Author name: Dr Maxwell Ampong

When a company, a syndicate, a government, or any entity needs to borrow money, to, let’s say, keep the business running, to embark on new projects, to pay back old loans, for aggressive expansion, or for whatever reason, they may issue out what is called “bonds” to interested parties. Quite simply, a Bond successfully issued is a Loan accepted. The borrower is the issuer of the bond and the bond will contain the terms of the loan e.g. the interest rate (or coupon rate), how the interest payments (or coupons) will be made, the time at which the full amount has to be paid to the investor (maturity date), etc. That is a bond.  What is a Eurobond? The EURObond only means the issuer isn’t in the same country or trading in the local currency of the investor/lender. A Eurobond doesn’t have to be about Europe or the Euro. It just points to the international aspect of the bond and the involvement of foreign currency. As Ghanaians, our most recent Eurobonds have meant that the loans to our government will be in a foreign currency, specifically, dollars. This should explain why the government is always confident of the arrest of any fall of the Ghana Cedi against the US Dollar when a Eurobond is near. Eurobonds that the government has been issuing means dollars come coming into the system, thereby reducing the scarcity and the accompanying demand for the dollar. The Eurobond, also known as external bonds, is issued in one country and sold in a different one. Bonds are grouped by the currency in which they are denominated. For example, bonds issued in US dollars is known as Eurodollars. How Eurobonds Work. Anyone in need of foreign-denominated borrowings for a specified time can offer Eurobonds at fixed interest rates. Private organizations, international syndicates, and the government can offer them. The buyers or investors of these Eurobonds are generally large companies, banks, or financial institutions. The interest is calculated annually, and the principal amounts paid at the maturity date. Ghana offered her first Eurobond in 2007 to the tune of $750 million, asking investors to lend that amount with the promise of paying it back in 10 years with interest. Bonds were issued through the Bank of Ghana, while the government received the cash amount in the form of a loan. The general popularity of Eurobonds is because of its ability to be a financing tool. They offer a high degree of flexibility. For governments, it’s usually an immediate, long-term finance option. An investor considers several factors when looking at which country to target for Eurobonds, e.g. favourable interest rates, a stable market, local regulations, or the presence of likely investors. These can all play a role in the decision. Ghana’s Eurobonds, present and past. Earlier this year, Ghana issued a $3 billion Eurobond. It just means we accepted a $3billion loan from outside. The Finance Minister, Ken Ofori-Atta, indicated in the 2019 Budget Statement last year that the government had the intention to do this. What is really worthy of mention is that when we asked for $3 billion, we got offered an impressive $21 billion and we still only accepted $3 billion. The extra offers made room for lower rates and better terms of engagement, as will any bargaining scenario when the demand for what you offer is high. Also note that, we issued not one but three bonds with three different maturity periods (payback times). So we’re going to pay back the $3billion in installments, with each payment installment having its own terms and conditions. Ghana’s Finance Minister, while presenting the mid-year budget statement in Parliament last month, said, “As you may recall, the government obtained the approval of this August House in December last year to raise up to US$3.0 billion to finance growth-oriented expenditures in the 2020 budget (including restructuring the energy sector) and also to conduct liability management operations”. “Based on the approval, Ghana became the first ever country on the African continent to issue a 41-year bond and a second tri-tranche bond in the history of the country”, he added. He further explained that “Ghana successfully raised US$3 billion in the international capital markets in three tranches of 6-year, 14-year and 41-year Eurobonds of US$1.25 billion, U$1.0 billion and US$750.00 million, respectively on 4th February, 2020”. “The 6-year, 14-year, and 41-year bonds were priced at 6.375 percent, 7.875 percent and 8.750 percent, respectively. Mr. Speaker, this transaction was a landmark achievement in many respects as the bond came with the lowest-ever coupon rate for Ghana and first 41-year bond tenure in Africa”, Mr Ofori-Atta reported to the House. And The IMF Cautions Us. Though we’ve professed to have broken up with the IMF, they seem to still slide in our DM’s with a message or two every now and then. A bond issued is a loan. The IMF cautions that, with all these monies coming in, we would have to pay it all back sometime. So if we don’t invest it well to generate growth and repayment capacity, then there will be a debt crisis on our hands later on. I have always stated that mismanagement is the biggest issue our continent faces.  You should understand why our government is quick to throw in Ghana’s increasing GDP figures and indications that Ghana is working for Ghanaians. That’s because it’s an easily spotted marker for if the country is productive. Of late the World watches Ghana. The macroeconomic data validated by the international community has, for a while now, pointed to a promising future for Ghana. While the global bond markets secretly scrutinised Ghana last year and those before that, Ghana got rebranded as “Beyond Aid”, planned for $3billion in Eurobonds and impressively got offered seven times that ($21million). That’s like leaving your spouse and suddenly getting 21 messages from other suitors the next day after announcing the breakup, but you expected about just 3 IM’s. That means you’re hot! Ghana has been looking very

