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17, OCTOBER, 2002

■ The nation that was once called the GoldCoast is now poised to enter a new era dri-ven by the government’s vision for a ‘Gold-en Age of Business’. The west Africancountry of Ghana has huge potential, andits 18-month-old government has alreadymade considerable headway in tacklingthe country’s most pressing needs.

Leaders of industry and commerce are re-gaining their confidence as interest ratesand inflation fall, and as trade opportunitiesopen up in the huge market of the EconomicCommunity of West African States (Ecow-as). Ghana believes it can be the gatewayto the region, providing its landlocked neigh-bors with safe trade routes through its ports.

The country is rich in mineral resources,such as gold, manganese, diamonds andbauxite and there is huge potential in agri-culture and fisheries. Under the AfricanGrowth and Opportunity Act (AGOA),trade links are being developed with theUnited States.

Tourism is also seen as a good invest-ment. The industry is now the third biggestforeign exchange earner, after cocoa andgold, and is set to expand.

The government is determined to reduce unemployment and bring its citizens closer to the global economicmainstream.

Ghana looks set to achieve a five percent annual growth rate over the nextfew years and emerge as a middle-incomenation within 20 years.

“We are building a model societythrough respect for human rights, the ruleof law and good governance to deliver ashining example to the rest of the world,”says President John Kufuor.

“But without continuous investmentour enterprises will not be able to com-pete in the global economy. With this inmind, my government has put in place var-ious policies, programs and projects tohelp the private sector perform.”

Certainly, the international donor com-munity is putting its faith in Ghana, whichis described by one minister as an islandof peace in a sea of turmoil. If the gov-ernment’s macro-economic policies work,then Ghana will surely be looking at thebeginning of a golden age.

See page 2.

■ The most westernized of the ArabMuslim states, Morocco has shown it-self to be a true friend to the U.S. formany years. Indeed, this was one of thefirst countries to recognize Americanindependence.

Now, Morocco is looking to the U.S.for support. The north African countryis seeking foreign direct investment ina bid to further modernize its agricul-ture-based economy. Guided by a youngmonarch, King Mohamed VI, who tookthe throne in 1999, and a reform-mind-ed democratic government, it has already made considerable strides inopening the doors to foreign investors.There has been substantial reform of thelegal and regulatory framework, taxlaws have been revised and generous

fiscal incentives are available.In 2001, foreign investments totaled

over $3 billion, primarily in the telecom-munications sector. Other areas of interest to investors include tourism,textiles, electronics and automobilecomponents. The government’s priva-tization initiative has attracted great in-terest from overseas and is expected togenerate further investment inflowsnext year. There is even talk of a freetrade agreement between the U.S. andMorocco, which could transform rela-tions between the two countries. Theissue was raised during King MohamedVI’s recent trip to the States.

Minister of Economy, Finance, Pri-vatization and Tourism, FathalahOualallou, describes his country as “apoint of convergence”, the most west-ernized country of the Arab world. “It’sa country proud of it’s history and cul-ture; a rich and diversified culture thatis at the same time open to modernity,”he says.

Casablanca, immortalized for Amer-icans by Humphrey Bogart, is now oneof the most prominent commercial cap-itals in the whole of Africa. With well-established links to Europe, and withan EU free trade agreement also in thepipeline, it is now looking West, acrossthe Atlantic, towards the U.S. The dooris open to American companies andtourists alike.

See page 7.

■ Mongolia, landlocked between the twinpowers of China and Russia, is forging its ownidentity on the world stage. Following thedemise of Soviet communism, the governmenthas introduced sweeping reforms that havetransformed this vast Asian republic.

Home to around 2.5 million people, Mongo-lia now combines the ultra-modern with the tra-ditional, from the progressive capital city, UlaanBataar, to nomadic culture on the distant plains.

As well as building ties with its near neigh-bors, the country is also looking to the U.S. andthe West for assistance and partnership. With

an economy based squarely on farming, live-stock and mining, there is a need to diversifyto tackle outstanding social issues such as pover-ty. Government officials have dubbed 2002 as‘The Year of Foreign Investment’.

President Natsagiin Bagabandi says thestrengthening of American commercial inter-ests in Mongolia is a guarantee for future pros-perity and national security. “We want to in-crease foreign investment, expand our foreignrelations and participate actively in regionalorganizations,” he says.

See page 12.

Building a model societythrough respect for humanrights and the rule of law”

IN QUOTES

Ghana Page 2Leaders of industry andcommerce gain in confidence asinterest rates and inflation fall

Ireland 0The Celtic Tiger comes of ageas company profits soar andunemployment drops

John KufuorPresident ofGhana

Morocco Page7

“

A rich and diversifiedculture that is at the sametime open to modernity”

FathalahOualallouMoroccanMinister ofEconomy, Finance,Privatization & Tourism

“

Sustain competitivenessto safeguard the impressiveprogress of recent years”

Bertie AhernPrime Minister of Ireland

“

Expand our foreignrelations and participate inregional organizations”

NatsagiinBagabandiPresident ofMongolia

“

Ready forthe goldenage ofbusiness

Doors are open toforeign investment

Generous fiscalincentives areavailable after a substantialprogram of reform

Mongolia Page12

Looking to diversify theeconomy and buildnew partnerships with the West and the U.S.

MOROCCO Privatization program builds on dynamicprogress and is attracting substantial overseas interest

GHANA Opportunities for trade via region’s gateway

IRELAND New technology brings more prosperity to the Emerald Isle MONGOLIA Sweeping reforms embrace modern era

A republic transformed■ With an annual growth rate ofnine percent since the mid-1990s,Ireland is one of the world’s most dy-namic economies. It has attractedhuge inflows of foreign direct in-vestment in the last decade; up to onethird of U.S. investment in the Eu-ropean Union is destined for Ireland.

From an agricultural-based state inthe recent past, it is now the largestsoftware exporter in the world withIT, chemicals and pharmaceuticalscentral to the new Irish economy.

The government of Prime Minis-ter Bertie Ahern has steered a coursetowards modernization with a slickcampaign highlighting tax breaks,low costs, skilled labor and accessto the growing EU market. Predict-ed future growth rates of four and fivepercent will remain well above theEuropean average.

The Celtic Tiger has received freshimpetus from its membership of theEU and the peace process in North-ern Ireland. Indeed, Mr. Ahern says

the need to secure Ireland’s role inEurope is paramount. “I want Ire-land to stay firmly rooted on the Eu-ropean stage,” he says.

With the launch of the euro cur-rency unit early this year, Ireland isa major component in U.S. corpo-rate strategy towards Europe. Ire-land has developed itself into a goodplace to do business and is an in-creasingly popular vacation desti-nation for Americans.

See page 10.

The success story continues

The tourism sector is Ghana’s thirdbiggest foreign exchange earner.

Proud of their history Moroccanshave a rich and diversified culture.

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17, October, 2002 2Distributed by USA TODAY


New incentives drive the economy forward

The private sector is at the

center of thegovernment’s

plans but furtherinvestment capital

is needed topromote industrial

development

■ Since taking office in 2000, theGhanaian government has donemuch to get the economy on theright track to set the scene for a‘Golden Age of Business’. Arangeof new policies has been adopted,new incentives offered and pro-jects announced that will drive thecountry’s economy forward.

“One of the critical constraintsto our industrial de-velopment in theprivate sector hasbeen the absence ofinvestment capital,”says President JohnKufuor.

“The private sec-tor is at the centerof our economictransformation. Asthe government, wewill continue to doeverything possible to ensure thatour indigenous industrialists be-come vibrant and more resilient.

“But in the current global eco-nomic environment they will haveto forge alliances. Joint ventures andpartnerships with foreign investorswill help them survive in the do-mestic and external markets.”

Mr. Kufuor says that to helpjump-start the economy and re-duce poverty, the government has also injected $14 million from the Highly Indebted Poor Coun-tries (HIPC) scheme into rural areas. “The ordinary man in thestreet has a high lev-el of expectation,”says Mr. Kufuor.

“It may seem thatthis expectation hasobscured the mod-est benefit that hasaccrued so far. Butwhen all the indi-cators reach appre-ciable levels andstabilize, the fullbenefits of the fis-cal policies will berealized.”

The African Growth and Op-portunity Act (AGOA) is a “wonderful opportunity” forGhana, says the president. Theact, signed by Bill Clinton in 2000,offers more liberal access to U.S.markets and tangible incentivesfor African countries to continuetheir efforts to open theireconomies. “To take advantage ofthis, we are reorganizing our non-traditional export sector and have

■ In developed countries, manypeople take out a private pensionscheme. This is not available toGhanaians, but they are able to qualify for a pension by mak-ing contributions to the SocialSecurity and National InsuranceTrust (SSNIT).

SSNIT is a statutory publictrust charged with the adminis-tration of Ghana’s national pen-sion scheme. It is the biggest non-bank financial institution in thecountry.

“It controls the largest pool offunds and has investments in al-most all the companies listed onthe stock exchange plus an addi-tional 50 not listed,” says the Di-rector General, Kwasi Osei.

SSNIT’s short-term investmentshave been in Treasury bills, secu-rities and other financial institu-tions, and more recently in gov-ernment index bonds. “On a long-term basis we have a lot of ourmoney in equities and we haveloaned to companies,” continuesMr. Osei. “We are probably thelargest source of placement fundsto private companies. Spanning all

adopted a number of measures,”says Mr. Kufuor.

An export development andinvestment fund to support ex-porters has been established, andthe business community and rural craftsmen are being ad-vised how to benefit fromAGOA. “I expect bilateral tradebetween Ghana and the U.S. to

increase tremen-dously over the nexteight years,” addsMr. Kufuor.

“I also expect tosee many new jointventures betweenour two countries. Iparticularly hopethat apparel and tex-tile manufacturers inthe United Stateswill relocate parts of

their manufacturing units toGhana to take advantage of thelower costs of production we of-fer, and the opportunity to ex-port finished items to the Unit-ed States duty-free and quota-free,” he says.

President Kufuor aims to de-velop stronger local ties and seesGhana as in the vanguard ofAfrican economic cooperationand integration. “My adminis-tration has pushed a bit further byadopting a pragmatic approachto relationships with our neigh-bors. This approach will bring re-

al and visible bene-fits to the averageGhanaian. We aim toextend an activehand of friendship,cooperation and con-tinuing dialogue toall of our neighbors.”

In June, the Glob-al Compact-Ghanawas launched by theAttorney Generaland Minister for Jus-tice, Nana Akufo-

Addo. The Global Compact is aninitiative from the UN Secretary-General, Kofi Annan, and callson businesses world-wide to helpbuild the social and environ-mental framework to support andensure the continuation of openand free markets.

Mr. Akufo-Addo says that gov-ernment support for the Com-pact means aligning itself to glob-ally accepted rules of doing busi-ness and best practices in corpo-

rate governance. He says that get-ting companies to operate usingthese principles will enhance pro-ductivity and overall performanceof the business sector – in linewith the government’s vision fora ‘Golden Age of Business’.

Mr. Yaw Osafo-Maafo, theMinister of Finance, says the gov-ernment inherited some big prob-lems when it came to power. “In-flation was close to 41 percent andwe needed 45 percent of our rev-enues to service our domesticdebt,” he says. The governmenttook immediate action, imple-menting tight fiscal policies, andby the end of its first year had re-duced inflation to 23 percent; itis now 13.5 percent.

“Ghana has been growing at anaverage rate of about four per-cent for the last 15 years, but wecan do better,” says Mr. Osafo-Maafo. He expects that by the endof the government’s fourth yearin office, the economy should begrowing at seven to eight percent.

“It was the IMF who told the

world that Ghana could make itand that they should invest inGhana. Symbolically, I think thiswas very significant,” he says. “Ifthe U.S. is seen to be showing akeen interest in Africa and doingmore business over here, the oth-er countries will just follow.”

Mr. Osafo-Maafo is pleasedwith Ghana’s relationship withthe World Bank and the Interna-tional Monetary Fund (IMF). Hesays the IMF has played a rolethat is not its usual one and inau-gurated the Ghanaian InvestmentAdvisory Council to identify ar-eas of improvement in govern-ment policy. “The Advisory Coun-cil will help private sector devel-opment. In fact, many of us in thegovernment come from a privatesector background. In this respectwe understand the problems thatpeople face”.

At the Bank of Ghana, Gov-ernor Paul Acquah says the gov-ernment’s strict fiscal policy was“well conceived” and “tightlyimplemented”. “The challenge

GHANA

Public trust targets informal labor forcePENSIONS / National scheme administrator campaigns to encourage saving for retirement

sectors – construction, mining, re-al estate, finance, banking institu-tions, manufacturing and hotels.

“We are either the majority share-holders or have a very significantshareholding. We get involved inhousing projects for workers. Webuild hospitals and turn them overto the Ministry ofHealth or to mis-sionary organiza-tions, and we get in-volved in a lot of so-cial investments, in-cluding schools.”

