The Economist Ghana 2018

Man on a mission On January 7th 2017, during his inaugural speech, Ghana’s newly elected 8th President, Nana Dankwa Akufo-Addo famously said ‘Ghana is a rich country, so there’s no excuse we be poor’. As the second largest producer of cocoa in the world after its neighbour Côte d’Ivoire, home to the second largest gold mining reserve on the continent after South Africa, and with Reuters announcing Ghana as Africa’s 4th largest oil producer by 2020, Akufo-Addo is on a mission to prove his point.

In the run up to the 2016 Presidential elections Ghana had suffered uncharacteristic power cuts, a weakened banking sector, resulting in a newly negotiated stranglehold to the IMF, leading Akufo-Addo, the opposition candidate, to victory. The new President and his carefully chosen key Ministers, representing the pillars of the Ghanaian economy: Finance, Energy, Agriculture, and Natural Resources, inherited a country that was underperforming and gravely indebted, yet they shared a clear set of policies and goals.

Thankfully, as a pro-private sector party, rather than career politicians, key government roles were given to the A-list of private sector professionals who have shown to think out of the box in their first year in office, determined to invert the government’s balance sheet with the primary focus being that of fiscal discipline and a tax regime to help stimulate the private sector avoiding government (over)spending.

Late last year, Akufo-Addo received the President of France, Emmanuel Macron and reiterated his preference for a ‘Ghana beyond Aid’ over donations that African nations traditionally receive. Heads of State flocked to Ghana in 2017, from all over Europe and the world over, but perhaps more interestingly was this President giving priority to his African neighbours, understanding and showing that unity and stability was in everyone’s best interest.

Ghana’s new Vice-President H.E. Mahamudu Bawumia believes this government instilled investor confidence because they restored fiscal discipline and “advocated for moving the economy from a reliance on taxation to a focus on production”. The head of the Ghana Investment Promotion Centre, Yofi Grant admitted “We do have some audacious goals; to make Ghana the best place to do business in Africa, and also to attract FDIs north of the USD$ 5billion mark within the next three years”. Promi-

ses made on the campaign trail, from free Senior High School (SHS) to a better healthcare scheme were launched. Varying programmes aimed at kick-starting industry with a particular focus on agri-business and a major digitization of the economy to leapfrog Ghana into the new era (as well as to wean out corruption), have been rolled out in record time.

The World Bank forecast that growth in Sub Sahara Africa will pick up at 3.2% in 2018 and Ghana will lead African economies with an 8% GDP growth forecast followed by Ethiopia and Tanzania at 7.2%, providing fiscal consolidation remained on track and a quick resolution to the power crisis was reached. Most investors interviewed last year felt that the government was already delivering on those conditions.

At Davos last month, JPMorgan announced it will be entering Africa via Ghana and Kenya, another sign that Ghana is fast becoming the reliable country in which to invest and expand to the wider region. Ghana as a hub for West Africa is not a new concept, and this despite big brother Nigeria’s location next door, commanding respect as Africa’s largest economy, having surpassed South Africa in recent years. ExxonMobil and ENI, two of the world’s largest oil companies are the most recent big names to enter the market, another undeniable sign that Ghana is fast becoming the place to be.

Managing expectations is going to be key. Having taken office at a disadvantage as the debt revealed itself beyond that which had officially been disclosed, it has been no small feat thus far to get the finances back in order, which has largely been achieved. Aim for the stars, as this government appears to be doing, is the Akufo-Addo way. The new President’s mission to do Ghana’s fore-fathers’ motto of “Freedom and Justice” proud is well underway.

Names from left to right: H.E. Nana Akufo-Addo - President of Ghana, H.E. Dr. Mahamudu Bawumia - Vice President of Ghana, Ken-Ofori-Atta - Minister of Finance, Alhassan Andani - CEO of Stanbic Ghana, Emmanuel Antwi-Darkwa - Chief Executive of the Volta River Authority, Fred Oware - Chief Executive of BUI Power Authority, Mohamed Samara - CEO of Meridian Port Services Ltd, Yolanda Cuba - CEO of Vodafone Ghana, Hon. Boakye Agyarko - Minister of Energy, Charlotte Osei - Chariman of the Electoral Commission, Dr. Afriyie Akoto - Minister of Agriculture, Dr. KK Sarpong - CEO of GNPC, Cecilia Dapaah - Minister of Aviation, Ernest Addison - Governor of the Bank of Ghana, Yofi Grant - CEO of the Ghana Investment Promotion Centre, Ray Sowah - CEO of Ghana Commercial Bank, Dr. Said Deraz - Chairman of GCR, John Awuah - CEO of Universal Merchant Bank.

Ghana - Finance

Grow Ghana, Grow Reducing fiscal deficit.

GDP growth predictions as high as 8% in 2018 Before even being sworn in, Finance Minister Ken Ofori-Atta, an ex-investment banker, hit the ground running and gathered the banking sector stakeholders to listen and discuss the best course of action to fortify the sector and stabilize the economy. Besides the task of dealing with the IMF and reassuring investors, both domestic and foreign, through starch fiscal discipline, Ghana’s new government had promised stability and growth all the whilst acutely aware they inherited a budget deficit. Yet by Q3 2017, figures started to show 7% GDP growth.

