The Minister of Finance and Economic Planning has launched a $50 million Golden Jubilee Savings Bond, a move which is designed to raise long-term capital for development and promote the savings culture among Ghanaians.
The minimum purchase price of a bond is GH¢10 and it will be valid for a period of five years, during which time it will accrue interest at a fixed rate of 14.5 per cent for individuals and 14 per cent for corporations.
In addition, the bond can be used as collateral and it will be tax exempt for retailers. The bond can be cashed after three years, but that will be at a 1.5 per cent charge.
The bonds will be on sale from December 10, 2007 to March 5, 2008 at commercial banks, rural and community banks, savings and loans companies, stockbroking firms, credit union associations, life insurance companies and Ghana Post offices.
Launching the bond, Mr Kwadwo Baah-Wiredu said, “The government recognises that the Golden Jubilee celebrations must not only be reflective but should be used as a platform to define the development agenda for the next 50 years,” adding that there was no better way for Ghanaians to symbolise their commitment to the next generation than by making investments in this Jubilee year.
He revealed that the $50 million that would be raised through the sale of the bonds would be invested in infrastructure projects in each of Ghana's 10 regions, in commemoration of the Golden Jubilee.
The government, in the 2007 budget statement delivered last month, announced its intention to develop the long-term investor segment of the capital market by issuing 10-year domestic bonds.
According to the budget statement, “the Government will rationalise the issuance calendar to achieve issues predictability and to encourage secondary trading between issues”.
Mr Baah-Wiredu said Ghana had one of the lowest savings ratios in sub-Saharan Africa of about eight to 12 per cent, compared with the average 25 per cent, saying that that was an impediment to economic growth.
“The bond has, therefore, been designed to achieve other important objectives, such as broadening the participation of Ghanaians in the formal financial system and promoting a long-term savings and investment culture in Ghana,” he said.
The minister also made it clear that the bond was a call to Ghanaians in the Diaspora to channel some of their resources into Ghana's development, as well as encourage recipients of remittances to save and invest what they received from abroad.
“Bank of Ghana information indicates that the total value of private transfers into Ghana during 2006 was $1.6 billion. That is more than what Ghana receives in foreign aid and almost half of Ghana's total 2006 export earnings of $3.7 billion,” he said.
The government of Ghana, through the Ministry of Finance and Economic Planning, appointed Strategic African Securities (SAS) as issue managers, Lawfields Consulting as legal advisors and Lowe Lintas Ghana as public relations advisors for the Jubilee Bond.
Present at the launch was the Chief Executive Officer of SAS, Togbe Afede XIV, who said the bond would provide secure, risk-free investment with a high return, adding that it was specifically aimed at individual buyers rather than larger corporate investors.
In the case of over-subscription, he said the government wished to accommodate all those who wished to purchase bonds and would, therefore, adjust its borrowing in order to meet the public demand.
He further reassured those present at the launch that if the bond was over-subscribed, interest rates would not be affected.
— Story by Hilda Owusu & Eleanor Gurney