With no clear end in sight for the global financial turmoil, observers are keen to find out what 2012 will present.
While Ghana has largely bucked the trend and posted solid growth in the last couple of years, it remains to be seen if the nation, entering its second full year of oil production, can maintain fiscal stability, expand the frontiers of economic activity and increase access to jobs and services.
Business World spoke to five of the nation’s top CEOs and here are their thoughts.
Greater investments, Safety and the Promise of an Outstanding Year
Brian F. Maxted
The year 2011 was extremely significant for the oil and gas industry in Ghana, and for Kosmos Energy. In January, Kosmos’ first shipment of crude oil was lifted from the Jubilee field, and by the end of the year, the field had produced more than 24 million barrels of oil. These oil sales are the culmination of Kosmos’ discovery of the giant Jubilee field offshore Ghana in 2007 and first production from the deepwater oil field in late 2010 – a record-setting timeline. This was a momentous accomplishment for the Ghanaian people and Kosmos Energy, and our partners and service providers.
It was also a year of notable exploration and appraisal drilling results offshore Ghana. We made significant discoveries at Teak, Akasa and Banda on the Kosmos-operated West Cape Three Points Block. And along with our partners, we had much success at the Enyenra and Tweneboa/Ntomme fields on the adjacent Deepwater Tano Block.
Building on the momentum of 2011, I believe 2012 will be an equally outstanding year for Ghana’s oil and gas industry. There are a number of key objectives to focus on next year, including:
– Implement the next phase of Jubilee development,
– Push ahead with additional field developments,
– Continue to progress toward a natural gas solution, and
– Make substantial investments in exploration to find additional oil and gas fields.
No single person or entity can execute this strategy alone. Kosmos’ intent is to work with others in the industry, including the Government of Ghana and the national oil and gas companies, so the petroleum system we helped unlock only a few years ago will continue to grow and mature.
A key to our success, and the success of Ghana’s oil and gas industry, is a steadfast focus on safety. This is our first priority as an organization. At Kosmos, we will continue to respect and protect the environment we all share, no matter where we work. The well-being of our neighbors and the places where we do business is of paramount importance to us. We are also committed to hiring and training local residents and building a durable legacy of oil and gas expertise in Ghana. And we support efforts such as sustainable health care initiatives and educational programs, such as what we have recently done with multiple projects benefiting the people of the Western Region.
Along with our partners, Kosmos Energy will invest billions of dollars in Ghana’s oil and gas industry in 2012. We are working to ramp up Jubilee production and cash flow, and we are close to executing the next phase of field development at Jubilee, which will ensure maximum production for an extended period. We also plan to submit a development plan for the Enyenra field shortly, which will bring a second floating, production, storage, and offloading vessel to Ghana’s waters. And we are excited about pursuing our exploration drilling program that includes several new wells to be drilled in 2012.
Ghana’s oil and gas achievements have served as the catalyst for a burgeoning energy industry up and down the west coast of Africa. Many nations are trying to replicate Ghana’s success. And other exploration and production organizations, including major oil companies, have been drawn to the region so they can participate in the vast potential of the region.
The oil and gas industry has played a vital role in stimulating Ghana’s economy, turning it into one of the fastest growing economies in the world. We look forward to continuing to help Ghana and its people transform the country’s natural resources into national resources, enhancing lives.
The writer is President and Chief Executive Officer of Kosmos Energy
Opportunities, Risks and Interesting Year Ahead
Prince Kofi Amoabeng
Depressing global economic sentiments characterized the year 2011 starting with the unrest in the Middle East and North Africa (MENA) which escalated crude oil prices sparking a rise in inflation globally.
The deteriorating Euro Zone debt crisis coupled with weak growth witnessed in the United States over the past months has led to a general slowdown in the world economy amid fears of an economic meltdown.
The outlook for the global economy in 2012 may be bleak but for Sub Saharan Africa, the region continues to exhibit strong macroeconomic performance largely due to the limited integration into global manufacturing and financial networks. However a further deterioration of the global economic environment could have substantial spillovers into the region as it could undermine prospects for exports, remittances, official aid and private capital flows.
Ghana has been noted to attain the highest economic growth of 13.6% worldwide for 2011 largely due to oil production, gold and cocoa. The beginning of oil production in Ghana presents numerous opportunities for not only production but the growth of allied industries such oil and gas refineries, petrochemical industries among others. This new resource boom presents opportunities in the upstream, mid and downstream sectors of the industry.
