11
MenuWallOpinions
Articles

CNN's Free Advertisement about Ghana - What Next?

Tue, 27 Apr 2004 Source: Kwakyi, Kwaku

The initial article ?CNN In Ghana? dated Friday April 23, 2004, may be referenced at link. That article showed how the World Bank (WB) and CNN tried to advertise the success of the Ghana Stock Exchange (GSE) as a good investment bet in emerging markets.

Let?s look at the relationship between stock market and a country?s economy. The general rule-of-thumb (in western world) indicates that economic trend usually lags behind stock market growth by 6 months. In the case of Ghana (a developing/third-world country), this lag may be in the 12-to-18 month neighborhood. In effect, the better days of Ghana are ahead of us!

The basic questions to ask are ?Is Ghana?s economic train dead locked in its track, has it been unlocked and about to take off, has it just taken off, or is rolling along just fine?? Due to experiences that many of us have had or have heard from others, most Ghanaians are very skeptical about doing business with ourselves. We do not have many track records to reference. Thus, many people in the Diaspora are content to keep their money in pillow cases, under their beds, or in savings/money market accounts ?to be safe?. Currently, the annual interest rate paid for the typical savings account and money market account in the USA is a mere 0.5% (i.e. half percent for a year) and 1.5% respectively. Let?s assume that either interest rate improves to a ?decent? 3%. Using Rule 72 (i.e. 72 divided by interest rate), it will take an investor in this category a staggering 24 years to double their money (i.e. 72 divided by 3). If one deducts the federal income taxes, then it will certainly take longer than 24 years to double such savings. Some may argue that they invest in their company stocks with a higher Return On Investment (ROI). Yes, ROIs are great and may be higher. However, they can never be guaranteed anywhere. So, isn?t it prudent to diversify our portfolio and invest some of our money on GSE and help rebuild the country we (in)directly ruined? Should we only invest when the obroni/white man (e.g. CNN or WB) says it is safe to do so? Some may wonder if GSE is than good, how does it compare with other stock exchanges? For a fair comparison, please see below the World Stock Market Performance Rankings (gleaned from ?African Stock Markets Consolidated Gains in First Quarter? document, compiled by Databank Research).

Obviously, most people in the Diaspora are NOT ready to pack up and relocate just yet. So how may we partake in the GSE ?good news? ? help our folks back home and make money at the same time? Whether or not it takes 6 months or 18 months for Ghana?s economy to reflect GSE?s growth, let?s realize that the GSE train is working and it is real. How may we join this GOODS TRAIN from the Diaspora? These are many ways, including but not limited to: