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NOVEMBER 2014 / ISSUE 042 GH¢10.00

A M O N T H L Y M A G A Z I N E

EPA:Can any good come out for Ghana?

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Cote d’Ivoire oil debacle

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CONTENTS ISSUE 042 / NOVEMBER 2014

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Front Cover: KLM celebrates its 95th Anniversary

BriefsHighlights of events that trended the business world in Ghana during the past month.

Economy Spare capacity occurs when actual production is less than what is achievable or optimal for the economy or a firm.

EnergyAnalysts agree that the low supply of, and high demand for, energy has led to the high cost of energy prevailing in Ghana.

Bank & FinanceIn spite of the economic malaise, one sector that seems to consistently rise above the ashes is banking.

Agriculture Despite its importance, sectoral growth has lagged behind that of other sectors and has been unpredictable, as most farming is reliant on rain.

CoverAs KLM celebrates its 95th anniversary worldwide, …

External TradeThe EU is far advanced in the functional areas in the EPA while Ghana is lagging far behind. That is why most CSOs were against the EPA.

Regional Integration The recurring border dispute between Ghana and Cote d’Ivoire brings to the fore the insecurity at the common maritime boundaries of West African states, and the need for more effective collaboration.

OutlookAn analysis of a basic global healthcare metric - doctor to patient ratios - may be the key in helping to identify the next West African states most vulnerable to the ongoing Ebola outbreak.

Doing BusinessThere are weaknesses and difficulties in starting a business, in addition to accessing finance.

Perspectives Businesses in Ghana need to start asking themselves some difficult questions. What expectations do they have?

Events Make a date and attend important conferences globally.

Book Review Read an appreciation of Nigerian Nobel laureate, Wole Soyinka’s, tail-spinning autobiography.

Stats & IndicesFigures speak louder than words for the economy

Commodities Market prices in October researched and compiled by Esoko

Regional Integration: Page 34

Outlook: Page 40

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The Ghana National Gas Company (GNGC), operators of the Atuabo gas processing plant, has confirmed that the gas plant would officially start operations this month. GNGC disclosed that the plant would be running on smaller volumes of natural gas at its initial stages. The plant would be in full production during the first quarter of 2015, ramping up its intake volume to 120 million standard cubic feet (SCF) of gas. The plant is expected to process an estimated 1.2 trillion SCF of natural gas from the Jubilee field.

Ghana Gas plant to start operations this month

Lamudi Ghana believes that the country should adopt pragmatic steps towards developing a sustainable real estate sector. In view of this, Lamudi is organizing a roundtable discussion in Accra on energy-saving systems and energy efficiency materials; sustainable materials and incorporating local materials into real estate; urban development and the future of housing; issues related to obtaining land; and the professionalism of agents and brokers. Members of the discussion panel include Kwame Ankapong of Land & Property Investment Consultant, Brandon Rogers, Design/Build Consultant, Akosua Obeng, AGIA, Architect Orthner of Orthner & Associates, and Narenth Tetteh, Sales Manager, Co-Owner Homes.

LAMUDI holds “sustainable real estate” roundtable

Ghana’s first cross-sector e-platform for SMEs launched Invest in Africa (IIA), an organization focused on tackling shared private sector challenges, has launched the African Partner Pool (APP), Ghana’s first cross-sector online business directory for Small- and Medium-sized Enterprises (SMEs). This directory, under the URL: www.africanpartnerpool.com, was created to simplify the local sourcing process by connecting independently validated Ghanaian SMEs with international and domestic companies. The directory aims to increase the visibility and credibility of the SMEs and support international and domestic companies who want maximize their local supply chains quicker and more cost effectively through its search functionality. Local businesses registered on the APP will have a profile page to promote

their business on, while international and domestic companies are able to use a search tool to help them find suppliers with the qualifications, experience and standards they need. A tender’s notice board also features buyers’ tenders, giving local businesses greater visibility of opportunities. A press release noted that APP was developed in response to a ‘David and Goliath: Creating a level playing field for Ghanaian SMEs’ survey, which the IIA commissioned in early 2014. The purpose of the survey was to understand the obstacles faced by local and international companies, and subsequently devise solutions to create and support local market growth. According to the research, international companies seeking local partners faced difficulty identifying

validated local SMEs from which to procure goods and services. Whereas, according to the survey, nearly eight in ten SMEs managers reported facing obstacles when trying to get contracts from international companies due to lack of access to timely information about the international companies’ procurement activities. “The African Partner Pool is the core of IIA’s work in Ghana. This directory will assist local suppliers promote their businesses and increase their ability to tender more competitively. It will also help them access training and support from Invest in Africa’s Partners and the African Development Bank to build capacity and grow their businesses,” said Sam Brandful, IIA’s Ghana Country Manager.

Access Bank was adjudged Bank of Year for 2013 at the 13th Ghana Banking Awards held on November 1 at the Labadi Beach Hotel in Accra. Access Bank won from among 25 commercial banks at the annual awards that is usually based on the published financial statements by the competing banks.

