Mobil ready to fight pressures in oil sector - MD
Accra bourse under heavy bearish sentiments
Economists decry depreciation of the cedi
Mobil ready to fight pressures in oil
sector - MD
Accra (Greater Accra) 08 June 2000
Mr. Craig Murphy, Chairman and Managing Director of Mobil Oil Ghana Limited (MOGL), on Wednesday said the company is positioned to surmount negative pressures threatening the oil industry.
The company has the financial strength as well as the customer base to deal with product supply disruptions, shortage of foreign exchange and effects of devaluation, which are challenges to players in the oil industry, he said.
At the "Facts Behind the Figures" programme organised by the Ghana Stock Exchange for managers of listed companies to interact with brokers, the media and analysts, he said the constant devaluation of the cedi has led to frequent price increases not only of fuel but other commodities.
Mr. Murphy also said frequent delays in obtaining foreign exchange have rendered the company impotent in completing offshore transactions, adding that it has impacted negatively on the company's profitability in foreign currency terms.
"The US dollar is the common currency for oil commodity trading and the currency used by our major shareholder when reviewing affiliate performance."
Mr. Murphy said the turmoil in the mining sector last year led to reduced demands for diesel and lubricants since most mining companies adopted stringent controls on consumption.
He said the company, in spite of these negative trends, made a net profit of 20.2 billion cedis last year, up from 13 billion in 1998.
Sales increased by 7.5 per cent from 325,278 million cedis to 400,113 million cedis while market share grew by one per cent to 26 per cent, despite the presence of three new wholesalers in the market.
He explained that the results clearly demonstrate the wisdom of the Board to reduce expenditures, control capital spending and to better manage inventories and receivables.
"Our desire to reduce borrowing and converting from overdraft to cash surplus have helped to propel the company."
He praised the efforts of the Energy Commission and Bulk oil Storage Transport (BOST) at working to ensure a level playing field for all parties.
"The much anticipated deregulation of the sector is moving closer. It will provide a more open market and will allow for greater competitiveness within the industry."
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Accra bourse under heavy bearish sentiments
Accra (Greater Accra) 08 June 2000
Heavy bearish sentiments continued to dominate the Ghana Stock Exchange (GSE) on Wednesday as investors once again stayed away from the market.
Only 13,100 shares were traded by seven of the 23 listed equities, with the highest being 8,200 shares by Ghana Commercial Bank.
This shows that institutional buyers are completely absent from the market and only a few individuals are buying a small amount of shares.
The GSE All-Share index, the main market indicator, inched up by 0.32 points, thanks to a five-cedi gain by Guinness Ghana Limited (GGL). It is now 814.57 points, up from 814.25 points.
There was negative pressure on 13 equities while only two equities - Accra Brewery Limited (ABL) and Home Finance Company (HFC) - had positive pressure.
There were bids for shares of only 10 equities, the highest being 91,500 shares of ABL. However there were no bids for 13 equities.
Total bids were 121,800 compared with 40,520 on Monday while total shares trades were 13,100 compared with 22,700 on Monday.
Offers were virtually unchanged at 1,903,890 compared with Monday's 1,911,480. On the broader market, there was only one price change, GGL's five cedi gain at 990 cedis
The following are the last prices of listed equities in cedis:
ABL 530
AGC 18,600
ALW 2,600
BAT 440
CFAO 38
EIC 1,880
FML 1,100
GBL 1,400
GGL 990 +5
HFC 910
MGL 200
MLC 150
MOGL 17,100
PAF 300
PBC 520
PZ 800
SCB 22,000
SPPC 150
SSB 1,990
UNIL 1,850
UTC-E 125
CMLT 422
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Economists decry depreciation of the cedi
Accra (Greater Accra) 08 June 2000
Corporate sector operators, economists, academia and researchers on Wednesday decried the fast depreciation of the Cedi and said it has created a backlog of unpaid bills for imported raw materials and spare parts.
The situation has threatened to wipe out capital bases, they said, and also driven businessmen to unofficial market sources, which rather fuelled a worsening trend at the height of the foreign exchange crunch.
