1. A M O N T H L Y M A G A Z I N E
BUSINESS & FINANCE MARCH 2011 / ISSUE 003 GH¢5.00
Bulk Oil Storage
Ghana’s new key
to gas-based
industrialisation
(page 26)
New private
pensions
A better promise
than oil & gas? Ghana’s potent
mining industry
(page 18)
Great output &
values, but not seen
in mining communities
(page 15)
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3. GHANA
BUSINESS & FINANCE MARCH 2011 / ISSUE 003
Managing Editor
Mark A. Kwateng
makwateng@ghanabizmedia.com
Contents
Special Reports Editor
Evans Boah-Mensah
ebmensah@ghanabizmedia.com
Copy Editor
Nana Spio-Garbrah
nspio-garbrah@ghanabizmedia.com
Contributors Leader
Emilie Norkor Kinkan
Raphael Adeniran 5..... Lessons for Ghana from Tunisia’s
Fred Alipui Jasmine Revolution
Nana Robert Mensah Despite the seeming distance in culture,
Director, Sales & Marketing
geography and history between Sub-
Martino Kashif Saharan Africa and the Middle East
mkashif@ghanabizmedia.com and North African region, the popular
revolts in Tunisia and Egypt begs an
Deputy Manager, Marketing examination of the lessons that other
Michel Kouassigan
mkouassigan@ghanabizmedia.com countries can draw.
Deputy Manager, Circulation & Subscriptions Mining: Too late to count on
Josiah Spio-Garbrah mining as a catalyst? Page 15
jspio-garbrah@ghanabizmedia.com Bulletins
Editorial Committee 8..... The economy this month
Prof. Paul N. Buatsi Check out developments in various
Prof. Kwame Addo sectors of the economy and what is up
Mr. Gaddy Laryea and coming.
Dr. Ekwow Spio-Garbrah
Mr. Ray de Bono
Nana Robert Mensah 11..... Business & finance this month
Mr. Fredrick Alipui Take a look at up-coming events in
Ms. Susie Efua Kotoku corporate Ghana, business acquisitions
Ms. Johanna Awotwi and partnerships as well as product
Ms. Dede-Esi Amanor-Wilks and service launches.
Dr. Stephen Ayidiya
Mr. Sam Fletcher
Office Location: Mining Energy: BOST - the logistics
Ghana Business & Finance centre for Ghana’s gas-based
African Business Media 15..... In pursuit of economic industrialisation. Page 26
House No. 7, independence: Too late to count
Lamb Street (Off Farrar Avenue) on mining as a catalyst?
Adabraka, Accra The high local expectation that Ghana’s
Ghana oil can serve as a major catalyst for rapid
Mailing Address: economic transformation seems to be
P.O. Box 0772, Osu, Accra, Ghana informed by the apparent failure of
Tel: +233 302 240 786 the country to harness the full benefits
Fax: +233 302 240 783 of gold mining.
editor@ghanabizmedia.com
adverts@ghanabizmedia.com
subscriptions@ghanabizmedia.com Pensions
info@ghanabizmedia.com
18..... New pension law to mobilise
major funds, improve retirements
of Ghanaians
Under a new pension regime, many
self-employed people operating
Branding, Layout & Design of the in the informal sector, just like
“Ghana Business & Finance” magazine
by Dmax Studios in Malta, EU. (www.dmax.tv) their formal sector counterparts Telecom: Time for telcos
can look forward to a more to earn their money. Page 30
CEO & Art Director secure retirement.
Ray de Bono
ceo@dmax.tv
Senior Designer-in-Charge of Publication
Sasha Vella
Studio Support Executive
(in charge of GB&F Online)
Jonathan Galea
IT Strategy Director
Uwe Schoenfeld
Subscribe online at www.ghanabizmedia.com
or please refer to page 10
Contents continued overleaf
All information contained within this magazine is the property of Ghana Business & Finance and is not to be used without written authorisation from
GHANA
the publishers. Although every effort is made to ensure the correctness of information submitted for publication, the magazine may inadvertently contain
technical inaccuracies or typographical errors. Ghana Business & Finance assumes no responsibility for errors or omissions in this publication or other
documents that are referenced by or linked to this publication. BUSINESS & FINANCE
3

4. GHANA
BUSINESS & FINANCE MARCH 2011 / ISSUE 003
Contents
Insurance Agriculture Trade
22..... Provident Life Assurance: The 37..... Venture Capital Fund helps boost 51..... Welcome to the Ghana rice wars
private pension scheme specialist local poultry, maize, sorghum The lack of government subsidy means
One of the many companies which are and soya production Ghanaian farmers cannot afford to
waiting anxiously to play a significant Ghana’s poultry industry, which used to invest in machinery such as combine-
role in the second and third tiers of the be counted among the country’s major harvesters. Imported rice brands,
new pension industry, Provident Life economic growth drivers two decades however, are heavily subsidised by
Assurance, is already meeting the long ago, is gearing up for a comeback foreign governments, leading to
term saving needs of workers. to economic significance. a "rice war" in Ghana.
