Thursday, May 13, 2010

British elections, losers and winners

• Gordon Brown holds Kirkcaldy and Cowdenbeath with a majority of 23,000 - up almost 5,000 on 2005. Returning to Downing Street, he says he is willing to hold discussions on the future shape of government with any party leader, with economic stability the top priority.

• David Cameron comfortably holds Witney, winning 58.8% of the vote on a 6.3% swing from the Lib Dems. He says it is clear that Labour has lost its mandate to govern, and plans to make a "big, open offer" to the Lib Dems about forming a strong, and stable government, but does not rule out a minority Tory administration. Former premier Sir John Major says offering the Lib Dems seats in Cabinet was "price worth paying".

• Liberal Democrat leader Nick Clegg increases his majority in Sheffield Hallam, but admits it has been a "disappointing night" for his party. He said the Conservatives have earned the right to try to form a government.


• The Electoral Commission announces a "thorough review" after hundreds of voters were turned away from polling stations and police called to deal with queues as the 2200 voting deadline passed. In Hackney, east London disgruntled voters stage a protest sit-in. Lib Dem leader Nick Clegg apologises to people at a polling station in his Sheffield Hallam constituency, who did not get a chance to vote.

• Overseas Britons also complain they have been denied the chance to vote.

Monday, December 01, 2008

review of the insurance sector

The review of the insurance sector in 2006, has brought some interesrting development in the insurance sector, bringing new insurance companies to the economy, Boahene Asamoah explains how new players would impact on the insurance sector.

THE Ghanaian industry is expected to get more exciting as new players storm the market taken over existing companies as a result of the oil find.
Some industry experts are already discussing issues rated to the capitalisation of the industry, the prospects of oil find and reshaping the industry especially the life business to attract more policy holders.
These new entrants have huge capital and assets as compared to the local operators
New entrants from especially neighbouring Nigeria have made their entry into the Ghanaian market already taking the initiative from their counterparts in the banking sector.
So far six major insurance companies have regisrtered their presence in the country. They are Capital Express Assurance Ghana Limited, which has bought controlling interest in Benefits Life Assurance Sector, while Regency Alliance Insurance Limited, another Nigerian firm has also bought controlling interest in Benefits Non-Life business.
Industrail and General Insurance (IGI) Ghana Limited, which is a subsidiary of IGI plc of Nigeria has bought controlling interesting in Network Assurance in both the Life and Non-Life businesses.
However, two other firms have set up their own operations in the country. They are the International Energy Insurance Company (IEI) and Equity Assurance Limited.
Others such as Zenith Bank plc, which has an insurance subsidiary are expected to also make inroads into the Ghanaian market.
Following the Insurance Law of 2006, Act 724, the separates the Life and Non-Life business of insurance companies and the raising of the minimum capital to $1 million for each of the buisnesses, the number of players have increased from 24 to 37.
Interestingly, the oil find has brought about new businesses in the country with some experts in the oil insurance underwriting becoming a new hot bed for the indurance industry.
Again, the general business climate in the country which has led to a construction boom presents some tremendous opportunities for insurance companies.
Over the past five years there has been a general increase in premium income. From 2002 to 2007 gross premium income for all businesses increased from GH¢47.2 million in 2002 to GH¢1.64 billion in 2006.
This represents a yearly average growth rate of 36.7 per cent.
Total gross premium for non life business however, increased by 270 per cent from GH¢38. 2 million in 2002 to GH¢141.5 million at the end of 2007.
For the life business gross premium increased from GH¢8.9 million in 2002 to GH¢68.6 million at the end of last year.
Analysts say the continous increased in growth in this sector is an indication of the increase in public awareness and confidence.
Over the past few years, there has been an emergence of new products that are tied to investments such as the funeral insurance, which has received a lot patronage.
However, some industry players still believe that a lot more attention needs to be given to the life business because of its spiral effects.
According to reports the life business of the insurance has the pontential to generate wealth for the industry and encourage investments as a whole in the insurance industry.
Looking at the premium income by class of business for the period between 2002 to 2006,
The Nigerian authorities on the 5th of September, 2005, announced the recapitalisation of Insurance and Reinsurance companies. The new minimum paid-up share capital, as announced, is as follows:
Class of Business, New Capital Base Life Insurance business 2 billion Naira, General Insurance Business 3 billion Naira, Reinsurance companies to 10 billion Naira.( would do the conversion)
It was also identified that the total market capitalization for the insurance industry then which stood about N34 billion spread among 103 direct insurers and 4 reinsurers.
Indeed this is the present situation in Ghana, at least four international banks in the country, with the new capitalisation requirement could take more than half the number of insurance companies in the country.
However some industry experts said it would not be prudent for Ghanaian insurance firms to recapitalise only to take advantage of the oil business, although the experts believe that recapiatlisation was neccessary.
The argument is that the oild business is a one risk business and that should all the insurance underwrite such a business in the likely event of a disaster, claims from such a disaster could wipe off the whole industry.
Experts say Ghanaian insurance firms must be encouraged to take some of the insurance, while spreading the risk with some international firms to safeguard the local industry.
While the economy present some opportunities for the insurance industry, the challenge is how best to educate the Ghanaian public on the need to take insurance policies for future occurences.

Zain implementing millenium villages

read by ssb
zain (fin)

Telecommunications giant Zain Ghana is implementing a mobile communications and internet connectivity to the Millennium Village of Bonsaaso in the Amansie West District in the Ashanti Region to help improve the living conditions of the inhabitants of this cluster of villages and lift them out of extreme poverty.
The project is being implemented through its partnership with Ericsson and the Earth Institute.
The project, after completion, would help the people to access health and education services through their mobile phones.
The initiative, which Zain, Ericsson and the Earth Institute first outlined in September 2007 at Columbia University in New York City, has already had a positive impact on health, education, social well-being and livelihoods in Dertu, Kenya
The villagers of Dertu, who are mainly pastorialists, can now access health and education services through their mobile phones.
Mobile communications have also helped them to identify safe sources of water, mobilise emergency transportation, find employment and get accurate information on the prices of goods and services before taking their livestock and other produce to the market.
For its customers, the benefits include improved access to health and education services, direct access to livestock and employment markets, and increased social contact with family, friends and the outside world.
The project has enabled villagers to be closer to their social network.
By putting the community in touch with and closer to their friends and family, it is integrating the village into the broader environment, which is all part of Zain's theme of creating a wonderful world.
The Dertu Millennium Village is located in north-eastern Kenya, a mainly rural and nomadic area approximately 140 km from the Kenya-Somali border.
Zain has a temporary network with a 20m, diesel-run tower that covers up to 20km and brings mobile communications, enabled by EDGE, to Dertu's estimated 5200 people.
Call volumes as of July 2008 increased by 30 per cent from June, with more than 1000 individual customers using the service so far. In June alone, 22,000 calls were placed.
By the end of 2008, a permanent “green” network will be up, with a 60m tower covering 50km. The permanent site will leverage renewable power sources and will reduce reliance on the diesel generator by up to 80 per cent.
For Zain, the benefits of supporting this cause include positive public relations, improved customer relations, closer community ties, positive stakeholder engagement, and additional marketing opportunities. In the long term, it's still a recipe for a profitable business.

Insurance Awards

THE First ever insurance awards has been launched in Accra with a call on the insurance companies to brace themselves up for challenges that comes with new businesses especially the oil find.
Speaking at the launching ceremony, the Executive Director of the Centre for Policy Analysis (CEPA), Dr Joe Abbey, stated that the oil presents opportunity for the insurance sector, however, he stated “to seize these opportunities, insurers will need to move up the value chain by providing innovative products, value-added services and holistic risk management.”
He said the increase in wealth and life expectancy would lead individuals to demand a range of wealth protection and health insurance, as well as property casualty coverage.
He said the economic growth, coupled with the higher usage of automobile in the country would give rise to new risks requiring insurance coverage from factory owners to cover property and casualty and to car owners that needed automobile insurance.
According to Dr Abbey, Ghana’s growing wealth and increasing sophistication of economic activities would lead to a sharp growth in the volume and complexity of risks adding that investors and individuals would be more conscious of managing these risks.
He said even as more complex insurance products were being introduced in the market, insurance intermediaries had a duty to ensure that consumers were only offered products they could understand and find suitable.
“Any undesirable sales practice such as churning and inappropriate switching will undermine the reputation of the insurance industry, with adverse consequence for its ability to attract good quality talent,” he said.
Dr Abbey said the industry faced important challenges in the current environment, but said the growth prospect for the industry was promising.
Giving an overview of the awards, the Head of Planning of the Ghana Insurance Awards, Mr Boahene Asamoah stated that 15 awards would given out best performing insurance companies.
He said the awards would be based on 2007 performance and stated as part of effforts to ensure transparency in the awards a technical committee has been set made up of all representatives of the methodology and approach.
He mentioned that the Institute of Social, Statistical and Economic Research (ISSER) has been contracted to undertake the survey and stattiscal analysis.
Mr Asamoah commended the media partners, which are Daily Graphic, Metro Television and Joy FM for the continued support of the awards.
Corporate Initiative Ghana (CIG), is a non for profit organisation aimed at ensure a high financial service delivery in the country.
The organisation has been organising the prestigeous Ghana Banking Awards over the past seven years.

Security and Excahange Commission

In spite of the bullish performance of the Ghana Stock Exchange, many analyst believe that the market capitalisation is too small to make any meaningful impact in attracting foreign capital. The way to go according to many analyst is to integrate with other regional markets, Boahene Asamoah explains.

