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GBF-Issue-3-Teaser

  1. 1. A M O N T H L Y M A G A Z I N E BUSINESS & FINANCE MARCH 2011 / ISSUE 003 GH¢5.00Bulk Oil StorageGhana’s new keyto gas-basedindustrialisation(page 26)New privatepensionsA better promisethan oil & gas? Ghana’s potent mining industry(page 18) Great output & values, but not seen in mining communities (page 15)USA.......................$5.00 EUROPE............... E4.00 CFA ZONE...... CFA 2,500 SOUTH AFRICA.........R25UK.........................£3.00 AUSTRALIA......... A$7.50 NIGERIA.................N500 SOUTHERN AFRICA...R25 THE FIRST BUSINESS READ IN GHANA Follow us online at www.ghanabizmedia.com
  2. 2. SIMPLIFYYOUR LIFEAn experience that begins the instantyou settle into your favourite chairImagine your living space as the best cinema in the world. Imagine having every kind ofentertainment experience available at the touch of a button. Imagine it all done exactlyas you want it, to your exact specifications and with both installationand operation made as unobtrusive as possible.Bang & Olufsen Ghana Ltd., F893/2 Ring Road East, Danquah Circle Osu- AccraPhone: 0233 0302 785757 Fax: 0233 0302 776271 Mobile: 0233 020 2022 668accra.ghan@beostores.com westonegh@gmail.com www.bang-olufsen.com
  3. 3. GHANA BUSINESS & FINANCE MARCH 2011 / ISSUE 003 Managing Editor Mark A. Kwateng makwateng@ghanabizmedia.com Contents Special Reports Editor Evans Boah-Mensah ebmensah@ghanabizmedia.com Copy Editor Nana Spio-Garbrah nspio-garbrah@ghanabizmedia.com Contributors Leader Emilie Norkor Kinkan Raphael Adeniran 5..... Lessons for Ghana from Tunisia’s Fred Alipui Jasmine Revolution Nana Robert Mensah Despite the seeming distance in culture, Director, Sales & Marketing geography and history between Sub- Martino Kashif Saharan Africa and the Middle East mkashif@ghanabizmedia.com and North African region, the popular revolts in Tunisia and Egypt begs an Deputy Manager, Marketing examination of the lessons that other Michel Kouassigan mkouassigan@ghanabizmedia.com countries can draw. Deputy Manager, Circulation & Subscriptions Mining: Too late to count on Josiah Spio-Garbrah mining as a catalyst? Page 15 jspio-garbrah@ghanabizmedia.com Bulletins Editorial Committee 8..... The economy this month Prof. Paul N. Buatsi Check out developments in various Prof. Kwame Addo sectors of the economy and what is up Mr. Gaddy Laryea and coming. Dr. Ekwow Spio-Garbrah Mr. Ray de Bono Nana Robert Mensah 11..... Business & finance this month Mr. Fredrick Alipui Take a look at up-coming events in Ms. Susie Efua Kotoku corporate Ghana, business acquisitions Ms. Johanna Awotwi and partnerships as well as product Ms. Dede-Esi Amanor-Wilks and service launches. Dr. Stephen Ayidiya Mr. Sam Fletcher Office Location: Mining Energy: BOST - the logistics Ghana Business & Finance centre for Ghana’s gas-based African Business Media 15..... In pursuit of economic industrialisation. Page 26 House No. 7, independence: Too late to count Lamb Street (Off Farrar Avenue) on mining as a catalyst? Adabraka, Accra The high local expectation that Ghana’s Ghana oil can serve as a major catalyst for rapid Mailing Address: economic transformation seems to be P.O. Box 0772, Osu, Accra, Ghana informed by the apparent failure of Tel: +233 302 240 786 the country to harness the full benefits Fax: +233 302 240 783 of gold mining. editor@ghanabizmedia.com adverts@ghanabizmedia.com subscriptions@ghanabizmedia.com Pensions info@ghanabizmedia.com 18..... New pension law to mobilise major funds, improve retirements of Ghanaians Under a new pension regime, many self-employed people operating Branding, Layout & Design of the in the informal sector, just like “Ghana Business & Finance” magazine by Dmax Studios in Malta, EU. (www.dmax.tv) their formal sector counterparts Telecom: Time for telcos can look forward to a more to earn their money. Page 30 CEO & Art Director secure retirement. Ray de Bono ceo@dmax.tv Senior Designer-in-Charge of Publication Sasha Vella Studio Support Executive (in charge of GB&F Online) Jonathan Galea IT Strategy Director Uwe Schoenfeld Subscribe online at www.ghanabizmedia.com or please refer to page 10 Contents continued overleafAll information contained within this magazine is the property of Ghana Business & Finance and is not to be used without written authorisation from GHANAthe publishers. Although every effort is made to ensure the correctness of information submitted for publication, the magazine may inadvertently containtechnical inaccuracies or typographical errors. Ghana Business & Finance assumes no responsibility for errors or omissions in this publication or otherdocuments that are referenced by or linked to this publication. BUSINESS & FINANCE 3