The upstream and mid stream sectors of the oil industry is buoyant at the moment but however largely controlled by foreigners and skilled labour which are mostly foreigners too. If more local content in the downstream is achieved, the sector will bring about increased creation of jobs which will spur growth in other sectors.
The budget for 2012 puts major emphasis on the development of infrastructure. Infrastructure development has a multiplier effect by creating jobs which leads to increased demand for goods and services which further stimulates the economy. This presents a number of opportunities for all sectors of the economy to benefit immensely.
Investor interest in Ghana keeps growing. Macroeconomic stability coupled with existing opportunities, makes the economic environment conducive for investments. Heightened investor interest also keeps Ghana on the radar as a tourist destination. The country is endowed with beautiful tourist attractions in almost every region. The sector has the potential of being big earner for the country. The growing number of hotels and restaurants together with major hotel chains also coming into Ghana is a boost for the development of the industry.
Growth for 2012 is projected at 9.4% with inflation remaining broadly stable at single digits. As growth soars, the banking industry is also expected to expand since the industry is vital for stronger economic development and growth. Though myriad opportunities exist, actualization of such opportunities can only be realized with the support of effective banking systems to meet the financial needs of businesses.
A pertinent risk to the economic outlook however stems from 2012 elections. Total spending is rapidly growing though also matched by an increase in revenues. There is however the tendency for an incumbent government to excessively spend in an election year to ensure visible improvement in livelihoods in order to increase support at the polls. Excessive spending by Government can threaten the outlook of interest rates largely due to a possibility of rates hikes. As already stated in the 2012 budget, 49.5% of the budget deficit will be financed by domestic borrowing which is likely to lead to increases in interest rates. In addition, the continuous depreciation of the Cedi over the past few months is gradually building pressure on prices. If the trend continues, it is likely to boost inflation which will further lead to interest rate hikes.
All these factors pose great risks to the economic outlook in 2012 and the impact of rising interest rates is the crowding out of the private sector from bank financing.
As part of the theme for 2012 budget is infrastructural development. A number of projects are going to start in the year, implying that contractors will need financial support from the banks. Being an election year and the uncertainty about the outcome, bank generally are likely to shy away from major ‘political construction projects’ and rather fund short-term transactions and private businesses. Thus the asset portfolios of most banks are likely to be made up by short-term funding rather than medium to long term funding and with emphasis on other sectors rather than government projects.
The on-going recapitalization process in the Ghanaian banking industry is expected to ensure that banks are well capitalized to enable them finance large transactions. With the deadline gradually approaching, the year 2012 is definitely going to witness interesting developments in the banking industry as local banks work fervently towards meeting the capital requirement. In the coming months banks will decide on undertaking mergers, acquisitions, private placement or listing on the stock exchange to make sure they meet expected capital requirement. These decisions will definitely have an impact on the industry as composition of ownership of Ghanaian banks may change.
A few questions need to be answered: Through mergers, is the banking sector going to create large banks which will dominate the industry at the expense of smaller ones? Are Ghanaian banks through this process being kicked out of the industry should they be acquired by foreign entities? Or are we going to witness more public participation in banking should some banks list on the stock exchange? The months ahead will definitely be interesting as the twelve Ghanaian banks weigh their options and take decisions.
In all, the new oil sector presents opportunities for businesses which in turn offer great prospects to the banking sector. However given the risks of fiscal laxity surrounding the 2012 elections, the banking industry will be very cautious in funding in 2012.
The Writer is the Group CEO of the UT Group
Mobile Data will drive the biggest changes in a competitive market
Michael Ikpoki
The year 2011 can be described as a successful year for MTN. We identified several opportunities that helped us maintain our lead as the number one telecommunications provider in the country. Our main focus for the year was to improve our services and to begin to increase data awareness in Ghana while investing in the communities in which we operate.
We were able to fulfill regulatory requirements related to SIM registration and Mobile Number Portability while meeting our targets. We achieved a major milestone with the attainment of our 10 millionth subscriber and we continue to sustain our lead. We remain grateful to our customers for their continuous patronage and loyalty.
We are extremely proud in the investments we made in many communities in Ghana and these includes the handing over of two of the ten ICT Centers of Learning we have built in all ten regions of Ghana. The MTN Ghana Foundation has executed several educational and health projects in every region and has recently added a third focus area – economic empowerment.
In the midst of these achievements we also faced many challenges. These included persistent fiber cuts which affected network quality, increasing operating expenditure as a result of arbitrary operating fees charged by municipal and district assemblies, and the lack of a clear telecommunications policy.
