By Kevin Daly, Aberdeen Asset Management
Africa is set to be a focus of the International Monetary Fund (IMF) and World Bank’s agenda at meetings next week. But observers need to be discerning: for too many the temptation is to think of Africa as one entity (or even country, if you are certain US politicians). This is frustrating for Africans. It is downright foolish for investors.
The 54 nations of the African Union speak over a thousand languages, are home to over a billion people and hold vast quantities of natural resources. Most maps, based on Gerardus Mercator’s 1569 projection, do not help by distorting land masses which gives the impression Africa is roughly the same size as Greenland.
It is in fact 14 times larger and easily large enough to fit China, India, the USA, Japan and a slew of European countries inside its land mass. The differing attitudes towards adversities suffered by Zambia and Ghana present a lesson in the continent’s contrasts. Read more
Ghana plans to brave into the sovereign bond market before the northern hemisphere’s summer this year, the finance minister, Seth Terkper, told the Financial Times on Friday. The plan comes in spite of a mounting economic crisis in the West African country.
The bond would test the appetite of investors for frontier and emerging countries battling with high fiscal deficits and rapidly rising debt levels at the same time as the US Federal Reserve “tapers” its monetary stimulus. Read more
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. Read more
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. Read more
By Yvonne Mhango of Renaissance Capital
Elections in Ghana tend to arouse less uncertainty than those in most of sub-Saharan Africa, due to its relatively stable political environment and mature democracy. This was affirmed by the smooth constitutional transfer of power following President John Atta Mills’s death in July, to his former vice-president, John Dramani Mahama.
However, a tight presidential election on December 7 – like that of 2008 – would increase the political risks. And there is a lot a stake from the ramping up of oil production to dealings with the IMF. Read more
The smooth and easy transition of power to Ghana’s Vice President John Dramani Mahama following the passing of President John Atta Mills speaks volumes about the strength of the nation’s democracy.
In areas such as oil and technology, progress should stay on track. But the markets still have a few things to iron out – the currency especially being a concern. Read more
By Yvonne Mhango of Renaissance Capital
Ghana’s president, John Atta Mills, died unexpectedly on Tuesday following treatment for throat cancer.
During his term, Mills adopted tight fiscal and monetary policies to reverse the large twin deficits his government had inherited from the New Patriotic Party government in 2009. He oversaw the country’s 60 per cent upward revision of GDP to $31bn, signalling its transition into a middle-income economy in 2009, and the debut of oil production in late 2010.
After his death, what are the likely political and economic implications? Read more