Ghana Archives - African Financial & Economic Data

08 May

High African Yields Raise Debt-Service Cost Concern, AfDB Says

Some African countries are overpaying for dollar bonds, raising concern about debt-service costs at a time when currencies are weakening against the greenback, according to the African Development Bank.

High interest rates make the continent’s bonds attractive to investors despite questions about the true extent of the debt loads of countries such as Zambia and the Republic of Congo.

“Raising a 30-year bond at a yield of 950 basis points — that’s very high,” AfDB President Akinwumi Adesina said in an interview in Johannesburg on Monday. Angola last week raised $1.25 billion selling a Eurobond due in 2048 at 9.375 percent.

Dollar bonds sold by African governments now yield 6.91 percent on average, compared with 5.66 percent in early January, Standard Bank Group Ltd. Indexes show. That compares with 6 percent for emerging markets generally.

African and emerging-market Eurobonds have sold off heavily in the last three weeks as the dollar strengthens and U.S. rates rise.

African nations have sold $18.3 billion of euro and dollar-denominated debt so far in 2018, already beating full-year records. Nigeria, Kenya, Senegal, Egypt and Angola have all issued 30-year tranches. Ghana is planning to sell as much as $2.5 billion of Eurobonds in 2018 and South Africa $3 billion.

The region’s average government debt ratio had increased about 20 percentage points in the past six years to 53 percent of GDP, according to Fitch Ratings Ltd. Still, public debt in Africa is far from crisis level, Adesina said.

Some nations will be better off selling local-currency bonds rather than take up foreign-denominated obligations, he said. That’s to avoid a currency mismatch, where the assets a government invests in generate income in local currency while the debt has to be repaid in a foreign denomination.

“If you have weak exchange rate, it means that you’re going to use a lot of your money to service your debt,” he said.

Nigeria announced plans last year to sell $5.5 billion of dollar-denominated securities, most of which would be to refinance existing domestic debt and reduce servicing costs.

To read the full article, click here.

15 Mar

Ghana Cocoa Board Former CEO Charged for Causing Losses to State

The former chief executive officer of Ghana Cocoa Board, Stephen Opuni, has been charged for causing financial losses to the state during his tenure as head of the regulator, according to a justice ministry official.

The charges against Opuni, who was fired by President Nana Akufo-Addo in January 2017, were laid Wednesday at the High Court in Accra, the capital, Joseph Addo, a spokesman for the office of the attorney-general and the justice ministry, said by phone.

Several calls for comment to the mobile phone of Opuni didn’t go through.

Opuni allegedly agreed deals of 217 million cedis ($50 million) for the delivery of fertilizers from 2014 to 2016 with suppliers which he knew wouldn’t have been able to fulfill their contracts, Accra-based broadcaster Joy FM reported on its website, citing court papers that were signed by Chief State Attorney Evelyn Keelson on March 12.

Opuni also allegedly took an illicit payment of 25,000 cedis from one of the suppliers in October 2014, Joy FM reported.

Justice authorities brought the charges “because they believed there were infractions in the award of contracts during Opuni’s tenure,” Fiifi Boafo, a special assistant to current Ghana Cocoa Board CEO Joseph Boahen Aidoo, said in a broadcast on Citi FM.

The charges follow as the year-old administration of Akufo-Addo’s New Patriotic Party pledged to crack down on graft and hold public officials to account for the management of state funds during their tenure.

Opuni was appointed in 2013 by former President John Mahama of the National Democratic Congress.

The NDC said Wednesday that the charges against Opuni were made up, according to Joy FM. Ghana is the world’s biggest cocoa producer after neighboring Ivory Coast.

Source: https://www.bloomberg.com/news/articles/2018-03-14/ghana-cocoa-board-former-ceo-charged-for-causing-losses-to-state

09 Mar

Ghana Wants to Shake Up the Way It Collects Taxes

Ghana wants to shake up the way it collects tax with the International Monetary Fund telling the government that it’s not raising sufficient income.

The West African nation needs to increase revenue as it plans to raise spending and reduce debts, which the IMF said to remain at risk of distress.

At the same time, Ghana is finalizing a $1-billion bailout program it entered with the Washington-based lender in April 2015 and has to meet targets for fiscal consolidation after years of chronic overspending.

Ghana should pursue its fiscal goals by raising collections as spending on fixed investments, such as infrastructure, are already too low, according to the IMF.

More than two-thirds of businesses in the nation are in the informal sector and will be brought into the tax net, said Kwasi Bobie-Ansa, an acting assistant commissioner at the Ghana Revenue Authority.

“Ghana does not necessarily need to legislate new taxes, but must find ways of widening the net,” Edem Harrison, a research analyst at Frontline Capital Advisors in Accra, the capital, said by phone. “The government needs to block revenue leakages and stop the wastage at revenue collection points, such as the ports.”

