When I stepped out of office to head home for the weekend, I saw a post regarding the $2 billion Eurobond issued by Ghana – because the bond is oversubscribed by 4 times ($8 billion bids for an offer of $2 billion), someone shared it with the caption “Ghana is working”. For God’s sake, what informed this conclusion that Ghana is working? If you know why the bond received that number of bids, you will delete the post and start crying.
To begin with, Ghana is not the first African country in 2018 to issue a sovereign bond with so much love. On 6th March this year, Senegal issued a $2.2 billion bond that received $10.3 billion bids with the dollar bond paying investors between 7.125% to 7.25%. That was close to 5 times more than they requested. I mean Senegal (if you get what I mean).
On Wednesday 21st February 2018, Kenya issues $2 billion bond that received $14 billion bids at a rate 7.25%. That was 7 times what they requested. I can keep going on and on…….This kind of love from investors does not mean they love the African continent; or that our economies are stronger, or the managers of our economies are doing great. They put their monies where the yield is high; and Africa offers the highest yield in sovereign bonds throughout the word.
The graph below shows the yield for sovereign bonds at the regional levels. Can you see that Africa is leading with an average rate of 6%? Note that this is just the average rate – not actual rates which are much higher at individual African countries as seen in the examples listed above.
Okay,let me bring you back to Ghana’s bond and that will send some sense to you that Ghana is collapsing rather than working. Ghana issued two bonds ; $1 billion each of the 10-year notes maturing in 2029 and a 30-year with 2049 maturity at 7.625% and 8.625% percent, respectively. My brother, please stop here; take the load off your head and use your head tothink for a minute. Looking at the rates at which our bonds are issued. Is the country working? Kenya issued their 10 year bond at 7.25% and the 30-year bond for 8.25%; Compare that to our bonds – is Ghana still working? You can follow the links for details on all the figures I am quoting.
Now let me tell you why we are offering higher rates than others. Do you remember the story that Ghana’s debt has reached the distress level? If you have not, read it here . What it means is that we cannot be 100% trusted to be able to make up our loan obligations in the near future: to convince investors, we need to promise them more returns; by offering higher return on their investments, we are distracting them from the possibility that we may not be able to pay them back. That is why our rates are this high! We are not working, we are rotting!
Indeed, I have maintained that my sad days revolve around the laziness with which we the leaders of tomorrow look at development and largely macro – economic issues. Because our leaders have identified our weakness, they take us for granted and have handled us with the same hand all the time. It is sad, it frustrating to know that we don’t ask the necessary questions when we are looking at issues that affect us.
Ghana needs to wake up – and it will when the youth wakes up. We are currently sleeping and have been sleeping for quiet too long. We don’t need to be writing long posts on FB to demonstrate our intelligence – let us use our intelligence to challenge the leaders on some of the decisions they are taking on our behalf. Stop following V8s shouting Ghana is working and think.
Take this and think about it – don’t consider it an insult; our parents have every right to take us to court for refund of the amount they spent on us, if all that is needed to send us to silence is wedding sponsorship, some 1000 Ghana cedis gift or messenger positions in offices that have their windows falling apart. They deserve more and better from us!
By: Iddrisu Abubakari Sadiq – MBA, CPA Certified Public Accountant – States of New York and New Jersey
Internal Auditor, Goldman Sach – NY, USA.
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