranked as the continent’s only “transparent” market underpins its reputation among global investors and corporate occupiers as the most desirable location to do business in Africa.

Business operating environments in Africa are selectively improving and economic governance is, in general, becoming more rigorous. Nonetheless, investors’ concerns about a wide range of risks persist, and Africa will remain a challenging balance of risk

IN FOCUS

poised for take-off versus opportunity. Within subSaharan Africa, Accra (Ghana), Lusaka (Zambia), Dar es Salaam (Tanzania) and Maputo (Mozambique) are judged to have the region’s most favourable risk profiles. Combined with their high rates of economic growth, they provide among the continent’s most attractive environments for investors. Property markets in countries such as Ghana and Kenya are improving in transparency, and are already proving themselves to be suitable regional hubs from which to reach the significant East and West African production and consumer markets.

11. New Infrastructure …

New Cities

Poor infrastructure (in terms of transport, utilities and telecommunications) remains one of the biggest challenges for the African continent, but investment funding is steadily increasing. China, in particular, has become a major source of funding that includes hydropower projects in Nigeria, roads and railways in DR Congo, Mozambique, Tanzania, Kenya and Angola, and communications in Ethiopia. With many city infrastructures straining under the weight of rapid urbanization, there are several ambitious plans for new satellite “cities” on the edge of Africa’s major cities, including Konza Techno City outside of Nairobi and Eko Atlantic on Victoria Island in Lagos.

12. Rapidly Evolving Commercial Real Estate Market

Sub-Saharan Africa’s commercial real estate sector is in an early, highenergy phase of development as the industry starts to respond to rapid urbanization and strong demand from businesses and consumers for a modern real estate infrastructure.

Nonetheless, the continent remains severely undersupplied with highquality commercial space, pointing to opportunities.

Commercial property in Africa is about to launch into a boom.

Legislators across the continent need to focus on creating more transparent property rights and environments if city skylines are to keep pace with global interest and African ambitions.

Credit: www.weforum.org

GHANA BUSINESS & FINANCE

29

OUTLOOK

Ebola threatens

to hobble three countries,

$13 billion in GDP Sandi Sesay was promised three months’ pay by his boss to stop coming to work.

In fact, most of Sesay’s colleagues at the Marampa iron-ore mine in Sierra Leone were offered much the same deal. The reason: to prevent the spread of Ebola.

T

wo weeks later, Sesay, 29, a driver, says he has yet to see any of the money from his employer, Dawnus Construction, a contractor at the mine. “I am taking care of my mother, my sisters, and my wife and three children,” he says at a gas station near his home. “How am I going to cope?”

Sesay’s and Sierra Leone’s prospects were bright before the worst-ever outbreak of the virus. The economy was expected to grow 14 percent this year, almost three times faster than the average for sub-Saharan Africa. In neighboring Liberia and Guinea, rich iron-ore deposits were luring billions of dollars in foreign investment and fueling growth.

Then, in December, the first case of Ebola appeared in Guinea. Its

30

emergence at first was seen as a shortterm outbreak with limited economic impact. The disease now threatens to cripple three economies with a combined gross domestic product of about $13 billion. Commodity companies are slowing production, and airlinesare shutting routes. In Liberia, the government says the epidemic threatens to derail progress made since the end of the civil war in 2003. Sierra Leone has canceled its first sale of bonds open to foreigners.

More than 1,200 have already died in those three countries. Attempts to quarantine infected populations and contain the virus have paralyzed some companies and led to job losses. Sime Darby, the world’s largest palm oil producer, has slowed output in Liberia, and Sifca Group, an Ivory Coast agribusiness, halted rubber production

GHANA BUSINESS & FINANCE

there. ArcelorMittal, the world’s biggest steelmaker, postponed expansion plans at its mine in northern Liberia because contractors transferred some of their workers out of the country as a health precaution. In early June, after London Mining and African Minerals announced similar protective measures for their operations in Sierra Leone, their shares fell in London trading.

Edmond Saidu, the agriculture officer in Sierra Leone’s Kailahun District, says the disease has killed farmers on cocoa and peanut plantations and rice farms, leaving the crops to rot.

Africa’s richest man, Nigerian cementmagnate Aliko Dangote, has pulled some employees out of his plant in Liberia and says one percentage point of growth may be shaved off in the region this year. “It will be a great impact,” he says. “But various

OCTOBER 2014

Liberia is recovering from a civil war that spilled into neighbor Sierra Leone during the 1990s, leaving both economies ruined. In 2010, Guinea, the world’s biggest bauxite exporter, held its first democratic elections since independence, following decades of erratic military rule. The health crisis has been compounded by a distrust of government rooted in the three countries’ unstable past: Officials are still struggling to convince locals that Ebola exists and isn’t a hoax.

The

of anyone not receiving money.) From Freetown’s hilly streets overlooking the Gulf of Guinea, residents spend their days in their houses worrying about costs for food and fuel, which are rising despite government promises to crack down on price gougers.

Liberia has banned public gatherings and told nonessential civil servants to stay home. The government is even planning to close open-air markets, a measure that will probably push up prices in the capital, Monrovia. At the crowded Duala market in the city center, food seller Mary Kolubah says business has slowed. The wholesale shop where she buys bags of rice to resell in smaller, paper-wrapped quantities raised prices by 10 percent recently, she says. Nearby, meat seller Amadu Bah, 46, sits idle at his empty stall. Traders from Guinea and Sierra Leone cannot bring their cattle across the border region, the area hardest hit by the disease. “I’m out of business now,” he says, “because selling cow meat is the only thing I’ve known since I was 25 years old.”

This marks the first time the disease, identified in 1976 near the Ebola River in what is now the Democratic Republic of Congo, has killed anyone in West Africa. The virus struck just as the three countries were starting to bounce back from a past of violence and instability.

outbreak has exposed the limitations of the countries’ health-care systems, which range from a scarcity of doctors and thermometers to medical workers neglecting basic hygiene such as hand washing. The official death tally may underestimate the outbreak, the United Nations’ health agency said in early August. The UN’s food aid agency says it will need to feed 5 percent of the population of the three countries in the coming months, because food supply routes have been disrupted.

OCTOBER 2014

(Five people have also died of Ebola in Nigeria, but its government has so far managed to avoid a wider outbreak.)

Airlines are suspending flights to the region, even though the UN health agency says air travel is an unlikely method of transmitting the virus.

Nigeria’s Arik Air suspended flights to Liberia and Sierra Leone after a Liberian man traveled by plane to Lagos, Nigeria’s largest city, and collapsed at the airport, fatally infecting health-care workers and an aide who came to pick him up. British Airways and Kenya Air Lines have also halted flights to Liberia and Sierra Leone, and Gulf carrier Emirates scrapped flights to Guinea.

Korean Air Lines on Aug. 14 canceled flights to Kenya’s capital of Nairobi, a regional hub located thousands of miles away from West Africa.

The crisis is debilitating, says Lansana Gberie, a political analyst in Sierra Leone, “not just because international flights are canceled and movement of people is restricted because of the quarantine moves.

There’s also a disabling psychological atmosphere that isn’t conducive to productivity.”

Fatmata Edna Njai, a hotel receptionist in Freetown, says she was dumbfounded when her employer handed her an envelope with the equivalent of a third of her monthly salary two weeks ago and told her to stay away until Ebola is contained.

Even though the hotel wasn’t getting any customers, Njai was told she hadn’t lost her job. She stays with her son, parents, and three other relatives inside their apartment most of the day, but she’s run out of money. “I’m praying and fasting, so that God will provide me a job,” she says.

credit: www.businessweek.com GHANA BUSINESS & FINANCE

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OUTLOOK

governments are doing things to tackle the situation.”