Stabilization of the cedi and inflation were a priority from the outset and the new Governor of the Bank of Ghana, Dr. Ernest Addison explained that “the implementation of policies to ensure stability yielded positive results.

Alongside fiscal consolidation that the government has undertaken, with the monetary stance of the Central Bank, we have seen inflation rates come down from 15.4% to the latest figure of 11.7% (as of Dec 2017)…Apart from the impact of the policy framework, we benefited from a relatively strong export performance this year underpinned by higher oil export revenues, higher gold production, and cocoa production remained relatively robust, so the trade balance recorded a surplus… which helped us build additional reserves which are currently around US$7.4 billion.”

Governor Addison explained that the banking sector took the brunt of the slow growth in 2016 due to high non-performing loans and energy sector problems and credit being extended to the sector. “This year, we have had the banks focus on cleaning up their books”. As such the minimum capital requirement was raised to USD$90million in the hope that banks would be forced to consolidate and become big enough to help finance high-valued projects that would be transformative besides bringing the cost of borrowing down with interest rates. Frank Adu, the managing director of Cal bank warns that although he is an advocate of a higher minimum capital requirement, “you run the risk of opportunistic private equity funds taking significant stakes and a dominance of foreign banks in the country”.

One of the first signs of consolidation was Ghana Commercial Bank (GCB) assuming all the deposits and selected assets of UT Bank and Capital Bank.

Similarly, banks like Universal Merchant Bank (UMB) are making sure they are in pole position to meet the new requirements.

Besides fiscal and monetary policy enabling the private sector to do what it does best, this government proved creative and resourceful. The much talked about non-sovereign energy bond being a prime example.

Edward Effah, CEO and Board Chairman of Fidelity Bank, one of the fund

Ghana’s power sector was a priority in 2017 managers of the 10-year bond said, “I think that it is a very innovative and well thought out program which I believe is the first of its kind in Sub-Saharan Africa… If you look at the UK market, they have issued more than £500billion of private capital for public financial institutions and this ESLA bond structure is not very different from a PFI in the UK”.

What best resumes that which consumed Ghana’s economic management team, finance Minister and Governor of the Bank of Ghana in their first year is President Akufo-Addo’s State of the Nation address on February 8th. The President congratulated his teams under his Vice President Mahamudu Bawumia, “a brilliant economist” who, he said, rose to the challenge and whose hard work is showing positive results: “We have reduced taxes, we are bringing down inflation and interest rates, economic growth is increasing from the alarming 3.6% in December 2016 to 7.9% in our first year… We have increased our international reserves, maintained relative exchange rate stability, reduced the debt-to-GDP ratio and the rate of debt accumulation… I am also pleased to report that the 3-year IMF-supported Extended Credit Facility Programme begun in 2015 comes to an end this year... We are determined to put in place measures to ensure irreversibility and sustain macro-economic stability so that we will have no reason to seek again the assistance of that powerful global body.”

Africa’s Star of Democracy celebrates its 60th anniversary In April last year, Ghana’s newly elected president, Nana Akufo-Addo, tweeted a picture that encapsulated the virtues of the country’s political life. The image shows him standing side-by-side with his surviving predecessors as head of state, the “three Johns” – John Dramani Mahama, John Agyekum Kufuor and Jerry John Rawlings. Together, the four men represent not only Ghana’s main political parties (the NDC and the NPP), but also the memory of military rule, in the controversial but respected figure of Rawlings – the country’s longest-serving leader, and the mastermind of its return to democracy in 1992.

Yet despite their deep political differences, all are smiling amicably, after a meeting reportedly characterised by “frank exchanges and mutual respect” – the perfect image of the maturity of democracy in this thriving West African nation. Ghanaians understand the implications of their peaceful elections.

Formerly known as the Gold Coast, Ghana gained its independence from the British in 1957, becoming the first Sub Saharan country to break away from colonial rule. And its first president, Kwame Nkrumah, was also one of the founding members of the Organization of African Unity and is widely regarded as the father of Pan-Africanism. This trailblazing nation has been seen as a leader in the region ever since.

Barack Obama called it a “model of democracy” in 2012, and this latest peaceful transition of power in January 2017 (the third such handover in three decades) just cemented that reputation. According to Charlotte Osei of the Electoral Commission, politics is built into the Ghanaian DNA, here the people “eat, drink and sleep politics.” So, it’s no surprise that the stable and peaceful democracy is an immense source of pride to the local population, an inspiration to the rest of Africa and perhaps the single most important source of confidence to foreign investors.

Ghana - Power

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The Power Plan From the local Twi language and literally translating as “off-on”, dumsor is the Ghanaian term for the rolling blackouts that came to characterize the country’s latest energy crisis. Even after the technical problems were resolved this latest crisis dragged on in Ghana for almost two years, exacerbated by financial and managerial problems in the sector. For decades the reputation of Ghana’s energy sector had been tarnished with high tariffs, inadequate fuel security and unsustainable debts. Those debts also had a knock-on effect on a banking sector forced to bear the increasing burden of the non-performing loans.

