Ghana to lose over $600 million over falling gold prices

The Minerals Commission is predicting that Ghana will lose 500,000 ounces of gold this 2014 as a result of declining gold prices, which has force some mining companies to suspend their operations.

Gold Production for 2014 is estimated at 3.1 million ounces, from an initial target of 3.6million, an Assistant Manager at the Minerals Commission, Daniel Krampah, has stated.

"We will definitely record lower volumes this year," he said, adding that, some companies have placed their mines under care and maintenance.

The price of an ounce of gold as at last Friday goes for $1,299.71, according to Bloomberg.

Fitch Says Ghana's Massive Rate Hike Alone Unlikely To Support Cedi

Rating agency Fitch said on February 7, that the massive interest rate hike and new foreign exchange controls by Ghana's central bank alone may prove inadequate to stop the currency, the cedi, from depreciating further.

On 6 February 2014, the Bank of Ghana raised the key policy rate by 200 basis points to 18 percent. The cedi weakened 14.6 percent against the U.S. dollar in 2013 and has depreciated 7.8 percent this year as on January 31.

In recent days, Ghana has also imposed forex controls including restrictions on foreign currency-denominated loans, repatriation of export proceeds, margin accounts for import bills, and revised operating procedures for foreign-exchange bureaus.

The interest rate hike and forex controls must be complimented by accelerated fiscal consolidation to address growing domestic macroeconomic imbalances, Fitch said. The agency blamed the African country's budget deficit, which has averaged 11 percent over the past two years, as the root cause of the imbalances.

World Economic Outlook Update| January 2014

Is the Tide Rising?

Global activity strengthened during the second half of 2013, as anticipated in the October 2013 World Economic Outlook (WEO). Activity is expected to improve further in 2014–15, largely on account of recovery in the advanced economies. Global growth is now projected to be slightly higher in 2014, at around 3.7 percent, rising to 3.9 percent in 2015, a broadly unchanged outlook from the October 2013 WEO. But downward revisions to growth forecasts in some economies highlight continued fragilities, and downside risks remain. In advanced economies, output gaps generally remain large and, given the risks, the monetary policy stance should stay accommodative while fiscal consolidation continues. In many emerging market and developing economies, stronger external demand from advanced economies will lift growth, although domestic weaknesses remain a concern. Some economies may have room for monetary policy support. In many others, output is close to potential, suggesting that growth declines partly reflect structural factors or a cyclical cooling and that the main policy approach for raising growth must be to push ahead with structural reform. In some economies, there is a need to manage vulnerabilities associated with weakening credit quality and larger capital outflows.

 

International Energy Agency| Oil Market Report for January 2014

Strong US deliveries lift global oil demand; OECD commercial inventories shrink

 

Unexpectedly strong deliveries in the United States lifted global oil demand for the final quarter of last year by 135 000 barrels per day (135 kb/d) higher than originally forecast, the IEA Oil Market Report (OMR) for January estimated. Curtailments in China and elsewhere partly offset the US increase, but the closing surge left growth for all of 2013 at about 1.2 million barrels per day (mb/d), which the monthly report expects to accelerate to 1.3 mb/d in 2014 as the economy continues to recover.

Global supplies eased 25 kb/d in December from the previous month, to 92.23 mb/d,

Nigeria’s Economy| Outlook for 2014

IMF forecasts stronger global growth in 2014 and 2015

 
World output grew 2.9% in 2013 from 3.2% in 2012 according to the recent IMF report on World Economic Outlook (WEO) released on January 21, 2014. Global activity strengthened during the second half 2013, driven by higher inventory demand in the advanced economies and export rebound in emerging and developing markets. The growth momentum is expected to progress into 2014 and beyond.
 

Global equities in a losing spree as U.S Fed wields the big stick

 
Global equities came under pressure at the beginning of the

World Bank cuts South Africa’s growth forecast for 2014

THE World Bank has revised South Africa’s economic growth outlook in 2014 to 2.7% from an earlier forecast of 3.2%. 

