investingh. BUSINESS PUBLICATION FOR INVESTORS
The War of the League Tables Ranking of the best investment banks in the country Page 18
001
OCTOBER 2018
Why MTN Shares are a Bad Idea A deep dive into MTN’s Financials and Valuation Page 21
7 Things You Didn’t Know About Buying Properties in Ghana Page 07
Blockchain: An Introduction to Bitcoin, Other Cryptocurrencies and Utilities Page 15
How Much Money Do You Need To Retire? Page 09
Sports Betting- T he New Gambling Addiction Robbing Ghanaian Men of their Savings Page 12
How to Obtain a Work and Residence Permit in Ghana Page 27
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Contents
7 Things You Didn’t Know About Buying Properties in Ghana
07
The War of the League Tables Ranking of the best investment banks in the country
Sports betting – the new gambling addiction robbing Ghanaian men of their savings
18 How to obtain a work and residence permit in Ghana
12
27 Why MTN Shares are a Bad Idea A deep dive into MTN’s financials and valuation
21
Blockchain: An Introduction to Bitcoin, Other Cryptocurrencies and Utilities
How Much Money Do You Need to Retire?
15
The Rise of Entrepreneurship in the Ghanaian Youth
09
30
From the Editor I will use this opportunity to say a big thank you to all our contributors. I think it is important for our readers to understand that without them, we would not have been able to publish this magazine. This magazine is our first edition and we will continue to deliver the kind of articles that appeal to you, while also offering interesting takes on personalities, innovations, and the latest news in the finance space.
Editor-In-Chief Elijah Adiasany Features Editor Eric Appo-Biney
We hope you enjoy this magazine half as much as we do. Elijah Adiasany Elijahadiasany95@gmail.com
Graphics Editor Luneo Graphics investingh18@gmail.com
7 Things You Didn’t Know About Buying Properties in Ghana By Meqasa.com
Property hunting can be overwhelming, especially if it’s your first time buying. Did you know that real estate can make you a millionaire? Also, did you know that investing in property is a lot simpler than you think? There are no complicated steps you need to take. As long as you’ve got your finances sorted out, you can start doing your research to find the right property. Unlike shares, real estate offers you more guarantee that you won’t lose money. The following are 7 basic things you didn’t know about buying properties in Ghana: 1. You Can Buy Property as an Investment Just because you’ve bought another home or an apartment doesn’t mean you should live in it. The property can serve as an investment instrument with incredible returns in the future. For example, you can make money off your property by renting it out. You can either take on the task yourself or leave it to developers to manage for you. This is an especially useful way to earn money on your investment while you focus on other important things.
This is similar to buying shares in a company and having it managed by a stock broker. 2. You can use one or more mortgages to buy property. A mortgage is a debt investment whereby the borrower is expected to pay back with a predetermined set of payments. Mortgages come in many forms; with a fixed-rate mortgage, the borrower pays the same interest rate for the loan. If market interest rates rise, the borrower’s payment does not change. If market interest rates drop significantly, the borrower may be able to secure that lower rate by refinancing the mortgage. With an adjustable-rate mortgage, the interest rate is fixed for an initial term but then it fluctuates with the market interest rate. Mortgage providers in Ghana include GHL Bank, Stanbic Bank, Republic Bank and Fidelity Bank among others.
troubles within and among families, communities and ethnic groups all over the country. Land disputes have ruined the lives of many Ghanaians, with some of them losing their lives. If you want to play it safe and avoid confusion over boundaries, then you’ll have to buy from developers and other reputable sources.
for people who are looking for property. They do all the leg work and present options to seekers. When it comes to property owners or people who are selling or renting out property, agents facilitate a faster process by showing the property to seekers and helping owners to sell faster.
4. Most Lands in Ghana Are Sold as Leasehold.
6. Buying Property in Ghana is Recession-Proof.
Nearly all lands in Ghana are sold as leasehold, meaning the properties are held by lease. Leasehold lands are owned by individuals and companies. A leasehold is a reversionary interest in land and will eventually revert to the freehold owner at some point. A freehold means outright ownership of the property and land on which it stands. Mostly, freeholds are owned by chiefs, kin and government. A freehold estate in land (as opposed to a leasehold) is where the owner of the land has no time limit to his ownership.
Generally, buying property in Ghana is recession proof. For instance; a property with strong cash flow can ride uncertain times such as during a recession for the simple reason that it meets a basic housing need. Ghana has a massive housing deficit so real estate will continue to be in demand regardless of a recession. People will always need a place to live, even during difficult times and this is where you can rent out your property. Even in times of recession, people will forgo other luxuries to have shelter over their heads.
Nearly all lands in Ghana are sold as leasehold, meaning the properties are held by lease. Leasehold lands are owned by individuals and companies. A leasehold is a reversionary interest in land and will eventually revert to the freehold owner at some point. A freehold means outright ownership of the property and land on which it stands. Mostly, freeholds are owned by chiefs, kin and government. A freehold estate in land (as opposed to a leasehold) is where the owner of the land has no time limit to his ownership.
3. It’s safer to buy from developers. There are no commissions when buying from a developer and prices are low compared to buying from an agent. Also, buying your properties from developers especially lands, are safe because they are litigation free. Many people buy property from disreputable sources and often end up in court settling disputes over ownership. Land litigation particularly has become very rampant, causing
Whilst a leasehold property has a limited duration. In Ghana, the maximum ownership duration for expats is 50 years and for locals is 99 years. 5. Agents are important. In buying a property, agents are very important because they act on your behalf in negotiations and dealings with the third party. For instance, when buying a land, home or apartment, they give you many options to choose from. Agents make the search process easier
7. Real Estate Can Be Used as Collateral. Collateral is a property or other asset that a borrower offers as a way for a lender to secure the loan. For example, owning a property can help you acquire a loan. In Ghana, you can buy a property and subsequently use it as a collateral for a loan for more properties or a business. Real Estate is a valuable investment tool in this regard.
How Much Money Do You Need to Retire? By Eric Biney-Appo
What is your retirement number? How much money do you need to not work anymore? You have probably heard this question thrown around by friends a few times, or in finance movies, where the topic is often discussed. How much money do individuals need in order to live the rest of their lives without having to work for another day? I will take you through how most people come up with that figure for themselves, so that you can decipher your own retirement figure, which will help you set goals to accomplish your dreams. Step 1: Forecasting Monthly/Annual Expenses
To ascertain how much you need to retire, you first have to determine what your expenses will be after retirement. To make it easier to ascertain, we will look at expenses on a monthly basis.
costs. It is important that when you are unsure of what figure to put to any expense, you go for the higher estimate rather than a lower one, just to be on the safe side.
