Country FilesWestCountry Profile 2014: GHANA


Posted on Sunday, 09 February 2014 09:12

Country Profile 2014: GHANA

Democracy’s gain, economy’s downgrade


The year ahead will be the first true test of mettle for PresidentJohn Dramani Mahama, who after coming to power unexpectedly in 2012 had to face an almost immediate election, the results of which were then not fully validated foreight months. The ensuing uncertainty meant that both political governance and economic management have takena while to find some equilibrium.







ar-infographie-ghana-2014Democracy’s gain, economy’s downgrade

The opposition’s challenge to the election results has hurt economic management

Action required to curb deficits, rising domestic debts and high inflation

The year ahead will be the first true test of mettle for PresidentJohn Dramani Mahama, who after coming to power unexpectedly in 2012 had to face an almost immediate election, the results of which were then not fully validated foreight months. The ensuing uncertainty meant that both political governance and economic management have takena while to find some equilibrium. For long-suffering citizens, the more immediate concerns have been the recurringshortages of power and water, as the public utilities struggle to manage their finances and long-term investments.Customer tariffs continue to rise without any sign of improved service.

When the results of the December 2012 presidential and parliamentary results were announced, with PresidentJohn Dramani Maham a for the National Democratic Congress (NDC) retaining his position, the New Patriotic Party (NPP) opposition cried foul. The presidential result was a narrow one, with Mahama at 50.7% and NPP leader Nana Akufo-Addo at 47.7%. An eight-month-long election petition in the SupremeCourt followed, leaving investors waiting in the wings and Ghanaians on the edge of their seats.


The NPP’s court case against the electoral commission and NDC was at first heralded, by national and internationalcommentators alike, as a step that would help solidify Ghana’s acclaimed democracy. Eight months later, however, the country was ready for it to be over with.

When chief justice William Atuguba dismissed the petition on 29 August the country for the most part seemed unperturbed;the streets were quiet for a day and then it was business as usual. In a show of good sportsmanship but undoubted disappointment, the opposition accepted defeat and retreated to prepare for the 2016 election. The NPP will have to face internal leadership issues as Akufo-Addo’s two consecutivelosses have left some members of the party questioning whether he is up to the job. But when it comes to crediblecompetition, there are slim pickings.

Once Akufo-Addo announces his comeback he will no doubt again face his closest rival Alan Kyerematen for the party leadership at their congress set for the second or third quarter of 2014. Within the ruling NDC, former President Jerry Rawlings cannot help playing his disruptive and vocal ‘ex-factor’ role, and in October he again spoke out against “crooks” in the government andMahama’s inability to “kick the badones away”. This follows yet an other year riddled with accusations over so-called ‘judgement debts’.


In August are port evaluating the activities of the Ghana Youth Employment and Entrepreneurial Development Agency(GYEEDA) revealed that contracts had been awarded to some companies on what appeared to be suspicious grounds.Ofthe 950m cedi ($427m) spent between 2009-12 on GYEEDA activities, 786m cedi went to service providers.

Meanwhile, controversy over the sale of a $24m drill ship by the Ghana National Petroleum Corporation (GNPC) in 2001 has resurfaced. Both the NPP, in power at the time, and the NDC are implicated in the sale, which helped settle debts with French bank Société Générale after it advised the GNPC following losses on derivatives transactions. There areclaims that $3.5m from the settlement is unaccounted for. Heading the GNPC at the time was Tsatsu Tsikata, lead counselfor the NDC in the election petition case, but Akufo-Addoover saw the transaction as the then attorney general.

The election petition saga may have been blamed for the government’s shaky handling of the economy, but some members of the ruling party suggest that the issue provided only a fig leaf for its shortcomings. In any case, Mahama’steam clearly has to play catch-up to fix the holes in the economy. Oil-fired growth continues, but may not last foras long as some had hoped, and non-oil growth shows signs of slowing.

Although projections for real GDP growth stand at 7.9% for 2013 and 6.1% for 2014, urgent action is required to reduce the high fiscal and current account deficits, to curb rising domestic debts and to tackle an ongoing surge in inflation. With foreign reserves hovering at less than three months of imports, the economy is more than ever exposed to risks from external factors and financial markets. Reacting to an expectedwidening of the current account deficit to 13% of GDP, credit rating agency Fitch in October downgraded the country from a B+ to B.

