A MONTHLY MAGAZINE

BUSINESS & FINANCE JULY 2012 / ISSUE 017 GH¢10.00

Dollarisation of economy: Matters arising (page 27) Obama’s new policy - Any good news for Ghana? (page 38) Glo Mobile causes stir in telecom market - What’s secret? Talal Fattal-- (page 54) a multi-talented business success

USA...... $7.00 CFA ZONE...... CFA 2,500 UK...... £5.00 NIGERIA...... N1000 (page 18) EUROPE...... 5.00 SOUTH AFRICA...... R45 AUSTRALIA...... A$8.50 SOUTHERN AFRICA...R45

THE FIRST BUSINESS READ IN GHANA Follow us online at www.ghanabizmedia.com

AZINE AG LY M ONTH A M

JULY 2012 / ISSUE 017 Editor BUSINESS & FINANCEGH¢10.00 Felix Dela Klutse Deputy Editor Utche Okwuosah

Senior Writer Dollarisation of economy: Effah Amponsah Matters arising (page 27) Obama’s new Contributors policy - Any good news for Ghana? Daniel Nonor (page 38) Glo Mobile causes stir Talal Fattal-- Justice Lee Adoboe in telecom market - What’s secret? a multi-talented (page 54) General Manager business success (page 18)

CFA 2,500 CFA ZONE...... Martino Kashif ...... $7.00 N1000 USA...... NIGERIA...... £5.00 A...... R45 UK...... SOUTH AFRIC 5.00 RICA...R45 EUROPE...... OUTHERN AF $8.50 S ALIA...... A [email protected] AUSTR Follow us online at www.ghanabizmedia.com THE FIRST BUSINESS READ IN GHANA Deputy Manager, Marketing Michel Kouassigan [email protected] JULY 2012 / ISSUE 017 Deputy Manager, Circulation Front Cover: Talal Fattal, CEO of Metro TV -Ghana & Subscriptions Josiah Spio-Garbrah [email protected] Editorial Committee Prof. Paul N. Buatsi Prof. Kwame Addo Contents Ms. Johanna Awotwi Mr. Gaddy Laryea 5..... Editor’s Suite 14..... Trade Mr. Ray de Bono Nana Robert Mensah About a month ago, a local news China is currently commanding great Mr. Fredrick Alipui reports emerged that the Kingdom of attention from the global economies Ms. Dede-Esi Amanor-Wilks the Netherlands have announced their due to its consistent increase in Nana Spio-Garbrah intention to withdraw their funding consumer spending. Office Location: support for Ghana’s budget after Ghana Business & Finance 2012. What is the reason? Read this African Business Media piece to find out. House No. 7, 18..... Cover Story Lamb Street (Off Farrar Avenue) The mention of Metro TV and Soccer Adabraka, Accra Academy pops up one name - Talal Ghana 6..... World Economy Fattal, a multi-talented man whose Mailing Address: Get to know the emerging dynamics contributions to the media and P.O. Box 0772, Osu, Accra, Ghana characterising the developed and economy of Ghana are apparent. How Tel: +233 302 240 786 developing economies in the world. much do you know him? Fax: +233 302 240 783 [email protected] [email protected] 8..... News in Brief [email protected] [email protected] Bring yourself up to speed on the business and business-related news in Ghana

Branding, Layout & Design of the 12..... Manufacturing “Ghana Business & Finance” magazine GHACEM is now attempting to hold by Dmax Studios in Malta, EU. (www.dmax.tv) World Bank responsible for the latter’s statement on breaking duopoly of cement CEO & Art Director Barclay’s Libor controversy production. Is the move by GHACEM is on Page 57 Ray de Bono necessary? [email protected] Senior Designer-in-Charge of Publication Sasha Vella & Team Studio Support Executive (in charge of GB&F Online) Jonathan Galea & Team IT Strategy Director Uwe Schoenfeld Subscribe online at www.ghanabizmedia.com or please refer to page 53

All information contained within this magazine is the property of Ghana Business & Finance and is not to be used without written authorisation from 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. Contents continue overleaf

JULY 2012 3 22..... Banking and Finance 36..... Oil and Gas 44..... Analysis Having met its required minimum Ghanaians are learning the hard It is interesting to behold how the capital through the equity way; conserving forest cover by tables are turning in the favor of participation, UT Bank proposes subsidising consumption of LPG Africa regarding macroeconomic to inject new vigour into its passion is proving extremely costly as growth to the disadvantage of the to remain trusted partners to SMEs. free-riders’ demand overwhelms developed economies. Africa is How would it do this? supply, and threatens to upend the gradually soaring! Read this piece programme. to learn more.

24..... Diplomatic Relations India is fast establishing itself as a 38..... Feature 54..... Special Report new friend of Africa and After months of braving much The predictions of telecom particularly Ghana, when it comes criticism for its lack of attention watchers that the entrance of Glo to trade and economic relations. on Africa, the Obama Mobile would cause a stir on the To what extent has both countries administration on 14 June launched telecom turf are coming to pass. leveraged on the relationship? an Africa strategy document that How is the situation like? seeks to clarify his administration’s specific focus for engagement with 27..... Money Matters Africa. Read this article to find out 57..... Barclays’ Scandal the benefits of this strategy to Issues surrounding the dollarisation Ghana and other African nations. Barclay’s Libor controversy is on, of the Ghanaian economy still rages how much do you know about it? on. Read this story to find out matters arising out of this. 43..... Executive Suite Minister for Education Ambassador 30..... Photo Gallery Lee Ocran is a man who does not pull punches. In an interview with The month of July was inundated GB&F, he says technology with several business-related events education remains the driving force in the Accra metropolis. See the behind Ghana’s education sector. photos. Read this piece to find out more.

32..... ICT This year’s electioneering campaign will surely take varied twists as politicians and political parties will have a wide range of digital publicity tools for their campaigns. Read this piece to find out more.

India is fast establishing itself as a new friend of Africa and particularly Ghana... Page 24

Minister for Education Ambassador The Obama administration on Lee Ocran is a man who does not 14 June launched an Africa pull punches... Page 43 Special Report: The predictions strategy document... Page 38 of telecom watchers... Page 54

4 JULY 2012 Controversy surrounding budgetary support EDITOR’S SUITE

bout a month ago, a local news reports emerged that “Ghana is now at the level of lower middle income country so; A the Kingdom of the Netherlands have announced their it is now time to look at higher impact aid and get more added intention to withdraw their funding support for Ghana’s value and value for money for each cedi spent.” What the budget after 2012. Ambassador meant was that, with the attainment of the middle- income status, it was time Ghana acts fully fledged and weaned According to Dr. Ton van der Zon, First Secretary and itself off donor dependence. The credibility of this thought is Environment and Water Advisor at the Embassy of the Kingdom further underscored by the current state of Ghana’s economy, of the Netherlands in Ghana, this decision was based on their where macro-fundamentals are showing that they are not dissatisfaction with the result they have been getting from their being built on a solid economic foundation. An economy that direct budget support over the years. He made this known to the depends on donor support to meet as much as 40% of its fund media in Accra at the opening of the third annual civil society requirement will always be vulnerable to all kinds of shock, more review of the natural resources and environment sector. so when those budget supports are withdrawn in unplanned circumstances. Consequently, the Netherlands decided to opt for specific programme funding where they can easily assess the outcomes By the way, just before going to press, the European Union (EU) and work more with decentralized government systems instead announced that, for the year 2012, it has disbursed a total of €24 of the central government, with the aim of ensuring development million to the Ghana government through the Multi- sustainability. Donor Budget Support (MDBS) framework, indicating that it has scaled down its own contribution by €2.4 million from its The implication of this decision is that, in the coming year 2013, €26.4 million support in 2011. Ghana will lose more than €25 million it had always received as budget support from the government of the Netherlands. The Perhaps to fully understand where the Netherlands’ decision is total contribution of the Netherlands to Ghana’s general budget coming from, one needs take into account this New York Times support, since 2003, is estimated at €187.8 million. report published May, 2012. The report unveils that “of all the people rocked by the debt and austerity tumult rattling Europe, Multi-donor Budget Support (MDBS) is a common phenomenon the famously prudent but prosperous Dutch were seldom on in most parts of Africa. In Ghana, it began in 2003. At present anybody’s watch list; until now.” Ghana receives such support annually from 11 donor countries and international agencies, some of these donors contribute It continues; “This bastion of probity became a flash point of through their various agencies. The countries and agencies are euro zone turmoil last week, when the government fell in a Germany (KfW), UK (DfID), France, Netherlands, Denmark, showdown over how to cut the budget to keep the nation from Switzerland, Japan (JICA), World Bank, African Development getting caught in Europe’s long-running debt crisis...It is the Bank, European Commission and Canada (CIDA). Netherlands’ toughest test of economic resolve since the nation became a founding member of the euro currency union in At a forum initiated by the European Union Delegation in Ghana 1999. Last week, facing a crisis that could have tarnished the about two months ago to rub minds with the government and country’s sparkling credit rating, a caretaker government people of Ghana on the way forward in Ghana-EU relations, the manoeuvred to pass a 14 billion euro ($18.5 billion) plan for Head of the Delegation, Ambassador Claude Maerten was as spending cuts and tax increases. Political leaders acknowledge candid as one could be in stating that the impact of the blistering that the belt-tightening will further retard an economy already in Euro crisis may not be that far off as people would like to make- recession.” belief. As Ghana is currently wrestling down the heady duo of flighty He said “With a world economic slowdown, there will be less inflation and depreciating local currency, it is expedient that all international trade, there will be less demand for [Ghana]’s solutions being sought be derived from efficiently addressing the products. The prices of oil, gas, cocoa, gold will go down, [the fundamental need for building an aid independent economy, country]’s balance of payments could be in deficit; and there will especially as another budget support withdrawal may not be too be less external assistance, eventually.” far away.

JULY 2012 5 BRIEFS

Airbus to set up Jacques Marraud des Grottes, Total's Senior Vice President for factory in US exploration and production in Africa, said in a statement on Airbus is close to Wednesday that the deal matched the group's "strategy of building finalising plans for its a strong presence in the new basins of East Africa offering high- first aircraft factory in potential plays for exploration." Total has been present in Kenya the US, a move that since 1955 through Total Kenya, with headquarters in Nairobi. would dramatically ramp up its compe-tition with Boeing. The Advances of Total within Kenya in terms of exploration and WORLD ECONOMY European aircraft maker is considering an expansion of its single production began only in 2011. Source: BusinessDay aisle aircraft factories in France, Germany and China by setting up in Mobile, Alabama. The move could involve an investment of several hundred million dollars, and underline how Airbus is More file for bankruptcy in California keen on improving its sales in Boeing's home market, where The Californian city of Stockton approved a special budget, airlines are placing large aircraft orders to replace their ageing paving the way for it to become the largest American city to fleets. "We have long studied our options to increase our market declare bankruptcy. "Unfortunately, we have no comprehensive presence [in the US]," said an Airbus spokesman. "We have no set of agreements with our creditors to offer you ... that would final decision yet." eliminate the $26 million budget deficit and avoid insolvency," City Manager, Bob Deis, said at a council meeting. Negotiations, Fabrice Brégier, Airbus's new Chief Executive, recently visited however, continue with some creditors. Mobile with Tom Enders, Chief Executive of EADS, the aircraft maker's parent company. Mr Brégier, in a recent interview with "I think we're very close in announcing some possible deals with the Financial Times, stressed the importance of the US market some creditors in the future," he said. "In fact, it could be as to Airbus, noting the regularity with which airlines there were many as a third of the creditors ... that's not enough to balance renewing their fleets. He said he wanted to continue Mr Enders' the budget." The city Council approved the pendency plan on a strategy of enlarging Airbus's international operations, highlighting 6-1 vote, meaning Stockton will file for protection under Chapter its narrow-body factory, which began operations in 2008 in Tianjin, 9 federal bankruptcy laws before Sunday when the new fiscal China. Boeing has a strong lead over Airbus in the US, where the year begins. The plan is essentially a new budget for the city of European manufacturer's estimated market share is below 20 per a population of about 291,000, spelling out day-to-day operations cent. Airbus hopes that the US will be the second most profitable under bankruptcy. The city, which is about 80 miles east of San market after China over the next 20 years. Francisco and about 50 miles south of Sacramento, says it will continue to pay employees, vendors and service providers, but The company underlined its ambitions last year by securing an curtail most other expenditures, such as debt service. Numerous order from American Airlines, the third-largest carrier by revenue, governments across the country have filed for bankruptcy since for a 260 A320 narrow-body aircraft. The deal marked the first the financial crisis of 2008. Last year, Jefferson County in Alabama, time that Airbus had broken into American's all-Boeing narrow- filed the biggest municipal bankruptcy in U.S history. In December, body fleet market. United-Continental Holdings, the largest US the county was $4.2 billion in debt. carrier by revenue, is preparing to place an order for at least a 100 single aisle aircraft. Airbus has an engineering centre in Mobile Before them, the largest municipal bankruptcy case was filed in and the site could serve as the optimal location for the aircraft 1994 by Orange County, California, which owed approximately maker's fourth final assembly line for its production of A320 $1.7 billion to creditors. Stockton Mayor, Ann Johnston, said: "In aircraft. the 1990s, the city council approved labor contracts and retiree health insurance plans believing the hyper-growth the city was Mobile would also have been the optimal location for the experiencing would continue forever. Then came the economic production of Airbus's A330 wide-body jets that EADS hoped downturn of recent years, and debt-strapped California's raid on to supply to the US military as aircraft refueling tankers. city finances." "Since 2009, Stockton has cut $90 million from its However last year, amid controversy, Boeing beat EADS to the budget," Johnston said. "The city has reduced its police force by $35billion contract with the US Air Force, and the A330 factory 25 per cent, its fire department by 30 per cent, and other city jobs plans did not go ahead as planned. Making aircraft in the US by 40 per cent but has not been able to get itself financially stable." would help reduce Airbus's currency risk by increasing its exposure She continues: "And then, there was the housing bust." to costs denominated in US dollars. Airbus's costs are principally in euros, but it sells aircraft overwhelmingly in dollars. When the "The housing was the last straw that broke the camel's back," euro strengthens against the dollar, EADS's earnings are reduced. said Johnston. "We had this bubble in our economy here. We The euro's weakness amid the Eurozone sovereign debt crisis were booming in construction. We were building about 3,000 should help EADS's earnings, although analysts said much would homes a year. It began to fall off sharply three and a half years depend on its hedging strategy. ago," she explained. "This past year only 105 single-family construction permits were issued." Richard Acosta is a 75-year- old retiree in Stockton. Acosta said everywhere he looks there Total signs oil exploration contract are "for-sale" signs. "You have two across from my house. There in Kenya was like four on the other side, and there's about two or three France's Total said it signed a production sharing more down on the next block," said Acosta. "I always thought contract with the Kenyan government to explore the city of Stockton was really gonna go somewhere. But I don't for oil in 2,000-3,500 metre deep waters off the really see any future in it for 5 to 10 years before something really Lamu Archipelago. is going to happen here." Source: BusinessDay

6 JULY 2012

NEWS

Harvard Marine to receive new Moreover, the agreement provides not General Budget Support is one of the vessels for operations only for the crewing of the vessels by three focal areas of cooperation between Ghanaians but also opens up avenues for the European Union and Ghana. Contrary employment in specialised fields such as to a project approach, budget support Harvard Marine International Ghana ROV Operators, Divers, Logistic involves the transfer of financial resources GHANA BRIEFS Limited has negotiated an agreement with Managers, Surveyors and many other well directly to the Government treasury to Go Marine Group Australia, to act as sort after vocations in the petroleum and complement Government’s own their agent in the tender for marine marine industries for graduates of Harvard domestically generated revenues. This is contracts essential to the development of Marine Petroleum Training Institute. to facilitate the implementation of the the Offshore Industry. Harvard Marine International Ghana national budget and its associated public Limited operates the Harvard Marine expenditure plans. In the year 2011, the The purpose of the agreement with Petroleum Training Institute in Takoradi. EU disbursed a total of €26.4 million as Go Offshore Australia is to manage and budget support to the Government of operate offshore supply vessels on It is an internationally accredited training Ghana. the West Coast of Africa based in facility specialised in training and Ghana. certification for occupational health, safety General budget support to Ghana is part and environment in the petroleum, of a broader EU aid portfolio of more mining, energy, construction and allied than € 420 million (about GHS 900 industries. million) for the period 2008-2014.

Other sectors of intervention include EU gives Ghana €24 million Transport and interconnectivity, govern- as budget support for 2012 ance, and non-focal areas such as trade facilitation, regional integration and support The European Union (EU) has disbursed to the Economic Partnership Agreement. €24 million to the Government of Ghana In addition, the aid will be used to support through the Ghana's Multi-Donor Budget other sectors, including the natural resources Support (MDBS)framework. This management and migration, security and disbursement is in the context of the the Diaspora. The agreement currently allows additional Millennium Development Goals Contract personnel to be accommodated on board (MDG-Contract). of their vessels for training purposes. Emirates Breaks New Ground As part of the deal, Harvard Marine will receive a large fleet of state-of-the-art Emirates Airline, one of the world’s newly built sea vessels owned by Go fastest-growing international airlines, has Marine Group Australia. The agreement responded to surging passenger demand was sealed with a Memorandum by introducing the Airbus A340-500 onto of Understanding at the Ministry of the Accra-Dubai route. Employment and Social Welfare in Accra, Ghana. The introduction of the A340-500 offers customers a rewarding experience when The vessels will be operated by Harvard travelling on the Accra-Dubai route. Marine in conjunction with Go Marine The 2012 disbursement follows the Group and crewed mainly by Ghanaians satisfactory conclusions of the 2011 Multi but will go under the high certifications Donor Budget Support (MDBS) annual and standards of the Australian company, review, conducted last May. Furthermore, one of the leading operators in the it is to recognise the commitment shown offshore oil fields. by the Government of Ghana towards attaining macro-economic stability, Captain Ronald McGrath, CEO of implementing the Ghana Shared Growth Harvard Marine International Ghana, and Development Agenda (GSGDA), signed for the Ghanaian company, whilst and improving the country's public Mal Wardle, Executive Director of the financial management. Go Marine Group initialled for the Australian company. Under the Financing Agreement of the MDG-Contract, the EU is to provide First Class passengers can experience The ceremony was hosted by the. Deputy €209 million as general budget support Emirates’ economically-designed private Minister of Employment and Social to Ghana over the years 2009-2014, with First Class suites, featuring privacy screens Welfare, Hon. Bosiako Sekyere and an overall objective of contributing to for maximum exclusivity and massage- witnessed by the Deputy Minister of sustainable growth and poverty reduction enabled seats which convert into flat beds, Energy, Hon. Emmanuel Armah Buah,, for the country to attain middle-income while Business Class customers will enjoy among other dignitaries. status and achieve the MDGs. the comfort of angled lie-flat beds.