You have to ask yourself how much you plan on spending every month after retirement. The standard of living you plan on maintaining will significantly affect your final figure. To ascertain your monthly expenses, you have to add up all your fixed expenses including utilities (electricity, water, gas etc.), fuel costs, food, dstv/Gotv, internet bills and any other expenses you will incur in a month. After getting these costs, you add them up to get your monthly fixed
Now that you know your monthly expenses, you have to multiply the figure by twelve (12), in order to arrive at your annual cost. After that, you add any other expenses that are difficult to determine on a monthly basis. These costs may include school fees, hospital bills, miscellaneous expenses, rent, trips etc. By adding your expenses, you have completed the first step; getting your annual cost. Step 2: For How Long?
The second step involves figuring out how long you plan on staying retired. While this may be tricky to determine, given that we have absolutely no control over how long we stay alive, it is possible to arrive at an estimate. Most financial planners use mortality rates in the individual’s country or region, the mortality rate in your family and your health status to make this estimate. You can easily ascertain an estimate for yourself by averaging the death age of a few close family members including your father (if passed), grandfather and close uncles. After averaging, you have to determine the age you plan on retiring at and subtract the mortality rate of men in your family by the age you plan on going on retirement. This will give you how long you plan on spending your retirement income. Step 3: The Role of Inflation Since the costs we added up in the first step are based on today’s prices, we have to make room for possible changes in prices of goods in the future. The simplest way to reach that figure is to average the historical inflation rate over the time period from step 2. If you are unsure of which inflation rate to use, or just to be on the safe side, you can use 16% as your average inflation rate. Recent inflation trends support using 16% annual inflation as an estimate. While 16% inflation is rather high, it is very difficult to accurately predict future inflation rates. Consequently, it is better to err on the side of caution and go with 16% inflation rate. Step 4: Find Your Number The fourth step is the easiest one yet, since it simply involves putting all the data collected so far into a formula. In this case, we will be using what is referred to as the “present value of annuity” formula. The formula is based on the question; “What is the value of money you need to have if you are paid XX amount every month for XX number of years, given an XX%
inflation rate/rate of return. The formula is seen below: This can also be easily calculated online with the help of an online calculator, which takes out the need to work it out manually. After inputting all the figures, you can solve for your present value of annuity. Now that you know your retirement figure, you know what you have to work towards to retire peacefully. You can continue to adjust the amount as time goes on, by changing any of the data in steps 1 to 3. It is best to have a base case and an optimistic case scenario, where the base case has all original figures, whiles the optimistic case has figures that you increase intentionally to reflect a higher standard of living. Saving and Investment To achieve any financial goal, it is important to have the ability and will to save and invest. To quote Warren Buffett, “Spend what is left after saving, do not save what is left after spending”. You cannot meet any financial goal if you don’t save or invest. While saving simply involves putting a portion of your income aside, investing is a little more involving, depending on your goals. There are hundreds of places to invest your money; from investing in private businesses or starting businesses, to buying houses (real estate), to investing in mutual funds from asset managers. It is advisable to seek professional help when you want to invest or when planning financial goals. While the cost of seeking professional help may vary depending on the institution or amount being invested, you can get free advice from investment advisors from the investment banks you trade and/or invest with. Do not forget to invest all windfalls, because they do not affect your way of life but will help meet your goal faster. A windfall is any sudden and/or unexpected income. These types of income are unplanned for, and could significantly increase your savings and investments when utilized wisely.
Sports betting – the new gambling addiction robbing Ghanaian men of their savings By Elijah Adiasany
There was a time when gambling in Ghana was reserved for the few social rejects who frequented lotto kiosks, gaming centers and the office locations of betting companies. Then came the invention of the Internet and smartphones and everything changed…. Today, there are a million and one betting companies operating and rapidly expanding across the country, touting their “high” odds and diverse betting types to entice users …. These companies do nothing but give you creative ways of losing your money.
may not represent the entire betting population, they definitely give you an idea of what to expect with the industry as a whole. Every week, hundreds of thousands of football enthusiasts bet on football matches; bets which very few of them end up winning. The large majority who do not win convince themselves that they could win the next time around. The few who win fancy their chances of winning again and re-bet their winnings the next week. The cycle continues….
This is not to suggest that there aren’t people who have It is almost impossible to drive through any street in the won large amounts of money from betting. Last year, country without seeing a billboard advertising one betting Betway, one of the biggest betting companies in the company or another. Every Tv-station, every radio station, country broke jackpot records after it famously paid a sum now seems to run adverts for these companies. The close to GHc1 million to a 23-year-old for correctly betting industry is expanding rapidly and its easy to see predicting the results of 14 football matches. In an why; business is booming for them. A large number of interview, Kwame Fosuhene the winner of the jackpot, said young Ghanaian males have convinced themselves that his winnings weren’t enough to deter his from betting they can get rich quick by invoking their knowledge in again and he would continue betting to increase his football to make money. But how real is that dream, really? wealth. If that isn’t addiction, I do not know what is. In my small group of friends and colleagues, I am Perhaps the most amusing thing about the way sports acquainted with about 6 people who bet on football betting works is how the betting odds are calculated. One matches religiously every week. Not a single one of them phenomenon that runs through with all betting has won more money than they have lost. While my friends companies is that results that have a high chance of
occurring have small betting odds (meaning you win less money for predicting them). The results that are less likely to happen on the other hand have large odds (meaning you win more money if they occur). The betting companies are therefore enticing you to bet on unlikely events occurring; a game that is literally rigged in their favor. In any case, the money made from placing a single bet is seldom enough to be called a profit. It seems like the only way to make any significant winnings from betting is to either bet large sums of money (thereby increasing how much you stand to lose), or string together several different bets to compound your profits. Note that the more bets you string together, the less likely you are to win that bet. Football in itself is a generally unpredictable sport where upsets and unlikely events occur every other week. It is therefore illogical to place one’s dreams, aspirations or ambitions to get rich on such a doubtful venture. It is often hilariously said that the lottery (or gambling) is a secret government tax on people who do not understand maths; I concur.
Perhaps the most amusing thing about the way sports betting works is how the betting odds are calculated. One phenomenon that runs through with all betting companies is that results that have a high chance of occurring have small betting odds (meaning you win less money for predicting them). The results that are less likely to happen on the other hand have large odds (meaning you win more money if they occur). The betting companies are therefore enticing you to bet on unlikely events occurring; a game that is literally rigged in their favor.
