THE LEX COLUMN: Ghana’s gold equity release smart but delicate

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THE LEX COLUMN: Ghana’s gold equity release smart but delicate 🔒

Ghana’s capital-raising wheeze is a smart idea flawed by dubious assumptions and numbers. The country is parcelling up royalties from its gold mines into a Jersey-incorporated company called Agyapa. The government will then sell half of this on the London Stock Exchange for a proposed $500m.

Parlaying minerals into present-day income makes sense: think of it as the sovereign equivalent of equity release. Ghana literally sits on a gold mine: last year it shipped $6.7bn worth, according to the Ghana Chamber of Mines, making it the country’s biggest export. But a combination of coronavirus and falling prices for oil and cocoa — two other big exports — have dented economic growth and left it with a debt-to-GDP ratio of 70%-odd. Half the government’s revenues go on servicing debt.

 

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