PRESIDENT KUFUOR HOSTS GHANA INVESTOR ADVISORY

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
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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
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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
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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