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Blockchain: An Introduction to Bitcoin, Other Cryptocurrencies and Utilities By Solomon Anzagra Introduction The arrival of blockchain technology almost a decade ago carried with it a technological promise as well as an economic potential. While the former refers to engineering efficiencies in sectors that were hitherto inefficient and unnecessarily costly, the latter lies in ensuring trust within spaces where inherent trust was lacking but necessary, and hence required intermediaries. Yet the tech’s arrival came with little announcement, from unknown quarters dominated by tech geeks who were motivated by their belief in a better humanity, or simply tired of the current economic order. Most of these early starters are likely to be rich today in “fiat” terms – a circumstance that was somewhat of a by-product or an unintended consequence of their dream of a better human economic system for a shared prosperity.
Blockchain technology: A simplified definition and difference with cryptocurrencies
Blockchain is an immutable distributed ledger/network of declarations either of ownership, rights, data, resources, etc. that are verifiable trustlessly and incentivised (generally through mining or staking). At the centre of this trustlessness are cryptographically designed codes that ensure that it is tamper-proof or compromise-free, based on an agreed set of rules or consensus. Hence the people contributing to a blockchain, or the ones that are upholding its integrity do not need to know each other to believe in the veracity of a single truth. An example commonly used is: imagine a set of strangers writing a single book with an agreed set of rules of what makes a new page of the book valid to be added to the book. Meanwhile, all the strangers are simultaneously and at all times in possession of the up-to-date version, so that when Today there is a growing momentum for adoption with an invalid page is added because it did not meet the rules, thousands of cryptocurrencies in existence, dozens being the strangers vote to remove it as inauthentic and perhaps released each day, carrying too many different consensus mechanisms to name them all. While the limits of the tech’s punish the irresponsible page writer through the established set of rules, whatever the rules may be. A potential are being tested relentlessly, there is no end in distinction between blockchain and sight of what it portends for humanity. From health to supply chains, to property titles and land deeds, to finance cryptocurrencies/tokens, is that blockchain is the tech that and ecommerce all the way to the remaking of the internet underlies all cryptocurrencies/tokens and those cryptocurrencies /tokens power the blockchain as an (Web 3.0) across the globe, its reverberation is felt. incentive mechanism to ensure good actors within a This article seeks to introduce the tech to a layman and blockchain network are rewarded and bad actors non-techies, to help them to ask the right questions. The (sometimes) punished depending on the blockchain’s terms are simplified for ease of understanding. A snappy consensus protocol. Hence, it could be said that while all introduction of the tech – separating blockchain from cryptocurrencies/tokens require a blockchain to be cryptocurrencies such as bitcoin – is made, followed by the relevant, not all blockchains need a native cryptocurrency state of applications and progress in innovation. The tech’s or token to be functional or relevant. future and propellers of mass adoption are also introduced It therefore goes without saying that while the origins of for a basic understanding. Further reading is encouraged blockchain lay in the humble idea of providing a for deeper understanding.
self-authenticating record, today it has become one of the leading buzzwords, getting most beginners confused as to what it is and what it can be used for. The sector today is mostly dominated by speculators and scammers, to the extent that even those still grappling to grasp its meaning can be overcome by the fear of missing out (commonly called FOMO) thus giving in to the temptation to rush and cash in on the promise of the new age of money. To avoid such mistakes, it is important to know what blockchain can do as well as the limitations of the technology. For instance, there is no blockchain that can cure cancer or end extreme poverty, although such claims have been made in the past. Therefore, when next someone proposes a blockchain solution for a problem, a single and perhaps most important question worth asking is: is there a trust issue with this particular problem? Types of blockchain, what blockchain is not, and why that matters In principle, it is possible to run a blockchain with just three computers. With three computers there is possibility of a simple majority for consensus building. But then depending on the type of blockchain, the consensus system and incentive process, it is easy for someone with a higher computational power to capture the network and add blocks that are not authentic and yet not disprovable, something which is generally referred to as 51% attack. There are different types of blockchains, and the hashpower – which loosely translates into the number and capacity of computers used to run nodes in support of the blockchain – determines how weak or strong the network is and how vulnerable it is to 51% capture. Today there are many types of blockchains but they are generally categorised as either public or private, permissioned or permissionless.
because they do not only defeat the original purpose of the blockchain (i.e disintermediation), but they also have centralization of power and hence suffer from Distributed Denial of Service (DDoS) vulnerabilities like any traditional centralized network or database. Bitcoin: Coming out of the shadows, a word of caution to the pessimists Since the publication of the Bitcoin white paper on October 31st, 2008, the mining of the genesis block on 3rd January 2009, to the proliferation of the blockchain today, bitcoin has suffered uncountable condemnations and “expert assassinations”. Somehow it survived the near-ten-years of its existence. Perhaps, though jokingly, because Satoshi Nakomoto dedicated the first 50BTC reward to the Gods, thereby making them unspendable. Indeed, Bitcoin has been declared dead so many times that today many people wonder if it is the very same Bitcoin that has always been vilified as criminal money, drug dealers’ bed mate and money launderers’ best friend. Clearly, Bitcoin has got more than one life. If anything, Bitcoin has a far better image today than in any time of its existence and has achieved legal status in many countries across the globe, thanks to an unrelenting community, some humble experts who are willing to take back their words, and perhaps progressive governments who are finally waking up to the new dawn of globalization. It is however still common in many countries for people to either blatantly dismiss Bitcoin as an “unreal” money or a scam. It is important to say that, though you can easily be scammed in the name of Bitcoin, Bitcoin is not a scam in itself, so people who want to put their hard-earned money into it must learn the basics or find an advisor. It is equally common for people to say, Bitcoin has no value because, according to them, it has no backing like government
Type
Permissioned
Permissionless
Private
Available to a selected community with restricted write access. All members can read, but only a selected group can write on the blockchain. (Not too different from traditional data base)
Available to a membership with read and write access for all members.
Public
Publicly available to everyone with restrictions on who can write on the blockchain. E.g EOS
Publicly available to read and write for everyone. E.g Bitcoin and Ethereum
The most resilient networks are arguably the public and permissionless blockchains partly because of the very purpose of the blockchain (trustlessness and disintermediation) and more importantly because they carry with them the innate potential of larger decentralization, bigger community support and enlarged network reach. The weakest form of blockchains are undoubtedly the private permissioned blockchains
bonds. Well, today the “economy of intermediation” is worth billions, if not trillions, backed by humanity’s search for trust and integrity. Now think of anything that will take the place of this economy in the fourth industrial revolution and there is none but Bitcoin, at least for now. This is the backing of Bitcoin. And a lot more could be said here.