The awards are based on a survey of the views and opinions of customers who use the services of the banks. Access Bank also won Best Corporate Social Responsibility Bank, first Runner-Up in Enterprise Finance and second Runner-Up in Household Finance. Standard Chartered Bank picked two awards on the night: Best in Trade Finance and Best Financial Performance. Zenith Bank emerged the Best Bank in Customer Care, while the Indian Bank BARODA came on top

in terms of Competitive Pricing. GT Bank was recognised as Best Bank when in Product Innovation. New entrant, Royal Bank, was honoured as the Best Growing Bank for last year. The Best Bank in Agriculture went to SG-SSB, while Best Long Term Financing was picked up by ADB. Fidelity Bank took the award for Best in Household Financing. UT Bank was adjudged the most active E-zwich Bank.

Access Bank wins best bank award

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The government’s policy direction is to focus on solar and wind in order to promote the exploitation and use of these renewable

resources through favorable regulatory and fiscal regimes. Further, the purpose is to engage Ghanaian engineers and scientists and foreign experts to undertake research and development aimed at cutting the cost of renewable energy technologies. The Commission decided that 30 percent of the energy mix dedicated to renewables be targeted at solar photovoltaic (PV) power to be set up in the remote rural areas which cannot access grid power. Larger scale solar power generation is still a novelty but

the Volta River Authority (VRA) has commissioned a 2MW solar plant to augment the total national electricity output – a small start but a start nonetheless. In his book, ‘Generating Electricity from Sunlight: Global Trends and Developments in Ghana’ , published in 2007, Prof. Fred Ohene Akuffo observes: “Ghana receives abundant solar energy throughout the year that could be harnessed to generate electricity using photovoltaic technology to meet the basic electricity needs of a significant percentage of the unserved.” Prof. Akuffo argues that despite the free cost of sunlight for power generation, solar electricity is far

more costly than grid electricity from traditional sources such as hydro, oil and gas, nuclear and wood mainly due to the high cost of the solar technology. “In spite of its relatively high initial cost, solar PV systems have steadily gained power generation market share due to their ability to produce electricity with no moving parts, no fuel requirements, zero emissions, no noise, and no need for grid connection,” the mechanical engineer says. He contends that the major goal of Ghana’s solar energy policy should be to attract private sector investment for further development and utilisation. Nevertheless, Prof. Akuffo also notes the hitches: “There are several barriers to be overcome to clear the way for

Energy deficit defies solutions but innovation may triumph (II)

Given the persistent droughts and floods that encumber hydro-based electricity production, and the environmental pollution caused by fossil fuels, their rapid depletion and relatively exorbitant cost, renewable energy is now the ‘in’ thing all over the world. The Energy Commission of Ghana has therefore proposed that 10 percent of the national energy mix be sourced from renewables by 2020 – now just five years away. To prepare the ground for the exploitation and use of renewables, the Renewable Energy Act came into force in 2011.

BY AYUUREYISIYA KAPINI ATAFORI

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The country has a variety of vegetation, like the dry savannah and wet forest, and various climatic zones which run in eastwards bands across the country. Agricultural crops, including yams, grains, cocoa, oil palms, kola nuts, and timber, form the base of Ghana’s economy. The main food crops grown are plantain, banana, maize, yams, cassava, rice, sorghum, millet, and guinea corn. Yet, cocoa is the only crop with a specific framework for facilitating international trade. Despite its importance, sectoral growth has lagged behind that of other sectors of the economy and has been unpredictable, as most farming is reliant on rain water. In spite of various governments’ statements concerning the importance of food crops, almost all their policies are heavily oriented toward market production, heavy reliance on the private sector for the needed services and the reduction of the role of the public sector - a clear disadvantage for subsistent producers. But why blame post-independence governments for religiously towing the line of the colonialists to experience and enjoy the white man’s “Good Boy” tag? When the British took control of the Gold Coast, their agricultural

policy was to turn the colony into a producer of raw materials for export and an importer of manufactured goods for consumption. From the 1890s, the colonialists adhered strictly to an agricultural policy aimed at encouraging, educating, and advising farmers to produce crops for export, without much support for small-scale farmers to produce for the local market. The agriculture sector during the colonial days concentrated on rapid growth in production of export crops to meet the demands of colonial authorities and expatriate merchants. Non-export crops were ignored and relegated to the background, with no effort to enhance production. Small-scale farmers and peasants abandoned non-export crops in favor of export crops, particularly, cocoa, which by the 1920s, within 30 years of its introduction, was accounting for over 80 percent of exports. Expatriate merchants imported manufactured food. Gold Coast was to be a crop export colony and an import dependant economy. Ironically, with independence, political considerations set in to influence decisions regarding agricultural policies. The politicians,

behaving like the proverbial ostrich, continued the colonial policy on agriculture with glee and imbibed the modernization and industrialization craze as the gateway to economic development. Thus, current small-scale rural farmers continue to suffer the same fate as those who farmed when the colonial authorities were at the helm. Although Dr. Kwame Nkrumah attempted to use agricultural wealth as a springboard for the country’s overall economic development, Ghanaian agricultural output had consistently fallen since the 1960s. Beginning with the drop in commodity prices in the 1960s, farmers have been faced with fewer incentives to produce as well as with general deterioration of necessary infrastructure and services. Last September, speaking to media practitioners at the sidelines of a policy dialogue organized by the Peasant Farmers Association of Ghana, Edward Kareweh, Deputy General Secretary of the Agricultural Workers Union, expressed dissatisfaction with the government for its policy posture which tended to promote importation rather than a policy of domestic production. “Imported food products

Ghana has an agrarian-based economy, but sadly is a large net importer of staple food crops. Agriculture is the country’s most important economic sector, employing more than half of the population on a formal and informal basis, accounting for almost half of its Gross Domestic Product (GDP) and export earnings. Ironically, the all-important agriculture is a neglected sector that needs much governmental attention.

