Cedi Performance and Macro-Economic Indicators
Ghana’s currency at the end of the first quarter 2022 depreciated against the major currencies. The cedi depreciated by 15.55%, 13.09% and 13.55% against the US Dollar, the British pound, and the Euro respectively on a year-to-date (YTD) basis. The depreciation of the Ghana cedi relative to the major currencies during the quarter can be attributed to demand pressures from economic activity pick up and sovereign credit rating downgrades of Ghana by Fitch and Moody’s. The unfavourable economic developments led to offshore investors exiting positions in domestic securities at a time when domestic demand for forex was rising and Ghana’s inability to access the international capital market.
Headline inflation rate accelerated to 19.40% at the end of March 2022 compared to 12.6% at the end of December 2021. The non-food group trended upwards from 12.5% in December 2021 to 14.50% in March 2022. Food and non-alcoholic beverage inflation also trended upwards from 12.8% in December 2021 to 22.4% in March 2022. The rise in inflation in both groups resulted in the surge in inflation for the end of first quarter 2022.
The Bank of Ghana raised the monetary policy rate to 17.00% in March citing the uncertainty and fragility in the global economy, heightened inflationary pressures, and tightening global ¬financial conditions as the reasons for the surge in Monetary Policy Rate. Inflation is currently above the Central Bank’s upper limit of the medium-term target band which poses significant risk to the inflation outlook. The major risks of high inflation include rising global inflation, high energy prices, uncertainties surrounding food prices and investor behaviour.
The table below provides details of the rates and movement in the currency market.
Economic Review
| Q4 2021 | Q1 2022 | Change (YoY) | |
| Monetary Policy Rate | 14.50% | 17.00% | 2.50%  |
| Inflation Rate | 12.60% | 19.40% | 6.80% |
| Close (31st Dec 2021) | Close (31st Mar 2022) | Quarter Depreciation | |
| US Dollar/Ghana Cedi | 6.01 | 7.11 | 15.55%  |
| British Pound/Ghana Cedi | 8.13 | 9.35 | 13.09% |
| Euro/Ghana Cedi | 6.83 | 7.90 | 13.55% |
Government Borrowing
The 91-, 182- and 364-Day Treasury Bills began the first quarter of 2022 at 12.52%, 13.19% and 16.64% respectively and traded at 12.92%, 13.40% and 16.88%, respectively. The government also issued a 2-Year Note at 19.75%, a 3-Year and a 10-Year Bond at 20.50% and 20.75%, respectively. Compared to quarter 1 2021, interest rates of the longer term GoG securities have trended upwards.
| Q1 2021 | Q1 2022 | Difference | |
| 91 Day T-bill | 13.51% | 12.92% | -0.59% |
| 182 Day T-Bill | 13.96% | 13.40% | -0.56% |
| 364 Day T-Bill | 16.82% | 16.88% | 0.06%  |
| 2 Year T-Note | 18.05% | 19.75% | 1.70% |
| 3 Year T-Bond | 17.70% | 20.50% | 2.80% |
| 5 Year T-Bond | 18.30% | 20.75% | 2.45% |
Stock Market Performance
The GSE Composite Index (GSE-CI) and GSE Financial Stock Index (GSE-FSI) closed the first quarter of 2022 with year to date (YTD) returns of -1.67% and 1.07%, respectively compared to 13.99% and 3.54% at the end of March 2021. The GSE-FSI performed better than the GSE-CI due to major price recoveries in the following listed financial stocks – SIC, ETI, EGL and TBL.
During the quarter, there were 5 gainers. SIC was the top gainer with a quarterly return of 175.00%, closing the quarter at GH₵0.22. The rally was mainly due to investor confidence in the firm’s 2021 financial performance. The second gainer for the quarter was GGBL which had a quarterly return of 25.00%. ETI was the third largest gainer ending the quarter at GH₵0.17, which represented a 21.43% quarterly gain. The other gainers were EGL and TBL who gained 18.28% and 17.65% respectively. On the other hand, ACCESS led the pack of 8 losers, ending the quarter at GH₵2.09, representing a quarterly loss of 33.65% followed by PBC ending the quarter at GH₵0.02, which represented a 33.33% quarterly loss. The other losers were FML, BOPP, MTNGH, GCB, CAL and SOGEGH which lost 25.00%, 9.77%, 4.50%, 1.53%, 1.15% and 0.83% respectively. Prices of 16 stocks remained flat.
The performance of the gainers and losers during the first quarter of 2022 on the GSE are detailed in the tables below.
Gainers
| Share | Year High | Year Low | 31st Dec 2021 (GH₵) | 31st Mar 2022 (GH₵) | YTD Gain | Quarter Gain |
| SIC | 0.21 | 0.08 | 0.08 | 0.22 | 175.00% | 175.00% |
| GGBL | 2.22 | 1.80 | 1.80 | 2.25 | 25.00% | 25.00% |
| ETI | 0.17 | 0.13 | 0.14 | 0.17 | 21.43% | 21.43% |
| EGL | 3.30 | 2.79 | 2.79 | 3.30 | 18.28% | 18.28% |
| TBL | 0.40 | 0.34 | 0.34 | 0.40 | 17.65% | 17.65% |
Losers
| Share | Year High | Year Low | 31st Dec 2021 (GH₵) | 31st Mar 2022 (GH₵) | YTD Loss | Quarter Loss |
| ACCESS | 3.15 | 1.90 | 3.15 | 2.09 | 33.65% | 33.65% |
| PBC | 0.03 | 0.02 | 0.03 | 0.02 | 33.33% | 33.33% |
| FML | 4.00 | 3.00 | 4.00 | 3.00 | 25.00% | 25.00% |
| BOPP | 6.65 | 6.00 | 6.65 | 6.00 | 9.77% | 9.77% |
| MTNGH | 1.11 | 1.05 | 1.11 | 1.06 | 0.00% | 4.50% |
| GCB | 5.24 | 5.16 | 5.24 | 5.16 | 1.53% | 1.53% |
| CAL | 0.87 | 0.80 | 0.87 | 0.86 | 1.15% | 1.15% |
| SOGEGH | 1.20 | 1.19 | 1.20 | 1.19 | 0.83% | 0.83% |
Current Economic Environment and Investment Implications
According to data released by the Ghana Statistical Service (GSS), Ghana recorded an economic growth rate of 5.4% in 2021. This is a positive indication that the economy is on the path to recovery to pre- pandemic level. However, other economic factors such as rising inflation and persistent high public debt pose serious implications to the economy. Although public debt to GDP reduced to 76.6% with fiscal deficit reducing to 14.7% in 2021 from 15% in 2020, Ghana’s fiscal risk remains high. Credible reforms are needed to reverse the unfavorable debt dynamics and reduce domestic refinancing risks.
The cedi is likely to further depreciate during the next quarter due to an increase in imports as a result of the revision of the benchmark value policy, as well as Ghana-based multinational companies repatriating their profits.
Interest rates are expected to inch upwards to make local bonds more attractive to prevent capital flight amidst the US Federal Reserve increasing interest rates.
On the capital market, the returns of the GSE Composite Index are likely to rise as investors take up positions in dividend paying stocks such as MTN, SCB, CAL, EGH to mention a few, as ex-dividend dates are announced.