8 JULY 2012 NEWS

Emirates now offers a new route-specific The move is expected to enhance the According to the GEPA boss, countries wine list, featuring some of the best chances of the Governing Council of at the receiving end of exports are able champagnes, red and white wines and GEPA to achieve its overarching goal to quantify how much is brought into ports from across its route network. The of reaching US$5 billion for the Non- their economy; meanwhile, Ghana does new offerings include top-of-the range Traditional Exports (NTEs) revenue not even recognise such movements as Grand Cru Classe Red Bordeaux, Premier by 2015, as directed by the Ministry of exports. GHANA BRIEFS Cru and premium quality wines from Trade and Industry during its other regions of France, California, South inauguration. “Because our data system is not able to Africa, Australia, New Zealand and capture the revenues from those Germany. services, we tend to ignore it in our non-traditional export statistics. Customers in all cabins can enjoy Whereas we pride ourselves in making Emirates’ professionally selected wines, US$2.4 billion in 2011, when you go spirits and beverages, as well as fresh, outside, the projections are that we earn locally-sourced dining options prepared three or four times more. It is all because by gourmet chefs and served by the of the way we capture our statistics. If airline’s multi-national cabin crew. somebody is able to put goods into Passengers can also lose themselves in their briefcase and sends it through the more than 600 channels of on-demand airport, it is not captured as part of our entertainment, including 50 new movie exports, yet he takes them abroad to releases, more than 20 movie classics and sell. But because the receiving country 20 children’s films. In addition to sees it when it lands, they are able to interactive games, satellite telephone, sms capture the goods as imported items, and email, live BBC news headlines, an while we in Ghana are not able to airshow moving map and external cameras capture these as export,” Dr. Owusu for a bird’s eye view of the journey en Agyemang told GB&F. route. The GEPA said his outfit has begun Emirates serves Accra daily, offering 12 sensitising companies and institutions First Class Private Suites, 42 seats in in the services sector to understand the Business Class and 204 Economy Class The Chief Executive Officer of GEPA, need to release their statistics and aid seats. There is also a total of 13 tonnes Dr. Kwadwo Owusu Agyemang, made the GEPA in collecting data to quantify of cargo-carrying capacity. EK 788 departs this known at the 73rd National Ghana’s total exports. Accra at 1735hrs and lands in Dubai at Exporters Forum in Accra. 0550hrs. EK787 leaves Dubai at 0740hrs and arrives in Accra at 1240hrs. According to him, government intends GSMA Speaks for Telcos on Tax First and Business Class travellers or to diversify its revenue streams to bring Burdens Skywards Gold member can have access in more money from areas that are not to world-class Emirates lounges at select under the coverage of the authority in The Global System for Mobile destinations across the globe. terms of exports. communication Association (GSMA), an organisation that represents the Besides its three lounges in Dubai, “There is an export component to the interest of mobile telecom operators Emirates lounges cover Auckland, services sector, which we are not worldwide, has called for the removal Bangkok, Beijing, Birmingham, Brisbane, capturing at the moment. If you of specific mobile related taxes such as Colombo, Dusseldorf, Delhi, Frankfurt, go to our cardiothoracic centre, the Communications Service Tax (CST) Hong Kong, Hamburg, Istanbul, the place is patronised by non- and the import tax on SIM cards. Johannesburg, Kuala Lumpur, London Ghanaians who pay hard currency for Gatwick, London Heathrow, Manchester, admission and treatment. If you go to Melbourne, Mumbai, Munich, New York any of our polytechnics or universities, JFK, Paris Charles De Gaulle, Perth, San you’ll find out that there are a lot Francisco, Shanghai, Singapore, Sydney of foreigners who are coming here to and Zurich. enjoy the educational services provided. In a way, you can even say our footballers who are playing in other countries are providing services GEPA to include services for which they are being paid. To the sector in exports figures extent that they are repatriating their income into Ghana, it can be The Ghana Export Promotion classified as service. So you can imagine There is a 20 per cent import tax on Authority (GEPA) has advanced plans how big the revenue from services could SIM cards, and a six per cent direct tax to include the services sector in its be,” Dr. Owusu Agyemang told on every call made from one network export trade portfolio in the near future. GB&F. to the other.

JULY 2012 9

NEWS

There is also a six per cent leverage on According to him, GRA has the interconnect fee that the originator arrangements, including the small network pays to the network on which taxpayer scheme, to rope majority the call is terminated. of players in the informal sector into the tax net. The Director of GSMA's Spectrum GHANA BRIEFS Policy for Africa and the Middle East, “With education, [an efficient] electronic Peter Lyons, explained; “The 20 per system, and a tax identification number cent import tax on SIM cards must system, I think we’ll be able to capture definitely be considered for removal many people in the bracket at the end and the six per cent CST at both the of the day to come and complement wholesale and retail levels should also what public and private sector persons be considered for potential removal The announcement was made by the are paying, and courtesy the Pay-As- because they both put a burden on Governor of the Bank of Ghana, Kwesi You-Earn [PAYE] system”. consumers,” Amissah-Arthur when he spoke to the media in Accra. The seminar was an opportunity for He said the removal of both taxes would GRA to sensitise taxpayers on the go a long way to encourage an increased According to the Central Bank, the new relevance of the integration of agencies use of mobile and broadband services, note will have a new set of features into business and national revenue which would have a multiplier effect different from the existing one but the mobilisation. on the growth of the economy and colour would practically be the same. Source:myjoyonline on productivity, in ways that could The Governor said two people have generate even better revenue for been arrested by the Bureau of National government rather than from direct Investigations (BNI) for attempting to Foreign Firms to Cede Businesses taxes. produce counterfeit of the 50 Cedis to Ghanaians notes. Reports said some foreign Mr. Lyons was speaking to journalists companies are behind the syndicate. Reports say foreign businesses coming after a day’s workshop organised by Source:myjoyonline into the country could soon be required GSMA and Ghana Chamber of to cede 30 per cent of their enterprise Telecommunications on how to speed to Ghanaians. up expansion of quality broadband GRA Widens Tax Net service in Ghana. Established foreign businesses would The Ghana Revenue also be required to give up part of their The Director of Regulatory Authority (GRA) is interest to locals over a period of time. Administration at the National fashioning out a These form part of proposals in the Communication Authority (NCA), Small Taxpayer revised Investment Act currently being Mr. Joshua Peprah, said telecom Scheme to rope considered by Cabinet. operators are within their rights to call majority of players in for tax rebates, but taxation is a matter the informal sector into the tax of sovereignty, and no external forces net. could determine the tax policies of any country. This was disclosed by officials at a forum in Kumasi to raise public Meanwhile, the CEO of the Ghana awareness on some modernisation Chamber of Telecommunications, policies being implemented by the Kwaku Sakyi-Addo, said what the telcos Ghana Revenue Authority. are asking for is not a complete removal of the CST (talk tax) but for However some participants at the self- government’s removal of the additional assessment seminar for GRA taxpayers six per cent on the interconnect fee. in Kumasi expressed concerns at what Source: myjoyonline they described as ‘tax holiday’ for the informal sector.

BoG to Introduce New GH¢50 They also questioned the viability of a voluntary tax compliance drive by the The bill is part of a broad indigenisation The Bank of Ghana has announced Ghana Revenue Authority. policy being worked on by managers that it will soon introduce new 50 Cedis of the economy. notes onto the market with a set of But Robert Mensah, an official new features. The Central Bank said at the GRA’s Public Affairs Department, It is also to ensure that indigenes can its intention was to prevent fraudsters is convinced that improved customer share in the profits foreign firms from producing counterfeits of the relations and service delivery generate from their local operations. currency. will encourage voluntary filing of taxes. Sources: myjoyonline

JULY 2012 11 MANUFACTURING stage crisis hitsglobal Ghana cement T 12 for closetoaboutfourweeks. production cement down shut to forced was Aflao-based company manufacturing the year this 26 April on lightning by struck was Company Cement Diamond of transformer It can any be good. recalled that following the incident where the other responses; a development that would not of do GHACEM the responseby Dr. Dawson-Ahmoah, islikely toattractaseries attempt to, in any way, for the global financial institution, hold brief an not industry.is fragile piece nation's this the While of future the for best the be not may necessary be not may they where soon, but honestly the attempt to to normal place return records to expected are things and abating is situation Thankfully,the thecrises. the heightof Ghanaian consumers, wentwho virtually through 'hell' during of themillions theinsensitivity totheplightof a demonstrationof not only be seen as rather confrontational but also in many ways, Bank On Cement Production Monopoly Allegations' as,' media local the by captioned and Dawson-Ahmoah, George Dr. GHACEM, of Director Affairs Corporate and Strategy the by delivered response, A Bank. Worldthe engage to (GHACEM) Company Cement Ghana ugly twist,following whatobserv havean takento seems foundation its to industry construction entire the shook which Cement, Diamond of producers needless tango As GHACEM World engages Bank in the production plant of Westthe production plant African of Cement (WACEM), of shutdown temporary the of result a ago,as months of couple a Ghana hit that crises cement recent he ers seeasaneedlessattemptby GHACEM Replies WorldReplies GHACEM may he stressed. and contractors will continue to be at their whims and caprices," and GHACEM controllingthemark Cement Diamond haveonly you where because system the "We need a conscious to other effort get cement factories into thetwo companies. whims andcapricesof andbuildingsectortothe than leaving thenation'sconstruction that the needed government to break the de-facto duopoly rather that was notenough,theABCECGnoted for consumers.' Asif morethereiscompetitionin The youth. teeming the for jobs more create and driveprices down help will sector cement the projects,'liberalising infrastructural status, many undertaking asadeveloping nationthat iscurrently Ghana's with that publication the in further noted He deficit. the country, especially given the rising housing and infrastructural for good not is likecement commodity essential an of sale and According to him, having a de-facto duopoly in the manufacturing sense," Mr. Dassussaid. a monopoly in the cement market in Ghana. It makes no economic for justification any see not do "I 'nonsensical'. as it describing theproductto pricing of and supply the on consequences direct has and sector the in hold on the market by the two companies suppresses competition inAccrathatthenearly90% toldfinancialjournalists reportedly Production", a World Bank led economist, Mr. Sebastien Dassus, Cement On Duopoly "Break headline the under 2012 19, competitionanddrivemarket toengender down prices. InJune the liberalise would that steps urgent for country,called the in GHACEM andWACEM, inthe companies, manufacturing two the of dominance continuous the with uncomfortable feeling WorldBank, The part, its For and expressedsimilarmisgivings onthematter. developmentunfortunate to the monopoly in the cement industry the linking as media the by quoted also were associations both of leaderships The crisis. the of result a as workers off laying were companies construction of number a that fact the of light the in especially concerns, grave expressed Dogbegah, Ghana (ABCECG), Civil Mr.Engineering Contractors Rocksonof Buildingand theAssociationof theTechnical Committeeof of Association (GREDA), Dr.Developers Alex Estate Real Ghana the of President the both 85percentfrom of hikeoverallprice an retail to led market local the on period the cementover some3millionbagsof of shortfall temporary The GH¢14 toGH¢25.Inthe building and construction industry,building andconstruction Tweneboah, andtheChairman production and sale of cement production andsaleof the sector,' hesaid,'thebetter et, itmeansthatbuilders heat of thecrises, heat of JULY 2012 MANUFACTURING

He continued: "Currently, GHACEM comfortably controls close However, GHACEM's response erred when Dr. George Dawson- to 60 per cent of the market share. Diamond Cement, on the Ahmoah threatened: "GHACEM is not afraid of competition hand accounts for about 35 per cent of total cement sale and but will resist any unfair competition imposed on them." Even production bringing to over 90 per cent the stake of the two though it has not been GHACEM's making that for the past 45 companies in the industry. years the market has been slanted in its favour. This in a way gives the company away, more so when Dr. Dawson-Ahmoah had "Fears are that the dominance of the two companies in the sector, earlier on, in the same story, admitted that back in 2010 both however accidental it may be, makes it possible for them to GHACEM and WACEM jointly raised a strong petition against 'technically' determine prices of the product nation-wide." the concessionary rate of five percent import duty, which they Then out of the blue came the 'bombshell' claimed was beneficial to a Nigerian-based from GHACEM posted on the Internet on cement importer, Greenview International June 26, 2012 with the caption "GHACEM Limited, for packaging 50kg bags and stood Replies World Bank on Cement "I do not see any justification for their grounds till the Government of Ghana Production Monopoly Allegations." a monopoly in the cement market amended its decision. Additionally, this does in Ghana. It makes no economic not sit well with many Ghanaian observers It read inter alia: "The Strategy and Corporate sense," Mr. Dassus said. in the diaspora who see this as an attempt Affairs Director of GHACEM, Dr. George to make mincemeat of the duopoly claim and Dawson-Ahmoah stated emphatically that the thereby insinuating that all is well with the company does not have total control in the building and production and marketing pattern of cement in Ghana. construction industry as portrayed. According to him, the monopoly of GHACEM was broken 12 years ago by the They argue that if, with its 30 per cent hold on the market, a four- emergence of other production companies like WACEM, week production shut down of WACEM could prompt an 85 producers of Diamond Cement who operate from Aflao in the per cent price hike, then one can only wonder at what would have Volta region." happened if the same circumstances were experienced by GHACEM which has over 60 per cent hold on the market. GHACEM does not enjoy monopoly in the cement industry; monopoly is a thing of the past now especially because there are Secondly, they wonder at how Dr. Dawson-Ahmoah would refuse other players in the cement market. to admit that the economic situation, where just two organisations control a particular raw material is monopoly or duopoly. There is the Greenview International Limited, operating in Tema community 2; Savanna Cement, operating from Buipe in the We should not forget that when we talk of monopoly, as was Northern Region; and the Fortress International, which imports done by the World Bank official, it doesn't mean there are no bagged cement among others," Dr. George Dawson-Ahmoah minor competitors in the system, otherwise where do we place noted. oligopoly? At any rate, assuming without admitting that Mr. Dassus erred in his monopoly claims, in what way does that Dr. Dawson-Ahmoah reiterated that Ghana has a trade liberalisation threaten GHACEM to the extent that the Strategy and Corporate policy, which allows business entities interested in importing any Affairs Director would have to 'respond' the way it did, captured product or establishing manufacturing units to do by the media? And by the way, who is not aware that for close so, provided they go through the right procedures. to half a century there had not been any meaningful competition in the sector? As much as the so-called ''response' is of little He said GHACEM is open to any fair and equal terms competition relevance to the consumer, as prices of cement are yet to reverse so far as the manufacturing and supply of cement in Ghana is to what they used to be before the crises, it is clear that it woefully concerned, adding that GHACEM is not interested in sabotaging failed to address the roots of the problem, if is not due to other competitors because their company will continue to work monopoly. Finally, increasing the production of GHACEM to hard to maintain its position as the leading manufacturer and meet demands, as was promised by Dr. Dawson-Ahmoah does supplier of cement in the country. not take away the question of monopoly.

JULY 2012 13 TRADE China can no longer be ignored

hina is gradually becoming an important part of the Demand for corn C global economy and no investor or business leader can ignore the increasing influence of its consumers. The China is the world's second largest consumer of corn, and demand tastes and preferences of China's market of 1.3 billion people continues to increase. It is also the world's second largest producer have the potential to sway demand and shift the trajectory of of corn behind the U.S., This is indeed surprising for a country global consumer spending. whose main staple is rice. Indeed, most corn in China isn't consumed by humans at all-75% of its corn consumption is used China's consumer spending is growing at an average annual rate for animal feed. Corn consumption has grown consistently, rising of 18%, according to the National Bureau of Statistics, compared nearly 3% each year for the past decade. The country's corn to 2.2 % gain for the United States. Getting through to China's imports were predicted to have reached a record 5 million metric consumer market is easier said than done and there have been tonnes by the end of 2011. According to the United Nations' some notable stumbles. Food and Agriculture Organisation, China's corn import is more than double the 2010 level of 2 million tonnes. That surge in Some consumer trends in China are well known, such as the demand has helped push corn prices on the Chicago Mercantile increasing demand for luxury goods, but others may come as a Exchange up 17% this year alone. surprise. In one edition of Ghana Business & Finance, we put together some major Chinese consumer trends. This list was based on studies and reports from international organisations Health food & nuts such as the United Nations, the U.S. Department of Agriculture, and research firms including, Euromonitor International and China's health food market is expected to grow to $70 billion McKinsey & Co. by 2015 -more than tripling from $20 billion in 2010. The expanding appetite for healthier foods among the country's fast-growing middle class and aging population has boosted Foreign real estate investment demand for imported fruits, nuts, and yoghurt. Global prices of nuts like cashews, walnuts, pecans, and almonds are at China's government is cracking down on its domestic property record levels, boosted by Chinese imports. Countries are eager market after a multiyear boom, and this is driving property to meet China's demand for health food, despite the investors abroad. Chinese buyers have thus been buying properties government's policy of food self-sufficiency. Last month, abroad in the U.S., Canada, Australia, the United Kingdom and Chile signed a deal to be the only direct exporter of fresh in Ghana to name a few, , according to various reports from these blueberries to China. This partnership was achieved after two countries. years of negotiations.

International real estate firms, such as CB Richard Ellis, have set up dedicated branches to help Asian buyers purchase homes Mobile internet overseas. In the last two years, China's biggest real estate website, Soufan Holdings, has been bringing Chinese property investors China's mobile internet industry is booming, growing much on tours of U.S. cities, including New York City, Los Angeles, faster than rates seen in many developed countries around the Boston, and Las Vegas. This spate of overseas real estate deals world. China is set to surpass 1 billion mobile connections by is not limited to North America. According to real estate firm July 2012, according to a report by Wireless Intelligence. About Knight Frank, Chinese buyers were the largest single block of 22% of urban Chinese mobile phone users browsed the investors buying investment properties in London, accounting internet on their phones at least once a week in 2010 up from for nearly 11 % of sales in 2010. 15 percent in 2009. This is quite impressive for a mobile phone market that boasts 770 million total users and 318 million The trend is worth noting, given that the Chinese government users with internet-enabled mobile phones. Furthermore, in bars its citizens from buying more than $50,000 worth of foreign exporting the surplus from their factories, Chinese phones currency each year. However, Chinese property buyers have found have found their way to Ghana, where Ghanaians have ways around these restrictions, working with relatives to pool developed a preference for them, especially at social functions money together or sneaking money out of China. where they display them to catch the fancy of loved ones.

