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  1. 1. A M O N T H L Y M A G A Z I N E BUSINESS & FINANCE JAN - FEB 2011 / ISSUE 002 GH¢5.00 The ECO: A common currency fantasy? (page 41) Kweku Awotwi CEO, Volta River Authority Ellen Johnson Sirleaf President of Liberia Ghanas oil: Zero gas-flaring John Atta Mills President of Ghana to bring lower cost electricity to West Africa Yahya Jammeh President of The Gambia (page 15) Ernest Bai Koroma President of Sierra Leone Goodluck Jonathan The Ivorian Crisis President of Nigeria An economic gain for Ghana? (page 46)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
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  3. 3. GHANA BUSINESS & FINANCE JAN - FEB 2011 / ISSUE 002 Managing Editor Mark A. Kwateng Contents Special Reports Editor Evans Boah-Mensah Copy Editor Nana Spio-Garbrah Contributors Leader Emilie Norkor Kinkan Raphael Adeniran 5..... To collateralise or not to Fred Alipui collateralise -That is the question! Nana Robert Mensah The key debate in the Parliament of Director, Sales & Marketing Ghana late last year on whether or not Martino Kashif to use the countrys petro-carbon resources as collateral for loans has brought to the Deputy Manager, Marketing fore the possibility of exploring other Michel Kouassigan tradable national assets that could be securitised for the same purpose. Deputy Manager, Circulation & Subscriptions Energy: The role that Volta River Josiah Spio-Garbrah Authority (VRA), was going to Bulletins play as the anchor customer for Editorial Committee 8..... The economy this month gas. Page 15 Prof. Paul N. Buatsi Get updates on Ghanas new global Prof. Kwame Addo reform status, fresh economic policies Mr. Gaddy Laryea Dr. Ekwow Spio-Garbrah and other socio-economic trends. Mr. Ray de Bono Nana Robert Mensah 11..... Business & finance this month Mr. Fredrick Alipui Check out which companies are getting Ms. Susie Efua Kotoku listed on the Ghana Stock Exchange, Ms. Johanna Awotwi those announcing their final results Ms. Dede-Esi Amanor-Wilks as well as those getting back in business Dr. Stephen Ayidiya after a long break. Mr. Sam Fletcher Office Location: Ghana Business & Finance African Business Media Energy House No. 7, 15..... VRA positions Ghana as Lamb Street (Off Farrar Avenue) West Africas power hub Insurance: Time to deepen Adabraka, Accra insurance penetration in Ghana. Ghana The policy of zero gas-flaring in Ghanas Page 26 oil fields has brought into sharp focus the Mailing Address: strategic importance of the Volta River P.O. Box 0772, Osu, Accra, Ghana Authority to generate low cost electricity Tel: +233 302 240 786 for Ghana and the entire sub-region Fax: +233 302 240 783 through the West Africa Power Pool project. Banking 18..... Banks complete phase one of recapitalisation Branding, Layout & Design of the The first deadline for the phased “Ghana Business & Finance” magazine recapitalisation of Ghanas banks by Dmax Studios in Malta, EU. ( was reached December 31, 2010 and some banks may need to raise CEO & Art Director Property & real estate: Sold Ray de Bono additional capital urgently in order before even reaching completion. to meet the second phase deadline Page 22 of December 31, 2012. Senior Designer-in-Charge of Publication Sasha Vella Project Coordinator Shaun Caruana Studio Support Executive (in charge of GB&F Online) Jonathan Galea IT Strategy Director Uwe Schoenfeld Subscribe online at 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 JAN - FEB 2011 / ISSUE 002Contents Property & real estate GB&F Aviation22..... Bright prospects for housing 32..... Ghana Business & Finance 44..... New Accra route posts in Ghana magazine launched record success for Virgin Atlantic Investors have long discovered that if The launch ceremony of Ghanas first With recovery in sight for many global one can get an acre of land in a prime global business publication was aired businesses following the recent world location in Accra, and pay even live on Metro TV and attracted economic crisis, Virgin Atlantic shares US$ 500,000 to US$1 million for it, one the nations top-tier media audience. its remarkable success story in Ghana. can put up between 6-10 luxury condominiums and apartments. These apartments can cost an average of Telecom Politics US$ 100,000 for one or two bedrooms, and up to US$ 500,000 for 3-4 bedrooms 34..... Internet pioneers leave 46..... The impact of the Ivorian Crisis or penthouse suites and most are sold the playground to on Ghana even before they reach completion. the next generation The ongoing Ivorian constitutional- The early entrepreneurs who ventured political crisis that began after the into setting and providing residential November 28, 2010 presidential runoff Insurance internet services in Ghana have almost may have an impact on Ghana. all moved on to different sectors or to Considering that during the Ivorian26..... Micro-insurance takes more elaborate IT applications and civil war in 2004, the effect on Ghana centre stage systems. was positive as it diverted cargo shipment Following