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mainly due to the challenging operating
environment for listed companies as well
as the attractive alternative offered by yields
on the fixed income market which also
GHANA’S ECONOMY fueled capital flight from equities to fixed
income investments.
Despite the short term losses on the GSE
Faces a Tricky Test in 2016 with Fiscal Adjustments in 2015, Ghana’s alternative market for
to Contain External and Election related Headwinds SMEs (the GAX) recorded active investor
participation as Databank Brokerage
Limited (Ghana’s Gold award winning
Broker-Dealer Company) was pivotal in
weaknesses in the Eurozone and China’s
LOOKING BACK ON 2015: economy) and the erratic electricity supply providing advisory services, resulting in the
A TALE OF TWO HALVES also constrained economic activity and listing of viable SMEs on the market. Some
undermined business confidence during of the viable SMEs that successfully raised
Ghana commenced 2015 with optimism 2015. As a result, real GDP growth rate capital and listed on the GAX (despite the
challenging macroeconomic environment)
that a “nightmarish” experience in 2014 slowed down from 4.3% in Q1-2015 to included: IZWE Loans Ghana Limited (first
had been consigned to the archives of 3.9% in Q2-2015 with manufacturing as
history as investors anticipated an early well as mining & quarrying subsectors ever bond listing on the GAX), Edendale
take-off of the 3-year IMF program, the estimated to contract by 2% and 3.8% Properties (bond listing), Mega Africa
negotiations of which was a protracted respectively for 2015. Capital (equity listing) and Intravenous
Infusions Limited (equity listing).
one. Fair to state that investor optimism
was anchored on relief from the past Investor sentiments however improved Given the developing nature of Ghana’s
with hope for the future as the 3-year (but remained fragile) during the 2HY-
IMF program is expected to correct 2015 following the IMF’s two (2) positive financial market, the establishment of
Ghana’s fiscal and external imbalances as reviews of Ghana’s performance (thus far the Ghana Alternative Exchange (GAX)
would provide an alternative to traditional
well as restore investor confidence and under the 3-year program) and the renewed bank financing for SMEs who constitute a
macroeconomic stability. interventions by the Bank of Ghana
which virtually quashed speculations. The significant portion of Ghana’s economy.
Investor optimism however cooled-off as return of some stability to Ghana’s FX
the delay in commencement of the IMF market during the 2HY-2015 was mainly LOOKING AHEAD TO 2016: HOW
program (which eventually influenced by: the substantial FX inflows THE RISKS ARE PROJECTED TO
took-off in Apr-2015) resulted in growing from USD-denominated debt transactions PLAY OUT
apprehension, exacerbated by thedeclining ($1 billion Eurobond and $1.8 billion
price of key export commodities which COCOBOD facility in Oct-2015), the Investors ended 2015 with clear indications
worsened Ghana’s external position. continued support from donor partners of what to expect from the government in
Consequently, the seasonal depreciation (~$500 million), extension of the auction 2016 as regards the fiscal and monetary
pressures associated with the first half of Ghana’s 2-Year Treasury note to foreign regime, government’s financing strategy,
of the year was compounded by speculative investors (in order to sustain FX inflows) power supply and general economic
activities which resulted in a sharper-than and the continued tightening of both fiscal activity.
expected pace of Cedi depreciation (26.2% and monetary regimes.
against the USD as at HY-2015). Ghana’s main stock market (the GSE) OUTLOOK FOR FISCAL POLICY
The resultant pass-through effect to also experienced the pinch of the
inflation also pushed Ghana’s consumer macroeconomic challenges in 2015 as Ghana’s 2016 budget signals the
price inflation to a 6-year high (17.9% in the equities market shed some weight government’s commitment to the ongoing
July 2015) prompting a monetary tightening to close the year in negative territory fiscal adjustments under the IMF program
cycle by the Bank of Ghana with a 500bps (about -12% return in 2015). The market’s despite perceived spending risks related to
cumulative hike in the monetary policy underwhelming performance was the upcoming elections in Dec-2016. The
rate to 26% by end of 2015. The continued
tightening of the monetary regime coupled
with government’s aggressive borrowing
on the shorter-end of the market exerted
sustained upward pressure on short term
yields.

The worsening external sector (resulting
from the declining commodity prices and

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