THE Ghana Stock market has for the first half of this year adjudged as one the best performing stock markets in the world, with year-to-date yield far excess of 65 per cent as of last week.
But while such performance has widely been welcome as good news for investors on the Ghana bourse, many analyst believe that Ghana could not attract big time investors, because of the constraints of the small nature of the market.
According to Mr Nick Naezer, the First Counsellor and Acting Head of the Delegation, European Ghana, the Ghana bourse is shallow and illiquid and could on its own could not compete with other regional bourse in Europe for capital and investments.
“The solution is this situation is obviously regional integration”, according the Mr Naezer.
Analysts believe that there are greater benefits that comes with integration of the stock markets in Africa, the most prominent is to attract huge capital inflows especially from the major markets.
Integration of the capital markets could bring about economies of scale, increase liquidity and provide a larger pool of investment resources for national development.
African markets have shown to be more vibrant in terms of the yields over the past years, which has led to some foreign institutional investors looking at Africa with keen interest.
Over the past two years, some multi-national firms have made substantial investments in Africa, one of which is Renaissance Capital.
But the small capitalisation of the Ghana Stock market and many other African Stock markets, does not favour such big investments into Africa.
Although there are on-going talks to merge for instance the BRVM of Cote d’Iviore, the GSE and the Nigerian Stock market, the snail pace at which such talks were being done pre-supposes that the realisation of an integrated regional bourse would not be in sight sooner than expected.
However, analysts also believe that there are various dimensions of integration and it is difficult to isolate financial aspects from political, economic, commercial or monetary agendas.
“There is certainly a need to tailor the sequence of integration and the level of harmonisation, according to the progress evidenced in the other dimensions”, Mr Naezer explained.
There are currently about 20 stock markets in African and market watchers believe that the continent could learn lessons from regroups such as London, Paris, Brussels, Amsterdam and Lisbon stock markets.
Liquidity issues
The GSE, for instance has about 34 companies listed on the bourse with about 10 of these equities being actively traded in, leaving the rest with little or no movements in their share prices and or trades. The GSE has a market capitalisation of about GH¢18.004,79 million. (US$......)
The Nigeria stock market on the hand has a market cap of N Naira 9,957,879,491,625.42 (US$.............
The BRVM, which is a regional bourse for the Francophone countries in the sub-region has a market capitalisation 4,184,306,581,400 CFA (US$.......) and that the combined capitalisation of these markets has the potential to attract more foreign capital, improve liquidity and promote investments and development within the sub-region.
Some brokers have expressed their frustrations about the lack of liquidity on the Ghana market, which makes it virtually impossible to do transactions on the market.
Their frustrations step from that fact that many individual and some institutional investors were unwilling to trade their shares, hampering the smooth operations of the stock market.
Again, while the performances of many companies on the market could be described as fair, other equities performance however, could be described far from being fair.
Serious institutional investors view this lack of liquidity on the markets an unattractive for which, their investments could not be guaranteed.
However, a regional stock market could provide such liquidity for foreign investors to enter and exist the market at any time.

The existence of various currencies with the inherent issues of convertibility is major constraints towards the realisation of a regional market.
Again, the legal regimes within the West African region and Africa as a whole have restrictive rules to foreign investments and currency exchange.
There are also difference in standards for accounting and audits within the African continent or for that matter even within the region of West Africa, the absence of a weak cross-border dispute resolution mechanisms and infrastructure and communication issues such payment systems are some of the major challenges.

Lessons from Europe
It is imperative to know that the treaty that established the European Communities did not include formal obligation to secure free movement of capital.
However, 29 years later the first document in this regard was signed when preparing the Single European Act, which constituted the first drive towards establishing an European financial area.
Under this agreement, operations concerned by the progressive liberalisation of capital movements were classified in three categories, namely, capital operations, operations in financial market securities, and operations involving financial credits.
Under the capital operations, commercial credits or direct investments were linked to the exercise of the other fundamental freedoms of the common market such as free movement of goods and services, persons and establishment.
Under the operations in financial market securities it encouraged liberalisation of financial securities such as bonds or shares requiring a single financial market at European level, while the third level operations involving financial credits, mandates a liberalisation of operations involving financial credits and operations relating to money market instruments and necessary for the establishment of a unified financial system.
The European Union proposed two main phases for achieving the liberalisation of capital movements.
These are liberalisation of capital operation, and total freedom of capital movements.
Realising the need that not all members would be able to move at the same pace the EU made provisions to support such countries to overcome such constraints.
“Moreover it was considered that it was crucial for liberalisation to be parallel by provisions designed to ensure the cohesion and identity of the financial convertibility of European currencies”, according to Mr Naezer.
It was in this light that the Single European Act signed by member countries in 1987 placed the free movement of capital on the same footing as that of goods and services and which led to the adoption in June 1988 of a directive aimed at giving the single market its financial dimension.
The EU went through some processes, which culminated in the completion of a single market by the end of 1992, seven years later in 1999 that led to the introduction of the Euro on the markets.
Market participants and experts believed that while the EU model may not replicated wholly, however, the sub-region could draw lessons from this experience.

The realities are that the total value of the Ghana Stock Exchange for instance remains small compared to the Gross Domestic Product (GDP), while access to the banking system are limited to a large number of people.
Therefore, according to analysts, capital market must play greater role in the intermediation between savings, investments and economic growth.
The robust capital market the size of a regional bourse can constitute the avenue for raising medium to long term capital especially for local entrepreneurs.
But in spite of the advantages that such a bourse presents, there are a number of constraints that face the integration of a regional bourse.
The first that comes to mind is the lack of an appropriate safeguard that minimise the risk and minimise the benefits of a stock market to investors.
“It is necessary to improve market infrastructure, mainly the clearance settlement and depository systems,” an analyst stated.
Again there is the need for clear regulatory and legal framework, using transparent codes and standards. Regulatory authorities are responsible for making markets fair, efficient and safe and investors must be protected from fraud, abuse and risk insolvency.
Market watchers believe that the underlying economic structure are not conducive enough and the vulnerability to macro-economic shocks remains high, representing a major risk to especially foreign investors.
However, many experts are also worried that deeper financial integration will increase volatility in capital markets, encourage speculation and make economies of more vulnerable to external shocks, due to the herd instincts of investors and their focus on short-term profits.
Analyst point to the financial crises in South East Asia and Latin America and the current global turmoil as clues to the potential volatility of capital markets and of the necessity to regulate their development.
“Indeed risk can be managed and therefore, risks must be compared with the potential benefits that capital markets can bring”, an analyst stated.
Market watchers point to the need to diversify financial systems with banks and non-banks so as to enhance risk sharing for investors and borrowers and to channel more domestic and international capital for investments in the national economy.
This however should be done with the appropriate safeguards investors rights.

A new dawn blows at GSE

new dawn

A new dawn is blowing through the Ghana Stock Exchange as a result of the introduction of information technology to transform the operations of the GSE. Boahene Asamoah reviews how the IT platform would transform trading on the floor of the Ghana Stock Exchange.

“A New dawn” is how the General Manager of the Ghana Stock Exchange, Mr Ekwow Afedzi described the automation of the Ghana Stock Exchange which is scheduled to begin by the end of next month.
The $2.1 million automation of the Ghana Stock Exchange has long been anticipated and has for years been on the drawing board of the GSE.
However, since January this year, through the influence of the late Finance Minister, Mr Kwadwo Baah-Wiredu, funds was released by the government to facilitate the process of automation and to bring the GSE close to international practise.
The full implementation of the electronic platform is expected to start after approval has been granted by the Securities and Exchange Commission (SEC).
This involves web base trading and settlement as pertains elsewhere such the one would find in New York Stock Exchange or the London Stock Exchange.
Among some of the what is expected to happen is to link the automated platform to major Licences Dealing Members of the Ghana Stock Exchange and other major clients.
This is to ensure online transactions and cut down the present manual transactions on the market.
A visit to the stock exchange showed that all equipment’s and gadgets have been installed, whiles brokers and dealers are going through training.
Some of the features of the automation platform is the electronic trading and settlement that would do away with the physical transactions between brokers and their clients.
According to the GSE, a settlement guarantee fund would be established to facilitate trade and settlements between brokers and their clients.
Brokers are also expected to come out with credit lines to cover short falls during the course of trading.
Analyst believe that with the electronic platform trading and settlement was expected to improve from the current T+3 to T+1.
Again, a central depository has been established as part of the transformation being witnessed in the industry where share certificates would be
Many market watchers believe that the capitalisation of Licence Dealing Members (LDMs), which currently stands at GH¢100,000 was too low and does not make LDMs competitive in the sub-region.
According to the Managing Director of the Ghana Stock Exchange, Mr K.S. Yamoah, the automation is achieve to three main objectives, to move from the manual automation that would ensure efficiency, ensure online settlement and to establish an electronic depository.
Mr Amoah was of the view that automation of the Ghana bourse would place the market in pole position as talks of common trading platform within the sub-region was on-going.
The BRVM of Cote d’Ivoire and the Nigeria Stock markets have all been automated.
“Our manual trading was a disincentive to especially foreign investments firms who were looking towards West African and Ghana for that matter”, Mr Yamoah stated.
Analysts also point to the intention of other neighbouring countries such as Gambia and Sierra Leone who are planning to established their own bourses.
As part of efforts to get investors involved in the process, the GSE has embarked on sensitisation process to ensure that its partners buy into the online transactions and do away with the paper transactions.
A depository has been established and investors would encourage to migrate from the paper certificates of shares to an electronic depository.
The electronic platform therefore offers a seamless transaction from trading, settlement and depository shares.
The idea is to get every investor to get involved in the depository, which would ensure an efficient trade execution.
Among some of the innovations would be quarterly issued of statements from the depository to shareholders as well as SMS alerts to all shareholders.
Again the GSE is looking to companies coming to the market to make provisions in their prospectus to shareholders informing that shares would issued in electronic form.
Again shareholders would encourage to make voluntary share migration where their paper share certificates would be transferred to the depository.
The seamless transactions stem from the fact, shares can only be traded and settled once there are locked in at the depository.
Many investors believe the automated platform would even place the stock market in better light as the bourse is set to achieve another record feat this year.

