Cedi Depreciation and Hike in interest rates to persist - Deloitte CFO survey

Captains of industry are worried interest rates in Ghana will continue to rise consistently in 2016 and 2017.

‘66% of Ghanaian respondents expect the interest rate to increase in 2016. While the 2017 elections in Ghana may be the cause of some anxiety for CFOs, 50% of them expect the interest rate to remain the same in 2017’, the report stated.

The Bank of Ghana has pegged average lending rate as at February 2016 at 28.2% , with the policy rate at 26% captured in the summary of economic and financial data released in march this year.

Currency volatility tops risk factors- Ghana/Nigeria

87% of Chief Financial Officers surveyed in Ghana listed the cedi’s unpredictability as the top risk to their businesses, similar to respondents in Nigeria.

The report stated that , ‘Given the uncertain global economic milieu in which companies are currently operating, it is not surprising to note that currency volatility is by far the greatest concern for respondents in West Africa, with 87% of CFOs in Nigeria and 87% in Ghana listing it as the top risk to their businesses.’

The cedi in the first quarter of the year depreciated by -1.5% against the dollar an improvement over the -14.7% it recorded for the first quarter of 2015.

These fears around currency instability can probably be attributed to the commodities-based nature of the Ghanaian and generally the West African economies and their relative exposure to the economic fluctuations of the larger economies such as USA, China and key European markets.

Other details of the report include:

What did West African CFOs tell us?

• CFOs in West African countries are more positive about their growth prospects over the next few years than their counterparts in Southern African countries, but a little less optimistic than East Africa CFOs.

• Terrorism and its impact on the economy is one of the top concerns for Nigerian CFOs.

• Ghanaian CFOs are concerned about margin deterioration due to cost input pressures.

• CFOs continue to spend more time in operator and steward roles than they do as catalysts or strategists.

What are they doing about it?

• CFOs are adopting an agile approach to dealing with economic volatility.

• Improving operational efficiency and optimising costs is a major strategic thrust for CFOs.

• Ghanaian CFOs are looking to sell non-core assets.

• CFOs in Nigeria are interested in growing customers, products and channels.

• The majority of CFOs will be spending their cash on improving current operations, while some want to retain cash for liquidity or repay debt.

Cedi Depreciation and Hike in interest rates to persist - Deloitte CFO survey

Captains of industry are worried interest rates in Ghana will continue to rise consistently in 2016 and 2017.

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