  4. 4. GHANA BUSINESS & FINANCE MARCH 2011 / ISSUE 003Contents Insurance Agriculture Trade22..... Provident Life Assurance: The 37..... Venture Capital Fund helps boost 51..... Welcome to the Ghana rice wars private pension scheme specialist local poultry, maize, sorghum The lack of government subsidy means One of the many companies which are and soya production Ghanaian farmers cannot afford to waiting anxiously to play a significant Ghana’s poultry industry, which used to invest in machinery such as combine- role in the second and third tiers of the be counted among the country’s major harvesters. Imported rice brands, new pension industry, Provident Life economic growth drivers two decades however, are heavily subsidised by Assurance, is already meeting the long ago, is gearing up for a comeback foreign governments, leading to term saving needs of workers. to economic significance. a "rice war" in Ghana. Energy Ecowas WACAM26..... BOST: the logistics centre 41..... Monetary Union for West Africa: 56..... Ghana’s Mining Sector: More harm for Ghana’s gas-based Great expectations from WAMI than good? industrialisation The question if and when the West Ghana has had a long history of From its original mandate of managing African region can enjoy a common mining, especially of gold and still Ghana’s strategic stocks of petroleum currency based on a monetary union US$2 a day is all that some have products, BOST is now expected to continues to exercise the minds to live on. spearhead the country’s gas-based of the region’s leaders. industrialisation. Financial Markets Taxation 58..... Ghana’s bonds gain as political Telecom 44..... Revenue authority balance act turbulence and inflation fears30..... Piloting mobile number portability: between reforms and increased grip global emerging markets Time for telcos to earn their money collection Ghana’s inflation rate continues to Telecom companies in Ghana are getting The Ghana Revenue Authority barely fall. With rising cocoa and gold prices, mixed feelings of apprehension and managed to meet its revenue target the Cedi is poised for a significant enthusiasm, as the test run of the proposed for last year but is determined to do appreciation in 2011, making the mobile number portability system begins. better this year on the back of reforms country’s bonds even more attractive and the new oil sector. to foreign investors. Banking34..... Ghana’s parastatals to benefit Economy from new funding options 47..... Uneasy road to economic freedom for infrastructure Ghana will find reason to celebrate her Given the fast pace in economic political freedom as the country marks growth and the potentially huge 54 years of independence on March 6th financing opportunities for but at the same time, the occasion will infrastructure development, call for sober reflection on why after Barclays, one of the nation’s oldest more than five decades of self-rule, and well capitalised banks, economic transformation and Pensions: New pension law to mobilise major funds, improve retirements... has started engaging government development seem to have eluded Page 18 and its parastatals. the country.4 GHANA BUSINESS & FINANCE
  5. 5. LEADERLessons for Ghanafrom Tunisia’s Jasmine RevolutionThe public demonstrations which culminated on January 14th in the departure of President Ben Ali of Tunisia putanother African country in a state of political insecurity. Despite the seeming distance in culture, geography and historybetween sub-Saharan Africa and the Middle East and North African (MENA) region, any activity of this magnitudeon the continent begs an examination of the lessons that other countries can draw.T he devil makes mischief for idle hands But Ghana is also likely to escape the Tunisian-style Jasmine revolution because of the high level of openness of the The revolution in Tunisia resulted from a single media, freedom of association and speech, active political parties, act of frustration by 26-year-old Mohamed and a relatively robust electoral system that is the envy of Bouaziz on December 17th, 2010. Although many other countries. he eventually died from his self-immolationinjuries and did not get to enjoy the end of 23 years of With the National