In Sierra Leone the government has sent hundreds of troops to cordon off the border. The quarantine, however, has made it almost impossible to get enough food to the capital, Freetown.

Thousands of workers such as Sesay sit at home. (Richard Evans, a spokesman for mining contractor Dawnus, confirmed that a “large number” of staff had been furloughed with pay and says Sesay’s complaint is the first he’s heard

OUTLOOK

Boko Haram aside,

NIGERIA is becoming a major global economy

Nigeria has been getting a lot of bad press lately, owing largely to the militant Islamist group Boko Haram’s abduction of more than 200 schoolgirls in April, part of a brutal campaign of kidnappings, bombings and murder. But, while these developments certainly merit international concern, they should not be allowed to obscure Nigeria’s recent achievements – or spur the outside world to turn its back on the country.

W

hat is lost in most discussions about Nigeria today is the strong economic record that the country has established over the last decade. In fact, a recent yearlong study by the McKinsey Global Institute showed that, over the next 15 years, Nigeria has the potential to become a major global economy.

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With roughly 170 million inhabitants, Nigeria has Africa’s largest population. But it has only recently been acknowledged as having the continent’s largest economy – 26th in the world – following the release of “rebased” data putting GDP at $510 billion last year.

MGI estimates that from 2013 until 2030, Nigeria could expand its economy by more than 6 percent annually, with its GDP exceeding $1.6 trillion – moving it into the global top 20. Moreover, if Nigeria’s leaders work to ensure that growth is inclusive, an estimated 30 million people could escape poverty.

The problem is that Nigeria remains subject to outdated assumptions, which are limiting its prospects, especially among foreign companies and investors. For example, many believe that Nigeria is a petro-economy, wholly at the mercy of the world oil market.

GHANA BUSINESS & FINANCE

But the resources sector accounts for only 14 percent of GDP – meaning that, while oil production remains a critical source of revenue and exports, the Nigerian economy is far more diverse than many assume.

A related myth is that Nigeria’s economic growth is unstable, with large and unpredictable shifts in performance from year to year. In fact, as Nigeria has diversified its economy and detached public-spending plans from current oil prices (part of a 2004 budget reform), it has become increasingly stable, both economically and fiscally.

Indeed, in recent years (2010-13, in “rebased” terms), GDP has grown by a steady 6-7 percent, owing more to rising productivity than to favorable demographics.

Finally, there is a general misunderstanding about the Nigerian economy’s evolution.

Despite widespread poverty and low (though

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improving) productivity in almost all industries outside of the resources sector, Nigeria has a rapidly growing consumer class that will play an increasingly important role in driving growth.

By 2030, more than 34 million households, with about 160 million people, are likely to be earning more than $7,500 annually, making them aspiring consumers. This implies a potential rise in consumption from $388 billion annually to $1.4 trillion – a prospect that is already attracting investments by multinational consumer-goods producers and retailers.

Nigeria’s prospects are enhanced further by its strategic location, which will enable it to take advantage of booming demand across Africa and other parts of the developing world.

Add to that a large and growing population and an entrepreneurial spirit, and the future looks bright.

In order to unleash this potential and ensure that the next decade of growth brings sharp reductions in poverty, Nigeria’s leaders must pursue reforms aimed at increasing productivity, raising incomes and delivering essential services

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in infrastructure. It will also need to intensify its fight against endemic corruption, which represents a tax on all businesses.

Finally, to promote inclusive growth – essential to relieving human suffering and mitigating social and political tensions – Nigeria must improve public-service delivery dramatically. The fact that Nigeria lags behind countries that spend comparable amounts on public services proves that it has the scope to improve. All that is needed to ensure that assistance – from seed subsidies to immunization – reaches those who need it most, regardless of where they live in the country, is a strong commitment from Nigeria’s leaders to build more effective and transparent government agencies.

In urban areas, productivity suffers from a high degree of informal employment, sometimes even by major corporations. This keeps too many Nigerians in low-skill, low-paying jobs and deprives the economy of the dynamism that competitive small- and medium-size enterprises create. The spate of Internet startups that have emerged in Nigeria demonstrates that the skills are there, and tapping Nigeria’s diaspora can augment that talent pool.

To make it easier to do business in Nigeria, the government also will need to streamline processes for registering and running a legal business and, together with aid agencies and the private sector, increase investment

Nigerians do not need sympathy or even outrage from the global community. What they need is support and encouragement. Only with stable and inclusive growth can Nigeria escape the clutches of brutal forces such as Boko Haram and give its citizens the security and prosperity that they deserve.

Paul Collier is a professor of economics and public policy at the Blavatnik School of Government, Oxford University, where he is also professorial fellow of St. Antony’s College and co-director of the Center for the Study of African Economies. Azcha Leke is Director of McKinsey in Africa.

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OUTLOOK

such as health care and education more efficiently.

F o r example, to increase productivity and incomes in the agricultural sector, the government could pursue land-title reform aimed at opening more farmland without deforestation; expand the use of fertilizer and mechanized equipment; and support a shift to more profitablecrops. Moreover, improvements in distribution and marketing would allow farmers to keep more of the proceeds from the sale of their crops.

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TOOLKIT

JAGUAR

The definitive executive companion Cars have long been more than a means of getting from A to B. Travelling salesman speak of the impact that their choice of car can make on the deal they seek. For those higher up the executive ladder, the company’s reputation can even be invested in their choice of carriage.

In the XF, Jaguar, long the preferred makers for many an image conscious high-flyer, have created the ultimate statement.

Sleek, dynamic, daring, XF is a fusion of sports car styling with outstanding luxury saloon comfort. Its inspired engineering has won over one hundred international awards and has proved itself the game-changer in the world of automotive design. More than a machine, XF combines Jaguar’s renowned flair for style and luxury with a genius for technological innovation, setting the standard that other sports saloons can only aspire to.

With its glowing bi-function HID headlamps, outlined with crystal white

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GHANA BUSINESS & FINANCE

OCTOBER 2014

daytime running LEDs, and its toned bodyshape, XF always looks ready for action. Its primed, nose-down, attitude, power vents and aerodynamic lines are more than an athletic pose, they’ve been precision-honed through exhaustive design testing to perfect XF’s air flow efficiency. Each curve and contour has been refined to produce top aerodynamic performance, helping to reduce fuel consumption and emissions. Beautiful, intense, potent; first XF captures your imagination and then your heart.

The XF is renowned for its performance, refined drive, effortless power and offers a choice of engines to suit the needs of every driver and driving style, whether improved fuel economy or power and performance are the priority. The range includes a selection of the latest petrol and diesel units.

Intelligent Stop/Start technology features on most engines deliver 5–7 percent improvement in fuel efficiency, depending on conditions. The 8-speed electronic automatic transmission achieves almost imperceptible, super fast gear shifts.

Responsive, powerful, driver-focused, XF utilises a range of technologies to assist, improve and enhance the driving experience. XF’s acclaimed handling is produced through combining exceptionally stiff body architecture, aerodynamic form and innovative suspension systems.

XF’s Adaptive Dynamics system, available on a selection of engines, continuously monitors the suspension, varying the damping to suit the conditions, whether cornering, navigating potholes or accelerating on the motorway. Which means that variations in the road that Ghanaian users have to contend with are easily taken in stride.

OCTOBER 2014

Adaptive Front Lighting enhances night-time driving. Sensors react to the car’s speed and steering input to deflect the headlamp beams casting light deeper and wider to help give added confidence at night. A Blind Spot Monitor uses radar sensors to remotely cover areas that cannot be seen either directly or in the mirror, and is designed to alert the driver to cars overtaking with an amber warning icon in the external mirrors. XF’s body structure uses 25 diferent grades of steel. Boron, an element 900 percent stronger than regular mild steel, is used to help create a vertical ring of safety around XF’s occupants. A total of eight airbags help to add further protection.