Promise of blockchain technology: Beyond the Hype, Bubbles, and Risk-Reward Arguments It is generally believed that early adopters of blockchain and its brainchild, Bitcoin, rarely did it for the financial windfall. This perhaps explains stories such as that of the pizza day celebration, a popular celebration in crypto space to commemorate the event of 2010 when a developer bought two Papa John’s pizzas for 10,000 Bitcoins, worth tens of millions of dollars today. Though one cannot get into the minds of the founders and early adopters, it is obvious that the idea behind blockchain and Bitcoin at the time was more of a fascination, an obsession or an inspiration beyond financial gain. After all, there was little ecosystem support, no shops received it as money and little was known about it. Nevertheless, today most people hear about Bitcoin on the grounds of financial rewards, the gains it has made and sometimes no information about the technology itself. It is very clear that today the technology is overhyped and is being applied (or at least promised to be applied) in areas where it is not actually needed. It is true that cryptocurrencies, for instance, started 2017 with a total market cap of 20 billion and ended the year with over 850 billion market cap, but it is also true that by mid 2018, between 70-90% of the market cap was wiped out again. Clearly, volatility is the name of the current market and you should not invest money you cannot afford to lose. That the market is in a bubble is an understatement and companies who previously had nothing to do with blockchain now add blockchain to their name to prop up shares. A startling example is that of the iced tea company which came under investigation for adding blockchain to their name to prop up the value of their stock price, which was plummeting. These examples are numerous, signalling need for caution to newcomers.
rules and once the parties agree on the rules, the fear of corruptibility is very limited and mostly eliminated, without need to trust anyone. Web 3.0, Blockchain Name Services and the new age of the internet If there is anything about blockchain that people, including non-techies, should be particularly excited about, it is the remaking of the internet from what it is today. The age of proliferation of distributed and decentralized applications has arrived with no end to what it could be in, say, ten years from now. Mass adoption and democratization of Decentralized Applications (called Dapps) development coupled with interoperability of blockchains presents a new wave of internet reformation from traditional centralized apps to fully decentralized apps. This presents a new breed of web apps resilient to DDoS attacks, and with no single point of failure vulnerabilities and with privacy and censorship-free policies at its core. The arrival of ecosystems such as Crowd Machine which is a blockchain agnostic, zero-code virtual machine, that allows anyone with no programming background to deploy their own blockchain based decentralized applications without writing a single code will definitely propel the blockchain sector’s mass adoption. For years, services in web and mobile applications have been a geeks-only space and the rest of the world were simply consumers of the internet of information which exacerbated inequalities to new record levels. Today it is no longer the same.
The development of these scalable interoperability ecosystems such as Crowd Machine, Essentia One, Open Platform, Wanchain, OneLedger, etc., coupled with the development of Blockchain Name Service (BNS) which allows for domain names reservation and deployment on the blockchain promise to truly disrupt the web and Misleading hypes and scams have clearly overshadowed further simplify the use of blockchain technology for all. the new breakthroughs and growing promise of the sector. Current ecosystems in BNS such as Ethereum (.eth) and Everyday a new blockchain applicability emerges and the Wanchain (.wan) and Neo Name Services (.neo) are likely to frontiers of the technology are being pushed in ways that be some of the largest utility blockchains in the years to could not be imagined by the early adopters, though the come, and disruption in this area comes with a big technology is still in a very nascent stage. The commonest promise. advantage of blockchain today is its decentralized nature, Furthermore, general problems of scalability and speed which makes it more resilient and less vulnerable to are being solved on leading blockchains such as Ethereum distributed denial of service attacks (DDoS) compared to blockchain (i.e with Sharding and Plasma) and the Bitcoin most traditional networks. The second advantage is the solution it has provided for the age-old problem of double blockchain (i.e with lightning network) with new blockchains implementing these improvement proposals spending (ie. mainly using the byzantine general’s problem). Also, the fact that blockchains, at least those that at their very start. merit their name, are trustless or permisionless leading to It is important that people move beyond the hype and disintermediation, is a crucial piece of value of the individual speculative gains to fully appreciate the technology. However, there is a catch. Disintermediation innovations behind the technology. If anything, note that does not mean there is no middle point of contact the technology is here to stay and has proven (albeit between dealing parties, it just means that this point of limited for now) what it could mean for the next wave of contact is not occupied by fellow humans who are always human progress: the fourth industrial revolution. corruptible. It is rather lines of code which are set based on
The War of the League Tables Ranking of the best investment banks in the country By Precious Afreh
Given the size and lack of information in the finance industry in Ghana, we will be ranking the best investment houses in the country. These investment houses will be ranked in four major categories; Asset management, Investment banking, Brokerage and Research. The ranking is done using publicly available information, and can be verified and cross-checked for its authenticity. The league table can help you plan your next investment or financing decision, as it shows which investment banks are leading in the various fields. However, the league table should not be interpreted as an invitation to invest or not invest in any of the institutions listed therein. Individuals are still responsible for their investment decisions. Brokerage (Aug ‘18) Which Investment banks brokered the biggest deals in the year under review? The brokerage table is led by African Alliance Securities (AAS), with an almost half (47.63%) control of the industry, brokering deals worth close to GH¢500 million. IC Securities (ICS), who were the primary brokers of the MTNGH ipo are in second place, with a 15.14% share of the market. Worldwide Securities Limited (WSL), Liberty Securities Limited (LSL) and First Atlantic Brokers Limited (FABL) occupy the bottom portions of the table. The brokerage list only considers equity trades over the period under review. This is mainly due to the readiness of information for the league table. Banks typically occcupy the first three spots in fixed income trading. Asset Management (Aug ‘18) The Asset management league table is computed using Total Assets under management (AUM) as a metric. The total assets under management show each firm’s overall control of the market, and only considers muual fund AUMs. Unsurprisingly, Databank Asset Management Services is in first place with GH¢ 897.96 million worth of assets under management, with EDC Investments closely behind with GH¢ 781.99 million worth of assets under management. Newly formed Galaxy Capital tails the table with GH¢ 0.73 million worth of assets under management.