the rebasing of the Ghanas from ports in Côte dIvoire to Ghana, national accounts in November 2010 But did they choose to jump to better should the latter country be worried which disclosed that the service sector opportunities or they were pushed out that the current crisis might affect its had overtaken agriculture as the highest of the still lucrative internet services economic fortunes? contributor to the countrys Gross market? Domestic Product, the insurance regulator, believes it is time to deepen Stock market insurance penetration in Ghana. Manufacturing 51..... Ghanas Stock Market looks up Is the anticipated expansion in the 38..... Industrialists concerns about to a good 2011 insurance industry going to come from 2011 budget Activity on the Ghana Stock Exchange catering to the growing number of small Governments budget for the first year is expected to gather more momentum and medium scale businesses? of Ghanas oil economy, 2011, promised this year than it did last year, in the light to stimulate growth and create jobs for of both fundamental and technical signs the people, but not many local of bullishness analysts see in the market. ICT Investment industrialists seem to agree that the policies it contains are business and28..... Cape Coast ICT park project investor friendly. Mining gears up for take off Examples abound of cities around the 54..... Akwatia diamonds spark fresh world which have succeeded in using Ecowas investor interest technology to provide world-class The Eastern Regional town of Akwatia, facilities in electronics, precision 41..... The ECO: a common currency home of once worlds famous Ghana engineering and bio-technology to create phantasm or certainty? Consolidated Diamonds Limited (GCD) jobs for local entrepreneurs. The plan by the Economic Community and West Africas biggest industrial of West Africa States to have a common diamonds mining concern, could Can Ghana replicate this with the monetary union with a single currency spring with renewed life and vigour prospect of an ICT park that promises has been put forward several times, as the governments Divestiture to transform the countrys Central leaving business people, cross-border Implementation Committee is close Regional capital, Cape Coast, known traders and financial analysts sometimes, to identifying a technically and for its abundant slave trade relics, into wondering when the proverbial old financially capable investor to a knowledge capital? lady will finally shove off her stick. take over GCDs operations.4 GHANA BUSINESS & FINANCE
  5. 5. ENERGY VRA positions Ghana as West Africas power hub: with gas generation, the days of lower-cost electricity are expected As the first barrel of crude oil poured from the belly of Ghanas Jubilee field last December, attention was drawn to the massive natural gas potential associated with it and the role the state- run generator of electricity, the Volta River Authority (VRA), was going to play as the anchor customer for that gas.Kweku Awotwi, CEO of VRAT he policy of zero gas-flaring in Ghanas oil fields When the segment from Côte dIvoire to Togo is completed, has been hailed by many as the answer to a cheaper VRA can send a lot of electricity with very little loss across the source of electricity not just for Ghana but also sub-region. Where previously VRA sent electricity up to the north for the whole sub-region through the West Africa and ran it on a 161KV line and got a 4% loss, VRA now runs it Power Pool, a project which enables countries in on a 330KV line and the loss should be less than 2%. This means the sub-region with excess power to export to those when the new transmission lines are completed, electricity couldthat have shortfalls. "Ghana is very fortunate to be where it is in be sent all the way to Niger and Mali on a 330KV line with veryWest Africa. We are geographically in the centre of West Africa. little loss.Furthermore, we are on the coast and we are enjoying the benefitsof the almost completed West Africa gas pipeline which is a "The new line has already improved reliability of service. Whereasdemonstration of the kind of regional collaboration that we can previously the 161KV line could get over-loaded, now with thedo," Kweku Awotwi, CEO of VRA told GB&F in an exclusive 330KV we have extra reserve. Its like a road, the broader it is,interview. the more cars can go through," Awotwi explained."Nigerian gas is moving 400 miles to Ghana and we are getting "The next two lines will connect our western neighbours, from90% of that gas. Now Ghana has found gas in her own backyard Côte dIvoire to Sierra Leone, and beyond. It is the early days butwith the prospect of finding even more.” I think the hope is that within 10 years, all of West Africa will be inter-connected with transmission lines," he said.