Ghana collected 27.4 billion cedis ($6.2 billion) in taxes in the first 11 months of last year, or the equivalent of 13.4 percent of the gross domestic product, against a target of 29.4 billion cedis, according to data from the finance ministry.

This compares with average tax collections as a percentage of GDP of 19.1 percent for 16 African countries in 2015, according to the Organization for Economic Co-Operation and Development.

Ghana needs tax revenue of at least 15 percent of the $45 billion economies, Joe Abbey, an economist at the Accra-based Centre for Policy Analysis, said by phone. This is the minimum requirement to meet the nation’s debt obligations and to avoid the need for the central bank to finance the budget, said Abbey.

To read the full article, click here.

23 Feb

Ghana Risks the Anger of 800,000 Cocoa Farmers

The government of President Nana Akufo-Addo in Ghana will struggle to sidestep one of its most difficult decisions since coming to power a year ago: telling a crucial constituency to accept a pay cut.

The New Patriotic Party-led government has little choice but to end subsidies for its 800,000 farmers that will likely cost almost $450 million this season.

Ghana Cocoa Board, the industry regulator in the world’s second-biggest producer, is running out of cash with few options for funding left other than to sell short-term debt to local investors at rates as high as 22 percent.

Justifying a decision to end the support will be tricky. The NPP swept to power in the December 2016 polls after pledging to invest in farms and increase prices.

Farmers are unimpressed with the prospect of the government going back on its promises even though international prices have slumped by more than a third since the middle of 2016.

“If the government cannot afford to pay for its own loose talking, then it must borrow,” said Michael Acheampong, 37, a cocoa farmer in Kwabeng, about 120 kilometers (75 miles) northwest of the capital, Accra. “To announce a cut after promising to help us is a sacrilegious crime. We will not accept that.”

Ghana has little room to support prices even if rising output from new oil fields are supporting an economic revival.

While the World Bank forecasts that the economy will expand by 8.3 percent in 2018, the fastest rate in Africa, the country remains bound by conditions for disciplined spending that are attached to an almost $1 billion bailout from the International Monetary Fund, agreed to in April 2015.

Ghana Cocoa Board is losing the equivalent of about $600 for every metric ton of the 850,000 tons that it plans to purchase this season until September, the regulator said earlier this month.

To read the full article, click here.

21 Feb

Cash-Rich Pension Funds in Ghana Drive World-Beating Stock Gains

A flood of money from private pension funds has driven a 33 percent surge in Ghana’s benchmark stock index this year, giving the West African country the world’s best-performing equities.

The government in December transferred 3.1 billion cedis ($690 million) to the funds, money the state had held since 2012 while the industry put structures in place for new entrants.

Seven months earlier, Ghana doubled the proportion of assets that pension funds can invest in stocks to 20 percent.

“We are seeing more participation from local institutional investors, especially the pension funds,” said Sena Agbo, head of investment banking at SAS Finance Group, which runs the country’s second-best performing mutual fund. “The temporary pensions account now transferred to them is enabling them to increase their take of stocks.”

The value of stocks traded by local investors increased almost five-fold from a year earlier last month, according to the Accra-based Central Securities Depository Ltd.

As of Tuesday, the 36-member Ghana Stock Exchange Composite Index had risen more than the 95 other benchmarks tracked by Bloomberg in dollar terms since Jan. 1, boosted by a World Bank forecast that the economy will expand by 8.3 percent in 2018, the fastest pace on the continent.

“The economy is growing and a lot of incentives like tax cuts and utility price decreases are out there to make businesses competitive,” Sidney Koranteng, a stock trader at Databank Group in Accra, said by phone. “It shows we’re in a period of a boom. The market is not hot yet.”

Source: https://www.bloomberg.com/news/articles/2018-02-21/cash-rich-pension-funds-in-ghana-drive-world-beating-stock-gains

05 Feb

Star of Africa in 2018 Lenders’ Economic Forecasts Is Ghana

Africa’s likely star economic performer this year isn’t in much doubt, according to all three of the international lenders focusing on the continent.

Ghana’s post-election upswing now is looking so strong that the country is poised to take the lead as Africa’s fastest-growing economy this year — for the first time in at least three decades.

Expansion in West Africa’s second-biggest economy in 2018 should surpass that of recent champions Ethiopia and Ivory Coast, according to forecasts from the World Bank, the African Development Bank — both released in the past month — and the International Monetary Fund.

Commodities including oil, gold and cocoa are the mainstay of the $43 billion economy and rising crude output is boosting the nation’s finances. But a year after the government of President Nana Akufo-Addo took power, fiscal credibility, a recovery in credit growth and expansion outside the resources industry mean that the country’s standing isn’t just the result of growth slowing in Ivory Coast and Ethiopia.