Zain to compete on network quality

New mobile telecommunications giant Zain, is preparing the grounds for what many industry watchers think would be grand launching of its operations in Ghana within this last quarter. Boahene Asamoah interviews the CEO for Africa, Chris Gabriel on the prospects of Zain brand in the highly competitive mobile phone market and general market conditions.

ZAIN telecommunications, a global mobile operator says it has invested over half a billion dollars in its Ghana operations as the company gears up to launch its brand and product on the Ghana market sometime next month.
The company plans to invest additional $100 million in the Ghana operations next year as part of its commitment to increase its market penetration strategies.
Management are tight lip on the exact day of the launching of the Zain brand.
Market watchers are upbeat that given the recent successful global brand of Celtel to Zain in 14 countries simultaneously, the Ghana launching is expected to take off in great style amidst huge media publicity.
“We are going to compete on superior quality and one network concept”, says Chris Gabriel, the Chief Executive Officer for Africa.
Chris explains that the company’s strategy of compete of network quality and the one network were expected to differentiate its brand from the competition.
The company says it intends to have 85 per cent coverage along the major roads through the Northern part of the
“We intend to make significant investments in Ghana and in African operations”, adding that it was to leverage.
Zain’s Ghana operations one-network operations when launched would enable customer access their mobile phones in Burkina Fasso, Nigeria and Sierra while paying for the same local charges and abolishing high roaming charges.
However over the next one year Zain customers in Ghana would be access to the groups network in 22 operations across Africa, Middle East and Europe.
So far, Zain Ghana has employed over 270 people already and there are indications that many more employment opportunities exist as the company expands operations.
The company said it has outlines a policy to ensure that 70 per cent of employees who excel at their jobs were promoted to management positions and that indeed the Ghana operations was determined to make Ghana a net exporter of human capital across the group’s 22 operations.
Price wars was a major concern for Chris, who thinks that that would ultimately lead to the collapse of the industry and undermine shareholders fund and thereby stifle investments in the sector.
As the company’s research, network quality remains a major source of concern for customers in Ghana, but Zain to ensure high level of network quality.
The network has over the past years invested over 12 million in its Africa operations and has operations in 14 African countries.
Zain would operating on the 3-G platform has added value services and the company hope to provide these services to the Ghanaian customers.
Touching on the mobile penetration rate which is currently at 35 per cent, Mr Gabriel said mobile penetration does not peak at 100 per cent and stated that in some countries mobile penetration is over 150 per cent and expressed optimism that the industry had potential to grow further.
“What Zain offers is value for money, customer service delivery affordable products and also expansion of our network to rural areas.”
Zain says they welcome competition provided that such a competition was rational.
Many experts say with five global brands in the country, consolidation was expected to happen among major players while there would be a sizeable proliferation of small operators across Africa.
Chris was of the view that industry players must however collaborate and encourage co-operation and discussions on market dynamics, especially in the area of taxation and infrastructure sharing.
The country has four operating brands, MTN a multinational mobile phone operator, TIGO, another international brand, Kasapa, which is an affiliate of Hutchison, another multinational and One-Touch, a local brand has just been bought by the world’s leading brand, Vodafone.
Zain and Globacom are the new operators soon to begin operations. Both are multinational brands.
Chris was appointed CEO of Zain Africa December 1, 2007 and plays a vital role, overseeing all Zain's 15 operations in Africa that currently serve over 33 million active customers representing two-thirds of Zain's total customer base.
Previous to this appointment, Chris was Chief Officer of ACE, from May 2007, where he was accountable for defining, executing and delivering Zain’s Global ACE Strategy (Accelerate, Consolidate and Expand); leading and managing the Group’s international and regional IPO’sBusiness Transformation and Performance Improvement.
Chris is an experienced international executive with a flair for operational excellence and over achievement in high growth start up, turn-around and challenging competitive environments. He is also a recognised leader in team building, mentoring, human capital development and public speaking.
Prior to joining Zain, Chris has played vital roles as Interim Chief Executive, Group Chief Financial Officer and Group Chief Information Officer in several regional telecom companies.
In addition, Chris was the Director, Finance for SingTel Optus Business in Australia. Major achievements during his time with
Chris has over 25 years experience in the Information Technology and Communications sectors, having developed his strategic, managerial and financial expertise through a wide variety of roles spanning Financial Management, Business Process Engineering, Customer Care and Billing, Product Development, Commercial Operations, Facilities, Strategic Programs, year 2000 Remediation, Information Technology and Corporate Acquisitions. He has previously held senior executive positions with Ericsson, Unisys and ComputerLand.
Chris holds a Bachelor of Business in Finance; CPA; an MBA in Marketing; a Bachelor of Law; a Diploma of Corporate Management and an Advanced Diploma Company Director.

Competition to drive telecoms centre as Zain enters the market.

With the licence of two additional mobile phone operators, and the anticpated launching of Zain Ghana operations, some industry players have already psyche up their activities, Boahene Asamoah examines how the much anticipated competition is expected to impact on customers.

TELECOMS watchers are anticipating real competition as Zain rolls out its services and products in the country by the close of the year.
With a huge financial muscle, the competition from Zain could be felt from afar with huge bill boards and television commercials even before it begins operations, making some giant companies rethink their strategy.
Already, MTN, the leading mobile network has began to rethink its strategy and has announced that customers can now have their mobile numbers for free from February next year. Previously, subscribers to its pay and go service have a given date and time by which time such subscribers have to re-load their credit or would have their services suspended.
Again, MTN has now abolished the $40 dollar charge for roaming services it introduced sometime ago. Now there is a new commercial that requires a subscriber to only pay local charges when the person is outside the home country.
Ghana is now home to five global brands, Vodafone, MTN, Zain, Tigo, Kasapa and yet Glo, each with strong balance sheet and huge subscriber base across their global operations.
Anticipating the introduction of the one-network concept from Zain which enables a subsrciber to be able to use the same number and pay local charges wihtin countries of operations, vigorous marketing communications have already began, introducing no roaming charges for West Africa.
Zain had indicated that during its take-off operations in Ghana, subscribers should be to access it network within the sub-region through its seamless one-network concept.
Indeed the competition is not only limited to these two networks, Vodafone which has controlling insterest in state run Ghana Telecom and Tigo, have also through its market communications began the process of attracting back into its fold, their old customers, by enticing them with offers to re-active their telephone lines.
But analyst fear price wars would be a major feature of competition to win over customers.
But the CEO of ZainAfrica, Mr Chris Gabriel would rather prefer what he describes as “rational competition” as price wars would eventually lead to the collapse of the entire industry.
Although Zain has indicated that it would not compete on price, but on network quality, indications are that other operators were likely to go the price war way.
Examples abound in Nigeria, where Glo brought down prices of the industry down and introduced the per second billing instead of the bulk charges. Again, the monthly charges for internet service by some operators had to abolished and prices dropping by almost 50 per cent.
However, network quality seems to be what most consumers in Ghana of mobile telecomunications are yearning for.
With a poor network quality most consumers are looking for the kind of network that would perhaps for the first time offer real value for money.
Again, analysts beleive that with the current mobile penetration of 35 per cent in the country, there was indeed huge potential in the mobile telecommunications sector to grow.
This is because according to analysts mobile penetration does not peak at 100 per cent and instances abound in Kuwait and some other countries where mobile penetration was well above 120 per cent.
This coupled with the expansion of the economy and ofcourse the oil find presents tremendous opportunity.
But market watchers are of the view that any market penetration strategy for late market entrants would deepen largely on how the four p’s of price, promotion, place and the product are mixed to yeild ultimate benefit to the customer.
According to research, one of the top most priority of mobile subscribers is that of network quality.
Industry experts think standards in the industry have fallen in spite of heavy investments, alluding to rest drop calls being experienced lately and poor quality network and the seemingly inability of the National Communications Authority (NCA) to walk-the-talk.
With Zain being granted the 3-G technology platform superior services are expected at an afforable prices.
The competition is expected to go even beyond mere price wars and network afforability, marketing integrated communications is expected to soar, with each mobile phone company pitching camp with a particular niche in the market.
Already, things have already started, with MTN loosing the sponsorship deal of Kotoko, while Tigo has grabbed that deal.
MTN for instance have invested heavily in football as some major sponsorship, Zain has chosen music as its main sponsorhip programme.
Interestingly, the very large segment of almost all the networks are targeted at the young people.
Giving the financial muscle of all the international players in the country, the competition is expected to be much keener in the coming months.
Zain for instance recorded a seven per cent increase in turn over across its operations amounting to $327 million at the end of the third quarter.
The results showed significant growth in revenues with customer numbers reaching 56.3 million.
For the third quarter of 2008, Zain Group recorded consolidated revenues of US$1.887 billion, an increase of 25 per cent compared to Q3-2007. The company's consolidated EBITDA increased by 20 per cent for the same period to reach $ 763.6 million.
Year-on-year customer growth across the two continents where Zain operates was 54 per cent with the Zain Group serving 56.3 million managed active customers at 30 September, 2008.
MTNs financial report for 2007 also shown strong financial support with the group showing 42 per cent growth for the period, with contributions to total revenue split 43 per cent, 43 per cent and 14 per cent among the SEA, WECA and MENA regions respectively.
With such strong financial performance the race to capture the mind and pocket of subscribers have been set with anticipated fierce competition from all five mobile phone operators.