Ghana remains one of the most competitive telecoms market in Africa, and with voice penetration close to saturation, market growth has slowed down.
The outlook for the global economy in 2012 is quite clear: there is recession in Europe, slow growth in the United States and a sharp downturn in growth in most emerging-markets. These have implications for Ghanaian businesses, and so while 2012 holds promise for us in the Ghanaian telecoms industry, we also expect challenges, and we are bracing ourselves for stiffer competition.
We all know that mobile telephony and information communications technology (ICT) are reshaping how the world communicates. Technology has created a wealth of opportunities for businesses and individuals to grow financially and efficiently in a way that enriches their lives. In the coming year we plan to benefit from some of these opportunites by focusing on the data communications market.
Mobile internet devices, in particular smart phones, will continue to drive the biggest changes in the way we communicate and do business. MTN is working tirelessly to make data accessible and affordable to suit different lifestyles. Our goal is to increase data usage by providing fast, reliable and affordable data services and to use ICT to provide enhanced opportunities for people to derive technological benefits in various aspects of their personal and business lives. MTN’s readiness to provide needed backbone to increase Ghana’s data penetration is evident in the US$90 million investment we have made in the West Africa Cable System (WACS), the continued expansion of our fiber network and the establishment of our Business Solutions division.
In the developing world, phones are being used not just as communication tools but as wallets for financial transactions. In 2012 we hope to see exponential growth in the use of MTN Mobile Money services.
With our renewed commitment to invest in relevant innovative products and services that will differentiate us from competition, and with the support of our staff, customers and other stakeholders, we can make 2012 a highly successful year.
The writer is the Chief Executive Officer of MTN Ghana
Elimination of challenges will herald even more robust growth
Emmanuel Botchwey
The year 2011 has been a very interesting one for the industry and for Regimanuel Gray Ltd in particular, it has been very exciting as it marked the 20th mile stone of a brand that is not only a pioneer and market leader offering a range of house types that appeal to a cross spectrum of our populace but has become the most preferred residential address – the Regimanuel Gray Brand.
The private sector continues to be the major driver in the real estate industry making significant impact in solving the gaping housing deficit which is currently estimated to be about one million. It is interesting to note that most of the “forebears” in the industry are still making impressive strides and continue to enjoy tremendous growth. The industry has also witnessed a number of new entrants who are making frantic efforts in meeting the demands of the un-catered segments – the lower income bracket.
The year has also seen developers registering their presence in and around the periphery of urban Accra with encouraging patronage from the public. These new developments have been boosted with the construction of the major roads leading to and fro Accra i.e. Accra-Winneba; Accra-Nsawam; Accra-Aburi; Accra-Dodowa; and Tema-Aflao Roads.
Not only are we witnessing lateral developments, the skyline of Accra is also fast changing with the development of “vertical villages”. The fast-paced development we are currently experiencing is bound to continue as the economy continues to remain robust and with growth on the ascendancy. The ripple effect of oil exploration, the middle income status of the country and the prospects of the government-declared “action year” were the propelling factors.
However, the purchasing power of majority of the populace is still weaker than would be idea. Financing for first time home buyers remain out of reach. Mortgage finance continues to be dreaded because of various fees and charges tied to the transaction as well as the interest rate which is also in dollar denomination.
Despite the numerous challenges, it is worthy to note that the real estate industry remains very vibrant.
Of note is the the National Housing Policy, the draft of which seeks to promote greater private sector participation in housing delivery by creating an enabling environment through the elimination of constraints and improving access to resource inputs, as well as create an environment conducive to invest in housing for rental purpose. It is envisaged that such a policy would go a long to mitigate the myriad of challenges that confront the present day developer. The industry looks forward to the enactment of this policy.
For us in the industry, we have proved to be more than capable to deliver quality housing for our people and we expect that our track record over the years would attract the desired confidence from government to throw their weight behind us in solving the housing problem that confronts us as a nation.
We are very optimistic that with the rate of economic growth and the economic projections for the year, the purchasing power of our people would be further enhanced to be able to access quality housing. It is our expectation that the micro-economic indices been registered in recent years would be sustained.
It is expected that with the huge infrastructural outlay announced in the 2012 budget would translate into a vibrant economic environment where both providers and buyers of housing would be highly motivated to intensify their participation in the marketplace. With a widening middle class and high mobility of the present day worker who cherish convenience, safety, security and value for money, a strategic window is opened to developers who have proved their worth.