The success of Ghana’s new plans for industrialization would hinge on banishing these recurring problems to the past and securing the country’s power supply once and for all. It is no surprise therefore that a drastic reform of the sector and a restructuring of debts were high priorities for President Nana Akufo-Addo and his NPP administration when they came to power in January 2017.

Ghana already boasted the second most advanced electricity sector in sub-Saharan Africa (after South Africa), with an impressive installed capacity of 4400 Megawatts (MW) and a national grid to which 80% of the population has access. But after only a year in power, this government has unleashed a new wave of confidence in the sector, with its pragmatic, private-sector-friendly approach and the introduction of much needed institutional reforms – setting Ghana in fine stead to fully deliver on its role as the energy giant of West Africa.

The Volta River Authority (VRA) board chairman Kweku Awotwi summarized the root of the sector’s problems in a candid address at a Ghana “@60” event entitled “Let there be Light”, saying, “A good electricity sector runs on cedis and dollars, not gas and crude oil.” And the new government also believed that improved financial management was the key to the sector’s stability. It established a new “Electricity Market Oversight Panel”, and rolled out an innovative “cash waterfall” mechanism that, according to Minister for Energy Boakye Agyarko, would “ensure liquidity within the energy sector, and make sure that all players get their fair share of all the revenue flows.” But the lynchpin of the reform package was the issue of almost GH₵6 million of bonds at the end of 2017, backed by the Energy Sector Levy Act (ESLA) special purpose vehicle. Local and international investors reacted very positively, thus immediately wiping out 60% of the power sector’s debts.

By all accounts the reforms are working and Ghana’s power sector has started 2018 in very good health. According to Fred Oware of the Bui Power Authority, the company responsible for the operation of the 400MW Bui dam hydroelectric project, “If we continue on the same trajectory we won’t have ‘dumsor’ again, because crucial institutions are working once more thanks to the new capital.” Given the installed capacity of 4400MW and a current maximum load of approximately 2500MW, this means the country is now sitting on a comfortable reserve margin of nearly 100%. That will ensure a safe and reliable power supply for many years to come, even considering the country’s ambitious industrialisation plans through the “One District, One Factory” project.

Less than two years ago Ghana’s power output was too low and the country was even importing electricity from its neighbours. But the reforms to the sector have been so effective that the government now needs to find ways to buy less electricity. Two such ways have already been identified. The government will review some of the morecostly power purchasing agreements (PPAs) signed by the previous administration. And it is also committed to prioritising renewable energy over traditional thermal power generation. In the long term, diversifying the sector in this way will only increase its stability, protecting the production chain from natural fluctuations in the Volta river basin and in the price of fossil fuels.

This new green revolution in Ghana is already making great strides.

Two-thirds of the country’s energy production already comes from hy-

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droelectric projects such as the Volta River Authority’s Akosombo and Kpong dams. But the government now aims to increase the proportion of total energy produced from other renewable sources from 1% to the official sustainable development target of 10% by 2030. Efforts are initially focused on solar and wind. And with Ghana’s growing domestic demand as well as its potential future role as an energy hub and exporter to the sub-region, investors see this projected growth in renewables as a huge opportunity. The government is welcoming proposals from private sector partners in the form of either Public Private Partnerships (PPP) or Build-Operate-Transfer arrangements (BOT).

In fact, it’s now clear that the goal of generating 10% of total energy production from renewable sources other than hydroelectric will easily be reached – and likely exceeded – by the end of the government’s current term. That’s thanks principally to four projects due to come onstream soon. The chief player is the Volta River Authority (VRA), Ghana’s largest and longest-established generator of electricity. As the company’s acting Chief Executive Emmanuel Antwi-Darkwa notes, “Our roots have always been as a renewable energy company and we want to refocus on them again.” VRA is already operating a pilot 2.5MW PV solar plant in Navrongo, northern Ghana, giving it crucial operating experience in large-scale renewable power production. In the coming year, it will be bringing two further solar plants online in the Upper West region, one of 12MW and the other 14MW, both with backing from the German KFW development bank. It is also developing two 75MW wind farms, again with foreign partners, which should be ready and producing power within two years. And this is in addition to the planned extension to the hybrid solar plant at the Bui dam.

The future is bright in Ghana’s power sector. Fuel security is more certain than ever, with projected increases this year in domestic production of liquified natural gas, and recent deals with Ghana’s neighbours to guarantee continued supply via the West African Gas Pipeline.

A plethora of exciting renewable projects are increasing diversity – and thus resilience – in the sector. And the latter are also adding to an already substantial installed capacity that, even at the most conservative estimates, will more than cover the country’s rapidly growing domestic and industrial demands. The word “dumsor” has been consigned to the history books: the lights will be staying on in Ghana for decades to come.

Ghana - Hub

Ghana: the First Port of Call Ghana’s best ambassador as the hub for West Africa might well be aptly named ‘Meridian Port Services’ (MPS) the company leading the JV in charge of the gargantuan development just beyond the capital in the sprawling port city of Tema. The name derived from the Meridian Line, 0º East, 0º West on the West Coast and is a testament to Ghana’s geostrategic location.

