US embassy cable - 04ACCRA1281

UNCLAS SECTION 01 OF 02 ACCRA 001281 
 
SIPDIS 
 
TREASURY FOR ALEX SEVERENS 
 
E.O. 12958: N/A 
TAGS: BEXP, ECON, EFIN, GH 
SUBJECT: PRESIDENT KUFUOR HOSTS GHANA INVESTOR ADVISORY 
COUNCIL MEETING 
 
 
Summary 
------- 
1. On June 4, President Kufuor presided over the fifth Ghana 
Investors Advisory Council (GIAC) meeting.  He highlighted 
recent, positive accomplishments, including MCA eligibility, 
and reassured the private sector that the GoG is committed to 
sound fiscal management during the 2004 election year. 
Private sector panelists spoke on priority areas for reform. 
End Summary 
 
Ghana Investors Advisory Council 
-------------------------------- 
2. President Kufuor and other high-level GoG officials met 
June 4-5 with the private sector for the 5th annual GIAC 
meeting.  The GoG invited the diplomatic community for the 
opening session.  The purpose of the GIAC is to give Ghanaian 
and international business leaders the opportunity to 
influence economic policy and propose reforms, and also to 
improve the GoG's understanding of the factors important to 
(and hindering) domestic and foreign investors in Ghana. 
 
Success Stories and Accomplishments 
----------------------------------- 
3. In his opening address, Kufuor highlighted positive 
accomplishments over the last eighteen months, including 
Ghana's inclusion among the 16 MCA-eligible countries, which 
he saw as an endorsement of the GoG's political and economic 
policies and reforms.  He highlighted the serious 
macroeconomic program, which has resulted in strong growth, 
falling inflation and interest rates, a stable currency, and 
record remittances of USD 1.5 billion in 2003 and USD 600 
million so far in 2004.  He predicted Ghana would reach HIPC 
Completion Point soon, bringing USD 3.7 billion in official 
debt forgiveness. 
 
4. Kufuor claimed that Fitch Rating Agency and Standard and 
Poor's positive sovereign credit ratings were confirmation of 
the GoG's prudent policies and Ghana's strong economic 
showing.  Kufuor also commended Ghana for being one of six 
African countries invited to the Sea Island G-8 meeting and 
for being the first African country to undergo the NEPAD peer 
review. 
 
5. On the business side, Kufuor emphasized high profile 
success stories:  1) the booming Ghana Stock Exchange (GSE), 
up 144 percent in 2003; 2) the Anglogold-Ashanti merger and 
its decision to list on the GSE; 3) Newmont Mining's half 
billion dollar planned investment; 4) the proposed 
Guinness-Ghana Breweries merger, which would create the 
biggest brewery in the region; 5) significant expansion plans 
of many banks and companies, including Unilever; 6) cocoa 
production expected to exceed 600,000 tons in 2004; and 7) 
the GoG's planned purchase of VALCO and its plans to develop 
an integrated aluminum industry.  Kufuor said the GoG would 
soon announce its private sector strategy and implementation 
plan, aimed at further improving the business climate. 
Kufuor ended proclaiming that all this activity would propel 
Ghana's economy to meet the GoG's medium-term target of USD 
1,000 per capita GDP. 
 
Caveat -- Oil Prices 
-------------------- 
6. Although Kufuor sought to reassure the private sector that 
the GoG was committed to staying within budget during this 
election year, he warned that the high world price of oil was 
a menace to society and could potentially undermine the GoG's 
gains over the last three years.  He reiterated his pledge 
not to increase the price of fuel at the pump this year, and 
stated that the GoG had reached agreement with developing 
partners (read:  IMF) to keep a lid on prices for the time 
being.  To pay for the increasing fuel subsidy, the GoG has 
cut costs and raised revenues from parastatal companies:  the 
Cocoa Board, the National Communications Agency (NCA), 
Divestiture Implementation Committee, and the Ports and 
Harbors Directorate. 
 
Private Sector Analysis of Priority Action Areas 
--------------------------------------------- --- 
7. Private sector representatives have divided into five 
working groups to focus on reforms related to land titling, 
financial sector, agriculture/agribusiness, labor, and 
customs and civil service.  Relevant GoG Ministries 
participate in the working groups.  Working Group chairs 
reported on progress made over the last year.  In most cases, 
the working groups are still in the recommendations phase. 
However, Ken Ofori-Atta, CEO of DATABANK and the Chair of the 
working group on financial sector reform, reported 
significant progress. 
 
8. Ken Ofori-Atta stated that the GoG was close to completing 
needed legislation related to the banking system, payment 
system, securities industry, money laundering, insurance 
industry, foreign exchange, and credit bureaus.  Plans for a 
venture capital fund are progressing, with partial funding 
from the GoG.  The Finance Ministry will soon put out a 
tender for private management.  Finance is also about to 
table to Parliament the Long Term Savings bill, which will 
establish programs similar to 401Ks, with the goal of 
increasing domestic savings. 
 
9. Three companies have expressed interest in establishing 
credit rating agencies, but the GoG needs to clarify 
legal/regulatory issues.  The IFC has also shown interest in 
this project, and also in a project to increase savings 
through the postal system.  The IFC (along with other donors) 
is also supporting three African pilot projects to promote 
SME financing -- SME Solution Centers -- one of which will be 
located in Ghana (Note:  the other two will be in Kenya and 
Madagascar.  End Note).  Ofori-Atta ended saying the goal was 
for Ghana to put in place the appropriate legal and 
regulatory structure and create the necessary incentives for 
Ghana to become a regional financial center, similar to 
Mauritius. 
 
Comment 
------- 
10. Both Ghanaian and international business reps seem 
satisfied with the level of importance President Kufuor is 
placing on this annual event.  This is the one time the 
private sector as a group gets to speak candidly and 
privately with Kufuor and his top Ministers, and it appears 
Kufuor is listening to their concerns and is intent on 
pursuing policies beneficial to the business sector.  As Ken 
Ofori-Atta stated during his presentation, with the sovereign 
credit ratings, MCA eligibility, HIPC Completion Point, and 
solid economic reform program, the private sector is feeling 
increasingly confident in the strength of Ghana's economy.  A 
new member of the advisors is Chris Kirubi, a Kenyan 
multi-millionaire who heads DHL and Coca Cola in Kenya.  He 
was exceptionally outspoken about including private business 
on more government trips and letting private business take 
the lead in the economy so free enterprise can triumph.  End 
Comment. 
Yates