“Today, even at a fairly high price, gas is half the cost of what However, back home, the VRA is faced with daunting challengesVRA pays for crude oil. If VRAs crude bill was US$40 million of old infrastructure and insufficient funding for investment fromthis month, gas comes in at US$20 million. And if you consider government.that the crude oil bill alone constitutes 80% of the electricitytariff, then if the gas continues to come then we could generate "The fact of the matter is that a good chunk of our currentelectricity at a lower cost," Awotwi said. The first segment of the network, as much as 40% in some cases, is 40 years old. ThereWest Africa power pool inter-connection, called the Aboadze- is another good chunk which is 20 years old and here we are withVolta line, has just been activated. It is a 330 kilovolt (KV) line electricity demand growing annually at 10% or more and we havewhich was energised in the last quarter of 2010 to serve as a not kept pace. So what we have found is that, the ordinary mansupplementary line to the existing 161KV line which is what is on the street bears the brunt of this under-investment and pooravailable in Ghana. service," said Awotwi. GHANA BUSINESS & FINANCE 15
  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 I 001 N SUE & F& Finance magazine CE E 0 - IS BUS 201 IS E SF I N A N BE R DE CEM S& SN GH ¢5 .00 IN E S UE 001 NE 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 lu H W su thriceor32cuomiersts. s e (page H tsr zo.. on P price ) cu NC DECEM BER 2010 - ISSU E 001 E G H ¢5 .0 0 om the rice Telec on n a plus lus mea p 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... linge 46) Squeupscale magazine targeted principally to corporate ge n l Otr (pa Izinfgautowth? r ge (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: ent 2 oKwabsh es view if 2 if 0 m Grown oraron results (P Inte ca for med nabizwith interests in Ghana. (pagernationa 26) USA....... l Airlin ra: a: for Accs ca for Accrcca Airlines e A Mec nal Airlines tional UK..... ................$5 A Me na Financ th? H AF SOUT RN AFRIC .......R RICA.. A...R25 25 w us onlin .gha www 16) e at (page Follo .......... .......... .00 HE Internatio EURO 2,500 SOUT Inter 26) £3.00 PE CFA 500 THE FI AUSTRA ............... E4 LIA..... .00 CFA ...... e Min ZONE .............N K wabee anabizmed R ST BU iste .... A$ CFA ZO 25 .... ) (page 26.....CFA 2,500 SO at r AFRICA.........R RIA 7.50 NE..... e H E4.00 (pag ...... CFAEUN500 ................HERN AFRICA...R NIGE 25GB&F has assembled a cadre of top-notch researchers, analysts and writers - HANA onlinna SINES NIGER IA...... . 2,500 SOUT... 7.50 .... Fo G us sha Duffuor S REA ......N5 UTH AF 0 CFA ZONE ROPE SOUT . A$ AD INllow 00 ........... E4.0A.. ............... D IN ......$5.00 EUROPE....A.....HERNRIC50 .....NIGERIA...£3.00 AUSTRA SOUT .00 LIA ..R25 .$5 USA......... GHA S RE res vie ........ RALI .... A$7. AFRIC ................ ..............£ NA A 3.00 AUST .... IN GHAN INES ....A...R2 ........ USA.. ........5 on res ws UK........... AD Smany of whom already write for various specialised clients to tap into the brightest minds SINESS REFollo ST BU UK.... Gh BU THE FIRST THE F w us o IR u lt First ana’s (page s nline a t wwwof corporate Ghana, to research the micro and macroeconomic trends, themes, and technological 16) .ghan abizm Busi Globa edia.c omadvances that are prevalent in Ghana and globally, and to decipher how these phenomena translate 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
  7. 7. BANKING Banks complete Phase One of recapitalisation: Capital raising needed urgently for Phase Two The first deadline for the phased recapitalisation of Ghana’s banks was reached December 31, 2010 and the country’s banking industry regulator must be happy that so far all the banks have met their new capital targets. The Cedi House where the Ghana Stock Exchange (GSE) is housed. Some banks may use the GSE to raise funds to meet new capital targets T he on-going recapitalisation exercise of all 26 banks “We don’t have a difficulty as a bank in meeting the new capital in Ghana is set out in two phases and aims to targets. If you look at our audited financials for 2009, you will dramatically improve the core capital of the industry see that we have our stated capital at GH¢50 million already. from a previous minimum per bank of just So, all we need between now and 2012 is to top up with GH¢10 million to GH¢60 million (US$40 million). GH¢10 million. And we have a significant amount of funds in income surplus which we can transfer to our stated capital The first phase required that all majority locally-owned banks to satisfy the requirement,” Stephen Kpordzih, Managing achieve a minimum core capital of GH¢25 million Director of Agricultural Development Bank (ADB), told (US$16.6 million) by the end of 2010 and that all majority foreign- GB&F in an interview. owned banks raise theirs to GH¢60 million (US$40 million) by that time. In the latter case though, two foreign banks that opened “We have a three year programme to increase our capital (from their doors in 2008, BSIC Ghana and Bank of Baroda, have up profit retention) to GH¢100 million. And we intend to do that to the end of 2011 to recapitalise, having been given a special by transferring another GH¢50 million from our income dispensation by the