"Osafo-Marfo only being flattered", -Agbesi
Accra (Greater Accra) 05 January 2002 - The financial sector saw improvements in economic indicators for most part of last year, but it is yet to have an impact, especially, on investments, Mr Daniel Ogbarmey Tetteh, Senior Vice President of
Databank, has said.
Speaking in an interview with the GNA, Mr Tetteh said most investors shied away due to macro-economic instability, which he attributed to the combined effect of external shocks and the steady loss in the value of the cedi and the change in political environment.
"But, generally, we are quite happy with the present stable economic situation even though there has not been a direct impact or response on investment immediately," he said.
Mr Tetteh gave figures to support the improved indicators, saying, "These were possible because of the absence of pressure on the nation's foreign exchange resources."
Inflation, he said, dropped from 41 per cent to 23.7 per cent and interest rates on 91-day Treasury Bills also dropped significantly from 45 per cent to 28.94 per cent.
On the capital market, Mr Tetteh said volume of shares traded on the stock market increased by 61 per cent while the value of shares traded was up by 55 per cent. Market capitalisation increased by 94 billion cedis.
Mr Tetteh said, however, that the average yield on capital ended lower at 11 per cent compared to 16 per cent recorded at the end of year 2000.
He said this was the result of foreign investors' reaction to the unstable macro-economic fundamentals that persisted in the first quarter of 2001.
Mr Tetteh expressed the hope that the economic situation would improve this year to attract foreign investors onto the market.
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Accra (Greater Accra) 05 January 2002 - A Senior Fellow of the Institute of Economic Affairs (IEA) has said economic policies pursued by the government this year have achieved positive results and stressed that the right measures must be implemented to sustain the successes.
Mr Samuel Apea, a former Deputy Governor of the Bank of Ghana, said stability of the cedi, decline in inflation and interest rates and stability of the macro-economic environment were indicative of some of the achievements.
"However, the next budget will determine if government will outline measures required to sustain economic gains made so far," he told the GNA in an interview in Accra.
Mr Apea said factors behind the figures recorded this year were the result of a lot of restraint on the part of government and sacrifices by the populace. The "Government on one hand minimised expenditure and deferred implementation of development projects at the expense of the populace some of who faced a certain level of retrenchment and denial of salary increases."
The government should consider these as short term measures and pursue sustained policies in the medium to long term period so that what had been achieved would not be blown off by agitation and external shocks, Mr Apea said.
"This will increase the gains and make the national cake bigger for all to share," Mr Apea said.
The national economic indicators at the beginning of the year when the New Patriotic Party government took over were:
Inflation - 40.5 per cent
Interest rates - 46 per cent
Exchange rate - One dollar = 6,794 cedis
One Pound = 10,199 cedis
Total national debt - 5.9 billion dollars (41 trillion cedis)
Currently, inflation is 28.3 per cent and the cedi has stabilised against major currencies with the dollar trading at 7,141 cedis and the pound at 10,351 cedis.
The Government has subscribed to the Highly Indebted Poor Countries (HIPC) Initiative to address the nation's indebtedness.
Mr Apea, currently the Chairman of ECOBANK Development Corporation, said the government could consolidate the gains made by encouraging small companies to merge and the large ones could also enter into joint partnership with foreign companies.
"What we have now is the compartmentalised sort of situation where the small companies are not growing out of their shells to join the bigger ones," he said, and cited agriculture, industry, services, such as the hospitality as some of the areas that required improvement.
He said projections could not be made on the international front due to recession in major economies, which were trading partners mainly because of the September 11 terrorists attack on the United States.
Mr Apea advised Ghanaian businessmen to take advantage of the African Growth and Opportunities Act (AGOA), which, he said would benefit the private sector and the nation as a whole.
He called on businessmen to stop operating behind walls and the selling of head loads of products to form mergers of about six or more companies working in pavilions to export products.
These, he said, were some of the things that foreign businessmen looked out for. Touching on the HIPC initiative, Mr Apea said Ghana was not in the position to pay her debts.
"Even if we went for loans, we had to go through the poor window from the IDA and the African Development Bank," he noted, saying that opting for the HIPC initiative was good for the country.
Mr Apea explained that for years, Ghana had not been able to discipline herself in spending. Therefore, there was the need to accept supervision from outside to enable the nation to stand on its feet. By so doing, the bulk of money saved from HIPC could be added to the budget to finance health and education among other sectors.