Youth Policy just developed in August 2010,autocracy, his experience incited thousands of other newly assigned Education Minister, Mrs. Betty Mould-Iddrissu,unemployed but well-educated youth to take to the streets and will have to work closely with the Minister of Youth anddemand civil liberties and better economic conditions for the Employment, Mr. Enoch Tei Mensah to pay closer attentionfirst time since the mid-1980s. to ensuring that the educational curriculum churns out graduates that are more employable. Additionally, the two ministries willAn estimated 50% of Ghana’s population is aged between 14 also need to engage the private sector more effectively inand 35 years old. Nearly 900 public and private senior secondary creating more viable employment options for youngschools, 28 training colleges, 20 technical colleges and more graduates. The main lesson from Tunisia is that youth withthan 50 active public and private universities imply that a lot nothing to lose create an untenable economic environment.of young people in Ghana are increasingly becoming formally In particular, the two Ministries need to address the claims ineducated. But, the private sector has a tendency to criticize the 2010 Education Sector Performance report, that “theregraduates as being generally unprepared for the workplace. is also no analysis of labour market and economic needs toAlthough the ‘reaspora’ movement is filling that knowledge make curriculum much more relevant. Consequently, mostgap, it is also exacerbating the local youth unemployment issue. teachers interviewed are still not sure of the relevance of the curriculum and syllabus to labour market needs”. With aAccording to the online edition of the Ghanaian Chronicle, budget of just GH¢775,166 for the very vital Curriculum,Ghana’s formal sector is only able to produce about 5,000 Research and Development work of the Ghana Educationnew jobs a year, absorbing just 2% of graduates annually. Service for 2011, it is clear that private sector intervention inHowever, it is likely that government sources will offer this aspect of youth development is critical.significantly different and more positive data. Ghana’s NationalYouth Employment Programme (NYEP) has tried to addressthis issue since it was launched in 2006. Nearly 800,000 mostly “The only way even God dares to appear before a hungryyoung people have applied to participate in the programme man is in the form of food” - Mahatma Ghandito date and its 2011 budget allocation is GH¢16.79 million. The second biggest grievance of protesters in Tunis was theHowever, it has been marred with financial woes and its price of food, particularly bread. Despite the internationalsustainability has been questioned. Within its first two years food crisis of 2007, inflation when viewed holistically has notof operations, the NYEP owed the Agricultural Development been higher than 10% for most of Ben Ali’s period as President.Bank (ADB), GH¢17 million and had five months of unpaid Inflation in Ghana averaged over the last 5 years is 16.47%.allowances to beneficiaries. Its cumulative debt to ADB stood Even though the Finance Minister and the Central Bank mustat GH¢23 million in 2009. be lauded for their successes in reducing the inflation rate, one should not forget that inflation represents the rate atThe newly proposed National Youth Employment Bill aims which general price levels increase. A reduction in inflationto counteract these funding challenges by providing an trends does not mean that prices are not still too high ininstrument to which funds due to the NYEP will be sequestered relative terms. In September 2010, the advocacy group, Foodfrom accredited funding institutions and also by dedicating Security Ghana, published an article which stated that “the60% of the Communication Service Tax to the programme. issue of food insecurity and high cost of food has compelled people to spend about 70% of their income on food alone,Despite these efforts, the NYEP has been criticised for having rather than on education, health and miscellaneous things.”modules that are too broad and not necessarily strategically Given the state of rage that ensued over the high costs of ricealigned to the development agenda of the country. But the imports into Ghana, this is a hot topic for most Ghanaiansprogramme has responded already by eliminating certain as well.modules in favour of those that promote entrepreneurism.Ghana, so far, seems to have successfully avoided the kinds