ETI lays foundation stone for its headquarters

Story: Boahene Asamoah

PRESIDENT Faure Essozimna Gnassingbe on Friday laid the foundation stone for the building of a $15 million head office complex of Ecobank Transnational Incorporated (ETI), the Pan-African bank in Lome, Togo.
The ceremony comes on the heels of a landmark public offer and rights issue in Africa by ETI to raise $2.5 billion across Africa.
The function also attracted the Prime Minister, Mr Gilbert Fossoum Houngo, and several ministers of state and the Speaker of the Togolese Parliament.
Delivering an address at the ceremony, the Board chairman of the pan African bank, Mr Mande Sidibe, said the decision to build a permanent office in Lome was a demonstration of the bank’s commitment to continue to do business across Africa.
He said “the group has grown so well that it has outgrown its current clothes. That is why it has decided to equip itself with a modern and functional building.”
Mr Sidibe stated that the bank had over the past 20 years overcome various difficulties to become the first pan African bank with 25 subsidiaries, 600 branches, more than 10,000 employees of 29 nationalities, and offering varied financial and banking products.
The board chairman said the bank had also established the Ecobank Development Corporation in charge of wholesale banking and stock market intermediation.
Mr Sidibe added that the bank had also established the e-Process which is in charge of technologies and integrated system and other specialised structures to assist trading operations across the world.
“Ecobank will continue with its appropriate policies in terms of risk management and resource mobilisation, adding that “we will continue with our banking activities and the development of financial services for the benefit of Africans”, he stated.
Mr Sidibe commended past executives and the founding fathers of the bank as well as the Togolese authorities for their immense support.
The Togolese Minister of Commerce and Private Sector Promotion, Mr Guy Madje, commended the management and board members of the bank for the initiative to build a permanent office in Lome, and assured them of the government’s support.
“Making these four hectares of land available to ETI for their new headquarters reflects the Togolese government’s wish that staff of the group conduct their work in the best possible working environment.’’
The Minister of Finance and Economy, Mr Adji Oteh Ayassor, in his statement also commended the board and management of the bank for their effort to expand their operations across Africa, and stated that the government would continue to offer them support that would ensure further growth of the bank.
The new head office, located along the coast of Lome, when completed would overlook the Atlantic Ocean.
It would be a seven storey building office complex and would house an Information Technology Centre, a conference room, catering spots and entertainment facilities.
Later in that evening a dinner was held to honour the founding members as well as employees who had spent 20 years or more with the bank.
Guests were treated to a sneak preview of the bank’s new logo due to be officially launched in January.

NTEs to hit $1.4 billion over five years

Story: Boahene Asamoah

THE country’s Non-Tradtional Exports (NTEs) is projected to hit $1.4 billion in the next five years under a new National Exports Strategy programme to be rolled out next year.
The country recorded for the first time last year, an increase of NTEs well above $1 billion from the $400 million it recorded in 2000.
Speaking at the launch of the National Service Export Strategy and inauguration of an Implementation Committee in Accra , the Executive Secretary of the Ghana Export Promotion Council (GEPC), Mr Edward Collins Boateng, said the council was hopeful that over $30 million of the total projected exports would come from the service sector.
He said the service sector had not been formally captured under the country’s non-traditional exports over the past years.
Mr Boateng said “the idea of streamlining and strategically positioning services in the nation’s exports portfolio has generated a lot of interest across the academia, policy makers, stakeholders and other interested groups”.
He said the strategy covered three main areas, namely awareness creation, looking at the obstacles which hindered the service sectors ability to export and the need to carry out specific activities to promote the service sector.
Mr Boateng said it would take the commitment of all stakeholders to ensure the development of the service sector to contribute to the national goal.
The Minister of Trade, Industry, President’s Special Initiative (PSI) and the Private Sector Development (PSD), Paapa Owusu-Ankomah, said the country needed a more purposeful national approach if wanted to take full advantage of and participating in the opportunities that existed in the sub-region.
“That is why we embrace this renewed national efforts at providing a clearer strategic direction for the development of the services export sector of Ghana”, the minister stated.
Mr Owusu-Ankomah, said the prospects of the service sector for developing new knowledge based services and international competitiveness would depend largely on how the country continued to invest in its human resources.
“Greater attention must also be paid to quality management, setting of standards and accreditation by professional bodies if we are to ensure that Ghana appears on the radar screens of the major users and consumers of international services”, he stated.
The minister called on service providers who wanted to be part of the export market to take advantage of the 50 per cent matching scheme available through the Business Development Services at his ministry.
He also stated that the Export Development and Investment Fund, had factored in the services export sector in its new corporate strategic plan.
“We believe that the tremendous growth recorded in the services sector in general which contributes over 40 per cent of the Gross Domestic Product (GDP) can also be replicated in the export of services within and beyond the borders”, Mr Owusu-Ankomah stated.
The Director General of the Private Enterprise Foundation (PEF), Dr Osei-Boeh Ocansey commended the GEPC for the initiative to ensure the implementation went through successfully.
He called on members of the implementation committee to face the challenges that came with the export sector by addressing some of the constraints that hindered business in the sub-region.

service export strategy for non-traditional exports

service export strategy (fin)

Exports of Non-traditional products have reached all-time high of over $1 billion over the past seven years. However one critical area that has not been looked at is the export of services sector especially within the sub -region.
Boahene Asamoah looks at the proposed National Strategy for the export of Non-Traditional Services.

THE country’s non-traditional exports (NTEs) for the first time cross the $1 billion mark as at the end of the 2007 export season.
Non-traditional exports are those products that does not fall within the three main traditional export of the country, namely Gold, Cocoa and Timber.
The significance of an appreciable increase in NTEs is important to the economy especially where there is a diversified foreign exchange earnings that serves as buffer for the cyclical external shocks that the economy experiences every now and then.
The service sector all over the world has been one that spearheads the economic growth of many industrialised countries.
This can be evidenced by such countries such as Taiwan, Malaysia, India and China where the boom in service sector has pushed up the economic growth in these countries.
Indeed, under a three year growth projection from 2005 to 2007, the Ghana Export Promotion Council (GEPC) stated that export strategy for NTEs envisaged the achievement of export earnings of US$ 1 billion by 2006 and US$1.2 billion by year 2007.
According to the Board chairman of GEPC, Mr Stephen Sekyere Abankwa, “strong export performance is crucial to Ghana's economic development and growth.”
Non-Traditional Exports increased from $460 million in 2001 to $1,164 million in at the end of last year depicting a growth rate of over 150 per cent.
On annual basis, this translates into a growth rate of 20.7 per cent
NTEs percentage contribution to total exports in 2004, 2005, 2006 and 2007 were about 25.74 per cent, 28.09 per cent, 26.14 per cent and 27.76 per cent respectively.
Three main sectors have contributed to the upward increase in NTEs, which are agriculture, semi-processed/processed or manufacturing and handicraft sectors have contributed.
Significantly, the service sector has not made any significant impact on the export under the non-traditional export sector.
Services in the country currently accounts for 30 per cent of the Gross Domestic Product (GDP) amount to about $3.87 billion and contributed about 31 per cent to economic growth.
Services exports account for only 8.3 per cent of GDP amounting to US$1.07 billion, however exports of goods represents over 30 per cent of GDP indicating that there is much more potential for the development of Ghana’s services exports.
According to the GEPC, the majority of revenue from services exports comes from the tourism sector, which account for US$836 million, however there seems to be lack of adequate information on the composition of the remaining $234 million services.
Research available indicate that the major component of these services were likely to be the more traditional services sectors such as transportation and financial services exports.
Estimates of selected non-million services exports based on a survey of films in selected sectors amount to US$34 million which comprise of: Business Processing Out-sourcing (BPO) exports US24 million, professional consultancy exports US$2 million; higher education exports US$8 million and medical tourism services, less than US$0.2 million.
As compared to with NTEs goods exports of about US$778 million, there is reason to believe that untapped potential for the development of the services sector strategy.
And to take advantage of these untapped opportunity a national strategy to develop and promote non-traditional services has been developed.
The thrust of the strategy is to increase exports of non-traditional exports of services to a level equivalent to 10 per cent of total non-traditional exports.
The strategy has been designed to be practical document to guide implementation of a comprehensive programme to promote, develop and support service sectors ports from the country.
The proposed strategy has three main components; awareness raising or creation, identification and removal of constraints and sector specific promotion.
According to the Executive Secretary of GEPC, Mr Edward Collins Boateng “the idea of streamlining and strategically positioning services in the nation’s exports portfolio has generated a lot of interest across the academia, policy makers, stakeholders and other interested groups”.
The Minister of Trade, Industry, President’s Special Initiative (PSI) and the Private Sector Development (PSD), Paapa Owusu-Ankomah, indicated that the country required a more purposeful national approach if it aimed at taking full advantage of and participate in the many opportunities that exists in the sub-region.
“That is why we embrace this renewed national efforts at providing a clearer strategic direction for the development of the services export sector of Ghana”, the minister stated.
“We believe that the tremendous growth recorded in the services sector in general which contributes over 40 per cent of the Gross Domestic Product (GDP) can also be replicated in the export of services within and beyond the borders”, Mr Owusu-Ankomah stated.
Many private sector operators believe that the strategy has the potential to open up the country to international best practises and building a solid human resource capital to serve the sub-region.
However, experts believe that the private sector must build capacity and also collaborate with other firms in the sector to take full advantage of strategy.

Chamber hold public lecture

Story: Boahene Asamoah

THE Ghana Chamber of Mines, the umbrella organisation of mining firms in the country, would next Tuesday, November 18, 2008, organise a public lecture as part of activities marking the 80th anniversary of the organisation.
Prof Daniel Mireku-Gyimah, Chancellor of the University of Mines and Technology, Tarkwa, would deliver the lecture on the topic “Life without Mining is impossible”.
According to the Chief Executive Officer of the Ghana Chamber of Mines, Ms Joyce Aryee, the topic, though controversial, was a reflection of the reality in that every activity of human live deepened on mining activities.
She said from agriculture to the use of new technology such Internet and computers, all such activities depended on mine products that had been transformed to better the lives of people.
Ms Aryee stated that contrary to perceptions of environmental degradation as a result of mining activities, the chamber had adopted best practises to ensure that the environment was not degraded.
“All human activities have impact on the environment”, she stated, adding that “technology has however made it possible to manage the effects of human activity on the environment.
The CEO stated that mining had always been part of human activity, and “would continue to be part of our lives”, adding that there was the need to ensure best practices to ensure development.
She said the chamber, together with the mining firms, had always paid attention to Corporate Social Responsibility and supported communities to ensure their activities impacted such communities positively.
The CEO said the chamber introduced the “Environmental Management Programme”, that monitors year-on-year environmental issues to ensure best practices, and that a recent survey had indicated that the country must harness the minerals that would be mined for economic development.
She said recent survey had indicated that the country had more untapped resources such as kaolin, mica, lime and others that needed to be exploited for the country’s development.
Ms Aryee stated that the chamber would continue with its efforts to ensure that communities and the firms continued to pursue policies that would ensure a win-win situation for all.
“Building trust is a continuous process and we are committed to ensuring that we build the right policies to manage conflicts and resolve our differences”, the CEO stated.
Ms Aryee stated that the chamber looked forward to collaborating with all stakeholders in moving the mining sector forward for the benefit of all.