Energy Ecowas WACAM
26..... BOST: the logistics centre 41..... Monetary Union for West Africa: 56..... Ghana’s Mining Sector: More harm
for Ghana’s gas-based Great expectations from WAMI than good?
industrialisation The question if and when the West Ghana has had a long history of
From its original mandate of managing African region can enjoy a common mining, especially of gold and still
Ghana’s strategic stocks of petroleum currency based on a monetary union US$2 a day is all that some have
products, BOST is now expected to continues to exercise the minds to live on.
spearhead the country’s gas-based of the region’s leaders.
industrialisation.
Financial Markets
Taxation 58..... Ghana’s bonds gain as political
Telecom 44..... Revenue authority balance act turbulence and inflation fears
30..... Piloting mobile number portability: between reforms and increased grip global emerging markets
Time for telcos to earn their money collection Ghana’s inflation rate continues to
Telecom companies in Ghana are getting The Ghana Revenue Authority barely fall. With rising cocoa and gold prices,
mixed feelings of apprehension and managed to meet its revenue target the Cedi is poised for a significant
enthusiasm, as the test run of the proposed for last year but is determined to do appreciation in 2011, making the
mobile number portability system begins. better this year on the back of reforms country’s bonds even more attractive
and the new oil sector. to foreign investors.
Banking
34..... Ghana’s parastatals to benefit
Economy
from new funding options 47..... Uneasy road to economic freedom
for infrastructure Ghana will find reason to celebrate her
Given the fast pace in economic political freedom as the country marks
growth and the potentially huge 54 years of independence on March 6th
financing opportunities for but at the same time, the occasion will
infrastructure development, call for sober reflection on why after
Barclays, one of the nation’s oldest more than five decades of self-rule,
and well capitalised banks, economic transformation and Pensions: New pension law to mobilise
major funds, improve retirements...
has started engaging government development seem to have eluded Page 18
and its parastatals. the country.
4 GHANA
BUSINESS & FINANCE

5. LEADER
Lessons for Ghana
from Tunisia’s Jasmine Revolution
The public demonstrations which culminated on January 14th in the departure of President Ben Ali of Tunisia put
another African country in a state of political insecurity. Despite the seeming distance in culture, geography and history
between sub-Saharan Africa and the Middle East and North African (MENA) region, any activity of this magnitude
on the continent begs an examination of the lessons that other countries can draw.
T
he devil makes mischief for idle hands But Ghana is also likely to escape the Tunisian-style Jasmine
revolution because of the high level of openness of the
The revolution in Tunisia resulted from a single media, freedom of association and speech, active political parties,
act of frustration by 26-year-old Mohamed and a relatively robust electoral system that is the envy of
Bouaziz on December 17th, 2010. Although many other countries.
he eventually died from his self-immolation
injuries and did not get to enjoy the end of 23 years of With the National Youth Policy just developed in August 2010,
autocracy, his experience incited thousands of other newly assigned Education Minister, Mrs. Betty Mould-Iddrissu,
unemployed but well-educated youth to take to the streets and will have to work closely with the Minister of Youth and
demand civil liberties and better economic conditions for the Employment, Mr. Enoch Tei Mensah to pay closer attention
first time since the mid-1980s. to ensuring that the educational curriculum churns out graduates
that are more employable. Additionally, the two ministries will
An estimated 50% of Ghana’s population is aged between 14 also need to engage the private sector more effectively in
and 35 years old. Nearly 900 public and private senior secondary creating more viable employment options for young
schools, 28 training colleges, 20 technical colleges and more graduates. The main lesson from Tunisia is that youth with
than 50 active public and private universities imply that a lot nothing to lose create an untenable economic environment.