Bank of Ghana. surplus account between now and 2012.” Kpordzih added. However, the other 10 foreign-controlled banks and the Of the local banks that still need to raise new capital, only 14 majority Ghanaian-owned ones have all met their respective two, HFC Bank and UT Bank, are already publicly listed. stipulated new capital targets. Ghana Commercial Bank, another Ghanaian-controlled bank, is also publicly listed but does not need to raise new capital Now though, comes the hard part. Over the next two years, the on account of the fact that it is one of the most heavily 14 Ghanaian-controlled banks will have to raise their own capital capitalised banks in the country with a capital base far base to GH¢60 million, to complete the second phase of the exceeding GH¢60 million. recapitalisation exercise and bring them at par with their foreign counterparts. However, some of the other 11 local banks would desperately need to look for ways to meet their new For many of the Ghanaian controlled banks which are small to capital targets to complete the second and final phase medium sized and that have only recently raised their capital to of the recapitalisation exercise. One of the most obvious GH¢25 million, this means having to more than double their ways to do this would be to seek listing on the Ghana Stock respective capital bases within a relatively short period. Exchange. 18 GHANA BUSINESS & FINANCE
  8. 8. 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 MediaHouse No. 7, Lamb Street (Off Farrar Avenue), Adabraka, Accra, Ghana T: + 233 302 240 786Mailing Address: F: + 233 302 240 783P.O. Box 0772, Osu, Accra, Ghana E:
  9. 9. PROPERTY & REAL ESTATE Bright prospects for housing in Ghana A casual drive through downtown Accra these days shows many luxury condominiums and apartments sprouting up. These apartments can cost an average of US$100,000 for one or two bedrooms, and up to US$500,000 for 3-4 bedrooms or penthouse suites. Most are sold even before they reach completion. Premium apartments are the preferred choice for expatriates and Ghanaian returnees from abroad D iscerning investors have long discovered that if In addition, the association wants tax exemptions on imported you can get an acre of land in a prime residential materials for construction. location in Accra, and pay between US$500,000 and US$1 million for it, you can sub-divide the Before government had time to consider GREDA’s proposal, property and build between 6-10 homes on it, the National Association of Graduate Teachers (NAGRAT) and sell the homes for a total of more than US$3- announced plans to build a housing project for its US$5 million, and make a tidy profit in less than two years. This members and has called on the government to grant it similar practice has placed excessive demand pressure on prime lands in concessions as requested by GREDA. Accra, and also increased the rents of ordinary people in most suburbs of Accra. Ghana’s upmarket housing sector continues If the government heeds calls by these groups, granting tax to grow quickly and keeps attracting more investment from both waivers and specific construction concessions, the floodgates local and foreign companies. The recent signing of a will open. Members of various labour unions and other entities US$10 billion housing deal between the government and the currently bear the brunt of exorbitant rent charges from South Korea-based real estate developer STX, is seen as the landlords who take advantage of the supply shortfall to charge needed catalyst to open up more business opportunities at the usurious fees for their heavily sought-after accommodations. lower end of the property market, for flats or apartments priced in the US$30,000 to US$60,000 range, and bring more vibrancy According to Kojo Addo-Kuffour, CEO of a local mortgage and growth to the housing sector. company, Ghana Home Loans, even if these new developments planned across the country came to fruition, they would hardly The government’s active involvement in the housing sector in meet the growing demand, a significant part of which comes 2010 has already started motivating the private sector to show from the increasing number of middle income earners in the interest. Some labour unions are considering putting their member country and Ghanaians resident abroad who are returning home dues into real estate investments. The Ghana Real Estate or want second homes in Ghana. Developers Association (GREDA) is planning a massive housing project and has asked government for some concessions. Various experts, including GREDA and the Ministry of Water Resources, Works and Housing, put annual demand for home GREDA wants the government to grant it a sovereign guarantee units at about 100,000 units. On the supply side, all efforts by for securing the funding to construct 300,000 units of housing developers put together hardly add up to 70,000 units annually estimated at a total cost of US$7 billion over the next decade. on average, leaving an annual shortfall of about 30,000 units. 22 GHANA BUSINESS & FINANCE