Investment: Sea-Change in Law


Ghana’s Investment Council Act of 1994, has not seen any changes 14 years after it was passed into law. To reflect global changes and local demands and requirements the GIPC has reviewed the Act and presented it to the Office of the President for consideration and passage into law. Boahene Asamoah talks to the CEO of GIPC on how the revised act could impact positively on the local entrepreneurs and also bring in the much needed FDI.

Mindful of the increasing attraction of the country as an investment destination within the sub-region, a revised investment and promotion law by the Ghana Investment Promotion Council (GIPC) which takes into consideration the realities of the country’s development agenda has been proposed for consideration.
Under a “Ghana Investment Council Act 2008”, the proposed revision of the law also seeks to empower Ghanaian entrepreneurs to actively take advantage of the emerging economic opportunities in different sectors of the economy and also cover broad areas under the Growth and Poverty Reduction Strategy (GPRS 2).
The revision of the law comes at a time when many traders, especially members of the Ghana Union of Traders Association (GUTA) have complained of foreigners taking over their trade without due regard to country’s investments laws.
The oil find and the progressive reforms undertaken by policy makers over the past years, to position Ghana as an investor-friendly destination for businesses within the sub-region, has resulted in record investments into the economy.
However, investment analysts have pointed to weak monitoring and supervision of the investment laws as some of reasons for influx of foreigners into trading activities.
The revised act, hopefully if passed into law by the end of the year, would thus, bring a huge sigh of relief to many such traders.
“ The revised laws takes into consideration the development needs of the country”, Mr Robert Ahomka-Lindsay, the Chief Executive Officer (CEO), of the GIPC, told the Graphic Business in an interview.
Among some of the proposals in the revised law, was the need to upgrade the act and threshold of investment requirements from as low as the current US$10,000 to US$1 million for trading activities.
“We need to scale up the investment ladder to attract the right investments and investors”, the CEO stated.
Under the Ghana Investment Promotion Centre Act, 1994 (Act 478), a foreign investor may team up with a Ghanaian entrepreneur or company for a joint venture, usually in the form of a partnership or a limited company.
Under the same law, however, a minimum equity capital of US$10,000 is required from any foreign investor who intends to enter into a joint venture partnership with a Ghanaian in any area of economic activity, except trading. In trading, the minimum equity capital requirement is US$300,000 in either goods or cash.
“This threshold is rather too low”, says Mr Ahomka-Lindsay, adding that
“the GIPC has proposed for instance that foreign investments in trading activities be pushed to US$1 million cash.”
Again, GIPC under the proposal, which is model along the Korean and Malaysian models, has proposed that 25 per cent of all goods on the shelves of foreign traders should be goods produced in Ghana.
The new proposal have suggested the establishment of a Negative Lists, which is currently being developed, which would delineate activities reserved for Ghanaians and majority owned Ghanaian companies.
‘This is tailored to ensure that Ghanaians play an increasingly prominent role in our economy and stimulate the effective development of indigenous capabilities’, Mr Akomka-Lindsay stated.
Under the negative list, for instance, the GIPC has proposed that all services and supplies related to the mining and oil explorations must be sourced from local entrepreneurs.
Again, trading in second-hand spare parts and clothes would be restricted to Ghanaians or foreigners with local partners.
Importation and distribution of pharmaceutical products and textiles have also been limited to Ghanaians.
Many traders would see this as welcome news for Ghanaians and timely intervention especially coming at time where there is unbridle competition from India and China in respect to pharmaceutical and textile products on the local front, leading to the near collapse of the textile industry.
According to experts, there is a potential $5 billion annual revenue that the country could derive in terms of services to the mining and oil sectors alone and this cuts across, food, advertising, hospitality, apparel, transportation, stationery, banking, insurance and many other services that comes with the activities of these two sectors.
Another interesting aspect of the revised act, is the targeted foreign direct investments, which seeks to attract FDI in very core areas of the country’s developmental challenges and focus GIPC more on attracting investments into these areas, rather than the general FDI attraction.
To ensure that these targeted FDI are attracted to the country, specific incentives have been designed for these sectors.
This policy, according to the GIPC was started at the beginning of the year and has already started bearing fruits with year forecast of FDI exceeding its target as of the first half of the year.
The GIPC projected FDI inflows for this year at GH¢1.5 billion, however, as of the end of the third quarter, FDI inflows have hit record high of GH¢2.66 billion from 227 new projects with estimated value of GH¢4.61 billion.
Seven major areas have been identified by the GIPC as priority areas that needed special attention under the targeted FDI drive.
These are; agriculture and agricultural processing; infrastructure, including utilities, railways and power; tourism;, information, communication technology (ICT); financial services; industry; mining and petroleum.
“ We intend to align these areas alongside the national growth strategy and priority areas.”, Ahomka-Lindsay stated.
Many analysts in the oil industry, say Ghanaian entrepreneurs may lack capacity in certain service areas, but Mr Ahomka-Lindsay was upbeat saying, “we have to start from somewhere and gradually build up capacity.”
However, other industry experts believe that with respect to the mining industry, the country do have the requisite capacity since mining has been part of the economic activity for decades.
The GIPC, has also beefed up its human resources to reflect the challenges that would come with the revised law and stand ready to offer technical assistance and advice to investors.
Some investment lawyers are of the view that the revision of the law would be a feather in the cup of the country, having been adjudged two years ago as one of the leading reforming economies with good business climate.
However, others are worried that other neighbouring countries and trading partners of the country would also impose stiffer investments laws as recipocral gesture to the GIPC.
But Ahomka-Lindsay disagrees, saying most countries have a negative list and Ghana was not alone in this, adding that the centre studied about 80 countries investment laws to fashion out what was best for the country.
To ensure continuos monitoring of the investment climate, GIPC intends to review its policies every two years in order not to be overtaken by events in the global investment climate.

Accountants must ensure high sense of integrity

ICAG (fin)
Story: Boahene Asamoah

THE Minister of State at the Ministry of Education, Science and Sports, in Charge of Tertiary Education, Ms Elizabeth Ohene, has called on professional accountants to ensure a high sense of integrity in the practice of their duties.
She said “if the country cannot count on the professional integrity of accountants in the country, then the country would be doomed”.
Speaking at the launching of five locally produced accounting manuals in Accra today, Ms Ohene said the country should be able to count on professionalism of accountants and should play an active part in national budget.
She added that the accounting profession also needed to be an integral part of the Ghanaian life and questioned why weighting of food items which were critical instrument of measurement was not part of the daily sales of goods in the country’s markets.
“You have a responsibility to become an integral part of our daily life and the economy as whole”, Ms Ohene stated.
She said the accounting profession comes with high responsibility to the society and urged accountants to partner her ministry in educating the youth on the need to take mathematics as a serious subject.
The Managing Director of HFC Bank, Mr Asare Akuffo, who chaired the function, said there was the need for the practice of the profession to reflect local demands.
He mentioned for instance the issue about audit, where in especially foreign countries the notion of auditing was not to discover fraud but rather to check whether proper procedures were followed.
Mr Akuffo said in such countries there were systems available to check fraud, however, he suggested that in countries such as Ghana, auditing must discover fraud as there were weak structures to deal with fraud in accounting practises.
“We must look at accounting systems that are relevant to the country’s own peculiar needs”, he stated.
He used the occasion to urge students to breast themselves with modern things and learn broad areas to be able to rise to the highest level in their careers.
The President of the Institute of Chartered Accountants, Ghana, (ICAG), Mrs Cecilia Nyan, said the launching of the manuals was an important step towards ensure that local students were adequately prepared for the examinations.
She said the books were not only relevant to local demands but also important for other countries as well.
She added that the manuals would help students to have access to books in order to study to pass their examinations as well as help increase the number of students who pass the chartered accountancy course from the current 100 annually to about 300 in a year.
Mrs Nyan also encouraged other professional institutions and companies to also make good use of the books as reference points and materials.
The first auctioned copy of the book was bought by Pricewaterhouse Coppers for GH¢7,500.

Merchant Bank opens more branches

THE acting Managing Director of Merchant Bank, Ghana Limited, Dr Kwame Osei-Owusu, has said that the bank would pursue an aggressive branch roll-out nation-wide, as part of the bank’s strategy to play a key part in the retail end of the banking business.
Speaking at the opening of a new branch office at Achimota in Accra, Dr osei-Owusu said “In the coming weeks this branch will be one of a chain of branches that would proudly display the Merchant brand all over the country”.
Merchant Bank until 2006 was a corporate bank. The opening of the new branch therefore brings the branch network to 15.
Dr Osei-Owusu said seven more branches were expected to be rolled out in Osu, Tema, South Industrial Area, Abossey-Okai, Asafo Market, Adum and Korle-Bu.
“Our presence would be heavily felt in Kumasi as we roll out more customer friendly branches in Bantama, Roman Hills, Railways, Suame Magazine, Komfo Anokye, the Kwame Nkrumah University of Science and Technology (KNUST) and Subin Valley in 2009,” the Managing Director stated.
He said the bank would extend to its customers the bank’s values of customer relationship, empathy, ethics and sound business advice to all its branches.