The FAO Food Outlook report of November 2010 reportsof socio-political tensions that could rise to the level of Tunisia that “following a series of unexpected downward revisions topartly because of its quite large informal sector, which accounts crop forecasts in several major producing countries, worldfor an estimated 70% of all employment in Ghana prices have risen alarmingly and at a much faster pace than inand has led to the establishment by government of a National 2007/08. Food Security Ghana published comments fromCommittee on the Informal Economy (NCIE), aimed at World Bank Senior Economist, Robert Townsend, which readproviding a policy and operational oversight of this inadequately “in West Africa, rice accounts for a much larger share of foodunderstood sub-sector. consumption than in Eastern and Southern Africa. GHANA BUSINESS & FINANCE 5
  6. 6. E NSUBSCRIPTION FORM I Z A G A E A I N M Z A M G Y A O M L Y N L T T H HGhana Business N T H O L M N Y A CE O M M A AN G A A 5 .0 0 Z GH¢ IN 1 I E 00 N ISSU & F& Finance magazine CE E BUS 0 - 201 IS E SF I N A N M BER ECE S& D SN S GH ¢5 .00 UE 001 NE IN E 2010 - ISS B U SPLIocoming S & DE CEMBER U Sri e War B on the FINASubscribe Today! ing Ho Loom wnlecom pricerizon Te ar g m i ld Price om ouizon an a pcuts Lo Wto conar e n H W su on thriceor32cuomiecrsts. lus Pe (page H tsr zo.. NC DECEM BER 2010 - ISSU E 001 E G H ¢5 .0 0 he plus lus om price ) rice u Telec on t n a p mea wouldTelecom ean a p Local . ... ers.. to consum ld mversu F ou onsumers sAN AFRICAN BUSINESS MEDIA PUBLICATION (page 32)oreig w The Cge 32)n Exp to c Pra l vesultancy ertise (paon us s Locactise rsapeerisu ertise ling dilel v rt s e (pageersL nc. ign .. mma x c Fore46nsooExcygn Eanpy ) ultan i The Co Fore nsultGhana Business & Finance (GB&F) is a unique a emm o a Practise dil e Ctise dilem m Out ezing r Th rs ... ion o linge46) onPrac rs on... ge 46) lin ge Squeupscale magazine targeted principally to corporate (page n l Otr Izinfgautowth? r (pa Hope Squeedecision-makers and policy-makers based G r inisu o a InflationthwaanbceenMeDsuvffieors of Betterpe e te op r Oil Pricesetter H Bette es e Ho w K ?rsharon reswlts Finin Ghana, as well as to international institutions, of B r c How will Ghana cope ices oe Pri a cop ls? f if 2011 oil price falls? na cop ?il Ghance fal Oil Pl Gha e falls will l pri 54) O Squee Gro Ministe u e 16) Inflati zinnancua Duffuors (Page 54) (pagmultinational companies and investors wil pric w oi e Accr How 11 oil age 54) Ho 011 (Pag Fi g Oe A Mec a: abent 2 oKw sh es view 0 if 2 if om Grown oraron results (P dia.c Inte ca for izme anabwith interests in Ghana. (pagernationa 26) USA....... Accs ca for Accrcc:a for Airlines l Airlin ra: e a A Mec nal Airlines tional UK..... ................$5 A Me na Financ th? H AF SOUT RN AFRIC .......R RICA.. A...R25 25 w us onlin w.gh t wwge 16) e a (pa Follo .......... .......... .00 HE ternatio EURO 2,500 SOUT r 6) £3.00 PE CFA 500 THE FI In 26) AUSTRA ............... E4 Inte 2 LIA..... .00 ZONE ...... K wabee CFA 25 ............ e Min .....N anabizmed ia.com RS iste .... CFA T BUS at www.gh r A$7.5 0 NIG ZONE...... CFA AFRICA.........R RIA (page .......... 2,500 SO e H E4.00 (pag ...... CFAEUN500 ............ HERN AFRICA...R NIGE 25GB&F has assembled a cadre of top-notch researchers, analysts and writers - ANA onlinna 2,500 SOUT... 7.50 INESS ERIA. Fo G w us sha Duffuor IN H UTH AF 0 CFA ZONE PE SOUT . A$ READ ......$5.00......N500PE................RNRIC50 .....NIGERIA.................AURO RALIA........ ... E4.0 IN 3.00 EURO RALIA.....HE A$7. RICA...R2.........$53.00 ST EAD llo SOUT A.. .00 USA......... GHA ..R ........ ..............£ NA AUST AF ........ 25 .... ........ ........ IN GH USA.. ........5 .£ ANA INESS R res vie on res ws UK........... READ USmany of whom already write for various specialised clients to tap into the brightest minds BUSINESS FollowT B UK THE FIRST THE F us onli IRS Gh ult First ana’s ne at w (page s ww.ghof corporate Ghana, to research the micro and macroeconomic trends, themes, and technological 16) anabiz mediaadvances that are prevalent in Ghana and globally, and to decipher how these phenomena translate .com Busi Globa ness linto the investment and transactional decision-making processes of the Ghanaian corporate environment. ReadGB&F’s uniqueness lies in its attractive format, its superior analytic content and its high-quality presentation.GB&F provides insights based on sectorial themes, focusing on banking and financial services, oil & gas, telecommunications, manufacturing,forest and wood products, agriculture and agri-business, the cocoa industry, tourism and hospitality, property development and real estate,transportation, healthcare, and the business dimensions of the beauty, fashion, entertainment, leisure and sports industries.You can subscribe to GB&F by filling in the form below.Subscription is either for 6 months (6 issues) or 12 months (12 issues). 