Brokerage August-18 (GH¢) Market Share (%) African Alliance 497.59 m 47.63% IC Securi�es 158.16 m 15.14% Databank Brokerage 113.76 m 10.89% SBG Securi�es 38.06 m 3.64% EDC Stockbrokers 36.44 m 3.49% Cal Brokers Limited 35.43 m 3.39% Republic Brokerage 29.48 m 2.82% Gold Coast Securi�es 25.37 m 2.43% UMB Stockbrokers 22.92 m 2.19% NTHC Securi�es 22.50 m 2.15% First Banc Services 21.38 m 2.05% Strategic African Securi�es 21.28 m 2.04% SIC Financial Services 13.85 m 1.33% 2.77 m 0.27% CDH Securi�es Bullion Securi�es 1.77 m 0.17% Pruden�al Stockbrokers 1.44 m 0.14% New World Securi�es 1.43 m 0.14% Chapel Hill Denham 0.92 m 0.09% Worldwide Securi�es 0.15 m 0.01% Liberty Services Limited 0.05 m 0.01% First Atlan�c Brokers 0.00% Investment House Total AUM (GHS) Market Share Databank Asset Management Services 897.96 m 31.85% EDC Investments 781.99 m 27.74% Stanlib Ghana 338.82 m 12.02% HFC Investment Services 324.14 m 11.50% Gold Coast Fund Management 236.04 m 8.37% First BanC 192.47 m 6.83% SAS Investment Management 12.65 m 0.45% Omega Capital 12.13 m 0.43% SDC Capital 6.94 m 0.25% CDH Asset Management Services 5.93 m 0.21% NTHC 4.34 m 0.15% New Genera�on Investment Services 3.31 m 0.12% Black Star Advisors 1.48 m 0.05% Galaxy Capital 0.73 m 0.03%
Investment Banking (Aug ‘18) IC Securities is the best investment bank in Ghana with very robust deal flow and impressive origination skills for the period under review. The investment bank was the lead manager and sponsoring broker for the largest IPO on the Ghana Stock Exchange, MTN’s IPO. African Alliance who were first runner up also have a strong deal flow, taking on two rights issues worth about GH¢340 million this year.
Investment Bank IC Securi�es
Deal Value Deals 3,478.35 M MTN IPO Access Bank Rights Issue African Alliance 389.72 M Societe Generale Rights Issue Enterprise Group Rights Issue Republic Investments 255.00 M HFC Rights Issue Serenge� Capital Markets 255.00 M HFC Rights Issue Databank Brokerage 219.72 M Enterprise Group Rights Issue Gold Coast Brokerage 2.85 M Digicut IPO SIC Brokerage 2.85 M Digicut IPO
Notable mentions that weren’t included are Strategic African Securities’ reverse stock split of Golden Star Resources shares and bonus issues by IC Securites and African Alliance. The deal value is based on the total size of the deal not the amount raised and does not consider bonus issues and reverse stock splits. Research (Aug ‘18) Our research list is based on the quality and frequency of reports sent out to clients. Databank sends the most reports out and actively covers over 10 stocks on the market. They also have a wide distribution list that depend on their reports for the Ghanaian market. Strategic African Securities follows in second place, covering the second largest number of stocks on the GSE. They also have a wide distribution list and a diversified report list. SIC Brokerage occupies the eighth position, with regular stock market reports.
Research House Reports Databank Brokerage Stock Market Reports, Company Reports, Currency Reports, Macroeconomic Reports Strategic African Securi�es Stock Market Reports, Company Reports, Currency Reports, Fixed Income Reports, Corporate Ac�ons, Macroeconomic Reports EDC Investments Stock Market Reports, Company Reports, Currency Reports, Fixed Income Reports Cal Brokers Stock Market Reports, Company Reports IC Securi�es Stock Market Reports, Company Reports First Banc FSL Stock Market Reports, Macroeconomic Reports UMB Brokerage Stock Market Reports, Currency Reports, Fixed Income Reports SIC Brokerage Stock Market Reports
Why MTN Shares are a Bad Idea A deep dive into MTN’s financials and valuation By Elijah Adiasany
FOR SALE GH¢0.55
Why MTN Shares are a Bad Idea a deep dive into MTN’s financials and valuation “Irrational exuberance” are the words I choose to start this piece with, because irrational exuberance can and will cause many to lose money. MTN Ghana Limited (“MTNGH”) for those of you who don’t know, is a telecommunications giant that has virtually monopolized the Ghanaian telecom market. MTNGH has the biggest reach in the country based on total number of customers/ subscribers and the availability of its services. Considering the strong brand that MTNGH has built for itself over the past years, it is not surprising that many investors, stock traders and ordinary Ghanaians bought shares in such a powerful company with seemingly promising prospects. Before I am accused of starting a witch-hunt, I would like to state that this article is purely research driven, and the
analysis made herein is based on publicly available and verifiable data. You should read the important disclaimer at the end of this article that says that this piece is solely for informational purposes, and should not be interpreted as a recommendation to buy or sell stocks in MTNGH. The disclaimer is important, because it is very easy for anyone with interests in MTNGH, financial or otherwise, to accuse me of being out to get them. Let’s get down to it.
It is deeply worrying that out of over 20 brokerage houses currently operating in the country, only two companies bothered to value MTN before, during and after its Initial public Offering. Considering how widely publicized and advertised MTN’s IPO was, you’d think the companies responsible for disseminating financial information and educating the public on investment products would want the general public given as much information as possible on an IPO that would come to be the country’s biggest ever. At this juncture, I’d like to give credit where it is due and say a word of praise about Strategic African Securities and Databank Research, the only financial institutions that bothered to do an independent valuation of MTN.
money selling the stock. I would imagine it’s a 50/50 split in most cases but this time, I am willing to wager it is more of 30% them being terrible analysts and 70% “let’s make money”.
Other companies like Ecobank , SIC Brokerage or Stanbic, it seems, were too busy selling shares to ask themselves if the price of the shares they were selling was overvalued or undervalued. Some investment banks like Cal brokers and FirstBanc produced one-page reports that recommended buying MTN shares, but had no valuations. Hilarious and sad at the same time. It boggles the mind how an investment bank can recommend a stock without the necessary research to back it up. I am pushed to believe that some of these companies either have terrible analysts or stand to make a lot of
In the course of writing this article, I spoke with several individuals with some expertise on the topic, including one of the analysts of Strategic African Securities’ valuation of the company who had a price target of GH¢0.81 for MTN. My decision to seek others’ opinion was not because I had doubts about my own valuation, but so I could have a clear picture of why analysts chose to sell a stock priced so high. In the case of Strategic African Securities, their valuation to a large extent takes into consideration the general behavior of financial markets.
IC Securities were the Financial Advisers and Sponsoring Brokers of the MTN IPO. We will come to them later, since they handled the valuation of the business. All of the top investment banks and a few banks were chosen as receiving agents for the transaction, basically meaning they were allowed to sell MTN shares. Shares were sold via mobile money and could also be bought online. Receiving agents stood to make GH¢10,434,138.00 from the IPO. I’m sure it is clearer now why some investment advisers were more concerned about selling the stock than putting out valuations.