Mr Apea also urged the formal sector to put party affiliation aside and assist genuine businessmen to generate employment.
He said the present set up and operative mode of the Export Development Investment Fund did not serve the rudimentary needs of businesses and reiterated the call to institute an independent body with the task to oversee the fund.
On the sub-regional level, Mr Apea said: "If we are seen to be making progress to produce what member countries require, especially, where the Francophone West African countries are concerned, we will be able to penetrate their markets."
He said Ghana had the potential and could take advantage to do cross-border business in the sub-region now that the European Union was loosing grip on the Francophone zone.
Mr Apea commended the government for tapping ideas from experts in the areas of industry, finance, and agriculture. "If they continue to dialogue and implement ideas systematically, not just giving in when there are problems, they can make steady progress and we can see the result in the near future," he said.
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Accra (Greater Accra) 05 January 2002 - President Abdoulaye Wade of Senegal is to convene a meeting of currency experts of both French and English- speaking ountries in West Africa to consider and recommend a common name for adoption by the Heads of State of the West African Monetary Zone.
A statement issued by the West African Monetary Institute (WAMI) in Accra and made available to the Ghana News Agency on Friday said the meeting was agreed on at its last meeting to help eliminate waste and duplication and enhance the eventual union of the two zones.
The statement, signed by Mr R. D. Asante, Technical Coordinator of WAMI, said the meeting also agreed that the capital of the Common Central Bank, the West African Central Bank (WACB), to be denominated in the new currency, would be the equivalent of 100 million dollars.
This will be subscribed to by the six member states by October 31st, 2002, in accordance with the existing ECOWAS budgetary contribution formula.
The statement said the stabilisation and cooperation fund would become operational this year with contributions to be paid in two trenches of 25 million dollars in March and September in accordance with the existing ECOWAS budgetary contribution formula.
The communiqué urged member states to take steps to ensure that their national parliaments ratified, by October 2002, the basic agreement adopted last year that established the WAMZ and the statutes of the WACB.
It also requested the establishment of National Sensitisation Committees to be formed in all member states to educate and inform the public on the proposed common currency.
"As part of the process of introducing a common currency, national payment systems are to be enhanced to ensure efficient domestic payment systems.
''In addition, an efficient cross-border payment arrangements are to be developed," the communiqué said."
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Accra (Greater Accra) 05 January 2002 - The Ghana Stock Exchange (GSE) is to embark on an extensive educational and promotional programmes as part of efforts to revive activities on the bourse, Francis Tweneboa, Managing Director of the Ghana Stock Exchange (GSE), said on Friday.
In addition, the exchange intends to automate clearing, settlement and depository system to enhance and attract strategic investors. "Rudimentary trading procedure is no longer the order of the day," Mr Tweneboa said, adding that, foreign investors who moved the market were more attracted to automated systems.
Mr Tweneboa talking to the GNA on the poor performance of the GSE last year, said the macro-economic difficulties in 2000, triggered disinterest in the market. First, there was a slump in world market prices of gold and cocoa, two of Ghana's major export commodities.
The All-Share Index, the market indicator closed at 955.95 points with a percentage change of the year registering only 11.42 per cent. In 1998, the GSE was adjudged a star in Africa for its sterling performance when the All-Share Index recorded a year high of 1,201.08 points.
Since then, the All-Shares Index, which gives the average capital yield, went into the red at negative 15.22 points in 1999, then improved to 16.55 points in 2000 and declined again to 11.42 points at the end of last year.
During 2001, the exchange recorded a year high of 1,025.78 points on August one but this declined steadily to close the year at 955.95 points.
Foreign inflow from exports therefore came in trickles leading to scarcity of hard currencies. "What exacerbated the situation is the increase in crude oil price which resulted among other things in government borrowing from domestic sources to support its expenditure.
"Government demanded money from local sources and had to attract investments in treasury bills by giving higher interests rates," Mr Tweneboa said, adding, that this brought about a general increase in bank rates as well.
There was shortage of the dollar and the cedi became weaker, he said, adding that the import of all these on the market were adverse.
Mr Tweneboa said following this, people who invested on the stock exchange turned their attention to the money market, which by then had discount rates of between 45 per cent and 48 per cent.
Some foreign investors who were the prime movers of the exchange also pulled out into other markets while others locked up their investments to watch the economy.