Last week, many people I came into contact with told me the coronavirus isn’t real. My mechanic, a guest at the office and a few more professed how they could never get the coronavirus. I even had meetings where some people just refused to wear a mask, or took it off once they entered.  I engaged a bit further. Some people think COVID-19 is as a result of some biological warfare, or is a biological weapon not intended for Africa. Real people think that. Then I had one man postulate that it might be the plan of the world pharmaceutical industry to sell vaccines. 5G towers causing the virus is quite popular so I got that too.  Some even asked me “where are the sick people”? You’re not seeing many sick people!” These disbeliefs are very disconcerting because COVID 19 is very easily transmitted and if a large number of people continue to believe it’s just “not for them”, that’s dangerous on many, many levels. Conspiracy theories are especially tempting during such a huge occurrence like COVID-19 because it helps to explain a lot that we can’t readily explain. Our brain has a function of trying to make sense of things and when there’s no upfront explanation, it has to bring something more easily graspable to the forefront. Proportionality Bias. Proportionality Bias is this tendency for us to assume that big events have big causes. It’s not a wild defect; it’s only natural. But critical and/or scientific thinking can help us out of this, especially because it’s so easy to be led astray. We need to have a healthy appreciation of how one small decimal point in 1000000.00 can change the meaning of the number entirely. Another problem is where the onus is on you to provide proof of facts to an overly cynical naysayer. I’m talking about the people that have impulse responses like “were you there yourself?”, “…so you’re saying nobody can fake this” and the like. Having to convince people like that of a worldwide threat can be a big mountain to climb. How do you even respond to “you don’t know, anything can be true”. Because they’re right, if you go by their logic. Because there might be some way to make pigs fly but as at today, the coronavirus is very, very, VERY real and the severity of the situation hasn’t changed much so do your best to wear your masks and observe social distancing protocols as much as you can. The virus is survivable. The world IS still spinning. It can take a considerable amount of time to sit with someone and debunk conspiracy theories. Most people just don’t do it. Restrictions have eased up since the pandemic began. Secondary Schools are open now in Ghana though with strict protocols in place. Elsewhere, the NBA is back again. But don’t be fooled into thinking that when you encounter someone with COVID-19, the virus is going to be like “oh my, the Champions League is back this week so let me take a break and go easy on you”. No it won’t! Precautions must be taken as seriously as when this started. Conspiracy theories are nothing new, obviously. They’re just harder to spot nowadays. In 1890, a newspaper claimed that electric light was responsible for the global influenza outbreak. It sounds crazy now, right? But people bought into that! We can find conspiracy theories scattered all over history. In the 14th Century, a conspiracy theory claimed that Jewish people were responsible for the Bubonic Plague. Also in 1918, rumours spread that German pharmaceutical company Bayer had tainted its Aspirin tablets headed for the US with the Spanish flu. All these might seem like conspiracy theories now but a lot of people bought into them at that time. It’s happening again with the coronavirus pandemic. A century from now they will call it totally absurd when they look back at us and hear some people say that masks harm their health in a time of a novel high-risk airborne contagion. What’s worse is that in 2020, technology has made it very easy to get the wrong information across, almost as easy as it is to get the right information across. The internet is live and accessible to billions who are free to publish lies and truth alike. With a good enough budget, you can make anything sound true. You can make anything look true. That is currently a problem with the coronavirus because there are so many theories out there that just aren’t true but look too good to overlook at first glance. Believing COVID-19 is overblown comes with a hefty price. There are many people in the hospital, at home, that are dying or in critical conditions because they did not take the virus seriously. I know people that have died from this virus. I know people that know people that have died from this virus. If you want me to confirm for you if it’s real, this is your confirmation: the virus is real and people are still getting it. Don’t be an avoidable statistic. I have also noticed social media companies like Facebook, Twitter and YouTube taking measures to reduce the ease of spread of conspiracy theories. But it’s not easy for them. The share volume and frequency of uploads make it harder to flag and tag false information. Also, when they do find false information, it complicates issues when the person’s freedom of speech and expression comes into play. And it can get messy very quickly with the risk of bad press. This leaves them doing something, but definitely not close to enough. What we need to do about it. It is has become clear to me that it is incumbent upon you, upon me, upon all decent and well-meaning people, whenever and wherever we find ourselves, to try and stop these theories and treat them with the needed scepticism before many more people believe them. Do it for yourself and your loved ones, if that thought helps motivates you. The coronavirus is no respecter of persons. You can’t

