| Securitisation transaction could be defined as the act | | | | deficit and the domestic debt. Oil subsidies have been |
| of converting an asset into marketable securities | | | | cut back, but public sector wages have been |
| typically for the purpose of raising cash. | | | | increased. Nevertheless, the recent computerization of |
| The concept is based on international market practices | | | | customs should increase tax and public sector |
| involving financial transactions in which an enterprise | | | | revenues, and contain the overall budgetary deficit. |
| brings together assets, mostly receivables, and later | | | | A number of initiatives to boost cassava, textiles and |
| transferred to a special purpose entity or vehicle, | | | | palm oil should increase non-traditional exports while |
| which finances the acquisition by issuing securities. | | | | strong prices for cocoa and gold should lead to higher |
| Securitisation is typically an improvement to the | | | | export earnings. High oil prices continue to hurt Ghana. |
| financing of existing business operation. | | | | It is estimated that oil imports will make up over 20% |
| Securitisation transactions are very popular with | | | | of the total import bill, leaving the economy vulnerable |
| mortgage-backed securities; there are currently more | | | | to large price swings. Large transfers, IFI credits, donor |
| non-financial types of assets and future cash flows. | | | | support and generous debt relief from the Paris Club |
| The following are examples of assets that can | | | | have brought the external current account deficits at |
| generally be securitised. | | | | more manageable levels. |
| Aircraft leases, auto loans(prime and sub-prime),auto | | | | Schemes, and reforms, such as increasing low |
| leases, boat loans, credit card receivables, equipment | | | | electricity tariffs towards international levels. Since the |
| leasaes,home equity loans, manufactured housing | | | | mid-1980s the Government of Ghana has been |
| contracts, marine shipping containers and chassis | | | | financing projects using small levies on petroleum |
| leases,morgages(residential and commercial).The rest | | | | products. The US$ 250,000 raised annually is paid into |
| are railcar leases, real estate, recreational vehicle loans, | | | | an Energy Fund and used to promote renewable |
| royalty streams, stranded utility costs, trade | | | | energy and energy efficient projects. |
| receivables, train wagons leases, truck loans, oil | | | | In Ghana petroleum operations are governed by the |
| exploratory, and other future receivables. | | | | Petroleum Law of 1984 which empowers GNPC to |
| Ghana School Financing Facility is Ghana's first official | | | | operate in all open acreage of the country on its own |
| "securitisation transaction". It is a structured risk-sharing | | | | or in association with foreign partners. |
| facility which covers a local partner bank's initial | | | | Smaller companies are finding it easier to explore in |
| portfolio of long-term local currency loans to schools. | | | | Ghana than in some of its neighbours in West Africa. |
| The objective was to help local banks to learn how to | | | | This is due in part to advantageous terms of the |
| make money and contribute to development in the | | | | contract which include the following elements: No front |
| country as well. | | | | end payments such as signature or production |
| The International Finance Corporation (IFC) provides | | | | bonuses; negotiable royalties and income tax (currently |
| advisory services to the banks to process and monitor | | | | at 35%); no limit on cost recovery, low rental |
| the school loans whilst at the same time assisting the | | | | payments, no restrictions on the repatriation of funds |
| local schools with management training and strategic | | | | and no import duties on exploration and production |
| planning to enable the schools operate more like | | | | equipment and materials... |
| sustainable businesses. This helped to improve their | | | | With securitisation, the GNPC can securitise its rights to |
| credit risk profile with the banks. | | | | receive payments for crude oil sold to other oil |
| The IFC set up a $2.1million risk-sharing facility with | | | | refineries. The agreements representing those |
| Ghana's Trust Bank Ltd supplemented by advisory | | | | receivables must be drafted such that anti-assignment |
| services by IFC and African Development Bank to the | | | | clauses in favour of the refineries for example will be |
| Trust Bank and its client schools. | | | | beneficial but must not be enforced since in doing so |
| It is expected that The Trust Bank will increase its size | | | | the securitisation cannot go on.Ghana and for that |
| and financing to private schools, implement | | | | matter Ghanaians must benefit from this black gold. |
| cost-effective, alternative funding mechanism for | | | | Reference: |
| schools. It will also afford the bank the opportunity to | | | | 1.Africa -Ghana organising in the informal sector(on line) |
| prepare itself for securitisation transaction when the | | | | (accessed 29th April 2006) |
| market is ready. | | | | 2.Ghana Chamber of Commerce Newsletter |
| The following gives an insight into an industry for a | | | | 3.Ghana Self-assessment (online)available on |
| potential Securitisation transaction in Ghana. | | | | ghanaembassy.dk/tax/asp.cata.org.my/Ghana1 |
| Ghana has a modest upstream oil industry with one | | | | accessed on 21/06/07 |
| onshore and five offshore sedimentary basins. The | | | | 4.Private Sector Development Strategy for Ghana |
| main drive behind the oil and gas industry in Ghana is | | | | (online) available on dfid.gov.uk/pubs/files/ghana |
| the need to reduce the country's dependence and | | | | priv-sect-dev-strategy/ accessed on 21/06/07 |
| reliance on hydroelectricity. | | | | 5.Securities Exchange Commission annual Report |
| The authorities are usually targeting a "primary" | | | | (online)available on secghana. |
| budgetary surplus to reduce the overall budgetary | | | | |