There are also opportunities for using new technology and embracing environmentally sound practices to deliver in a more timely fashion whilst limiting adverse environmental agents.
Buyers stand to gain from increasing competition with offers from various locations within and outside Accra, and a wide array of house types with receptive prices. The traditional banks are gradually moving into mortgage financing whilst existing mortgage providers are bracing themselves for the opportunities ahead with better offers and less strenuous processes. This is good news for the Ghanaian worker and first time home buyers and it is expected that mortgage providers would adequately educate the public and allay the fears of those who are risk-averse.
The problems of access to finance, the extension of utility lines to new developments by service providers, the difficulties associated with land acquisition and litigation would have to be addressed in a more holistic fashion.
At Regimanuel Gray, a brand that cares and understands what the market craves for, identifies with the taste and aspirations of the present day home owner, we shall continue to employ industry best practices to deliver comfort, convenience, security and value to our many home owners.
We shall provide customers new and old with a wide array of house types including the apartments at Balloon Gate, Kwabenya; the 2/3-bedroom mixed house types at Katamanso and Essipon and look out for the luxurious apartments at East Airport.
The year 2012 promises to be a good one for both industry and homeowners so we encourage first time home buyers to follow their dreams as we are well positioned to deliver the promise as always.
The Writer is the Executive Chairman of Regimanuel Gray Ltd
New Technology; New Media in a crucial year
Edward Boateng
Ghana’s media landscape will be lively in the year 2012 partly because of the elections in which the parties and candidates will jostle for the public’s attention through the media.
However, the ultimate measure of the media’s success in the important year of 2012 will be how well we will serve the Ghanaian people to ensure peaceful and successful elections and the growth of our industry. This means objectively reporting the news including election campaigns; educating the public through well thought-out analyses of the issues that confront our country; and providing quality entertainment that at the end of the day leaves the Ghanaian relaxed, re-energized and ready to work even harder.
Doing the above has never been easy and it will be even more challenging next year.
Ghana has developed a unique form of media citizenship through the use of texting via cell phones. Viewers participate in radio and TV programs in real time. Media citizenship is a very developed concept in this country though monopolized by a few individuals calling themselves “serial callers”. We need to develop media citizenship further by employing other modern innovations like facebook, twitter, interactive media websites and blogging. The diversity will not only break the “serial-callers” monopoly but also enable media brands to build themselves and yield revenue through multiple avenues.
Most importantly, it will help define the future of Government. Government is still struggling to understand and cope with the self-selecting or governing method of social networks and media.
To ward off our version of the “Arab Spring” Government should welcome the idea of media citizenship and any recommendations on how to create an informed society. With so much poverty, if drivel is allowed to fester through the public forums that the media provide, the country would be setting itself up for total chaos should we have an “Arab Spring” here because of our rapidly increasing social problems.
So, how do we create an informed citizenry? Creating an informed society will involve the ability of the media to access public information to better educate citizens on public policy; the willingness of media practitioners to live up to their time-honored values; and the use of new technologies and innovations to facilitate constructive public discourse. In addition media houses should be better capitalized to pay their people well and the influence of politicians especially on the print media should be truncated. It is critical to the growth of media independence.
In 2012, new communication technologies and innovations must be utilized to facilitate the work of the media. The “Arab Spring” was ignited by the tragic story of the young Tunisian Mohammed Bouazizi, but it was catalyzed by Mark Zuckerberg’s Facebook. The internet, mobile telephony, the worldwide web, satellite TV and other components of advanced media are breaking down political and social boundaries, shrinking the globe and effectively rendering our world a true global community. These modern tools of communication allow the media now to penetrate the most obscure corner and reach a wider audience.
When I started work at CNN about 23 years ago, the slogan was “First in Breaking News.” Today, CNN is more eager to say it’s “going beyond borders”, a reflection of its policy of more audience participation through programs like iReport.
In Ghana, many radio and television stations already have interactive programs, websites, Facebook and twitter pages. These should help journalists to more effectively discern social trends and keep in touch with audience which will enhance their work. In 2012, the media should be dominated by debates over the programmes of the various political parties and the records of these parties and their candidates and not op-eds from the politicians and their followers.
Lastly, the media industry like all others needs the state to play its facilitator role effectively. Government can be helpful to the industry by offering tax credits, helping to put in place the required basic infrastructure, enforcing intellectual property rights and reducing tariffs on expensive equipment.
The writer is Group CEO of Global Media Alliance and a member of the World Economic Forum Council on Informed Societies