14 JULY 2012

Last year was the first in which veterinarians were required to pass an exam in order to obtain a license. In an effort to control the pet population, the government has introduced a one-dog rule in major cities, including Beijing and Guangzhou. TRADE

Overseas education

China has the world's largest number of students studying abroad, with about 1.27 million students attending foreign universities at the end of 2010. This represents an increase of 284,000 students Wine consumption or 24% from 2009. Many undergraduate students choose to study abroad to avoid China's highly competitive national college China will overtake the U.S. to become the world's largest consumer entrance exams. Britain's University of Cambridge, for example, of wine by 2015, says Euromonitor. About 126 million cases of had 1,000 Chinese students last year, comprising approximately wine were sold in China in 2009 only. The country is currently 8.3% of the student body. Adding to the trend, more middle- the world's fastest growing market for wine consumption, with class families are able to afford a foreign education for their annual growth rates of around 20% in each year of the last children. Indeed, 93% of students studying abroad are funded decade. Sales of imported wines are growing faster than domestic by their families. Some Chinese parents, eager to expose their brands. Wine drinking is considered a healthier alternative to children to foreign culture, are willing to spend roughly $5,000 spirits and an increase in the number of Chinese women who to send them to American summer camps, where they interact drink alcohol has also boosted demand for wine. The Chinese with citizens of different countries, and thus broaden their government is looking into ways to make domestic wines more worldview. attractive to consumers. Earlier this month, government-controlled Bright Food Group said they would consider acquiring wine assets in Australia, France, Chile, and the U.S. Luxury goods

China's growing demand for luxury goods has been well publicised International travel and global luxury retailers are flocking to the country to cash in. Luxury consumption in the country is predicted to grow 18% China is home to the world's fastest growing travel market. With annually from 2010 to 2015, and reach $27 billion by 2015. If 65 million outbound departures expected this year, the UN World these projections prove to be correct, China would account for Travel Organisation estimates that there will be 100 million more than 20% of the world's luxury market by 2015. China is Chinese outbound trips by 2020. Travel has become a top priority the fastest growing market for a number of luxury brands. Retailer for the newly wealthy Chinese in a country where a few people sales in the country jumped 27% in the second quarter, compared used to travel outside its enormous borders. Chinese tourists are to the same period the year before. China's demand for luxury spending more money on their travels abroad-boosting tourism products has continued unabated, despite the 2009 global recession, industries in countries around the world. National carriers from rising 16% that year. The world's priciest luxury brands have the Middle East to New Zealand are rushing to launch new direct taken notice of this trend. flights to a number of cities in China. In 2010, more than 450,000 Chinese visitors spent $3 billion in Australia. This is 20% more than the year before. Hotels and tour companies around the Conclusion world are gearing up to meet this demand. The iconic Burj Al Arab Hotel in Dubai, for example, has hired a number of Chinese- The world can no more sit idly and continue to think that the speaking staff; created brochures and programmes in Mandarin; Chinese are confined behind walls built up by their Communist and added Chinese cuisine to its menu to accommodate this leaders. Governments are beginning to take notice, resulting in growing trend. signing bi-lateral agreements with many African countries, where raw materials are traded in exchange for badly needed infrastructural development. Businesses all over the world are also beginning to Pet ownership take notice, focusing their marketing drives towards this huge market. Just like the proverbial elephant in the room, China cannot Increasing numbers of Chinese home owners are buying pets, be ignored any longer. It is high time the world recognised this as the country's attitude toward pet ownership has evolved. One- and put strategies in place to embrace this new player on the child households and an aging population have created an international scene. environment in which pets have become an extension of the family. This new fashion is driven by increasing levels of disposable income. Consumers are now able to afford better care for their animals. The pet population grew a rapid 20% from 1999 to 2004, according to Euromonitor. Dogs are the most popular pets, with their numbers growing 10% a year, but the true number is likely higher, since this figure only includes registered pets. This comes as no big surprise, as dogs are viewed as a status symbol among wealthy Chinese. The increase in pet ownership has led to an increase in pet-focused websites and social networks, and dog treat stores. As a result, the country is attempting to regulate the pet industry.

16 JULY 2012

COVER STORY Talal Fattal – A multi-talented man

Through his multiple talents, the Ghanaian economy has experienced immense benefits in various ways; these benefits include an enhanced image of Ghana, job creation, discovered talents, instilled nationalism and broadcasting the nation. Talal, as he is known by all, is not a Ghanaian by birth but he is a Ghanaian by heart! Effah Amponsah gives us more insight on Talal Fattal and his works.

The reward for grit, pursuit of personal and societal conviction is recognition. Talal Fattal poses for this memorial photo with his wife after annexing the Best Entrepreneur, Electronic Media at the Ghana Entrepreneurs Awards

ike a fairy tale, the life story of Talal Fattal is very Music engineered my life L interesting, exemplary and thought-provoking to any person who desires to succeed in life. With its many The life of any successful person is normally driven by a particular twists, his story has great lessons that can serve as a reference conviction, interest, endowment or pursuit that usually defines point to give impetus to many people who are facing great him or her. Normally, a beautiful blend of fate, faith in fate and hindrances or impediments in their quests to be outstanding in more importantly, the pursuit of fate is what sets the tone for their chosen fields of endeavour in life. successful life. For Talal, music was his lucky charm, which set him up on a pathway to the destination of his destiny. The great respect that Talal enjoys from his contemporaries, both local and abroad is an ovation to his exceptional endowments, “Music has been an integral part of my life and where we’ve reached wits and feats, which he has amassed through his journey in life today, in the sense that I went into music because of my love for and career. writing, producing, arranging and singing songs,” Talal Fattal told GB&F at the start of an exclusive conversation on his life. When it comes to expats contributing to the transformation of the Ghanaian society, Talal Fattal, who is well-known for his In music, he was ‘the jack of all trades but a master of one’. In flagship company Metropolitan Television (Metro TV), stands the 1970s, when he began his music journey, Talal composed, tall among his compatriots in this niche of business interest. sang and promoted his music, a combination that is highly capital- intensive, and hence, grimy to young musicians in Ghana. Talal’s His love and passion for the Ghanaian society has stimulated his music captures particular social issues, serving not only as music heavy investments into the society and economy, maybe not as but also as a message to all. in what one considers as tangible traditional exports products but in unquantifiable, image-raising dimensions for Ghana. His “As a young person, it was not just a dream, but a passion that companies, captured under one group, the Global Village Media I wanted to share with people. Most of my songs portrayed Group with its subsidiaries including the popular Metropolitan messages that are social in feeling: ‘Forgive and Forget’, ‘Better Entertainment Television (Metro TV), Optimum Media Prime Place than Home’ and others. So there were social messages that (OMP) and Soccer Academy, are a testimony of his optimism I wanted to bring out and music was a means of communicating and entrenched belief in the Ghanaian and the Ghanaian them. That was then, now if I ever would like to do music, it’ll community. Though not a citizen of Ghana by birth, the enigmatic be theme music for movies, instrumental music that can be used Talal from all reference of deeds, has taken Ghana as his adopted for TV and listening pleasure. So then, my music was a social home, and probably knows this country more than some Ghanaian message but now it’s for listening,” Talal said with his face beaming citizens. with reminiscence.

18 JULY 2012 The likes of ‘Forgive and Forget’, ‘Give and Get’, ‘Better Place than Home’ and the famous Black Stars song ‘Straight to the Metro TV’s broadcast milestones in Ghana and beyond Top’ are some of the hit songs from his albums that made tremendous waves in the music industry, subsequently becoming Achievement Year household lyrics in Ghana. However, talented Talal Fattal’s social messages seem to have halted. First TV station to broadcast free-on-air December, 2004 24 hours

“The music career I would say is in the background, but still there. First TV station in Ghana to broadcast January, 2005 For example, as I speak to you, I’m putting finishing touches to via satellite COVER STORY my huge music studio at the back [of my residence]. I intend to return to the music business but not to sing may be produce and Business of the Year Award 2005 write songs for other artistes. I’ll probably resurface again, hopefully (Millennium Excellence Awards) in the next year or the next two years,” Talal hinted. First TV station in Ghana to launch March, 2006 on DSTV The journey continued First TV station in Ghana to partner with February, 2007 Supersport and MNet With his many gifts, Talal transitioned from music to media, using advertising as his means of transition. The entrance into the Sports TV Station of the Year 2007 media landscape meant Talal was entering a whole new world but he was prepared for it. First private TV station to broadcast July, 2008 free-on-air nationwide “Part of the package earlier on in the 70s was that I had to promote my music, conduct radio interviews, produce jingles, Sports TV Station of the Year 2008 TV videos and newspaper write-ups in order to get to know the media. That interaction with the TV, radio and the print media CIMG Media Organisation of the Year 2009 was what I’ll say, later became the seed for entering into advertising, Sports TV Station of the Year 2009 television and where we are now,” he told GB&F. Very characteristic of him, Talal introduced novelty concepts when he GJA Best Journalist Award 2010 first ventured the advertising business on television including ‘TV (Samuel Agyemang) Market’, ‘Smash TV’ and then ‘Advertising Cycle’. “Then, local programmes were being produced by the state broadcaster, Ghana Commonwealth Broadcast Award 2011 Broadcasting Corporation (GBC), and we were the first to break that jinx,” Talal said with a sense of pride. “But it never came without challenges” – Talal “The opportunity came later and we felt the need to establish a TV station. It was As Metro TV relishes its 15th milestone a joint venture with GBC to start Metro “15 years! It looks easy, but when I but highlighting the accolades at the TV. It was an opportunity for all other look back, it’s 15 years not like a expense of the challenges may not be a firms, but some refused it, others could fair move, given the fact that testimonies not take the challenge or meet the wink of an eye. The challenges have of surmounting challenges normally requirements, but I also believe there was come from various spheres; technical, stimulate others to forge ahead. an element of destiny in that.” programming, salesmanship, technology but we’ve managed to “15 years it looks easy, but when I look back, it is 15 years not like a wink of an Accolades cross over” – Talal. eye. The challenges have come from various spheres: technical, programming, Metro TV has evolved to become the salesmanship and technology. The fastest growing private television station in Ghana and a must- challenges have been quite overwhelming over the years, but watch for the Ghanaian television aficionados, across varied we’ve managed to cross over”, Talal expressed. demographic segments of diverse broadcast tastes and inclinations. After achieving its target of urban and sub-urban profile via “When we brought the foreign content, it wasn’t well accepted. expanded broadcast platform, with more than 12 million viewers It wasn’t what I thought it should have been. The response was representing 20 per cent market share, Metro TV further introduced average. We started it all in the industry but now it is received the premium quality family entertainment programming. better than then. Right now, I think the taste is more cosmopolitan Therefore, Metro TV purchased top notched TV programmes especially in the urban areas.” to match the taste of it and capture larger audiences on the local turf. To this end, Metro TV has become advertisers’ first port for In 2012, the management of Metro TV is aiming at positioning business. its content quota to 30 per cent of news, 30 per cent of sports and 40 per cent of entertainment. Currently, Metro TV is dishing “You know it is the philosophy of trying to be the first, not out more entertainment programmes to its viewers such as drama, because we think we are the first, but when you try to be the best game shows, sitcoms among others. At the mention of 30 per along the line, and then it becomes a part of you. The philosophy cent soccer content in programming, the interview with Talal of trying to be the first is part of our mission statement. Of took a somewhat pessimistic turn, despite the fact that Metro TV course, it’s not only becoming first but staying at the top is more has been ingrained in the minds and hearts of many important.” Ghanaian as the ‘Home of Sports’.

JULY 2012 19 As much as GB&F persisted to know details of the upcoming programme, Talal was elusive on the subject, very characteristic of a businessman who wants to keep his secret as a secret! “It’s different, just different; completely out of the box.

Just when you think you’ve seen all the reality show formats, this one will make a difference. It’s a music reality show; not a music talent hunt!” he only hinted, amidst smiles. COVER STORY

Is Talal’s group of companies on sale?

The Global Village Media Group is on 30 to 50 per cent shares offer. Ten years from now, Talal wants to sit back and offer more Talal Fatal (left) in a discourse with Martino Kashif (General Manager advisory services to the group. He wants to see the group enter of Ghana Business and Finance) into a dispensation of many owners. Of course, this will facilitate capitalisation and re-investment and make the group more or less, “In 2005, we took it upon ourselves to carve a niche of sports. a public company. We succeeded but now, we are going back to quality family entertainment. Right now we have a more balanced formula. “We are looking for more investors to buy into our group and Though we have reduced sports content, we’re still strict on quality take us to the next level,” he mentioned. Under the company stuff but it does not have as much time coverage as it did before.” name, Optimum Media Prime (OMP), Talal is a shareholder of African Business Media, publishers of Ghana Business and Finance Talal understands very well that the new move and direction for (GB&F) magazine. the station is a daring one, nevertheless, he argues that television is a business and a service to the society, hence, other target audiences must receive a fair share of programming content for The other side of life personal and societal development. He is also mindful of the advertising revenue, Talal Fattal is a liberal Muslim, has a wife which he believes to be very crucial to and four children. As a liberal Muslim, he Metro TV’s existence, sustenance and “The competition is on embraces all other faiths. He is an adherent development. According to him, Metro and practitioner of principled living. He TV wants to be the trailblazer in venturing and we feel it. You can’t believes in investing in people as against new television vistas with the aim of setting turn a blind eye or using people for material gains. George the new course of direction for the TV discount it, it’s there Orwell said in his famous book, ‘Animal broadcasting industry in Ghana. Farm’, that every person is a political animal, and to me, it’s vibrant...” one way or the other. GB&F dared – Talal investigate Talal’s political inclinations. Is there competition in the broadcast media turf? “I can say my heart is somewhere and my head is somewhere else. I’m very objective, “The competition is on and we feel it. You can’t turn a blind eye neutral. I’m into the politics of ‘positivity’ and playing politics with or discount it, it’s there and to me, it’s vibrant. lyrics and themes in songs,” was Talal’s response to our tricky investigation as he smiled. Metro TV has played a role in the past to positively stimulate the industry and other players have yielded to that stimulation. Now, all the yardsticks and benchmarks have been raised. We are now What do you do when you are alone, Talal? aspiring with other networks and competing for quality, production values and news values. So the competition is there and it keeps “I like watching TV and getting new ideas because, some of the everybody on their toes.” ideas we borrow, we don’t invent all the time. I like creative artworks like designs, logos, symbols, animation and graphics. I love this “It is like localisation of industry in economics, as competition world of creativity, where you can escape the realities of this harsh increases a firm reduces its market share and the market volume world. We enter there, feel good and then come back after that.” becomes bigger. This is how it is affecting us; we have a lesser market share but of a larger market,” he admitted. Metro TV is “I still love music but recently, I have drawn closer to health advancing plans to begin a soccer academy solely for ladies. activities in order to shed more weight. Last year, I was 150 kilos, According to the CEO, talks are ongoing with a headline sponsor, today I’m 112 kilos. I have now developed the passion for exercising, who of course has to measure the benefits and value of the swimming, playing badminton, golf and using the gym,” he phenomena on its corporate direction and goal. Talal is upbeat responded. Talal Fattal is a true communications business mogul that when the programme becomes a reality, the likes of Mercy whose exceptional contributions to the industry and the economy Myles, the Black Maidens’ captain, will be discovered of Ghana have not gone unnoticed. to bring development to women’s football in Ghana. He has annexed several awards both in the country and “This year, maybe, the Soccer Academy would take a break. We internationally. Ghana is yet to harness the endowment, acumen want to re-strategise; and we want to start a new music reality and strength of character in the likes of Talal Fattal. His life typifies show.” the saying, ‘the old soldier never dies!’

20 JULY 2012

UT Bank: Going the extra mile for SMEs

BANKING & FINANCE Having met its required minimum capital through the equity participation of the International Finance Corporation (IFC) and other big international investors, UT Bank proposes to inject new vigour into its passion to remain trusted partners to SMEs. GB&F’s Utche Okwuosah digs into the details. Prince Kofi Amoabeng, Chief Executive Officer, UT Bank

ccording to the Registrar General’s Office, small, medium The Chief Executive Officer of UT Bank painted a clearly Aand micro enterprises (SMEs) have consistently formed contrasting sobering picture of a modern banking sector that is between 90 and 92 percent of registered companies over supposed to be the informal SMEs’ ultimate source of the years. That this group of enterprises – referred to as the realising their entrepreneurial aspiration. informal sector – also constitutes a significant backbone of most African nations’ economies is no longer a new economic “Banks are formal and well-structured institutions which have fact. Rather, what remains elusive is the staying solution to their developed as the advanced countries developed. The SMEs are perennial lack of sustained funding. mostly residing in the informal sector, especially in Africa. So, what you find is that there is a disconnect between the banks In a paper published in the International Research Journal of and the SMEs in the informal sector. Typically, a bank has a nice Finance and Economics by Joshua Abor, Department of Finance, edifice, air-conditioned, people in suits and ties, with MBAs, University of Ghana Business School, Legon, and Peter Quartey and what-have-you, big English, and all that and, in addition to of the Institute of Statistical, Social and Economic Research all of that, they are holding the money. Now, on the other hand, (ISSER), University of Ghana, Legon in 2010, they stated that if you take the typical SME operator, he is quite the opposite – “SMEs in Ghana have been noted to provide about 85 percent probably not too much English, not structured, doesn’t keep of manufacturing employment of Ghana. accounts, doesn’t wear suits – and this person is supposed to go and take money from those other well organised and quite formal They are also believed to contribute about 70 percent to Ghana’s people? Can you imagine that? And if he somehow finds the guts GDP and account for about 92 percent of businesses in Ghana.” to approach them for the money, they want to tell him what to Now, this is how important this less understood and financially do because, obviously, they know more than he does and they underserved informal sector is to Ghana’s economy. Over the have the money. How do you think such an encounter would years, figuring out exactly how best to meet their needs to harness always work out? It is that disconnect that we want to bridge the growth and developmental potential they offer to both the because we know that the SME person knows his terrain and private sector and the national economy has been a seemingly knows what he wants to do and that, we as a bank, if we want adamant problem. This is especially the case in Ghana, where to be useful to him, must listen and even create the conducive locating an individual poses a herculean challenge, as street environment for him to relax and establish trust between us. This identifications are almost nonexistent. Consequently, as a result is exactly what we are saying, that we know the SMEs; that UT of their lack of structure, locatable addresses and at times, proper Bank knows the SMEs more than any other bank because that accounting, they can be a high risk to the banks. Thus, the sector is where we are coming from, so it is like walking a familiar path perennially remains in lack of sufficient funding to perform at you know too well. We came as an SME to the banking business its best. Add to that the never-improving high cost of borrowing, so going back is natural. Therefore, when we say we are for SMEs, and what you have is an informal sector that continues to crawl we are not just talking. We are SMEs ourselves, except that we instead of leaping. have become a bank.”

“But, what do you expect?” queries Prince Kofi Amoabeng Recently, UT Bank entered into an equity relationship with the rhetorically from across the glass conference table in his Manet International Finance Corporation (IFC) in its bid to meet the Towers office, Airport City, where he sat in an interview with the GH¢60 million minimum capital requirement stipulated GB&F team. by the Bank of Ghana (BoG).

22 JULY 2012 With that relationship, also came an additional $15 million facility specifically secured for the funding of SMEs and for Senior Loan and Trade Finance. Speaking at the press briefing held when the documents for the facility were signed, Prince Amoabeng affirmed that “the additional $15 million investment will, among other things, help increase access to medium-term capital for Small to Medium Enterprises.”

He also said that the facility will also provide UT Bank access to a global network of banks that will help the bank to finance cross- border trade transactions of local companies. As a matter of fact,

facilitating the SMEs was the founding goal of the bank’s mother BANKING & FINANCE company, Unique Trust Financial Services, about 15 years ago, and the passion seems not to have waned.