Although Takoradi Harbour services Ghana’s ever-growing oil and gas industry, 75% of the country’s imports arrive via Tema, making it one of the largest ports in Africa in terms of volume of containers “from Dakar all the way to the equatorial ports, including Nigeria” explains Mohamed Samara from MPS – a joint venture between international giant Bolloré Transport & Logistics, APM Terminals and the Ghanaian government, represented by the Ghana Ports & Harbour Authority. As the most important public-private partnership in Ghana’s history, longevity is central to Samara’s vision for the port, and although MPS’s operational contract runs out in 30 years, he maintains they are delivering the new port as a lasting heritage with a breakwater designed to last over 100 years.

In 2020, when the first phase of the expansion comes online, the port will increase its current operating capacity to 3.7 million TEUs (twenty-foot equivalent units) from the current 18,000 thanks to an investment of 1.5 billion USD. With a deep-water channel allowing for ships with a draft of 16 metres, Ghana can also expect to be the first country on the continent to receive the new container ship leviathans such as Maersk’s Triple E Class which transports 18,000 TEU on a single ship. According to Kevin Taylor at Maersk, cargo is currently discharged from their larger vessels at Togo’s Lomé port before docking in Ghana. However, once the new development comes on stream, Tema will be a serious contender as the first port of call in West Africa for these mega ships. The construction will be a game changer for Ghana’s economy leading indirectly to the creation of 500,000 jobs in the region in the coming years, according to World Bank estimates.

Currently 93% of business processed by MPS is import and exports to and from Ghana. Besides the opportunities that come with the inevitable expansion of the Ghanaian economy and its own considerable consumer market, MPS also sees in this statistic a huge potential for Ghana to further cement its role as a West African shipping hub. Tema is ideally positioned to compete for the region’s transit shipping business. But size isn’t everything. For Tema to become a true leader in the region and attract ever more international shipping companies, efficiency is also key. As the main driving force behind the government’s “paperless ports” policy, MPS have not disappointed on this front.

The ports will play a crucial role in this government’s wider plans for regional industrialization and economic decentralization, with the much-touted “One district, one factory” project. The products of such regional factories will rely heavily on the new port at Tema to reach the international market. “Our port investment comes at just the right time to support this. Raw materials and finished products for industry have to cross in and out of the nation, and the sea ports are crucial to facilitate such trade and support such industries,” adds Samara.

Case in point is Amit Agrawal’s opinion as Senior Vice President and Country Manager for Olam Ghana, underlining that “While our local production facilities cater mainly to the domestic market, because Ghana is such a convenient hub, we are also able to export a lot of our production to West African markets.”

Whilst much needed improvements to regional road and rail links are planned, the airline industry is also poised to become a key player in this decentralization agenda. There are plans to create two new international terminals at Kumasi and Tamale, as well as to establish a home-based carrier airline. Several government policies have also already been deliberately tailored to incentivize and democratize internal air travel. Cecilia Dapaah, the new Minister for Aviation, believes “we need to satisfy the domestic de-

mand as well as the regional and international demands and then the ripple effects will be exponential growth for the GDP of this country”.

The International Air Transport Association (IATA) predicts a 6% growth in the aviation industry in Africa this year, a whole percentage point ahead of the rest of the world. Currently, West Africa has no single leading aviation hub – but with such growth expected, Ghana seems to have all the pieces in place to effortlessly step into this role. The country is already a favoured port of call for many airlines, with comparatively low aviation fuel costs, an open skies policy, new terminals and modernization works underway from the capital to the domestic airports and a reputation as a regional bastion of security and democracy.

Challenges remain, of course and according to Dick Van Nieuwenhuyzen, Air France/KLM’s country manager, there is still work to be done to reduce handling costs in Accra’s Kotoka International Airport, which by some estimates remains the second most expensive operationally in Africa. But the government is already working hard on tackling both of these issues, improving the facilities at Kotoka for the 37 airlines that already operate here and welcome more. Dapaah added “the new terminal will be able to take 5 million passengers a year with equipment in place to process an impressive 1,280 passengers per hour”.

You don’t need to venture far from the airport to see the natural pull Ghana has for multinational businesses. In fact, the shiny new head offices of Gold Coast Refinery, West Africa’s first state-of-the-art gold refinery open directly onto the capital’s airport terminal building. For the company Chairman Dr. Said Deraz, basing themselves in Ghana was an easy decision given the obvious political and legal stability, particularly given that producing bullions requires compliance with local and international regulations and standards. “Ghana is a more stable economy and country… and the output of the West African region is very significant in terms of the continent’s output”. Public and private infrastructure developments are building the country up fast to become the first port of call in West Africa.

It’s time for Africa At the beginning of last year, newly elected President Akufo-Addo stood in front of a jubilant crowd at Accra’s Independence Square to deliver an inaugural speech that will go down in history for its resounding message: “Ghana is open for business”. From that moment, the world saw that this was an outward looking president. His eagerness to reassert his country’s commitment to the Pan-African cause and Ghana’s role as a torch bearer for ECOWAS and the broader West African community became obvious when the ceremony was attended by no less than eleven African heads of state, including the guest of honour, Ivorian president Alassane Ouattara (an early sign that a closer relationship with Cote d’Ivoire would be a priority under this administration). Reciprocating this display of regional support, President Akufo-Addo opened his speech with a warm “Akwaaba” to his fellow West African leaders.