of young people in Ghana are increasingly becoming formally In particular, the two Ministries need to address the claims in
educated. But, the private sector has a tendency to criticize the 2010 Education Sector Performance report, that “there
graduates as being generally unprepared for the workplace. is also no analysis of labour market and economic needs to
Although the ‘reaspora’ movement is filling that knowledge make curriculum much more relevant. Consequently, most
gap, it is also exacerbating the local youth unemployment issue. teachers interviewed are still not sure of the relevance of the
curriculum and syllabus to labour market needs”. With a
According to the online edition of the Ghanaian Chronicle, budget of just GH¢775,166 for the very vital Curriculum,
Ghana’s formal sector is only able to produce about 5,000 Research and Development work of the Ghana Education
new jobs a year, absorbing just 2% of graduates annually. Service for 2011, it is clear that private sector intervention in
However, it is likely that government sources will offer this aspect of youth development is critical.
significantly different and more positive data. Ghana’s National
Youth Employment Programme (NYEP) has tried to address
this issue since it was launched in 2006. Nearly 800,000 mostly “The only way even God dares to appear before a hungry
young people have applied to participate in the programme man is in the form of food” - Mahatma Ghandi
to date and its 2011 budget allocation is GH¢16.79 million.
The second biggest grievance of protesters in Tunis was the
However, it has been marred with financial woes and its price of food, particularly bread. Despite the international
sustainability has been questioned. Within its first two years food crisis of 2007, inflation when viewed holistically has not
of operations, the NYEP owed the Agricultural Development been higher than 10% for most of Ben Ali’s period as President.
Bank (ADB), GH¢17 million and had five months of unpaid Inflation in Ghana averaged over the last 5 years is 16.47%.
allowances to beneficiaries. Its cumulative debt to ADB stood Even though the Finance Minister and the Central Bank must
at GH¢23 million in 2009. be lauded for their successes in reducing the inflation rate,
one should not forget that inflation represents the rate at
The newly proposed National Youth Employment Bill aims which general price levels increase. A reduction in inflation
to counteract these funding challenges by providing an trends does not mean that prices are not still too high in
instrument to which funds due to the NYEP will be sequestered relative terms. In September 2010, the advocacy group, Food
from accredited funding institutions and also by dedicating Security Ghana, published an article which stated that “the
60% of the Communication Service Tax to the programme. issue of food insecurity and high cost of food has compelled
people to spend about 70% of their income on food alone,
Despite these efforts, the NYEP has been criticised for having rather than on education, health and miscellaneous things.”
modules that are too broad and not necessarily strategically Given the state of rage that ensued over the high costs of rice
aligned to the development agenda of the country. But the imports into Ghana, this is a hot topic for most Ghanaians
programme has responded already by eliminating certain as well.
modules in favour of those that promote entrepreneurism.
Ghana, so far, seems to have successfully avoided the kinds The FAO Food Outlook report of November 2010 reports
of socio-political tensions that could rise to the level of Tunisia that “following a series of unexpected downward revisions to
partly because of its quite large informal sector, which accounts crop forecasts in several major producing countries, world
for an estimated 70% of all employment in Ghana prices have risen alarmingly and at a much faster pace than in
and has led to the establishment by government of a National 2007/08. Food Security Ghana published comments from
Committee on the Informal Economy (NCIE), aimed at World Bank Senior Economist, Robert Townsend, which read
providing a policy and operational oversight of this inadequately “in West Africa, rice accounts for a much larger share of food
understood sub-sector. consumption than in Eastern and Southern Africa.
GHANA
BUSINESS & FINANCE
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8. MINING
In pursuit of economic independence:
Too late to count on mining as a catalyst?
The refrain in Ghana about promoting local content has not changed,
five months after the production of the country’s first oil and four years
after the discovery of the natural resource.
T
he high local expectation that Ghana’s oil can serve According to Dr. Aryee, all the pipes that are used in the mines
as a major catalyst for rapid economic transformation as well as huge volumes of cement are produced by local
seems to be informed by the apparent failure of manufacturers such as Interplast, Duraplast and Ghacem.
the country to harness the full benefits of other
equally high-end natural resources such as gold and She said other Ghanaian-owned major mining contractors,
diamonds. such as Engineers and Planners and Drill Masters control a fair
share of the market and can hold their own against
It is believed that if the country had promoted local content in established competitors like African Mining Services, an Australian
her century-old mining sector, the country’s economy would have company. In spite of what the Chamber considers as gains in the
seen a much swifter economic transformation and marked sector, many who argue the industry has not done much to
improvement in the living standards of the people. improve the standard of living in mining communities cite the
deprived conditions in mining towns like Obuasi and Tarkwa.