According to Prince Amoabeng, one of the gratifying things about their decision to go to the IFC for the additional capital they needed was the aspect that made it possible for the bank to access loans. CAPTION NEEDED

“The loan will enable us do long and medium term business because until now we didn’t have long term debts; we finance up to about two or three years and that’s it. Now that we have long term loans we can finance about five to seven years, if we want. “Yet, we considered it would be a test on ourselves if we should “And then, the trade lines are to support our clients when it comes qualify to have them partner us. So, it took us almost a year and to establishment and confirmation of letters of credit (LCs) so a half to get the IFC to come on board.” that they don’t have to come up with the money up front. With an equity injection of $15 million through IFC’s subsidiary, “We want to redefine banking. We started as an SME – from Africa Capitalisation Fund Ltd (AFC) – that is, aside the $15 micro, small, medium and then converted into being a bank – million loan facility mentioned earlier – the IFC has now bought just four people, and built our business up. So we understand the up to about 19 percent of UT Bank. Also, other investors, like SMEs more than any other bank.” DEG for instance, are also buying about 13 percent, “and this is coming from new issue of shares,” says the Chief Executive. Since its inception, UT Bank has continued to make indelible impressions on the terrain of its sub-sector, making it clear that As at December 2011, the bank's total assets were valued at it is here to stay. It has made sure that its paths are marked with approximately GH¢712.9 million, with shareholders' equity of performance acclamations in the form of awards, right from its approximately GH¢61.23 million which, with the new capital first year, crowning it off with the “Bank of the Year 2011” injections, would have inched up quite significantly. award. The bank’s recent relationship with the IFC has reinforced this belief that the bank is set for the big At present the bank has about 26 branches and is still working leagues. at increasing that number, although the CEO thinks that with the modern technology offerings, physical presence of a bank “Being in bed with the IFC tells the whole world that you have would soon cease to be a priority. come of age. So much so that our foreign investors, local investors, even our customers, staff and clients, are all happy about the IFC “Now, if you ask me personally, I think that, because of technology, being a part of us. It means that you are a world-class bank, and you don’t have to have physical presence in most places. All we that the IFC has faith in what you are doing and what you are are trying to do is look at using a vehicle for reaching most places going to generate for them in terms of return on investment. We with the telephone as well. We are seriously looking at mobile are the only bank now that the IFC has shares in. And then they banking. By this, I mean having a vehicle that could go to places bring in all sorts of things like trade lines, some loans, technical on market days, because in most of these villages, after market assistance, which is all good.” days it seems business is dead until another market. So what we want to do is to be there when they need us. Then you can take Here is the genesis of that significant relationship: “You see, we deposits and disburse and keep moving. Actually, before the started this business with fifteen to twenty thousand cedis and end of the year you are likely going to see the mobile banks in we have built it over the last 15 years to the position we are now, operation reaching the very people that need us most: the which is a far, far cry from the relatively meagre capital we took unbanked. off with. For an indigenous company, we are still growing. However, because of the Bank of Ghana requirement to raise “You know, when we say the unique bank for real people we our minimum capital to $60 million we had to strategise and look want to do things that meet the real need of people and not just to how we can raise the additional funds and stay in business to doing it because other people are doing it.” continue on our growth path. That was how come we had to go the IFC. Of all the investors that we could get, looking at our UT Bank has boldly taken steps to own an area of banking where position, performance and the state of our shareholders, the IFC other banks have been cautious. SMEs have found in them a appeared to be the best option, despite their exhaustive due partner that was once like them, and with whom their dreams diligence processes.” and aspirations for growth will become reality.

JULY 2012 23 DIPLOMATIC RELATIONS DIPLOMATIC

Hon Hannah Tetteh, Minister for Trade and Industry with Mr Anand Sharma (left) Current Union Cabinet Minister in charge of Commerce and Industry and Textiles in the Government of India Evolving India-Africa commerce relations: Ghana’s lot At a time when the Eurozone is wading in sovereign financial crisis, local debts situation in the US and economic meltdown in China, India seems to be taking advantage of the extant situation and enhancing economic and trade partnerships with Africa, though with a flexible hand. Ghana, India’s friend in the sub-Saharan region, has also positioned itself strategically to benefit from this opportunity. Effah Amponsah writes.

s a marketing slang for a national brand, India calls itself During the 8th edition of CII EXIM Bank meeting on India- A ‘a land of limitless opportunities,’ summarising the Africa Project Partnership, Anand Sharma, India’s Minister of endless prospects the nation has to offer its people and Commerce, Industry and Textile, reiterated India’s objectives other partner-nations that engage in bilateral or multilateral towards Africa. cooperation. “India and Africa are the driving forces of global economic At the recent India Show held in Accra, India made its intentions recovery and the Indian government would fast-track the clear to the rest of Africa including Ghana, that it plans to offer establishment of the specialised capacity building institutions on the continent an enhanced economic and commerce relations the continent.” that has a competitive edge over other trade partnerships. “We are committed to fulfilling the developmental aspirations of The two-day event showed how entrenched India is in its bid to Africa,” Minister of State for External Affairs, Preneet Kaur also do business with Africa to position the latter as an indispensable told African ministers and entrepreneurs at the opening of the trade partner in the world of commerce. meeting. This meeting was focused on how India-Africa partnership could be aligned further to create valuable possibilities towards Various sectoral discussions were held, including the area of food building India-Africa partnership. security and inclusive development, mostly. Modern agricultural practices, accessibility and affordable of healthcare and From all intents and purposes, the Asian country has an ‘open- pharmaceuticals, mining and minerals, chemicals, automobile, secret’ to unseat the US and China as the world economic super infrastructure and construction, textile, power and energy were power permanently in the near future. Against all odds, the nation some of the topics raised during the event. The deftness and has made tremendous strides when it comes to initiating acumen exhibited by resource persons at these sectoral and win-win partnerships with other interest parties, especially in roundtable discussions showed a glimmer of hope in the India- Africa. Africa trade and economic relations. In the last decade, the trade relations between India and other It is important for India to direct its foreign trade to Africa in African nations have reached a crescendo, thanks to the mutual these times of economy struggle for the Eurozone, US and China. understanding between the two sides, stemming from the spirit “Africa remains India’s top priority and we would look to energise of South-South cooperation. the relationship through greater diversity and depth,” Dr. Manmohan Singh, Prime Minister of the Government of India India’s economic growth and Africa’s economic resurgence have has said in recent times. created new possibilities for partnership for the two parties.

24 JULY 2012 POINT OF SALE BUSINESS & FINANCE

Koala Shopping Centre Total House Fuel Station Tema Aflao Shell Shop: Osu Shop: Tudu Shop: Tema Motor Round About Vidya Bookstore Circle-Goil Fuel station Shop: Osu Shop: Circle Teshie Total Fuel Station Shop: Tsuibleo Kingdom Books Stationery Artise Alliance Shop: Ako - Adjei Shop: Labardi Adabraka Total Fly Over Ebenezer Pharmacy Shop: Adabraka Silver Bird Life Store Shop: Ridge Car Park Shop: Airport Kanda Total Fuel Station A-Mart Shops Shop: Kanda Whispers Whispers Shops: Shop: Novotel Hotel and Sranak Zongo (opp. Great Lamptey Fiester Royale Hotel (Close to Tesano Fuel St.) Mills Sch.) Shop: Tesano Konekions Bubuashie ( opposite Shop: Holiday Inn Hotel Cemetry) Oppamo Supermarket Shop: Tesano Challenge Bookstore Odorkor (opposite Auto Shop: Kokomlemle Plaza) Agingano ( American House) Catholic Bookshop Shop: Adabraka Spintex ( 18 Junction) GET Ho Market (V.R) YOUR Afrinvest Consult Shop: Airport Kumasi ( Santaasi Round COPY about) NOW Into Clothing Shop: La Palm Hotel

A MONTHLY MAGAZINE Neeni Gifts Gallery E 005 / ISSU Y 2011 0 Shop: Alisa hotel MA GH¢5.0 Chinese invests in soya bean production (page 30) Dark days for poultry industry Tesano Total Fuel station (page 48) SADA Bright future for Shop: Tesano interior design industry - A vision of hope(page 18) (page 54)

Single spine Farrar Avenue Total Fuel St. salary structure Ghana-Australia Is it breaking the back of the national budget? relations (page 5)

Improved ties open A M New insurance body O Shop: Trust Towers a new chapter N T H L Y for West Africapt at retaining M of opportunities(page 22) A G First bold attem A sub-regional business Z IN ) E A M (page 34 ONTHLY M CFA 2,500 CFA ZONE...... N500 $5.00 NIGERIA...... R25 USA...... £3.00 AGAZINE SOUTH AFRICA...... UK...... E4.00 SOUTHERN AFRICA...R25 EUROPE...... A$7.50 Follow us online at www.ghanabizmedia.com AUSTRALIA...... BUSINESS & FINANCE THE FIRST BUSINESS READ IN GHANA

E IN Z NOV - D A EC 2011 / IS BUSINESS & FINANCE G SUE A MONTHLY MAGAZINE A 010 M GH¢5.00 Y L H T N APRIL 2011 / ISSUE 004 O M GH¢5.00 A

0 GH¢5.0 E 003 / ISSU H 2011 MARC

2 SUE 01 2012 / IS .00 BUSINESS & FINANCE FEB GH¢10 Micro idea with big aims BUSINESS & FINANCE MASLOC supports Private sector small business credit growth (page 17) How are the banks coping with bad loans? (page 20) Mobile money wallet Bulk Oil Storage Telcos spread A quest for Ghana’s new key new payment craze to gas-based (page 34) Govt fiscal policyFocus to on be scrutinisedspending industrialisation national (page 26) USA ...... UK $5.00 (page 22) renewal ...... C FA Z EU ..£3.00 ONE...... ROPE...... N CFA 2,500 ..... E4 IGERIA...... AUSTRA .00 N LIA...... SOUTH 500 Easing cashflow A$7.50 AFRICA...... New private World renowned SOU R25 Inform TH Ghana’s potent ERN AFRIC al sector is credit-squeezed THE FIRST BUSINESS READ IN GHANA A...R25 pensions ise architect and (page 31) A better prom mining industry USA...... Follo $5.00 w us online a UK...... CFA ZONE...... £3.00 CFA 2,500 designer shares EUROPE...... NIGERIA...... t ww than oil & gas? Great output & E w.ghan 4.00 AUSTRALIA...... SOUTH AFRICA...... N500 Interest rate abizm ge 18) A$7.50 R25 edia.com (pa SOUTHERN AFRICA...R25 'overkill' THE FIRST BUSINESS READ IN GHANA his ideas ) The untold story values, but not seen (page 22 (page 15) Follow us online at www.ghanabizmedia.com(page 16) of WOYOME in mining communities How to avoid 'resource curse' Ghana's accounts ) (page 38 to be frozen

...... R25 (page 18) AFRICA SOUTH A...R25 2,500 N AFRIC ...... CFA SOUTHER CFA ZONE N500 “I'm sad about fuel price E4.00 NIGERIA...... EUROPE...... A$7.50 Follow us online at www.ghanabizmedia.com $5.00 LIA...... increase” - Dr Abbey AUSTRA 46) CFA 2,500 USA...... £3.00 (page CFA ZONE...... N1000 UK...... $7.00 NIGERIA...... R45 USA...... £5.00 SOUTH AFRICA...... THE FIRST BUSINESS READ IN GHANA UK...... 5.00 SOUTHERN AFRICA...R45 EUROPE...... A$8.50 AUSTRALIA...... Follow us online at www.ghanabizmedia.com

THE FIRST BUSINESS READ IN GHANA

For further information please contact Ghana Business & Finance T: + 233 302 240 786 / F: + 233 302 240 783 / E: [email protected] Trade and economic partners like India will no doubt endeavor to maintain a balance of interest and mutual benefit in its dealings with Africa, if not soon, in the near future. Ghana is one of India’s friends in the sub-Saharan region benefiting tremendously from the South-South cooperation and bilateral relations with the Asian country. Economic and commercial relations between the two countries are on an upward trajectory.

Official figures show that bilateral trade between India and Ghana in 2010/2011 stood at US$ 818 million, an increase of 52% over the previous year. For the year 2012, Rajinder Bhagat, the High Commissioner of India to Ghana say the bilateral trade between the two countries is projected to be US$1.2 billion.

DIPLOMATIC RELATIONS DIPLOMATIC On GIPC’s facts sheet, India currently lead the pack of countries that have invested heavily in diverse sectors in Ghana’s economy. As at the close of 2011, India alone had established 548 projects amounting to US$ 550 million dollars of investments. Updated figures from the Indian High Commission for 2012 unveil a staggering US$ 540 million in investments in the Ghanaian economy. The Indian Government has to date extended US$ 228 million lines of credit to the government of Ghana. Mr Anand Sharma, Current Union Cabinet Minister in charge of Commerce and Industry and Textiles in the Government of India The credit has been used for the construction of the Flagstaff House, the expansion of the railway sector, agro-processing, fish processing, waste management, rural electrification, and the During the 2nd Africa-India Forum Summit (AIFS) in 2011 in establishment of a sugar-processing plant. Not only has Ghana Addis Ababa, Ethiopia, the most refreshing cooperation between offered India a safe haven for investments, it has also proven to the two parties emerged, as the Indian Prime Minister met African enjoy a healthy economic growth. This confirms that Ghana is leaders to find ways to revitalise economic cooperation between able to meet the requirement of any economic partnership head- his country and the region of Africa. This resulted in India’s to-head. A general prediction for the future is that most developed announcement of US$ 5 billion for economic cooperation with economies would be focusing on establishing trade and economic Africa over three years. Since then, trade agreements have been relations with countries whose economies are developing and signed with almost all West African nations. can offer a competitive advantage with win-win partnerships. African economy, mainly driven by relatively strong commodity prices, substantial external From all intents and purposes, Ghana is gradually – albeit, on an increasing capital inflows and a continued expansion of the Asian country has an rate – positioning itself economically to stand demand and investment from Asia, is rapidly ‘opensecret’ to unseat the US on a pedestal of equal benefits from its trade improving. . Reports say among the continents and China as the world and economic relations with India. in the world, Africa has made the greatest stride in terms of percentage growths in recent times. economic super power “Ghana’s investment in the diversification of This explains the current situation of Africa, permanently in the near future the economy positions [the country] on a good which is seen as the safe haven for the pedestal to enjoy robust, sustainable economic industrialised economies, resulting in the influx growth in the future,” Hannah Tetteh, Minister of MOUs, initiatives, partnerships, action plans and the like, between of Trade, Industry and Private Sector Development told a 200 many African countries and some developed economies. member Indian delegation, - the biggest ever to visit Africa from Foreign Direct Investments (FDIs) have surged in many African India –when they participated in the just-ended maiden Indian nations in recent times, as the existence of untapped resources Show in Accra. for growth. Moreover the improving economic managerial skills have proved to Western and emerging Asian countries that Africa Ghana’s macroeconomic performance is very impressive and is is a reliable business partner to deal with and a sure place where widely recognised as the current fastest growing economy in the to invest. I world. Its attainment of a staggering double-digit GDP figure of 14% gives it an upper hand over its contemporaries, at least in India has invested US$ 47 billion in Africa in recent the West African sub-region. No doubt Ghana has won the hearts times with 40% in West Africa and intends to shoot its investments of Western and now Asian countries, considering the strides it in the sub-region from US$ 20 billion to US$ 40 billion by 2015. is making as a middle income economy.

The opportunities that Africa has to offer can be assessed from Ghana, like other African countries, offers myriads of natural the fact that by 2020, Africa’s collective GDP is projected to resources for harnessing and exploitation. The nation also possesses touch US$ 2.6 trillion, with combined consumer spending a developing human resource asset that only needs training and amounting to US$ 1.4 trillion and a number of working age expertise tutelage to be at par with human resources in developed population estimated at 1.1 billion in 2040. With a promising economies. State-of-the-art technologies are also needed to harness future for African economies, external investors, economic and and add value to the various products emerging from the sectors foreign trade partners, the world is assured of a rise in the scale of the economy. It is imperative that the India-Ghana trade and to a balance level, where the benefits of relationships would not economic relationship adopt a fresh paradigm and outlook to always be skewed to the benefit of one party. make their relations a more mutually beneficial one.

26 JULY 2012 MONEY MATTERS

Dollarisation of economy: Matters arising

n June 8, 2012 Ghana’s central bank, Bank of Ghana Almost all major local O (BOG) released a statement strongly refuting Ghanaian businesses, even domestic media speculations that it was devising plans small-scale business owners, to close all privately held foreign currency bank accounts within upper and middle-class the country as a means to halt the popular dollarisation culture. families own US dollar savings accounts. Nevertheless, the statement did not rule out the possibility that such a crude action could be adopted in the future. Moreover, Similarly, corporate invoices it stated that in the future, such drastic measures may be taken and pro formas are often if the current set of market-based policy tools fails to work. quoted in US dollars rather than in Ghana Cedis. The Ghana Cedi has fallen by almost 15 per cent against the US dollar since the beginning of the year and consequently, major In April, the Bank of Ghana sectors of the local economy have effectively become dollarised. announced a number of Rents and prices for private luxury homes, apartments, cars and market-based measures to professional services such as private school fees for instance are stem the Cedi slid and reverse Ammisah Aurthur being quoted in US dollars. the ongoing dollarisation. Bank of Ghana governor.

JULY 2012 27 MONEY MATTERS 28 is tradingatalmostGH¢2toUS$1. foreign exchange hasnotbeeng However, over time markets have realised that the much-anticipated US$1. to GH¢1 of value the pegged Ghana of Bank the economy, Cedi, Ghanaian capital markets anticipated an oil-fuelled booming In late2006,whentheCediwas redenominatedintotheGhana oilperday. of 120,000barrels rate of oil, Ghana is still 42 per cent behind its set daily production target thediscovery andcommercialproductionof that afterayearof disappointment market capital major the is Cedi Ghana the of However, on the domestic front, the the depreciation likely cause of investors globally,includingGhana’smiddleclasses. and savingaccounts most choicefor havensafe the of become devaluation amidst a new recession, the US dollar has once again depreciation/ major a for measures in putting is Eurozone the Though crisis. Eurozone the now and recession US the situationcanbeatt current The measures. more considering therefore is bank central The the Ghana Cedi, they are not likely to the reversefall of the trend. halted temporarily havemay measures markets these Though, local GhanaCedicover forallbankvostro accounts. a100percent inforexandinstructed non-Ghana Cedideposits restricted local banks from holding nine per against cent reserves liquidity,mop to bonds government 270-day and 60 30, new the local net banks open in positions currency trading, of introduced rates,interest limited increased included measures the of Some Dr. KwabenaDuffuor, Minister ofFinance,Ghana ributed tomanycauses, primarily enerated; today, theGhanaCedi lines willbecutdown that include a tighter restriction on loans; credit Consequences of Ghana. in based banks of majority a for mismatches sheet accelerated will lead asset-liability to balance large process if This proverbialtheir under them putting pillowsmattresses.and and banks local of out monies withdrawingsavers are class Middle keeping theirforexincashathome. and withdrawing or Europe and America North in accounts their forexaccountsandmoving their closing quietly are businesswomen and Panickedbusinessmen occurred. have effects negative of number a bank, central the such a move, despite the statement released byIn anticipation of ithappens. economic disasterforGhanaif major a be will future the in considered be may that accounts forex local seizing of tactic crude and based non-market the said, That made. havebeen forex potential of million US$700 to million US$500 about of losses meant has shortfall This bpd, 42percentbelow itsearlier2012target. 120,000 anticipated the to opposed as bpd 000 70, producing only technicalon-site,is to issues it due that confirmed recently has fields, oil Jubilee Ghana’s of operator major a TullowOil, of theGhanaianCedi. of an anticipatedfallinthevalue their retailpricestoreapprofitsbeforesuch due to future translation currency losses, many will increasing start year-endprofits shopping season. With fearing importers a loss of withinthedomesticmarkets goods imported rocketing arelikely changes toseesky These pricesof problems orhoarduntilmarket signalsareclear. schedule abroad, and mayencounter storage either order ahead of from goods for orders place to seeking businesses that mean also will accounts forex private of seizure potential a of hint householditems,ordinary including of number a of importation of quota large the to due Finally, inflation. controlling in difficulties increasing mechanism, transmission policy monetary weakenthe also can accounts of seizure bank central possible a of anticipation in businesses and individuals bybanks the from forex massivea withdrawal of Furthermore, forex deposits. will be reduced to match their balance sheets with the withdrawn drastically and credit of drastically andcreditof even before the onset of the even beforetheonsetof imported food,anycredible imported savings andfundsback to the private sectors JULY 2012

Dominion University PHOTO GALLERY

Archbishop and Members of the Governing Council of DUC interacting on the way forward

Dr. Ekwow Spio-Garbrah brainstorming with Ms. Fafa Kpodo Some members of the DUC before the DUC Governing Council meeting & ACI Press Corps at the launch The Launch of the Institute of International Negotiations

Mr. Adu Anane Antwi, D-G, Securities & Exchange Commission, Nana S.K.B. Asante, President of the Institute_ Angela Asante Dr. Kwaku Addeah, CEO, Financial Law Inst. the Exec. Dir. of the Institute and Eva Mends, Head Budget Hon. Justice S.K. Date-Bah, Judge of the Supreme Court Dev, Minstry Of Finance expressing their joy over the successful and Nana S.K.B. Asante at the hightable take-off

Key members of the Institute and some Mr. K.B. Andah guests pose for a and Hon. Justice group photograph to Date-Baah commemorate the taking time off historic occasion to catch up

30 JULY 2012 National Forum of Mining PHOTO GALLERY

Stakeholders of Ghana's Mining Sector including Chiefs, Mining Companies, Mining Associations and Regulators participated at the forum

From left to right - Hon. Mike Hammah, Minister for Lands Minister of Lands and Natural Resources, Mike Hammah & Natural Resources, Mr. Ohene Kena, Chair of Minerals speaking at the maiden National Mining Forum held at the Commission, Mr. P.V. Obeng, Chair of NDPC, Hon. Victor Smith, National Theatre, Accra Eastern Regional Minister.

