in a volatile economy, fortes fortuna adiuvat

… in a volatile economy,
fortes fortuna adiuvat
Presentation by
Kenneth Thompson
[CEO, Dalex Finance & Leasing Company Limited]
What I am about to share…
My philosophy
Ghana’s economy
• fortes fortuna adiuvat
• Addicted to foreign goods and
services
The Cedi
Cedi Depreciation Remedies
• Exchange rate be allowed to move to
its true level
• Bans and Artificial Restrictions may
not work
Business Opportunities
• There are significant business
opportunities in the an era of a
depreciating cedi
Introduction
3
Selling shoes in the “Gold Coast”
4
My story starts in Ghana in the 1960s
• Born to a Middle class
Ghanaian family
• Grew up in a large
household full of love,
care and sharing
• Upbringing anchored by a
loving grandmother and a
no nonsense mother – a
nurse at the largest
hospital in Ghana
5
Growing Up
Dalex Today
‘000 GH¢
The 2013 business climate
• Post election blues
• Election Petition daytime
soap opera
• GoG spending freeze
• Companies went into
malarial bed-rest
• Economy was flat yet all
Dalex BU experienced
significant growth
Dalex Salary Loans BU grew by 300%
Its all about analysis & aligning strategy
Analyze the marketing environment
Identify competitive
advantages
Market segmentation
Select the target market
Identify core benefits
for the target market
POSITIONING
MARKETING MIX
PRODUCT
PRICE
PLACE
PROMOTION/IMC
9
… in a volatile economy,
fortes fortuna adiuvat
The Ghanaian Economy
11
Ghana has an alcoholic economy
• In our economic behaviour we are as addicted to
foreign goods and services as an alcoholic is
addicted to ‘Apio’ or Vodka
Table 1: Evidence of Addiction
Start
year
Rate
GHC=USD
End Year Rate
Depreciation
GHC=USD
1998
2,350.00 2006
9,600.00
309%
2007
0.93 2014
2.5
167%
1998
2,350.00 2014
25,000.00
963%
Attending Alcoholics Anonymous
• 1972 - OFY
• 1983 - SAP
• 2000 - HIPC
• Each initiative included a
significant attempt to
wean us off our addiction
to foreign goods and
services
13
The latest binge: 2007-2012
• Chinese furniture
• Foreign schools for kids
• 4x4 cars
• Holidays abroad
• Fuel subsidies
• Luxury clothes, bags, etc.
• Electronic gadgets
• Ghana @ 50
• CAN 2008
14
The hangover: 2013-2014
• The rapidly depreciating
cedi
• Freeze on GoG spending
• Loss of business
confidence
15
Analysis of the Cedi’s value
16
The cedi’s value using the ‘Big Mac’ index
Average Price of a Big
Mac in Jan 2014
Big Mac index:
USA
Ghana
Local Currency
USD 4.62 GHC 25.00
At exchange rate of
GH₵2.50 = $1.00
USD 4.62
USD 10.00
GH₵ 5.41=$1.00
‘Hair of the dog’ remedies don’t work…
• Having another drink the
morning after to ‘chase
away’ the hangover …
• Any attempt to combat our
addiction to foreign goods
and services using
restrictions and bans is
doomed to fail
• The ‘hair of the dog’ will
only create a parallel market
• The true market value will
always win!
18
the Sankofa remedy …
Export
Promotion
Import
Substitution
19
Export Promotion
• Incentive programs
designed to attract more
firms into exporting by
offering help in etc.
• Product & market
identification and
development,
• Pre-shipment & postshipment financing,
• Training,
• Payment guaranty
schemes,
• Trade fairs,
• Trade visits, etc.
20
Golden Era of Export Promotion:
1990 - 2000
21
Import Substitution Industrialization (ISI)
• Trade and economic policy
that advocates replacing
foreign imports with
domestic production.
• Kutu Acheampong era
• Light manufacturing
• Agriculture processing
22
the Sankofa remedy …
Export
Promotion
Import
Substitution
Let the cedi fall!
23
… in a volatile economy,
fortes fortuna adiuvat
The opportunity
The Private Sector Opportunity
• Produce Buying
• Cocoa/Sheanut/Cashew
• Non-traditional exports
• Yam/ Cassava/ Pineapple
• Handicrafts/ Flowers
• Seafood/ Mangoes
• Green field investment
• Growth Investment & Finance
• Subcontractor finance
• Logistics services
• Agric Processing
• Juices & Beverages
• Aquaculture – Tilapia/ Prawns
26
In summary …
My philosophy
Ghana’s Economy
• fortes fortuna adiuvat
• Alcoholic - addicted to foreign
goods and services
The Cedi
Cedi Depreciation Remedies
• The true value of the may be
₵5.00=$1.00
• Let the cedi fall! Bans and Artificial
Restrictions will not change our
alcoholic behaviour
Business Opportunities
• Investment in the Export and Import
Substitution value chain
Questions
28
… in a volatile economy,
fortes fortuna adiuvat
Presentation by
Kenneth Thompson
[CEO, Dalex Finance & Leasing Company Limited]
29