Young Black Professional Guide

Quite a bit evidently.

And if you’re into African stocks like I am you may also know that the Ashanti Goldfields Corporation was the first African stock to be traded on the New York Stock Exchange.

But if you’re more into pop culture like most people I may have just tricked you into learning something about stocks.

Seriously, though, Ashanti Goldfields merged with AngloGold in 2004 to create the world’s second largest gold producer, AngloGold Ashanti Ltd.

The name was most likely inspired by the pre-colonial Empire of Ashanti which is now the Ashanti region in Ghana. But I am still willing to entertain the possibility it could have been named after the pop star.

Lately, AngloGoldAshanti Ltd. (AU) has been getting considerable analyst attention due to the weak dollar and the ridiculousness of commodity prices. But I’d rather focus our attention on Ashanti’s largest shareholder, the Ghanaian government.

Along with being the majority shareholder of Ashanti Goldfields, the Ghanaian government also happens to be the proud owner of an oil field that was discovered last year and is reported by some sources to contain up to 3 billion barrels of light crude oil. Ghana’s GDP also happens to be 50% agriculture, so in case you haven’t been keeping up with rice and wheat prices, that’s a good thing for Ghana. With help from other exports such as timber, cocoa, diamonds, manganese, and bauxite (element used to make aluminum) Ghana has twice the per capita output of its neighbors and is growing exponentially (over 6 ½% annually).

Pardon the pun, but Ghana has a golden opportunity here. While I’d love to see the Ghanaian government morph this opportunity into the sickest, most diversified publicly traded hedge fund ever, Ghana has a great responsibility as well.

President John Kufuor of Ghana, literally, interviewed (I kid you not) with BBC and had a glass of oil in one hand and a glass of champagne in the other. With all due respect Mr. Kufuor, before we get too exited about the prospects of oil let us examine the track records of some other African oil producing nations, namely Uganda and Nigeria.

Though Ghana has more than twice the GDP of Dubai it is still working in the red. Meaning, it spends more than it makes. Ghana’s inflation is over 11% and simply throwing more money into the system will be like throwing more gas on the fire. Also, oil doesn’t last forever. Dubai’s oil reserves are expected to diminish in less than 20 years. But its economy, which was built on the back of oil exploration, is now diversified to the point that oil accounts for less that 6% of its GDP. Can an African nation do the same?

No matter what, Ghana will need to diversify. But in what? Ghana’s biggest export will be oil but it’s biggest import will be petroleum, so refining capability could be a start. Clean water resources could be another.

But the inevitable question down the road will be, how responsible is or should Ghana be for the well being of its neighbors (or the rest of Africa for that matter)? Do you think it would be a wise PR move for Ghana to build indoor ski lodges like Dubai while over 28 million other Africans are dying of AIDS?

Does Ghana have an obligation to help other African nations or should they reinvest in their own economy to make it self-sufficient before its oil reserves are depleted? I like to hear some YBP thoughts on this.

Share This