An Introduction to Ghana’s Treasury Market

Levar Hewlett, founder and CEO of Arrancar Investments, gives us a few pointers on how to invest in Ghanaian t-bills, notes, and bonds.

Levar Hewlett, the founder and CEO of Arrancar Investments, has a wealth of experience in asset management, commercial credit, and corporate trade credit insurance. Africa’s debt capital markets are his current area of focus.

Here, he answers some of my questions on ways to invest in Ghanaian government securities.

Levar Hewlett
Levar Hewlett, Founder, Arrancar Investments

Ryan Hoover: What are Ghana’s most accessible and attractive fixed income investments?

Levar Hewlett: The most accessible would be government treasuries, which Ghanaian citizens can purchase for as little as GHS100.00 (roughly $21.00) and currently offer yields ranging from 16.1% for a 91-day treasury bill to 21.0% for a two-year fixed note.

Unfortunately, foreigners are not legally allowed to purchase Ghanaian treasury bills on auction. They are restricted to treasuries with maturities of two years or longer, and must purchase a minimum of GHS100,000 (roughly $21,000.00). But they are permitted to buy them on the secondary market, which is reasonably active.

Ryan: How does one go about purchasing Ghanaian treasuries?

Levar: Purchasing treasuries on the primary and secondary market is done through a licensed Ghanaian broker such as IC Securities, Databank, or SAS Ghana.

But local and foreign investors can also get exposure to these instruments through a number of local funds.

  • Databank’s MFund is probably the easiest way for retail investors to invest in Ghanaian government securities. It’s a money market fund with a very low minimum invest amount – GHS50.00 – and it currently offers a yield exceeding 19.0%.
  • First Fund is an open-ended money market fund which invests in money-market instruments, including Bank of Ghana treasury bills and bonds, high-quality corporate bonds, commercial papers and certificates of deposits.
  • HFC Future Plan Trust is a collective investment scheme whose main objective is to invest mobilized funds in short-term money market securities. It invests in bonds, debentures, fixed deposits, treasury instruments and commercial paper. The fund is open to all individuals and institutions who can afford the required minimum contributions. Parents can also invest in trust for their children and dependents.

Ryan: How do the yields on Ghanaian treasuries compare to the interest rates on savings products at local banks?

Levar: Yields on t-bills, notes, and bonds are considerably more attractive than interest rates on savings accounts. As of September 2016, interest rates on local savings accounts ranged from 1% to 12%, which was much lower than the 17.2% rate of inflation at the time. Meanwhile, the yields on treasuries were 22% to 24.75%, which gave investors an ample premium to cover inflation and currency risk.

Yields on treasuries have dropped sharply since September, but inflation has, too. It’s currently 13.3%. So, there remains the potential for a positive real return on investment compared to the negative real return on savings accounts, whose nominal interest rates have quite a rigid ceiling.

Ryan: The high rate of inflation suggests that there may be significant currency depreciation over the next year or two. Do you have any tips for investors on how to evaluate whether Ghanaian treasuries are worth the currency risk?

Levar: There are two key drivers of Ghana’s inflation. There are demand pressures, which are driven by high fiscal deficit financing and exchange rate pass-through. And there are cost pressures, which are driven by hikes in utility tariffs, ex-pump prices of petroleum products, and low productivity in the real sector of the economy.

In the last 12 to 24 months, Ghana’s inflation has been largely driven by cost-side pressures rather than forex pressures as the Central Bank already maintains a tight monetary stance to contain the forex and demand-side pressures. At the moment, the monetary policy rate stands at 26%. Following a sharp depreciation of the Ghanaian cedi against the US dollar in 2014 ( about 32%), the monetary tightening cycle embarked upon between 2015 and 2016 has ensured a slower rate of depreciation by 15.6% and 9.6% respectively.

Cost-push pressures have, however, elevated inflationary pressures since 2015, as the 59% and 67% hike in electricity and water tariffs in December 2015 heightened inflationary expectations. The tax measures implemented in 2016, higher prices of petroleum products, and a 15% upward adjustment in public transport fares in the first quarter of 2016 added further momentum to inflationary pressures. As a result, inflation surged to a peak of 19.2% before retreating gradually toward the end of 2016 to a level of 15.4% in December 2016 as these cost-side pressures eased.

If you take a five-year average of annual depreciation of the cedi versus the dollar, you obtain a 17.3% average depreciation rate. Therefore, for a non-resident investor to bypass forex risks on Ghanaian bonds, the acceptable coupon rate for medium term debts must not be below 17%.

Levar Hewlett has provided financial oversight helping to ensure the long-term viability of multi-million dollar portfolios. In 2017, he founded Arrancar Investments, an investment company focusing on asset management of individuals and real estate opportunities. Levar holds a master’s degree in Finance and an Investment Certificate from Johns Hopkins University, Carey Business School (JHUCBS) and is currently pursuing another master’s degree in Real Estate and Infrastructure at JHUCBS. In his spare time, Levar enjoys spending time with family and friends, traveling, and playing competitive lacrosse. You can contact him at:

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