USA, China top FDI inflows

United States of America topped the list of countries with the largest estimated value -- US$ 407.21 million --of Foreign Direct Investments (FDI) into Ghana, with China being the leading source of investment projects (12) registered during the first quarter of 2012, latest reports released by the Ghana Investment Promotion Centre (GIPC) have revealed.

The GIPC during the period under review recorded 95 new projects with an estimated value of US$1.18 billion. This value represents an increase of 67.98 per cent over the value recorded in the same period in 2011. Total initial capital transfers for the quarter amounted to US$43.27 million.

“The results of the first quarter of this year, give a good indication of the levels of foreign direct investments that the country will attract in 2012, And we are optimistic that 2012 will be another year for recording appreciable levels of investments.

There is a heightened investors’ confidence in the economy despite the elections later this year” said Mr. George Aboagye, Chief Executive Officer of GIPC.

Announcing the latest investment figures at a press briefing in Accra, Mr. Aboagye said: “With our ever strong commitment to our mandate and our ongoing promotional activities, we believe the investment climate will continue to be conducive for existing and potential investors.”

He explained that the foreign direct investment component of the estimated inflows of newly registered projects amounted to $979.85 million, up 178 per cent over $351.75 million in the corresponding period of 2011.

He indicated that the 95 projects registered during the period, 52 were wholly-foreign owned enterprises valued at $422.77 million while the remaining 43 projects were joint ventures between Ghanaians and foreign partners also valued at $759.28 million.

Approximately, 4,468 jobs were expected to be created from the 95 projects, a 36 per cent decline from 7,004 jobs to be created in the same period last year.

Mr. Aboagye emphasised that results from the Centre’s on-going biennial re-registration exercise showed that a total of 577 companies renewed their registration with the body in 2011.

These companies, he said, had created a total of 43,923 actual jobs from the registered projects, comprising 41,391 jobs for Ghanaians and 2,532 jobs for non-Ghanaians.

The jobs created were far more than the 24,028 jobs estimated during the time of registration.
Besides, the current investment at the time of re-registration by the companies stood at $982.91 million compared to the projected investment of $421.10 million recorded at the time of registration.

Mr. Aboagye said GIPC would step up its investments and trade delegations missions across the world to market opportunities in the country.

“The Centre will also undertake nationwide investment tours to promote local indigenous investments between June 4 and July 27 July, to deliberate with the Regional Co-ordinating Councils, District Administrations and other stakeholders on how to attract investments into their areas.

“The tours will also help identify investment opportunities in each region and call for project proposals and to brief local investors on opportunities available for partnerships and joint ventures,” he remarked.

Eight out of the 10 regions directly benefited from the registered projects during the quarter. The regions are Ashanti, Brong Ahafo, Central, Eastern, Greater Accra, Northern, Volta and Western regions. 78.95 percent of all the projects registered are located in Greater Accra region.

BIVAC cautions fraudsters

BIVAC International Ghana Limited, a destination inspection company has observed, fraudulent and fake documents presented for clearance of goods, hampers trade facilitation and customs operations at the country’s ports, Mr. Herve Chassagne, Managing Director, BIVAC disclosed.

“Fraudulent documentation increase delays and cost in port transaction. There are delays in the process because when you raise a query on suspected invoices, you ask the importer to come and explain. It takes forever for them to come and explain.

“This result in the delays of issuing the final classification and valuation report. And then when you are not there they turn around to accuse you of frustrating them,” Mr. Chassagne said.

This was made known in Accra at a day’s seminar organized by BIVAC International, for Customs House Agents and stakeholders including Ghana Shippers Authority, Ghana Union of Traders Association among others.

It was aimed at equipping participants on the processes and procedures required to obtain the final classification and valuation report without hindrance. The seminar also educated stakeholders on how to acquire relevant documentation to facilitate transactions at the ports.

Nii Ansah-Adjaye, Chief Director of the Ministry of Trade and Industry said: “Delays in the issuance of final clarification and valuation report have hampered the smooth operation of the scheme and therefore require the attention of the companies contracted to provide the services.

“There is the need for inspection companies to continue to improve upon their performances. Even though much has been achieved over the years by the introduction of the scheme, there is still some ground to cover with regards to issues of verification and classification.”

Mr. Ansah-Adjaye explained that improved trade facilitation reforms and training can bring immense benefit for the development and stimulation of trade, improvement in the collection of customs duties and reduction in the propensity to smuggle.

“It is therefore necessary to continuously put in place modalities such as this initiative to enhance our trade agenda to bring considerable benefit to the government, the private sector and consumers,” he stated.

Mr. Fred Mac Bruce, Deputy Managing Director, BIVAC called suggested that government must impose harsh sanctions on importers who use fraudulent means or documents to clear goods.

“I believe such a step should serve as a deterrent for potential perpetrators.

“It is time for government to adopt the approaches of the EU where importers or traders who engage in fraud are blacklisted forever,” Mr. MacBruce explained.

BIVAC International Ghana Limited is s subsidiary of the Bureau Veritas Group, a global destination inspection company.

Wobbly cedi drives inflation to 1-yr high

Headline inflation accelerated to 9.1 percent in April as the weak cedi increased the pace of price growth in the economy.

The rate increase was the second in consecutive months -- from 8.6% in February and 8.8% in March -- and follows on the heels of consistent steep falls in the value of the local currency to the dollar.