As we have come to expect from this President, actions followed words and within six months Akufo-Addo had made official visits to thirteen of the fifteen nation states that make up ECOWAS, whilst Ghana’s equivalent of the State Department received a conspicuous rebranding as the “Ministry of Foreign Affairs and Regional Integration”. Ghana was making it clear that its future economic success would rely on facilitating free trade in the region. The stage was set for it to capitalize on its growing reputation as the hub for west Africa and the gateway to the continent.

Delivering world-class port services from the centre of the world.

87% MPS handles 87% of all containers that passes through the Tema Port, Ghana’s biggest Port.

12% In 2016, MPS operations contributed to increasing handled containerized cargo at Tema Port from 748,000 TEUs in 2015 to 837,000 TEUs in 2016 which represents a 12% growth over the period.

Growing with Ghana As the most important PPP in Ghana’s history, the new port of Tema will be able to accommodate next generation ships (up to 18 000 TEUs) and handle the increasing flows of goods to and from Ghana and the hinterland. The new Port of Tema will significantly boost economic growth and trade revenues for local companies, with an estimated US$ 1.1 billion rise in global value added to the Ghanaian economy and around 450,000 indirect jobs created.

Learn more www.mps-gh.com

Ghana - Technology

Looking to the future Africa’s decidedly fresh-faced demographics are an advantage and Ghana is no exception with 46.5% of Ghanaians under 24 and a median age of 21. This is in sharp contrast to many of the world’s wealthiest countries which are now facing the crisis of an increasingly aging population. This is perhaps one of the reasons that “innovation” is the new buzzword on the streets and across Accra’s boardrooms. New technology is changing every sector of the economy from cutting edge renewable projects in the energy sector to the digitization of traditional industries from finance to agriculture.

The three most talked about digitization projects that the government rolled out in 2017 are the national ID card scheme, the digital address and the ‘paperless port’ systems. These projects have been seen as crucial to the government’s plans to reach as much of the informal sector as possible, widen the tax net and fight corruption. In the Vice President’s words, “we begin a process of modernization and formalization of this economy which was not there before.”

Moses Baiden, Margins Group CEO, awarded the contract for the digital IDs, spoke of all digitization schemes “This new economy offers the opportunity, in a very short space of time, to take away some of the negative effects of human ambition and greed.” Ghana’s paramount “paperless ports” initiative also implemented in 2017 is another example of the way in which the de-humanization of bureaucratic processes increased government revenue streams instantly.

By investing in the latest technology and in staff training, Meridian Port Services have automated nearly 90% of the movement of each container between ship and truck at the future mammoth port of Tema. Human operators remain important and MPS still relies heavily on the highly educated workforce readily available in Ghana who are initiating and overseeing the processes rather than manually implementing each stage. MPS CEO, Mohamed Samara, explained “the company has invested in both technology and training. The success is partly a return on these investments, so it’s a two-way corridor… We expect an avalanche of technology.”

Dr. Sarpong, head of the national oil company, GNPC, emphasizes that their criteria for selecting IOC partners goes beyond access to capital stating “technology and knowledge transfers are key to assist GNPC to eventually become a standalone operator... We have decided to build indigenous technology, so GNPC is setting up the Research and Technology Centre. The idea is to have cutting-edge technology and focus on understanding and exploiting the Ghanaian basins, and to be at the forefront of Petroleum research in the industry”. In so doing, Ghana’s energy industry is also preparing the country and her youth for the industries of the future with a heavy focus on technology and innovation.

Likewise, in Ghana’s sizeable mining sector, part of the government’s crackdown on illegal mining has involved regulation that incentivizes modern, “clean business” techniques. In this light, Ghana has also been chosen as the location for one of only two high calibre gold refineries in the whole of Africa. Costing over US$100 million the new Gold Coast Refinery has, according to company Chairman Dr. Said Deraz, “the most high-tech refinery equipment you can find anywhere in the world.” The Gold Coast Refinery is also a fine example of one of the major advantages that comes with international companies importing technology to Ghana: knowledge transfer.

Where traditional infrastructure was lacking in Africa, mobile technology quickly filled the gap. Mobile voice penetration in Ghana at the beginning of 2017 reached an astonishing 136%. Yolanda Cuba, Vodafone Ghana’s CEO, is an enthusiast of the positive impact technology can have on society, believing technology can help democratize Africa.

“

14 million Ghanaians have cell phones. Insurance penetration is at only 2% which tells you that you have to go digital to reach the informal market” Daniel Awuah-Darko Chairman, Vanguard Assurance

Their ‘Farmers’ Club’ program has been designed to provide live content such as weather forecasts, crop yields, market pricing, so that farmers can better manage their own cultivation. Cuba adds, “Our internal tagline is that we should ‘leave no one digitally behind’.”

Arguably the most life-changing impact of mobile technology in Ghana has come in the form of mobile money. 2017’s bitcoin hype might have finally woken mainstream society in Europe and the USA to the concept of decentralized payment systems, but for decades citizens across Africa have been circumventing banks and sending cashless payments to each other via mobile phone. By September 2017 the total value of mobile money transactions in Ghana had reached GH¢109 billion, or approximately US$24 billion.

