POST COMMENT ON APPLICATION FOR OPIC FINANCE:

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