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By Stephen Adams of Global Counsel

Events at west African lender Ecobank over the past six months have been widely and rightly interpreted as an important test for the credibility of African bank governance and regulation. A combination of internal whistleblowing, regulatory pressure and shareholder activism did for former CEO Thierry Tanoh and have prompted a fairly substantial overhaul of bank governance. All good news for African good governance.

But the bigger question for African banks like Ecobank is still unanswered. This is simply that as a cross-border African financial institution, Ecobank is evolving much faster than the institutions that supervise and regulate it. With operations in more than 30 sub-Saharan markets, Ecobank is a complex prospect for African bank supervisors and one that they are only just starting to get to grips with. Continue reading »

The discovery of oil and a rising consumer class had investors positive about Ghana’s growth story, holding up the west-African country as one of the frontier markets to invest in. But the recent broad sell-off in EMs has changed the mood about the country and exposed a slate of problems in need of resolution.

Source: Thomson Reuters

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Ghana celebrated its 57th anniversary of independence on Thursday, but a hangover from the heady 15 per cent GDP growth posted in 2011 is putting a damper on the mood.

West Africa’s second largest economy was turbo-charged by the discovery of oil in 2007. Foreign investment flowed in, attracted by the vibrant economy and the country’s reputation as a stable, democratic state. By 2011, Ghana was one of the top 10 fastest growing economies in the world and just a year later, oil had surpassed cocoa as the country’s second biggest export after gold. Continue reading »

Africa is at the forefront of bringing financial services to the “unbanked” and new opportunities to seasoned investors. In Monday’s FT special report on Africa Banking and Finance, our correspondents examine the continent’s enormous potential and challenges, writes Justin Cash.

Africa editor Javier Blas looks at the growth of sharia-compliant investments across the continent, whilst Anousha Sakoui assesses bright new prospects for M&A activityContinue reading »

Ratings agency Fitch has downgraded Ghana to ‘B’, citing the government’s failure to fully implement its fiscal consolidation plan.

The agency has dropped Ghana from B+, saying: “The authorities continued to overrun on wages, interest costs and arrears, leading Fitch to expect that the government will fail to meet the 9% of GDP fiscal deficit target for this year.” Continue reading »

As incomes rise in Africa, the battle is on to snap up the millions of ‘unbanked’ – those without a bank account. The potential is vast: the African Development Bank says only 20 per cent of African families have bank accounts.

As well as innovative new players, the old global payment technology rivals Visa and MasterCard are keen to join in. Both are looking to enlarge their footprint in different corners of the continent. Continue reading »

It’s a sign of the times. Ghana on Thursday raised $750m from the sale of 10-year eurobonds, but the deal did not come easy.

With investors more cautious about lending to frontier countries with shaky finances following June’s violent market rout, Ghana had to pay a premium to get the deal off the ground. Continue reading »

South African private equity funds rarely took an interest in neighbouring countries, preferring to invest at home. All that is now changing as Africa rises, and South Africa faces stagnation.

In May, Johannesburg-based Vantage Risk Capital made its first investment in West Africa, and only its second transaction outside of South Africa, with a $30m mezzanine capital investment in Genser Energy’s Ghana operations. Metier says it is expanding its southern Africa portfolio. South African banks Investec and Standard Chartered are investing in private equity off their own balance sheets.

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A lot has been written about the potential of the African consumer but there’s not been exactly a flood of deals to demonstrate investor interest.

Well, here’s one: the Abraaj group, one of Africa’s larger private equity groups, has snapped up Fan Milk International of Ghana. It’s a vote of confidence for the west African country, which has seen consistently high growth over the last few years, and for the region in general. Continue reading »

Ghana’s central bank sprung a surprise on Wednesday by raising its policy rate from 15 per cent to 16 per cent, stepping up its efforts to halt the decline of the cedi.

Central Bank Governor Henry Kofi Wampah noted risks to economic growth arising in part from tightened credit, but decided the weakening of the currency was the bigger threat. Continue reading »

Alongside the riches, Ghana’s oil boom has also ushered in a string of woes, including huge infrastructure needs and the stubborn problem of rampant public expenditure. So, at a time when investors are displaying appetite for sub-Saharan African bonds, it’s little surprise then that the country is planning to issue a Eurobond worth up to $1bn. Continue reading »

Ghana is planning a mid-year bond to strengthen the public finances, according to the country’s president, John Mahama (pictured). “We are floating the bond to pay down some very high interest credit from the domestic market, to bring down our interest payments, and to bring the deficit back on track,” he told This is Africa. The bond brings further detail to the government’s March plans to reduce the fiscal deficit to 6 per cent of GDP from its 2012 high of 12 per cent. Continue reading »

Multinational brewers have been doing a roaring trade in Africa lately, but with normal lagers too expensive for many consumers there is now an increasing focus on products for the mass market.

SABMiller has already rolled out its lower-cost cassava beer in Mozambique (called Impala). Now it’s launching a cassava based beer in Ghana, to be brewed by its local subsidiary, Accra Brewery, and called Eagle. Continue reading »

The Ghanaian government’s 2013 budget was presented to parliament on Tuesday, outlining plans to gradually bring the country’s fiscal deficit down to 9 per cent of GDP from its 2012 level of just over 12 per cent.

In the first major piece of economic policy since presidential elections held in December, the National Democratic Congress government led by president John Mahama said it would raise taxes and control government spending to calm concerns over a fiscal gap which grew to almost double its target level in 2012. But observers are skeptical about the extent of its commitment to balancing its books. Continue reading »

A stable democracy, rule of law, rapid economic growth and almost all the other tick-boxes, plus new oil discoveries, have won Ghana a lot of fans lately.

So it’s worth paying attention to anything which goes against the sunny narrative (leaving aside its continued under-performance in the Africa Cup of Nations, which can now almost be taken as given). This comes in the form of two recent reports from rating agencies Fitch and Moody’s.
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