Author: OBG Admin

Pham Hong Hai-CEO-HSBC Vietnam

Fiscal sustainability: Successes help the debt situation but fiscal performance remains in the spotlight

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  As a presidential and parliamentary election year, 2020 represents a key test of the government’s commitment to fiscal responsibility. The current government came to power on a platform of economic competence, promising to break the cycle of spending and debt crises that has challenged the nation’s economic progress for decades. In this regard it has already achieved a measure of success. In 2019 the government received praise from some of its most prominent national development partners for its fiscal performance over the previous year.

Amin Al Husseini-CEO-Oman Arab Bank

Ties that bind: International cooperation and bilateral agreements to ensure greater economic development and trade opportunities

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  Since independence in 1957, Ghana’s foreign policy has been characterised by a core set of interests and values that have remained relatively consistent. As a founding member of the Non-Aligned Movement in 1961, Ghana has been dedicated to maintaining positive neutrality and promoting multilateralism. As the first country in sub-Saharan Africa to declare independence, successive governments have remained devoted to pan-Africanism, and the country lives up to the ideal today through its participation in peacekeeping operations and efforts to bring about closer trade and

Nhon Luc Ly-CEO-AIA Myanmar; Son Nguyen-Country President-Chubb Life Insurance Myanmar; Daw Zarchi Tin-CEO

Macro impact: The microfinance segment remains crucial for rural and underserved populations

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  Ghana was an early adopter of the microfinance concept. According to the regulator, the Bank of Ghana (BoG), the first credit union was established in northern Ghana as early as 1955, introduced to the country by Canadian missionaries. A more local financing tradition, susu (where informal agents charge a small fee to hold money and provide limited credit), is thought to have spread from Nigeria to Ghana in the early 20th century. From there, the microfinance industry advanced in a number of stages. The Agricultural Development Bank was established in 1965, tasked with directing small loans to the fisheries and agriculture sector. In the

Continuing growth: Fixed-income market to remain buoyant in 2020

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  Ghana’s fixed-income market has experienced significant growth. As of end-September 2019 domestic fixed-income securities issued on the Ghana Fixed-Income Market (GFIM) totalled GHS104bn ($20.1bn), against GHS102.4bn ($19.8bn) over the same period in 2018, marking growth of 2%. Comparatively, the equity market experienced a year-to-date decline of 5.8%, to a market capitalisation of GHS57.6bn ($11.2bn). Sovereign Debt Domestic debt issuances by the government dominate the fixed-income market, with a total outstanding value of GHS77.4bn ($15bn) as of the third quarter of 2019. Government issuances accounted for 35% of total debt securities issued on the GFIM in the first nine months of 2019, compared to 29%

Recovering market: Regulatory reforms to facilitate equity market activity

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  The equity market experienced reduced performance in recent years, with the Ghana Stock Exchange (GSE) Composite Index returning -0.29% and -10.44% in 2018 and September 2019, respectively. This is down from a high of 52.37% in 2017. Market capitalisation as of end-September 2019 was GHS56.3bn ($10.9bn), down from GHS66.1bn ($12.8bn) one year earlier. The downturn in the equity market can be attributed to rising yields in the fixed-income market and capital flight from foreign investors dumping local securities to take advantage of rate hikes by the US Federal Reserve. Additionally, local retail investors have been selling their stock portfolios to invest in better performing

Éric N’guessan-Managing Partner-EY Côte d’Ivoire

Healthy expansion: Major players in the life segment weigh routes to profitability

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  Performance in the Ghanaian life insurance market has shown mixed results. While some providers have remained profitable despite the challenging environment caused by the crisis in the banking sector (see Banking chapter), others are struggling to achieve underwriting profitability. Those that are securing a margin are doing so with the help of high levels of investment income stemming from the country’s double-digit interest rates. A growing middle class and the recent increase of micro-insurance products, where life policies are particularly strong, suggest that the segment has potential; however, expansion has remained behind its non-life counterpart, showing an 8% increase in assets in 2018, compared

George Richani-CEO-Al Ahli Bank of Kuwait

Small packages: Micro-insurance products and services are increasing access among previously underserved populations

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  Micro-insurance represents a new development path for Ghana’s insurance industry, and protecting workers and businesses from unforeseen events, such as flood or drought, is emerging as a policy priority for regional governments. Low median incomes have traditionally excluded many Ghanaians from financial services, but the emergence of the microfinance industry in the late 20th century has greatly enhanced access to an array of products and services. Financial inclusion levels in Ghana remain low by international standards, but they have been growing rapidly – particularly

Nhon Luc Ly-CEO-AIA Myanmar; Son Nguyen-Country President-Chubb Life Insurance Myanmar; Daw Zarchi Tin-CEO

Fresh approach: A new competitive bidding system aims to increase transparency and improve regulation across the sector

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  For many years, commercial agreements made between Ghana and oil companies were reached through direct negotiations. This open-door policy was useful in the early stages of the development of upstream oil and gas industry; it allowed the government to rapidly build momentum in the sector. However, as policymakers began to look to the long-term development of its resources, they came to the conclusion that a more transparent and better regulated process was needed. The new competitive bidding regime is therefore an important development for

Nhon Luc Ly-CEO-AIA Myanmar; Son Nguyen-Country President-Chubb Life Insurance Myanmar; Daw Zarchi Tin-CEO

Local participation: Domestic engagement to increase across the value chain as ambitious targets are set for 2020 and beyond

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  Ghana’s recent competitive bidding round for offshore oil blocks garnered considerable foreign interest. Applications from global players, such Italy’s Eni, helped to boost investor confidence in the domestic oil and gas industry. However, an increasing foreign presence runs counter to a competing ambition: Ghana has long worked to boost local participation across the petroleum value chain, first introducing a local content policy for the sector in 2010. A target of 90% Ghanaian content and participation in the oil and gas industry was established for

Daniel Asare-Kyei-CEO-Esoko; Curtis Vanderpuije-CEO-ExpressPay; and Daniel Marfo-General Manager-Zipline Ghana

Going for gold: Multiple factors bode well for gold output, as the government prepares to open a new refinery

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  In 2018 Ghana overtook South Africa to become the top gold producer in Africa. According to the Ghana Chamber of Mines, total production increased by 11.9% in 2018, from 4.3m oz in 2017 to some 4.8m oz, with gains in output expected to continue beyond 2019. Global credit ratings agency Fitch also ranked Ghana’s mining sector first in Africa – ahead of both Botswana and South Africa – on its Risk Reward Index, which compares industry rewards and risk against others in the region.