By Francis K. Quartey, Francis@sikabit.com
Agyapa Royalties Limited has become a controversial initiative. Yes, the debate about the company’s structure and how this noble venture came about is murky; I would prefer to leave the activities of the pre-incorporation of Agyapa to the political season, but I wouldn’t throw out the baby with the bath water. It has a great deal of potential to stimulate the economy. However, I believe there are some fundamental structural changes that can be made to democratize this new system for more Ghanaians to take part and help the diaspora become invested in Ghana’s growth over the next few decades.
Just after the Great Depression, the U.S. needed ways to jump start its economy and gather its internal resources to finance the second World War. This desire led to the Assignment of Claims Act of 1940. The Act allowed contractors to use government receivables as collateral for discounted loans. What this means is that even small businesses could do bigger business using the credit worthiness of the state, thus the advent of the big defense contracting industry in the United States. Today, defense contracting boasts over $929 billion in economic output and accounts for well over 2.5 million jobs (aia-aerospace.org). Ghana’s gold industry can see similar growth down the line with Agyapa.
Agyapa is set up to leverage the people’s royalties (Ghana’s gold inheritance) to attract discounted cash flow in exchange for part ownership of our inheritance.
The simplest breakdown is that investors around the world can pay a lump sum of money to Ghana now in amounts between $500 million to one billion dollars. In exchange for this immediate cash flow, the investors will have 49% ownership of Ghana’s annual gold royalties into perpetuity. This tradeoff will stimulate a sudden influx of cash flow into the country that the government can use to industrialize and modernize Ghana’s infrastructure.
Using lawyer and government advisor Ace Ankomah’s Agyapa document as a resource, as well as what I’ve read from Ghanaian media thus far, the government (represented by the New Patriotic Party) will guarantee that Agyapa and its 49% sale of Ghana’s gold royalties will be free from any future adverse liens, encumbrances, and interferences whatsoever. In effect, Agyapa will be untouchable—fait accompli! However, the money that will be realized by Agyapa from the investors (shi shee shi) will be utilized affirmatively for infrastructure, gold industry development, and economic development.
That seems great, yet I take issue with the structure of Agyapa. In the way it is designed now, foreign multinationals are bound to monopolize Agyapa shares. There’s a better way to make it more accessible to our people without losing any of Agyapa’s equity stake.
The initial public offer (IPO) is a mechanism to reach the public for subscription, but most Ghanaians are far removed from both the Ghana and London stock exchange. The ordinary Ghanaian does not patronize the stock exchange, this will take power and wealth away from Ghana’s own population and the Black diaspora who have demonstrated that they are interested in the success of Ghana.
The recent 2019 Year of Return campaign was a huge success. It was purported to have brought in an estimated $2 billion to the Ghanaian economy mainly from youth in the diaspora who visited Ghana to reconnect with their cultural heritage. Let us take the much difficult road and reach out to that market again. This time, the state would be offering a jubilee investment product to this market.
Here is the other option: I recommend creating the first state equity sovereign security token to represent the 49% of Agyapa receivables. The token would derive its value from the underlying value of the spot market price of gold. We would democratize the sale of the token by offering the sale to any person who owns a smart phone and who is Ghanaian, of Ghanaian descent, African descent, and persons or firms who believe in investing in Africa as a mix of their socio-financial portfolio. A financial market can further be created for the secondary trading market of this gold equity of receivable market.
Granted, this is a road not traveled before, but it makes sense.
A gold derivative financial hub will be born in Ghana and how appropriate it would be for the “Gold Coast.” Let us think about it people!
I think this is a risk potential these new investors (resourced Ghanaians and diaspora youth) would appreciate and could believe in. The beauty of such a solution for Ghana would be that the security offer does not have to be a common ownership, it could be investment in just the government receivables. This way, the ownership of Agyapa will remain 100% Ghanaian and owners of the jubilee security will be limited to only 49% of the guaranteed equity in the receivables and we democratize government receivables of royalties.
As a final note, I recommend changing the name Agyapa—it is a terrible name to begin with; it translates to good paternal figure—father or grandfather. That is not an appropriate name because it connotes a sense of entitlement.