Non-food inflation went up to 11.7 percent from 11.4 percent in March, driven by increases in all but one of the constituent sub-groups. Food inflation surged to 4.8% from 4.4%, the highest since January 2011.

Acting Government Statistician, Dr. Philomena Nyarko, at a media briefing in Accra said the current rise in inflation could be attributed to the cedi’s depreciation against the dollar.

“The depreciation of the cedi has obviously impacted the inflation print,” she said.

The cedi has depreciated by nearly 10% this year against the dollar, losing as much value as it gave up for the whole of 2011. In the forex bureau market, the cedi has slipped by more than 12% since the start of the year.

The weak cedi poses risks to inflation, macroeconomic stability and economic growth, Governor Kwesi Amissah-Arthur said on April 13, when the Central Bank raised its benchmark policy rate for the second time this year to 14.5%.

The move was seen as a strategy to boost earnings on cedi assets and encourage a shift from dollar investments.

But the cedi has remained wobbly, and the Central Bank has taken further steps to stem the slide.

Looking to lure investors to cedi assets and stabilise the exchange rate, the Bank has increased yields on short-term government paper.  

At its last auction, the bank hiked interest rates to levels not seen in two years. The yield on the 91-day bill rose to 15.4%, the highest since March 2010, while the 182-day bill returned 15.9% per annum.

The yields on the one- and two-year notes were 15.5% and 16% respectively, up from 14.5% and 14.8% on April 23.

Beginning May 1st, the bank said it will reintroduce short-term bills, change bank reserve requirements, and require 100 percent cedi cover for so-called vostro balances -- held by local banks on behalf of foreign banks -- to help stabilise the cedi.

“Arguably, the recent measures put in place all represent a more significant tightening than adjustments to the policy rate alone,” Head of Africa Research for Standard Chartered Bank, Razia Khan, told Reuters.
“Nonetheless, we think more policy tightening will be required as a signal of the Bank of Ghana's intent to maintain tight policy,” she said.

Samir Gadio, an analyst at Standard Bank, told the same media more monetary policy tightening could push long-term bond yields up. Ghana's most recent three-year bond auction was oversubscribed at an average yield of 14 percent.

“From a foreign investor perspective, this will eventually generate attractive re-entry points into the bond market at the 3- and 5-year tenors,” he said.

The Central Bank will sell a five-year bond in June to raise GH¢200 million from local and foreign investors, but its willingness to allow yields to rise means the interest on the bond will surpass the 14.3% paid during the last issue.

At the regional level, year-on-year inflation ranged from 6.3 percent in the Upper East and Upper West Regions to 12.1 percent in the Central Region.

Three regions, Central, Western and Ashanti, recorded inflation rates above the national rate of 9.1 percent.

‘Empower private sector’

Discussants at the maiden Ghana Economic Forum 2012 have proposed a policy initiative to empower the private sector to spearhead the development paradigm of the country’s economy.

 “Government must re-think policy strategies and programmes, and also identify innovative, pragmatic and effective ways that will spur sustainable economic growth and development as well as poverty reduction, especially job-creation to reduce the ever-growing unemployment among the youth,” said Nana Owusu Afari, President of the Association of Ghana Industries.

Discussants were Dr. Joe Abbey, Executive Director of the Centre for Policy Analysis; Dr. John Kwakye, Economist at the Institute of Economic Affairs; Kweku Andoh Awotwi, Chief Executive of the Volta Riva Authority; and Foluso Phillips, Executive Chairman and Founder of Phillips Consulting Group as well as Abena Amoah an investment banker.

Delivering the keynote address at the opening ceremony under the theme “Integrating People, Systems And Technologies For Sustainable Economic Development’, Hanna Tetteh, Minister of Trade and Industry observed: “The current global economic and financial crisis being experienced in most of the developed countries and its spill-over effects on developing/emerging economies places enormous responsibilities on all of us.”

She stressed that policymakers will have to identify ways to manage the present economic challenges while preparing their economies to perform credibly in an increasingly complex global economy.

 “For us in Ghana, the challenge is not different. The Ghanaian economy has witnessed some challenges that continue to inhibit its growth trajectory.”

She indicated that high unemployment among the youth, rising levels of public debt, high interest rates, volatile international commodity markets and its attendant effects on foreign exchange earnings, as well as high public sector wage bills and infrastructure deficits are issues of major concern that threaten the growth of the economy -- and these must be tackled head-on.

Tetteh expressed that there is a missing link in the development process that must be addressed as a matter of urgency if the pace of growth of the economy is to be maintained at higher levels and on consistent basis.

 Dr. Abbey said the culture of the country’s politicians high-jacking institutions must stop. “We need to get the political parties’ hands off State institutions and allow them to work.” Mr. Phillips said: “Ghana needs to start from the beginning in defining its value proposition.

This will help the country to align its priorities and the core competencies. “Ghana needs to develop strong competencies based on its natural resources, which will be used to develop its capabilities. There is a need for us to develop the capacities of the human capital.”

Dr. Kwakye also stated that the country also needs to develop its human capital, which is the most essential asset of every nation.

 “We need to develop and educate more of our youth to improve their capacity to be able to promote the development of our country. “We need to support the private sector to be able to support and absorb the youth,” he remarked.