Accra’s changing skylines has informed recent arguments that the country’s economy is booming but financial analyst and editor of the Financial Post newspaper, Toma Imihere has described the development as a façade.
There has been a significant increase in the construction of luxury homes and high-rise buildings across the city.
According to him, a lot of the funds investors are using for these projects are ‘hot money’ while other individual investors are also funding these projects with “illegitimate” funds.
‘Hot money’ is the flow of funds (or capital) from one country to another in order to earn a short-term profit on interest rate differences and/or anticipated exchange rate shifts. “Illegitimate earnings go into housing,” Toma Imihere said on the Citi Breakfast Show and according to him, most of these laundered funds are legitimised when invested in the real estate.
The occupancy rate in most of these expensive apartments in the city according to him, is very small.
“When you build houses which you are selling for like $300,000 to $400,000 per unit and you have built about 40 of them and only about five have been bought and you are still sitting comfortably, then you begin to wonder…” he laughed.
He was speaking on the continuous depreciation of the Cedi against the dollar and other major international trading currencies.
Recently, when the currency started its ritual decline, the Bank of Ghana said it was pumping $20 million daily into the money market but it was short-lived, as it started recording another fall.
Per the analysis on the Citi Breakfast Show, a huge chunk of Ghana’s economy is owned by foreigners, hence repatriation of dividends usually affect the cedi’s performance.
Nigeria for a long period of time was the leading African country investing in Ghana with close to 200 projects registered, according to the Ghana Investment Promotion Council (GIPC).
Between 2004 and 2011, Nigerian companies invested about $1.3 billion as direct investments into Ghana, after the UK, the USA and the UAE.