XF brings complete control to your fingertips using an innovative 7 inch colour Touch-screen. Simple and intuitive, it ensures you are never more than a few selections from any control: satellite navigation, climate control, Bluetooth telephone connectivity or in-car audio.

At the heart of XF’s multimedia functions is a 30GB Hard Disk Drive. As well as holding the car’s navigation system, it can store up to ten CDs of uploaded music in uncompressed format for enhanced audio quality.

Ergonomically optimised, XF’s cabin is a space both contemporary and luxurious, created to focus on driver and passenger needs and to excite the senses. Comfort and quality reign supreme with form-hugging seats, real wood veneers, Piano Black finishers and aluminium surfaces. From the premium floor carpet and side trims to the polished stainless steel finishers, there is luxuriousness throughout XF. Thoughtful design encompasses every feature. The steering wheel position adjusts at the touch of a button, along with the seat and mirror.

These settings can be memorised for different drivers.

In the XF, Jaguar have created a mean machine that delivers luxury, comfort, speed and safety while not compromising on its tested reputation for producing head turners, guaranteeing that your next meeting will be as much a pleasure to arrive at as it will be to travel to.

The Jaguar XF has been launched in Ghana and is available from Alliance Motors, exclusive distributors of Jaguar and Land Rover vehicles locally since April 2013.

GHANA BUSINESS & FINANCE

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TOOLKIT

Using Jaguar’s ride and handling technology, XF is ready for almost all road situations. For an exceptional driving experience, different modes are available to suit the driver’s preferences or the prevailing conditions.

Beneath the bonnet with enlarged air intakes is Jaguar’s 5.0 litre V8 Supercharged Petrol engine. This all-aluminium quad-cam powerplant delivers performance and efficiency.

Its Intelligent Stop/Start technology and 8-speed electronic automatic transmission is designed to help reduce CO₂ emissions, yet it’s powerful enough to produce an impressive 510PS and 625Nm of torque.

The XF’s safety systems are designed to be anticipatory, utilising an array of technological features to be ready for almost anything and assist the driver in dealing with the unexpected.

Dynamic Stability Control (DSC) maximises XF stability when it detects the wheels slipping. Electronic Brake Force Distribution measures load weight and distributes braking force to front and back wheels accordingly. Adaptive Cruise Control (ACC) uses a radar in the front bumper to monitor the vehicle in front, automatically adjusting XF’s speed to maintain a constant distance.

Emergency Brake Assist (EBA) is designed to work with Adaptive Cruise Control to detect the severity of a stopping situation and applies optimum crisis braking forces as necessary.

SPECIAL FEATURE

Rethinking approaches to child labour policies: The child workers of Nangodi and Agbobloshie and Operation Sunlight Operation Backlight

When twenty-something year-old Mara stares at her reflection and concludes she is “a soul grown old from too much use of its shelter,” she is referring to the work—as water carrier, trash dumper, street hawker, and prostitute—she has had to do as pubescent girl and young woman in order to support herself and her family. Mara is a fictional character in Ghanaian Amma Darko’s 1995 novel Beyond the Horizon. Ghana today has many real life Maras in the making heading for that same bitter realization, if they live long enough to have the space and time to be contemplative.

The child workers of Nangodi and Agbobloshie, mostly boys, are Maras in the making.

In several visits to the TalensiNabdam district between 2009 and 2012, I watched pubescent boys in the village of Nangodi descend into narrow

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holes and work in and around artisanal gold mines. In May 2012 and 2013, I watched another set of pubescent boys with no protective gear salvage copper and other valuable metals from discarded electronic devices and household appliances in Accra’s E-waste dumpsite, Agbobloshie, aka Sodom and Gomorrah. To get at these metals, the boys set fire to foam, plastic, and rubber casings. Then, with makeshift prongs, but sometimes with bare hands, they jab and poke to dislodge the valuable metals. While they seemed able to inhale the toxic fumes with ease, I choked and coughed. Yards away, emaciated cows nibbled at the brave islands of grass that dared to sprout amid the blackened mental odds and ends of this metallic wasteland.

From personal interviews, the boys revealed they understood that their work endangered their lives; that with

GHANA BUSINESS & FINANCE

appropriate skills and opportunities they could work less hazardous jobs; and that they were being underpaid if not exploited. However, to a person, all would rather work in their current conditions than not work at all, and, consequently, starve to death. If death was inevitable, they reasoned, they might as well enjoy the modicum of economic freedom work provided.

Their attitude, combined with the poverty universally agreed upon as the main force that drives children to harmful jobs, underscores the difficulty of formulating effective child labor policies. The work of the boys in Nangodi and Agbobloshie represents one of the many forms child labor takes in Ghana and many parts of subSaharan Africa.

The 1998 Children’s Act primarily regulates child labor in Ghana. It sets the minimum age for general employment

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“Until Ghana significantly alleviates the poverty which drives children to work, intermediate steps need to be taken.”

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SPECIAL FEATURE

at 15 and for hazardous activities such as small-scale artisanal mining, quarrying, and cattle herding at 18.

The Hazardous Child Labor Activity Framework for the Cocoa Sector prohibits children from such activities as felling trees, applying chemicals, and using machetes for weeding. The list of worst forms of child of child labor occupations includes working as kayayes, domestic labor.

The debate about how child labor should be handled breaks down into two camps. Supporters of eradication take a moral-providential view: they argue the welfare of children is paramount and should be preserved. Children working for economic gain, particularly in artisanal, small scale mines (ASM) and other hazardous environments like Agbobloshie’ s e-waste dumpsite, put their health and lives at risk and lose their childhood and education.

Pragmatic traditionalists argue against eradication claiming child labor is part of sub-Saharan African cultures. They point out that work socializes children to connect to family and through it they learn to be responsible. Both views clearly have merit but as policy neither alleviates the poverty that traps the boys from Nangodi and Agbobloshie in their hazardous forms of labor or recognizes them as autonomous agents.

This inability to effectively address both elements plagues many programs.

SPECIAL FEATURE Operation Sunlight

This collaborative program was launched in 2007 in the TalensiNabdam district as part of Ghana’s effort to prevent children from working in small-scale mines and quarries. It aimed to prevent 450 at-risk children from entering mining and quarrying in ten communities and remove 150 children from mining in the district while also supporting them and their parents. Support included subsidizing educational expenses, retraining the children, and providing viable economic alternatives for their mostly peasant farming parents.

In his analysis of this program, Gavin Hilson, identifies a complex of regional, ecological, cultural, bureaucratic, and practical factors that explain the program’s partial success.

Ultimately, he notes, “policymakers poorly acquainted with the various dimensions of the poverty plaguing the ASM sector” and without baseline data about the participants they serve, will be unable to develop effective solutions. In short, policymakers suffer from a knowledge or data deficit.

Undoubtedly then, gathering more fine-grained data should lead to better solutions. This formulation rests on the assumption that data and the policies that arise from them are independent of those that gather the data and make the policy. Unexamined are the policymakers’ vision of development and how it affects policy. That such vision feeds policy and, in fact, may be inconsistent with the needs of the sector’s participants might be gleaned from the program’s name.