Far from a threat to the financial system, Ghana’s widespread adoption of mobile money has been seen by the more forward-thinking banks as an opportunity. Mobile platforms will provide the most efficient way of reaching the large “unbanked” section of society. Stanbic have ambitious plans to provide services via a mobile platform. Their CEO Alhassan Andani added, “By having a mobile number and a smart phone, you can join the formal financial services industry. I see that as a good thing that helps our market to mature… Are we waiting for that to happen? No! That’s why innovation is so important.”

Universal Merchant Bank (UMB) and Ghana Commercial Bank (GCB), focus on being ahead of the curve. GCB’s managing director Ray Sowah is adamant that technology will be the enabling factor in attracting and keeping these small business clients by putting the customer at the centre of everything they do, “We in GCB are very acutely aware of the change in the world… and we are going to use technology to drive our vision.”

UMB’s CEO John Awuah recently announced that they are launching an app, the first of its kind in Ghana, to offer micro lending and micro saving features. He also believes that technology will be the only way to incentivize a large proportion of the population to contribute to national social security and pension schemes, “The only reason that banks have not been able to successfully engage with that [pension] sector is because of the way that we interact with the informal sector.”

Awuah insists that “for every physical investment we make, we ensure a greater percentage is going to technology because the next frontier is in the digital world.” Importantly, UMB have established an innovative PPP incubator specifically targeting indigenous startups. This style of homebred incubator project, alongside government incentives, will be essential if Ghana is to maintain this current momentum and firmly establish itself as a technology hub in West Africa. As Vokacom’s Nana Osei Kwasi Afrifa points out, “Sometimes people think that Silicon Valley or other big global tech hubs happened by accident, but that is not the case… If there is no deliberate policy to make it happen, it will never happen.”

The groundwork is certainly there. Ghana’s stability, political will, its English speaking, highly skilled workforce and its proximity to Europe are all appealing factors to international investors. And with the continued judicious application of government policy and private capital, Ghana will soon find itself not only looking to the future, but being looked to by other countries for tried and tested solutions.

This material was produced by Press Report House.

For more information please contact: Eleanor Legge-Bourke · Editor-in-Chief · eleanor@prhouse.co.uk Texts by Thomas Robinson and Mark Beresford Design by Miguel Duarte

Ghana - Agriculture

Agri-business boost With about half of the entire Ghanaian labour force working on farms, and rural areas still home to a large proportion of the population, the agricultural sector has a critical role to play in the country’s social and economic development.

While often overlooked in favour of flashier industries such as gold mining and offshore oil, the administration of President Akufo-Addo has made it a national priority to modernise Ghana’s farming industry, to improve the productivity of farmers by providing them with fertilizers and other support, and to create jobs for the country’s rural youth on farms and in a new generation of internationally competitive food-processing factories. Shortly after taking office in 2017, the Minister of Food and Agriculture, Dr. Owusu Afriyie Akoto, launched an ambitious programme, Planting for Food and Jobs, which aims for nothing less than revolution in the Ghanaian agricultural sector.

“We want to do something that will change the agricultural economy of this country permanently,” Dr. Akoto says. “Planting for Food and Jobs will symbolise the transformation of our agriculture, turning it into a source of invaluable inputs for new industries in Ghana.”

The Planting for Food and Jobs campaign is already supporting farmers across the country by supplying them with subsidized seeds and fertilisers, providing them with improved access to agricultural training, and giving them new marketing opportunities for their produce after harvest. Focused on maize, rice, soybeans, sorghum and vegetables, the programme will help the sector reduce its dependence on cocoa, its traditional mainstay. According to government forecasts, the initiative will directly and indirectly create 750,000 jobs, increase the production of maize by 30 percent, rice by 49 percent, soybean by 25 percent and sorghum by 28 percent.

Supported by the Canadian government, the World Bank and USAID, Planting for Food and Jobs aims not only to increase farming employment and to improve Ghana’s food security and replace imports, but also to enable new value chains built on the increased output of the country’s farms.

“Ghana has the unique potential to feed its growing population, meet the raw material requirements of our processing industries, achieve food security, and compete successfully as a leading supplier to countries around us and beyond,” President Akufo-Addo said at the launch of Planting for Food and Jobs.

Singapore-based agribusiness giant Olam, which has had a presence in Ghana since 1994, is one of the many foreign investors eyeing up new

One District, One Factory Agricultural investment is at the heart of the flagship economic policy of the administration of President Nana Akufo-Addo, the One District, One Factory programme. The initiative, which aims to establish at least one manufacturing plant or processing plant in each of Ghana’s 216 districts, has identified agribusiness as one of main sectors where the country has a competitive advantage. The very first project to be constructed as part of the programme is a fruit and juice factory in Ekumfi in central Ghana, which will process and package about 25,600 tonnes of locally produced fruit each year.

Ghana’s financial sector is playing an important part in enabling the success of the One District, One Factory initiative. Ghana Commercial Bank (GCB), the largest financial institution in the country, has pledged one billion cedis ($222 million) to the programme and nominated 216 officers to help businesses and entrepreneurs access credit in every single district in the country.