Never say never. This piece isn’t to persuade you to flat out put aside your efforts for external funding. The world is still spinning, albeit amidst a full-blown pandemic. But if ever there was a time to look internally for value first, this would be it. COVID-19 did not spare the investment and venture capital (VC) space. There is less interest in putting money out there and more risk averse behaviour towards spending of any kind. This is true all over the world. This coronavirus has not been fully figured out and most investors and VC’s would prefer to wait to see how things pan out before leaping back into the game. I’ve been reading on how COVID-19 has affected international  diplomacy. It hits me now that it’ll reduce the preferred face-to-face due diligence processes that most investors and VC’s like to undertake. When flying out is not the first choice, foreign investors will opt for local investment opportunities on their turf rather. Don’t even get me started on company valuations. I mean, who knows anymore. Multimillion corporations have been reduced to dust during this pandemic. Apropos that, who can tell what’s worth what within the startup space in a time like this. But it’s definitely not the end of the world, literally. So, in the current times and space where things are not looking so good, I believe what we’re saying is LOOK WITHIN. Enjoy the following article, written by Simon Turner, Project Operations Director at MEST Africa, and Marco Rovagnati, Founder of Poapoa. Have a lovely week! ♕ —- ♕ —- ♕ —- ♕ —- ♕ —- ♕ —- ♕ —- ♕ —- ♕ All too often we see startups obsessing over funding, especially when they’ve only just started out. Funding is seen as a holy grail, the solution to all problems and too often considered the only measure of success. This is a common pitfall for entrepreneurs, all the way from Silicon Valley (USA) to Yabacon valley (Nigeria).  When it comes to the African continent, it’s not surprising that we have the tendency of putting capital on a pedestal, given the challenges that entrepreneurs face when accessing finance. As humans we crave what we can’t have, which is why we must beware of red herrings.  Funding will not solve all of your problems. In this article we are going to debunk some of the myths around funding, emphasize the importance of bootstrapping for the early growth of your business, and give you a set of guidelines to understand whether you are truly ready to raise capital and how to make sure your business is in the shape to do so.  Any advice on funding should be tailored to your stage of development and specific needs, but if we have to make a blanket statement it would probably be: bootstrap as long as you can and try to think of ‘revenue’ as your primary funding strategy. In other words, don’t raise money until your business is making money.  Obtaining funding does not guarantee success or prevent failure, and as soon as you acquire funding, you also have to manage other people’s interests and agendas. You become beholden to people who want to make their money back (at considerable multiples). Some cynics would argue that once you raise money you basically end up working for someone else, so why are you in business?  What are the values driving you? For example, if you are pursuing entrepreneurship because you seek freedom and flexibility then accessing institutional funding (e.g. from a VC), might not be for you as it will turn your dream of freedom into a full time job with targets and accountability.  If you are extremely ambitious and driven to build the next tech unicorn, you need to prove that your idea can work and generate cash (also known as MVP, Minimum Viable Product). To achieve this, you don’t need millions of dollars but a few thousands will take you great lengths.  So, how do you get your first cash injection? We often see successful entrepreneurs being their own source of funding (savings, double jobs etc) and when things start to look promising they then reach out to their immediate circle of what we like to call ‘friends, family & fools’. Remember that this is your journey, don’t compare yourself to others and scale at your own pace; you are in the driving seat and you should seek funding when you least need it. The more mature and successful your company is, the more attractive you’ll be to investors, and the better the deals you’ll get. Being desperate will almost certainly get you the raw end of the deal. Besides, chasing funding is a full-time role that requires a lot of preparation and leg work and a lot of knowledge. You’ll be expected to be an expert and know your business and market inside and out.  Thus, if you’re not careful, chasing the dollar can distract from your core business. This is true when you are raising equity and even more when it comes to grants.  A well-crafted grant application requires several days of work and a really good track record, therefore, do not apply to every grant that looks remotely relevant, but focus on your business and be laser focused with a putting together a few outstanding applications. As a rule of thumb, the best applications and funding sources will come from within your network, hence you should focus on nourishing your connections with the entrepreneurial ecosystem rather than applying blindly to all the grants out there. Losing focus is a key danger for any entrepreneur and should be avoided at all costs. Bootstrapping your business will help you build a strong MVP (minimum viable product) and define a clear value proposition to your company, meaning that your product is well defined, your team is strong, you have traction (sales), you know your industry and competition and you have your financial projections.  You also need to be absolutely clear about the type of (funding?) you want (such as debt, equity, grants) and how you’ll use it. There are many different sources too. We’ve come