“Operation Sunlight” seems harmless enough. However, its mix of the medical, martial, and biblical concepts suggests a vision of child labor as a

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malignancy that requires extraction, surgically, like pulling out a bad tooth, or militarily, like destroying a terrorist cell. Reinforcing this idea of professionals applying specialized skills to excise a canker is the JudeoChristian notion of bringing the boys, literally, out of the darkness of their holes and wastelands into the sunlight of enlightened methods This mode of seeing the child labor issue can affect how questions are formulated, recorded and interpreted; and eventually how policy is designed and implemented. In other words, accumulating finer-grained data may not by itself necessarily lead to policy changes if the issue remains anchored in or mediated by the old paradigms and ways of seeing. Additional data gathering, I suggest, should be accompanied by rethinking and reseeing the outcomes and goals of child labor policies.

Cooperation Black Stars

The foregoing is not criticism to devalue past and current efforts to tackle child labor. Rather, in line with current theories of development as expanding freedoms, I call for a more intentional social-support approach to child labor policies that removes what Nobel Prize winning economist Amartya Sen describes as “unfreedoms” and leads to greater individual agency.

Such an intentional approach opens up new ways of seeing child labor and designing solutions; it turns working children (to be seen not heard) into persons, responding, adult-like, to their impoverished conditions and deserving to be assisted, government’s number one function. It also removes the aura of criminality hanging over child labor by legitimizing that work can be

GHANA BUSINESS & FINANCE

performed by all citizens; rather than seeing children as primarily dependents and victims, it reinvigorates efforts to protect children from danger and exploitation, in the same way a union bargains for the best working for its members. It develops policies that remove obstacles to work, facilitate its improvement, make work a reflection of responsible citizenship, decision making, and brings it into the formal sector.

This is not to argue that children have a right to work and should be allowed to do so in hazardous conditions. Rather, this approach recognizes that Ghana is unable to perform the nanny role her laws have prescribed for her. While governments in developed economies are able to prevent children from working by providing free education, financial and other support for those from low-income families, these supportive measures, for a variety of reasons, are either not available or accessible to the boys of Nabdam and Agbobloshie and their parents. Until Ghana significantly alleviates the poverty which drives children to work, intermediate steps need to be taken. Child labor laws and policies need to be custom-fitted to local circumstances with the goal being to sustain development by expanding agency and promoting freedom for children.

At the end of Beyond the Horizon Mara lacks freedom because she has “plunged” herself into her profession as a prostitute. She believes there’s “nothing dignified and decent” left of herself to give her children, but in trying to buy a “small cement house so… “they will at least have a decent place to lay their heads,” she displays an understanding of the goal of work: to attain the freedom.

Pede Hollist is an associate professor of English at the University of Tampa, an education abroad teacher, and fiction writer.

His novel, So The Path Does Not Die was named 2013 Creative Writing Book of the Year by the internationally renowned African Literature Association. His short story, “Foreign Aid,” was short listed for the 2013 Caine Prize. Over arching all is work is an abiding interest in human rights and social.

OCTOBER 2014

BY INVITATION

Building a product for the market,

looking from within

BY SELORM BRANTTIE

Innovation is a hard thing to sell. Most people think about innovation and immediately think of the Bill Gates, Richard Bransons and Zuckerbergs of this world. People see revolutionaries who tend to spend time hob nobbing with top journalists, riding on a wave of success that comes with some particular opportunity they saw, and lives like rock stars.

The truth is worlds apart. For every rock star company, are dozens, perhaps hundreds, that should have thrived, that should have also hit the big time.

The clearest difference and the biggest deciding factor that has stopped them hitting that landmark is strategy.

No matter how brilliant an innovation is, no matter how life changing, no matter how much potential it has, without a clear strategy and a clearly defined product, it will fail. Products do not sell themselves.

They adopt an organic life-form of their own which is usually a reflection of the product or brand owner’s own ability to communicate.

Innovative products in a new space have no power of their own. All innovations that need commercialization and mass usage, or any kind of market presence, must have or belong to an ecosystem. The strategy to fit a product into an ecosystem becomes a combination of essential characteristics. These characteristics are as follows: identity, utility, desirability and enforceability.

Before we begin examining what the products must possess, lets all look at one thing that is often overlooked in the evolution of a business from one that has found a product to one that is ready for the market. The usual assumption: recruit a bunch of dedicated people, encourage and motivate them, make them product evangelists, and BAM,

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success!

Hold on, that picture is too rosy.

The team that is the foundation of the products or the business is as important as the product itself. Their internal communication, approach to work, attention to detail, attitude and dedication directly becomes a coefficient of the outcome of the product.

Indeed, whether it is mining or soapmaking, the essence is not on only the qualification of the team, but rather their ability to build and create the best and most desirable philosophy that your product wishes to achieve.

While that sounds very abstract, it is necessary to examine how these scenarios play in real life. Workers at waste management companies like Zoomlion might be doing something that culturally was seen as demeaning – collecting rubbish. However, the business method and strategy built around Zoomlion’s method made collecting household rubbish an attractive livelihood, while entrenching their presence as a market leader in the rubbish collection domain.

Similar examples in many other domains in Ghana could be given. The essence is that the core team around which the product evolves must be fully in tow with the short term strategic objectives of what the company or business seeks to achieve with its product.

How does this happen in real life?

GHANA BUSINESS & FINANCE

Often, most material meant to aid in business decisions deal with the abstract, where internal and external pushes pertaining to the business domain, especially in a place like Africa or Ghana are different from conventional western scenarios, however, some truths will always remain constant.

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OCTOBER 2014

BY INVITATION

To make this more meaningful, let us construct an internal communications dynamics matrix.

This will help you as a business owner determine whether your team or yourself have the right views about your product before reaching the outside world.

The matrix above is simple enough.

So are the questions. The first place to start, in creating the culture around your product, is to answer these questions. Internally, among your core team, everybody should have these answers written down. These should be compared side by side with what the other team members say, in order to get a perception of whether the answers fit the goals for which your product was designed or manufactured.

If there is no convergence in the answers even among your core team, it is time to have a strategy that best fits the most desired elements of what your team answered to. In the case where the answers all converge, then it means that you can firm up a direct strategy based on the suggestions your team makes.

That strategy should include a clear internal communication of what your organization stands for, and how you will merge your unique product

attributes into a powerful marketing message. Even before creating a brand, even before advertising, even before packaging a product for the public, this matrix should be at the core of your product perception modelling.

While introducing your product to a larger audience, it will be important to enhance this matrix and have your team re-evaluate their answers based on initial market reception. It will also be important to have others have a look at your offering clearly referring to the matrix to determine whether your internal perceptions of product fit into market expectations.

Eventually, while focusing on quality of your product or service, as well as good practices is important, the game changer ultimately will be how the product is received, and how it drives expectations among your intended and unintended audiences.

While most people will desire to be first in the market, that does not ultimately determine success. It helps people get familiar with a product.

Most of the first television brands were American, but today the powerhouses of display technology are in South Korea and Asia. Similarly, Dutch wax prints originated from Indonesia but are now very popular across Africa. This is because products evolve according to certain parameters, and it is important when the producers align their product

relevance to fit the changing situations.

This means that you always have to question your products existence critically from the onset.

Consumers will always like to know what they interface with. Whether it is a new mobile phone, cooking oil or bathing soap, even when they pay nothing for it, consumers like to know what it is they are using. In selling innovation, the first step, like having a child, is to give it an identity. Branding and advertising alone do not create a definite identity of a product. This involves creating a philosophy around what the product represents. Apple products represent premium quality and exclusivity, Milo represents vitality, MTN represents ubiquity. Every product you create must represent something. The first short term strategy of any product owner is to therefore to create the right thoughts around the product.

The writer is the Country Strategist at mPedigree Gold Keys, a Ghanaian technology company that helping combat drug counterfeiting by enabling consumers to verify products through text. mPedigree is currently collaborating the Pharmaceutical Society of Ghana to rid local shelves of fake drugs through the “Prevent!�

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PERSPECTIVES

7 easy steps for encouraging employees to take initiative Taking initiative is essentially assuming the risk of a possible failure.