Accountants hold career guidance counselling for students

Members of the Accra West District Society of the Institute of Chartered Accountants (ICA) last Thursday carried out a career guidance seminar at Presby Osu Secondary School in Accra, where they also donated about 400 books and documentary literature to the school.
The programme was part of the ‘early awareness’ programme of the ideals required of the professional accountant.
Students in their final year were taken through the various modalities of becoming a chartered accountant and the subjects and grades required to be eligible to register with the institute.
Among the resource persons were the Accountant-General of Ghana, Mr Christian Sottie, an old boy of the school, and the Head of Education at the Institute of Chartered Accountants, Miss Helen Boafo.
The books were received on behalf of the school by the headmistress, Miss Dennis Welbeck,
Ms Welbeck expressed her appreciation to the members of the ICA society, who were led by their President, Mr Joe Hyde Jr and his vice, Mr Joe France.

Pix: Mr Joe Hyde Jnr, Chief Accountant of Mechanical Lloyd (third Left), presenting the books to Ms Welbeck at a short ceremony.

UN should play active role in solutions to financial turmoil


THE bail out of some of the world’s wealthiest companies have send strong signals about the likelihood of cut backs of financial support from the developed economies to the developing countries.
At a meeting of the Trade and Development Board (TDB), in Geneva on “Financing for Development” recently, concerns were raised on the need to continue economic support for the developing world despite the global crisis. Boahene Asamoah reports.

TRADE and development experts who spoke at the Geneva meeting were unequivocal on the need for a systemic remedy to the global financial crisis and also the need for the United Nations and its partners to play an active role in crafting solutions to the global financial turmoil.
These crises according speakers at the forum would impact financial support to especially developing countries, as rich countries have dolled out trillions of dollars to help bail out the affected financial institutions.
“The availability of phenomenal sums for bailouts and stimulus packages" in rich nations "makes it hard to understand why resources are suddenly so scarce when it comes to developmental assistance,” says Mr. Supachai Panitchpadki, the Secretary-General of the United Nations Conference on Trade and Development (UNCTAD) at the meeting.
His opinions were echoed by a various speakers a the just ended Trade and Development Board (TBD) meeting In Geneva.
Experts say the developing world is facing, with the expanding financial turmoil, difficulties over food costs, and wildly gyrating energy prices, a "triple crisis" that must be addressed.
Reports from some renowned economist, Jeffrey Sachs, indicate that Europe and the US have mobilised around US$3 trillion in the past month in guarantees and bailout funds for banks, but failed to mobilise even one ten-thousandth of that this year to help the world's poorest grow more food, and this is in the midst of a food and hunger crisis.
Senior officials from some developing countries were equally upset at the billions being dolled out to support such companies.
A deputy Minister of Trade, Industry, President’s Special Initiative and Private Sector Development, Mr Kwaku Agyeman-Manu, also expressed similar concerns.
“Even before the onset of the current turmoil, efforts to implement the “Monterrey Consensus "had been mediocre, because even though significant progress has been made in the area of debt relief, progress has been very limited in other areas of mobilisation of domestic and international resources for development, promoting international trade as an engine of development, and addressing systemic issues through expanded participation in global economic governance", Agyeman-Manu stated.
Preliminary research indicates that during past banking crises official development assistance (ODA) to poor nations has declined anywhere from 20 per cent to 40 per cent.
For the current crisis, according to estimates from the Organisation for Economic Co-operation and Development (OECD), foreign direct investment to developing countries would have declined by 40 per cent during 2008.
Remittances to developing countries from nationals working overseas who represents a huge source of income, according to reports, may fall by up to six per cent.
The International Labour Office has estimated that the financial crisis will cause global unemployment to increase by 20 million and extreme poverty to rise by 40 million.
“The current meltdown “must not be allowed to derail the very important efforts developing countries have made in recent years to sustain economic growth,” TDB President, Debapriya Bhattacharya of Bangladesh stated at the meeting.
Trade experts say the current global crisis should be an occasion for the United Nations to perform “an essential function in generating innovative ideas, fostering universal dialogue and building consensus,"
“It is the forum, par excellence, for universal participation in global decision making when needed,” Mr Supachai stated.
"People may discuss whether it is a recession or a depression,” Mr Bhattacharya said, adding that “we will soon find out."
Experts say it is necessary for the international community to move from "a fire-fighting approach" to a more concentrated and co-ordinated response to the financial crisis.
Again, they said “risky” financial instruments, “runaway speculation,” and insufficient supervision by regulatory agencies, particularly in developed countries, had led to the current crisis.
Impacts on developing countries could be expected to be significant, including declining exports, declining tax income, and expanded debt problems. These could make it difficult for governments “to meet basic human needs.”
Many analysts have called for a holistic approach to development which places equal emphasis on the health of the global economy as it does with individual national economies.
Civil society organisations were concern that financial markets would continue to deteriorate for some time, however they were optimistic that the failings of financial markets would not detract from the solid record of the market economy system and globalization in rescuing millions of people from poverty.
Others have said the crisis called for the widest possible dissemination of information on the turmoil and steps to improve and reform accounting and auditing and the overall financial system, so that confidence is restored.
There should be “democracy and stability” in the international financial architecture and the architecture itself "should be restructured," international trade experts stated.
UNCTAD said it has assembled a Task Force on Systemic Issues and Economic Co-operation to co-ordinate research on major weaknesses in the international financial system and related institutional architecture of concern to developing countries.
The task force, according to UNCTAD would focus, among other things, on currency speculation and global monetary co-operation; commodity futures speculation and price volatility; and financial sector regulation and surveillance.
Some senior European governmental officials have admitted that financial markets in the developed countries, the rules of the game have simply not kept up with the speed of globalization.
Analyst believe that financial stability was clearly "a global public good" that requires supervision and international co-operation.
While the EU said it was committed to financing for development and to achieving the Millennium Development Goals (MDGs), it called for steps to be taken, including through the essential role of the Bretton Woods institutions (the World Bank and the International Monetary Fund) to carry out an effective and complete reform of the international financial system based on the principles of transparency, banking stability, and the integrity of international economic and financial governance.
The African group at the meeting said a "concerted structural measures" can ease the effects on Africa of the financial crisis.
According to the African group, major steps must be taken to permit Africa to resist the external shocks caused by the current turmoil and enable it to protect and expand the economic progress it has made over the past five years and to sustain reductions in poverty.
According to experts the world economy had become much more integrated since 2002, and any talk of a supposed "de-coupling" of the South from the economies of industrialised countries was being exposed as untrue by the current crisis.
It also was a matter of concern that manufactured goods from developing countries had suffered, overall, a decline as compared to manufactured goods from developed countries.
“ Clearly there was a need for further aid and attention to expanding the productive capacities of developing-country economies, says the Assistant Secretary-General of the United Nations Department of Economic and Social Affairs (DESA)Mr. K.S Jomo .
Trade experts say three major issues should be addressed namely, greater international tax co-operation; the Financing for Development follow-up mechanism, which must be made more effective; and the matter of systemic financial reform which would ensure a widespread recognition of the need for new international financial architecture.
Many experts express concern that there was a widening global imbalances in current-account deficits and current-account surpluses among countries around the world, that indicates that the risks associated with the currency statuses of a number of countries have increased, which helps to explain why the financial crisis is having such a widespread fallout.
“This is a systemic question that can only be addressed at the global level,” senior economist at the UN stated.
According to senior analysts one long-standing UNCTAD proposal deserves further consideration were co-operative global financial and monetary system should be established that would assure, on a multilateral basis, the same rules of the game for all parties involved, more or less in the same way as multilateral trade rules apply to any trading partner.

36 companies receive awards

December 1, 2008 Page 71
Story: Boahene Asamoah

Thirty-six companies and organisations have been awarded at the first Ghana Business and Financial Excellence Award for their contribution to the economy at a ceremony in Accra last Friday.
Ghana Cocoa Board won the ultimate award; a Platinum Award for its contribution to the lives of people and the company’s impact on the economy as a result of its activities.
Other companies which won awards were Agricare Ghana Limited, Alhaji I.D. Construction, Aluworks Limited, Amin Sankari Industries, Atwima-Kwanoma Rural Bank, Cadbury Ghana Limited, Cocoa Research Institute, Dizengoff Ghana Limited, De Paul Wood Treatment Limited, Enterprise Insurance Company, First Allied Savings Limited, Ghana Commercial Bank, GIHOC Distilleries, Global Haulage Ghana Limited, Guinness Ghana Breweries Limited and the Ghana Stock Exchange.
Others were, Holy Trinity Medical Centre, Inter City STC Company Limited, Interplast Limited, Irani Brothers, K.I. Ghana Limited, Latex Foam, Mechanical Lloyd, Melcom Ghana Limited, National Lottery Authority (NLA), New Plan Ghana, P & W Ghana Ltd, Produce Buying Company, State Housing Company Limited, Toyota Ghana Limited, Unilever Ghana Limited, Villa Cincinario, Voltic Ghana Limited, West African Mills and Western Union Money Transfer.
Delivering the keynote address at the function on behalf of the Vice President, Alhaji Aliu Mahama, a Deputy Minister of Trade, Industry, Private Sector Development, and the President’s Special Initiative, Mrs Gifty Ohene-Konadu, said the private sector must work closely with the government to ensure rapid development of the economy.
The Vice President said six key priorities needed to be focused on during the next phase of the country’s economic development.
These, he said, were enforcing adherence to rules and regulations regarding business operations; aggressively promoting the spirit of entrepreneurship at all levels of the society and attracting and mobilising foreign investment to priority sectors.
The rest were, building synergies between local entrepreneurs and foreign investors; improving efficiency, productivity and competitiveness of local industries through skills development, access to credit and technology improvement and promoting exports and facilitating access to foreign markets.
Alhaji Aliu Mahama said the focus of the government’s policy “is on the integration, promotion, development and growth of the private sector.
The Vice President acknowledged that “there have been remarkable reforms in the financial sector which has significantly transformed our economy”, adding that “these reforms have indeed opened up investments in the banking sector”.
The Vice-President called on businesses in the country to take advantage of the tremendous opportunities that abound in the economy to turn around the economy.
He commended the business community and the financial institutions for their immense contribution to the economy.
A Minister of State at the Ministry of Finance and Economic Planning, Dr Anthony Akoto-Osei, in a speech read on his behalf by Mr Dominic Donkoh, a Director at the Ministry, said there was the need for the financial service sector to support the Small and Medium Scale Enterprises (SMEs) to ensure their growth and development.
“Banks and other financial institutions remain the most significant source of credit for funding business and meeting the needs of individual borrowers”, he said.
“This demonstrates the critical role the banks and financial institutions are playing in financing the private sector, which has been identified as the engine of growth of our economy”, the Minister added.
Dr Akoto Osei said the government will continue to give banks and other financial institutions the necessary support to enable them realise a good return on their investments.