In its economic update for South Africa released on Tuesday, it also projected economic growth to improve to 3.4% in 2015.

Despite the downward revision, the World Bank said economic growth this year would be much better than the expected 1.9% growth in 2013 and would be boosted by an

Nigeria could soon overtake South Africa as the largest economy in Africa

In the next few months, Nigeria's National Bureau of Statistics will recalculate its gross domestic product (GDP) to be up-to-date with current market data and prices, which could boost the figure more than 50 percent - the largest on the continent.   

Frontier market investors will likely take notice, but for most Nigerians, the number won’t change anything.

“Would it make any difference to the man on the street? No,” said Charles Robertson, Renaissance Capital’s chief global economist. “Does it make any difference to the companies? Not directly, although it might make them more interesting to global investors,” 

Nigeria’s current GDP, the value of all goods and services it

Ghana: Cashew is king as farmers gang up against traders

Under the darkness of midnight in Seketia, a farming village in western Ghana, cashew traders and middlemen go knocking from door to door looking for supplies of harvested nuts. 

"During the peak harvest, they visit us late at night, trying to get us to sell," says David Enkamah, a cashew farmer.

Worldwide demand for cashew has grown about 7% a year over the past decade on healthy snacking habits. The tree nut, along with sesame seeds — favoured especially by the Japanese, South Koreans and Chinese — and pigeon peas, a
common ingredient in Indian kitchens, are among a number of crops where the balance of power has tilted a little towards African farmers.

Nigeria signs US$350M deal with GE to support small-scaled power projects

The struggle by Nigeria to provide adequate power supply to industrial zones, as well as, small and medium-sized enterprises (SMEs) seems to be bearing fruits especially after the government has just cemented a US$350m deal with General Electric (GE) to support the construction of small-scale power projects across the West African country.

The deal which was sealed over the weekend was signed by the Industry, Trade and Investment Minister Olusegun Aganga and his counterpart of Power ,Chinedu Nebo on behalf of the Nigerian government while the GE Global Chairman ,Jeff  Immelt and the Stanbic IBTC CEO, Sola David-Borha signed on behalf of their organisations. The fund would be managed by Stanbic IBTC Nigeria.

Quotes About Africa At The 2014 World Economic Forum In Davos

With CNBC Africa’s Bronwyn Nielsen’s opening remarks to the 2014 World Economic Forum session “Africa’s Next Billion”, the debate on Africa started with speakers President John Mahama of Ghana; President Goodluck Jonathan of Nigeria; Aliko Dangote, billionaire business-mogul; Winnie Byanyima, Executive Director of Oxfam International; Julian Roberts, Group Chief Executive, Old Mutual and Doreen Noni, Creative Director, Eskado Bird.

While the narrative on Africa is evolving, more and more Africans are joining in the conversation and taking ownership of the issues that impact the continent. As such, the just ended annual global meeting in Davos attracted industry captains, political leaders and social entrepreneurs from Africa who shared their views on the continent.

Why Africa Will Rule The 21st Century

According to the authors of a new book, The Fastest Billion – the story behind Africa’s Economic Revolution, Africa’ s current sustained growth level is set to not only continue but rise over the next four decades so that, come 2050, the continent’ s GDP will equal the combined GDP's of the US and the EU at current prices. There is a possibility that Africa’s growth could outstrip that of Asia over this time span. Some have described this scenario as over-optimistic and an exercise in wishful thinking. But the authors of the book put forward sound arguments based on analyses of trends going back centuries to support their thesis. Editor Anver Versi talked to the book’ s lead author, economist Charles Robertson, to outline the case for a defence of the theory.

Ghana: The AGI Business Barometer 2013 (Q3)

Here is a Business Barometer Report from Association of Ghana Industries for the 3^rd quarter of 2013 financial year.

