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Bi - Weekly Newsletter
Friday Edition ISSUE 1 | FIRST QUARTER | 2009

MILLS:
challenges of progressive change...

"New presidencies are

invigorating because
they offer a fresh start"
Robert Zoellick
Though not a novice to the high office of presidency, Ghana's new president is no less than one of the newest,
democratically elected leaders upon whose shoulders rest a daunting, but certainly unenviable challenge to perform.

From some quarters of the nation the performance expected of him will be from his own promises:
(i)Improve Industry-Government Relations (ii) Address unfair competition, (iii) Establish Trade Adjustment Fund,
(iv) Improve industrial infrastructure and human resource base, (v) Increase power generation capacity from 1600 MW
to 5000 MW in the medium term, (vi) Increase governmental efforts to ensure access to greater and cheaper funds,
(vii) Embark on tax reform for industry (viii) Facilitate access to funds, technology and entrepreneurial skills and markets
for SMEs. This is a list of some of the issues he'll be expected to deal with, on the part of the Association of Ghana
industries. (Credit: AGI)

Recent events make the situation anything but easier for President John Evans Atta-Mills. Phrases such as "extremely
worrisome" and "socially painfully which are reported to be contained in the World Banks January report by its Country
Director typify the sentiments of some about the likely impacts of the infamous "credit crunch". It is only fair to be
optimistic about the situation but the fact remains that Ghana's donor funding will bear the brunt of this crisis.

" The World Bank said in the coming years, the country will have to spend 14 per cent of its total Gross Domestic
Product (GDP) to service its fiscal deficit, while the balance of payment deficit would be larger." (Credit: Daily Graphic)

Rightly, these turbulent times have come with a strong burden upon leaders to perform. On Thursday 8th January, the
Bank of England cut the base rate from 2% to 1.5%, the lowest since the central bank was founded in 1694. The banking
authority is trying to fight a recession that looks increasingly likely to be the worst since the second world war.
(Credit: Economist) However, the courteous silence that our African leaders have paid to the expected impact of the
ongoing economic downturn is perhaps the loudest indication of uncertainty of the real impacts on our fledgling
economies.
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If it is of any significance, the least impact we can expect is that our country's donor - funded budget might suffer
significant setbacks.
The primary policy direction of the 2008 budget was to sustain the stable economic environment created over the
previous 7 years through accelerated infrastructural development. The key projections were: GDP growth rate of
at least 7.0%; Single digit end of year inflation of between 6% and 8%; Average inflation of 7%; Accumulation of
international reserves to at least three months of import cover; Domestic primary deficit of at least 1.7% of GDP;
Overall budget deficit of 4.0% of GDP. (Credit: PwC) And what is the reported progress?...Last years inflation (y-o-y,%,
end of period) is 17.44% (November figure), and real GDP growth was 6.5%. The IMF projects Real GDP growth for
2009 to be 5.8%.(Credit: BoG, IMF). Ghana has been credited with improvements in "Doing business".

What decisions will the Mills administration take that will change the fortunes of the 23 million highly expectant
Ghanaians? Given their socialist tendencies, this NDC administration may be expected to carry on improve such
laudable developments such as the National Health Insurance Scheme and the School Feeding Programme put
into operation by the previous government.
Meeting his goal of bringing prosperity to all is challenging. Satisfying groupings within the economy such the AGI
will not prove any easier. Given the world economic situation, its even more challenging that the Debt Sustainability
Analysis (DSA) of Ghana suggests that our debt distress in 2008 was an increase compared to 2007. This resulted
from the recent rapid accumulation of external and domestic public debt among other factors.(Credit: IMF, IDA)
At his point, the ball is in the court of the president and his team. They must be at their most innovative selves in
these demanding times and its doubtful that Ghanaians expect any less.
"Prosperity used to come from pulling crops
or minerals out of the ground. Then it used
to come from manufacturing prowess.
But these days it comes from innovation."
(Credit: Aspen Institute)

CORPORATE FINANCE ANALYSTS Consulting in:

Corporate Finance
Michael Sowah, Project Finance
michael.sowah@cpi-ghana.com Market Research
Business Plan Development
Financial Statement Analysis
Elorm Oben - Torkonoo
elorm.oben-torkonoo@cpi-ghana.com

DISCLAIMER:
This Information has been compiled from sources we believe to be reliable but we do not hold ourselves responsible for its completeness or
accuracy. It is not an offer or an advice to make investments. This firm and its affiliates may from time-to-time have a consulting relationship
with a company or institution being reported upon. This may involve the firm or the affiliates providing significant corporate finance services.
All opinions and estimates included in this report constitute our judgment as of that date and are subject to change without notice. Available
only to persons having professional experience in matters relating to finance.
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