Following the acquisition of rivals UT Bank and Capital Bank, GCB is now in the ideal position to provide support to small and medium enterprises across Ghana, explains managing director Raymond Sowah. “It is our mission and our passion at GCB to do everything we can to move this country forward.”

opportunities in the country as agricultural output increases and infrastructure improves. Currently the operator of a flour mill, a tomato paste processing and canning facility, and a biscuit manufacturing facility in Ghana, buying food from more than 100,000 farmers across the country, Olam is exploring the potential of exporting peanuts and starch made from cassava, says Amit Agrawal, Senior Vice President and Country Manager for Ghana.

The country’s agricultural minister has his sights set even further.

“Given our proximity to the European market, there is no reason why we should watch South African planes and vessels pass us by when we have the capacity to deliver the best fruits and vegetables ourselves,” Dr. Akoto says.

Sowing the seeds of growth Supporting 'One District - One Factory' GCB is the bank to cradle the ‘One District-One Factory’ programme, with a dedicated unit to drive this initiative. ‘One District-One Factory’ is one of the key government projects in this new era having launched in May 2017. GCB understands the importance of supporting these initiatives, empowering Ghanaians and industrializing the country and has as a result allocated 1 billion GHC/in loans towards all entrepreneurs wishing to industrialise across all corners of Ghana.

www.gcbbank.com.gh

Ghana - Mining

A golden age for mining For hundreds of years, the gold-rich lands of western Africa have attracted explorers, merchants and investors from across the world. In colonial times, the region was even known as the Gold Coast, and to this day Ghana is the second largest gold producer in Africa.

Now, more than 60 years after independence, the Ghanaian mining industry is starting on a journey of transformation that is set to turn the country into a major refiner of gold products as well as a leading producer of the metal. It is a journey which promises to reduce Ghana’s exposure to volatile commodity prices, grow new downstream industries, increase export revenues, and create far more jobs for Ghanaians than the mines alone, which are capital-intensive but which employ relatively few people.

“There can be no future prosperity for our people in the short, medium or long term if we continue to maintain economic structures which are dependent on the production and export of raw materials. We must add value to these resources and we must industrialize,” President Nana Akufo-Addo advocated last year. “Raw material producing economies do not create prosperity for the masses.”

“Unless we industrialise with the goal of adding significant value to our primary products, we cannot create the necessary numbers of high paying jobs that will enhance the living standards of the mass of our people. The way to that goal, the goal of assuring access to prosperity, is value additive activities in a transformed and a diversified modern economy.”

Refining at GCR Operating on the frontline of the campaign to diversify the gold sector and industrialise the economy is the $110 million Gold Coast Refinery Ghana, or GCR. The plant, which began commercial operations in 2017, is the largest refinery in West Africa and the second largest in the entire continent, with the capacity to refine 180 tons of gold per year to the highest quality grades.

“As the 10th largest producer of gold in the world, it is only logical that Ghana should have its own modern gold refinery,” says Dr. Said Deraz, the chairman of Gold Coast Refinery. “Our major objective is to provide the country with a refinery that enables it to add value to the major raw

material it produces - gold. This fits into the government’s own agenda of adding value to its raw materials and industrialising the economy.”

A subsidiary of the Euroget Group from Egypt, and strategically located at the Kotoka International Airport in Accra, the refinery will create 300 direct and 1,200 indirect jobs when running at full capacity.

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Our major objective is to provide the country with a refinery that enables it to add value to the major raw material it produces - gold. This fits into the government’s own agenda of adding value to its raw materials and industrialising the economy.”

Dr. Said Deraz Chairman of GCR

The brand new refinery is currently focused on certifying its procedures for the most demanding international and local accreditations, hallmarks and certifications. At the site, GCR has introduced into Ghana state-of-the-art technologies for refining gold chemically and using electrolysis, and it has already installed its own gold bar-making machines.

These initial investments have created significant opportunities for innovative high-technology jobs for local employees, Deraz says. “Our staff are very excited by this chance to enhance their skills. They are embracing the innovations and new technologies that we are bringing to Ghana.”

As well as adding value to Ghana’s natural resources, GCR also aims to raise standards in the industry by sourcing gold from responsible small producers as well as from large mines.

At a time when the administration of President Akufo-Addo has cracked down on illegal and environmentally damaging small-scale gold mining (or ‘galamsey’) and has tightened up licensing procedures, GCR’s role as a reputable in-country buyer will help professionalize gold production across Ghana. In the longer term, the refinery could also process gold from across the metal-rich West African region.

For now, GCR is focused on embedding world-class processes at its refinery, increasing its capacity utilisation rate, and striking supply agreements with large operators within the country as they ramp up their own operations in Ghana. Among multinationals increasing their investments in the country, Newmont Mining Corporation is currently building a new underground mine at its Ahafo operations, while Gold Fields is extending the life of its Damang operation.

Even more promisingly, AngloGold Ashanti CEO Srinivasan Venkatakrishnan has spoken of a “positive tailwind” in Ghana and said the mining giant may redevelop its massive Obuasi mine, creating yet another source of possible production to help grow Ghana’s all-new refining sector.

“We are bringing to Ghana all the modern processes and procedures needed for gold refining,” Deraz says. “We are hopeful that we will win the regulatory and policy support of the Ghanaian government and the commercial support of the international players in the market.”

