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Money market and power; Places to look when investing

Investing in Ghana with the agriculture sector, mining, oil and gas in mind is a good bet. But here are other places you could look when investing

With recent economic twist and turns, however, the exigencies of the times have pushed some sectors ahead of the bunch and have presented more opportunities for investing.

In 2016, the energy sector and the money market are proving to be the most attractive when investing in Ghana and here is why:

Money market

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Government’s high demand for funds to finance its activities has been soaring since 2012, owing primarily to considerably reduced revenues from donors, and high rates of concessional loans. Government has had to resort to borrowing from the domestic market, which has seen treasury bill rates hit highest in the history of the country.

Apart from that, government has issued more domestic bonds than any other government in the history of the country, and very good rates too. Government on Monday, accepted 1.123 billion cedis (294 millon dollars) for a three-year domestic bond with a yield of 24.5 percent.

Out of GH¢8,388,427,713.45 of funds under management in Ghana's fund management industry, only 17.6% was invested on the capital markets with 73.6% in money market. This should tell you even the professional fund managers even have great faith in the money market.

The rates went as high up as 25% in 2013. Currently the rates stand at for 91 day treasury bill is 22%, 182 and 3 year deposit rates are 24%

Talk about opportunities in adversity. Private sector businesses have complained about government’s resort to the local money market as a source of borrowing and how it is depriving them of funds to expand their businesses. This is testament to the fact that banks and investors have seen lending to government at such rates as to die for. So for any investor looking to invest in Ghana, the money market could be one of the sure ways.

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Energy provision is another area of great need, which has provided immense investment opportunities to investors looking to invest in Ghana.

Electricity accounts for 69 per cent of modern energy used in the economy, and largely controlled by government. However, government’s inability to keep up the high demands from an expanding economy has pushed it to encourage private power producers to invest in the generation side of things.

This has opened immense investment opportunities for thermal power producers like Seimens, GE, Ameri, Karpower and others to set up shop in Ghana.

As if that was not good enough, a three-year protracted energy crisis ensured the need for independent power producers became extremely necessary.

Ghana has in recent times engaged in discussions with various investors regarding the construction of power plants. This is important because the country is going through its worst power crisis to date.

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Ghana loses about two per cent to five per cent of GDP annually as a result of lost economic output due to the insufficient and unreliable power supply. There is therefore huge demand for investors in this sector. One of the leading engineering companies in the sector is Wilkins Engineering.

Government is at its wit end in keeping up with the increasing demand for electricity pushing it to formulate policies to entice power investors into the country.

You may want to follow American multinational conglomerate, General Electric (GE)’s example as they have already realized this opportunity and are currently building a 1000-megawatt (MW) thermal power plant in Ghana.

The GE initiative is a pure independent power producer (IPP) which means GE will finance the deal. The deal was signed on January 28, 2015 and it is a US$1 billion deal.

There are so many investment opportunities in Ghana, but if you want maximum returns as current trends suggest, you may want to keep an eye on the power sector and Ghana’s money market when thinking about investing in Ghana.

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