When doing so, you put yourself out there and things don’t always go as planned. But the alternative is choosing to be inactive. If you’re a leader, it’s vital that members of your team make the right choice between doing nothing and doing something. For a healthy, forward-looking operation, they should want to choose action - and this begins with the encouragement of a proactive leader.

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3. Preach volunteering and spearheading

2. Kick people out of the office for a day

4. Remember, a good plan today is better than a perfect one tomorrow

Team members need to feel comfortable in their workspace. They should know that while they may strike out, their ideas will be heard and taken seriously by leadership. If the office isn’t a safe place to do this, new ideas will no longer be shared -- or conceived at all.

Make an effort to tell employees you are excited to hear their thoughts.

Don’t always have time to sit down and discuss ideas face-to-face? Create a process for workers to submit and share ideas. Even set up a unique email address for this excluive purpose.

From time to time, encourage your teams or units to meet separately outside their normal work environment. My company, N2 Publishing, did this with its design department. Members of the team met off-site for the better part of three days and developed some really creative ideas that the company plans to implement.

These thoughts may not have surfaced had the team members met in the same workspace they occupy day to day. Sometimes, all it takes achange of scenery for less vocal employees to come out of their shells and share ideas.

Initiative comes in many forms. It doesn’t have to mean single-handedly taking on a new project. Someone can volunteer to help another person who is already on a committee, team or project and support that individual any way he or she knows how. Remind employees that it’s not all about coming up with the idea but also helping to move it forward is valuable, too. If you praise volunteers as as potential thought leaders, everyone will realize he or she has an important part to play.

Yes, it seems strange for a leader to discourage staffers from working too hard to perfect something. And in certain situations this does not apply.

But it’s important to remind team members that tomorrow may never come. What you are capable of doing today should be done today.

In essence, taking initiative means fighting procrastination. One tip I’ve heard from many others (and the advice works for my team) is to tackle first the task that you are least excited about.

Nothing kills initiative like anxiety or dread.

5. Prod staffers to recall what exactly they’re working for

It’s important for employees to understand why they do what they do and what consistently motivates them to achieve more. Showing initiative is not a one-day mind-set. It’s an everyday process that needs continual inspiration.

Encourage team members to bring personal objects into their workspace as a physical reminder of why they should want to take initiative. Give workers the freedom to spark their motivation in a personal way with things like a family picture, a motivational quote on the bathroom mirror or vision boards on the wall,

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6. Let history speak for itself

Looking back on the past, one can find evidence of great things coming from those who take initiative. Breakthrough ideas, inventions and processes exist today because someone recognized a problem and sought a solution. Your employees may not change the face of the future with their work, but there’s a message to be learned from history: No matter how worthy the goal, a person may be unlikely to succeed on the first try.

In sharing stories of people in similar industry or job position who evenutally succeeded after many attempts, you may be providing the encouragement members of the team need. It may not negate their risk of failure, but this human spin might shift their mind-set toward taking action versus sitting back.

7. Tell employees the truth

The best, most transformational ideas don’t always come from the top. Many times the best ideas come from individuals involved in a department’s day-to-day business. They see the organization from a different perspective, which can be very valuable.

If a team member waits to be called upon, however, the positive transformation will tend to be dependent upon a leader’s prompting.

The easiest way to encourage team members to take initiative is to simply enlighten them accordingly: If they know their ideas are not only wanted but also needed, they may find the extra time to develop them.

We’ve all heard leaders say they want new hires to have go-getter attitudes. It’s easy to forget that this approach can be found inside everyone.

Often it’s a matter of encouragement.

By simply opening up communication and creative freedom, you may find that you’ve had a team of thought leaders on your side all along.

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1. Start by creating a supportive environment

PERSPECTIVES

The three A’s of customer expectations management

BY J. N. HALM

The frequent changes in the educational system in this country can sometimes leave one very confused. The apparent misunderstanding in the system makes one wonder why the old system was scrapped in the first place. Why was the system not tweaked to suit the realities of modern times? Was it necessary to have thrown it all away?

I am told the old system was a relic of colonialism and that is why it had to go. Who am I to argue against that?

Anyway, I miss the good old days of the O’s and ‘A’s. Writing the GCE A’ Level was war, at least for some of us. I am sure there were some folks who just waltzed through those exams.

I wonder how the early folks wrote A’ Level Additional Mathematics without calculators and still managed to come out with a chain of A’s because I wrote mine with a huge Casio by my side and I still struggled. In those days, when you hear of a fellow who had had three or four ‘A’s, you looked at that person twice. We held such people in such high esteem. I happened to have written my GCE A’Levels as part of the last batch of the “old school” and never made 3 ‘A’s. I would not lie about that.

Scoring ‘A’s, in any, or all, of the three electives and General Paper, was no easy feat. Many were those who had to go for 2nd and 3rd World Wars. Some even earned the nickname ‘Addo John Sulley’ after the (in) famous fictional candidate used as an example for how the exams forms were to be correctly filled. Those were interesting times.

46

Recently I came up with another form of A’s - this time in an ‘examination’ for business on customer care. Businesses condition the minds of their customers, either directly or indirectly, as to what to expect from their products or services. I have found out that there are three A-factors that firms used in affecting customer expectations. A business that intends to win the loyalty of its customers must be conscious of these factors. Just like me, many businesses might also find it very difficult to score ‘A’s in all three A-factors.

GHANA BUSINESS & FINANCE

Advertising

Advertising is one of the most direct means businesses use in conditioning the minds of their customers. Through advertising, firms tell us what to expect of them. However, in creating those expectations in the customer, it is essential that a line is drawn between

OCTOBER 2014

OCTOBER 2014

Ghanaians believe billboards are a very expensive advertising medium.

Therefore, it is assumed that products (or services) advertised on billboards must really be good. This heightens the expectations of customers for that brand. I find it interesting that one bank uses a number of billboards to advertise their brand while customers have to beg for pay-in slips.

Ambience

Research has revealed that elements of a business’s location, such as music, lighting and aroma and decor have a profound influence on customer mood, satisfaction and expectations. At the point of purchase, the atmospherics matter a lot. The ambience created can elevate the expectations of customers.

I believe some good restaurants in this town are doing well with their ambience. The cool music in the background, arousing aroma and well-dressed attendants increase the expectations of patrons.

Even the dressing of company staff has an effect on the expectations of patrons. I doubt the professionalism certain private security companies claim just by the looks of their officers.

How do you convince a client that the scruffy-looking gentleman will be able to keep her home or office safe face if he cannot even take time to dress decently?

Attitudes

We are judged by the friends we keep; companies are judged by the personnel they keep. If sales and customer service reps are professional in their interactions with customers, the expectation is that the product-service offering must be good. Whenever I have to go to the Ministries for business, I lower my expectations just because of the attitudes of the people there. This is because I have experienced so much unprofessionalism in those offices that my expectations are always lowered.

Attitudes can be very infectious; therefore when sales people or customer care representatives do not possess the right attitudes, customer expectations are not only lowered but purchase of the offering might not occur at all.

Salespeople who sell as if they have being forced to do so by their bosses end up lowering customer expectations of the offering. Many times these wrong attitudes affect the customer who

eventually declines the sales offer. It is interesting when these same mediocre salespeople come back to report that people are not buying these days.

Great companies are very careful about the expectations they create.

Every advertising message is carefully crafted. Every single item that forms part of the atmospherics of the firm is carefully selected. Every single employee is made aware of his or her role in sending the right corporate message out. When such companies make a claim they ensure that they put their resources behind the claim and ensure that the expectations of customers are, in the very least, met.