These sentiments were expressed by Dr Osei Boeh-Ocansey, Managing Director Pioneer Food Cannery Limited, Mr. S. K. Appea, of the Institute of Economic Affairs (IEA) Dr A. D. A Laryea, a lecturer at the University of Ghana, and Dr Wahab Alhassan,of Ministry of Finance, when they took turns to address a seminar organised by Ghana National Chamber of Commerce and Industry.
It was under the theme "Rapid Depreciation of the Cedi and the Foreign Exchange Crisis: Challenges and Strategies for Business".
Dr Boeh-Ocansey speaking on the topic: 'Impact of Depreciating Exchange Rate of Cedi on Business in Ghana', said, even though, Ghana had at different times applied all the exchange rate mechanisms the results have been mixed.
He said in this situation prudent planning and budgeting, vital management tools for the operation of successful business, become impossible.
Dr Boeh-Ocansey said this was one of the main causes of workers' strike actions and the recent one week strike by the Ghana Union of Traders Association, which was intended to preserve the value of their wares.
He said in the short term, in the light of the impending national elections, "measures should focus on re-orienting national priorities to reflect the changing circumstances without the loss of fiscal discipline''.
"Re-ordering national priorities", Dr Boeh-Ocansey added, "means reviewing current budget targets and fiscal discipline demands greater efficiency in the mobilisation and utilisation of existing resources".
He urged the government to ensure that the continuing improvements in the transparency of government business are pursued to a logical end.
Since the inception of the ERP and SAP in 1983, the Cedi has depreciated from 2.75 to the dollar through 1,075 in November 1994, 2,345 cedis four years later to 3,500 cedis in 1999. As at May this year, the cedi was going for 4,500 cedis to the dollar.
Mr. Appea said, even though, the cedi has shown a downturn for a long time, the real depreciation started from the third quarter of last year. He spoke on 'The Positioning of Ghanaian Businesses for Competitive Global Market'.
He said, at slightly above seven per cent, the rate of depreciation at the end of the first half of 1999 was twice as fast as it was for the whole of 1998.
This he attributed to delayed disbursement of foreign aid, which turned out to be less than expected.
Mr. Appea noted that this underlined the fact that Ghana's economy was purely donor driven, adding that in order to arrive at the heart of the matter, it is important to know if the change in terms of trade and donor inflows is temporary or permanent.
Mr. Appea said the short respite of the cedi after the government measures were announced recently seems to point to the fact that the applied solutions were not appropriate.
He said while the effort to support the cedi cannot be said to be incompatible with Ghana's managed floating foreign exchange system, such an effort could properly be regarded as a form of first aid treatment.
Mr. Appea, suggesting a way out, said it is important that substantial foreign resources are mobilised for the purpose.
"In the meantime and urgently, a more serious effort should be made to implement some of the appropriate programmes for the diversification of the nation's exports", he said.
Mr. Appea expressed regret that, even though, a lot has been said about creating an enabling environment for business in Ghana, "the stark reality is that it is more costly to do business in Ghana than in other comparable developing countries".
To enhance the competitiveness of Ghanaian businesses, the former Governor of the Central Bank called for a 12-point approach to bring the nation's economy in line to meeting her set targets aside of becoming a major player in the international economic arena.
He called for ways to reduce inflation and stressed the need for the government to work on the high and unstable general price levels.
He said considering the fact that inflation for April was at 17.5 per cent, the 12.5 per cent for December 2000 seems far-fetched, more so, the requisition of the Convergence Criteria for the establishment of ECOWAS Common Monetary Zone that inflation hit a single digit by December 2000.
Dr Alhassan, speaking on the Crowding Out Effect on Business and the Feasible Solutions, said it is clear that drastic exchange rate depreciation is not good for the country and pushed for the exploration of possible ways of mitigating its effect.
"The first thing to do is to undertake an intensive diagnostic study of major causes of exchange rate depreciation and their relative strengths. It will then become clear which demand side and supply side factors affect the exchange rate".
Dr Alhassah said it is important to ensure a strong import substitution base by granting tax rebates on locally manufactured goods, saying that free zone concept is a way that the government is pursuing.
Another important factor he brought up was the intensification of moral persuasion for the patronage of made-in-Ghana goods adding that it will shift demand from imports to local products.
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