UT Lists on GSE

UT lists (fin)
Story: Boahene Asamoah

UT Financial Services, an indigenous non-banking institution was today listed on the trading floor of the Ghana Stock Exchange at GH¢0.30 and immediately gained a 10 per cent price appreciation.
The listing of the shares comes after a successful initial public offer which saw the floatation of 90 million shares of the company to the investing public to raise GH¢27 million.
It’s shares were oversubscribed by 1.7 per cent, mainly individual investors.
UT Financial Services now has over 10,843 shareholders.
UT thus becomes the 35th company to be listed on the market and third company to be listed this year.
Speaking at the ceremony, the Chief Executive Officer of the company Mr Prince Kofi Amoabeng, assured shareholders that the company would continue on the path of growth to ensure higher share holder value.
“I can assure shareholders that we would live up to expectations”, Mr Amoabeng stated.
He said the primary interest of the company now was to fulfil the interest of shareholders and added that systems were in place to ensure the continuos viability of the company way into the future.
Mr Amoabeng paid glowing tribute to the staff of the company for their dedication to work and for playing a major part in what has become a world-class financial institution.
Mr Ken Ofori-Atta, the Executive Chairman of Databank, lead brokers of the offer, reiterated that the successful over-subscription of the offer was remarkable considering the difficult period under which the offer was done.
He mentioned the credit crunch, the global financial turmoil and the refusal of the Social Security and National Insurance Trust (SSNIT) to take a major stake in the UT share offer as some of the challenges that offer faced.
Mr Ofori-Atta said the business of UT Financial Services was viable in that the normal banking institutions have not be able to cover the niche market where UT operates, whiles there was a huge difference between UT Financial Services and the competition.
The Chairman of the GSE Council, Mr Frank Adu Jnr, said Ghanaians must celebrate Ghanaian companies that have been able to become very successful.
“It is not easy to grow business in our environment”, he acknowledged.
The Managing Director of the Ghana Stock Exchange, Mr K.S. Yamoah, called on shareholders of UT Financial Services to contact their brokers to convert their paper certificates into the electronic trading system to help ensure liquidity and improve efficiency.

Tuesday, September 16, 2008

Insurance industry set for boom

Boahene Asamoah reviews the insurance industry since 2006, highlighting the significance of new entrants to the industry

There is a new buzz about the insurance industry today. As an important industry to everyone, businesses and individuals, one would have expected more serious activity until now. The industry seems to have been late responding to change, but it seems that it was worth the wait.

The Ghanaian insurance industry is expected to get more exciting as new players storm the market, and in most cases, as part of their market penetration strategy, taking over existing companies. It all seems to be working together for Ghana at the moment, with some industry watchers attributing the current foray into the insurance industry by bargain-hunting investors to the oil find.

The rush has got some industry experts talking, with some worried that if firms are not properly capitalised, they could collapse the industry in the future. Capitalisation is important for many reasons. As the Ghanaian economy develops with more people taking up insurance policies, some for the very first time, it is important that insurance companies are well endowed to meet the growing demand. What is important about capitalization also is that if the firm is well capitalised, it will be able to have more funds set aside for capacity development for example, all helping the industry to mature and grow fast.

But the worrying part if the new entrants, mostly foreign, do have the financial muscle to meet the growing challenges. In fact, they seem to have more capital than the local ones, which is causing anxiety among local industry players.

New entrants from especially Nigeria have made their presence felt in a big way, with more serious-minded approach to the business. It seems that they have taken a cue from their counterparts in the banking industry who have changed the face of banking in Ghana.

So far six major insurance companies have pitched tents in the country, and all of them in a big way. They are Capital Express Assurance Ghana Limited, who has bought controlling interest in Benefits Life Assurance Sector, while Regency Alliance Insurance Limited, another Nigerian firm has also bought controlling interest in Benefits Non-Life Business.
Industrial and General Insurance (IGI) Ghana Limited, which is a subsidiary of IGI Plc of Nigeria has bought controlling interesting in Network Assurance in both the Life and Non-Life businesses.
However, two other firms have set up their own operations in the country entirely from scratch, without taking over an existing trade. They are International Energy Insurance Company (IEI) and Equity Assurance Limited.
Other banking entities like Zenith Bank Plc, that already has a banking business in Ghana is expected to follow that by setting up an insurance company in the country. Zenith Bank has a subsidiary that deals in insurance.
Following the Insurance Law of 2006, Act 724, the separation of the Life and Non-Life business of insurance companies and the raising of the minimum capital to US$1 million for each of the businesses, the number of companies in the industry has increased from 24 to 37.
Interestingly, the oil find has brought about new businesses in the country with some experts in the oil insurance underwriting becoming a new hot bed for the insurance industry.
Again, the general good business climate in the country over the past five years that has led to a construction industry boom also presents some tremendous opportunities for insurance companies.
And performance has been good also. Over the past five years there has been a general increase in premium income. From 2002 to 2007 gross premium income for all businesses increased from GH¢47.2 million in 2002 to GH¢1.64 billion in 2006.
This represents a yearly average growth rate of 36.7 per cent; total gross premium for non life business however, increased by 270 per cent from GH¢38. 2 million in 2002 to GH¢141.5 million at the end of 2007.
For the life business gross premium increased from GH¢8.9 million in 2002 to GH¢68.6 million at the end of last year.
Analysts say the continuous increase in growth in the sector is an indication of the increase in public awareness and confidence in insurance products.
Over the past few years, there has been an emergence of new products that are tied to other investments such as the funeral insurance, which has received a lot patronage.
However, some industry players still believe that a lot more attention needs to be given to the life business because of its spiral effects.
According to market reports on the industry, the life business has the potential to generate wealth for the industry and encourage investments as a whole in the insurance industry because of its potential appeal to people looking at the premium income by class of business for the period 2002 to 2006.

Market watchers also believe that the companies from Nigeria could have a lot of impact on the Ghanaian market because of the excess funds they have for the industry. The Nigerian authorities on September 5, 2005, announced the recapitalisation of Insurance and Reinsurance companies. The new minimum paid-up share capital is as follows:
Class of Business, New Capital Base Life Insurance business 2 billion Naira, General Insurance Business 3 billion Naira, Reinsurance companies to 10 billion Naira.

It was also identified that the total market capitalization for the insurance industry then which stood at about N34 billion spread among 103 direct insurers and 4 reinsurers.
Indeed this is the present situation in Ghana; at least four international banks in the country, with the new capitalisation requirement could take more than half the number of insurance companies in the country.
However some industry experts believe that it would not be prudent for Ghanaian insurance firms to recapitalise only to take advantage of the oil business, although the experts believe that recapiatlisation was necessary.
The argument is that the oil business is a risky business and that should all the insurance companies underwrite such a business in the likely event of a disaster, claims from such disaster could wipe off the whole industry.
Experts say Ghanaian insurance firms must be encouraged to spread their risk, so that the industry is protected. Re-insurance provides that safety net for insurance companies, but there are always other pitfalls that should be checked.
While the economy presents some opportunities for the insurance industry, the challenge is how best to educate the Ghanaian public on the need to take insurance policies to protect themselves and their families.

Value added products to transform economy

The government of Ghana is committed to adding value to cocoa produced in the country, so it introduced a policy to ensure that 40 per cent of production is processed locally, Boahene Asamoah explains.

