Mr Ken Ofori-Atta, Executive Chairman of Databank Financial Services Limited, on Wednesday urged local investors to take advantage of the vacuum created by the reduction of foreign direct and portfolio investment to pool funds for long term returns.
He noted that with the fundamental shifts in global investment as a result of the 11 September terrorist attacks on the United States, Africa skidded further as world growth output dropped from 4.6 to 2.4 per cent in 2001.
Mr Ofori-Atta was speaking when he presented a report at the annual general meeting of EPACK Investment Fund Limited, an equity pooled fund, in Accra. He said: "Cost to African countries of services such as insurance has consequently gone up or has been curtailed thus reducing the flow of both foreign direct and portfolio investment.
"A number of portfolio investors are actually disinvesting. This, however, creates opportunity for local capital and saving; pooled funds such as EPACK can capitalise on this vacuum for good long-term returns."
Mr Ofori-Atta noted that the Ghanaian economy was recovering and attributed it to the smooth political transition that contributed to an enabling political environment that impacted positively on the economy. He said improvements in the macro-economic environment resulted in the Ghana stock market recording a moderate performance pick up in 2001 with dollar returns recording positive gains.
He said although the Databank Stock Index (DSI) posted a gain of 11 per cent in 2001 as against 15 per cent in 2000, in dollar terms the index for 2001 was up six per cent, while the index in 2000 lost 34 per cent.
Mr Ofori-Atta said the rally in the index during the year was driven mainly by the manufacturing and consumer goods sectors. "With the decline in interest rates, investors have gained more confidence and are now moving to the stock market to enhance returns."
He observed that with the downward trend of interest rates on treasury bills, it was expected that there would be a more direct correlation between risk and return and shares would outperform treasury bills in 2002.
Mr Ofori-Atta announced that the board of the fund had made an application to the Securities Exchange Commission (SEC) to operate EPACK as a mutual fund and expressed the hope the permission would be granted to ensure a more open and dynamic marketing of the fund for shareholders to enjoy the advantages of operating a larger fund.
Net inflows into EPACK fund amounted to 909 million cedis, a significant increase on the 315 million cedis in 2000. The directors did not recommend the payment of any dividend. Established in 1996 with five shareholders with 2,500 shares at 100 cedis each, EPACK has grown to have 1,300 shareholders with 4.2 million shares, at a price of 700 cedis a share as at December 2001.