The trust is work-ing on a new five-year strategy to max-imize the return onits investments andto encourage morepeople to becomecontributors to the pension scheme.“We have a significant role to playin the economic development ofthe country,” says Mr. Osei.

Not all the investments have beenproductive and he concedes therehave been some setbacks. “Wehave some problems with our in-vestments so our focus is very much

on that side of the operations,” hesays. “We have been through dif-ficult times, but we are poised totake off and make significant con-tributions to the economy.”

In five years’time Mr. Osei saysSSNIT will be more customer fo-cused. “We will be judged on how

cost effectively andefficiently we processthe funds and deliverthe service,” he says.

A key element inSSNIT’s strategywill be to encouragepeople who are in the informal sector (casual employment)to start a pension. Thecurrent pensionscheme is virtuallyentirely supported by

workers in the formal sector. “Theinformal sector, by far the largestpart of the labor force, is hardlytouched,” says Mr. Osei. “Out ofthe potential estimated labor forceof nine to 10 million, the schemecurrently covers about 800,000,less than eight percent of the laborforce. One of our key objectives

in the stategic initiative is to ex-pand the coverage to the informalsector. This may require a redesignof benefits, and a repackaging of the program for this sector ofthe market.”

SSNIT carries out extensivepublic relations to persuade peo-ple they should build up a pen-sion for their retirement. There isa weekly radio program aboutthe need to save, as many peopledo not receive a pension fromtheir employers.

“The trend now is towards pri-vatizing social security. The con-cept works well in the more de-veloped countries with matureeconomies and more sophisticat-ed workers who understand theneed to save,” says Mr. Osei.

“But this argument is not soclear-cut in our part of the world.We suggest that social security inits public – as opposed to private– form will be needed for quitea while. It is this type of schemethat allows for the solidarity con-cept – those in higher wage brack-ets can assist the poorer segmentsof the labor force.”

PAUL ACQUAH

Governor of the Bank of Ghana

KWASI OSEI

Director General ofSSNIT

YAW OSAFO-MAAFO

Minister of Finance

is to sustain it. We want singledigit rates of inflation as soonas possible,” he says.

Stabilization of the national cur-rency, the cedi, is also a key prior-ity. “We can control the cedi butnot the dollar, so setting well-bal-anced interest rates is importantto ensure people keep using cedi-based financial instruments, ratherthan shifting to dollar invest-ments,” says Mr. Acquah.

“With the stabilization of pricesand inflation coming down, thereis a certain resurgence of lend-ing to the private sector. The econ-omy is poised to generate incomes and employment.

“When recovery takes hold andemployment begins to expand,then the average person will seeimprovements,” says Mr. Acquah.

Jake Obetsebi-Lamptey, the

Minister of Information and Presidential Affairs, says Presi-dent Kufuor’s administration hasmade great progress.

“One of the biggest things is thenew-found confidence people have– they are part of a popular on-go-ing democratic process. They feelthey can talk to the government andthat it is listening,” he says.

He points to three other factorswhich will contribute to Ghana’seconomic recovery: Ghana’s bur-geoning relations with its neigh-bors, the infrastructure develop-ment, and the National Recon-ciliation Process (NRP).

“The NRPis a bit like the Truthand Reconciliation commissionin South Africa,” says Mr. Obet-sebi-Lamptey. “We believe thatcoming out into a public forumcan help heal old wounds.”

The government is encouraging indigenous business to becomemore resilient by forging joint-ventures with foreign companies.

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■ In the past two years Ghanaianbanks have undergone major restructuring and are today poisedto kick-start new enterprises andreinvigorate old ones. Falling interest rates have reduced thedebts of many companies whichare now able to plow more backinto business.

Most banks still have sub-stantial investmentsin treasury bills, but there has been a gradual switch to different fund vehi-cles. Others arelooking at utilizingthe huge reserves ofthe Social Securityand National Insur-ance Trust (SSNIT),which runs the national pensionscheme.

More rigorous monitoring andaccounting, greater automation andmore efficiency have also helpedthe banks provide new services.Loan portfolios have been clearedup, although banks still supportloss-making enterprises that theybelieve they can turn round.

Daniel Gyimah, Managing Di-rector of the National InvestmentBank (NIB), says much of thelosses on loan portfolios were theresult of high interest rates. “Wewere building up interest that wasunpayable,” he says. “In certaincases we just wiped 50 percent ofthe interest and asked each in-dustry if they could pay the other 50 percent. We got back sub-

stantial income, so we made amoderate profit of $1.7 million.The previous year it was $5.2 mil-lion, but $4.8 million of that wasunrealized exchange gain, so thereal profit was in fact $400,000.”

Mr. Gyimah says the bank ex-amined its loan portfolio and dis-covered that just 12 enterpriseswere responsible for about 40 per-

cent of the non-per-forming loans, main-ly in gold mining,agri-business andfood processing. “Wewent further andlooked at a companyin the agri-businesssector. After restruc-turing, the companyis now back on itsfeet,” he says.

“In gold miningwe found the bank

had actually ad-vanced the moneyfor the resettlementof communities, sothere was no waythat this was going tobe performing. Min-ing had not startedso we said we wouldcover interest forwhatever it wouldcost us until the startof production.”

NIB’s approach ishelping enterprises togenerate higher revenues – it is par-ticularly focusing on supportingagri-business, creating joint ven-tures and developing infrastructure.

Mr. Gyimah also points out thatthere is a great deal of potential inthe food processing and salt pro-duction industries.

The Ghana Commercial Bank(GCB) is a major supporter of thecountry’s oil refinery, giving itloans at less than base lendingrate. “The idea of putting so muchof our resources in one single as-set may not help the bank in thelong run,” says acting ManagingDirector Matilda Obeng-Ansong.

“We may have customers whoperhaps want just $2 million butbecause we have given $30 mil-lion to one company we cannot af-ford to attend to the smaller loan.We are trying as much as possibleto resolve this issue.” The GCB isnegotiating with SSNIT to utilizeits resources. “We think long-terminvestments need to be expand-ed,” says Mrs. Obeng-Ansong.

“SSNIT has saidthey would like tojoin us in a partner-ship where they willlend us long-termfunds to be able tosatisfy our cus-tomers’ requests.The customers wantmoney to buy equip-ment and they willneed seven to 10years to repay this.”

High interest rateshave made it diffi-

cult for customers to repay loans,resulting in high debts, says Mrs.Obeng-Ansong. The bank hastherefore had to make adequateprovisions to cushion itself in adifficult business environment.

“The trend is, however, chang-ing because of favorable economicconditions. Currently, the gov-ernment is encouraging the bondsmarket as a medium to long-terminvestment. This is likely to shifttowards long-term funding.”

Mrs. Obeng-Ansong says thegovernment’s handling of theeconomy has been “very wellmanaged”, but interest rates andinflation are still too high. Sheadds: “Gross domestic product isbuoyant for the region but notenough to obtain tangible eco-nomic benefits for the averageperson to feel.”

■ ‘Government should be in thebusiness of governing and not inbusiness’ is a maxim now heardthroughout the world. The spirit offree enterprise is thriving in coun-tries in which, less than two decadesago, the government owned mostof the companies in every sector,whether manufacturing, mining,agriculture or services.

African administrations weremuch later than most in privatiz-ing businesses they owned andran. Ghana launched its divesti-ture program in 1988, when morethan 300 state-owned enterpris-es were in operation.

A large number of these werein fishing and farm-ing, including poul-try, coffee and co-coa plantations. Oth-ers were in the min-ing, hotel and tim-ber sectors.

Many of themwere performingbadly, often hugelyover-staffed by peo-ple who had no in-centive to workhard, and crippledby bureaucracy andunder-funding. Lackof technical expertise and poormanagement meant many of themwere simply paralyzed and werea serious drain on limited gov-ernment resources.

The government established aDivestiture Implementation Committee (DIC) to execute the program. Today around 250state-owned enterprises have been divested.

For the majority of the enterprises,

assets and shares have been soldto the private sector. In some cas-es, a joint venture has been creat-ed with the government holding apercentage of the shares. A hand-ful have been leased, whilst morethan 40 have been liquidated.

Among the major state-ownedenterprises successfully divestedis West African Mills at Takora-di, in which the German ownershave invested more than $15 mil-lion, saving it from imminent collapse. Cocoa bean processingthere has more than doubled andthe company has been able to takeon many more workers.

Other examples of successful di-vestitures include theTema Steel Compa-ny, which had ceasedoperations prior to itssell-off, Ghana Agro-Food Company, theCoca Cola BottlingCompany and GhanaOil Palm Develop-ment Company.

C o n s i d e r a b l eprogress has also beenmade in the miningsector. In addition toAshanti Goldfields,there is now private

participation in Tarkwa, Dunkwaand Prestea mines.

Benson Poku-Adjei, ExecutiveSecretary of DIC, says divesti-tures are carried out with completetransparency and fairness. “DIC’sinternational image is very im-portant,” he says. “It has to be of-ficial, professional and veryopen.”

He says that the transfer of state-owned enterprises to the private

sector means that the governmentis freer to concentrate on vital ar-eas such as education and healthservices. “I always say to peoplethat state enterprises did not evenwork in communist Russia, yetalone in Cuba,” he says.

“When you look at countries inEurope and at America which be-lieve in an open market, they are theleaders. So why not copy them?”

Investors in state-owned en-terprises are given a wide rangeof incentives, including a “cleanslate” when they take over oper-ations. They can select their ownlevels of staffing and it is gov-ernment policy, with some spe-cial exceptions, to terminate allexisting contracts of employeesupon transfer of ownership.

Other incentives include cus-toms import exemptions, tax hol-idays, generous capital allowance,investment guarantees, free trans-fer of capital, dividends and netprofits, preferential access to themarkets of the Economic Com-munity of West African States(Ecowas), and duty free exporttrade zones.

Mr. Poku-Adjei says there arestill a number of major state-owned enterprises that the DICwishes to divest quickly, amongthem Ghana Commercial Bank,Ghana Railways and the DiamondConsolidated Company. Agricul-tural companies are also goodpropositions, he adds.

“The time is ripe for foreigninvestors to assist us,” he says.“The present government will doeverything to ensure that as far asgood governance is concerned,the right environment is created.”

Greater efficiency and rigorouschecks have set new standards

BANKING / Lenders spread risk and aim to diversify portfolios

Spirit of free enterprise reignsPRIVATIZATION / Wide range of incentives on offer for investors

BENSON POKU-ADJEI

Executive Secretary of the DivestitureImplementation

Committee

MATILDA OBENG-ANSONG

Acting ManagingDirector of GhanaCommercial Bank

DANIEL GYIMAH

Managing Director ofthe National

Investment Bank

The Ghana Commercial Bank wants to shift to long-term funding.

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■ The government of PresidentJohn Kufuor has been in powerless than two years, but there arealready noticeable changes, par-ticularly in the business commu-nity. In creating the Ministry forPrivate Sector Development, thepresident sent a clear signal toGhana’s private entrepreneurs thathe was going to back them.

Industry leaders are expressingmore confidence in the economyand are beginning to see the excess of regulations and time-consuming impediments to busi-ness being cut away. While thishas yet to produce results that filter down to the poorest Ghana-ians, the tremendous scope forinvestment offers the hope ofgreater employment prospectsand higher living standards.

“There is no doubt in anyone’smind that the private sector is bestat delivering production,” saysKwamena Bartels, the Minister forPrivate Sector Development. “Thepriority for the government hasbeen to see what needs to be doneto facilitate the private sector to op-erate with maximum efficiency.”

Mr. Bartels says that when thepresent government came to power the economy was in poorshape. “In 2000 it was a disaster.Inflation was going through the roof and a lot of businesseswent under.

“When we camein, our first objectivewas to stabilize the macro-economic situation, to controlinflation and to bringdown interest rates.To a large extent, wehave succeeded indoing this.”

Now the govern-ment is tackling bot-tlenecks that slowdown trade. “Some of our legalstatutes need to be reformed,” hesays. “For example, insurance

law makes it impossible for in-surance companies to invest inequities.” Effort is being made tobring the public and private sec-tors closer together. “The publicsector has always seen the pri-vate sector as an anathema be-cause of our colonial history,”adds Mr. Bartels.

With projected return on in-vestments averaging 25 percent,

ministers and pri-vate sector leaderssay now is a goldenmoment for foreigninvestors. NanaAsare, President ofthe Private Enter-prise Foundation(PEF), says: “I thinkthat President Ku-fuor is definitely acommitted person tothis Golden Age ofBusiness.”

PEF is the umbrella organiza-tion for all the players in the pri-vate sector, from exporters’ and

industrialists’associations to cham-bers of commerce, delivering aunited voice to the government.

While Mr. Asare praises thegovernment’s approach, he addsthat there is still work to be done.“I believe that where the gov-ernment is doing well in bring-ing the macro-economic envi-ronment under control, which wasreally unfriendly for business, ithas not helped theordinary man in thestreet,” he says. “Webelieve the way for-ward would be to fo-cus seriously onagriculture, becausethere is a need to cre-ate more jobs.”

By adding value tocrops through pro-cessing – for exam-ple, turning maize in-to cereals – the livesof many people wouldbe improved, says Mr. Asare. “Ithink that, first and foremost, the

government has to create an enablingenvironment for a lot of investmentto come into agriculture. We can im-prove the lives of our people. If theyare going to feel the benefits of eco-nomic prosperity, it must be feddown to the grass roots, in health care,in education and in other facilitiesthat makes life worth living.”

An increasing number of multi-national companies are seeing the

benefits of investingin Ghana – Heinzhas a tuna packingfactory in Tema forexport to the U.S.market. Local com-panies are also moreconfident of growth,as they look to the250 million-strongmarket of Ecowas,the Economic Com-munity of WestAfrican States.

Ernest BediakoSampong is director of one suchlocal company, Ernest Chemists

Limited. He established two phar-macies in the mid-1980s, import-ing generic drugs from the UK,Slovenia, Belgium and Bulgaria.

The pharmacies grew and be-gan to deal with some of thebiggest multinational drug man-ufacturers, but when the cedi be-gan to lose value in the late 1990s,Mr. Sampong decided that theycould no longer compete in theimport business andthat they should gointo manufacturing.Land was acquiredat Tema, only 30minutes drive fromAccra, and he builta modern multi-pur-pose pharmaceuticalplant to produce a range of drugsfrom antibiotics topainkillers, as wellas disinfectant andantiseptics.

“Our mission is to supply highquality medicines at highly

affordable prices,” says Mr. Sam-pong. “There will be no compro-mise on quality because we arefocused on becoming one of thebest indigenous African pharma-ceutical companies. We think wecan achieve this objective, espe-cially now that we have the Ecow-as market to enter.”

The family-owned companyhas two major distribution outletssited in Accra and Kumasi, tocater for the southern and north-ern sectors of the country. “Ourstaff comprise pharmacists,chemists, technicians, marketingpersonnel, accountants and oth-er professionals,” he says. “We gofurther to train them and upgradetheir skills to make them feel com-mitted to their work.”

He says that there will alwaysbe a certain percentage of cus-tomers who prefer the importedproducts to the locally manu-factured ones. “We still importproducts for retail and whole-saling as we can’t produce every-thing ourselves”.

Mr. Sampong agrees with NanaAsare that the government is work-ing more closely with the privatesector to boost the economy.

“Now the government has es-tablished a whole Ministry forPrivate Sector Development, itmakes it easier for private busi-

nessmen to interactwith the govern-ment. The creationof that ministry isclearly a shift fromthe past and that isvery encouraging,”he says.

As for the futureMr. Sampong wantsto see Ernest chemistsin the top ten Ghana-ian companies. “Wehave a well motivat-

ed labor force and we are workinghard to improve upon the healthneeds of our people.”

■ The potential for tourism hasyet to be fully exploited in Ghana,a country with a rich culture, unspoilt beaches and superb gamereserves. Many of its visitors areAfro-Americans keen to learnabout their African history, and forsome it is an emotional experience.

Ghana, once known as the GoldCoast, was a main center in westAfrica for the slave trade. Alongthe coast, more than 40 forts andcastles where once slaves wereheld before being shipped to theNew World are now open to vis-itors and are designated WorldHeritage sites.

Although Ghana’s tourism in-dustry is still in its infancy, everyyear more than 400,000 visitors ar-rive to explore their roots, watchthe varied wildlife or simply relax on one of the many finebeaches. Hardly a week goes bywithout a colorful festival beingstaged somewhere in the country and these are always a big drawfor vacationers.

The government has made thetourism sector a priority growtharea. Part of its strategy is to encourage tourists to visit

several of the country’s 10 regions in order to generate incomein poorer areas.

“It has become apriority for the gov-ernment because the potential isthere,” says HerbertAcquaye, GeneralManager of the LaPalm Royal BeachHotel. “We have the right weatherand the right attractions, and the people here arevery hospitable.”

The five-star hotel, about fiveminutes’ drive from Accra’s

financial district, is part of the Gold-en Beach Hotels group.

Currently there are127 rooms, scatteredthroughout approxi-mately 30 acres of lushlandscape, creating theimpression of a smallvillage. In anticipationof greater numbers ofvisitors, La Palm isplanning to investaround $15 million inbuilding 200 newrooms; a casino andnightclub are also onthe drawing board.

“It is going to be the largest casino in the country, maybe even

in west Africa, and it is going to bring a lot of people here,” says Mr. Acquaye.

La Palm already has the largestswimming pool in Ghana, with amaze of lagoons, bridges and is-lands. Mr. Acquaye says a secondpool is to be built that will be evenbigger, with an overall length ofmore than 1,000 yards.

The hotel has some of the finestconvention facilities in the country,and until now has concentrated onthis sector of the tourism business.However, this is set to change, saysMr. Acquaye.

“At the moment we are more ofa business hotel, and we have beenconcentrating on conventions,” he

says. “But we should see somechanges over the next year and thereason for the new facilities is thatthere are a lot more airlines com-ing to Ghana.”

Mr. Acquaye is also enthusias-tic about the prospects of increasedvisitors to other hotels in the Gold-en Beach Group.

About two hours’ drive from Accra is the group’s luxuriousElmina Beach Resort, Ghana’slargest hotel outside the capital.

Elmina is not far from the KakumNational Park, which has the world-renowned rope walkway toweringabove the rainforestcanopy. Thepark, offering visitors the opportu-nity to see a wide range of

mammals, reptiles, amphibians andbirdlife, was the 1998 recipient ofthe Global Winner Award underthe British Airways sponsoredTourism for Tomorrow Scheme.

The resort is also within easydistance of the Cape Coast forts andcastles. Elmira Castle, just a fewmiles away, was built by the Por-tuguese in 1482 and is the oldestEuropean-built structure still stand-ing in sub-Saharan Africa.

The third hotel in the GoldenBeach Group is Busua Beach Re-sort, about four-and-a-half-hours’drive from Accra. Near a bird sanc-tuary and a fort, Busua has milesof golden beaches to stroll along andwater sports are popular.

17, October, 2002 4Distributed by USA TODAY Our World


Historic trail adds extra meaning to beauty and the beachTOURISM / Country set to benefit as priority strategy aims to exploit wealth of natural attractions and generate income nationwide

Companies such as the family-owned Ernest Chemists Limited welcome government initiatives to help local entrepreneurs flourish.

La Palm Royal Beach Hotel, which boasts superb leisure and business facilities, is testament to the widespread confidence in the future of Ghana’s tourism sector.

PRIVATE SECTOR / Improved trading environment attracts attention of multinationals

Fledgling regime is better for business

KWAMENA BARTELS

Minister for PrivateSector Development

NANA YEBOAH KODIEASARE II

President of thePrivate Enterprise

Foundation

ERNEST BEDIAKOSAMPONG

Director of ErnestChemists Limited

HERBERT ACQUAYE

General Manager ofLa Palm Royal

Beach Hotel

Ern

est C

hem

ists

Ltd

.

■ Agriculture is the biggest em-ployer in Ghana, engaging morethan 60 percent of the workingpopulation, and continues to bethe main sector of the economy.Cocoa is traditionally the mostimportant crop and is the coun-try’s second largest export earn-er after gold.

“Côte d’Ivoire produces thelargest quantity of cocoa– we arethe second largest producer – butwe intend to keep our position ofproducing the best quality co-coa,” says Kwame Sarpong, ChiefExecutive of the Ghana CocoaBoard (Cocobod).

“Ghana has always producedthe best quality cocoa in theworld,” he adds.

Mr. Sarpong says Ghana couldincrease production from the cur-rent 400,000 tons a year. “We be-lieve we can do this because wehave the best quality. We wantbuyers to come to us first,” he says.

“Years ago people tended to ignore the importance of cocoa forGhana, preferring to encourage diversification. But I feel that weshould not ignore this core ac-tivity and we should explore allits potential while also develop-ing other areas.”

Major confectionery and chocolate

manufacturers worldwide alreadyexclusively use Ghanaian cocoa intheir products. Jamieson in the U.S.is one and Cadbury in the UK isanother, says Mr. Sarpong.

There are around250,000 cocoa farm-ers, each with aroundfive acres of land, andabout 800,000 peo-ple are involved inthe industry. Mr. Sar-pong is against theidea that cocoa cropsshould be grown onlarge plantations.“Under the reformprogram we cater forsmall farmers. We aredeveloping the technology to in-crease production, hopefully byfive times in the next four to fiveyears, without losing quality andperhaps even improving quality,without planting additional trees,”he says. “To reduce poverty, weneed to help small farmers.”

Cocobod does this in variousways, probably the most impor-tant of which is its Cocoa Re-search Institute. Mr. Sarpong saysresearch shows that cocoa beanby-products could be used in oth-er manufactured products such asalcohol.

“Instead of throwing away theby-product of the beans we shouldbuy it from the farmers. This willenhance their incomes,” he adds.

Timber is Ghana’s third largestexport commodity.The sector accountsfor about 11 percentof total export earn-ings and contributessix percent to grossdomestic product.

In recent years theindustry’s exportsearnings have aver-aged $170 million.The European Unionis Ghana’s main tim-ber trading partner,

accounting for between 65 and75 percent of exports, but theU.S., the Middle East and otherAfrican countries are also exportdestinations.

Productive forest reserves areestimated at 2.96 million acres, buta sustainable timber industry is thekey objective of the ForestryCommission. “Our core respon-sibility is to ensure sustainablemanagement and development ofthe forest and wildlife resourcesof this country,” says the com-mission’s Chief Executive,A.S.K. Boachie-Dapaah.

The commission is to developover 49,000 acres of plantationsannually, concentrating on in-digenous species. Some 30,000farmers are taking part in the de-velopment scheme and they willintercrop the trees with food crops.“We are putting money into thehands of the local communities,”says Mr. Boachie-Dapaah.

It is estimated that logging andmilling waste accounts for up to45 percent of the harvested tim-ber in the country. Mr. Boachie-Dapaah points out there are in-vestment opportunities in the in-dustry in the manufacture of bri-quettes, particleboard and block-board from the waste material.

■ African countries have the leastnumber of telephones per capitaof anywhere in the world. Thehuge distances and often ex-tremely harsh terrain have ham-pered development, but above allit has been the continent’s pover-ty that has held back the sort ofadvances the western world takesfor granted.

Ghana is no different frommany other African nations in thisrespect. With a population of 20million there are 265,000 fixedlines. Cellular telephony was in-troduced in October 2000 andnow has a customer base of 78,000subscribers.

When the state-owned GhanaTelecommunications Company(Ghana Telecom)was partially priva-tized in 1997, thenumber of fixedlines was fewer than80,000. The suc-cessful bidder for the30 percent share ofGhana Telecom putup for sale wasMalaysia Telecom.Although the num-ber of fixed lineswas increased andimprovements made, not all thetargets were achieved and the gov-ernment decided to end the rela-tionship with Malaysia Telecom.

The government has now in-vited Norway’s Telenor to drawup a business plan and to providecommitments on financing. “Weare working with them on thisplan and we will discuss how itwill be financed,” says DicksonOduro-Nyaning, Chairman ofGhana Telecom’s Interim Man-agement Committee and ChiefNetwork Officer.

He says that at the time of privatization there were some

contractual obligations laid downby the National CommunicationAuthority. These included a tar-get to install 50,000 lines a year.

“We were thus obliged to ex-pand massively to fulfill this,”says Mr. Oduro-Nyaning. “In ad-dition we were contracted to im-prove the quality of service in lo-cal, national, long distance and in-ternational call completion rates.We also had to improve our faultincidence rates and operator re-sponse times. In some areas wedid well but in others we did not.”

Ghana Telecom succeeded inimproving international calls byreplacing the old switching gear,as well as operator response times.“However, local and national long

distance call com-pletion rates and service provisiontargets were notmet,” says Mr.Oduro-Nyaning.

“In some areas only 42,000 or48,000 lines were installed instead ofthe 50,000 target. Sowe did not fail by agreat margin.”

The government’snew target is to increase the number of fixed lines to 400,000over the next three years and toincrease the number of publicphone booths, particularly in thecountryside. “Outside the bigcities the rural areas have practi-cally no facilities,” says Mr.Oduro-Nyaning.

The government is also to re-view the possible entry of moreoperators. “The directives havenot yet been made. However, itis expected that when investmentis forthcoming a second or thirdoperator will be licensed to com-pete with Ghana Telecom. I don’t

think it will affect us because thepotential is so big,” he adds

When Ghana Telecom intro-duced its mobile telephone serviceit decided to cover all of the coun-try’s 10 regions except the UpperEast and Upper West Regions.“But we still don’t have sufficientcoverage to meet demand,” addsMr. Oduro-Nyaning.



Enhancing the prosperity of the country’s small farmers remainsat the heart of the Ghana Cocoa Board’s overall strategy.

The government plans toexpand telephony facilities in rural areas.

New potential for cocoa and forestry AGRICULTURE / Production advances will not compromise quality

Crucial developmentplan is back on line

TELECOMS / Focus switches to finance

DICKSON ODURO-NYANINGChief Network

Officer at GhanaTelecom

A. S. K. BOACHIE-DAPAAH

Chief Executive of theForestry Commission



■ Ghana is determined to be thegateway to west Africa by creat-ing maritime and airport hubs andopening up trade for its landlockedneighbors. It will be a long haul,but the country’s ports are alreadybeginning to attract more business.

The Ghana Ports and HarborsAuthority (GPHA), which ownsand operates two ports, is striving to become the most efficient one-stop service centerin the Economic Community ofWest African States (ECOWAS).

The authority has turned overthe majority of cargo handling to private operators and by the endof the year all cargo will be handled by pri-vate firms.

The main port,Tema, and the small-er Takoradi, handlemore than 85 per-cent of Ghana’s ex-ports and imports.The dredging ofTema port from 9.6meters to 11.5 me-ters to allow largervessels to berth hasalready been com-pleted and work hasstarted to extend Tema’s secondquay and construct a dedicatedcontainer terminal.

To expand the use of the ports,roads are being upgraded to pro-vide better links to the rest of thecountry and beyond. They includethe asphalting of the road fromTema to the northern border townof Paga to ensure a smooth trans-port route to Burkina Faso.

Other improvements plannedinclude upgrading the 50-mileroute between Tema and the riv-er port of Akosombo, and the de-velopment of an inland port atBoankra near Kumasi with facil-

ities for cargo destined for thenorth of the country and land-locked neighbors.

Security at the ports and ontransport routes has been im-proved, Customs and Excise op-erations streamlined and plansare far advanced to introduce one-stop documentation. To ensurefaster and easier port operations,an electronic data interchangesystem is to be developed.

Ben Owusu-Mensah, GPHADirector General, says: “Our man-date is to make sure that the costof doing business here is as lowas possible. In order to increase ef-ficiency we had to downsize and

so we set up an ear-ly retirement scheme.People were happywith the package andwe have reduced the permanent stafffrom 2,961 to around1,410.”

His focus now ison strengthening theprofile of Takoradiin the region. “Therehas been a big in-crease in traffic fromBurkina Faso, Mali

and Niger, and recently we havebeen able to wrestle traffic fromLome and Benin. Most people pre-fer to ship their cargo through here,so we are making real headway.”Mr. Owusu-Mensah wants Tako-radi, which mainly handles cocoaexports, to be the preferred port forGhana’s neighbors. “Our onlyproblem is the rail link,” he says.“If this develops we should be ableto really capture the transit cargo– even cargo meant for other ports.”

The government plans to ex-tend the railroad north, and theproposed inland port at Boankrawill also be connected by rail.

Much of the current rail networkhas been poorly maintained andwill require considerable invest-ment to modernize.

Mr. Owusu-Mensah is opti-mistic that the future bodes wellfor the ports as transport links areimproved. “Already some of theshipping lines are trying to useTema as their transshipmentpoint,” he says.

“They bring cargo from Benin,Dakar, Lome and Abidjan. Wehave P&O and other shipping linescoming here. What we really needto do is create space, which is whywe are building a container ter-minal outside the port.”

Tema and Takoradi are freeports and Mr. Owusu-Mensahwould like to see more investorsset up businesses in them. In thevicinity of Tema, the GPHA has168 acres of land available fordevelopment.

“We are opening an office inBurkina Faso to market our ports.This is an area where we can seegrowth,” says Mr. Owusu-Mensah.“If the free zones are marketed prop-erly and we attract foreign firms tolocate here for production it will in-crease traffic considerably.”

Dr. Richard Anane, the Minis-ter of Roads and Transport, is askeen to develop Ghana as an air-line hub as he is to make the coun-try a maritime hub. “We need tocreate an airline hub to exploitthe the sub-region, which has apopulation of about 250 million.

“If we can do this there is noreason why other airlines couldnot radiate from here to other partsof the world. We are expandingthe airport to ensure we can ac-commodate the traffic we antic-ipate. We want to make Ghana thegateway to the sub-region, so wemust reposition our airline.”

■ Without electricity, there canbe no industrialization. It is a co-nundrum that everyone in Ghanawould like to solve, not least President John Kufuor.

Interruptions in power supplydiscourage investment. When thestate-owned electricity generatorVolta River Authority (VRA) cel-ebrated its 40th anniversary lastyear, the President Kufuor wrote:“From scientific socialism to theGolden Age of Business, whichis offering us another opportuni-ty to usher Ghana into a success-ful and competitive modern in-dustrial and technological econ-omy, the VRA remains resoluteand purposeful to fulfill its piv-otal role, which is to continue topower Ghana’s development, nomatter the name and thrust of theprevailing political vision.”

His words have been the yard-stick by which all else is mea-sured for Dr. Charles Wereko-Brobby. As VRA’s Chief Execu-tive he faces the enormous chal-lenge of increasing power sup-plies as well as reducing costs.

Currently, Ghana is in the strangesituation of being obliged to im-port electricity to meet growingdemand, while at thesame time it also ex-ports power. “I do notbelieve that we canredirect ourselves toan export marketwhen the commit-ment of the govern-ment is to the Gold-en Age of Business,”says Dr. Wereko-Brobby.

It’s estimated thatfurther industrial de-velopment in thecountry will lead to a threefold orfourfold growth in domestic pow-er usage over the next decade.

For this year and 2003 alone,the VRA will require about $82million to construct and operatea 100MW strategic reserve pow-er plant to satisfy immediateneeds. A further $55 million willbe needed for the construction ofcritical transmission lines overthe next two years.

For Dr. Wereko-Brobby, the mainproblem is obtaining an econom-ic tariff for electricity. “We are try-ing to tell all our customers that weare not in the charity business andthat we should recover fully thecost of producing power,” he says.

“We are also trying to get acrossthe message that we do not be-lieve that electricity is a free social good for which the gov-ernment should put valuable re-sources into subsidies.

“At the moment consumers donot pay economic prices,” he says.

His solution to the dilemma isa transitional period in which sub-

sidies are phased outand tariffs adjustedaccordingly. “I thinkthat the institutionshave by and largeaccepted the argu-ment and so in thisyear’s budget, forthe first time, thereis a transparent sub-sidy to support thegap between the current tariffs andmore economic tar-iffs,” he says.

The main VRA power genera-tor is the massive Akosombo hy-dropower plant, with an installedcapacity of 912MW. Behind thedam is the world’s largest man-made lake. A second hydropow-er plant at Kpong brings the to-tal generating capacity on the Vol-ta River to 1082MW.

VRAsells its power to about sev-en major bulk customers, the largestof which is the Valco aluminumsmelter at Tema, followed by theElectricity Company of Ghana,which is responsible for distribu-tion to the majority of domesticconsumers. The authority also ex-ports to Togo and Benin, suppliestowns in Burkina Faso, as well as

importing from Côte d’Ivoire.As the country’s demand for

electricity has outstripped the hy-dropower generation system, theshortfall in demand has been metthrough the development of ther-mal power systems. A 330MWcombined cycle thermal plant wascommissioned at Takoradi in1998. This was followed by an ad-ditional 220MW thermal plant atthe same site, developed in a jointventure with CMS Energy ofMichigan. A110MW steam plantis to be added to the Takoradiplant bringing the total installedthermal generation capacity to 660MW.

At the moment the Takoradiplant uses relatively expensivediesel oil as fuel but it was de-signed with cheaper natural gasin mind. However, the ‘GoldenAge of Business’will be more re-alizable when Ghana begins re-ceiving gas from Nigeria via theWest African Gas Pipeline(WAGP). As a foundation cus-tomer, VRA will pay about $70million annually for gas to pow-er the Takoradi plant.

“Gas will cut our generationcosts by anything up to 40 per-cent,” adds Dr. Wereko-Brobby.“With gas we should be able toget our costs down to around threecents per KW hour, which makesus competitive as a resource formanufacturing industry.”

The WAGP is expected to beready in 2005 and it will act as animportant infrastructure to the sub-region, boosting industrializationand development along its route.

INFRASTRUCTURE / Ultimate aim is to be gateway to the region

ELECTRICITY / Increasing demand generates realistic price policy

Power supplier has pivotal role

Ports profit amid a hub of activity

The massive Akosombo hydropower plant is supplied by the world’s largest man-made lake.

BEN OWUSU-MENSAH

Director General ofGhana Ports and

Harbors Authority

CHARLES WEREKO-BROBBY

Chief Executive of Volta River

Authority

A 110MW steam plant will be added to the existing thermal plantat Takoradi bringing the combined capacity to 660MW.

Volta

Riv

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rity

Volta

Riv

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utho

rity


Flourishing economy is testament toforesight of structural reform program

Far-reaching modernization measures and the achievementof fiscal discipline are reaping rewards across all sectors

and herald a period of dynamic and sustainable growth

Dynamic corporationplays national role


■ Banque Commerciale duMaroc is Morocco’s leading pri-vate bank and is one of the coun-try’s most dynamic corporations.It sets an impressive standard,with market shares of 17 percentin deposits, 17.2 percent in loansand 25 percent in internationaltransactions.

Founded in 1911, BanqueCommerciale du Maroc emergedfrom the banking system reformof the1990s as the second largestdomestic bank, with a truly glob-al perspective. Says Ali IbenMansour, General Manager andDirector of BanqueCommerciale duMaroc: “The suc-cess of the newbanking systempaved the way forour increased com-petitiveness and re-inforced the soundeconomic image ofthe country. Thiscompetitiveness,led by the modern-ization of the bank,has followed a pos-itive trend in spiteof the slowing down of the econ-omy due to a drought which last-ed for more than three years.”

As the leading banking net-work in the private sector, with262 branches, Banque Com-merciale du Maroc plays an im-portant role nationally. Mr. IbenMansour explains: “We are a na-tional bank, but not in a nation-alistic sense. We want to remainclose to our customers and staytrue to our values as an easily ap-proachable bank, always strivingfor excellence.” Proof of that isthe strong increase in the num-ber of ATMs, the comprehensiverange of financial products andthe improved telebanking ser-vices, which the bank offers toits retail and corporate customers.

“At this point, we are well-es-tablished throughout the country

and try to cover the needs of everysector of the Moroccan econo-my,” says Mr. Iben Mansour.

Through its network in majorEuropean countries, BanqueCommerciale du Maroc has alsoestablished an international di-mension and is consolidating itsexperience in the processing andfinancing of foreign trade trans-actions. “We believe that, withtime, Morocco will increasinglypresent itself as an attractive plat-form for foreign investors,” Mr.Iben Mansour says. “As the cross-roads of the world’s major trade

flows, Morocco of-fers a sound envi-ronment for thoseeconomic operatorson the look out fornew investment op-portunities.”

Abdelaziz Alami,Chairman and ChiefExecutive Officer ofBanque Commer-ciale du Maroc forthe last 33 years,adds: “We expect anincrease in Ameri-can investment in

Morocco as the economic ties arestrengthened and talks of a free-trade accord in the near futureare finalized.” He continues: “Ourbank offers all the requirementsthat international investors arelooking for in a local partnershipand we are ready to work withthem hand in hand.”

After decades of constant de-velopment, Banque Commer-ciale du Maroc intends to use allits assets to build on its leadingposition. It has a number of pri-orities, such as dominating mar-kets, increasing profitability andimproving quality of service.Alami concludes: “We firmlybelieve in the virtues of our hu-man capital and, above all, wewant to remain a people-orient-ed bank as we grow and win newmarket shares.”

ABDELAZIZ ALAMI

Chairman and CEOof Banque

Commerciale du Maroc

■ The political and economicreforms of the 1990s have helpedtransform Morocco into a mod-ern and diversified industrialstate. Though agricultural activ-ity remains dominant, in termsof employment, there is an in-creasing emphasis on new ex-port-based industries, such aselectronics and automobile com-ponents, servicing the vast Eu-ropean marketplace just acrossthe Mediterranean Sea.

Granted independence fromFrance in 1956, it has not alwaysbeen an easy ride, but the coun-try has worked diligently on struc-tural reforms with the IMF and theWorld Bank to address imbalancesand achieve sustainable growth.

Despite a high external debtstock and an over-dependence onan agricultural sector vulnerableto drought, the economy is flour-ishing. In 2001, GDPgrowth post-ed a healthy 6.5 percent. Ac-cording to Moroccan governmentstatistics it will grow again by 4.6percent this year, then to 5.8 per-cent in 2003.

There are positive signalsthroughout the economy with ro-bust growth predictions for theindustrial sector, mining, trans-port and communication and thenon-commercial sector.

The reform process has beenwide-ranging. Large swathes ofpublic companies have been soldoff to the private sector and foreigndirect investment is on the rise.

According to Fathalah Oualal-lou, Minister of Economy, Fi-nance, Privatization and Tourism,

macro-economic stability is crit-ical for the ongoing success ofthe country. “I think we haveachieved that in the last fouryears,” he says.