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Than you! k• 12 months Subscription rate: Ghana - GH¢52, USA - $45, UK - £28, Europe - s36, Other African Countries - US$36 (equivalent) 3 Also applies to orders of past copies.For advertisement, subscription and/or general enquiries, contact:Office Location Tel: +233 302 240 786Ghana Business & Finance Fax: +233 302 240 783African Business Media Email: editor@ghanabizmedia.comHouse No. 7, Lamb Street (Off Farrar Avenue), Adabraka, Accra, Ghana advert@ghanabizmedia.comMailing Address: subscription@ghanabizmedia.comP.O. Box 0772, Osu, Accra, Ghana info@ghanabizmedia.com www.ghanabizmedia.com
  7. 7. MININGIn pursuit of economic independence:Too late to count on mining as a catalyst?The refrain in Ghana about promoting local content has not changed,five months after the production of the country’s first oil and four yearsafter the discovery of the natural resource.T he high local expectation that Ghana’s oil can serve According to Dr. Aryee, all the pipes that are used in the mines as a major catalyst for rapid economic transformation as well as huge volumes of cement are produced by local seems to be informed by the apparent failure of manufacturers such as Interplast, Duraplast and Ghacem. the country to harness the full benefits of other equally high-end natural resources such as gold and She said other Ghanaian-owned major mining contractors, diamonds. such as Engineers and Planners and Drill Masters control a fair share of the market and can hold their own againstIt is believed that if the country had promoted local content in established competitors like African Mining Services, an Australianher century-old mining sector, the country’s economy would have company. In spite of what the Chamber considers as gains in theseen a much swifter economic transformation and marked sector, many who argue the industry has not done much toimprovement in the living standards of the people. improve the standard of living in mining communities cite the deprived conditions in mining towns like Obuasi and Tarkwa.“The Chamber has been at the forefront of the promotion oflocal content in the country over the years,” Dr. Joyce Aryee, “People say Obuasi is ugly but without the mines there will beCEO of Ghana Chamber of Mines, told GB&F in an exclusive nothing there. And its ugliness has nothing to do with the mine.interview. It has everything to do with our own concept of building a town or a city. Obuasi will never become“The way I understand local content is that a nation will make a Johannesburg unless we plan forsure that as far as possible a lot of jobs can be done by Ghanaians it. We will never become anand a lot of services can be provided by Ghanaian companies. Australia unless we plan for it.Currently, expatriate employees in the mining sector constitute will never become a San Franciscoonly 2% and the rest are all Ghanaians. There are a lot of which is a financial centre thatGhanaian companies that supply inputs to the mining industry. also was established on the backGoods such as explosives, lime, grinding balls and heat exchangers of mining, unless we plan for it.are procured locally. A 100% owned Ghanaian company like Most of our structures for planningHufra-Tech uses high level technology to supply goods such as have totally broken down. Nobodyheat exchangers to the mining companies. In 2009, the industry thinks planning is an important partspent over US$1.1 billion out of the US$2.3 billion revenue of the development agenda.” she said.realised to procure local inputs,” she added. GHANA BUSINESS & FINANCE 15