Consultative Meeting

Minister for Finance & Economic Planning, Dr. Kwabena Duffuor delivering his speech Managers of Ghana's Country in a chit-chat at the meeting

Members of the Budget Support Donors, Dignitaries who graced the Consultative Meeting Developmental Partners and International Blocs listening to proceedings at the Consultative Meeting

JULY 2012 31 ICT

Election 2012: Ghanaian politicians go high-tech By Effah Amposah

he 2012 electioneering campaign is sure to elicit interesting twists as politicians and political parties will have at their T disposal, a wide range of digital publicity tools for their campaigns.

This became evident during a boot camp organised by Google Ghana, aimed at training election stakeholders on the effective utilisation of Google products and digital tools, purposely for the enhancement of activities before, during and after the Presidential and Parliamentary elections this December.

Activists from various political ideologies, representatives of political parties within the country, journalists and business entrepreneurs gathered for a two-day program, which educated them on the various Google applications and software CAPTION NEEDED available and how these tools can enhance the marketing of their businesses. Politicians and journalists were further enlightened on the usage of Google Apps, Google Data Visualisation, Google Ngram, “Politicians and campaign managers need to be aware of the Hashtags, Hangouts as well as Google Public Data Explorer. power of the Internet and use products and tools available on According to Madam Akofio-Sowah, “Google Alert is really the Internet to send their campaign messages across via the aimed at helping to bring together in one place, all the information Internet,” Estelle Akofio-Sowah, the Country Manager for Google one seeks to avoid long hours of searching. Simply set up an alert Ghana told GB&F. “This is a part of our efforts to support the with all the keywords that you want to monitor. Whenever you 2012 elections in Ghana and to ensure that there are free, fair prefer to monitor, either every morning or evening, and successful elections,” she added. you will receive an email that summarises and captures all the information on the Internet that is related to the keywords you During the program, Google Ghana officials lectured on a number selected when setting up. We are assisting citizens in getting quick of Google products including Google Alert, Google Docs, Google information and responses to enable them make the right decisions Plus, Google Fusion Tables and Google Maps. or react in the right way.”

32 JULY 2012 Google Docs, now known as Google Drive, is a free, Web-based office suite and data storage service. It allows users to create and edit documents online whilst collaborating in real-time with other ICT users. Thus, it can allow both the electorate and political aspirants to simultaneously create and disburse propaganda materials.

“We know that the media, civil societies and Ghanaians in general are already using the Internet to get their messages across, therefore we are not introducing these products to novices but as a means to build the existing capacity of users in analysing information and decision making.

Everyone agrees that social media add new arrows to the quivers of social activists. The social media we have discussed can be helpful in mobilising protesters rapidly undermining a regime’s legitimacy and can increase national and international exposure to a regime’s atrocities.

The “Arab Spring” in Tunisia, Egypt and elsewhere in the Mid- East for instance heavily relied on the Internet and social media it enhances such as Twitter, TwitPic, Facebook and YouTube in the early stages to accelerate social protest. In view of this, some people have expressed optimism at the introduction of these Google products, which seem to empower the electorate and gives them wider range of options in responding to national and political issues.

Looking at what happened in the Middle East and North Africa; people achieved what they wanted in a way. We really need to understand the commitments that the political parties are making to citizens and hold them to their promise after the elections. So we wouldn’t experience what has happened elsewhere to affect the decisions we make as Ghanaians,” Estelle Akofio-Sowah explained extensively in an interview with GB&F.

However, she also admitted that, “some people may pursue their own goals aimed at inciting violence and we need to be aware of that.” Google+, another tool, enhances user-specific interaction for the purposes of the receipt or dissemination of information. For “We have in place many organisations that are responsible for instance, a Member of Parliament or a political aspirant can interact monitoring what people are saying and their implications. There with a constituency by sharing and/or receiving information. Even are civil societies who would monitor methods employed by people though a politician might have used other social networking in trying to incite trouble and quickly counter that by educating platforms like Facebook and Twitter to release poignant messages people on not responding to such information,” she added. to the public, Google+ is more effective in amplifying his or her message to a targeted population critical in determining his or her It is expected that Google Ghana would have gatekeeping measures triumph. The tool allows live, face-to-face video chats. firmly in place to prevent the prevalent situation in North Africa and the Middle East from brewing in Ghana, during the parliamentary “It is as though people sitting in a room with you and they are and presidential elections in December 2012. raising their hands to ask questions,” offered Justin Arinstein, a Google products training expert, as he lectured on the usage of Google+.

Google Ngram is a tool within the Google books product, purported for displaying the occurrence of particular phrases over the years in books using a graph. In the same way, it can enable the electorate to make a quality decision as to who to vote for, by comparing and assessing a record of politicians’ publications found on Google books that discuss issues that matter to the electorate.

Google Public Data Explorer provides users with the ease to track study and analyse a wide range of national issues that are of interest to them through visual representations. The products keep track a wide range issues such as of international treaties, pacts, memorandum of understanding and agreements between nations, regional blocs and international bodies to make these visualisations possible.

JULY 2012 33 ADVERTORIAL / MTN ADVERTORIAL

Rahul De, Chief Marketing Officer supports with education on road safety tips with commercial drivers MTN sensitises drivers on road safety during ‘21 days Y’ello Care Programme’

taff Volunteers of MTN Ghana have undertaken a number As part of activities marking this year’s Y’ello Care, employees of activities in all of MTN's three business districts in partnered with officials of the National Road Safety Commission S Ghana as part of this year's 21 Days of Y'ello Care and MTTU to educate commercial drivers on road Programme. safety issues. The road safety exercise took place at the Tema Lorry Station (Accra), Market Circle, (Takoradi) and Asafo Market The 21 Days of Y’ello Care Programme is an annual community (Kumasi). The group offered advice on the use of “hands free” enhancement programme that encourages MTN staff across all driving kits. They also reminded the drivers to avoid drinking 21 operating countries to set aside 21 days in the month of June alcohol before driving and offered other safety tips. (from 1st . 21st) to volunteer and undertake community uplifting projects in the communities in which MTN operates. ASP Alexander Obeng, a representative from MTTU, in his remarks urged all road users to put safety first and drive cautiously. Each year, the Y'ello Care Programme is undertaken under a He encouraged drivers to take driving lessons seriously and also global theme and specific subthemes. The global theme for 2012 acquire a driver’s license before driving on the roads. was “Investing in Education”, while the sub-theme for Ghana was “Education . A Tool for Development”. Mr. Reuben Adjetey, Assistant Planning Officer from the National Road Safety Commission, took the commercial drivers through During the launch of the 21 days of Y'ello Care for 2012, the various road safety tips such as wearing of seat belts while driving Chief Executive Officer of MTN Ghana, Mr. Michael Ikpoki, and using hands free kits where necessary to attend to urgent said, “As a business, MTN is passionate about education and we phone calls. He urged drivers who drive long distances as well as recognise that education is the heartbeat of every country. It is truck drivers to have enough rest before they embark on their a powerful driver of development and is one of the strongest journey and in between the journeys. instruments for reducing poverty, improving health, promoting gender equality, as well as peace and stability”. Mr. Etse Ladjekpo, Executive Director of the National Drivers Academy who chaired the function reiterated the need for It is in line with its passion for education that MTN is embarking passengers to caution drivers who drive recklessly and if possible on various sensitisation programmes aimed at educating different desist from continuing their journey in those vehicles. He also stakeholders about the different services that will enrich their emphasised the need for drivers to have fire extinguishers, triangles, lives and improve business opportunities. reflectors and other road safety items in their vehicle.

34 JULY 2012 ADVERTORIAL / MTN ADVERTORIAL

(Main) MTN Volunteer distributes Road Safety Materials to Commercial Drivers (Inset Top) Education on The Mobile Phone, My Business with Market Women in Takoradi (Inset Bottom) MTN Staff shares Road Safety Tips with a commerical driver

MTN Staff also had one-on-one sessions The interaction highlighted the efficient with the drivers and educated them on use of Mobile Money to operate a cashless, safety signs and other precautionary “As a business, MTN is safe and convenient system regarding the measures to be observed on the road. passionate about collection of school fees. Staff volunteers also distributed fliers to education and we Some groups of Market Women and the drivers to serve as a guide and a recognise that education members of the Ghana Union of Traders reminder on the safety tips as they go Association (GUTA) were also engaged about their daily routine. is the heartbeat of every in a forum that sought to enlighten them country. It is a powerful on how they can use their mobile phones The Chief Marketing Officer of MTN, driver of development ” as a tool for enhancing their business. Mr. Rahul De who participated in the road forum was under the theme: “The safety campaign, shares his experience. – Michael Ikpoki, MTN Mobile Phone & My Business”. “It is so refreshing to interact with the Ghana Boss drivers. I never knew I would get this Recognising the need to educate stake- opportunity to share my driving experience holders on the telecoms industry, a seminar with these commercial drivers. I am happy on Telecommunications was organised that 21 Days of Y’ello Care has made it for student journalists of the Ghana possible for me to contribute to enriching Institute of Journalism (GIJ) in Accra. the lives of these drivers with the knowledge I have. I believe with this sensitisation, a lot of lives would be saved as a result of The aim was to educate GIJ students on how mobile phone more cautious driving on our roads”. technology works and also to encourage young journalists to specialise in telecoms reporting. A group of MTN staff also interacted with the Conference of Heads of Assisted Secondary Schools (CHASS), Accountants A career session was organised for female senior high school and Bursars of Senior High Schools on the topic, “How can Students in Kumasi and Takoradi about the benefits of pursuing Mobile Money transform the management of schools fees careers in Science and Maths, Telecoms and other Engineering collection.” fields.

JULY 2012 35 OIL & GAS

The LPG Subsidy saga Ghanaians are learning the hard way; conserving forest cover by subsidising consumption of LPG is proving extremely costly as free-riders’ demand overwhelms supply, and threatens to upend the programme.

o suggest that Ghana’s policy of subsidising the The data consumption of liquefied petroleum gas (LPG) shows an appreciable T should be scrapped was, not too long ago, simply uttering rise in the usage of LPG the unthinkable. In recent times, however, powerful voices have as fuel in the residential sector, thereby helping to cut down on been pushing that agenda. the use of the traditional sources of fuel. Most households use more than one form of fuel (a combination of charcoal, firewood Dr. Charles Wereko-Brobby, an energy expert, first broached the and LPG) and the data shows that currently about 36 percent of topic in 2010. He argued that there should be at least a partial the residential sector use LPG. This number continues to rise ban on commercial vehicles’ usage of LPG rather than gasoline, steadily, while about 79 percent use charcoal, and 40 percent use which was undermining the effective supply of the product to firewood. domestic users, for whom the policy was instituted. So while the use of LPG may be helping the situation, the country Since the 1980s LPG, a by-product of the crude oil refining has since 2009 been intermittently rocked by acute shortages of processes, has been promoted as a substitute for charcoal and LPG. Many domestic consumers, especially institutional kitchens fuel wood. The policy aims at conserving what is left of Ghana’s such as in schools and hospitals, have been forced to revert more alarmingly dwindling forest cover, which, at the turn of the 20th increasingly to the use of charcoal and firewood. century, stood at 8.2 million hectares. Currently, this figure is below 1.6 million hectares and is estimated to be contracting by Superficially, Dr. Wereko-Brobby’s arguments sound plausible. 65,000 hectares annually. Skyrocketing demand, caused by the increasing use of LPG by commercial vehicles, was creating persistent supply shortfalls. The measure has become even more urgent for Ghana, since the northern fringes are increasingly threatened by the rapid southward Domestic users bore the brunt of this shortage, as the country spread of the Sahara Desert as a result of global climatic changes. lacked both the refining and storage capacity to meet the growing Incidentally, the source of fuel in the northern parts of the country demand. is mainly firewood, charcoal and cattle dung. Extensive grazing, a major economic preoccupation in those parts, compounds the To put it in the right perspective, the National Petroleum Authority already precarious ecological balance of the area. This has resulted (NPA) revealed that within a short period, consumption of LPG in rapid worsening of the situation from excessive harvesting of had moved from a low consumption quantity of between 500 wood for fuel. and 800 metric tonnes per week to over 1,800 metric tonnes. And with a price differential of more the 50Gp per kg in favour of But though there are no exact numbers on the measure’s impact LPG, increasing numbers of commercial vehicle owners were in reducing the rate of deforestation, some success can be inferred converting their vehicles from petrol engines to enable them run from figures obtained from the Energy Commission. on LPG.

36 JULY 2012 That perhaps has prompted the Chief Executive Officer of the NPA, Mr. Alex Mould, to call for an outright ban on the use of the product by vehicles, among other recommendations. These included a price differential to ensure full cost recovery of LPG, which receives high subsidies from the government. OIL & GAS The raw numbers seem to justify his position. From 2006 to date, LPG consumption has increased by over 537 per cent, from 21,116,059kg to 134,409,632kg in 2012.

In a presentation at a forum in June organised by the Integrated Social Development Centre (ISODEC,) Dr. Wereko-Brobby said credible evidence suggests that more than 70 percent of LPG consumption is now as vehicular fuel and not for cooking as originally conceived and intended.

But the debate about the wisdom, or otherwise, in maintaining subsidies on LPG consumption gets marred in the bigger picture of general fuel subsidisation. Mr. Mould notes that the cost to government is estimated to have grown to GH¢60 million a month with total cost in the first five months of 2012 alone exceeding GH¢ 200 million. He said government spends over GH¢450 million on fuel subsidies annually, and with oil prices likely to remain elevated, fuel subsidies will continue to weigh on government budgets.

The International Monetary Fund (IMF) had earlier waded into the fray, pressing government to remove all subsidies on petroleum products. Trade unionists were angered by this, and threatened a ‘gargantuan demonstration’ should that happen.

Government obviously had no interest in removing fuel subsidies; certainly not in an election year. Caught in the debate of fuel subsidies, and more especially as commercial vehicular use of LPG as fuel is greatly undermining Expectedly, civil society organisations, chief among them, the primary purpose of LPG subsidisation, the price of LPG ISODEC, who hold themselves as representing the interests of needs to be raised to achieve parity with gasoline, while contrarily the people, welcomed government’s decision to maintain fuel instituting support measures such as lower taxes and subsidies subsidies. on cookers, stoves, gas cylinders and other such household appliances used in cooking. On the other hand, proponents of fuel subsidy removal have a solid case. They argue that fuel subsidies pose huge financial This will ensure that there are no incentives for vehicle users to burden on the government, disproportionately benefit the convert their engines to allow them take advantage of lower- unintended income groups, encourage inefficiency and corruption, priced LPG as fuel. and divert scarce public resources away from investment in critical infrastructure. Concurrently, a return to the programme of conversion of institutional kitchens, which largely depend on charcoal and Interestingly however, Dr. Wereko-Brobby debunks the notion firewood for cooking, is imperative. that government actually subsidises the consumption of fuel, noting that a plethora of taxes in the cost build-up of fuel Even more urgent now is the need to introduce more discipline outweigh the subsidy component in the price of petroleum products, in the LPG sector as the head of the Ghana National Gas arguing that actually, in recent years, 10 percent of government Company (GNGC), Dr. George Sipa Yankey, disclosed at the budgets are supported by such levies on petroleum products. recent launch of the Ghana Oil and Gas Yearbook. He stressed that upon the completion of the country’s gas processing plant Questioning whether the IMF’s insistence on fuel subsidy removal that would utilise local natural gas, a lot of effort will go into is indeed a re-introduction of the Structural Adjustment making more gas available for domestic consumption. Programme, (SAP) he punches the organisation and its allies to stop demonising subsidies and offer more constructive models. Obviously, if Ghana’s dwindling forests must be conserved then While saying no to subsidies as they exist in current form, he is subsidies must move away from fuels generally. The intended all for subsidies that actually reduce the negative impacts of fuel targets need to be supported exclusively, and as far as possible, price hikes and also make direct positive impact on the intended the support must be enjoyed and must be seen to benefit directly beneficiaries. those for whom it was intended.

That is where he suggests that subsidies on LPG consumption, Ghana now has a great opportunity to effectively adapt to the which qualified for subsidisation for the sake of environmental adverse impacts of climate change. It all however depends on considerations, needed better treatment if they are to serve their how well government succeeds at accurately targeting subsidies purpose. on LPG.

JULY 2012 37 FEATURE

Obama’s new policy for Ghana & others - Any good news? By Sebastian Spio-Garbrah Barack Obama, President of the U.S.

fter months of braving much criticism for its lack of Early last year, during the largest wave of democratisation ever A attention on Africa, the Obama administration to occur on the African continent since 1975 when Africa’s finally launched an Africa strategy document on June Portuguese colonies gained their independence, “the Arab Spring,” 14th, 2012. The document centres on clarifying the Obama there have been mixed views on the position of the USA. administration’s specific focus for engagement with Africa. For many, the USA was behind much of the evolution process as in the case of Libya. For some, the USA remained a silent The document is realistically minimalist as it seeks to anchor the force until it was clear that the forces of democracy had been administration’s policies towards Africa around 4 main pillars: won. strengthening democratic institutions; spurring economic growth, trade, and investment; advancing peace and security; and promoting In Ghana, the quintessential poster child for good governance opportunity and development. in Africa and a stop for Presidents from the last three US administrations have started showing signs of simmering ethnic While former President Bill Clinton prioritised trade and investment, violence ahead of the 2012 elections. Evidences of political and President George W. Bush made HIV-AIDS treatment a corruption surmount as the immediate past Attorney General number one priority, President Barack Obama, current President and Minister of Justice, Martin Amidu, widely known for rectitude, of USA, has chosen to focus on ‘strengthening democratic accuses the US-friendly President, John Atta-Mills, and several institutions’ as his highest priority for Africa. members of his cabinet of perpetuating “gargantuan” crimes.