That is to say, the analyst expected the price of MTN shares to go up, because of the theory of reflexivity; simply put, because people expected it to go up. As demand for a particular stock with fixed supply increases, it is only rational to assume that its price will also go up. This analysis also makes sense in hindsight, considering the fact that the stock climbed to GH¢0.92 on 2nd October 2018. I however am of the view that buying shares in MTN is a bad idea. I believe the company is overvalued, and should be trading at a much lower price than its IPO price of GH¢0.75. My reasoning is based on three very salient points. 1.
Dividends
When investing in stocks, an investor can make money in two ways; capital appreciation – selling the stock at a higher price than you got it for, and dividends – being paid a certain percentage of the company’s profit at the end of the year. Most investment bankers I spoke to in relation to MTN shares made mention of regular dividend payments from MTN as a prime motivator in their decision to invest in the company. There’s a very good reason why; MTN Ghana is a subsidiary of MTN Group based in South Africa. Most multinational companies usually send money back to their parent companies and MTN Ghana has been very consistent with dividend payments to MTN Group. As Ghanaians now own part of MTN Ghana, those Ghanaians will now be receiving a share of the profits that previously would have gone to MTN Group. MTN Ghana’s consistency in paying dividends to its parent company means that unless there is an extraordinary event that affects MTN’s profits, shareholders will certainly be paid dividends. In 2016, MTN made some very huge investments that affected its profits. Dividends dropped by 61.33% in 2016, compared to 2015’s dividend. But that isn’t necessarily a bad thing, it’s good actually. It means that MTN will most likely never stop paying dividends. The bad thing though, is your opportunity cost. As an investor, you must buy a
stock only if the potential benefit and risk is better than other investments. To make a case that dividend is important, you must use the dividend yield. The dividend yield measures the percentage return you will make on an investment in a year. It is calculated as dividend per share or dividend divided by price per share or market capitalization. In the last five years, the largest dividend MTN has paid out to shareholders is GH¢0.0437 per share, which in my opinion, was a move for display to entice investors or give the parent MTN Group enough cash to withstand the shocks from suits against MTN Nigeria. At the IPO price of GH¢0.75 per share, the dividend yield of MTN Ghana is 5.83% (0.0437/0.75). Yep, only 5.83% for a whole year. Given the denominator is price per share, a higher share price will mean a lower dividend yield. For income seeking investors, buying 91 Day Treasury bills with a rate of approximately 13% per year is a better investment. The table below shows a scenario analysis of what the dividend yield would be, based on an assumption of using different dividend per share and different share prices.
The poor dividend yield isn’t even the punchline here; the punchline is that MTN Ghana might start paying MTN Group, its parent company, a management fee of 4.5%-5.0% of revenue. Management fees are usually used by subsidiary companies to send money back to their parent companies without paying tax. So, it’s basically a way for MTN Group to steal from Government and shareholders.
MTN Ghana run this management fee program in the past, and stopped in 2014, but there is a strong likelihood that the company will bring back the program this year, 2018.
recognized agency. The scary part is that the forecasts are needed for the valuation. We’ll touch on the valuation next, so I’m going to pick on just two of the errors committed:
The effect of the management fee on dividends will be to decrease the dividend yield substantially. While you may choose not to care about the millions in taxes the Government will lose, you should definitely care about the money you will lose if you own shares in MTN Ghana. Shareholders will be lucky to get a dividend yield of 3% after the management fee has been taken into account.
a. Retained Earnings: In 2017, MTN had an income surplus of GH¢1.87 billion while making a profit of GH¢714.77 million. In lay-man terms, income surplus is the percentage of a company’s profit that is not paid out to shareholders but kept in the company for its operations. For the 2017 financial year, the board of directors of MTN recommended the payment of a special dividend of GH¢1.87 billion to existing shareholders (no, that doesn’t include investors who bought shares during the IPO). To put this is in perspective, basically, shareholders of MTN and the Board of MTN prior to the IPO agreed to payout everything they had in income surplus to themselves. But agency conflict isn’t the topic of discussion today, so let’s leave that aside for now. The GH¢1.87 billion as agreed at the general meeting is supposed to be a special dividend separate from the GH¢470 million dividend declared in 2017.
2.
Financial Projections
Now that we have successfully concluded that dividend payment from MTN isn’t worth it, let’s find out if the potential for capital appreciation is. Perhaps the worst thing about the MTN IPO is how their financial advisor & sponsoring broker forecasted their financials. The voodoo mathematics that went into their analysis is horrifying. I am forced to believe that IC Securities simply did not have the capacity to handle work of this magnitude and were simply in over their heads. As Gordon Gekko would put it, “their analysts don’t know the difference between preferred
stock and livestock”. But let’s not attack the company, which I would describe as extremely good at deal origination but poor at deal execution. No, let’s attack their accountants KPMG and the Securities and Exchange Commission (SEC) instead for not checking their forecasts. A two-minute look at their financials will reveal several forecasting errors which one wouldn’t expect to see from such a highly renowned and well
A quick analysis of these items reveals that in 2018, MTN should have in its books an income surplus of GH¢287.20
million for 2018 instead of the GH¢805 million recorded in their books for 2018. This is 64.32% less than the figure stated. The problem is that they did not account for the dividend payment in 2018. The same problem was done in 2019, meaning MTN Ghana has most likely decided not to pay dividends to its new shareholders in 2018 and 2019, and will start payments in 2020. That, or someone did not do a good job reviewing the
3 statements forecasted. Either way, this impacts the valuation of the business from three valuation methods – the dividend valuation model, the price to book model and the residual income model. Surprisingly, or maybe unsurprisingly, these valuation methods were not included in the valuation of MTN. b. Depreciation: Aside from the fact that what was supposed to be five-year projections were only 3-year projections in the prospectus, it is difficult to ignore the fact that for a capital-intensive company like MTN, the sponsoring broker forecasted depreciation of property, plant and equipment by calculating it as a component of revenue. This is absolutely atrocious, and I can only wonder the thought process that went into this. Interestingly, depreciation is a key component in calculating free cash flow, and since the value of MTN was to a large extent tied to their DCF model, herein lies the eternal question; what were they doing when they decided to project depreciation as a component of revenue? 3.