  8. 8. PENSIONS New pension law to mobilise major funds, improve retirements of Ghanaians Until January 2010, only workers in the Ghanaian formal sector could count on the state’s paternalistic role of assuring them of a retirement income. Mr. Wilson Tei, Managing Director of Provident Life Assurance U nder the new pension regime, Ghanaian farmers, Furthermore, the new pension law also encourages workers to carpenters, taxi drivers and many other self-employed subscribe to voluntary privately managed third-tier pension people operating in the informal sector, just like schemes in addition to both the mandatory first-tier scheme their formal sector counterparts, can look forward managed solely by SSNIT and the second-tier schemes managed to a more secure retirement in view of the multiple by private fund managers. The third-tier schemes will mainly sources of potential retirement income the new make provision for privately managed provident funds and pension law offers. Unlike previously when retirees received both personal pension schemes that enables self-employed artisans, a lump sum payment and monthly pension payments from the traders, farmers and others operating in the informal economy state pension fund manager, Social Security and National Insurance to also prepare for a dignified retirement. Trust (SSNIT), the new pension law (National Pensions Act 766) now provides for a separation of these payments to the retiree “The new pension law also provides that up to 35% of a worker’s between SSNIT and other institutions. income, which is saved in pension schemes, not be subject to taxation,” said Dr. Francis Sapara-Grant, MD of SSNIT Informal “Previously all the funds (workers’ monthly contributions) went Sector Fund, in an exclusive interview with GB&F. He explains to SSNIT and generally people have been dissatisfied with the further: “In view of the tax incentives provided by the new performance of SSNIT. The attempt now is to ensure that part pension law, it is expected that workers will be motivated to of the money goes out to other fund managers to attempt to grow subscribe to the three-tier pension scheme in order to reap its the money better,” says Mr. Wilson Tei, Managing Director benefits fully. In the process, billions of cedis are expected to be of Provident Life Assurance, in an exclusive interview with GB&F. mobilised that can be invested in the long term.” Consequently, based on the new law, out of the total contribution Based on the prospects of huge sums of long-term funds, some of 18.5% of the basic salary that is supposed to be paid by analysts say the new pension regime would do a lot more employers on behalf of their employees to SSNIT, 5% is expected for Ghana’s economy than the new oil and gas industry. to be transferred by SSNIT to approved trustees for management “By its nature, pension funds are long-term funds that on the behalf of scheme members. The approved trustees, who would keep accumulating as long as contribution will compete for these funds, are subsequently required to manage mobilisations exceed benefit payments. Thus, where such these contributions and pay lump sum benefits to workers upon savings are invested primarily in the country, they become an attainment of the retirement age, in addition to the monthly ever-increasing source of development capital for the nation,” pensions to be paid by SSNIT to the pensioner. said Dr. Sapara-Grant. 18 GHANA BUSINESS & FINANCE
  9. 9. ADVERTISE IN GHANA BUSINESS & FINANCE Ghanas first global business read.GB&F reaches prestigious audiences across Ghanas public and private business and economicstrata: the Presidency, all ministers, CEOs of public corporations, agencies and institutions,members of Parliament, top bankers, insurance and financial services executives and more.GB&F is also distributed in hard copy to 20 countries, reaches foreign investors interested inGhana, Ghana’s missions abroad, foreign missions in Ghana, as well as the important GhanaianDiaspora. Through GB&F’s on-line platform on the Internet, your e-message also reaches thewhole world. It brings intelligent reporting through quality design backed by a top-notch editorialand management team.We believe in objectively exploring, promoting and discussing Ghana’s immense potentials -both inside Ghana itself, but also its ability to impact the rest of the business world.If you want to invest in cost-effective publicity, with Return on Investment,then GB&F is the only medium that helps you reach the audiences you aspire to.The magazine that gives you more!Download our Media Pack and publicity specifications from:www.ghanabizmedia.comContact our Sales Team at:Office Location:Ghana Business & Finance, African Business MediaP. O. Box 0772, Osu, Accra, House No. 7, Lamb Street off Farrar Avenue T: + 233 302 240 786Mailing Address: F: + 233 302 240 783P.O. Box 0772, Osu, Accra, Ghana E: info@ghanabizmedia.com