“The Chamber has been at the forefront of the promotion of
local content in the country over the years,” Dr. Joyce Aryee, “People say Obuasi is ugly but without the mines there will be
CEO of Ghana Chamber of Mines, told GB&F in an exclusive nothing there. And its ugliness has nothing to do with the mine.
interview. It has everything to do with our own concept of building a town
or a city. Obuasi will never become
“The way I understand local content is that a nation will make a Johannesburg unless we plan for
sure that as far as possible a lot of jobs can be done by Ghanaians it. We will never become an
and a lot of services can be provided by Ghanaian companies. Australia unless we plan for it.
Currently, expatriate employees in the mining sector constitute will never become a San Francisco
only 2% and the rest are all Ghanaians. There are a lot of which is a financial centre that
Ghanaian companies that supply inputs to the mining industry. also was established on the back
Goods such as explosives, lime, grinding balls and heat exchangers of mining, unless we plan for it.
are procured locally. A 100% owned Ghanaian company like Most of our structures for planning
Hufra-Tech uses high level technology to supply goods such as have totally broken down. Nobody
heat exchangers to the mining companies. In 2009, the industry thinks planning is an important part
spent over US$1.1 billion out of the US$2.3 billion revenue of the development agenda.” she said.
realised to procure local inputs,” she added.
GHANA
BUSINESS & FINANCE
15

9. PENSIONS
New pension
law to mobilise
major funds,
improve retirements
of Ghanaians
Until January 2010, only workers in
the Ghanaian formal sector could count on
the state’s paternalistic role of assuring
them of a retirement income.
Mr. Wilson Tei, Managing Director of Provident Life Assurance
U
nder the new pension regime, Ghanaian farmers, Furthermore, the new pension law also encourages workers to
carpenters, taxi drivers and many other self-employed subscribe to voluntary privately managed third-tier pension
people operating in the informal sector, just like schemes in addition to both the mandatory first-tier scheme
their formal sector counterparts, can look forward managed solely by SSNIT and the second-tier schemes managed
to a more secure retirement in view of the multiple by private fund managers. The third-tier schemes will mainly
sources of potential retirement income the new make provision for privately managed provident funds and
pension law offers. Unlike previously when retirees received both personal pension schemes that enables self-employed artisans,
a lump sum payment and monthly pension payments from the traders, farmers and others operating in the informal economy
state pension fund manager, Social Security and National Insurance to also prepare for a dignified retirement.
Trust (SSNIT), the new pension law (National Pensions Act 766)
now provides for a separation of these payments to the retiree “The new pension law also provides that up to 35% of a worker’s
between SSNIT and other institutions. income, which is saved in pension schemes, not be subject to
taxation,” said Dr. Francis Sapara-Grant, MD of SSNIT Informal
“Previously all the funds (workers’ monthly contributions) went Sector Fund, in an exclusive interview with GB&F. He explains
to SSNIT and generally people have been dissatisfied with the further: “In view of the tax incentives provided by the new
performance of SSNIT. The attempt now is to ensure that part pension law, it is expected that workers will be motivated to
of the money goes out to other fund managers to attempt to grow subscribe to the three-tier pension scheme in order to reap its
the money better,” says Mr. Wilson Tei, Managing Director benefits fully. In the process, billions of cedis are expected to be
of Provident Life Assurance, in an exclusive interview with GB&F. mobilised that can be invested in the long term.”
Consequently, based on the new law, out of the total contribution Based on the prospects of huge sums of long-term funds, some
of 18.5% of the basic salary that is supposed to be paid by analysts say the new pension regime would do a lot more
employers on behalf of their employees to SSNIT, 5% is expected for Ghana’s economy than the new oil and gas industry.
to be transferred by SSNIT to approved trustees for management “By its nature, pension funds are long-term funds that
on the behalf of scheme members. The approved trustees, who would keep accumulating as long as contribution
will compete for these funds, are subsequently required to manage mobilisations exceed benefit payments. Thus, where such
these contributions and pay lump sum benefits to workers upon savings are invested primarily in the country, they become an
attainment of the retirement age, in addition to the monthly ever-increasing source of development capital for the nation,”
pensions to be paid by SSNIT to the pensioner. said Dr. Sapara-Grant.