Valuation
IC Securities performed the company valuation with Sao Capital, a Mauritius-based investment bank. The valuation report, for whatever reason, was “strictly privileged, secretive and confidential” and has all these disclaimers, essentially stating that its dissemination was forbidden. I managed to get a copy of the report anyway, for the purpose of doing my analysis. Interested shareholders who wish to do their own analysis can acquire it from IC Securities. As a shareholder in the company, they are required by law to send you a copy of the report. MTN was valued based on four valuation methods – discounted cash flow model, trading multiples, precedent transaction multiple and broker sum of the parts valuation. In calculating the discounted cashflow model, the two most important
factors that can increase or decrease significantly the value of a business, are the weighted average cost of capital (discount rate) and the terminal growth rate. The discount rate or required return is the cost investors want to be compensated for, for investing in the company. This cost calculates both the equity and debt cost on a weighted average basis. This is where things fall apart; the DCF model for MTN used a risk-free rate of 13.7%, while the yield on the 10-year bond is currently trading around 18%. Why would they use a lower risk-free rate? The formula for the cost of equity is risk-free rate + (beta x market risk premium). This simple formula is therefore saying that the lower the risk-free rate, the lower the cost of equity assuming a fixed beta. Using a risk-free rate of 13.7% is simply wrong, and using a long-term inflation rate of 8.9% is worse, given historical inflation rates and current market conditions. Worst of all is giving a 25% weighting to MTN Ghana’s debt in the long-term capital structure, which I would describe as being highly questionable. In the last five years, MTN has never borrowed in excess of GH¢300 million, except in 2017 through a syndicated loan facility with Ecobank Development Corporation, Ecobank Ghana Limited and Barclays Bank of Ghana. The loan was taken most likely to help MTN run its operations after paying all of its money in dividends from retained earnings in 2017. In the five-year forecast, they make mention of paying off all debts in 2020 for long term debts and paying off all short-term borrowings in 2022. How does zero debt justify a 25% weight, except in situations where the cost of debt is less than the cost of equity; meaning that the best way to reduce the cost of capital would be to manufacture debt. Therefore, saying the company’s current capital structure represents its future capital structure is false. I won’t even bother touching on their long term growth rate of 8% - 9.1%. The comparable analysis shows that IC Securities chose companies that were definitely not peers. They only selected a
number of telecom companies that would push MTN’s value higher. Bloomberg shows a different list of peers for the telco. How did they get there, you ask? They are simply Masters in voodoo mathematics. The broker sum of the parts valuation revealed the lowest valuation ranges but the actual valuation would have been much lower. While the dcf model and the trading multiples used post management fee EBITDA in their valuation, the management fee was not included in the valuation for good reason but it still does not represent the actual value of MTN. In conclusion, I would like to congratulate MTN Ghana, their Financial Advisers IC Securities, and their accountants KPMG, for their extraordinary use of Voodoo mathematics, groundbreaking marketing techniques and intelligent misdirection to convince thousands of Ghanaians into buying into their shares. I remain convinced that buying shares of MTN Ghana is a bad idea, and anyone who chooses or chose to do so will end up regretting it. The hype surrounding the stock will eventually die down, and it will have to survive on its fundamentals only. “It is when the tide goes out that you discover who has been swimming naked”, Warren Buffet.
Disclaimer The author of thr article does not hold any stock in Sancom PLC (MTN Ghana). This article should not be intepreted as an investment/legal advice. While the information contained in the report has been pocured in good faith, from sources considered/believed to be reliable, all/part of the statement/statements/opinion/ opinions/view/views in the report may not be considered to be complete or accurate. Therefore, it should be relied upon at the recipients own risk.
How to obtain a work and residence permit in Ghana By Firmus Advisory A work permit is an approval granted by the Ghana Immigration Service (GIS) for the employment of foreign nationals specifying the number and description of persons authorized to be employed. A Ghana work permit is usually valid for 1 year and in some special cases 6 months. The work permit specifies the name of the employer and a statement indicating that the holder is only permitted to engage in the particular employment, business or professional occupation specified in the work permit. Established by Immigration Service Act, 2016, Act 908, the Ghana Immigration Service (GIS) serves as the principal source for all immigration services including visa entry, residence and employment of foreign nationals in Ghana, in accordance with the Immigration law. Foreign nationals wishing to work in Ghana may register their business in Ghana and afterwards, apply to obtain a work permit from the Ministry of interior through the Ghana Immigration Service (GIS). Work permits may be renewed subject to satisfying the conditions for renewal. The duration for processing work permits is within 2 to 3 weeks and the official fees for a 1-year work permit in Ghana is $1,000.
Requirements for work permit To apply for a work permit, the following documentation needs to be provided; 1.
Application letter on company’s letterhead
2.
Business Registration Documents – certificate of incorporation, certificate of commencement of business, company regulations, form 3&4
3.
Tax Clearance Certificate (for existing companies)
4.
Letter of employment / Contract
5.
Ghana Investment Promotion Centre (GIPC) Certificate (If registered)
6.
Letter of support from Ministry, Department or Agency (if required)
7.
Bio data page of passport of applicant
8.
Curriculum Vitae / Resume
9.
Medical Report to confirm fitness of employee to work from a local hospital in Ghana
10.
Police Clearance Certificate from employee’s country of origin or current residence
11.
Educational and Professional Certificates
12.
Passport & residence permit copy of employer
The work permit is the first stage in the work authorization process and therefore does not entitle a prospective employee to engage in work activities in Ghana. To commence work activities, the applicant is required to apply and obtain a residence permit with their company.
To apply for a dependent residence permit the following documents are required; 1.
Application letter on Company’s letterhead requesting for residence permit
2.
Two passport size photographs of applicant
Completing Work permit application forms
3.
Birth certificate (if child)
Work permit application forms are obtainable free of charge at the GIS office. The form requires three classes of information; Company, Employee and Employment contract details. Relevant and accurate information must be provided in all sections to enable the GIS to effectively assess and the application on its own merits and take appropriate decision.
4.
Marriage Certificate (If spouse)
5.
Copy of Non-Citizens ID Card
6.
Passport
Sector Specific requirements for Work/Residence Permits – GIPC, GFZB etc.
Additionally, companies may be required to register with The application forms should be signed by an authorised other statutory agencies and comply with sector specific requirements/controls depending on the company’s representative of the employer. The person who signs the application must attach relevant documents as proof that ownership structure and/or the sector of operation in order to obtain relevant automatic quotas or work permit. he is an officer of the company (passport, copy of These Agencies include; residence permit etc). Residence Permit application process in Ghana
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Ghana Investment Promotion Centre (GIPC)
A Residence Permit is usually obtained after the grant of a work permit. A formal application must be made on behalf of the employee to the Ghana Immigration Service.
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Ghana Free Zones Board (GFZB)
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Petroleum Commission
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Minerals Commission
The following must accompany the application; 1.
Attach two(2) recent passport pictures
2.
Copy of Non-Citizen ID Card
3.
Original Passport of employee
4.
Approved work permit/Automatic Quota
5.
Current Company Tax Clearance Certificate (for existing companies)
6.
Letter of support from Ghana Investment Promotion Centre (GIPC), Ghana Free Zones Board or Minerals Commission (where applicable)
7.
