Isaac and Bless Boahen saved for months to fund her economics doctorate, but when the time came to cash in the investment, they were left empty handed.
The couple are among at least 70,000 investors who have become collateral damage from a cleanup of Ghana’s banking industry. The crackdown, which reduced the number of lenders by a third and saw the closure of 23 savings and loans companies, also triggered a run on fund managers, who couldn’t sell their holdings fast enough to meet demand.
That’s tying up as much as 9 billion cedis ($1.6 billion) of investments, more than a third of the 25 billion cedis in assets that private fund managers oversee for retail and institutional investors.
“My wife was very disturbed,” the 36-year-old said by phone from Kumasi in Ghana’s Ashanti Region. They’re not getting answers and are now worried they’ll never get back the 12,000 cedis they expected back from their investment. “If I knew this would happen, I wouldn’t have gone there.”
They’re in for a long wait. The nation’s markets regulator is looking into whether 21 fund managers violated rules by placing their clients’ money into illiquid assets. The Securities and Exchange Commission has stepped up the pressure, blocking these money managers from accepting new investments for fear they may use the funds to pay out existing investors.
“The harm has already been done,” Lord Mensah, a senior finance lecturer at the University of Ghana, said by phone. “Assets need to be protected.”
As much as 5 billion cedis is tied up in unlisted bonds, direct private-equity stakes and other deals with small- and medium-sized businesses, according to the SEC. Another 4 billion cedis is stuck in fixed-term investments with banks rescued during the clean up, savings and loans companies, and microlenders.
The SEC hasn’t yet released a list of all the fund managers it is investigating. An 11.2 billion-cedis bailout for lenders that were closed down and another package of about 925 million cedis for microcredit companies whose licenses were revoked is helping to release some of the funds locked up in those segments.
“It’s cutting across all the finance houses and when it happens like that the government needs to step in to build confidence again,” Mensah said. “There’s nothing we can do apart from making sure that we create that necessary environment to regain investors’ confidence again.”
That’s of little comfort to the Boahen’s, who were going to use the money to cover the costs of field-data collection for Bless’s thesis with the University of Ghana. After being promised a return of 26% a year on the investment, Isaac, an accountant, had to borrow money against his provident fund.
While he got the loan at a reduced rate of 10% a year, Boahen didn’t want to go the route of raising debt, he said. “It’s costing me more now.”
Ghana’s Atewa forest is one of the most beautiful and scenic landscapes in the country. It is seen as the better of only two Upland Evergreen forests left intact in the country, forming part of the six dominant vegetation zones of Ghana based on different climates zones.
The Atewa forest is part of the Guinean Forests of West Africa which stretch from southern Guinea into eastern Sierra Leone and through Liberia, Côte d'Ivoire and Ghana into western Togo. Deforestation has massively reduced the size of the forests and the Upper Guinea Forest is now restricted to a number of more or less disconnected reserves and a few national parks acting as man-made refuges for the region’s biodiversity.
The Atewa forest landscape is remote and pristine, providing the habitat for a major collection of Ghana’s biodiversity. It has been named as one of Ghana’s 30 globally significant biodiversity areas.
But the forest is under threat. Last year Ghana signed a memorandum with China to explore Ghana’s deposits of bauxite – the primary ore in aluminium. The deposits are found in two locations – Awaso with very high deposits in the moist semi-deciduous forest zone of western region of Ghana, and Atewa, with minimum deposits and located in the Upland Evergreen forests in the Eastern Region of Ghana.
Under the memorandum Ghana will cede 5% of its bauxite resources to the Chinese. In turn, Beijing will finance $2billion worth of infrastructure projects that include rails, roads and bridge networks. The Ghanaian Parliament has passed the Ghana Bauxite Integrated Aluminium Industry Act which would provide a legal framework to exploit country’s bauxite deposits.
Yet the government says it still has to validate the true worth of the bauxite deposit in the forest.
As a botanist I view the Atewa landscape as a scientific gold mine. A recent impact assessment by the US Forest Service corroborates the concerns of several conservation groups about the potential damage that mining would cause.