18 GHANA
BUSINESS & FINANCE

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12. Ghana’s bonds gain as political turbulence
FINANCIAL MARKETS
and inflation fears grip global emerging markets
As expected, Nigeria on Friday January 21st launched
its B+ 10-year $500mn Eurobond issue at 6.75% coupon rate.
T
he issue was successfully oversubscribed As a result, countries such as Kenya, Zambia and Nigeria,
at 2.5 times however, due to growing worries who are all hoping to tap the debt markets, will likely be able
about Nigeria’s fiscal management - especially to do so later in 2011. Of the three, the Nigerian and Zambian
as it relates to government management of the issuances will be most problematic because they are indirectly
excess crude oil account - the yields on the tied to the direction of commodity prices - copper for Zambia
Nigerian issue at 7% were higher than Ghana’s and oil for Nigeria. Both commodities, despite their recent
lower ‘B’ rated issue that is yielding only at 6.3% and Gabon’s price rises, are likely to face strong headwinds in 2011 as the
2017 Eurobond, rated one step higher by S&P, but yielding global financial system remains ensnared in a ‘liquidity trap’
at 5.32%. Nigerian Finance Minister Olusegun Aganga, who with bank intermediation channels clogged with bad loans
is expected to step down in April after he likely wins a senate and toxic assets. Recent anti-inflationary measures by China
seat in his home state of Edo, will have to answer to increasing will also impose a ceiling on global commodity prices in 2011.
investor questions over the nation’s fiscal management.
Conversely, Ghana’s inflation rate continues to fall and with In Egypt, Nigeria and Cape Verde, the expected ratings
rising cocoa and gold prices, the Cedi is poised for a significant downgrades will be partly based on tensions surrounding their
appreciation in 2011, making Ghana’s bonds even more respective national elections and the resulting political instability.
attractive to foreign buyers. In Ghana, Uganda and South Africa, the likely ratings upgrades
will reflect improving government revenues and stronger than
Meanwhile, Nigeria’s growing budget deficit and worries over expected macroeconomic fundamentals. Ghana’s new oil
fiscal management means that the Nigerian central bank’s revenues will bolster government coffers. In Ghana the passage
program of defending the Naira at around N152/$1 may also of a much expected Oil Revenue Law will likely trigger an
come under increased pressure as foreign exchange reserves S&P ratings upgrade. In Senegal, growing fear of inflation
dwindle. If currently elevated global oil prices take a downward and the lack of political clarity over who will succeed President
turn on renewed European financial worries, growing Chinese Abdoulaye Wade will likely trigger a ratings downgrade
inflation worries and monetary tightening or a 2011 US fiscal sometime in 2011.
austerity budget, worries over Nigeria’s government revenues
and fiscal management will only deepen and push its Eurobond
yields higher. Ghana’s yields are conversely expected to trend
lower as foreign investors demand the issue and the price of
the bonds rises. Ghana’s sovereign debt ratings will likely see
an upgrade this year. On the back of accelerated GDP growth
and falling inflation, many African countries with outstanding
Eurobond debt issues will see a ratings upgrade in 2011.
S&P Fitch Moody's Likely 2011 Actions
Angola B+/Stable/B B+/B/Positive B1 Upgrade
Benin B/Positive/B B/B/Stable No change
Burkina Faso B/Stable/B No change
Cameroon B/Stable/B B/B-/Stable No change
Cape Verde B+/Negative/B B+/ BB-/Stable Downgrade on election risk / political instability
Egypt BBB-/Stable/A-3 BB+/BBB-/Stable Ba1/Stable Downgrade on political instability
Gabon BB-/Stable/B BB-/BB-/Stable No change
Ghana B/Stable/B B+/B+ Upgrade improving macro, revenue outlook
Kenya B+/Stable/B B No change
Libya A-/Stable/A-2 B+/ BB-/Stable No change
Morocco BBB+/Stable/A-2 BBB-/BBB/Stable Ba1/Stable No change
Mozambique B+/Stable/B B/ B+/Stable No change
Nigeria B+/Stable/B BB-/BB-/Negative Downgrade on election risk / political instability
Senegal B+/Negative/ B Downgrade on surging inflation / President Wade
re-election risk
South Africa A+/Negative/A-1 BBB+/A/Negative A3/Stable Upgrade on falling oil prices, stabilising inflation outlook
Tunisia A-/Stable/A-2 BBB/A-/Stable Baa2/Stable No change
Uganda B+/Stable/B B/B Upgrade on relatively peaceful polls
58 GHANA
BUSINESS & FINANCE