BY OPPONG BAAH

The neglected chicken that lays the golden eggs

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Ghana Business & Finance: As you celebrate your 95 anniversary, can you share with us some of the key strategies that have led to the continuous growth of KLM? Axel Metselaar (AM): “Koninklijke Luchtvaart Maatschappij” or in English KLM Royal Dutch Airlines’ successes over the past 95 years cannot be expressed with just a few words. Our continued drive to offer our worldwide customers reliable and high quality products certainly has a lot to do with it. Innovation has been, and will remain, a crucial importance as we count down the years till we reach our centennial anniversary. When Mr. Albert Plesman founded our corporation on October 7th, 1919, he had a great vision to set up a Dutch airline to transport passengers, cargo and mail by air. At

that time, our then reigning Queen Wilhelmina awarded KLM a “Royal” (“Koninklijke”) predicate. Under the leadership of Plesman and with his pioneering spirit, KLM embarked on a journey that would take us to great heights from two passengers on the very first operated flight between London and Amsterdam to now over 26 million customers, as many as the population of Ghana. I always say that KLM is too big to be just a Dutch airline. With only 16 million inhabitants in The Netherlands, and no real distances to cover when one goes from north to south, or east to west, KLM has always focused on transporting customers, cargo and mail from point A to point B via Amsterdam. This so called hub-and-spoke system was invented by KLM, and with this strategy of connectivity

in mind, we developed our network of flying to over 135 destinations across the continents and countries.

GB&F: What activities were lined up to commemorate KLM’s 95th anniversary? AM: Worldwide, in all countries and stations where we operate, festive activities took place to commemorate our birthday. If you allow me I will elucidate on what we did in Ghana. Starting with our customers, of course, as always they are first. So we offered every passenger flying from Accra to Amsterdam on October 7th specially made cookies and sweets. Those flying in our World Business Class received a special ceramic miniature replica of a Dutch house: A collector’s item for our loyal customers, as we issue a new

KLM celebrates its 95th Anniversary:The Journey Continues:As KLM celebrates the worldwide commencement of its operation 95 years ago, the leading Dutch airline has chalked many inimitable successes which are the envy of many an airline. After plying in Ghana for nearly 54 years, KLM has warmed the hearts of its numerous customers with its spectacular services. GB&F seeks the secret behind KLM’s stellar achievements from Mr. Axel Metselaar, KLM Regional Manager for Ghana and Sierra Leone. KLM’s success story is underpinned by its dedication to complete customer satisfaction.

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BY MARTIN LUTHER C. KING

The C100 bloc is in the Tano basin of the Dzata-1 exploration well, located 75 kilometres (km) south of Ghana’s Cape Three Points. The Ivorian part of the border appears unusual. Rather than continue on a vertical line, the country’s eastern frontier suddenly deviates west along its Aboisso Department, an area that is, itself, cut off from the sea by Lagune Juen and Ghana’s Jomoro

District. This delineation means that any big maritime discoveries situated directly southward of Cote d’Ivoire’s Aboisso Department, such as the Vanco or Tullow finds below the Jomoro District, are actually, on paper, Ghana’s. What this simply means is that, had Cote d’Ivoire’s borders continued uninterrupted south from the Aboisso Department, the contentious Dzata

and Tullow oil finds by Ghana would likely have belonged to Cote d’Ivoire. Understandably, this argument has been met by deaf ears in Ghana, where some leaders claim that Abidjan’s UN petition is simply a poor attempt at an “oil grab.” Though both countries had agreed after independence to set up a joint commission to redefine their

Tit-for-tat may well be the new name of Ghana-Cote d’Ivoire diplomatic relations as both West African countries initiate arbitration proceedings against each other at the United Nations Convention on the Law of the Sea (UNCLOS) over their oil-rich common maritime borders. At issue is a median line derived from the position of the end-point of the two countries’ land boundary that was defined in the Anglo-French agreement of 1893, based upon the position of a house occupied by British officials in the 1880s. For Cote d’Ivoire, the maritime demarcation of the two neighboring states had, since the start of decolonisation in the late 1950s, never been made official. Some Ivorian leaders go as far as to argue that the entire C100 bloc is actually located within Ivorian territory, a claim consistently decried by Ghana.

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Two West African neighbours in border conflict over oil

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The Ebola pandemic shines light on African

doctor exodusEbola outbreak exposes catastrophic doctor-patient ratios in key African states. Why won’t we care for

our own?

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21st January 2015Best Western Premier Hotel, Accra