Reshaping Our Priorities Today for Tomorrow

Friday June 1, 2007, Ghana Commercial Bank was in the Washington DC metro area to inform Ghanaians of its share flotation. A renounceable rights issue of 75,000,000 ordinary shares of no par value at 6,000 per share. 65 cents a share.

Announcements and invitations were sent out at least 2 weeks ahead of the event, and many others were invited by word of mouth, directly through the Ghana Embassy and also through others interested enough to share the good news with their friends. Outside of the Ghana Embassy staff, 22 people made it to the event. Three weeks earlier, the DC Metro area turned out to support one of its own in the community to commiserate with him on the death of his 85 year-old mother. Over 600 showed up. A month earlier, some political leaders were also in the DC Metro area to meet with political pundits and share their views to make a bid for the Castle. At least 200 were there to support and raise funds for their campaign.

The GCB share offer plans to raise 450 billion cedis, the equivalent of $100 million to improve its processes and inject additional working capital to enable it to standardize banking operations and increase the number of ATM’s in the country. The offer is an 11.6% discount off the existing market price of the bank and if realized, will improve GCB’s position as the largest bank in Ghana.

What are we missing here?

If GCB has better operations and can improve it’s systems, Ghanaians could save between $6 and $12 dollars on each dollar sent to Ghana, by sending money directly to relatives through a GCB transfer account (if they can set one up).

A stake in GCB today means wealth creation and investment growth for the future and generations to come. It also means increasing wealth through a stronger Stock market back home. It is also a possible safe retirement package for anyone thinking of a future retirement back home. Then of course there is a potential capital gain and tax savings element involved. With this share issue, GCB plans to increase return on equity by at least 20% each year from 2007 to 2009.

The Ghana Stock Exchange has 34 listed companies, of which 7 are banks. Returns on the market have been phenomenal and investors have been rewarded many times over in the past years. Voted best equity growth market at least 3 times in the past 5 years, it has chalked up impressive successes, but is still a very small market compared to the exchanges in South Africa and elsewhere. It is one of the better-regulated exchanges in the region. So why were only a handful of people interested in the share issue? Allowing for a weak information campaign (past invitations have been honored the same way anyway), it appears Ghanaians simply pay lip service for their love of the country. Our vociferous concern for “Ghana our Ghana” is evidentially shallow deep and stops after we send money home to relatives and girlfriends. 1st quarter remittances to Ghana by the Diaspora, NGO’s etc. is up significantly this year already. TNG PIECE LINK HERE There were close to 3,000 Ghanaians at the Ghana Embassy for the Independence day celebrations on March 6th, and they were mainly if not all from the DC metro area. We show a lot of concern for issues on education, health, teenage pregnancy and we express grave concern for chieftaincy and drug related stains. Recently, a porn site involving Ghanaians created some hue and cry, but fizzled out after a few weeks. These present and short-term issues, which have no cash impact in the immediate, seem only to arouse our passion for changes in society. None however, impacts us more than funerals and political intrigue. In Ghana, politics has become synonymous with a “get rich quick” attitude. So when a long-term proposal with no real immediately estimable cash value comes up, we shy away and wait for others (the West) to invest in our country so we can follow after it proves itself. Of course when it fails we will complain that the West has “sabotaged” our economy and wealth.

Ergo, we do not invest in writing books and contributing our views to analysis and commentary. If it means committing it to paper, “Ma enkaho” (let it wait?). We hardly invest in industry because it will take too long to realize the gains of our investment. We shy away from agricultural cash crops, because we cannot eat or sell the produce now and we struggle to justify expenditure on education (that is changing now, thank God!). But when it comes to equities? We cannot see the benefits and we do not know whether it will yield earnings in our time.

We need to tackle the more complicated and longer-term projects, which will provide stability for our future and our children’s future. Wealth in the US and Europe is from what they call “old money”. These are the pillars constructed from years ago, investments in exchanges and solid industry that have been tried, tested and handed down from one generation to another. Succession planning, using today’s resources to secure tomorrow’s wealth means we think more about diverting our energies and courage into a confident political and economic utopia. The Ghana Commercial bank offering closes on June 15th , 5pm Ghana time.