This focus, though laudable, is ironic, as evidence on the ground Once again, the US remains silent, as the Ghanaian public grows in Africa does not necessarily reflect a strong commitment by weary of their political class. Though the African Strategy the Obama administration to democratisation. Despite the Document does not clearly spell out tackling bribery and corruption administration’s past ambivalence concerning the current as one of its objectives, it is clear that strengthening democratic democratisation process in Egypt, it may be too early to tell their institutions and spurring economic growth need to tackle with current position on the matter. It is still uncertain how the plan this poignant issue. to move forward in US-Egypt relations and implement its strategy after the Muslim Brotherhood’s candidate Mohammed Morsi, Kenya, President Obama’s homeland, has seen a rise in ethnic- just won Egypt’s presidential runoff. based political parties and growing indications that late 2012 and early 2013 polls may become a repeat of the see a 2007 However, the fact is for many - especially within the international demonstrations. In spite of this, President Obama is yet to visit community and to many African democracy activists - this priority Kenya; similarly, he has barely mentioned Kenya in any for Africa by the Obama administration comes as a surprise. major speech concerning economic development or elections.

38 JULY 2012 FEATURE

Evidences of political corruption surmount as the immediate past Attorney General and Minister of Justice, Martin Amidu, widely known for rectitude, accuses the US-friendly President, John Atta-Mills, and several members of his cabinet of perpetuating “gargantuan” crimes. John Evans Atta-Mills President of Ghana

In Tunisia, France being a major ally of the US, supported the On the East of Africa, the US continues to supply military arms Ben Ali regime until its final hours in power, with the response to Ethiopia, despite the many violent anti-democratic crackdowns of the US Secretary of State, Hilary Clinton, “We can’t take that Prime Minister, MelesZinawi, has supervised during his 21- sides”, speaking volumes, emphasising their muted stance. year rule. Later when the Egyptian revolution started, it was not until the day before former President Mubarak announced that he will In neighbouring Djibouti, the US maintains a military presence step down from power with a new Vice President, Omar Suleiman and has continued to support President Ismail Omar Guelleh, named, that the Obama administration came out publicly in who has in recent years arrested opposition leaders, amended the support of the democratic protests. constitution to run for a third term and disregarded many of the tenets, which the Obama pro-democracy Africa In Libya, despite aiding the toppling of former leader Muarmar strategy advocates. For the civil society and pro-democracy forces Gaddhafi, the US has taken no strong public steps to assist the in Djibouti, Obama’s strategy to “amplify and support voices new Libyan regime to re-establish order. It has done as much as calling for respect for human rights, rule of law will” may come granting diplomatic recognition to the National Transitional as a daydream. Council as the legitimate Libyan government and led efforts at the United Nations to allow unfrozen Libyan assets to be transferred Somalia also experiences a literal absence of US with respect to to the interim government. the main political debates, except for a few drone attacks ordered on suspected terrorist bases. However, nothing significant has been done with respect to the objectives of the African Strategic Document. In Uganda, though, the Obama administration has posted 100 US troop in the country to help regional governments haunt Further south on the African map, the new Republic of South down Joseph Kony and fight the Lord’s Resistance Army (LRA), Sudan, an advent American administration of all ideological the White House has been largely muted the ongoing destruction stripes supported for decades, lies in tatters. South Sudanese ordered of the opposition parties and physical abuses President, SalvaKir, since gaining independence in 2011, has meted against the principal opposition leader KizzaBesigye by launched an aggressive unsuccessful war against the north and President Museveni. has recently accused several ministers of siphoning several billion dollars from the government treasury. In Zimbabwe, the US still remains politically irrelevant to the debate over a post Mugabe era after a series of leaked US Yet again, the Obama administration has remained a silent giant diplomatic cables unveiling the known weaknesses of the on this democratic apostasy in South Sudan. opposition leader and current Prime Minister, Morgan Tsvangirai.

JULY 2012 39 In Senegal, it was only a forceful populace that eventually pushed the octogenarian and former President, Abdoulaye Wade, out of office. The US voice in that drama was largely absent.

In Mali, when the democratic government of President Amadou FEATURE Toumani Toure was overthrown earlier this year, there was virtually no strong US response commensurate with the scale of constitutional violations. Indeed, the US has endorsed the Economic Community of West African States’ (ECOWAS) solution of forcibly retiring Toure and setting up a makeshift hybrid civilian-military Frankenstein government which has no President Atta Mills in conversation with Presidnt Obama popular legitimacy. Despite the political progress made, by the two political parties, As Ghana Business and Finance Magazine quick survey has Zanu-PF and the opposition Movement for Democratic Change shown, the Obama administration despite its public (MDC) to form a coalition, US policy towards Zimbabwe and pronouncements of placing the “strengthening of democratic the regime remains atavistic and unsupportive of the on-going institutions” at the forefront of its Africa policy, this has yet to improvements in that country’s political governance. take root. Relations between South Africa and US remain tense. Also lacking from the Africa Strategy is any discussion of Africa’s The Obama administration supported international military natural resources sector, especially the growing strategic importance interventions in Libya and Cote d’Ivoire, whilst South Africa’s of the Gulf of Guinea to US energy security, which the Cheney Jacob Zuma ultimately was opposed to both military operations. 2001 energy task force recognised. Today, South Africa refuses to recognise the interim government of Libya and vociferously opposed French-led (US supported) The management of resources, which the USA has taken a special intervention in Abidjan, Cote d’Ivoire. interest in and a desire to counter the strong anti-competitive approaches taken by China to tie up large quantities of critical In Angola, where according to Gallup polls, the African mineral commodities is not discussed. government has the lowest support lever of any The word “oil” appears only once in the entire government in Africa, the US barely said a word On the East of Africa, the document, and even there, about the convoluted political transition underway refers to “non-oil exports” to the US. from President Eduardo dos Santo back to US continues to supply himself or to his close ally, Manuel Vincente military arms to Ethiopia, Indeed, the word “energy” appears only twice with potentially hundreds of millions allegedly despite the many violent anti- in the document, once in reference to the financial embezzled in the process. In Angola, signs point democratic crackdowns that management of energy resources and another to an incipient youth revolution, an imminent Prime Minister, in reference to “clean energy.” shift in the country’s political structures and yet MelesZinawi, has supervised the Obama administration’s position on the It is very clear that the Obama administration, presidential transition is unclear and not during his 21-year rule. unlike the Clinton or the Bush II administrations, categorically supportive of democratic change. does not consider Africa’s oil and mineral resources of strategic importance to the US, and In Gabon and Equatorial Guinea, the voice of the Obama consequently, does not consider the role that major American administration has not been heard on the many allegations of energy companies such as Exxon Mobil are playing in Africa, democratic abuses that have occurred over the past few years. beneficial to the US energy strategy. For an administration whose Africa policy is focused on “strengthening democratic institutions”, the most obvious These companies are essentially on their own, whilst the Chinese, candidates for reproach and reform have been largely left off the Koreans, Indians, Russians, Japanese and Thai energy firms receive hook. In Cameroon, US policy favoring democratic change strong diplomatic and political support from their home remains moribund and impotent as President Paul Biya entrenches governments to snatch as many African oil leases and mining himself in power after 37 years in office. concessions as possible. As the botched acquisition of Kosmos’ Ghana assets by Exxon in 2010 showed, the strategic Nigeria, is arguably the one country in Africa that the Obama priorities of the US in Africa may not extend to giving strong administration has the most important bilateral relationship with support to major energy firms operating there. and yet the US is missing in action on the most urgently pressing issues as to how to contain and defeat Islamist terrorist group, Despite grandiose expectations by most Africans in 2008, when Boko Haram, and prevent a full scale escalation of a sectarian Barack Obama won the American presidency, that Africa will be violence despite condemning its attacks and designating three a major thrust of his administration, his policy focus is naturally leaders of the Boko Haram militant group as terrorists. on domestic-economic issues, as his re-election in 2012 will be a referendum on his domestic competencies rather than his On Cote d’Ivoire, Senegal and Mali, the views of the US remain international popularity. tentative and obscure to discern. In Cote d’Ivoire, a victor’s justice seems to be underway, where only those associated with former Evidently, the tangible legacies Clinton and Bush have in Africa President Laurent Gbagbo have either been hauled before the must serve as a painful reminder to many Obama supporters that International Criminal Court at the Hague or jailed in his country, merely having parents or grandparents hailing from the African despite a UN team’s findings on violence on both sides during continent does not guarantee that the continent will become a the recent post-vote civil war. The US still remains silent. priority when one attains the American presidency.

40 JULY 2012 Help us reduce cancer impact in Africa

Our Mission ACO is dedicated to reducing the impact of cancer in Africa through the provision of effective and feasible public awareness interventions aimed at reducing cancer incidence, suffering and mortality in Africa ACO: Key Objectives Helping Cancer advocacy Encouraging cancer screening programmes Improve Cancer Awareness Education & awareness programmes Mobilise resources through fundraising activities Promoting volunteer services Forging strong institutional partnerships Supporting cancer research How can you help? To donate, please send your cheques to 'African Cancer Organisation' or internet, in-branch or international payment using the following account details Bank: HSBC Account Name: African Cancer Organisation african cancer organisation Account number: 71838776 Sort code: 40-06-21 House No. 7, Mailing Address: IBAN: GB72MIDL4006217183776 Lamb Street (Off Farrar Avenue) P.O. Box 0772, Osu, Accra, Ghana Adabraka, Accra T: + 233 302 240 786 BIC: MIDLGB2107T Ghana F: + 233 302 240 783 Thank you for your support! www.africancancer.org

ACO is an International non-governmental organisation formed and dedicated to the control of cancer and its effects on the African Continent UK Registered charityUK Registered no: 1127740 MOTORING

Meet Audi A6 Allroad

udi didn’t invent the crossover segment, but it does field It emits a quiet purr and very little vibration, and it’s powerful, a pretty strong lineup of models. Things arguably started with most of its torque available at low rpm. Atwelve years ago with the A6-based Allroad. Today, the company offers the Q3, Q5, and Q7utilities, as well as the A4 The seven-speed dual-clutch transmission makes for seamless Allroad and A6 Allroad wagons. The Ghanaian market currently shifts and, thanks to a short first gear, you don’t miss torque stocks the Q5, and Q7 while the A6 Allroad could, hopefully, multiplication when launching the car from a stop. The diesel fits join Ghana’s lineup sometime in future. the character of a crossover wagon better. Plus it’s very efficient.

Well, the recipe remains unchanged from prior models: It is once The A6 Allroad is an accomplished long-distance cruiser, but it again a dressed-up and jacked-up A6 Avant, without any true off- also enjoys single-lane highways. The weight of its power-train roading aspirations. Okay, the A6 Allroad does offer a tilt-angle is somewhat offset by body construction rife with aluminum, and display and an electronic hill-descent-assist function. But these the electromechanical power steering - one of the finer systems enhancements don’t go very far in matching the chops of the in this class - reacts loyally to driver input. first Allroad. Will the A6 Allroad be offered in the Ghanaian auto market? So, the Allroad is mostly about aesthetics. In fact, many customers Indeed, one can’t answer with great certainty because in markets will choose it, not because they ever wish to leave the asphalt, as sophisticated and as liquid as the US market, the cutie was held but because they simply want the most upmarket A6. Ground back because Audi wanted to push its Q5 and Q7 models there. clearance is increased slightly; the grille features specific vertical Just keep the faith and your eyes on the road! slats, the bumpers and fender flares are painted in a contrasting color. Overall, the new look isn’t exactly rugged, but it makes the Source:caranddriver.com point that its owner is an outdoor type.

In accordance with its place as the top-shelf A6 wagon, the Allroad is offered with the A6 lineup's better engines - there is one gasoline engine, the supercharged 3.0 TFSI V-6 with 310 hp, and three variations of the 3.0-litre V-6 TDI with 204 hp, 245 hp, and 313 hp.

The Allroad is the first application of this engine to get increased torque output of 428 lb-ft, up from the previous 369 lb-ft. (Variations of this engine are sold in various Audi models, as well as the VW Touareg and the Porsche Cayenne.) As far as diesels go, this unit is just about perfect.

42 JULY 2012 Technology is crucial for educational sector - Education Minister The Minister for Education, Ambassador Lee Ocran, is a man who does not pull punches. In this interview with GB&F, he says technology education remains the driving force behind Ghana’s education sector. Below are excerpts of the interview.

Q: In the current technology-driven world, what are you Consequently, the government ensured EXECUTIVE SUITE doing to promoting science and technology education in the passage into law of the Student Ghana? Loan Trust Fund Act (Act 820) in June 2011. Subsequent to this, we A: We are committed to promoting science and technology in support the Student Loan Trust Fund education. This includes improving technical and vocational to initiate activities geared towards easy education, rehabilitation of science laboratories in senior high Ambassador Lee Ocran and adequate access to funding by Minister for Education, schools, and the development of appropriate curriculum to instill tertiary-level students. To improve Ghana innovation and creativity in the application of scientific knowledge. service-delivery to clients of the scheme, the SLTF has also introduced a guarantor diversification provision for the benefit We are also exploring all possible means to increase interests in of students. This facility enables non-SSNIT contributors to act the study of science and technology in order to ensure the as guarantors for students applying for a loan. Through this attainment of government’s policy to achieve the 60-40 ratio diversification, district assemblies, corporate bodies and individuals admission requirements at the tertiary level. Among the package as well as SSNIT contributors will be able to provide guarantees of incentives earmarked for this purpose include specific targeting for students. of support to science and technology-related courses as well as the provision of scholarships for the study of science. In addition, polytechnics with the capacity are now permitted to offer Bachelor Q: How effectively do you implement the study-leave- of Technology (B.Tech) degrees in programmes but with special with-pay facility for teachers? preference for science and technology related programmes. A: The NDC government is aware of its promise to teachers to create opportunities for easy access to study leave with pay. This Q: What efforts are you making towards increasing promise was made with the full understanding of the challenges computer-literacy in Ghanaian school children? faced by the Ministry of Education and the Ghana Education Service, with regard to the GES’s motivational support A: As part of efforts to ensure that children in Basic Schools for teachers’ professional development. The Ghana Education have access to computers, the Ministry in 2011 launched the Service has been directed and has accordingly streamlined the ‘Basic Schools Computerisation Project’. Under the project, 60,000 implementation of the study leave programme. The system now laptops were purchased for distribution to Basic Schools throughout links study leave to teacher gaps in the delivery system. the country. To date, 15, 000 of these laptops have been distributed This study leave system serves the best interest of the child, the in the Upper East and Upper West and Northern regions. Plans teacher and the education system as a whole. In terms of statistics are underway to cover the rest of the country before the end of on study leave approvals, the Ghana Education Service in the year. The Ministry has also drawn up plans to supply all Junior 2010/2011 academic year granted study leave to 3, 000 teachers High School teachers throughout the country with laptops. Under to further their education the initiative, 65,000 teachers are expected to benefit from the package, which takes off before the end of the year. Q: The dearth of professionals in oil and gas to service Ghana’s new oil economy has made room for many Q: Is GETFUND broke? institutions claiming to offer training in oil and gas to A: To my knowledge as the one in charge, I am not aware that advertise for students. What can you do to help ordinary GETFUND is broke. The law setting up the fund mandates it Ghanaians sieve the real from the dubious ones? to provide finances to supplement the government’s budget for A: Of course when there is something new, some smart guys education at tertiary levels. The monies from the fund are to be want to take advantage of the situation. When I was Ghana’s expended in the provision of financial support to agencies High Commissioner to South Africa, we faced a similar problem and institutions under the Ministry of Education for the from thieves in Ghana who placed adverts in South African development and sustenance of essential academic facilities in newspapers for academic positions in non-existent oil and tertiary institutions through the Ministry of Education. gas institutions in Ghana; institutions with funny names like University of Oil and Gas, Sekondi. Prospective candidates were asked to pay certain amounts and they concurred. When they did Q: Prospective beneficiaries of the Student Loans Scheme not get the employment, they run to the mission to complain. have complained about the stringent hurdles they have to scale before they can access the loan. How can you So definitely, there are people that will take advantage of the make the scheme more accessible? situation. My advice to those who want to study oil and gas is to A: It is this government’s intention that every student in an be patient and diligent. Before committing money, ask yourself, accredited tertiary institution in Ghana has access to loans from “What kind of oil and gas institution is that?” Currently, there the Student Loan Trust Fund (SLTF). is an oil and gas training facility at Takoradi, for example.

JULY 2012 43 ANALYSIS

Africa is up & coming By Angelina Lazar (International Management Consultant)

t is beyond fascinating, infinitely enigmatic, extremely The change is just moving at a veritable lightning speed, economies I precarious and highly ironic what is happening in macro- are virtually transmogrifying themselves into their antitheses economies across the globe today. Advanced, capitalist simultaneously and vicariously. economies of a super-satiated developed world, as we know them, are plummeting head first, whereas underdeveloped third Billionaire George Soros puts it like this: "The world financial world and transitional economies are ‘up and coming’, rising like system is on the brink of collapse, with developed markets running a phoenix from the ashes, and soaring upwards in flight at top at top speed toward disintegration [and] although developing speed like the loftiest. countries are battling a slew of problems themselves, such as corruption and tattered infrastructure, they will most likely end Never has the world been so topsey-turvey, veritably somersaulting up faring better than markets in the big, industrialised nations!" as it is today; and we are only just beginning to witness this extravaganza play itself out, as it unveils itself mesmerisingly As if that were not enough, he goes on to say that, "the global on the world stage, leaving polar peoples, unanimously gaping, financial system finds itself sliding down a slope of a ‘self- watching with dropping jaws. Many are glaring, flabbergasted, reinforcing process of disintegration‘, and that ’investors spellbound, doubtful, shocked, and positively intoxicated over must brace for the worst‘ because the consequences could be the implications these circumstances mean for them, their families ’disastrous‘!” and friends, nation and continent as a whole. That was the bleak forecast Soros projected for the most developed Today, though, the change has already started to take over and countries in the Western world. We must not deceive ourselves, is running at rampant speed, with no brakes to clutch, no flinching Soros is highly experienced in this field, therefore these are hardly in heady cerebral intentions, no dovetailing, spinning or pit projections, but are certainly warnings of what is to come and, stops with junctions along the way. indeed, is already here.

44 JULY 2012

High unemployment, lack of economic opportunity, low wages, widespread poverty, extreme concentration of wealth, unsustainable government debt, control of the government by international banks and transnational corporations, a weakening rule of law, disintegrating National Constitution, and counterproductive

ANALYSIS government policies are sure tell-tale signs; all of them are present and evident in the U.S. today and widespread throughout Europe as well.

Other factors include poor public health, nutrition and education, as well as lack of infrastructure. These factors will rapidly deteriorate in a declining economy. In other word, we can expect to see these manifestations emerge in North America and across Europe, as unbelievable as they may seem to us today.