I believe strongly that Atewa is not for mining and that it must be preserved. Firstly, it needs to be preserved as a living natural history laboratory. Secondly, it should be protected because it provides a vital resource – water. Thirdly, it is a precious gift whose value cannot be quantified, but which must be lived, felt and appreciated. Finally it is a naturally bequeathed heritage that must be protected for future generations to enjoy.
An interesting characteristic of the Atewa forest is that the canopies of its trees are not easily visible as they merge with the surrounding clouds creating a beautiful cloud cover line. This is very rare in the Ghanaian landscape. This feature is described in local parlance as the phenomenon in which the trees are in direct communication with the firmament of the heavens and bring good tidings to the ground underneath.
Scientifically, the phenomenon is responsible for the daily condensation of water vapour which falls as precipitation. As a result the mountain top is kept permanently moist. This in turn explains the interesting hydrological networks beneath the soil surface. The water percolates down to create under ground water ways as well as water falls and many streams and tributaries that coalesce or combine to form Ghana’s famous three rivers. These are the Ayensu, Birim and Densu.
The three eventually drain their basins as they meander through the forests and farm fields providing essential water resources to over 5 million inhabitants. They also deposit suspended clay and silt materials as fertile alluvial for crop production during the rainy periods when they burst their banks and overflow.
The Atewa landscape provides rich forest cover for climate regulation, a show piece to illustrate climate adaptation to avoid drought, reduce poverty and enhance sustainable livelihoods and improve human well being in its catchment area.
The landscape has been the subject of research by geologists, hydrologists and geo-morphologists. A geologist studies studies the solid, liquid, and gaseous matter that constitute the Earth while a geo-morphologist studies the earth’s surface. A hydrologist is a scientist who researches the distribution, circulation, and physical properties of the earth’s underground and surface waters.
Studies of the fauna and flora of the area have brought up new scientific discoveries of species like the critically endangered white-naped mangabey Cercocebus lunulatus. This shows that the knowledge of the faunal and floristic diversity and to a large extent the microbial diversity is still at the exploratory stages.
I would strongly argue that the Atewa landscape is an important species discovery destination, awaiting extensive research and studies. It should, therefore, not be disrupted or destroyed by mining.
Zimbabwe’s government said it is ready to settle with global lenders, sell assets and make the difficult spending decisions needed for financial recovery. But with opposition protests against plunging living standards scheduled in cities nationwide, it is in a race against time.
In an exclusive interview with Bloomberg News, Finance Minister Mthuli Ncube dismissed rapidly accelerating inflation as “wage compression” and warned the country it will have to endure four more months of economic pain. for over a weeks, police in the capital has violently dispersed demonstrators protesting over the hardship his austerity measures have spawned.
“The big macro-economic decisions should be complete by year-end,” Ncube, 55, said in Harare. “In December, everything stops in terms of the big decisions. Beyond that, we focus more on jobs, growth, productivity and development.”
Almost a year into the job, Ncube, a Cambridge-university trained economics professor, has reined-in state spending and boosted tax revenue. But his introduction of a new currency in June, accompanied by a ban on the use of the US dollar, has seen the rapid erosion of spending power with the Zimbabwe dollar trading at almost 10 to the greenback. Its predecessor, a quasi-currency known as bond notes, was officially said to be at parity as recently as February.
Now many of the country’s 400 000 civil servants, who form the bulk of the middle class, are earning less than the $1.90 (R29) a day defined by the World Bank as the line below which people are living in extreme poverty.
Zimbabwe's annual inflation, the release of which has been suspended for six months, is officially 176 percent, the highest globally after Venezuela, and shortages of fuel and bread are widespread.
The government's inability to pay for adequate electricity imports has crippled the economy with power outages of as long as 18 hours a day. The measures, which Ncube conceded were painful for citizens, are necessary if the country is to regain a sound economic footing, he said.
There’s a growing risk that the economic hardship may trigger unrest similar to violence that took place two decades ago, said Japhet Moyo, the head of the Zimbabwe Congress of Trade Unions, the biggest labour federation.