There is a real commitment tofiscal discipline from Morocco’snew breed of politicians and man-agers. The budget deficit, inflationand the balance of payments sit-uation, have all been reined in,which sends out a positive signalto investors. The external debt hasbeen slashed from $29 billion fouryears ago, down to $11 billion.

There is also a commitment toimprove educational facilities andsocial welfare, in a country wheremany people remain poor andwithout basic services such asclean water and electricity. Theintroduction of private manage-ment concessions to run utilitiesin the major urban centers hastransformed the pro-vision of these ser-vices for city-dwellers, however.

Hassan Bernous-si, Director of theForeign InvestmentDepartment, a divi-sion of the financeministry, is respon-sible for promotingthe new face of Mo-rocco to outsiders.He believes foreign investment is vitalfor the country to reach its po-tential. With the aid of foreigncapital and know-how, areas suchas food processing could be trans-formed.

“I find it frustrating to see Mo-rocco, with all the fish productsthat it has, able to process onlysardines and fish cereal,” he says.“It’s the same thing for agricul-ture as we can only process toma-toes. With the help of foreign investors we canprocess many otherproducts.”

Certainly, Moroc-co is receiving inter-est in a number ofnon-traditional areas.In the automobilessector there is Gen-eral Motors andVolkswagen; in theelectronics sector,there is Siemens.There are clear op-portunities in more traditionalbusinesses such as tourism andtextiles. The government has made

growth of thetourism sector its toppriority and wants toattract 10 million vis-itors a year by 2010,up from the current2.3 million figure.

Many foreigncompanies regardMorocco as a bridgeto Europe, given itsclose proximity,cheaper costs andgood relations withthe EU. The Moroc-

co-EU free trade agreement be-came effective in March 2000 andnow almost three quarters of thecountry’s exports go to the EU.

The government has put in place

a strong package of incentives toattract more business. Among theassistance available is the HassanII Fund for Economic and SocialDevelopment, which can assistwith investment costs associatedwith land purchases and the con-

struction of build-ings. Priority sectorsinclude tourism,electronics, IT,telecommunica-tions, car compo-nents, textiles, aero-nautics and foodprocessing.

Hassan Chami,President of theGeneral Confeder-ation of MoroccanEnterprises, the rep-

resentative body for the privatesector, says that the country’sdemocratic political system isanother selling point. “We arethe certainly the most democra-tic in the south of the Mediter-ranean,” he says. “This is an ex-tremely important advantage.”

Mr. Chami believes hugestrides have been taken, not on-ly in terms of political reform, butalso in the advancement of the in-dustrial and commercial sectors,which are now more diverse andproductive than before. There isstill plenty of room for improve-ment, however. He believes U.S.investors can play a meaningfulrole in the long-term develop-ment of the country. “I believethat there are certainly links to bedeveloped between the two coun-tries,” he says.

■ Since the reform of the Mo-roccan banking sector in the1990s, a lot of things havechanged for the better. The in-dustry has become more sophis-ticated, offering greater productvariety and better value, while in-stitutions are more closely alignedto international standards.

The country’s financial servicessector has matured. The injectionof new capital and managementfollowing the privatization of for-merly state-controlled banks hasbrought profound change, in termsof modernization and customer fo-cus. These days, the concepts rangefrom internet banking to bond mar-kets. The development of the Mo-roccan economy is expected tobenefit these new-look institutions.

Although there are nearly 20commercial banking organiza-tions in Morocco, there is a heavyconcentration of assets. The fourleading banks control more than72 percent of the country’s de-posits and 66 per-cent of all loans.

Another issue fac-ing the banking com-munity is the rela-tively low penetra-tion rate, only 20 per-cent of the entirepopulation has abank account, andthere is only onebranch for every20,000 inhabitants.

For many, though,this represents opportunity. Mo-rocco’s consumer banking marketoffers rich potential, especially giv-

en the trend towards urbanization.Banque Marocaine du Com-

merce Exterieur (BMCE), whichwas privatized in 1995, has already

made significantheadway in the con-sumer market. Thebank, founded afterindependence to dealwith Morocco’s for-eign trade, is now apioneer on the retail,as well as the com-mercial, side.

Othman Benjel-loun, Chairman andChief Executive Of-ficer, says that retail

banking is a priority area, provid-ing customers with a choice of ser-vices such as mortgages, loans and

savings vehicles. For Mr. Benjel-loun, BMCE’s corporate social re-sponsibility also plays an importantrole. “For us this reflects our phil-anthropic actions related to the en-vironment and children in rural ar-eas. Specifically, the BMCE Foun-dation was created with two mis-sions: the fight against illiteracyand the preservation of the envi-ronment,” he says.

The bank, which is still the lead-ing player in the international tradefield with nearly 30 percent mar-ket share, has pio-neered the develop-ment of higher value-added products inMorocco in recentyears. A year afterprivatization itlaunched a $60 mil-lion global deposito-ry receipts programon the internationalmarket, a first of itskind for the country.

Technology is play-ingan important role in shaping thenew-look financial services in-dustry. Institutions like BMCE andothers are placing a major empha-sis on the Internet, tele-bankingand other home-banking accesstechnologies. It is another way toraise banking penetration ratesacross the country.

As one of the oldest institutionsin Morocco, Banque Centrale Pop-ulaire, is deeply involved in pro-moting banking and developmentthroughout the country. Initiallydedicated to small and medium-sized firms, the bank now boasts

an impressive array of new cus-tomers, including big corporationsinvolved in international trade. Itis already one of the best known in-digenous banks abroad and receivesan estimated 60 percent of all re-mittances from Moroccans livingoverseas. According to NoureddineOmary, Banque Centrale’s ChiefExecutive Officer, the institution issomething of a link between thecountry itself and the Moroccan di-aspora around the world.

The bank – which is slated for pri-vatization in the nearfuture – plays the roleof a central bank tosome 15 other re-gional developmentbanks scatteredthroughout the coun-try. One of its majoraims is to promote lo-cal and regional bank-ing activities throughits network of 400branches. After pri-vatization, this fun-

damental role will continue. “Thisinstitution should contribute to thedevelopment of the national econ-omy,” says Mr. Omary.

He believes that the countryhas come through the hardestpart of the reform process andthat the industry is now more se-cure as a result. “The bankingsector was able to face its diffi-culties especially after the re-forms of 1993 which workedboth to liberalize the sector andto impose certain rules whicheventually gave more security tothe industry,” he says.

MOROCCO

Today Morocco presents the world with a picture of vibranteconomic health that holds substantial investment opportunities.

Morocco’s banking sector isdeveloping at speed.

HASSAN BERNOUSSI

Director of theForeign Investment

Department

Banque Commerciale du Maroc plans to enhance its leading positionby improving its quality of service and increasing its profitability.

Consumer market offers increasing valueFINANCE / Sophistication and choice are the watchwords of revitalized finance sector

OTHMAN BENJELLOUN

Chairman and CEO of BMCE

NOUREDDINE OMARY

CEO of BanqueCentrale Populaire

HASSAN CHAMI

President of CGEM

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century, little development of theseresources was ever undertaken. Thearrival of more foreign firms is anexciting recent development, addingfresh impetus to the relatively un-derexplored Moroccan territory.“What is new today is that most of

the firms are interest-ed in the offshore,”says Mr. Mansouri.

These first inter-national arrivalshave been rewardedin many cases withvast tracts of off-shore explorationalong Morocco’slong coastline. KerrMcGee has a 100percent interest in areconnaissance per-mit covering more

than 27 million acres in the off-shore Boujdour block. Theacreage lies in water depths rang-ing from the shore to more than10,000 feet, and extends about350 miles along the coast. It al-so has a 50 percent interest in thenearby three million acre CapDraa block.

The National Office for Oil Re-search and Exploitation (OfficeNational de Recherches et d’Ex-ploitations Petrolieres) (ONAREP)is the government organization re-sponsible for the hydrocarbons sec-tor. It dates back to 1981 and musttake some of the credit for the factthat Moroccan oil is starting to lookmore and more attractive.

Amina Benkadra, Managing Di-rector of ONAREP , says that theorganization participates at confer-ences and seminars throughout theworld to promote the opportunitieson offer. It also played an importantrole in shaping the new energy in-vestment laws alongside the min-istry. “We have modified our legis-lation in March 2000 and we nowhave a more enticing hydrocarboncode that offers moreadvantages to com-panies than before,”she says.

In the last fouryears, the number offoreign oil compa-nies in Morocco hasrisen to 14; others areexpected to follow asthe province matures.The country has ahuge sedimentarybasin that is largelyunknown. Exploration firms areonly now using state-of-the-art 3Dseismic technology to analyze thesub-sea potential. “We are still be-hind international norms when itcomes to exploration,” she adds.

Timing is another importantfactor. With the advent of mod-ern exploration techniques, areasthat were accessible 10 years ago,but difficult because of certainparameters or because exploita-tion conditions were not assured,



Water management is the key to growth

Exciting times asforeign prospectorsjoin search offshore

AGRICULTURE / Wind-powered desalination plants could provide a long-term solution

ENERGY / Government is determined to reduce dependency on oil and gas imports

■ American oil companies are tak-ing an increasing interest in Mo-rocco. Big names such as Conoco– which recently tied the knot withfellow U.S. firm Phillips – andKerr McGee are now active in thehunt for hydrocarbons off the Mo-roccan shoreline. Other prominentinternational players include An-glo-Dutch giant Shell, France’s To-talFinaElf and Malaysia’s Petronas.The number is growing.

The Moroccan government hasmade the search for oil and gas atop priority since the country re-lies heavily on imports – as muchas 85 percent – tomeet its energy re-quirements. It is alsopromoting the de-velopment of renew-able resources suchas solar and windpower. It is keen tosee more U.S. com-panies take an activerole in upstream ex-ploration work.

Mustapha Man-souri, Minister of In-dustry, Trade, Energyand Mines, says that explorationwork is still at an early stage. “Interms of petroleum we are still atthe beginning,” he says. “Wehaven’t discovered any real reservesyet, but we have good potential.”

While Morocco showed the firstevidence of its hydrocarbons po-tential in the early part of last

■ Though agriculture provides aliving for the majority of Mo-roccans – up to half the popula-tion is involved in the sector di-rectly or indirectly – it accountsfor just 15-20 percent of the coun-try’s GDP. Difficult climatic con-ditions, especially seriousdrought, put extremepressures on farm-ers. While Moroccois an exporter offruits, vegetables andcereals, it is also stillreliant on imports.The growing popu-lation, which jumpedfrom just four mil-lion people to around30 million in the lastcentury, is intensify-ing the problem.

Minister of Agri-culture, Rural De-velopment, Water and Forestry,Ismail Alaoui, says that the gov-ernment is keen to help the ruralcommunity modernizeproduction

methods and to see the develop-ment of more agricultural-basedindustry. “Moroccan agricultureis characterized by the co-exis-tence of both modern agriculture,and the traditional version,” he says. “Modern agri-culture plays an important role as

it absorbs manpow-er and engenderswealth, via export.”

There are otherpotential threats to the agricultural sector too, includingthe U.S. free tradeagreement on thehorizon, which wouldopen the Moroccanmarket to Americanproducers; converse-ly, it would createfresh exporting op-portunities for in-

digenous suppliers. Mr. Alaoui says a key thrust of

the government’s agricultural strat-egy is tackling water shortages, in

order to minimize the effects ofdrought on crops. It also meansgiving more people access to cleanwater and providing better irri-gation systems.

Bringing potable water to thewhole populace is a fundamentalchallenge. The National Officefor Drinking Water(Office National de l’Eau Potable)(ONEP) is the statebody responsible forthe management anddistribution of drink-ing water resources,including treatmentstations of residualwaters. Its primarymission is to provideall Moroccans withclean drinking wa-ter. Ali Fassi Fihri, ONEP’s Man-aging Director, says the organi-zation’s motto is quite simple:“The right to water.”

Big developments have meantthat an initial target of 2010 to

■ Moroccan industry has grownin stature with the arrival of keyEuropean players, such as Hol-cim – one of the world’s leadingcement producers and active inmore than 70 counties. The Swiss-based firm took a controlling eq-uity stake in the former state-owned Ciments de l’Oriental (Ce-ments of the East), a local producerof cement, aggregate and con-crete, through the government’sprivatization initiative. The com-pany – which wasonly recently giventhe Holcim name af-ter a series of quali-ty and performanceimprovements – pro-duces 2.2 milliontons of cement foruse in the local con-struction sector.

The Moroccan ce-ment industry is nowdominated by fivemultinationals work-ing with local partners. Holcim’s part-ners in Morocco are the Islamic De-velopment Bank and the govern-ment. According to Youssef Ennad-ifi, Chairman of Holcim Morocco,the cement sector is fairly dynamicwith significant growth potential. Theuse of cement per capita is the low-est of the Maghreb region. Thetourism sector and the expansion ofthe country’s infrastructure are ex-pected to drive development forward.