Mediocre companies, on the other hand, have a habit of mismanaging customer expectations. They say things they know they cannot do. They spend a lot of money and time on advertising and neglect the atmospherics in the offices. As far as I am concerned, the worst of these companies are those that try to manipulate customer expectations by the use of ambiguous statements. The most popular these days is “Terms and conditions apply.”

What does that statement mean? Is it a ploy to cheat customers, as many people I have spoken to believe? I believe I should talk to some legal brains over that statement.

The product or service a company offers is important but a good product (or service) is not enough to ensure business success. As we have seen, there is more to satisfying customers.

Companies must ensure that they create the right expectations or else they will end up scoring three F’s instead of three A’s.

The writer is the CEO and Principal Consultant of Exsellers International, LLC, an avantgarde sales training and consulting firm involved in turning around and improving the sales fortunes of its partners through cutting-edge training seminars, recruitment and placement of highly trained sales professionals, and the provision of state-of-the-art salesboosting products and services.

GHANA BUSINESS & FINANCE

47

PERSPECTIVES

customer expectations and actual business performance. The firm must know what it can actually do and what it tells its customers to expect.

The advertising message must ensure that expectations are not so high that performance falls way below expectation, while at the same time raising expectations high enough to entice customers to be interested in the company’s offering. It seems this is where some of the firms in this country fall short. They overpromise and underdeliver. MTN’s “Everywhere you Go!” slogan always amuses me, especially in the light of the many complaints from patrons about the “out of coverage area” phenomenon. I have been trying to get a broadband Internet access from Vodafone in my house for sometime now. It is taking so much of my time that I wonder if that is not a reflection of the real meaning behind their “It’s Your Time” tag line. Maybe it is really their time not mine.

I know of a microfinance company around Kokomlemle that claims they can give a loan within 30 minutes.

That is a message I wish they had not put out there. It is not the impossibility of the claim that worries me. Having spent a number of years in banking, I am fully aware that a loan can be disbursed within thirty minutes; that is, if all conditions are met. What I have a problem with, however, is whether they can do this for every single client every single time.

Just this past Tuesday, I saw a gentleman who had gone to that particular company for a loan. I am sure he was expecting the money within 30 minutes but it never happened, even though as far as he was concerned he had met all obligations. I am sure we could argue that the gentleman might not have provided the necessary documents to merit the loan in 30 minutes, but that is not the point.

The customer’s perception is very important. If customers find out that a company is unable to meet claims that it has made, the company is worse off, in the mind of the customer, than if it had not made those claims at all.

Even the medium used in advertising has a way of psyching patrons up about the product-service offering. One of the findings of a research I did for my second degree on billboard advertising was that many

PERSPECTIVES

A potential solution for housing all

BY AKUA NYAME-MENSAH

Housing is one of man’s essential needs and equally important to a nation’s development. According to Abraham Maslow, housing ranks as one of the basic necessities of life. It presupposes that the survival of mankind rests on adequate housing to ensure optimum productivity levels.

Ghana is no different in its focus to ensure its citizenry and foreign nationals are well-catered for in that respect. The country has come a long way from the pre-colonial days of thatched houses, to the modern era of highly sophisticated homes strewn across the country, especially Accra, its capital.

Ghana’s attainment of independence is largely seen as the catalyst for its housing boom. The Nkrumah government made housing one of its topmost priorities, setting up State Housing Corporation and Tema Development Corporation to see to the housing needs of the country. It is by no coincidence that Ghana registered a remarkable improvement in the number of persons per dwelling unit from 10.57 to 9.05 from 1960 to 1970.

The political and economic instability following those years led to a higher

48

housing deficit. This was exacerbated by the rapidly growing population that was far exceeding supply. The inability of the country to adequately meet the housing demands during the period 1970-1984 has put a strain on the nation. Today it needs to close the current deficit of 1.7 million homes.

A major reason for this deficit is the inability of the country to provide enough affordable housing to meet the needs of the middle class.

Institutions such as the Home Finance Company (HFC Bank) and the Social Security and National Insurance Trust (SSNIT) were once torchbearers of providing ‘affordable’ housing.

However, high costs associated with lending and the relatively low incomes of the Ghanaian populace led these institutions to shift focus in subsequent years.

GHANA BUSINESS & FINANCE

Definition of affordability as a barrier

Affordability is rather a relative term. Defining it is the first step the government should take to combat issues related to affordability. In some countries affordable housing is related to the median household income.

Other countries use a percentage of the household income to determine what is considered affordable.

In the United States, it is deemed unaffordable if more than 30 percent of the household income is spent on housing. In other countries, this percentage is either higher or lower. A look at some African countries shows that they have taken a similar step in their quest to provide affordable housing. Senegal, for instance, defines affordable housing as costing less than USD 40,000 while Kenya and Uganda

OCTOBER 2014

either bullied by ‘landguards’ or hit with court injunctions. The laxity of Ghana’s laws on land titling has made this situation worse, coupled with the slow pace of justice served during land disputes.

When developers are building in newer areas, the basic infrastructure that is usually provided by the government may not be available. Developers end up investing in infrastructure such as roads, electricity and water. This cost increases the price of the property and is passed on to the buyer.

Various factors make providing housing in Ghana expensive

Aside from consumers being unable to afford or obtain mortgages after a property is built, there are many factors which make the cost of providing housing high. This cost is eventually passed on to the ultimate consumer.

Difficulty in accessing credit, high interests on loans and the high costs of raw materials are but some of the challenges faced by home builders.

The lack of construction financing means that developers need to focus on selling their properties as quickly and as expensively as possible to be able to repay their loans. In countries such as Malaysia and Singapore, funds have been created to ensure the completion of hanging projects. As banal as it may sound, these countries attained independence about the same time Ghana did and had similar housing challenges at the time. Today, thanks in large part to government intervention, the two Asian countries have become models for the housing sector around the world.

The lack of local quality materials and the increasing cost of foreign construction materials increase the cost of construction and ultimately the buyer. We once spoke to a developer who said they were unable to deliver some houses because the cost of the materials they had budgeted for had increased drastically.

Issues related to land insecurity makes it easy for land to be leased to developers multiple times. Developers give into buying the land over and over again to appease ‘owners.’ Individual buyers, who do not have the resources developers have and thus cannot afford multiple purchases are unfortunately

OCTOBER 2014

Data is key

A housing policy can only be successful if it is driven by data. The policy needs to reflect the current needs of the population. We know there is a huge housing deficit, the number of housing units we need to build and that majority of the population live in informal housing situations. We are not sure of the pricing and what we would need to do to ensure that the construction inputs that would have been affordable at the onset are no longer affordable once it is built.

The next steps

The government needs to develop an actual housing policy. It should start small. The government should focus on the larger regions and metropolitan areas and then develop a comprehensive housing strategy that covers the entire country.

Beginning with the Greater Accra Region, the government should look at data to figure out the best way to cope with large numbers of migrants.

Philippines, which has similar housing challenges to Ghana’s, has made some respectable strides to the improvement of its housing

conditions. The enactment of its Urban and Housing Act (UDHA) in 1992 and the Comprehensive Shelter Finance Act (CISFA) in 1994 were the first legal steps it took to address its modern housing problems. These acts empowered their state and local agencies to come up with solutions to the urban slums and housing deficit.

Again, it is instructive that Philippines has clearly defined its term of affordability, dividing it into two groups of socialized housing and economic housing units valued at less than USD 6,000 and USD 40,000 respectively. Ghana can follow suit and define it to suit the country’s unique environment.

Government should explore the possibility of resourcing the SSNIT to handle mortgaging for affordable housing. It would also be prudent if Parliament passed a bill allocating a percentage of tax revenue to housing, while creating a special housing fund overseen by SSNIT to increase supply.

