US embassy cable - 05ACCRA1499

UNCLAS ACCRA 001499 
 
SIPDIS 
 
STATE PASS OPIC FOR DEBRA ERB, DIRECTOR/FINANCE 
 
E.O. 12958: N/A 
TAGS: EINV, EFIN, GH, OPIC 
SUBJECT: POST COMMENT ON APPLICATION FOR OPIC FINANCE: 
GHANA HOME LOANS CO. LTD. 
 
REF: A. STATE 125075 
 
     B. 2004 ACCRA 1810 
 
1.  Post has consulted with various sources in Ghana and 
found no adverse information on Ghana Home Loans Co. Ltd., 
CAL Bank Ltd., or on any of the individuals mentioned Ref A. 
 
2. Dominic Adu, the proposed Executive Chairman, is a 
Ghanaian trained in the U.K. as an accountant.  Prior to 
working for Actis in Nigeria, he worked with Ashanti 
Goldfields Corporation (now Anglogold-Ashanti).  Kojo 
Addo-Kufuor, the proposed CEO, has an MBA from Columbia 
Business School.  Before returning to Ghana to work for SDC 
Brokerage Services Ltd., he worked in Nigeria, U.K., 
Australia, New York, and Indonesia.  His father is Ghana's 
current Minister of Defense, Dr. Kwame Addo-Kufuor, who is a 
brother of President Kufuor.  Mr. Malcolm Pryor, the main 
equity partner, has been a director and shareholder of CAL 
Bank Ltd since its establishment in 1989. 
 
3. Ghana Home Loans Co. Ltd. is a new company and its 
proposed directors have little experience in mortgage 
financing in Ghana.  CAL Bank Ltd., which is expected to 
provide the back-end service to Ghana Home Loans Co. 
mortgagees after origination, also has limited experience in 
the mortgage business.  However, CAL Bank is a 
well-capitalized and sound financial institution, and has a 
good reputation as performing creditably over its 15 years of 
existence. 
 
4. The mortgage market in Ghana is minuscule and is dominated 
by HFC Bank Ltd.  Other banks have sporadically and 
infrequently tried to do mortgage financing, but rocky 
economic conditions over the last 20 years have forced them 
to pull out of the market.  More recently, private banks in 
Ghana have re-entered the mortgage financing business. 
Interest rates on government bonds have fallen dramatically 
and the Central Bank recently reduced reserve requirements on 
deposits, so the banks have more funds to loan and are 
looking for higher returns.  Most of these banks, however, 
target high-end borrowers.  Approximately 60% of mortgage 
customers are mostly rich Ghanaians resident in Ghana, while 
the remainder is comprised of Ghanaians living abroad.  A 
large portion of the market in Ghana is still not supplied 
because most Ghanaians cannot afford houses that cost over 
$25,000.  (Note:  see Ref B for Post's last readout on the 
banking sector.  End Note) 
LANIER