GRi Business News 26-03-99

Ghana attracts 1.3 billion dollars investment in four years

GCB profit, dividend dip

Shareholders cry foul over dividend:

Accra(Greater Accra) 26 March Between September 1994 and December 1998, the Ghana Investment Promotion Centre (GIPC) registered 780 investment projects valued at 1.3 billion dollars (318.5 billion cedis). Out of the figure, 246 projects, estimated at 260.4 million dollars, were wholly foreign-owned, and 534 projects, costing one billion dollars, were joint ventureships between Ghanaians and foreign partners.

Mr Cletus Kosiba, Deputy Director of the GIPC, disclosed this at the launching of seven ranges of "Safe Solutions", disinfectant products, introduced by Pointer Limited, in Accra on Thursday. The products are design to prevent bacteria, fungi and virus infections on the human body.

Mr Kosiba noted that since the inception of the GIPC and the privatisation policy of the government about four-and-a-half years ago, there has been a steady growth in foreign and joint venture investment.

The total investment of 1.3 billion dollars chalked so far "was made up of 997.04 million dollars of foreign direct investment and 269.7 million dollars in local investment" , he said. Mr Kosiba said initial foreign capital transfers within the period amounted to 113.57 million dollars, as against the expected transfers of 25.75 million dollars.

"These investments were expected to generate a total employment of 45,300 Ghanaians and 2,800 foreigners, mainly in the manufacturing (16,178), agriculture (8,982), building and construction (7,278) and services (7,633) sectors of the country."

Mr Kosiba said in 1998 alone, the centre registered 187 projects in various sectors, estimated at 177,44 million dollars. This comprised foreign capital of 164.82 dollars and 12.61 million dollars of local contribution. It generated 12,240 jobs. He noted that the records show the success in the government's privatisation policy initiative, saying that GIPC would persevere in its effort to sustain Ghana's image as a competitive location for private direct investment.

"We will step up our efforts and sharpen strategies to develop and expand the domestic capacity to absorb foreign direct investment in order to guarantee meaningful co-operation between domestic and foreign investors."

He called on businesses in the country to collaborate with the GIPC and play a more proactive role in efforts at marketing Ghana as the gateway to West Africa.

Mr Kosiba noted that the example of Pointer Limited in the joint venture investment is indicative of the fact that the GIPC is on the path to achieving its goals outlined in Vision 2020.

Mr David Anthony, the manufacturer, said the products are environmentally friendly and cost-effective, and are designed for preventive rather than curative purposes.

Mr Herman Seshie, Managing Director of Pointer Limited, said a manufacturing plant for the "Safe Solutions" range of products would soon be established in Ghana.

Accra (Greater Accra) 26 March 

Ghana Commercial Bank (GCB) on Thursday declared a profit after tax of 32.3 million cedis and a dividend per share of 100 cedis for 1998. Both amounts are low, when compared to 1997's profit after tax of 65.7 million cedis and a dividend of 120 cedis. The dividend for the year under review represents 51 per cent of the profit after tax.

This was made known by Mr John Sey, Chairman of the Board of Directors, to shareholders at the bank's fifth Annual General Meeting in Accra. He said the bank could not meet set targets due to some constraints it encountered during the year. Some of the constraints, he said, are the power crisis that confronted the nation.

It also had to cede assets of its London office in the face of high competition and strive to meet high operational costs. Operation expenses increased from 58.3 million cedis in 1997 to 76.5 million cedis. Total income of the bank fell from 136.2 million cedis to 128.7 million cedis.

Mr Sey said in spite of the gloomy atmosphere, the bank acquired huge assets that are expected to yield better income in the coming years.

Mr Akwetey Akita, General Manager of Financial Control, said the bank's total assets now stand at one trillion cedis, the majority of which are in fixed assets. The figure, which represents a 23 per cent increase over the previous year, makes GCB the only bank to achieve such a target. He mentioned some of the assets as acquisition of 19.8 billion cedis worth of shares in Ghana International Bank and the purchase of computers, which would enable GCB to fully computerise 48 branches.

These were achieved by increasing loans and advances from 204 million cedis in 1997 to 258.8 million cedis in 1998.

Mr Akita said the bank is now building on its fresh deposits and investors would soon see an improvement in its operations. The bank's share of total deposits of the banking industry could be estimated at about 30 per cent=92 he said. Mr Akita said the GCB's main focus now is in computerising its operations within the year and expressed the hope that it would soon make major strides.

Mr Sey and two former directors, including the Acting Managing Director, Mr W. P. Bray, were re-elected as directors. Five other people were elected to serve on the board after shareholdres agreed to increase the number from five to 12.

Shareholders of Ghana Commercial Bank (GCB) on Thursday expressed their dissatisfaction over the 100 cedis dividend declared for 1998, saying the amount, as well as increased cost of operations, indicate that the Bank is retrogressing. Total dividend for the year was 16.5 million cedis, representing 51 per cent of profit after tax of 32.3 million cedis. Profit after tax for 1997 was 42.9 million cedis.

At the bank's fifth Annual General Meeting in Accra on Thursday, some shareholders said the dividend should be doubled to 200 cedis per share immediately. Other shareholders proposed that the 100 cedis should be accepted as interim dividend, pending the issuance of either 50 or 100 cedis dividend in the near future.

The issue, which was the second on the agenda, was dragged for more than one hour, and the Chairman of the Board of Directors, Mr John Sey, had to suspend it to make way for discussion on other matters. The shareholders said operation cost increased more than necessary and could not match profits. Some of the cost they referred to were medical expenses of 926 million cedis in 1998 from 655 million cedis for 1997 and donations of 111 million cedis from 67 million cedis for the same period in 1997. Other costs were fuel and repairs on vehicles and directors' emoluments.

They also said the bank should account for monies spent on the current pass book, which they described as "too big and too ugly", and answer why they could not print dairies in Ghana but in London.

The bank's total earnings were disbursed as 7.3 per cent in dividend, 42.7 in interest expense, 7.6 in government tax, 7.2 in operating expense, 24 in payment of staff and 11.2 in maintenance and continuity of assets.

Mr Sey explained that the bank came up against some constraints during the year but managed to make modest gains, saying they should be grateful for that. He managed to convince the shareholders to accept the 100 cedis dividend with the promise that the bank would do all it can to add more if it is able to get hold of some funds.

He assured the shareholders that GCB, in view of the decline in earnings, has put in place measures that would yield more dividends in the future.