With respect to credit, risk is still fairly high due to the absence of a proper street addressing system.

However, companies are seen as lower risk by banks. HFC Bank should thus be mandated to provide affordable credit to members of the Ghana Real Estate Developers Association (GREDA), as they assume a far lower risk.

Tax rebates should be made available to real estate developers who develop homes for the affordable targeted group. This would incentivise them to provide more affordable housing as against the current trend of constructing premium homes.

In spite of the many challenges, the Ghana government and various stakeholders seem to be increasingly concerned with the real estate sector, which is a good start. It is the hope that the nation reduces its housing deficit and eventually become a model for Africa and the world.

The writer is the Managing Director of Lamudi Ghana, the online real estate marketplace launched in 2013 and now the leading property portal in the country. She holds a bachelor degree in Growth and Structure of Cities from Bryn Mawr College and a master’s degree in City Planning from the University of Pennsylvania.

GHANA BUSINESS & FINANCE

49

PERSPECTIVES

makes that distinction based on the respective amounts of USD 191 and USD 85 of income generated by its citizens.

With respect to Ghana, the nation is missing a clearly definition.

Affordability has been left to the whims of the populace, with some indicating a range of GHc 87,000 - GHc 130,000 as affordable while another group deem the phenomenon as between GHc 40,000 and GHc 60,000. The first step to addressing Ghana’s housing deficit would be for the nation to clearly define the term affordable housing and seek to make plans targeted at those within the defined range.

EXECUTIVE SELECTION

Director General, Ghana Meteorological Agency

Group Head of Audit (GHA) The position The successful applicant will provide independent assurance to the Group Audit Committee and senior management on the adequacy of controls around the systems and activities of the Group to manage risk.

He or she will report functionally to the Chairman of the Audit Committee (“Committee”) of the Group’s Board of Directors (“Board”) and administratively to the Chief Executive Officer of the Group. The position involves overseeing the development and execution of a comprehensive audit programme that addresses the key operational and financial risks facing the Group, developing and presenting to the Committee, the annual risk assessment and audit plan including periodic updates of status and changes required in the plan. The successful applicant will lead discussions with senior management, the Committee, and the independent external auditor regarding audit plans, activities and findings.

The candidate A graduate degree in a business related area and a minimum of ten years of progressive internal audit experience in a reputable organisation with subsidiaries is required. An MBA and/or professional auditing and/or accounting designation (e.g., CIA, ACCA, CA. CIMA CPA) will be an advantage.

To Apply: Interested Applicants should apply by sending their CVs and applications to HR Advisory Services, KPMG. Marlin House, 13 Yiyiwa Drive, Abelenkpe. P. O. Box GP 242, Accra. Z

50

Corporate Compliance Officer The position As CCO, you will oversee the Corporate Compliance Program which is an independent and objective body responsible for reviewing and evaluating compliance issues/concerns within the Group. You will report directly to the Group Board and administratively to the Chief Executive Officer of the Group. Your key responsibilities will include developing policies and programmes that encourage managers and employees to report suspected fraud and other improprieties without fear of retaliation; monitoring the effectiveness of the Group’s compliance arrangements and network of compliance functions; promoting internal compliance reviews and monitoring activities, including periodic reviews of subsidiaries and reporting on the progress of implementation of methods to improve efficiency and quality of services.

The candidate A Bachelor’s degree in law, accounting/ business, philosophy, ethics, or a related field is required as well as a minimum of ten years’ experience of which three should have been in compliance and risk management. The ideal candidate should have experience of independently performing and managing compliance audits/reviews and projects and working knowledge of complexities of Group operations with subsidiaries in diverse industries and foreign operations. A post-graduate qualification would be an advantage.

To Apply: Interested applicants should please apply to HR Advisory Services, KPMG. Marlin House; 13 Yiyiwa Drive; Abelenkpe. P. O. Box GP 242, Accra or email hr@kpmg.com.gh.

GHANA BUSINESS & FINANCE

The position The Director General directs the provision of meteorological information to the general public for the protection of life and property from weather and climate related hazards, and ensure the provision of specialized weather information in support of activities of sectors such as agriculture, aviation, water resources management and the construction industry. He or she initiates action on policies relating to the strategic direction of the Agency for the Board’s consideration; enforces the rules, regulations and procedures prescribed by the World Meteorological Organization (WMO); advises the Board on the management of the National Meteorological Fund; serves as the Permanent Representative of Ghana with the WMO; coordinates the relationship of the Agency with other national and relevant intergovernmental organisations and submits annual and other periodic reports covering the activities and operations of the Agency to the Board.

The candidate Candidates must have minimum of a Master’s Degree in Meteorology or Climate Science from a recognised university; at least fifteen years post First degree qualification and working experience, five which must be in a senior management position should be able to serve a minimum of three years before attaining the compulsory retiring age of sixty. A certificate in Public Administration or Management would be an advantage.

To Apply: Applications, together with supporting documents, statement of applicant’s vision for the position, curriculum vitae, office and residential telephone numbers, e-mail and addresses of three referees should be forwarded The Secretary, Public Services Commission, Accra.

OCTOBER 2014

STUDENTS LOAN TRUST FUND (SLTF)

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

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

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

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

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

1

4

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

SLTF HEAD OFFICE

2

ECOBANK GHANA LIMITED (EBG) USING BANKCOLLECT

5

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

3

GCB BANK USING SMART PAY

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

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

This notice is by:

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

"Your Business is our Business".

EVENTS

African Economic Conference 2014:

“Knowledge and Innovation for Africa’s Transformation”

21st Africa Oil Week / Africa Upstream Conference

Join industry peers and colleagues from all over Africa and around the world for Africa’s longest established and landmark conference dedicated to the fast-moving African Upstream industry – covering breaking trends and critical issues from Cape-to-Cairo – Madagascar-to-Mauritania.

Within the Africa Oil Week 2014 program there will be 65 corporate / state speakers, plus private and public companies seeking to execute acreage deals and farmouts, combining a quality program with over 140 corporate industry exhibitors, numerous government roadshows for acreage/asset transaction, along with the presence of major energy banking institutions, institutional oil and equity investors, project financiers, multilaterals, transaction advisors and the a wide range of growing service and supply industry operators found across Africa’s oil and gas-LNG value chain.

Date: 3rd-7th November 2014 Venue: Cape Town, South Africa Website: www.globalpacificpartners.com

The Conference, which is co-organized each year by the African Development Bank (AfDB), United Nations Economic Commission for Africa (ECA) and United Nations Development Programme (UNDP), will provide a unique opportunity for researchers, policy-makers and development practitioners from Africa and elsewhere, to explore Africa’s existing knowledge generation approaches and frameworks, the efficacy of its knowledge and innovation institutions in developing needed skills, technology and innovation capacities. It will look at the policies required in the areas of knowledge generation and innovation to achieve Africa’s transformation agenda.The 2014 AEC coincides with the 50th anniversary celebrations of the founding of the African Development Bank Group.

Date: 1st - 3rd November, 2014 Venue: Abidjan, Côte d’Ivoire Website: www.afdb.org

6th Africa Public Private Partnership Conference and Showcase

The APPP conference is in its 6th edition and has evolved into Africa’s premier PPP event, unparalleled in its presentation and reputation as a definitive platform and a strategic forum to initiate the next PPP deal as well as establishing and cementing business partnerships and accessing PPP project information. Focusing on infrastructure sectors of energy, transport, roads, airports and social sectors amongst others, the 2014 edition will once more gather key decision makers from both the public and private sectors under one roof.