As for unemployment, this problem cannot be ameliorated, as However, people are not taking notice as they are believing the it is a profound issue in the U.S. In fact, the problem hype and propaganda of media giants - the fourth arm of shadow of unemployment is due to the fundamental change in the governments worldwide; hence, they are being programmed and modus operandii of the transnationalists based there and are brainwashed literally with their “eyes wide shut”. attributed to a huge challenge to economic opportunity in the U.S. On the other hand”, Soros defines emerging markets such as Africa, the Arab World and China as "bright spots in an otherwise As a result, the labour market is in a serious downward trend with dim global economy". Other financial investment gurus claim corporate downsizing on the rise, an escalation of outsourcing that for those seeking yield and serious growth, Africa is the first jobs to Third World relative parties and offshoring of the place to target. This is highly encouraging for a manufacturing sector, as a whole. This is continent that was continually stigmatised as the globalisation at its worst and it is absolutely anti- "Dark Continent", and which represented a place protectionist, causing veritable de-industrialisation where savvy investors avoided. Today, though, The change is just of the West. What a concept! it is foreseen as a safe haven , which they will moving at a veritable invariably flock to once they gain more appetite Now, I want to enlighten the savvy African reader for risk, as they see their options in the developed lightning speed, to please understand, prior to the Clinton world, namely Europe and the U.S., going up economies are virtually Administration, unemployment in America was in smoke and down the drain. measured properly, fairly and accurately. But transmogrifying Billy would willy-nilly calculate unemployment Conversely, the U.S. is increasingly becoming themselves into their in a way that would hide the fact that the economy more and more a ‘post-industrialist neo-third antitheses was in huge disarray and outrightly disastrous. world’, as Gerald Celente, the world’s most renowned futurist, likes to call it, and this will simultaneously and The actual fact is that unemployment in the U.S. become more and more visible to the naked eye, vicariously. exceeds 22 per cent, just short of what it was as it sends a shock wave to global citizens across during the Great Depression, when it was at 24.9 both sides of the equator and all income per cent. Now, we are beginning to see how spectrums inter-continentally. Thus, people may “stable” and “opulent” the U.S. really is when very well, in this quasi-virtual reality, consider putting their heads we look at the real numbers and not the fudged statistics we are on backwards to cope with the conundrum at hand in order to fed with from the proverbial silver spoon. keep moving forward. To put things further into perspective, so as to better understand The question however is: “What constitutes third world status?” this new reality and see the big picture, let me say that the U.S. trade deficit with China alone caused a loss of 2.8 million U.S. Well, let us consider this in order to truly grasp the hard cold jobs since 2001. But what about the number of jobs that were reality and facts at hand, as they smack one in the face so hard lost to North or South Korea, the Philippines, Thailand, Indonesia, that, it can only be likened to the Russian cold felt Vietnam and India? And the list goes on and on with no end in when one alights from a Moscow-based front sight. What, though, of increasing wages for those who are porch on a typical wintery 'po-russkii den.' employed? Isn't this, at least, a plus and not a negative, and can it not, somehow counter the negative numbers produced in the U.S.?

Actually, the answer is “no.”; Real wages are actually falling as household incomes decrease precipitously. Those workers may be earning more dollars in fact, but what are they worth when wages, adjusted for inflation, have not kept up with the Consumer Price Index (CPI)? Hence, the cost of living is rising faster than the increase in wages, again rendering the net effect negative with higher wages null and inefficient, and more of a cover-up than anything else to programme people into thinking they are "making it" instead of 'breaking it'!

46 JULY 2012 Advertise in Ghana’s 1st Global Business Read

GB&F reaches prestigious audiences across Ghana's Through GB&F’s on-line platform on the Internet, public and private business and economic strata: your e-message also reaches the whole world. It the Presidency, all ministers, CEOs of public brings intelligent reporting through quality design corporations, agencies and institutions, members of backed by a top-notch editorial and management Parliament, top bankers, insurance and financial team. services executives and more. We believe in objectively exploring, promoting and GB&F is also distributed in hard copy to 20 countries, discussing Ghana’s immense potentials - both inside reaches foreign investors interested in Ghana, Ghana’s Ghana itself, but also its ability to impact the rest of missions abroad, foreign missions in Ghana, as well the business world. as the important Ghanaian Diaspora.

If you want to invest in cost-effective publicity, with Return on Investment, then GB&F is the only medium that helps you reach the audiences you aspire to.

Contact our Sales Team at: The magazine that Office Location: Ghana Business & Finance, Africa Business Media, P. O. Box 0772, gives you more! Osu, Accra, House No. 7, Lamb Street off Farrar Avenue Mailing Address: P.O. Box 0772, Osu, Accra, Ghana Download our Media Pack and publicity specifications from: T: + 233 302 240 786 F: + 233 302 240 783 E: [email protected] www.ghanabizmedia.com And please note that the total wealth of society is reduced when wealth is highly concentrated. This is because there is a lower overall level of economic activity nationwide; hence, no matter which angle we shine the light from, the reality is grim, stark, devastating and destructive. ANALYSIS We have not even discussed the unprecedented problem with the sub-prime mortgage crisis, which is rippling across the U.S. and beyond, as we have only seen the tip of the iceberg with upside down mortgages from coast to coast.

And when we couple that with deteriorating jobs, it will mean an increasing number of home owners will not be able to make their monthly mortgage payments; as such resulting in the foreclosure of their homes, rendering them homeless, consequently, increasing the poverty rate, ushering in a post-industrial welfare state extraordinaire.

Indeed, did I even mention the bank debentures and all the speculation and the fact that American citizens were fooled into subsidizing the very banks that put them in this mess with the bogus bail-our programmes? And did I also mention the hyper- inflationary obligatory coming collapse of the U.S. dollar hardly anyone speaks of, and what that will do to an already plummeting U.S. economy?

So, anyone thinking the Western world will perk up and find its way out of this hidden, disguised, ‘procrastinating’ depression is Consequently, what does this mean and what is the conclusion? only a wishful thinker, and refusing to look at the hard, This means that there is an avid increase in poverty in America cold facts. They are in denial and paralysed with fear or totally today. According to the U.S. Census Bureau, the poverty rate in oblivious and ignorant of anything and everything around them, the United States rose to 15.7 per cent in 2011, with 47.8 million living in a virtual dream-world. And is there a way out? Yes! But Americans living in poverty which is 1 in 6 we will speak of that exclusively in our next people. The official poverty line, determined issue. Here, the point is being made by the U.S. Department of Health and Human surreptitiously that the wealth of the West is Services, is $22,314 for a family of four; and The actual fact is that disintegrating into nothingness, while the woes the number of families living in poverty has unemployment in the and ills of the Third World are being risen sharply since 2006 and continues to climb. transformed as the tide turns with yin and U.S. exceeds 22 per yang’s interchanging roles, fates and natures. This is hardly the image America depicts of cent, just short of what Preposterous or providential? Perhaps both, itself and is far from the “American dream”; indeed .. instead, it is more like an American nightmare. it was during the Great Yet still, we are witnessing an increase in the Depression, when it concentration of wealth. Africa is up and coming. Africa is the was at 24.9 per cent. future Based on the grim outlook for employment Now, we are beginning and reality of actual and real wages however, to see how “stable” and Africa is unexpectedly, travailing in birth pangs, both poverty and reliance on government it is true, but the fruit it shall bear in the context assistance programmes will only continue to “opulent” the U.S. of these global economic wild card grow. But simultaneously, we are observing a really is when we look manifestations will totally surprise the residents phenomenon and contrary trend with the on this continent, as it will the rest of the household income and wealth of the wealthiest at the real numbers watching world abroad. Today, we can just one per cent of Americans increasing sharply, and not the fudged paddle over to the other side of that poverty despite the overall deterioration of the U.S. line, finally, experiencing a whole new economy, according to the Congressional statistics we are fed future of exciting possibilities. Budget Office. Quaint, isn’t it? But let us qualify with from the this to better understand the growing disparity in income distribution in America. proverbial silver spoon.

For the wealthiest one per cent of Americans, household income has veritably tripled between 1979 and 2007 and only continues to increase while household wealth in the United States has fallen by $7.7 trillion, according to Ron Hera of Hera Research. The Gini Coefficient measuring income disparity reveals that today, America is at parity with China and will soon overtake Mexico, a developing country.

46 JULY 2012 Invest in a Beach Resort in Ghana (And/or buy nearby residential plots)

A strategic investor and partner(s) is sought for a beach resort at one of Ghana’s most sought-after beach resorts. Excellent location 40 kilometres from Accra, good access roads, power and water, telecoms, scenic town nearby. Great opportunity, high returns. World-class architects and developers from South Africa. Associated Opportunity exists for development of 30 beachside villas nearby, or for purchase of residential plots and self-development within a future gated community, with access to beach, hotel, restaurants, pools, spa, gymn, tennis and amusements.

Sunset Beach Resort Limited Enhancing the tourism supra-structure in Ghana.

10 Reasons To Invest in Ghana a Ghana is a multi-party democracy and is internationally a Ghana has an immense workforce, with an employable recognized as one of Africa’s most politically stable countries population of 10 million plus (out of a total of some 23 million) a Ghana has a stable, growing economy, averaging a growth a Wage costs are low, averaging just 1 dollar a day. of around 5-6% a year Government programs are in place to consolidate Ghana’s a The Ghanaian government is pursuing a policy of economic status as a low-cost, quality producer deregulation. A fully privatised economy is the ultimate a Ghana is strategically located, offering an excellent gateway objective to the Economic Community of West African States (ECOWAS), with its combined population of around a Ghana has large tracts of arable land that are attracting a 250 million. Thanks to its modern harbours, airports growing number of agricultural projects. The government and communications systems, Ghana is fully equipped has launched numerous programs to support and develop to handle international transport. various agricultural sectors a English is the official language. This gives the country a a Ghana has a well-developed production and service industry. head-start over its low-wage competitors in the international Sectors include heavy industry, precision manufacturing, economic arena. electronics, agro-processing, plastics, garments & textile, a Ghana is part of the G-8 debt relief program. mining, and timber

For further information, and a site visit, please call +233 (0)302 240 786 or +233 (0)206 433 663 Services sector to be captured in exports statistics NEWS EXTRA – GEPA By Effah Amposah

he Ghana Export Promotion Authority (GEPA) has “If you go to our cardiothoracic centre, the place is patronised T advanced plans to include the services sector in its export by non-Ghanaians who pay hard currency for admission and trade portfolio in the near future. treatment. If you go to any of our polytechnics or universities, you’ll find out that there are a lot of foreigners who are coming Currently, GEPA focuses on tangible commodities when it comes here to consume the educational services provided. In a way you to export trade, promotion and marketing. These are divided into can even say our footballers who are playing in other countries traditional exports and non-traditional exports. are providing services for which they are being paid. To the extent that they are repatriating their income into Ghana, it can be The authority intends to implement an age-long policy of including classified as service. So you can imagine how big the revenue the services sector in the number of products that would be from services could be,” Dr. OwusuAgyemang told GB&F classified under exports with intentionto record the full range According to the GEPA boss, countries at the receiving end of of earnings from all exports and also to rake in more revenue for exports are able to quantify how much is brought into their the development of the country. economy, meanwhile, Ghana does not even recognise such movements as exports. The Chief Executive Officer of GEPA, Dr. Kwadwo Owusu Agyemang made this known at the 73rd National Exporters “Because our data system is not able to capture the revenues Forum in Accra. According to him, the authority intends to from those services we tend to ignore it in our non-traditional diversify its revenue streams to bring in more money from areas export statistics. Whereas we pride ourselves in making US$2.4 that are not under the coverage of the authority in terms of billion in 2011, when you go outside, the projections are that we exports. earn three or four times more. It is all because of the way we capture our statistics. If somebody is able to put goods into their The move is expected to enhance the chances of the Governing briefcase and sends it through the airport, it is not captured as Council of GEPA to achieve its overarching goal of reaching part of our exports, but he takes them abroad to sell. But because US$5 billion for the Non-Traditional Exports (NTEs) revenue the receiving country sees it when it lands, they are able to by 2015, as directed by the Ministry of Trade and Industry during capture as import, when we are not able to capture as export,” its inauguration. Dr. OwusuAgyemang told GB&F.

Though exports earnings from the non-traditional exports (NTEs) In the initial attempts to pursue statistics to quantify the services sector exceeded targets for two consecutive years, experts say the sector, GEPA has run into challenges. “Unfortunately the difficulty services sector which is growing tremendously, currently growing has been that, when you are trying to get these statistics by 8.7 per cent according to the Ghana Statistical Services (GSS), just to be able to quantify how much these institutions earn for can boost the NTEs earnings. 2010 earnings exceeded target by export statistics purposes, they are afraid to give you the figures, 12.3 per cent rising from US$1.45 billion to US$1.629 billion. because they think when you get to know, you are going to tax them,” he said smiling. Again the 2011 export earnings exceeded set target by 33 per cent rising from US$ 1.8 billion to US$ 2.423 billion. It is likely Meanwhile, awareness creation has begun in earnest in the tertiary that the GEPA would meet its target and even exceed, given the institutions in southern Ghana on exports in Ghana in order to current stimulating factors are held constant or get better. It is allay the fears that the statistics they release would be used as believed that if the contributions of the services sector were bases to tax the institutions. quantified like the traditional and non-traditional exports, Ghana would haverecorded a colossal amount as the total exports earnings It is imperative that corporate bodies and other institutions in the for the year under review. services sector appreciate the essence of recording accurately, the total real export earnings for the country at the close of an “There is an export component to the services sector which we economic year. The country cannot continue to plan its budgets are not capturing at the moment. For instance, do we know how with false figures, whether inflated or deflated. It is high time that much foreign revenue we get from the University of Ghana? In decision and policy makers fully understand how much we earn all the polytechnics in the country, do we know how many foreign as a country through the non-traditional exports including the students are there and how much they are paying in foreign services sector so that proper, realistic plans can be made to currencies?” Dr. Owusu Agyemang asked in wonder in an enhance the visibility and attract more export interest to the interview with GB&F. services sector.

50 JULY 2012 Work with US to solve problems of governance

As Ghana asserts itself within the African Continent as a country with an internationally respected track record in improved governance, the role of information and communications technologies (ICTs) as an enabler of good government and good governance is becoming increasingly appreciated. E-Governance enables the central government to network public institutions better at the capital city level, and also with regional, district and township level administrations to improve the governance process, using the electronic platforms of telecommunications, the Internet, information technology and broadcasting.

Ce-G invites partners to execute research and consulting projects in typical e-Government issues, e.g. e-Parliament, e-Justice, e-Voting, and application of electronic platforms in solving Government to Government (G2B), Government to Citizen (G2G), Citizen to 2 Government and vice versa problems.

Contact: Office:House No. 7, Lamb Street (Off Farrar Avenue) Adabraka, Accra, Ghana Ce-G Mailing Adress:P.O. Box 0772, Osu, Accra, Ghana Phone:+ 233 302 240 786 Fax:+ 233 302 240 783 E-mail: [email protected] Website:http://www.ghanaceg.org MARKETS Wholesale andretail pricesofmaize dippedovertheweekby5percent (gh¢1.00togh¢0.95)and 16percent (gh¢1.20togh¢1 Maize pricesdrop intheTakoradi market Week endingJuly20 Esoko CommodityMarket Prices 52 * AccramarketisAgbogbloshie NB: a Tbr 14 .0 .9 .8 .0 .0 .5 .2 1.18 2.58 3.08 1.22 1.45 2.58 3.16 1.86 0.62 1.59 2.52 2.00 3.40 5.00 1.30 1.91 0.61 1.65 2.52 3.50 3.50 1.00 1.28 2.31 1.20 1.16 0.37 1.60 2.40 2.40 3.33 0.68 1.54 2.50 0.93 1.00 1.24 1.16 2.00 3.00 1.19 3.54 2.00 1.15 1.36 2.00 0.83 1.40 0.90 0.30 1.60 2.20 2.60 2.94 0.80 3.58 1.00 1.24 1.60 1.50 0.85 0.68 1.42 2.41 3.75 2.00 2.02 1.62 0.71 0.43 1.00 1.40 0.90 1.85 1.23 3.20 3.00 1.30 1.28 0.99 3.00 4.00 0.95 1.04 1.00 0.76 1.48 2.00 3.80 0.81 2.40 1.23 2.65 1.04 2.41 0.57 2.40 Yam (Tuber) 0.56 3.42 1.60 2.40 Tomato (cooking) 1.23 0.88 1.20 0.73 2.68 1.60 2.35 1.67 (Grain) Wheat 0.49 3.23 1.43 2.25 Cassava (Fresh Tubers) 1.80 0.60 3.80 1.12 3.40 (White) Cowpea 1.66 0.52 1.00 3.95 1.25 1.53 Rice (imported) 2.22 2.80 0.70 3.00 1.14 Rice (local) 2.12 0.28 1.04 0.99 1.08 1.50 2.00 Soya Beans 3.91 2.70 0.50 1.46 2.10 Millet (sanio, grain) 1.80 0.80 0.80 1.08 0.97 1.80 2.50 Cassava (Gari) 1.00 3.31 1.80 Maize (white, grain) 1.35 1.14 1.60 0.75 1.28 0.26 0.79 Groundnut (edible) 1.60 2.00 2.30 0.78 2.20 3.36 0.80 1.20 1.40 1.00 0.77 0.67 1.40 2.40 3.54 2.00 1.90 1.37 0.70 0.32 1.28 0.95 0.74 1.50 1.00 2.80 2.60 1.00 1.23 0.80 3.84 2.70 1.03 0.77 1.43 0.75 1.90 3.54 0.75 1.91 0.96 0.56 2.29 Yam (Tuber) 0.50 3.41 1.50 1.92 Tomato (cooking) 1.05 0.80 0.67 1.46 (Grain) Wheat 2.92 Cassava(Fresh Tubers) 0.55 (White) Cowpea 0.90 3.65 1.12 Rice (imported) Rice (local) 0.91 Soya Beans 3.84 Millet (sanio, grain) Cassava (Gari) Maize (white, grain) Groundnut (edible) EALPIE G¢K)Average Average RETAIL PRICES(GH¢/KG) WHOLESALE PRICES(GH¢/KG) Prices are provided in standard measures (Kgs or Litres) as local measures tendtochangeforeachmarket. aslocalmeasures (Kgsor Litres) providedinstandardmeasures Pricesare cr Bwu uai aae ehmn aoai oo Ti ek Lastweek Thisweek Hohoe Takoradi Techiman Tamale Kumasi Bawku Accra Lastweek Thisweek Hohoe Takoradi Techiman Tamale Kumasi Bawku Accra .00 JULY 2012 SUBSCRIPTION FORM Ghana Business & Finance magazine Subscribe Today!

AN AFRICA BUSINESS MEDIA PUBLICATION Ghana Business & Finance (GB&F) is a unique upscale magazine targeted principally to corporate decision-makers and policy-makers based in Ghana, as well as to international institutions, multinational companies and investors with interests in Ghana.

GB&F has assembled a cadre of top-notch researchers, analysts and writers - many of Ghana’s whom already write for various specialised clients to tap into the brightest minds of First Global corporate Ghana, to research the micro and macro-economic trends, themes, and technological Business advances that are prevalent in Ghana and globally, and to decipher how these phenomena translate Read into the investment and transactional decision-making processes of the Ghanaian corporate environment.