  10. 10. Ghana’s bonds gain as political turbulenceFINANCIAL MARKETS and inflation fears grip global emerging markets As expected, Nigeria on Friday January 21st launched its B+ 10-year $500mn Eurobond issue at 6.75% coupon rate. T he issue was successfully oversubscribed As a result, countries such as Kenya, Zambia and Nigeria, at 2.5 times however, due to growing worries who are all hoping to tap the debt markets, will likely be able about Nigeria’s fiscal management - especially to do so later in 2011. Of the three, the Nigerian and Zambian as it relates to government management of the issuances will be most problematic because they are indirectly excess crude oil account - the yields on the tied to the direction of commodity prices - copper for Zambia Nigerian issue at 7% were higher than Ghana’s and oil for Nigeria. Both commodities, despite their recent lower ‘B’ rated issue that is yielding only at 6.3% and Gabon’s price rises, are likely to face strong headwinds in 2011 as the 2017 Eurobond, rated one step higher by S&P, but yielding global financial system remains ensnared in a ‘liquidity trap’ at 5.32%. Nigerian Finance Minister Olusegun Aganga, who with bank intermediation channels clogged with bad loans is expected to step down in April after he likely wins a senate and toxic assets. Recent anti-inflationary measures by China seat in his home state of Edo, will have to answer to increasing will also impose a ceiling on global commodity prices in 2011. investor questions over the nation’s fiscal management. Conversely, Ghana’s inflation rate continues to fall and with In Egypt, Nigeria and Cape Verde, the expected ratings rising cocoa and gold prices, the Cedi is poised for a significant downgrades will be partly based on tensions surrounding their appreciation in 2011, making Ghana’s bonds even more respective national elections and the resulting political instability. attractive to foreign buyers. In Ghana, Uganda and South Africa, the likely ratings upgrades will reflect improving government revenues and stronger than Meanwhile, Nigeria’s growing budget deficit and worries over expected macroeconomic fundamentals. Ghana’s new oil fiscal management means that the Nigerian central bank’s revenues will bolster government coffers. In Ghana the passage program of defending the Naira at around N152/$1 may also of a much expected Oil Revenue Law will likely trigger an come under increased pressure as foreign exchange reserves S&P ratings upgrade. In Senegal, growing fear of inflation dwindle. If currently elevated global oil prices take a downward and the lack of political clarity over who will succeed President turn on renewed European financial worries, growing Chinese Abdoulaye Wade will likely trigger a ratings downgrade inflation worries and monetary tightening or a 2011 US fiscal sometime in 2011. austerity budget, worries over Nigeria’s government revenues and fiscal management will only deepen and push its Eurobond yields higher. Ghana’s yields are conversely expected to trend lower as foreign investors demand the issue and the price of the bonds rises. Ghana’s sovereign debt ratings will likely see an upgrade this year. On the back of accelerated GDP growth and falling inflation, many African countries with outstanding Eurobond debt issues will see a ratings upgrade in 2011. S&P Fitch Moodys Likely 2011 Actions Angola B+/Stable/B B+/B/Positive B1 Upgrade Benin B/Positive/B B/B/Stable No change Burkina Faso B/Stable/B No change Cameroon B/Stable/B B/B-/Stable No change Cape Verde B+/Negative/B B+/ BB-/Stable Downgrade on election risk / political instability Egypt BBB-/Stable/A-3 BB+/BBB-/Stable Ba1/Stable Downgrade on political instability Gabon BB-/Stable/B BB-/BB-/Stable No change Ghana B/Stable/B B+/B+ Upgrade improving macro, revenue outlook Kenya B+/Stable/B B No change Libya A-/Stable/A-2 B+/ BB-/Stable No change Morocco BBB+/Stable/A-2 BBB-/BBB/Stable Ba1/Stable No change Mozambique B+/Stable/B B/ B+/Stable No change Nigeria B+/Stable/B BB-/BB-/Negative Downgrade on election risk / political instability Senegal B+/Negative/ B Downgrade on surging inflation / President Wade re-election risk South Africa A+/Negative/A-1 BBB+/A/Negative A3/Stable Upgrade on falling oil prices, stabilising inflation outlook Tunisia A-/Stable/A-2 BBB/A-/Stable Baa2/Stable No change Uganda B+/Stable/B B/B Upgrade on relatively peaceful polls 58 GHANA BUSINESS & FINANCE

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