Police Clearance Report from home country
8.
Medical Report
9.
Business Registration Documents
10.
Offer letter/Appointment letter/ Contract of employments
The law provides that a person who has been granted a work permit may one month before the expiration of that permit apply to the Immigration Quota Committee in the prescribed manner for the renewal of the permit and the application for renewal shall be treated as a fresh application. Dependents residence permit A foreign employee who holds a Residence Permit may apply for a Dependent ResidencePermit for his ependents. Dependents include spouse, children under 18 years of age and parent (s) above the age of 60 years.
Ghana Investment Promotion Centre (GIPC) Companies with foreign ownership (whether jointly / wholly foreign owned) are required to register with the GIPC and then subsequently apply for automatic immigrant quotas based on their equity investment. Application requirements for holders of GIPC quota; •
Letter of application for residence permit from company
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Business Registration Documents – certificate of incorporation, certificate of commencement of business, company regulations, form 3&4
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Completed residence permit form
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2 passport size pictures
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GIPC quota approval letter
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Resume
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Police report from country of origin
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Medical report from recognised hospital in Ghana
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Employment contract
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Tax clearance certificate from the company
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Copy of non-citizen ID card
Ghana Free Zones Board (GFZB) The GFZB is the regulator for all businesses that meet a 70% minimum export capacity of all production in Ghana. The work permit application for holders of free zone licenses must be directed to the GIS through GFZB. The application must be accompanied with all documents for obtaining a standard work permit application above. However, the entire process is controlled by the GFZB, who will forward application to GIS on behalf of applicants and provide approvals when obtained. Application requirements for holders of GFZB license; • Letter of application for residence permit from company • Business Registration Documents – certificate of incorporation, certificate of commencement of business, company regulations, form 3&4 •
Completed residence permit form
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2 passport size pictures
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Copy of Company’s free zones license
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Resume
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Police report from country of origin
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Medical report from recognised hospital in Ghana
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Employment contract
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Copy of non-citizen ID card
Petroleum Commission Petroleum companies as well as companies offering services to the petroleum sector may apply for work permits for their expatriate personnel through the Petroleum Commission (PC) of Ghana. The company must provide, among others, a justification for employing a foreign national. The Petroleum Commission will typically ascertain whether the prospective employee possesses the technical skill set required for the industry as well as the unavailability of such skill set in Ghana. Upon satisfying itself, the PC will receive all GIS requirements for obtaining a work permit and process the application on behalf of the company. Approvals will be forwarded to the companies upon receipt of same from the Ghana Immigration Service. Minerals Commission The Minerals Commission is the regulator of the mining sector. In practice, companies registered under the Commission require a letter of support from the Minerals Commission in applying for work permits for its expatriate employees. Upon obtaining the letter of support from the Mineral’s Commission, application must be accompanied with all documents for obtaining a standard work permit application above.
Firmus Advisory your one-stop-shop for business support services, business registration, immigration service, market research & industry analyses in Ghana and West Africa. We assist investors and companies in Ghana and abroad to undertake all their business registration, licensing and formalities in Ghana as well as all immigration facilitation services without the client having to make a trip. We also provide market and sector analysis for you to make an informed decision.
THE RISE OF ENTREPRENEURSHIP IN THE GHANAIAN YOUTH By Elijah Adiasany The Ghanaian business environment has gone through what can only be accurately described as an ideological revolution. A country which once was filled with individuals willing to spend their whole lives working for their corporate overlords and big firms has slowly evolved into a vibrant and energetic population with ideas of their own, determined to be their own bosses. 30 years ago, the average Ghanaian working class citizen’s idea of a life well-lived was to go to school, pick up some degrees, find employment at a good firm and then work their way up the corporate ladder. Fast forward 3 decades into the future and everything seems to have changed. A 5-minute conversation with 10 Ghanaians between the ages of 20 and 30 will reveal that at least 6/7 of them have plans to start businesses of their own or have already started them. The drive to be self-employed and independent is the main force motivating the actions of today’s generation. The Success Stories
It would be criminal to not include in this article the story of Tonyi Senayah, the CEO of Horseman shoes. Tonyi, who started his business while an undergraduate at the University, built one of the most recognizable locally manufactured shoe brands in the country, earning him personal praise from none other than the former President of the Republic of Ghana, John Dramani Mahama. Tonyi was also awarded the “Young entrepreneur of the year” award at the CIMG Marketing Performance award. All across Ghana, there are similar stories of young men and women starting businesses on their own or with the help of some friends and making it big. These success stories end up motiving others with ideas to follow suite, which creates a snowball effect. The Pitfalls of the Revolution As much as entrepreneurship and self-employment is a force for good in the country, there are some unfortunate side effects that have crept up. In recent years, there has been an increase in Ponzi schemes, Pyramid schemes, Network marketing schemes and other forms of financial fraud that feed on the desperation and desire of the youth to be financially independent.
We are now all quite familiar with the story of A1 Bread; a young man from humble beginnings who began his journey into riches by selling custom-made bread on the streets, and through hard work and dedication, grew it into One such scheme, called “Peer to Peer” lending, asks a multi-regional conglomerate, now selling an average of subscribers to deposit fund into the accounts of other 60,000 loafs of bread every day. subscribers, promising to pay back double their investment after a stated period. The system works as a Another entrepreneur of similar footing, Barima Osei Mensah, the founder and owner of Adinkra Patries, quit his typical Ponzi; paying old investors with money from new investors and goes on for a while, until the creators of the day job as a Personal Banker at the Bank of America and scheme, satisfied with their earnings, close down shop and travelled back home to start his own business; selling jump ship. pastries. He now employs over 800 workers and is ever always expanding to other parts of the country.
But falling victim to these schemes isn’t the only threat to Ghanaians looking to becoming financially independent.
Statistically speaking, about 75% of all startup business fail‌ 50% of them in their first year. Most young people who enthusiastically run to start their own businesses may have no idea what they are getting themselves into; and may come to find out that running a business is not always a bed of roses. It becomes a bigger problem when the entrepreneur in question quits their day job to start that new business. Even in the case of successful ventures, it often takes a few years to start realizing profits, which are preceded by years of running a loss or just managing to break even. These sad realities can often kill a visionary’s dreams and aspirations, ridding the world of their great ideas. The Takeaway Despite the pitfalls, it would be nothing short of an understatement to say the growth of entrepreneurship in the country is a force for good. Decrease in unemployment, crime and lawlessness, increase in importations, national development and the standard of living, are but a few benefits the country stands to gain. The entrepreneurial revolution is here and it is here to stay for good.
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