Friday, May 29, 2015

American investors to ‘flood’ Ghana soon

Ghana will, in the coming months, witness the influx of American investors to the country, the United States of America (USA) Ambassador to Ghana, Mr Gene A. Cretz, has said.

That, according to him, follows the steps being taken by the government to bring the economy back on track after some challenges.

Speaking with the Daily Graphic shortly after hosting the Vice-President of Microsoft and some top business executives in the country to breakfast at his residence in Accra, he mentioned some of the sectors as the oil and gas because of the shape the sector was taking as a result of the Atuabo gas project, and infrastructure among other things.

“We have a network of companies that we are always talking to. The State Department is also encouraging the companies to come and our commercial department is also active in getting out the information about changing economic trends,” he said.

Mr Cretz said: “It is beginning to manifest that the situation in Ghana is beginning to turn and now is really the appropriate time to come here,” he said.

“I am pretty confident that in the next several months we are going to see a real upsurge in America corporate interest in Africa and Ghana in particular,” Mr Cretz added.

According to the May report of the Monetary Policy Committee (MPC) of the Bank of Ghana, preliminary fiscal data for the first quarter indicate that the fiscal consolidation efforts are on track.

Revenue and grants were above target, on the back of strong growth in domestic revenue. Expenditures were below target, as the major items, including the wage bill, were contained within target.

These resulted in a cash fiscal deficit equivalent to 0.6 per cent of GDP, against a target of 1.9 per cent.

The deficit was financed mainly from external sources totalling GH¢1 billion with a domestic net repayment of GH¢278.2 million.

Ghana’s economy had been saddled with a myriad of challenges that have almost forced the nation to its knees.

For instance, the energy crisis is eating away the profits of many businesses while those which are not able to absorb the extra cost brought unto their businesses are being forced to lay off workers.

Inflation is still in the double digits at about 16.6 per cent as of March this year, with no sign of it abating because of the recent rise in petroleum prices.

The cedi, the local currency, has plunged against the United States dollar, having lost more than 20 per cent of its value between January and now. This has taken a serious toll on a country which is predominantly import-dependent.

Interest rates are hovering around an average of 29 per cent on the back of the high interest on government securities such as treasury bills (TBills). Although the Bank of Ghana claims the rates are dropping, the situation is still crowding out the private sector players who rely on bank loans to stay afloat.

For instance, according to the MPC report, interest rates have broadly declined during the period. Between December 2014 and April 2015, both the 91-day and 182-day Treasury bill rates fell from 25.8 per cent and 26.4 per cent to 25.1 per cent and 25.8 per cent respectively.

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