"The year 2000 was the worst year but there was a spill over into 2001 in which we recorded few large trades by foreigners but these were not as good as what we recorded in 1997 and 1998," Mr Tweneboa stated.
However, the situation ameliorated after the second quarter of the year to end of year 2001 when inflation declined from 40.5 per cent to 23.7 per cent, 91-day treasury bills discount rate slumped from 38 to 26.99 per cent, interest rate slumped and the dollar stabilised around 7,200 cedis.
Mr Tweneboa said the reduction in inflation and the real active stability of the cedi were signals to foreign investors that the economy was improving.
He said their return to participate in the exchange would revive activities and encourage local investors to take advantage of the current situation to invest on the bourse. This, he said, was because most of the equities had single digit price earning ratios, which meant that they were undervalued.
Mr Tweneboa said apart of education and automation, the Exchange intended to play its part of attracting investments by pursuing regional integration within the West Africa sub-region first and later with the southern Africa market.
The GSE has targeted the Nigerian and the Kenyan stock exchanges, and later the francophone stock exchange. The GSE's promotional campaigns were also targeted at companies in the Ghana Club 100.
The Managing Director said these were intended to widen the market base to afford listed companies the advantages of listing on other markets and give investors a variety of equities to invest in.
The GSE would also call for law reforms to strengthen transparency by listed companies, promote development of corporate bonds, encourage introduction of new products, derivative instruments, more venture capital funds and capacity building to promote efficiency of market players.
Mr Tweneboa admitted that the change in the trading system had not affected volumes of trade in terms of liquidity, prices nor demand. "Immediately, there has not been any discernible impact, but what it has done is to introduce an element of first come first served and afford brokers enough time to rediscover prices and trade realistically."
On the Ghana Government Index Linked Bond (GGILB), Mr Tweneboa said: "It is going to have a tremendous impact because it will cover substantial volumes in monetary terms." A unit of the GGILB would be traded for one million cedis.
Mr Tweneboa said trading in the GGILB would mean an increase in earning flow to the GSE from dealers who would pay registration and listing fees. "The amalgamation of a variety of investments on the bourse (shares, corporate bonds and government bonds) is a big plus to the GSE."
On the performance of individual shares, Mr Tweneboa said Aluworks was the star of the year, performing better than any of the other 21 listed equities. The company filed quarterly reports, which indicated its transparency.
The following is a summary of market activity for the year 2001 as against 2000:
2001 2000
Number of listed companies 22 22
Number of bonds:
Corporate 5 5
Government 17 0
Number of trading days 154 152
Total turnover of equities
Volumes (In millions) 55.30 30.72
Value (In million cedis) 92.28 50.62
Total market capitalisation (billion)3,904.03 3,655.04
Total number of listed issued shares 1,603.53m 1,487.21m
GSE All-Share Index:
End of period 955.95 857.98
Percentage change in index 11.42 16.55
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Ashaiman (Greater Accra) 05 January 2002 - Mr. Alfred Agbesi, a lawyer has said foreign institutions only named Yaw Osafo-Maafo as the world' second best Finance
Minister because he allowed Ghana to join Highly Indebted Poor Countries (HIPC) initiative.
Ghanaians do not see it that way because, "Back at home, we have started feeling the pinch of the conditions attached to the HIPC initiative, and Ghanaians would feel it more when we reach the last stage of HIPC process", he said.
Mr Agbesi, speaking at Ashaiman Youth Coalition forum on the theme: "Democracy, good governance and its influence on the youth", on Saturday said it is not surprising that the Bretton-Wood institution, who lived in a different environment should make such a comment to make Mr. Osafo-Maafo swollen headed.
Those grading the Ghanaian Minister are top managers who do not go to the same market with the ordinary people of this country, who feel the harsh economic conditions and the realities on the ground.
Mr Agbesi said since the International Monetary Fund (IMF), the World Bank and the European Union made Ghana to join HIPC under pressure, they have to shower praises on those who led the country into it, so that they will apply the harsh and unfavourable conditions attached to the letter.
He explained that HIPC initiative, which was set up in 1996 requires countries to stay in line with the World Bank and the IMF's directed economic policies for three years.
Once that has been achieved, the country reaches a "decision point" to draw up a "Poverty Reduction Strategy Paper (PRSP) and carry it through along with institutional reforms for a full year.
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