Mr. Ennadifi says that the man-agement of the company seeks toguarantee a reliable investment forshareholders over the long-termthrough a broad-based strategy,

one that prioritizes environmentalissues alongside traditional businessvalues, such as profit. “Our poli-cy is based on economic perfor-mance, social solidarity and re-spect for the environment,” he says.

Holcim Morocco’s track recordspeaks for itself. “We were the firstin Morocco to import recycledtyres,” he adds. “It’s a political andecological policy, to reduce thecost of production and at the sametime preserve the environment.”

On the social side, thecompany has built ahome for desertedchildren in the city ofFez and is looking toraise educationalstandards at ruralschools.

Certainly, HolcimMorocco’s green cre-dentials are sound,but it has also steeredthe business side inthe right direction

too. It is now a leading Moroccancompany and a symbol of theprogress this country has made inrecent times. With a free tradeagreement with Europe on thecards, local firms can expect evercloser ties with their counterpartsacross the Mediterranean. Mr. En-nadifi also highlights the increas-ing level of collaboration with theU.S., both in a business sense andin other areas. He is very opti-mistic not only for his own orga-nization, but also for the coun-try’s prospects. “Morocco is thecountry of the future; it promisesso much,” he says.

Agriculture strategy is geared towards tackling water shortagesand minimizing wastage with improved irrigation techniques.

Government run ONAREP helps promote energy sector opportunitiesand is ready to assist partners carry out their exploration work.

YOUSSEF ENNADIFI

Chairman of Holcim(Morocco)

ISMAIL ALAOUI

Minister ofAgriculture, Rural

Development, Waterand Forestry

MUSTAPHA MANSOURI

Minister of Industry,Trade, Energy and

Mines

Cement firm showsits green credentials

achieve this vision of universal coverage should now be complet-ed by 2006. In cities, the problemwas solved a long time ago, butmore than half the population, al-most all in the rural areas, does nothave access to drinking water.These people rely on a shared well

which is often locat-ed many miles awayfrom the familyhome. “By 2006, wewill have linked al-most all households,”says Mr. Fihri.

There is no reasonto doubt that it willhappen. Since 1995,the number of ruralhouseholds suppliedwith water has dou-bled. In remote parts

of the country, micro-firms set upby local inhabitants have provid-ed the necessary financing to al-low well drilling and canal con-struction. The scale of the prob-lem has brought out the innova-tive side of Moroccans; even theking has become involved.

In Africa, Morocco has alreadypioneered the involvement of theprivate sector in the managementof water resources. French andother foreign operators now con-trol large water management con-cessions in a number of urbanareas such as Casablanca. Here,a company called Lydec, which

represents a consortium of Frenchfirms, was selected five years agoto take over the water and elec-tricity distribution management.Its success in patching up both thewater and power networks, in-creasing revenues, and connect-ing more customers, has beenwidely praised. The majority ofother cities are now contemplat-ing privatizing their own munic-ipal management.

Improvements in irrigation willalso help boost Morocco’s wateravailability, according to Mr.Fihri. Only 10 percent of the wa-ter produced by dams is used asdrinking water, while agricultureabsorbs a staggering 90 percent,a large chunk of which is wast-ed or lost through poor irrigation

methods. “We lose more than halfof our reserves of water becauseof the badly managed system ofirrigation,” he says.

Morocco’s use of wind ener-gy, and other renewable re-sources, is also creating options.In Tan Tan, a city in the Sahara,ONEP has launched a study in-to the possibility of setting up adesalination plant, with the aidof wind energy. “We are now ex-amining many aspects of possi-ble partnerships with the privatesector, especially new techno-logical options such as wind en-ergy and desalination,” adds Mr.Fihri. He is keen to see tie-upswith American partners, as wellas traditional French and Euro-pean players.

ALI FASSI FIHRI

Managing Director of ONEP

have now become more viable. Ms. Benkadra says these tech-

niques have allowed importantnew oil provinces such as the Gulfof Mexico and the Gulf of Guineain west Africa to be exploited.“In the last decade there has beena considerable evolution in ex-ploration techniques in the off-

shore and deep off-shore and a reduc-tion of almost halfthe cost,” she says.

Under Morocco’snew hydrocarbonslegislation, the state– through ONAREP– takes only a smallequity share, leavingprivate operators incharge of their workand free to bring inadditional partners.

Ms. Benkadra says that ONAREPis ready to help but does not im-pose anything.

She believes that foreign oilcompanies should seize the op-portunity. “The conditions arefavorable, the code is flexible,the state participates with just 25percent, so the investor has themajority, and besides, he can lookfor his partners himself to sharethe financial and technical riskwith him,” she says.

Hydrocarbons were firstdiscovered in the early part of the last century.

AMINA BENKADRA

Managing Director of ONAREP

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Monarch calls for investment in tourismTOURISM / There is something on offer for everyone, from Andalucian culture and the Atlas mountains to imperial cities and beautiful beaches


Trade deal to boost air links■ The number of air passengersarriving in Morocco is risingsharply. It has led to a substantialmodernization program for theair transport sector, with invest-ment pouring into new runwayand track, as well as services andcommercial operations.

In just a few years’ time, Mo-rocco expects the current numberof eight million passengers, torise to as high as 12 million.Casablanca, the country’s pre-mier airport which is twinned withMiami, receives roughly half thesepassengers, some four millionpeople; by 2005, it is expected tohandle close to six million.

The National Airports Authori-ty (NAA) is the state-ownedagency that runs the country’s mainairports. In total, it operates 17 air-ports throughout the kingdom in-cluding seven with internationalstatus. Mohamed Amal Guedira,NAA’s Managing Director, be-lieves that the coun-try can handle thissteep jump. The con-struction of a newterminal at Casablan-ca’s Mohamed V in-ternational airportand a second runwaycosting $20 millionis already underway.“The reception ca-pacity at the otherairports is sufficientto meet the growthof air traffic expect-ed by 2010,” he says.

Morocco is positioning itself asa hub for intercontinental services.According to Mr. Guedira, thecountry offers a number of loca-tional advantages. “The airport ofCasablanca has been developed toplay an important role as a hub atthe regional level,” he says. “Itsstrategic position enables it to actas an important center for air traf-fic links between Africa, the Mid-dle East, America and Europe. I

expect Casablanca’s regional sta-tus will grow in the future.”

In addition, improved trade re-lations with the U.S. will gener-

ate more passengertraffic. Morocco iskeen to attract newairlines to the coun-try, especially thosefrom America. Thedevelopment of afree trade deal be-tween the two coun-tries will also boostties. “We expect thatthe creation of thisfree trade zone willhave an importantimpact on the growth

of air traffic between Moroccoand America,” says Mr. Guedi-ra. “We are very optimistic aboutthe results of this agreement onthe air sector.” The twinning ofCasablanca airport with Miamiopens another direct line of com-munication. The two airports ex-change staff members, which rais-es standards and professionalismand generates ideas. It is an im-portant learning experience forCasablanca’s airport personnel.

The local air transport sector isundergoing something of a trans-formation. With the privatizationof both the NAA and its spin-offservices, such as air traffic con-trol,on the drawing board, thereis change in the air.

Yet there is no compromise onkey issues such as security andsafety. Morocco’s airports complyfully with all international secu-rity requirements, while staff train-ing and the overall quality of ser-vice at the airports are equally vi-tal. Indeed, after 9/11, the firstplane to depart from an Arab coun-try to the U.S. was a Royal AirMaroc flight from Casablanca.

Mr. Guedira says that the NAAis looking to raise the level of itscommercial operations fromroughly 15 percent of globalturnover to as much as 40 percent,in line with international opera-tors. This means opening han-dling and catering activities tocompetition, developing indus-trial and commercial zones, as well as concessions and shop-ping. These moves will helpsmooth the ground ahead of privatization.

■ Amagical land of open-air mar-kets, spices, ancient civilizationsand beautiful beaches: Moroccohas something for everyone. Pro-moting this cultural appeal is partof the government’s strategy in thedevelopment of the tourism sector,one of the most important enginesof the economy. Each year, Mo-rocco attracts over two million vis-itors, mainly from Europe, but a sig-nificant number from America.

Though numbers have dipped during 2002, the industry remains an important source of hard curren-cy earnings and a major employer.

Expansion of the tourism sectoris the government's top priorityand annually it contributes around$280 million to Morocco’s econ-omy and employs over 600,000people. The aim is to attract 10million visitors by 2010.

In the summer, the king of Mo-rocco himself, Mohammed VI,spoke of the need to accelerate thedevelopment of the industry.There is ongoing investment in thecountry’s resorts and facilities toattract more visitors. In 2001,tourism revenues grew three per-cent over the previous year. This

is a destination with a lot to offerand timeless appeal.

Mohamed Achari, Minister ofCulture and Communications,believes that what distinguishesMorocco is its unique geograph-ical position and ancient civi-lization, rather than its sandybeaches and sunny climate. “I’llgive you an example,” he says.“If you look at the historical sitesin southern Spain, you will real-ize that they represent the Andalucian culture. But this cul-ture is still alive in Morocco. Itexists in our houses, in kitchens,

MOHAMED AMALGUEDIRA

Managing Director ofthe National Airports

Authority

The state-owned National Airports Authority runs the country’s17 airports, including seven that can handle international flights.

in music, weddings. Andalucianculture is living in Morocco.”

Mr. Achari says that he wouldlike to see even more Americanstake an interest in his country. Hewants to see more people travelinto the interior, to see the diver-sity on offer. “Morocco is not on-ly imperial cities and beaches,” hesays. “People need to visit the in-side of Morocco like the beauti-ful Atlas mountains.”

Getting the right messageacross is vital. With a portfoliothat also includes media and com-munications, Mr. Achari under-stands the role of promotion morethan most. He says a lot of workhas been done to promote the im-age of Morocco abroad – peopleare now able to find it on the map– but much more is needed.

“We need to continue present-ing Morocco abroad so that moreand more people know it,” hesays. “They should know that Mo-rocco is a stable and democraticcountry midway between Africaand Europe. A country that, asKing Hassan II used to say, is likea tree with its roots deep in Africaand branches in Europe. It is acountry that be-longs to the Arabworld but withsome sensitivitythat makes it theoccident of theArab world.”

As communica-tions minister heis also playing animportant role inshaping the futureof broadcastingand media ser-vices in the kingdom. Players inthis industry can assist in thecountry’s general marketing ef-forts. One of Morocco’s leadingtelevision stations, 2M, is look-ing to launch its services in theU.S. possibly by the end of thisyear. It will be a significant leapforward in the availability of

Arabic stations in the States aswell as a promotional tool for Morocco itself.

The reform of the media, fromtelevision to radio, which includesplans to scrap the state monopolyover television – next year, thestate is to consider the issue of pri-vatizing 2M itself – is expectedto lead to more choice and vari-ety for viewers. It poses impor-tant questions for the proliferation

of Morocco’s cultural identity,both at home and abroad.

Nour-Eddine Sail, 2M Man-aging Director, believes that thestation has a lot to offer an in-ternational audience. As the coun-try’s second oldest channel, af-ter the state-owned Royal Tele-vision Morocco, it has a long his-tory; it is now the leading chan-nel of the two original stations.2M also has interests in radioand the internet.

Mr. Sail thinks the arrival of2M in the U.S. would be signif-icant for many people. “All weask for is that our signal arrives,that people get our messagethere,” he says. “We do have amessage, especially for the100,000-200,000 Moroccanswho live in the U.S. and the100,000 who live in Canada. So,all we want is to be broadcastover there and to give these peo-ple the chance to watch us.”

NOUR-EDDINE SAIL

Managing Director of 2M

Visitor promotion focuses on Morocco’s diverse range of attractions.

MOHAMED ACHARI

Minister of Cultureand Communications

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■ The Celtic Tiger is on the loose.The Irish economy has come ofage in the last decade, spurred bythe peace deal in the north andmembership of the EU, whichhas committed substantial sumsof money towards developmentinitiatives.

The signs of success are every-where and Dublin’s pro-businessstance has paid dividends. Hun-dreds of American companies inthe high technology sector andother related industries have setup shop. The Japanese and Eu-ropeans are also taking advan-tage of Ireland’s competitive en-vironment. Overseas companiesnow generate more than half ofall exports.

“We have six or seven hundredthousand more people working today than a decade ago,” saysBrendan Halpin Media and Mar-keting Manager of the Investmentand Development Agency (IDA).

The IDA, formed in 1969, hasplayed a critical role in the processof attracting foreign multination-als to the country, generating thou-sands of new jobs. A conduit be-tween business and the govern-ment, it is now helping these com-panies to extend their operationsinto more sophisticated areas.

Mr. Halpin says Ireland is nolonger seeking simple manufac-turing assembly operations, it hasmoved on to more advancedprocesses.

“Today, Digital Compact have2,000 people in Galway but notone of them assembles or manu-factures their product; it is allsoftware, customer service, orvalue-added services,” he says.“Ericsson has changed operationsin the same way. The companycame here to assemble circuitboards. Today, they have 2,000engineers here. That’s the waywe’re moving.”