On the government side, plans for refining bauxite are being discussed, understanding the importance of adding value to Ghana’s natural resources. in December 2017, at the African roundtable on mobilising support and accelerating the implementation of the Sustainable Development Goals (SDGs), Vice President Bawumia spoke of the moves to establish a bauxite refinery “Our goal is to have an aluminium refinery in Ghana possibly by 2019…There is a clear goal that the President has set…

We already have an aluminium smelter and a bauxite mine; we just need a refinery, and then we will see value addition to our minerals”. Ghana is finally ready to refine its gold and other metals.

Ghana - Oil and Gas

New majors on the block Ghana is assuming a central place on the world’s energy map and is well on the way to becoming sub-Saharan Africa’s fourth-largest producer of hydrocarbons.

While smaller companies such as London-based Tullow Oil and private equity-backed Kosmos Energy made the initial breakthroughs, it is now global giants such as ExxonMobil, the world’s largest International Oil Company (IOC), and Italian major ENI who are leading Ghana’s charge up the oil and gas rankings.

In January 2018, ExxonMobil signed a Petroleum Agreement with GNPC and the Government of Ghana for a deepwater E&P block not far from the 1.2 billion barrel Jubilee field that Tullow and Kosmos discovered back in 2007.

Dr Kofi Koduah Sarpong, CEO at the Ghana National Petroleum Corporation (GNPC), the country’s national oil company, says that Ghana is no more a frontier oil province adding “Our petroleum basins, particularly the Western Basin has been de-risked. We worked with Tullow, Kosmos, ENI, Hess and others to find oil and gas. This, together with the development and production of three fields in quick succession, brought confidence and we are now witnessing the arrival of the majors like ExxonMobil, BP, CNOOC etc.” To add to the proven track record Dr. Sarpong

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positive ruling on the maritime boundary dispute, the company is opening a new offshore drilling campaign in its operational areas.

Ghana’s Energy Minister, Boakye Agyarko, says that the country is committed to supporting aggressive exploration and development and to putting more blocks out to competitive tender.

“We believe that we still have abundant reserves of hydrocarbons to be exploited,” the Minister for Energy, Boakye Agyarko forecasts. “We anticipate heightened activity in the coming years from both existing and potential projects, in line with the Government’s strategic vision of building an industrialized nation powered by a robust energy sector.”

We believe that if we properly manage our resources, such as oil and gas, then we should be able to go beyond aid and depend only on our own resources and our trade.”

Dr. Mahamudu Bawumia Vice-President of Ghana

stated there has been a high exploration success rate over the last decade which stands at about 70%. “Following from Jubilee, an additional 23 discoveries were made in that Basin from which two additional fields – TEN and Sankofa-Gye Nyame – have been brought on stream. Field development by Hess is expected to commence this year.”

According to Sarpong, the resurgence of interest from major oil companies in the country is not only the result of a revival of global crude prices. More local factors are also at work. Notably, the peaceful resolution of the maritime boundary dispute between Ghana and neighbour Côte d’Ivoire, following a ruling by the UN’s International Tribunal of the Law of the Sea (ITLOS) in September removed a shadow that was hanging over the Western basin.

ExxonMobil’s decision to invest in the Ghanaian offshore comes fast on the heels of the start of production at ENI’s 770 million barrels Offshore Cape Three Points (OCTP) /the Sankofa field.

“The fact that Ghana enjoyed another successful, peaceful and transparent transition of government, which is not something you take for granted in Africa, is very important,” adds Myles Bouvier-Baird, the managing director of Puma Energy, the Singapore-based midstream and downstream company. “The transition has strengthened the view that Ghana is quite advanced in terms of its approach to governance. It has instilled confidence in investors.”

Those initial investors in the Ghanaian offshore also remain very active in their fields. The Ghanaian Government has approved Tullow’s development plan for Jubilee, which will increase production and commercial reserves. In 2016, Tullow began production from the Tweneboa-Enyenra-Ntomme (TEN) fields just to the west of Jubilee, with output reaching around 50,000 bpd last year. This February, following the

The Offshore Activity Map (www.petrocom.gov.gh/maps)

Fuelling economic growth The benefits of the oil boom in Ghana extend well beyond the offshore. In the upstream sector, GNPC has ambitious plans to open up the country’s vast onshore basin, the Voltaian Basin, to exploration and production. “Covering 40% of the total landmass of this country, this could be a game-changer with a huge impact on the industry and on Ghana’s national development,” Dr. Sarpong says.

Production of all of ENI’s offshore gas fields will be used entirely

by Ghana’s domestic power market. Construction of the onshore facility for receiving gas and of the pipelines is already proceeding rapidly. Furthermore, in 2017 the GNPC signed a 12-year agreement with a consortium led by Russian natural gas Gazprom for the supply of Liquefied Natural Gas (LNG).

Dr. Sarpong spoke of the investments beyond power into petrochemicals enabling Ghana to diversify its economy, create new sources of export revenue, and create thousands of job opportunities for the country’s young and growing population.

Ultimately, says Mahamudu Bawumia, Ghana’s Vice-President, it is the energy sector that holds the key to fulfilling President Nana Akufo-Addo’’s vision of a “Ghana Beyond Aid.” “We believe that if we properly manage our resources, such as oil and gas, then we should be able to go beyond aid and depend only on our own resources and our trade.”