“Ghana has a more diversified economy than a lot of its African peers,” Capital Economics Ltd. economist John Ashbourne said by email. “Ghana is doing very well — this isn’t just a matter of being the last man standing.”

Oil Booms

Ghana’s growth booms and busts have been closely linked to crude since it became an oil producer in 2010, when Tullow Plc started the Jubilee field. Economic growth surged to 14.4 percent the following year, and slumped to less than 4 percent from 2014 to 2016 as oil prices dropped.

What Our Economists Say

“Ghana clearly is having an oil-fueled boom at the moment but non-oil growth is yet to pick up markedly. Its high debt-servicing cost will make it challenging to lift public capital investment despite a large infrastructure deficit compared to many peers.

Ghana is the world second-largest cocoa producer, lagging behind Ivory Coast, and produces the most gold on the continent after South Africa. The government is investing in agriculture and Akufo-Addo has pledged to set up factories in each of the nation’s 216 districts to diversify the economy.

To read the full article, click here.

13 Nov

African Economic Growth Rides on Wireless Rails

A telecommunications boom is lifting an industry and a continent.

In Kenya, hundreds of thousands of people are rising out of poverty as mobile-money services turn subsistence farmers into business people. A similar dynamic drives Ethiopia, the fastest-growing economy in Africa, where the gross domestic product is forecast to climb 8 percent in 2019. Borrowing costs in Ghana plummeted almost 2.5 percentage points during the past 12 months amid an unprecedented gain in GDP that’s been led by the growth of the telecom industry.

From the Atlantic to the Indian Ocean, hand-held phones are letting people become their own ATMs, increasing economic activity by enabling payments for food, travel, school and business. Wireless communication is driving economic growth in sub-Saharan Africa much as the railroad did in the 19th-century U.S., accounting for almost a tenth of global mobile subscribers and a growth rate that’s beating the world.

The transformation is reflected in the more than 1,300 publicly-traded companies that make up corporate Africa. The value of communications firms increased during the past five years to 25 percent of the total market capitalization of African companies, up from 16 percent, according to data compiled by Bloomberg. Materials and energy, the natural-resources benchmarks that defined the region since its colonial days, diminished to a combined 18 percent from 27 percent during the same period.

18 Aug

Quantum Global’s Africa Investment Index shows Ghana on the rebound

Ghana is the eighteenth-most attractive economy for investments flowing into the African continent, according to the latest Africa Investment Index (AII) compiled by Quantum Global’s independent research arm, Quantum Global Research Lab. In 2016, Ghana attracted a net foreign direct investment of US$3.5bn.

According to research by Quantum Global Research Lab (QGRL), Ghana’s economy has experienced strong and robust growth over the past decade, making its success a case worth emulating by its regional peers. Industry was the main driver of overall growth with an annual average growth of about 13%, followed by services with 8.4% and agriculture with about 8%. The strong growth record has fostered the country’s graduation to lower-middle-income status in 2010.

Commenting on the Ghanaian economy, Prof. Mthuli Ncube, head of Quantum Global Research Lab stated: “Ghana’s democratic attributes are as robust as its economic growth, and by improving policies and institutions, successive governments have been able to build an attractive business climate conducive to growth. These measures include reducing the number of days it takes to register a limited liability company and days spent on resolving commercial disputes in the courts. Furthermore, the election of a new government in 2016 has revitalised the drive for higher growth and infrastructure investment, all which augurs well for investment opportunities in the country.”

The research noted that whilst the economy continued to grow on a steady pace until 2013, the GDP growth slowed from 7% in 2013 to 3.6% in 2016 due to structural challenges – such as the on-going fiscal deficits pushing public debt to over 70% of GDP, trapping the country in a cycle of debt service and borrowing.

Furthermore, a three-year power crisis and power rationing slowed down the private sector’s productivity and competitiveness. In addition, the significant external sector deficit and low world prices for the country’s gold, cocoa and oil exports were a major factor behind the economic slowdown.

Ghana: Economy Among Africa’s Best

Ghana is the eighteenth-most attractive economy for investments flowing into the African continent, according to the latest Africa Investment Index (AII) compiled by Quantum Global’s independent research arm, Quantum Global Research Lab. In 2016, Ghana attracted a net foreign direct investment of US$3.5bn.

According to research by Quantum Global Research Lab (QGRL), Ghana’s economy has experienced strong and robust growth over the past decade, making its success a case worth emulating by its regional peers. Industry was the main driver of overall growth with an annual average growth of about 13%, followed by services with 8.4% and agriculture with about 8%. The strong growth record has fostered the country’s graduation to lower-middle-income status in 2010.