After U.S. involvement in theNorthern Ireland peace process,there is an enormous desire tosee this small island nation, soclose to the hearts of many Amer-icans, succeed. American invest-ment in Ireland will help keepthe tiger roaring, says U.S, Am-bassador Richard Egan. It is theway to create jobs and also a high-ly profitable thing to do for thelikes of Microsoft, Oracle, Com-paq and Apple.

In the future, the IDA plans topush Ireland as a resource-basedlocation that is founded on edu-cation, skills and research in acost-competitive environment,with a highly integrated infra-structure.

As well as IT and chemicals,Ireland has also developed a flour-ishing financial services sectorbased in Dublin. It is now a worldleading center for the mutualfunds industry. Tourism is also on

the rise. The number of peoplevisiting the country has doubledin a decade.

The benefits for Ireland’s youngpopulation – 40 percent of peo-ple are under 26 – are new jobs,broader opportunities and a high-er standard of living. The age-old trend for Ireland’s younger cit-izens to seek work in the U.S., theUK and Europe has finally beenreversed.

A new crop of Irish entrepre-neurs has evolved. These are peo-ple that have adapted to the newtechnology-driven economy andmade it work for them. They aresymbols of Ireland’s new identi-ty as a modern European state,

with a skilled labor force.Software company Iona Tech-

nologies is now selling its prod-uct to the States and other desti-nations and has high-profilenames, such as aircraft giant Boe-ing, on its list of customers. Whatstarted as a three-man operationin 1991 now boasts 40 officesworldwide and more than 500employees in the U.S. alone. It islisted on Nasdaq and the IrishStock Exchange.

Barry Morris, Iona’s Chief Ex-ecutive, believes that IT opportu-nities in Ireland are only just

opening up. “I think that there arelot of good people here on the streetslooking for jobs, that’s a big dri-ver,” he says.

Mr. Morris believes Ireland willcontinue to make advances in the coming years, with contin-ued support from the top. “TheIrish government is making theright investments,” he says. “Thesort of continued growth of thiseconomy is very much about theright infrastructure investmentsand you look around and that’swhat they are doing. It’s very sen-sible stuff,” he adds.



IRELANDOverseas investment boomsas the Celtic Tiger roars on

Foreign companiesqueue up to sharein the success of

this small Europeanisland nation.

Ireland continues todrive its national

economy forward byembracing new

technologies andexploiting an

abundance ofhomegrown

talents and skills

The role of the Investment and Development agency has been vitalin attracting foreign multinationals and creating thousands of jobs.

■ Aland of medieval monasteriesand Celtic legends, Ireland has al-ways been a popular holiday choicefor Americans. A warm and wel-coming place, it offers some of themost beautiful scenery in the world,as well as a rich cultural heritageand a buzzing, modern lifestyle. In2000, it received close to a millionvisitors from the U.S.

Tourism is a growing business.The total number of visitors hasshot up from roughly three millionin 1990 to more than six millionin 2000. It follows a concertedmarketing effort by the Irishtourism authorities overseas.Though figures have dipped be-cause of the global downturn, andfallout from 9/11 – U.S. visitornumbers are down 21 percent thisyear – the long-term trend is set.

John O’Donoghue, Minister ofArts, Sport and Tourism, says theaim is to increase tourism by fivepercent every year through to2006. He is keen to see moreAmericans visit thecountry, particular-ly the large IrishAmerican commu-nity, which has bothfamily ties and his-torical interests.

Another keythrust is the bur-geoning Britishmarket. Here, Mr.O’Donoghue citesthe positivity sur-rounding the peaceprocess. “There is no doubt thatthe UK represents big potential forIreland, and the peace process hasgiven added impetus to that cam-paign,” he says. “Relations be-

tween Ireland and England havematured and this is an advantageto the industry.”

With a joint marketing effortbetween the north and the south,Ireland looks in good shape tomeet its objectives. As well asraising visitor numbers, these in-clude building a national sportsstadium, an international confer-ence venue and a new national the-ater plus improving the overallinfrastructure.

A major lure for Americans isthe golf. The coun-try has 378 golfcourses, includingmany championshipcourses. In 2006, Ire-land will host the Ry-der Cup – the bian-nual golf tournamentbetween Europe andthe U.S. It is only thesecond time theevent will have beenheld in Europe out-side of the UK.

The K Club – the Kildare Ho-tel and Golf Club – was chosenas the venue for the Ryder Cup,a great honor for the exquisite es-tate that dates back to 550 AD. Theproperty includes Ireland’s finestgolfing facilities, plus understat-ed luxury and world class fishing,just a short drive from Dublin.

Ray Carroll, General Managerof the K Club, says the resort’slocation is a major advantage butits “secret weapon” is its staff.He believes the club has capital-ized on the renowned Irish senseof hospitality. While it is a veryexclusive place – and very ex-pensive – most guests feel at homewhen they arrive.

“What we have tried to do istake the best we can have by wayof art, carpets, rugs, furniture,sheets, bed linen, whatever it hap-pens to be, food orservice, and then putan Irish stamp onit,” he says.

Mr. Carroll ad-mits that businesswill be good in therun up to the RyderCup, but the eventshould also benefitthe rest of the coun-try. “There will be ahuge upturn in de-mand because of theRyder Cup beingplayed here,” he says.

In the coming decade, in fact,

sport will take center stage. Thecountry is also set to host the 2003Special Olympics, the 2007 rug-by world championship, and haslaunched a joint bid with Scotlandfor the 2008 European soccerchampionships.

According to Dr. MichaelSmurfit, Chief Executive of Jefferson Smurfit Group, an international print and packagingfirm that also owns the K Club

and is a major golfing sponsor, theRyder Cup will be the icing on the cake.

Since the Jefferson SmurfitGroup took over in 1988 the KClub resort has undergone sub-stantial re-development. “There isa new 18-hole golf course that iscurrently under construction. Whenthat project is finished, which willbe at the end of 2003, then the vi-sion and dream will be complete.”

Quality is not hard to find wher-ever you are in Ireland. One of thecountry’s top hotel groups, Fitz-patrick Hotels, a family-owned op-eration that also has hotels in

the U.S., has carvedout a name for offer-ing personal serviceand attention to de-tail. John Fitzpatrick,Chief Executive,thinks Ireland canmeet its tourism goals.“Ireland is still bloom-ing,” he says.

The close associa-tion with the U.S. willalways play an im-portant role too. Wa-terford Wedgwood is

regarded as one of the world’sfinest crystal brands, with a huge

slice of the American market. Itsvisitor center attracts over 350,000people every year, making it thefourth most popular tourist at-traction in Ireland. Redmond O’-Donoghue, Waterford WedgwoodChief Executive, says quality haslong played a part in the compa-ny’s fortunes. “Waterford is thequintessential Irish-Americanbrand,” he says. “It has its homeand heart here.”

■ One of Ireland’s most famoushotels, Le Méridien Shelbourne,in the heart of the city of Dublin,offers a real taste of luxury cou-pled with some of the EmeraldIsle’s unique hospitality.

The Shelbourne is one of theoldest hotels in the Le Méridienchain, one of Europe’s premier ho-tel groups. Though based inFrance, it is keen to uphold thelocal cultures and traditions of itsindividual properties. “It is a ques-tion of diving into the local cul-ture and making sure that this ho-tel remains very Irish and veryunique,” says JeanRicoux, GeneralManager.

The hotel, situat-ed close to the Irishgovernment build-ings, has longstand-ing political associ-ations. It was herein 1922 that the IrishConstitution wasdrafted – in Room112, to be precise,now called ‘TheConstitution Room’– and many leading politiciansfrom around the world havestayed here over the years.

Mr. Ricoux says this historicalsignificance is part of what en-dears the hotel to ordinary peo-ple and dignitaries. “There is anemotional content about this ho-tel for the local population in

Dublin, in Ireland, and in Amer-ica, that is not to be under esti-mated, because the hotel has wit-nessed so much in terms of pol-itics,” he explains.

The Shelbourne, which datesback to 1824, remains a focalpoint for social and political life.The hotel offers some of the bestbanqueting and conference facil-ities in the city, as well as touch-es of luxury, such as a health spa,and No.27 The Green, possibly thebest restaurant in Ireland.

Le Méridien Shelbourne is pop-ular among businessmen and

tourists, as well asworld leaders. It islocated just sevenmiles from the air-port and close to allmain attractions.

Mr. Ricoux saysthe hotel worksclosely with othertop hotels in the cityto promote Dublinon the world map. Itis also lobbying forlarger convention fa-cilities to be built in

the city to attract even more busi-ness visitors. “This would great-ly enhance the visibility of Dublinand create more wealth,” he says.

American visitors to Dublin areno strangers at the Shelbourne. In2000, as much as 35 percent ofthe hotel’s business came fromAmerica.

“We had an excellent summerlast year with Americans comingto Dublin in big numbers,” saysMr. Ricoux. “We don’t think weare going to beat that this year.However, analyzing each quar-ter this year as it progresses, wehave been improving.”

Kildare Hotel and Golf Club is the venue for the 2006 Ryder Cup.

Waterford crystal has built aworld-class reputation.

Emerald Isle swings into action with a warm welcome and scenic splendor

TOURISM / New marketing initiative aims to capitalize on a decade of robust growth

Dublin’s rich culture and colorful architecture is a potent mix.

Le Méridien Shelbourne is one of Ireland’s most famous hotels,combining elegance and luxury with history and tradition.

Centers of eleganceenchant with style

HOTELS / First-class hospitality on the menu

MICHAEL SMURFIT

Chief Executive of Jefferson Smurfit

Group

JEAN RICOUX

General Manager ofLe MéridienShelbourne

JOHN O’DONOGHUE

Minister of Arts,Sport and Tourism

IDA

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■ After the flood of foreign in-vestment in recent years, a keypriority for the Irish governmentoutlined in the National Devel-opment Plan 2000-2006 is to im-prove the country’s transport in-frastructure. Ireland has invest-ed heavily in national highwaysprojects and railroads to build asystem on a par with the rest ofEurope. It has also tapped sub-stantial EU funding and turned tothe private sector for assistance.

This catching-up process is on-going. Although the infrastructureis now comparable with other Eu-ropean states, the government isplanning ahead. The plan aims tohelp maintain the country’s boom-ing economy. It is also a criticalpart of the regional strategy thatwill bring prosperity to less-de-veloped areas of the country.

Seamus Brennan, Minister ofTransport, says Ireland’s next greatleap forward will depend on hav-ing a first-class infrastructure. “It’sonly in the last seven or eight yearsthat Ireland’s infrastructure hasreally taken off,” he says. “I thinkour infrastructural program mustbe nine or 10 times what it wasseven or eight years ago.”

Mr. Brennan says Ireland isnow a modern place to do busi-ness, with a state-of-the-art trans-port network in terms of roads,rail and aviation links. There aresigns that Galway, Cork and oth-er major urban centers outsideDublin are growing. He describesit as the ideal location to serve therest of Europe because of the single currency and the languageadvantage.

But there are still ambitiousplans. The big picture shows thatgrowth is unevenly concentratedon the east coast. The governmentis looking to provide highwaysand rail links to givepeople the option ofpushing out into theregions. With thelevel of EU funds onthe decline, howev-er, as other aspiringmembers in easternEurope press theircase for a share ofthe developmentcash, there is an in-creasing focus on therole of the private sector. Thismeans forging public-private part-nerships (PPPs) in several majornew infrastructure schemes.

“I have invited the private sec-tor to look at the PPP projects andlook at investment in toll roads,”

adds Mr. Brennan. “We are tryingto develop a concept of maybe rent-ing roads from the private sector.”

A few toll roadsare already in oper-ation. National TollRoads (NTR) is aprivate companythat operates a tollbridge in Dublinalongside the cityand port authorities.It has diversified in-to other areas suchas waste manage-ment and energy ser-

vices, and is now looking at op-erating a second toll bridge. JimBarry, NTR’s Chief Executive,expects to see continual im-provement over the next fewyears. “There will be big im-provements on what is there,

hopefully sufficient to deal withthe requirements of foreign in-vestors,” he says.

The National Roads Authority(NRA), an independent statutorybody that oversees the country’sroads program, is spending closeto $1 billion this year to improvethe national network. It follows aperiod of sustained investment inrecent years that has already al-tered the face of Irish roads.

Peter Malone, NRAChairman,says Ireland is a victim of its ownsuccess. “You have heard of theCeltic Tiger,” he says. “There hasbeen a dramatic change in livingstandards and in the number ofvehicles on the roads in Irelandin the last 10 years.”

The NRAis an important play-er in the government’s PPP ini-tiative. The private sector is ex-

pected to contribute up to a quar-ter of the funding for projects by2006, with the majority comingfrom the government and the re-mainder from the EU. At this time,there are about 11 major projectsbeing developed with the privatesector.

Mr. Malone says that the ob-jective is to link all major centersin the country with fast highways.“Our aim is to get the main roadsout of Dublin, straight to Dundalk,to the border, straight down toWaterford, and straight to Port-laoise and there they will go fromLimerick to Cork,” he says.

