Title: Ghana in Talks With Brazil, Abu Dhabi for Financing
Ghana, the West African nation that had its credit rating cut in October, is in talks with Brazil, Abu Dhabi and South Africa for financing, President John Dramani Mahama said.
“The appetite for investment in Ghana is strong,” Mahama said in an interview at the World Economic Forum in Davos, Switzerland yesterday. “We have short-term challenges and we don’t hide it, we are transparent and open about it. We are doing things to fix it.”
Fitch Ratings cut Ghana’s credit on Oct. 17 due to concerns that the government will overrun spending and won’t reach a fiscal-deficit target of 8.5 percent this year. Fitch cut Ghana’s rating one level to B, five steps below investment grade, while Standard & Poor’s and Moody’s Investors Service last month lowered the outlook on Ghana’s ratings to negative from stable.
“They have too short-term a view,” Mahama said of the ratings cut. “There is strong confidence in Ghana’s economy.”
The president reiterated plans to sell bonds in overseas markets, saying the government will issue this year at least $1 billion of securities and that the amount could swell to $1.5 billion “if the market looks very good.” It’d be the country’s third international offering.
Ghana sold $1 billion of 10-year dollar-denominated bonds in July, joining a surge in African nations’ overseas issuance, to help finance its budget deficit. The bonds yielded 8.61 percent yesterday, up from 8 percent at their sale last year. The country hasn’t yet chosen banks to help arrange a new deal, Mahama said.
Deputy Finance Minister George Ricketts-Hagan said earlier this month that the government wanted to tap the international market in April.
A slump in gold prices, shrinking investor confidence, and less-than-anticipated oil output meant that Ghana was unable to meet its growth target. Gross domestic product probably expanded 7.4 percent last year, less than the projected 7.9 percent, Finance Minister Seth Terkper said Nov. 19.
Mahama, 55, assumed office in July 2012 following the sudden death of John Atta Mills, who fell ill toward the end of his first term. The former vice president won elections five months later with a 3 percentage point victory over the main opposition party. A dispute over the results, which ended when the Supreme court upheld Mahama’s win, slowed the pace of investment in West Africa’s second-biggest economy last year.
Gold-mining companies in Ghana plan to scrap as much as 4,000 jobs to reduce spending after the gold price dropped 28 percent last year, according to the Chamber of Mines. AngloGold Ashanti Ltd. (ANG) Chairman Tito Mboweni told Bloomberg TV this week that inflexible labor laws and outdated work practices are “enormous challenges” for the company’s gold mine in Ghana.
The challenges facing gold companies cannot be tied to labor laws, Mahama said. The companies will need to reach a consensus with workers to continue operations, he said. Gold dropped 28 percent last year, its first annual drop since 2000.
“I must say that Ghana has a strong tradition of trade unions,” Mahama said. “The workers are quite enlightened about their rights, they negotiate strongly.”
The government is struggling to narrow a budget deficit that grew to 12.1 percent of gross domestic product in 2012 due to election spending and an increase of state workers’ salaries. Wages now account for 72 percent of tax revenue. The government raised taxes, cut fuel subsidies and increased the price of electricity and water to narrow the gap. Ghana is targeting a fiscal gap of 8.5 percent this year, while the International Monetary Fund sees a budget deficit of 9.1 percent.
“We are taking all the measures to try and rein it in,” Mahama said of the fiscal deficit. “One is by reducing expenditures and two, by raising revenues.”
The central bank has raised borrowing costs 3.5 percentage points since 2012 to 16 percent in a bid to tame inflation that quickened the most in almost four years because of a weak currency and an unprecedented jump in fuel and electricity prices after the government cut subsidies. The inflation rate rose to 13.5 percent in December from 13.2 in November.
The cedi dropped 0.9 percent to 2.43 per dollar by 10:46 a.m. in Accra after strengthening 0.5 percent yesterday. The currency dropped 20 percent against the dollar last year, the worst among 22 African currencies tracked by Bloomberg after the Malawian kwacha and Sudan’s pound. The currency has depreciated every year since at least 1995, according to data compiled by Bloomberg, which began compiling the data in May 1994.
“We are trying to get the macro right because its key to our vision of creating an environment for foreign direct investment and for the private sector to bloom,” he said.