GB&F’s uniqueness lies in its attractive format, its superior analytic content and its high-quality presentation. GB&F provides insights based on sectorial themes, focusing on banking and financial services, oil & gas, telecommunications, manufacturing, forest and wood products, agriculture and agri-business, the cocoa industry, tourism and hospitality, property development andreal estate, transportation, healthcare, and the business dimensions of the beauty, fashion, entertainment, leisure and sports industries. You can subscribe to GB&F by filling in the form below. Subscription is either for 6 months (6 issues) or 12 months (12 issues)

Name: Amount paid (Indicate Currency in figures):

Designation: Amount paid (Indicate Currency in words):

Company: Bank/Cheque details:

Address: Card Number:

Expiry Date: Today’s Date:

Telephone No: Signature:

Mobile No: Payment Mode (please tick below):

E-mail: CHEQUE CREDIT CARD MASTER CARD VISA Period: Note Well: • 6 months Subscription rate: Ghana - GH¢54, USA - $50, UK - £30, Rest of Europe - €40, Other African Countries - US$40 (equivalent) 1 Subscription rate excludes postage. • 12 months Subscription rate: Ghana - GH¢104, USA - $90, UK - £56, 2 Postage and handling costs depend on quantity ordered and distance. Thank Rest of Europe - €72, Other African Countries - US$72 (equivalent) 3 Also applies to orders of past copies. you! For advertisement, subscription and/or general enquiries, contact: Ghana Business & Finance Africa Business Media P. O. Box 0772, Osu, Accra, House No. 7, Lamb Street off Farrar Avenue Tel: +233 302 240 786 • Fax: +233 302 240 783 Email: [email protected] • [email protected] • [email protected] • [email protected] www.ghanabizmedia.com SPECIAL REPORT

The arrival of Glo onto the telecom scene – Emerging situations on the turf

Two months into its operation, Glo Mobile Ghana is directly or indirectly causing a stir in the Ghanaian telecoms market, but to what extent? Effah Amponsah presents his analysis based on an indepth study of the new trends.

t is apparent that the liberalisation of the telecommunications Kyle Whitehill, CEO of Vodafone Ghana, asserted that a sixth industry in 1995 has launched Ghana’s telecommunications operator was not necessarily a good idea, explaining that in most I sector into ever-increasing growth, serving the needs of markets around the world excluding India, there were two to the Ghanaian economy. Today, the mobile telecommunications three operators, and experience had shown each operator eventually industry is experiencing a golden age in business as the key players needed at least 25 per cent market share to survive and be on the turf, buoyed by strong international backing, are unleashing profitable. According to him, a sixth operator would dilute the innovative and value-added products to shore-up their subscriber market share structure and revenue of existing operators, hence base , thereby increasing revenue. The latest addition to the making it particularly difficult for the relatively smaller operators bandwagon of telcos is Glo Mobile Ghana, which launched its to earn profits and survive. operations in April 29 of this year after the market had waited three long years, prompting a $200,000 fine by the National “Besides if you enter a market like Ghana, that already has five Communications Authority (NCA) in early April. multinational players, how are you going to make money as a sixth operator?” he questioned. With six players now competing for Ghana’s relatively small market of 25 million people, the competition is growing keenly Mr. Whitehill further emphasised his opinion by making reference every day. The telecommunications opportunities and potential to India,, where all the new entrants were falling out because, in Ghana are being explored vigorously by the six telcos in invariably, it was not easy to be profitable under those circumstances. their quest for a strong return-on-investment (ROI). However, Philip Sowah, CEO of Airtel Ghana, admitted that The country’s telecoms space has proven that it has capacity Glo’s entry would change the focus of the industry and also pose enough to accommodate six players despite the doubts of critics, further challenges to the other operators with respect to the especially those that were centered on the view that the market returns on their investment. “What this does is that it makes it was too small for six operators. The regulator’s decision to add more difficult to recoup the investment you make in the market a sixth operator seems to have been vindicated as the healthy because then you are sharing the telecoms revenue with more competition that has emerged as a result of Glo’s entrance is operators than before,” he said. serving the best interests of Ghanaian subscribers. If the contribution of the telecommunications industry to the Telco executives in the country expressed various sentiments on economy is anything to go by, the advocate for more competitive the coming of the sixth operator onto the Ghanaian terrain. players would win the argument of the day.

54 JULY 2012 Carlos Caceres, CEO of Tigo Ghana, was of a different opinion. Network operators, upon realising the dire consequences on their He believes that the market always has opportunities for companies revenue of the poor network and customer services, started that offer competitive service, adding that, “in a dynamic industry introducing promotions and products to compensate subscribers like this one (telecommunications), new business opportunities in the face of sanctions by the industry’s regulator. Before Glo are appearing daily.” Caceres said competition was always good commenced operations in Ghana many, including the industry’s when it benefited consumers, adding that there was still room to regulator, wondered whether the company would be able to grow in the Ghanaian market. According to him, the operators survive the heightened competition in the country as far as the who would propose and offer the best value to consumers would telecoms market was concerned. According to the Chief Operating emerge as winners. Officer of Glo Mobile Ghana, George Kojo Andah, the company was poised to achieve its set target irrespective of the fierce SPECIAL REPORT If the contribution of the telecommunications industry to the competition currently characterising the telecoms space in Ghana. economy is anything to go by, the advocate for more competitive players would win the argument of the day. The benefits of “We do not intend to limit ourselves to survival. It is our strategic telecommunications to a nation’s economy are quite obvious. objective to thrive in this market and grow by focusing our efforts According to Telecom Operators’ Annual Reports, mobile on building a customer experience, which comes with a strong operators in Ghana currently employ more than 1.5 million people comparative urge,” said George Andah. According to him, as a directly and indirectly, and with the commencement of Glo’s customer-focused telco, “we believe and understand the market, operations, the number is expected to significantly increase. so we will keep doing what the customer wants as far as voice, data and mobile commerce is concerned.” This obviously brings some relief to the present government, given the high rate of unemployment plaguing the country today, especially among the youth. The Africa Economic Outlook 2012 More time on the phone, less payment by subscribers Report estimated the unemployment rate among youth from ages 15 to 24 in Ghana at 25.6 per cent. This estimate is twice that of A few years ago, mobile network operators in Ghana were the Ghanaian population within the 25 – 44 age group consolidating their profits, enjoying an average industry call charge and three times that of the 45 – 64 age group. Therefore, the of 13 pesewas per minute on calls within the same network (on- telecoms industry has in a significant way relieved the government net) and 14 pesewas on calls to other local networks (off-net). burden of creating more jobs for the youth. These reports also Now telcos have implemented drastic cuts on their call charges revealed that mobile operators contributed to about 10 per cent in order to stay on the competitive edge. With the entrance of the total national revenue, and have invested more than of Glo Mobile Ghana, it is expected that the price wars will $5 billion dollars into the Ghanaian economy. intensify as time goes on. Not long ago, the industry benchmark was 8Gp per minute. Today, Tigo has established itself as the The benefits of more operators can be observed in both tangible operator with the lowest voice charge. Tigo initially offered its and intangible ways. Telecoms observers have started noticing subscribers 7Gp per minute to call all Tigo numbers, but presently, some budding changes within the market with the conception of it charges 3Gp per minute for all Tigo to Tigo calls upon Glo Mobile Ghana’s operations. It has been observed that operators subscription. are really stepping up their game when it comes to quality of service rendered to subscribers. Innovative and subscriber-tailored products have been inundating the airwaves and print media in unprecedented fashion. The Mobile Number Portability (MNP), which has been in place in Ghana for one year, gives each operator as well as new entrants an equal opportunity to increase their subscriber base. Though some telcos expressed pessimism at the introduction of the MNP, the initiative has proven ideal, signaled a wake-up call, and has raised the quality of service of various operators. Each one of the operators in Ghana has lost significant numbers of subscribers due to the poor network services they offer to subscribers. George Andah, Chief Operating Officer of Glo Mobile, Ghana

MTN Tigo Vodafone Airtel Expresso Glo Mobile Call Charges (GH¢) On Net (Sept, 2010) 0.075 0.15 0.08 0.08* 0.0954** - On Net (May, 2012) 0.09 0.03 0.144 0.084 0.0954 0.08 Other Local Networks (Sept.2010) 0.075 0.162 0.08 0.08* 0.1494** - Other Local Networks (May, 2012) 0.13 0.084 0.144 0.084 0.1494 0.09 SMS Charges (GH¢) On Net (Sept, 2010) 0.04 0.0403 0.04 0.04* 0.0438** - On Net (May, 2012) 0.04 0.0403 0.04 0.04 0.0424 0.04 Other Local Networks (Sept, 2010) 0.05 0.0477 0.0424 0.04* 0.0438** - Other Local Networks (May, 2012) 0.05 0.0477 0.0424 0.044 0.0438 0.04 * Formally owned by Zain ** Formally owned by Kasapa

JULY 2012 55 This consequently makes Tigo the operator with the lowest per Glo Mobile made history by being the first cellular mobile minute charged at a time when the industry average is GH¢0.872. network in Ghana to capture approximately half a million The ongoing Vodafone ‘138’ promotion offers calls at a rate of subscribers within the first month of its commercial operations as low as 1Gp per minute, but only for weekends. Glo Mobile offers its customers the Sweet Number promotion where a Given Glo’s promise of mesmerising packages for the local customer could call a special number for only 2 Gp per minute. subscriber community and the traditional desire to experience a new thing, the June report on mobile voice market share is These price reductions imply that competition has become so expected to show many Ghanaians opting more for Glo World intense that operators are willing to sacrifice their profit margins outlets than any other telco. Hence, this is likely to reduce the to poach subscribers from other networks, assuming subscribers market share of MTN, Tigo and Expresso, whilst Vodafone and SPECIAL REPORT will likely shop for the deals that ease pressure on their phone Airtel are expected to experience slight increases at the expense bills. However, pricing is not all that there is to keeping subscribers of the current market leader. in this extremely competitive industry. Unique service niches are very important in attaining brand loyalty of subscribers. The recent cuts in prices of Airtel’s modems and promotions by both Vodafone and Airtel are expected to turn to their favour Interestingly, MTN Ghana CEO, Michael Ikpoki, stated clearly and influence their benefits in the June market share. that the current price cuts as a result of the entrance of a sixth operator would be a nine day wonder. According to him, the impact of the sixth operator would not be substantial, adding Data niches are there for the taking that although in the short-term, the impact would lead to a reduction in call and data tariffs, the trend would be reversed in With the Average Revenue Per User (ARPU) still declining to the the long-term. dismay of telcos, it is incumbent on operators, especially new entrants, to step-up their efforts at searching for other sources of revenue in lieu of focusing solely on the voice dimension of Interesting market share twists their business. This is why the race for data is intensifying among the operators, as it seems to be the leeway for operators, given As at May, the entrance of a sixth operator has slightly affected the relatively low usage of data in Ghana. the market share of mobile operators and this may further affect that of June as well. First of all, the total cellular/mobile voice With the coming of the Glo 1 fiber-optic armored-cable on the subscriber base in Ghana had surged from 21, 805, 590 in April shores of Ghana, joining SAT3, Main One and West Africa to 22, 453, 907 in May this year, representing an increase of 2.8 Computer Systems (WACS), the nation’s quest to leverage on per cent. At the end of May, the market leader, MTN had a ICT and telecommunications for developmental growth has been marginal decrease in its market share despite an increase in its given great impetus. It will also consolidate its position as the subscriber base of 10, 644, 804, representing 47 per cent of the country with the highest internet speed in Africa. With a capacity total market share as against 10, 518, 581 subscribers representing of up to 2.5 terabits per second, as well as 99.9% uptime reliability, 48 per cent in April. Glo 1 introduces onto the telecoms scene a much faster, reliable and relatively cheaper data and internet service. Vodafone, which toppled Tigo at the start of the year, had a subscriber base of 4,576, 384, representing 21 per cent of total Dr. Mike Adenugah, CEO of Globacom Ltd, has invested in market share in April, and had a marginal increase, state-of-the-art technology that currently provides subscribers giving it a subscriber base of 4, 671, 999, still representing 21 per with value for money data services and internet coverage anywhere cent of market share in May. in Ghana. This is really causing a stir in the market, prompting possible boardroom discussions by other operators as to how to Tigo again suffered a marginal decrease in its subscriber base, undercut and outwit Glo’s strength in data services. Some telecom retaining only 3, 457, 427 for May, representing 15 per cent, as operators have, in this regard, reduced the prices of their modems against 3, 568, 094 subscribers representing 16 per cent of the to ensure an increase in usage. To consolidate their interest in market in April. Airtel Ghana came fourth on the chart, closing pursuing revenues from data services, some operators in Ghana the gap on Tigo as it increased its subscriber base from 2, 938, have franchised with some smartphone manufacturers to undertake 108 in April to 3, 015, 499 representing 14 per cent of the total promotional sales in Ghana, in their bid to shore up their data market share in May. drive.

Glo Mobile Ghana made the best start at the close of May, 2012 The coming of a sixth operator onto the Ghanaian telecom turf as it canvassed 468, 508 subscriber base representing two per is therefore a blessing to the sector and the economy as a whole. cent market share after going commercial on April 29, 2012. The mere thought of a new competitor stirs up competition, Thus, they overtook the beleaguered Expresso, which experienced which means things have to be done right, if winning is the goal. a decrease in its subscriber base earning only 195, 670 in April, representing only one per cent of the total market share. Though there are concerns that the voice telecoms space in Ghana is nearing saturation, the discovery of data business However, the management of Glo Mobile may be asking opportunities renders that opinion irrelevant. themselves some questions regarding the subscription numbers, considering the fact that out of the 1.8 million potential customers There are also expectations of a looming consolidation between that reserved a number, only 468, 508 were on the Glo network some telcos operating in the country. Though this decision cannot as at the close of May. Nevertheless, Glo Mobile made history be taken internally, given the global nature of telcos’ operations, by being the first cellular mobile network in Ghana to capture it looks like sooner or later, the new unfavorable trends approximately half a million subscribers within the first month characterising the industry may force some telcos to succumb to of its commercial operations. others, either by way of an acquisition or a merger.

56 JULY 2012 BARCLAYS’ SCANDAL BARCLAYS’

Barclays’ Libor Scandal - How does it affect consumers? By Jeffrey E. Osei-Hwedieh (IT and Risk Intelligence Consultant)

anking giant Barclays Capital has been rocked by If it goes down, some borrowers will enjoy lower interest rates, B revelations that it manipulated Libor, a key benchmark but mutual funds and pensions with investments in Libor-based for interest rates worldwide, for its own benefit. CEO securities will earn less in interest. Bob Diamond and the scandal appears set to spread to other banks as well. But just what is Libor, and what’s this whole controversy about? What’s the controversy all about? U.K.-based investment bank Barclays Capital paid $453 million in a settlement with U.S. and U.K. regulators, admitting that it lied in its Libor submissions What is Libor? Libor is short for the London Interbank Offered about its cost of borrowing. Between 2005 and 2008, Barclays’ Rate, a measure of the cost of borrowing between banks and a traders repeatedly requested that colleagues in charge of the Libor crucial benchmark for interest rates worldwide. It’s actually a process tailor the bank’s submissions to benefit their trading collection of rates generated for 10 currencies across 15 different positions. Barclays’ staffers also colluded with counterparts from time periods, ranging from one day to one year. Libor rates are other banks to manipulate rates, according to the settlement. The set each business day through a process overseen by the British logic is similar to that of an insider trade in the stock market - if Bankers’ Association. Between seven and 18 large banks are asked you have advance knowledge of information that will affect a what interest rate they would have to pay to borrow money for security, you can make trades to profit from it. In addition, between a certain period of time and in a certain currency. The responses late 2007 and early 2009, Barclays made artificially low Libor are collected by Thomson Reuters, which removes a certain submissions. percentage of the highest and lowest figures before calculating the averages and creating the Libor quotes. Interbank rates are This was during the height of the financial crisis, and the bank measured elsewhere in the world through similar processes. For was afraid that if its submissions were too high, it would get example, there’s also Japan’s Tokyo Interbank Offered Rate, or punished in the markets as investors questioned its health. It's Tibor, and the Belgium-based Euro Interbank Offered Rate, or not just Barclays, however - suspicion has now fallen on all the Euribor. banks that participate in the Libor process. Deutsche Bank, Royal Bank of Scotland, Credit Suisse, Citigroup and JPMorgan Chase How does it affect consumers? Libor is the world’s most are among the institutions that have acknowledged they are being important benchmark for interest rates. Roughly $10 trillion in investigated by regulators. UBS has revealed that it's providing loans - including credit card rates, car loans, student loans and information to U.S. and Swiss officials on possible Libor adjustable-rate mortgages - as well as some $350 trillion in manipulation in exchange for leniency and conditional immunity, derivatives are tied to Libor. If Libor goes up, your monthly depending on the jurisdiction. While Barclay's is the first institution interest rate payments may go up with it. ensnared by U.S. regulators, it certainly won't be the last.

JULY 2012 57 What's being done about it? Diamond is set to testify on Wednesday before British lawmakers investigating the scandal. Meanwhile, similar probes around the world are in progress.

In the U.S., the Justice Department is conducting a criminal investigation, and officials in Switzerland and Canada are also looking into the issue.

In Japan, regulators temporarily suspended some transactions by UBS and Citi last year after finding that traders at both banks had attempted to influence Libor rates and the related Tokyo Interbank Offered Rate. BARCLAYS’ SCANDAL BARCLAYS’ Regulators themselves, though, are also facing scrutiny. In a lengthy public statement released Tuesday, Barclays claimed it had alerted U.S. and U.K. authorities about suspicious Libor submissions by other banks in late 2008, and was “disappointed that no effective action was taken.”

The British Bankers Association, meanwhile, says it's reviewing the process by which Libor is set.

Other Complications - Impact Analysis - Libor (and its counterpart Euribor) are the starting points for setting the interest rate for, well, pretty much everything.

To give you an idea of the size of the possible distortion, the FSA notes that the notional amount of financial instruments, derivatives and contracts which depend on Libor “in the first half of 2011 has been estimated at 554 trillion US dollars”. The World’s GDP for the same period was roughly 35 trillion US dollars. Bob Diamond, former CEO of Barclays Bank The manipulation of this interest rate by a tiny one-tenth of a percent can result in a distortion the size of the entire Eurozone How big is the scandal? “This dwarfs by orders of rescue fund. magnitude any financial scams in the history of markets,” said Andrew Lo, a professor of finance at the Massachusetts Institute Here is a fallacy which has emerged some few weeks ago: there of Technology. were winners and there were losers. When the rate was manipulated up borrowers lost out, but savers gained. When the rate was Given Libor's vast reach and the number manipulated down, the converse happened. of global firms that may be involved in its This is a perfect example of the simplistic manipulation, the scandal is prompting calls masquerading as complex. It ignores the for resignations, criminal prosecutions, U.K.- based investment biggest and most dangerous impact. and stricter regulation of the financial bank Barclays Capital paid sector. Interest rates are all about the assessment $453 million in a settlement of risk. The discovery that the basic Libor Barclays CEO Bob Diamond and chief with U.S. and U.K. regulators, rate on which most such assessments are operating officer Jerry delMissier announced admitting that it lied based was arrived at by collusion and was their resignations on Tuesday, following essentially fictional makes it unreliable. This chairman Marcus Agius's announcement in its Libor submissions creates extra risk. No prizes for guessing a day prior. The bank has been hammered about its cost of borrowing. who will absorb this extra risk. by politicians in the U.K. including Prime Minister David Cameron, who called Next time any lender sets its variable its actions “a scandal” and “extremely mortgage rate, they will be adding a little serious.” bit of fat, in case the Libor rate has been massaged down. Next time the decision is made on what interest to award to a pension Civil suits have been filed in recent months by a wide variety of fund, it will be made a little meaner, in case the Libor rate has plaintiffs - ranging from mutual funds to individual traders to the been artificially boosted. city of Baltimore - claiming they lost profits on Libor-based securities due to banks' artificial suppression of the rate. Defendants That is the real cost of the Libor Scandal. Rendering the Libor in the consolidated case include Bank of America, Citi, HSBC, rate unreliable, is like removing the base pillars from an enormous JPMorgan and Credit Suisse. By surreptitiously bilking investors financial tower. It is causing the entire construct to teeter and of their rightful rates of return, defendants reaped hundreds of become more unstable at every level. Importantly, it makes it millions, if not billions, of dollars in ill-gotten gains,” one complaint more susceptible to the next crisis. It may steady itself or it may says. collapse.

58 JULY 2012