Adding value to raw cocoa beans has always been the plan of successive governments but it has not always been successful.
So the announcement by the government some few years back to introduce policy initiatives that would ensure that over 40 per cent of cocoa produced locally would be processed into semi-finished goods so as to increase its price value was received with mixed reaction. But generally, the initiative holds a lot of promise for the country. Ghana's cocoa is of premium quality on the international market and as a result, many analysts and commentators believe that its semi-processed form could add as much as 40 per cent more to the price currently offered on the international market.
The current cocoa processing activity in the country is not encouraging. In 2007, Ghana exported about 730,000 tonnes of cocoa beans out of which about 13 per cent was processed into semi-finished products like cocoa liquor, butter and cake.
Again, only one per cent of total annual cocoa production is processed into finished products like chocolate, and other confectionery products.
Until recently, the West African Mills (WAMCO), Cocoa Processing Company (CPC) and Barry Callebaut were the only major companies producing semi-finished cocoa products on a large scale for exports. However, over the past three years as a result of the government's policy initiative, new companies have taken advantage of the government's policy and entered the industry to process cocoa beans into finished and semi-finished products, while the major companies already in the industry have made significant investments into their operations to increase their capacity.
CPC for instance has embarked on an expansion programme that would see its production capacity increased to 64,500 metric tonnes of cocoa powder, liquor and cake.
Barry Callebaut has also undertaken an expansion programme that would double its capacity to 60,000 metric tonnes per annum all in anticipation that the government policy would spike up the industry further.
Furthermore, WAMPCO 's capacity has increased tremendously, since it was divested and currently has a capacity of 80,000 metric tonnes.
New companies such as Gergens Cargilm, ADM, Afrotropic and Commodity processing are currently putting up capacities of 60,000; 60,000; 15,000 and 15,000 metric tonnes respectively to process raw cocoa into semi-finished products.
So far Afrotropic and Commodity Processing Industries, which is a joint venture between some Ghanaians and their foreign partners, has started operations, to take advantage of the government's policy and by the end of next year, Cargil and ADM should be in full operations. The combined production of these companies is expected to reach 354,500 tonnes by the end of next year, nearly 50 per cent of total production.
According to some industry experts, this new policy initiative will not only benefit the country, but also the companies themselves. Some of the locally registered cocoa processing companies are already processing beans for their parent companies abroad, which analysts see as a cost-saving measure. Due to the high labour cost in most advanced countries, processing the beans locally saves cost on transportation and labour.
Cocoa importing firms, it seems, are looking up to Ghana to process cocoa for the European and the US market, so as to improve their own bottom-line profit.
Strong demand from China and India has stimulated interest in cocoa products especially from Ghana and West Africa.
Ghana's cocoa enjoys high patronage especially from Japan and other Asian countries.
The only glitch, industry experts have warned, is the rising cost of the price of cocoa beans on the international market. It is believed that if prices keep rising, like they are today, financially it could become more beneficial to sell the raw beans than the processed product.
On the international market, cocoa price currently stands at US$2,862 per metric tonne, the same price local processing firms have to pay for cocoa beans.
Cocoa sales in Ghana are effected through forward sales, which involve contractual arrangements for future delivery of the beans. Cocoa has a long history in Ghana and from 1911 to 1976 Ghana was the world's leading producer, contributing between 30 and 40 per cent of the world's total output.
It is a major export earner for the economy. Since the mid 19th century, cocoa has contributed significantly to the socio-economic development of the country and there are currently around 1.6 million people involved in growing cocoa and many more in associated industries.
Processing of cocoa in the country, however, started in 1947 and in the late 1970s the world market price for cocoa plummeted by two thirds. Ghanaian cocoa farmers were getting less than 40 per cent of the world market price from the state agency responsible for the industry — Cocobod — and so many stopped producing cocoa altogether.
The situation worsened after the droughts and accompanying bush fires of the early 1980s and production in Ghana fell from a third of the world's total in 1972 to just 12 per cent of total world production.
At this stage the World Bank and International Monetary Fund intervened with a Structural Adjustment Programme to "rescue" the economy, and the industry, as it was a major sector for any structural reforms.
Today the government offers over 70 per cent of the producer price to cocoa farmers.
Cocoa production has soared since the government introduced mass spraying of cocoa farms throughout the country, a policy that started in 2002; culminating in record production in 2005.
Due to smuggling, the volume of export from Ghana has reduced in this light crop season.
Cocobod purchased about three per cent less beans from farmers during this year's light-crop season. Cocobod bought 13,613 metric tons of beans from growers by the eighth week of the season, compared with about 14,000 tons in the same period a year earlier, according to sources at Cocobod.
In July, the board said it expected to receive as much as 40,000 tons of the beans, compared with 50,000 tons last season. Fewer controls and poor quality beans in neighbouring Ivory Coast, the world's biggest cocoa grower, enable Ghanaian farmers to fetch higher prices for their crop in that country. Cocobod is working with security agencies in Ghana to reduce smuggling.

Middle-income status by 2015 an illusion?

If Ghana is to achieve a per capita income of US$815 and US$1020 by 2010 and 2012 respectively, its growth rate must increase three-fold from the current level, writes Boahene Asamoah.

Analysts and market watchers agree that Ghana has enjoyed impressive growth rates over the years, significantly improving on an annual growth of 3.7 per cent in 2000 to 6.4 per cent by the end of 2007.

The government has projected a per capita income of US$1,000 by 2015, a tall order that many analysts see as unrealistic, looking at the current economic development. Analysts at Renaissance Capital, for example, are of the view that Gross Domestic Product (GDP) growth has to triple to attain this feat.
This means that economic expansion, which will have to involve all sectors, must be firm.
It is true that the economy has held its own quite well, and that despite all the problems or credit crunch and its attendant problems in some economies, it has managed to steer clear of trouble — at least for now.

“We think that the US$1,000 threshold in income per capita [by 2015] will represent an important psychological boost at a time when oil production starts accelerating structural change,” the analysts said.
In fact, what are needed mostly in the Ghanaian economy are structural changes, since the economy has not changed structurally for more than 50 years.

Analysts are also not sure how even a GDP per capita growth could affect the lives of ordinary Ghanaians, many of whom live below the UN-backed poverty line of less?????????????? than US$1 dollar a day.
GDP per capita growth may not be fully indicative of actual income dynamics as a result of endowment differentials. Even with cross-border comparisons this distortion exists, notably in countries with small populations or oil exporters, leading, in some cases, to inflated GPD per capita levels.

According to Renaissance Capital, in terms of inequality, Ghana's Gini-Co-efficient stands at 40.8 on a scale of 100, thus Ghana is ranked 135th among 177 countries.

This is far below that of most sub-Saharan African countries having a relative level of development.
Research has revealed that recent economic reforms have sustained the consolidation of a domestic middle class, which would become more evident when the results of new surveys are released in the future.
The other worry with the structure of the Ghanaian economy is that there are a large number of people in the informal sector who constitute the bulk of the population whose lives may not be necessarily improved by a GDP growth. Therefore, the anticipation is that any increase in per capita income could be skewed and may only affect the small middle class and so may not be indicative of a real growth in GDP.

???According to the United Nations Development Programme (UNDP) Human Development Report for 2007-2008, Ghana has one of the lowest shares of income held by the 10 and 20 per cents richest segments of the population in the group of the sub-Sahara Africa frontier markets.

It was expected that Ghana would achieve a growth rate of seven per cent at the beginning of the year, but this has been revised downwards to 6.8 per cent as a result of the effects of the volatile oil market and rising food prices.
????The rising food and oil prices have taken a serious hit on the economy, threatening the macro-economic stability at has achieved so far.

This, however, does not derail the focus of the economic managers as government officials are adamant that the economy is strong enough to withstand such external shocks.

Inflation soared in the past months, but has recently shown signs of marginal decline.


Procredit to support sector

Procredit Savings and Loans Company Limited, Ghana, a member of the Procredit Group and a leading savings and loans company in Ghana, has earmarked 50 per cent of its total loan portfolio to support the agricultural sector in the next five years.

According to Ms Edwige Takassi, Managing Director of Procredit Ghana, currently Procredit Agro Loan (which is loans specifically earmarked for the agriculture sector) stands at GH¢1.5 million, representing just eight per cent of its total loan portfolio.

Procredit has made commitment to the agricultural sector, and according to Takassi, even though the current Procredit agro loan was its single largest loan portfolio, it was still not enough to meet the growing need for credit in agriculture.

"Procredit projects that within the next five years, agro loans would account for at least 50 per cent of the institution's loan portfolio," she said.

It estimates that if it is able to raise its funds available for disbursement to a portfolio of GH¢500 million, about GH¢250-million increase within the next five years, GH¢250 million would go to farmers, food processors and other stakeholders in agriculture.
Agriculture continues to be the mainstay of the Ghanaian economy, but it is also the sector that is so much dominated by peasant farmers who are unable to secure the needed credit to expand their farms. However, Procredit hopes to change all this, by providing them with the much needed credit facilities.

"Procredit is determined to become the leading provider of financial services to the agricultural sector," she said. According to Takassi, even though the agricultural sector is the backbone of the Ghanaian economy and employs over 60 per cent of the country's workforce, the sector is hugely underserved by traditional banks and financial services institutions, probably due to the inherent risk in the sector.
"Our agro loans would target farmers and people in agriculture-related businesses who constitute a very significant part of the sector, providing jobs and food for our people and yet do not have access to credit because banks usually require expensive business plans and huge collaterals from them," she said.
"The minimum loan amount is 50 Ghana cedis - loan amount will vary from one farmer to another, depending on the size and value of what the farmer already has," she said.

Meanwhile, Mr Ernest Debrah, the Minister of Food and Agriculture, on Thursday said in order for Ghana to achieve a middle income status by 2015, the country should not only increase its traditional agricultural export, but also diversify and modernise the agricultural sector.

"The horticultural sector, especially the fruits, vegetables and ornamentals, therefore presents an opportunity for the needed diversification, modernisation and accelerating economic growth due to its high potential economic returns," he said.

Mr Debrah said this at the Ninth Annual General Meeting and Scientific Workshop of the Ghana Institute of Horticulturists organised on the theme: "Achieving Middle Income Status in Ghana; The Role of the Horticultural Industry in the Millennium Challenge Account." The workshop, which was organised on September 11, brought together about 200 professionals and students in the industry to deliberate on issues affecting it and find common grounds for advancement.

He said the horticulture industry could play an important role in supporting the government's efforts at wealth creation and poverty reduction.

"The Ghanaian horticultural industry has grown rapidly within the last decade and has enabled Ghana to establish herself among the top six exporters of horticultural produce to Europe."

Databank left off the hook

The Securities and Exchange Commission (SEC) on September 10 announced that it had resolved the impasse between the Ghana Stock Exchange (GSE) and Databank Brokerage Limited (DBL) over the sale and purchase of Cal Bank shares.

A statement issued by Mr K. Okwabi, Deputy Director General, SEC, said subsequently the penalty levied on Databank by the GSE had been waived.

DBL was suspended from trading on the exchange by the GSE in what many analysts see as “improper” their conduct with regard to the Cal Bank shares.

The statement assured the public that the parties in the dispute, as industry participants in the capital market, were committed to the growth of the stock market.

SEC, the statement said, would continue to ensure that conflicts between market participants would be resolved in good time to foster the development of the market.