The Ghanaian financial market is the most attractive destination for funds looking to maximise returns, Mr. S. J. Kok, Director, Global Markets Africa, Standard Bank Group, has said. Ghana is one of the biggest attractions for the offshore funds. From an offshore perspective, the investor perception is very positive, he explained.
He told this to 15 financial journalists from seven African countries who attended the just-ended the 4th Annual Media Forum of the Standard Bank Group when they visited the dealing offices of the bank in Johannesburg, South Africa.
It transpires that Ghana offers fund managers and investors much higher yields compared to other African markets, which makes it the most attractive investment destination in Africa. Other markets in Africa are offering an average of between seven and ten percent yields, while Ghana offers between 18 and 20 percent. In the United States and some European markets, investors can only expect a three percent yield.
While the real return on long-term investments on the capital market is offering between six to seven percent minus inflation, just investment in money market instruments like dollar-indexed fixed deposits can guarantee a return between 2.5 percent and 3 percent compared with other markets outside Ghana where the returns range from .25 % to .75%.
Dealers in foreign exchange are guaranteed returns between 18% and 19%. One-year government Treasury bill notes also guarantee a yield of 12%, which is far better than some countries where the one-year note’s yield is normally lower than the inflation rate.
Non-resident holders of listed securities have the legal right to remit capital, profits and income freely. Forwards are also available for all players. And there is no withholding tax for foreign investors. The stable political environment has also contributed to the positive investor perception of the country.
Some analysts have explained that flotation of an international bond by government in 2008 also contributed immensely to help to raise the image and profile of the country in the international financial markets. The issuance of the offshore bond helped in assessing the Ghanaian market, and it has offered the benchmark in evaluating some securities.
However, getting access to the market is very difficult for offshore fund managers. More investors are eyeing the Ghanaian market, but the challenge of lack of access is still a major problem -- especially in the secondary market. It may be that more corporate issuance might serve as the solution to the problem.
The secondary market is controlled by a few players, and if investors could trade in them it would open up the market and make it more liquid. Some investors from South Africa and other parts of the world are looking into investing in the Ghanaian market, especially the equity investments.
Some analysts have suggested that one of the options Ghanaian companies could look at is attracting these investors to invest in their companies through private placement. This would also provide them with the necessary capital.
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