Improved Power Supply Boosts Business Confidence In Quarter Three (Q3).

Energy supply related issues have attracted more attention since the last three quarters. The impact of over 250 megawatts of power added from the Bui dam to the national grid between May and August was largely felt in quarter three (Q3), according to the AGI Business Barometer, Q3, 2013. This was a big relief to businesses and it is amazing how an improved power supply could significantly impact on business even though there were agitations over the proposed electricity tariffs.

Competitiveness conditions of basic factors such as cost of raw materials and utility prices have however proven to be severe obstacles to growth of businesses in Q3.

AGI believes the further removal of barriers to competitiveness must engage Government’s attention the more if local businesses are to remain relevant in the current global economy.

SMEs are still seen as pivotal players in creating economic growth, but their development continues to be largely constrained by access to credit and cost of credit as seen in Q3.

Understanding Africa’s uniqueness is the key to rewarding investments in 2014

The investment prospects for Africa as a whole are exciting and offer the potential to provide great long-term returns, according to Josef Odili, head of Africa Manager Research at RisCura.

“The key is to have a thorough understanding of each country’s unique situation. A frontier market like Africa (excluding South Africa) has a very different dynamic to developed markets and it’s important not to invest without understanding this dynamic.”

For example, Nigeria has enjoyed strong returns over recent years, but there is some uncertainty in the short term given the election next year and the appointment of a new central bank governor this year. On the positive side, assertive actions are being taken to address the country’s shortfall of electricity. Reducing electricity prices from their current levels will be a significant boost to the economy.

Is Africa’s young population a risk or an asset?

Africa has more people aged under 20 than anywhere in the world and the continent's population is set to double to two billion by 2050.

Two analysts put forward rival arguments about what this means for the Africa.

Researcher Andrews Atta-Asamoah believes it poses a major challenge unless properly managed, while economist Jean-Michelle Severino argues it is a massive potential work force that can drive development.

Jean-Michelle Severino:

"Urbanisation is one of the most powerful growth engines the world has ever experienced”- Jean-Michelle Severino

Ghana’s Advance to Middle-income Status Requires Firm Policies

By Francisco Javier Arze del Granado 

IMF African Department

• Strong growth momentum amid significant short-term vulnerabilities
• Debt sustainability weakened by unexpectedly high fiscal deficit
• Higher borrowing costs, unreliable energy supply risk curbing growth

With robust economic growth of 8 percent, strong democratic institutions, and favorable prospects for oil and gas, Ghana is attracting significant foreign direct investment.

However, continued success will depend on strong political will to decisively confront Ghana’s short-term vulnerabilities, the IMF said in its regular review of the West African nation’s economy.

Mining and agriculture dominate Ghana’s exports, but construction and services now account for more than half of the country’s output, while a large majority of jobs remain in the informal sector. Ghana has made great strides in reducing poverty to less than 30 percent of the population and has recently reached lower middle–income status. Offshore oil production started in late 2010, with new discoveries to come on stream over the medium term.

Should we continue subsidizing energy?

Here is an article by Antoinette M. Sayeh that tackles head-on the issue of energy subsidies in sub-Saharan Africa.

For many years, countries in sub-Saharan Africa have spent large amounts on subsidizing fuel and electricity. For both sources of energy combined, this averages around 3 – 4 percent of GDP. That is about the same magnitude as public spending on health in many countries. Now we need to ask some important questions.

Is this a good use of scarce resources? 

Where does this money go?

Is it helping to support the livelihood of the poorest in African economies?

Is it helping to boost the country’s competitiveness?

The answers are largely, no. I believe this money can and must be used better to invest in the critical physical and social infrastructure required to sustain growth in sub-Saharan Africa. A recent IMF paper backs this up.

Tracking who benefits

Most of the fuel products are consumed by higher income groups. The situation is even more acute with electricity subsidies, as a large majority of the poor are not even connected to the grid.