Commenting on the Ghanaian economy, Prof. Mthuli Ncube, head of Quantum Global Research Lab, stated: “Ghana’s democratic attributes are as robust as its economic growth, and by improving policies and institutions, successive governments have been able to build an attractive business climate conducive to growth. These measures include reducing the number of days it takes to register a limited liability company and days spent on resolving commercial disputes in the courts. Furthermore, the election of a new government in 2016 has revitalised the drive for higher growth and infrastructure investment, all which augurs well for investment opportunities in the country.”

The research noted that whilst the economy continued to grow on a steady pace until 2013, the GDP growth slowed from 7% in 2013 to 3.6% in 2016 due to structural challenges – such as the on-going fiscal deficits pushing public debt to over 70% of GDP, trapping the country in a cycle of debt service and borrowing.

Furthermore, a three-year power crisis and power rationing slowed down the private sector’s productivity and competitiveness. In addition, the significant external sector deficit and low world prices for the country’s gold, cocoa and oil exports were a major factor behind the economic slowdown.

According to the research, the financial sector in Ghana has undergone restructuring and transformation, and the supervisory framework is relatively strong. Bank credit to the private sector has increased, and capital markets are developing. The sector was rated as fairly developed by the 2014-2015 Global Competitiveness Report, with Ghana ranking 67th from 116th out of 148 countries.

According to the AII report, the top-five African investment destinations attracted an overall FDI of $13.6bn. Botswana was ranked the most attractive economy for investments flowing into the African continent followed by Morocco, Egypt, South Africa and Zambia.

Source from allAfrica

02 Aug

Mobile contributes $110bn to sub-Saharan economies

Sub-Saharan Africa is, and will continue to be, the fastest growing mobile market in the world, contributing $110bn to Sub-Saharan economy

By the end of the decade, there will be more than half a billion mobile subscribers in the region, up from 420 million at the end of 2016.

Among the growth drivers is the under-16 age group, which accounts for more than 40 percent of the population in many countries, and women, who are currently 17 percent less likely to have a mobile phone subscription than their male counterparts.

Mobile is now also a significant contributor to the sub-Saharan African economy. In 2016, mobile technologies and services generated $110bn of economic value, equivalent to 7.7 percent of regional GDP.

This figure is expected to grow to $142bn, or 8.6 percent of GDP, by 2020. The mobile ecosystem also employed about 3.5 million in the region last year, and contributed $13bn to the public sector through taxes.

Here are some of the key trends industry group GSMA has observed:

Transforming industries

Across Africa, mobile is transforming traditional industries and enabling innovative business models to deliver affordable and sustainable services.

Perhaps one of the best examples is mobile money, which has been critical in advancing financial inclusion over the last decade. There are now 140 live mobile money services in 39 countries in sub-Saharan Africa, accounting for nearly 280 million registered accounts.

Today, more than 40 percent of the adult population in seven countries – Gabon, Ghana, Kenya, Namibia, Tanzania, Uganda and Zimbabwe – use mobile money regularly.

Utilities are another area where mobile is driving innovation. Mobile-based, pay-as-you-go solar enables access to clean energy solutions, with entrepreneurs partnering with mobile operators to deliver the solution.

Growing by nearly 40,000 systems per month, there are now one million home systems installed globally. Some 95 per cent are in sub-Saharan Africa, impacting about 4.8 million people.

We see similar innovation in sectors such as healthcare, agriculture and others. This is just the beginning as we move forward in Africa’s digital age.

Fuelling economies

Local mobile operators have invested $37bn in their networks over the past five years, mainly to deploy new 3G/4G mobile broadband networks across the region.

Fuelled by growing access to mobile data services and smart devices, the local mobile ecosystem is flourishing, supported by investments from operators and others in mobile-focused start-ups and tech hubs.

Seventy-seven tech start-ups across the region raised almost $370m in funding in 2016, up 33 percent from the previous year.

However, this continued growth and investment is not a given. The mobile industry faces several challenges, such as high levels of taxation and outdated regulatory frameworks.

Positive collaboration is needed between governments and the mobile industry to enable innovation and extend connectivity to all.

Connecting everyone

Looking beyond the numbers, mobile is positively impacting African society and helping to achieve the UN Sustainable Development Goals (SDGs) in time for the 2030 deadline.

Mobile operators across Africa are working together to deploy mobile-enabled solutions to deliver key services such as health and education, increase women’s access to mobile, create employment opportunities and decrease poverty.

Of course, the mobile industry cannot solve the challenges of the SDGs alone – no one can. Governments, industry, humanitarian organisations and individuals must come together to build sustainable partnerships.

Having just visited Tanzania and witnessed much of this first-hand, I am struck again by the power of mobile to foster innovation, to fuel economies and to transform lives across Africa.

[Via thisisafricaonline]