Private Capital Flows Deepen

Ghana recorded a private capital inflow of 1.54 billion Ghanaian cedis (US$1.59 billion) in 2007, which brings the total stock of capital inflow of the private sector to 4.33 billion Ghanaian cedis (or US$4.47 billion) at the end of 2207, a survey by the Bank of Ghana has established.

The inflows comprised direct equity investments of 854 million Ghanaian cedis, trade credits amounting to 304 billion Ghanaian cedis and loans of 361 million Ghanaian cedis.

In 2007, inter-company borrowing constituted an important component of direct equity investments accounting for 62 per cent of the total inflows.

The Monitoring Private Cross Border Capital Flows in Ghana 2008 Survey report indicated that transport, storage and communication were the sectors with the highest foreign direct equity investment (FDEI) in 2007, amounting to 163.4 million Ghanaian cedis, followed by banking with 58.9 million Ghanaian cedis, and mining and quarrying with 48.1 million Ghanaian cedis.

“Together, these sectors accounted for 82.0 per cent of the total FDEI flows in 2007,” the report stated.

In 2008, the Bank of Ghana embarked on a survey to monitor the scale and composition of private cross-border capital flows and investor perceptions in Ghana.

The survey findings will help improve coverage in compiling balance of Payments (BOP) statistics; provide estimates of Ghana’s International Investment Position (IIP) and provide a basis for formulating policies that will improve the investment climate.

Questionnaires were administered to a representative sample of 286 enterprises across Accra-Tema metropolis, Eastern, Western, Central, Brong Ahafo and Ashanti regions with a high response rate of 81.47 per cent.

The survey also identified substantial flows into real estate and property services of about 20.8 million Ghanaian cedis; construction 2.4 million Ghanaian cedis and manufacturing 13.8 million Ghanaian cedis. Also, the stock of private sector debt increased to 2.47 billion Ghanaian cedis in 2007, with most of the debt having long-term maturities.

“The sectors with the highest private sector debt flows in 2007 were banking (366.2 million Ghanaian cedis); mining and quarrying (218.6 million Ghanaian cedis), transport, storage and communication (144.8 million Ghanaian cedis) and manufacturing (131 million Ghanaian cedis).

Foreign direct equity investments from Europe accounted for 60.7 per cent with the rest of Africa contributing 38 percent.

Direct equity investments from America were mainly targeted at mining and quarrying.

The survey identified the top 10 sources of FDEI inflows in 2007 as Mauritius (27.9 percent), France (19.4 percent), British Virgin Islands (18.4 percent), United Kingdom (16.9 per cent), United States (5.9 percent), Togo (3.4 percent), Norway (3.3 percent), Israel (3.2 percent), Nigeria (2.1 percent) and Switzerland (1.9 percent).

However, the survey established that investor perceptions signalled inflation as the main economic factor which impacted negatively on business activities.

Labour market rigidities such as staff turnover, wage levels, costs of skilled labour and restrictions regarding hiring of expatriates also had negative effects on enterprises, the BoG survey stated.

Source: Daily Graphic