2009 half-year investments dipped 94%

…but 2nd quarter made momentous gains

The second quarterly reports released by the Ghana Investment Promotions Centre (GIPC) has shown that both number and value of investments into the Ghanaian economy over the first half of 2009 declined by 18.6% and 94% respectively, compared with what pertained in the same period in 2008.

The total number of projects registered for the first half of 2009 was 118 with a total estimated value of GH¢181.61 million ($129.72 million), as against 145 projects registered for the corresponding half year of 2008 with a total estimated value of GH¢3.03 billion ($3.09 billion).

Interestingly, the total initial capital transfers amounted to GH¢105.22 million ($75.16 million), representing 314.3% increase in receipts over the corresponding half year of 2008, which amounted to GH¢25.39 million ($25.91million).

The reason for this disparity in total investments recorded and initial total capital transfers for the two corresponding periods is not readily available, since the centre did not provide this in its release.

However, the seeming investor apathy that characterised the first quarter of 2009 seems to have given way to soaring investor confidence as indicated by the result in the second quarter of 2009.

According to the report, investments in the second quarter of 2009 numbered 83, accounting for 56.6% jump over that of the same period last year, which recorded 53 newly registered projects.

The total initial capital transfers for the newly registered projects during the second quarter amounted to GH¢92.65 million ($66.18 million), with the total estimated value for these projects being GH¢156.34 million or ($111.67 million). In contrast, for the corresponding quarter of 2008, the initial equity transfers was GH¢7.73 million ($7.89 million).

This value also represents a significant increase of 91.9% compared to GH¢57.03 million ($58.19 million) recorded for the same period in 2008, when the cedi was much stronger than the dollar.

With 83 new projects registered in the second quarter as against 35 in the preceding one, the second quarter has recorded a 137.14% jump in investments over investments recorded for the first quarter of 2009.

It is quite clear that the apparent global financial meltdown which started two years ago may have contributed to the low Foreign Direct Investment (FDI) in the first quarter of 2009.

Although the reported decline in the financial turmoil in the West and the current growth in reported investment figures seems to be pointing to positive investment prospects, 2009 investment figures could still fall short of what was recorded at the end of 2008.

According to the release, of the 83 projects registered during the second quarter, 56 (67.47%) were wholly-owned foreign enterprises, while 27 representing 32.53% were joint ventures between Ghanaians and their foreign partners.

The total Foreign Direct Investment component of the estimated value of the projects registered during the period was GH¢129.25 million ($92.32 million), representing 82.68% of the total estimated value, and a local currency component of GH¢27.08 million ($19.35million), representing 17.32%.

“For the corresponding quarter of 2008, the FDI component of the estimated value of projects registered was GH¢51.97 million ($53.04million) and the local currency component was GH¢3.9 million ($ 3.98 million) of the estimated cost of the projects,” the report noted.

Total foreign equity was GH¢107.12 million ($76.51 million) for the quarter.

While China, with 14 new investments, topped the list of countries with the highest number of projects registered, Nigeria with $70.62 million topped the list of countries with the largest value of investments registered during this quarter, with Access Bank alone recording GH¢96.32 million ($68.80 million).

The service sector still leads the pack of investments with service registering 29 new companies valued at $79.96 million, representing 71.6%. This is followed by manufacturing with 19 newly registered, with a total value of $16.12 and a percentage value of 14.44.

General trading followed third with 15 new projects valued at $7.98 million and representing 7.15%, while building and construction came fourth with eight newly registered projects valued at $ 4.25 million in estimated value and accounting for 3.80%.

There were six newly registered projects in the Agricultural sector which were valued at $1.89 million with a percentage value of 1.69, while tourism followed with four newly registered projects with an estimated value of $0.82 million and representing 0.73%. Liason services also had two newly registered investments with an estimated value of $ 0.65 million with 0.58%.

The other major companies which brought in investments apart from Access Bank are: Triton Aquaculture Africa Limited, who are into aquaculture, hatchery, feed plant and processing plant for fish and poultry farming with an estimated project value of GH¢1.89 million ($1.35 million).

Scanstyle Biofuel Mim Limited, engaged in the production of wood pellets from wood waste with an estimated project value of GH¢7.19 million ($5.14million).

American Tank & Vessel Ghana Limited, who deals in fabrication, engineering and erection of pipelines, steel tanks and vessels with an estimated project value of GH¢3.99 million ($2.85 million).

Main One Cable Co. Ltd, who are engaged in installation of Submarine Optic Cable between Portugal and South Africa on the West Coast of Africa with an estimated project value of GH¢5.05 million ($3.60 million).

A total of 8,125 jobs are expected to be created in the first half of the year from the registered projects.