Ghana still attracts investment because of its relatively benign business environment, but there are signs of nervousness. In July, the country had to pay a premium to investors in its $750m Eurobond, with a yield of 8%, compared to 6% on its first international bond issue. Yet, at $2.2bn, the order book was around three times the issue size and the government plans to use the proceeds for capital expenditure and refinancing public debt. Finance minister Seth Terkper still hopes to issue more bonds to support infrastructure projects.

ar-infographie-ghana-2014-2DEFICIT REMAINS HIGH

Following IMF advice, the removal of fuel subsidies in June and a sharp hike in utility tariffs in October formed part of a bid to control the budget deficit that stood at 12% of GDP in 2012. But plans to reduce the deficit more sharply are not on track, and Terkper expects it will still be 10% in 2013 and 9% in 2014. The public wage bill weighed heavily on the deficit as the transition to a so-called ‘single spine’ salary structure continued. A September report by the Bank of Ghana showed that public debt rose to 43.9bn cedi, equivalent to 49.5% of GDP, at the end of August 2013, up from 35.1bn cedi in December 2012. Meanwhile, the rate of the cedi’s depreciation against the dollar slowed in the first eight months of the year at 3.9%, against 18.4% over the same period in 2012.

After its power tariff increase, the Volta River Authority said that the company still had a funding gap of 40-50% of its operating costs, hinting that load-sheddingcould resume in the new year. There are plans to increase the tariffs further still, but the erratic power that marked thefirst half of 2013 is likely to return in 2014. The acute load-shedding of 2013 was mostly attributed to damage along theWest African Gas Pipeline from Nigeria. Maintaining regular water supplies has also caused grief, as when parts of Accrawent for days at a time without water. Government says the completion of an expansion project at the Kpong water treatment plant in Weija should see supplies stabilise by the end of 2014.

Although infrastructure took precedence in the government’s plans for 2013- 17, delays to the disbursement of loans have left many projects on the startingblocks. A $3bn infrastructure loan from the China Development Bank was held up in the first quarter, stalling the completionof the long-awaited Atuabo gas processing plant in the Western Region, but the government still hopes that revenues from the plant can be a panacea for the country’s economic woes.

Once the Atuabo plant finally reaches completion – the opening is slated for April 2014, more than a year after it was first expected – it will have the capacity to handle450mcubic feet of gas per day. Meanwhile, current production from the Jubilee field lags behind, with some 100m cubic feet of gas daily in addition to around 110,000 barrels per day of oil. However, exports of oil are rising, with earnings between January and August increasing by 46.9% to $2.8bn, according to the Bank of Ghana.


GOLD MINING ALMOST TOOK A BACK SEAT to oil in Africa’s second-largest gold-producing country in 2013, as the price of the precious mineral fell on the global market from more than $1,750 per ounce in November 2012 to around $1,200 in June 2013. Ghana’s January-August earnings from gold fell by 12.6% to $3.4bn. After production at 4.2m ounces in 2012, the Minerals Commission expected output to fall by around 18% in 2013.

Mining companies made moves to lower operation costs by cutting jobs. Losses of 300 jobs at Newmont’s Ahafo mine and 400 at Anglogold’s Obuasi mine were anticipated by the end of 2013. Still, Newmont was simultaneously hoping to begin production at its Akyem project in the Eastern Region with newproduction potential of up to 450,000 ounces annually.

As the gold industry strives to modernise, some 4,000-4,500 people were deported in June and July after they were caughtengaging in illegal small-scale mining (known locally as galamsey). Nationalities have not been confirmed but the vast majority were thought to be Chinese.Deposits of lead, copper and zinc were identified in the Volta Region in July and investigations are being conducted to discover how viable the find might be for commercial production. Ghana already produces gold, diamonds, bauxite and manganese.



Rank 2012Rank 2011CompanySectorCountryTurnover (Thds $)Turnover changeNet profits
187166MTN GHANATELECOMSGHANA729,674-14.18%0
311336GHANA OIL CO.PETROL. SERVICESGHANA405,56218.07%5,268



Rank 2012Rank 2011Bank nameCountryTotal assetsNet interest incomeLoansDeposits
114106GHANA COMMERCIAL BANKGHANA1,487,412124,875287,5411,244,688
129-STANDARD CHARTERED BANK GHANAGHANA1,190,147131,231360,308893,450
132121BARCLAYS BANK OF GHANAGHANA1,151,46193,175355,424804,143
136133ECOBANK GHANA*GHANA1,046,813125,926341,345768,189
164163STANBIC BANK GHANAGHANA686,52177,123303,987551,245
165154AGRICULTURAL DEVELOPMENT BANK*GHANA681,35895,595385,300357,983
173-FIDELITY BANK GHANAGHANA622,43028,967247,307541,403
185168MERCHANT BANK GHANA*GHANA543,46966,707155,633435,850
190-NATIONAL INVESTMENT BANKGHANA531,53245,208192,128436,488
197187SOCIT GNRALE - SSB BANKGHANA507,85166,735208,040377,849
200-CAL BANKGHANA488,70224,994248,517354,298

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