Date: 19th November - 21st November, 2014 Venue: Abidjan, Cote D’Ivoire Website: www.africappp.com

Conference on Regional Studies:

Asian, American, African and European (AAAE 2014)”

The event will bring together researchers and academics across the globe to present and share their recent research developments on the global economic amalgamation, fast development in the evolving world economies and technological change. It will provide a platform to interact and discuss innovations in infrastructure, urban governance, economic development strategies and finance. At the same time, it will enable discussions on obstacles to such innovations, from existing political arrangements, engrained interests, segregation, and poorly adapted theories and models as well as establish the need and nature of future research requirements and address the concerns and challenges confronting policy makers and practitioners.

Date: 14th - 16th December 2014 Venue: Hotel Fort Canning, Singapore Website: aaae-conf.org

African Banknote Conference 2014:

Improving the security and cost-effectiveness of banknotes

Hosted by the Association of African Banknotes and Security Documents Printers, (AABSDP), the conference will welcome central banks, secure document issuers and security printers as well as global industry suppliers. Participants will share ideas on how improve the security and cost-effectiveness of banknotes, as well as identity and other secure documents. Delegates can expect to leave the conference armed with information for making the best decisions on procuring, producing and processing their banknotes and security documents.

Date: 16th - 20th November Venue: Cape Town, South Africa Website:www.africanbanknote.com

52

GHANA BUSINESS & FINANCE

Amref Health Africa International Health Conference: ‘From Evidence to Action: Lasting Health Change for Africa’

The three day conference is the first international event by Amref Health Africa and will focus on the exchange of scientific results and debates on strategic ideas and application of knowledge to inform health care financing, human resources for health, community systems strengthening and the post 2015 health agenda. It will bring together leaders, scholars, players and partners in African health development and advocacy. It is an important forum for discussions on how Africa can influence the global health agenda to improve health and health rights on the continent.

Date: 24th-26 November, 2014 Venue: Nairobi, Kenya Website: www.ahaic.org

OCTOBER 2014

STATS & INDICES

Trading Results - GH Cedi as at Tuesday 23rd September, 2014 Share Code

Daily Interbank Forex Rates as at Wednesday 24th September, 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

3.1987

3.2013

Pound Sterling

GBPGHS

5.2318

5.2376

AYRTN 0.18 0 0.17

Swiss Franc

CHFGHS

3.4083

3.4104

BOPP 3.62 0 3.62

Australian Dollar

AUDGHS

2.8273

2.8325

Canadian Dollar

CADGHS

2.895

2.8972

Danish Kroner

DKKGHS

0.5525

0.553

CPC 0.02 0 0.02

Japanese Yen

JPYGHS

0.0294

0.0294

EBG

New Zealand Dollar

NZDGHS

2.5761

2.5806

Norwegian Kroner

NOKGHS

0.5036

0.5038

Swedish Kroner

SEKGHS

0.4477

S/African Rand

ZARGHS

0.2859

Euro

EURGHS 4.113 4.116

Chinese Reminbi

CNYGHS

BCEAO

GHSXOF 159.37 159.48

GWEB 0.04 0 0.03

Dalasi

GHSGMD 12.36

12.38

HFC 1.6 200 1.3

Ouguiya

GHSMRO 91.49

91.56

Naira

GHSNGN 51.15

51.19

Leone

GHSSLL 1358.27 1359.38

PKL 0.06 0 0.06

WAUA

WAUGHS 0.1456 0.1456

PZC 0.79 0 0.4

0.5212

AGA 37 0 37 ALW

CAL

0.06 19,500 0.04

1.04 1,487,000 0.9

CLYD 0.04 0 0.03 CMLT 0.16 200 0.12

7.98 25,200 7.11

EGL 2.5 0 1.65 ETI

0.43 77,700 0.41

FML

7.55 1,500 4.89

0.448

GCB

5.69 319,600 5.11

0.2861

GGBL 6.2 0 3.1

0.5215

Treasury Bill Rates

GLD

26.13 0

GOIL

1

1,700 0.99

GSR 2.75 0 2.34

MAC 3.59 0 3.59 MLC 0.39 0 0.28 PBC 0.17 0 0.11

SCB

20.56 270 18.2

SCB PREF

0.52

SIC

0.52 20,300 0.4

0

SOGEGH 1.17

as at Monday 22nd September, 2014 to Friday 26th September, 2014

23

100

0.55

0.94

SPL 0.04 0 0.03 SWL 0.03 0 0.04

Period

Discount Rates Discount Rates

TBL 0.35 0 0.24

91 - Day

23.88%

25.40%

TLW 36 0 36

182 - Day

23.32%

26.40%

1 - Yr Note

-%

22.50%

2 - Yr Fixed Rate Note

-%

23.00%

OCTOBER 2014

TOTAL 6.57 14,800 6.1 TRANSOL 0.03

0

0.03

UNIL 18.31 0 UTB

15

0.35 774,900 0.25

GHANA BUSINESS & FINANCE

53

COMMODITIES

Month ending September 2014

Wholesale Prices (GH¢)

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

Cassava(Fresh Tubers) Bag 91kg 40.00 N/A 26.88 65.75 36.50 61.42 35.00 44.26 45.04 -1.74 Cassava (Gari)

Bag 68kg 100.50 122.50 179.00 116.00 68.00 131.42 96.00 116.20 114.57 1.42

Cowpea (White)

Bag 109kg 405.00 270.00 250.25 196.00 268.75 303.75 266.00 279.96 281.36 -0.50

Groundnut (shelled)

Bag 82kg 432.50 435.00 378.38 289.50 328.13 377.00 346.00 369.50 409.93 -9.86

Maize (white, grain)

Bag

Millet (grain)

Bag 93kg 170.00 159.00 146.25 136.00 140.00 180.50 131.00 151.82 142.43

100kg 130.00 97.50

137.63 96.00

99.50

123.75

96.00

111.48

118.25

-5.72 6.59

Rice (imported-unclesam) Bag 50kg 190.00 N/A 259.50 N/A 280.00 257.50 N/A 246.75 228.13 8.16 Rice (local-white) Soya Beans Tomato (cooking) Wheat (Grain)

Bag 100kg 384.50 260.84 268.50 253.00 255.00 145.25 256.00 260.44 240.46

8.31

Bag 109kg 315.00 235.00 192.63 216.00 236.25 271.67 196.00 237.51 208.50 13.91 Crate 72kg 268.75 N/A 173.38 172.50 246.25 311.25 162.50 222.44 199.00 11.78 Bag 50kg 150.00 122.75 284.38 124.25 258.13 180.00 N/A 186.58 175.83 6.11

Yam (pona-medium) 100 tubers 250kg 327.50 N/A 219.25 170.00 275.00 363.25 225.00 263.33 297.08 -11.36

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 September dipped by 5.72 percentage points to close the month at GHS 111.48 from the previous months GHS 118.25.

A bag sold averagely on the Dambai and Tamale for GHS 96.00 being the lowest and on the Kumasi for GHS 137.63 being the highest for the month. On the various markets there are a lot of new maize being traded.

This has brought down the price of the commodity.

54

Soya

In the month September, the average price of 109kg bag of soya beans sold between GHS 192.63. in Kumasi and GHS 315.00 in Accra with Kumasi being the lowest and Accra the highest again. The average price of the commodity shot up by 13.91 percent to close the month at GHS 237.51 from the previous months GHS 208.50. Soya beans has been in high demand for most parts of the year, this has affected 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 September gained 11.78 percent to close at GHS 222.44 from the previous months price of GHS 199.00. The commodity sold between GHS 162.50 in Dambai and GHS 311.25 in Takoradi. The highest was recorded in Takoradi and the lowest in Dambai. The weight of the crate of tomato has been adjusted upwards to 72kg for a crate.

OCTOBER 2014

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