Paulina says: What's going on Ghana? ....I just don't know folks but........ our brothers to the east are working as team, a very aspirational and successful one at that!!! A team consisting of their President Goodluck Jonathan, a select few ministers, a handful of billionaire businessmen including: Aliko Dangote and banker Jim Ovia and for a pop of relevant popular culture (Davos is about solutions, advice, the glamorous and the fabulous after all) -music producer Cobhams Asuquo, -all went to Davos to represent a prospering Nigeria -and you know what --its quite impressive!!!
All wearing warm team building green and white scarves (Switzerland is cold after all), which President Goodluck Jonathan of Nigeria later put around our President John Mahama's neck??? I don't know if he did it for a bit of fun or if he thought our president was cold (mercy) --regardless, I feel that the Nigerians are getting it...-and are clever enough to use their largess to wow the worlds media -which I must add ---haven't wasted a minute with regards to the 'newly' glamorous Aliko Dangote, he is Africa and Forbes' richest African man after all (even if he wasn't, he will be now -as his being celebrated by Forbes will most definitely have helped him secure more funding for his various new ventures) -reporting his every word/wants and suggestions concerning what African governments should be doing!!!!
So while Nigeria's representatives definitely 'went-to-work, or 'Profile' as I prefer to call it -our representatives ---ok I'm going to be honest here, the thing is......apart from President John Mahama I don't know who else was there from Ghana...
I don't know if we Ghanaians were/are being our usual secretive self (nervous bored laughter) or if President John Mahama went on his own -either way.........dot, dot, dot.......regardless it just lacks-lustre!!! Still its good to see photos of Ghana Rising fave, Cardinal Peter Turkson, president of the Pontifical Council for Peace and Justice and actor Idris Elba at Davos 2014!!!
I then......dared to tear myself away from the news of the week --which as far as Africa is concerned ---is all about future Nigerian president in the making Aliko Dangote, and read what's been written about 'us' with regards to our precious homeland Ghana -and low-and-behold (oh crumbs......oh heavens)............. it has the word BORROW in it!!!!!
Instead of using the uber platform that is the World Economic Forum in Davos Switzerland to sell Ghana, ----I think we still have Oil -no? Our agriculture sector is gaining grounds -no? River Island is coming to Ghana ---ok I'll leave it there!!!!.........All that's been reported about our sweet homeland Ghana is according to FT and Bloomberg et al ---is that our President John Mahama is in talks with Brazil and Abu Dhabi and South Africa for financing!!!!!
I don't know what else to say!!!!!..........Will we always be borrowers and never lenders?????
Ghana has a few good PR firms now --see past posts, I suggest for next year's Davos, -that team Ghana seeks professional advice about how to package Ghana to the rest of the world especially at such a prestigious event/platform -and go with a mind to selling Ghana's yumminess /assets etc, etc ---and leave the begging bowl at home in one of those open gutters in Accra!!!!!
"As at today, an American has more access to Africa than myself, taking visa issues into consideration. I would require 38 visas to visit 38 African countries outside of ECOWAS." Aliko Dangote
"For instance, foreign investors wait for elections to be concluded. After then, they try to check the stability of the government of the day, for at least two years, but by then, its more difficult to take any decision because the tenure of the government is coming to an end. By so doing, foreign investors are scared of incoming or incumbent governments and the cycle keeps going on," Aliko Dangote
"The government needs to make a policy where we don’t supply/export raw materials alone; we want to be involved. We want those factories to be set up and produce here, run it for us for about 4-5 years, then we can take over production ourselves. Majority of our raw materials have been exported, processed abroad and brought back with at least 10 percent higher than the original cost." Aliko Dangote
"In Nigeria, we have one of the most attractive investment policies through framework that the government has put in place to help businesses succeed. If I dreamt five years ago that I would invest in agriculture, I would write it off as bad dream or nightmare, but today, we’re investing $2.3 billion in agriculture, $2 billion in sugar, and $300 million in rice," Aliko Dangote
"In agriculture, we’re going to create 180,000 jobs in the next four years in Nigeria. African governments need to invest in infrastructure, education, economic stability." Aliko Dangote
A List of South Africans in Davos - http://businesstech.co.za/news/international/51767/full-list-of-south-africans-at-davos-2014/