There are major rail projectsunderway, including a light railsystem in Dublin – the first twolines will be open at the end ofnext year – and a metro link withthe airport. There are plans to cre-ate high-speed rail links betweenall the major cities.

In the air transport sector, thelevel of passengers passingthrough the main airports ofDublin and Shannon is risingrapidly. Aer Rianta, the airportmanagement company responsi-ble for Dublin, Shannon and Cork,has plans to establish Ireland asa major transit hub for traffic tocontinental Europe. Its Chief Ex-ecutive, John Burke, has alreadytaken the company’s expertiseabroad with shareholdings in theUK’s Birmingham airport andGermany’s Dusseldorf airport.

Ireland’s national carrier, AerLingus, is also planning a big fu-ture. After major restructuring tocut costs and improve efficiencies,in response to the downturn in airtraffic, it is again looking at newroutes, including America.

“Aer Lingus is now a less bu-reaucratic organization,” saysChief Executive Willie Walsh.“We are quicker to respond toopportunities in the market. Weare carrying almost the sameamount of passengers that we didlast year but we are doing it moreefficiently with fewer staff andfewer aircraft.”

■ A sporting event of a specialkind will take place in Ireland nextJune. The Irish capital, Dublin,will be the host city for the 2003Special Olympics, an internationalsports showcase for children andadults with a learning disability.It is the first time the event has beenheld outside America. It will alsobe the largest sporting event inthe world that year.

The idea for the SpecialOlympics was formed 30 yearsago by an American, EuniceKennedy Shriver. Today, the ini-tiative is a program of year-roundsports training and athletic com-petition for all people with learn-ing difficulties. Nearly one millionathletes – from eight- to 80-years-old – train and compete through-out the year for the love of sport,the thrill of accomplishment, andfor some, the chance to competein a World Games.

Ireland was chosen to host theGames in March 1999. Sincethen, preparations have been wellunder way, including the creationof purpose-built facilities suchas a large Olympic-size swim-ming pool. “I suppose the worktruly started in January 2000,”says Mary Davis, Chief Execu-tive of the Special OlympicsCommittee. “We’ve been work-ing hard in trying to secure spon-sorship and raise awareness.”

The whole of Ireland has risento the challenge. Before the Games,approximately 7,000 athletes from160 international delegations willarrive and disperse to ‘host towns’– designated areas where com-petitors will prepare and sample thelocal way of life. The business

community has also responded,with the Bank of Ireland appoint-ed as the chief sponsor.

The Games will play a role inthe reconciliation process be-tween north and south. TheAmerican team will be stayingin Belfast, in Northern Ireland be-fore the Games. “The Games arefor the people of Ireland and forthe athletes,” says Ms. Davis.“They are not to be seen or re-garded as games just for Dublin.It is an all-Ireland effort, we’vebeen working very closely withNorthern Ireland. In fact, someof the events and activities areoccurring in the north.”

After four days in the hosttowns, the athletes will move toDublin for the opening ceremo-ny, on 21 June, and compete ina variety of Olympic-type sportsbefore a closing ceremony on29 June.

Denis O’Brien, Chairman ofthe Special Olympics Commit-tee, says there are also impor-tant additional benefits for thecompetitors. “We have a majorhealthcare center where athletes,particularly from poorer coun-tries, can come and get their eye-sight checked, their teeth doneand and their health checked outfrom A-Z,” he says.



SEAMUS BRENNAN

Minister of Transport

The perfect picture takes shape

Dublin isa racingcertainty

■ Ireland lives in the hearts andminds of many millions of peo-ple throughout the world. RadioTelefis Éirann (RTÉ), the Irishpublic broadcasting service, isnow looking to bring the countrycloser to all those people, espe-cially in the U.S., with the launchof a new international service.

After a brief flirtation with theAmerican television market threeyears ago – with the launch ofCeltic Television in Boston – theorganization is again looking tobring its own blend of cultural, ed-ucational and entertainment pro-gramming to U.S. audiences.

A statutory corporation, RTÉhas provided a comprehensive ra-dio service in Ireland since 1926and television services since 1961.The company also has a wideportfolio of media interests, in-cluding the RTÉ Guide, Ireland’sbiggest-selling magazine.

Bob Collins, RTÉDirector General,says the company isactively planning itsreturn strategy to theU.S., including seek-ing a locally-basedcommercial partner.He is looking to tapinto the goodwilland interest amongIrish Americans.

“I think Bostonwould be our obvi-ous choice but it shall not be lim-ited to Boston,” he says. “One ofthe difficulties with Celtic Tele-vision was that it was too limit-ed in its scope. Boston is an im-portant center of Irish interest butnot the only one.”

This time, he says the companyis taking a more careful, structured

approach to what is an extreme-ly crowded media market. Theultimate aim is to make sure theventure is profitable or at leastbreaks even. “We are not goingto race at this project,” he says.

RTÉ already has close links withseveral U.S. and other foreignbroadcasters, both public serviceorganizations and commercial op-erators. It is involved in co-pro-duction on a wide range of mate-rial, not just of an Irish nature, but

also of interest to anIrish audience, withAmerican and Britishproducers. The orga-nization is currentlyin discussions aboutpresenting Irish con-tent in the UK.

As in other sectors,the Irish media indus-try is undergoing un-precedented change,with the advent of digital services, in-

creasing competition, and tight budgetary constraints.

Mr. Collins is determined tosee a primary role for publicbroadcasting in the new-look me-dia environment. While the in-fluence of public broadcasting ismarginal in the U.S., it is of pro-found importance not only in

Ireland, but across the rest of Eu-rope. “If you want to have a com-prehensive service of content forIrish audiences then you need thekind of investment that purelycommercial considerations willnot allow,” he says.

He says the scope of program-ming must be protected, with achoice that is not exclusively com-mercial. RTÉ also provides pro-grams for Gaelic-speaking peo-ple, which make up just a tenthof the Irish population.

“I think broadcasters every-where must deal with the balancebetween the nature of the contentand the need to attract audiences,”he says. “One of the challengesfor public broadcasters is to main-tain that balance in the schedule.”

There are important financial is-sues at stake, with RTÉ seekinga funding settlement with the gov-ernment to continually improveits services. Presently, RTÉ re-ceives roughly 33 percent of itsbudget from the state, with therest dependent on advertising,sales and commercial sources.Mr. Collins would like to see ashift in the balance towards pub-lic funding, similar to the BBC inthe UK. “We would prefer agreater equilibrium between thesefigures,” he says.

SPECIAL OLYMPICS / Sporting showcasemakes tracks for the Irish capital city

Irish public broadcaster RTÉ is aiming to resume its U.S. services.

The National Roads Authority is investing nearly $1 billion in2002 on further developments to the national network.

BOB COLLINS

Director General of RTÉ

Development planeyes up the regions

INFRASTRUCTURE / Ongoing transport improvements help maintain economic boom

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MONGOLIABright future beckons as free marketholds center stage in reform program

Government digs deep to attract foreign partnersMINING / Wide-ranging reforms aim to encourage full-scale exploitation of extensive mineral resources

Privatization is keyBANKING / Financial policies pay dividends

■ Mongolia’s banking sector hascome a long way in recent yearsfollowing the government’s sweep-ing liberalization efforts and fi-nancial reform program. Before1991, there was only one bank, theCentral Bank of Mongolia, whichwas then split into several com-mercial operations to create a two-tier system. Today, there are 16commercial banks in operation.

The successful privatization ofthe Trade and Development Bank(TDB), previously the largest statebank, symbolizes the approach ofthe Mongolian financial authorities.

In May 2002, a consortium ofSwitzerland’s Bank of Commer-cial Lugano and Gerald Metals,a U.S.-Swiss entity,paid more than $12million for a 76 per-cent stake in the organization. INGBank of the Nether-lands has agreed toassist on the man-agement side.

The group is com-mitted to investing$28 million withintwo years to mod-ernize TDB’s ser-vices. This means expanding cred-it card services, telephone and in-ternet banking and introducingATMs. It also means setting uprepresentative offices in the U.S.,China and Russia.

“The key aim is to build a pri-vate sector-based economy,” saysChultemiin Ulaan, Minister of Finance and Economy.

At other institutions, such as theAgricultural Bank of Mongolia, for-eign management has been installedto lead the culture of change. Thereis a higher level of professionalism,a greater degree of choice and moreattention to customer service. Many

■ Mining is one of the pillars ofthe Mongolian economy. Thecountry has extensive mineral re-sources including copper, coal,molybdenum, tin, tungsten andgold, as well as significant hy-drocarbons potential.

It is home to some of the world’slargest mining operations. Majorestablished producers include theMongolian-Russian joint venture,Erdenet, which operates an open-pit copper-molybdenum miningand concentrating complex in thenorth of the country, and Mon-golrostvetmet – the world’s thirdlargest producer of fluorspar.

But full development of theminerals sector has been held backby cost constraints and a shortageof infrastructure, while much of

■ Mongolia – the land of 13thcentury warrior and national heroGenghis Khan – is once againshowing its fighting spirit.

The country has come throughthe collapse of the Soviet Unionto become an important beaconfor free market and democraticprinciples in the Far East. In thelast decade a great deal of workhas gone into restructuring theeconomy and reforming the po-litical and legal system. Today,Mongolia is exemplified by peace-ful elections and a commitment toprivate sector-led growth.

There are still several challenges,including unemployment andpoverty, plus the need to achievemacro-economic sta-bility. President Nat-sagiin Bagabandisays the governmentaccepts its responsi-bilities. “Certainlywe have to do thesethings ourselves,” hesays. “We have tomobilize our re-sources and over-come our challengeson our own.”

Yet Mongolia hasalso been nurturing its profile inthe international arena during thistransition process. As well as as-sistance from the donor commu-nity it is encouraging businesslinks with the U.S., which im-ports most of Mongolia’s finecashmere production. It is a mem-ber of the World Trade Organi-zation and other multilateralgroupings.

In the longer term there is aneed to diversify the economyfrom the traditional industriessuch as livestock and mining. Thismeans developing a broader, ex-port-based industrial sector andexpanding traditional industries toproduce value-added products.

Prime Minister NambarynEnkhbayar thinks heightening thecountry’s profile overseas is vital to attract the level of for-eign investment it requires. “In-vestors cannot put their moneyinto a place that they know noth-ing about,” he says.

The strategy appears to be work-ing. Foreign investment is filter-ing through, spurred by new fis-cal incentives and the privatizationinitiative. GDP growth is expect-ed to rise to three percent in 2002and 4.9 percent in 2003, accord-ing to the Asian Development

local institutions now have closelinks to major American banks.

There have been some toughissues to contend with along theway, including restoring confi-dence after a wave of bad loansand insolvencies.

Mr. Ulaan says huge strides havebeen made, primarily in reducingpublic borrowing. Before 2000,non-performing loans were 20 per-cent of total loan stock – today thisnumber is around seven percent.

Regulation has been tightened– including a reduction in the loan-to-asset ratio – while competitionhas intensified. The governmentis also working with the World Bank and the IMF to help

strengthen its finan-cial capacity.

The integrity ofthe Bank of Mon-golia, the agencythat steers monetarypolicy, is a majorplus for investorsand customers alike.

Mr. O. Chuluun-bat, Governor ofthe Bank of Mon-golia, believes thecountry has come

through a difficult period. “Public confidence in the bank-

ing sector is returning,” he says.“Last year, the banks attractedmore deposits than in any of thelast 10 years.”

Mr. Chuluunbat says that,above all, it is stability – curren-cy stability, economic manage-ment and a strong commercialbanking sector – that will ensurethe long-term success of the fi-nancial services industry.

In this sense, new legislation,such as raising capital require-ments, has already established asolid platform for future growth.

O. CHULUUNBAT

Governor of the Bank of Mongolia

the country remains under-ex-plored due to a lack of detailedgeological mapping.

The government iskeen to bolster themining industry.Chimiddorj Gan-zorig, Minister forTrade and Industry,outlines two maintasks: “First, to in-crease mining pro-duction; second, to diversify miningproduction to includesome processed prod-ucts,” he says.

In the last decade, the author-ities have worked hard to refinemining investment laws in a bidto attract more foreign capital

and stimulate the industry. It hasgreatly liberalized the sector and

introduced generoustax breaks, such asthe abolition of a 10percent export levyon gold mining.

The new mininglaw, regarded as oneof the most attrac-tive in Asia, pluschanges to the over-all investment cli-mate, has lured anew breed of west-ern mining compa-

nies from the U.S., Canada andAustralia. Canada’s IvanhoeMines is currently planning thedevelopment of a huge copperand gold discovery in the GobiDesert, which will extract 50,000tons a day at full productivity by2009 if it goes ahead. The com-pany is working on feasibilitystudies for the project, whichwould entail a new railroad linkto China. Such is the scale of theoperation, that if the mine wentinto production tomorrow, itwould virtually double GDP.

Erdenet – which itself accounts

for as much as 20 percent of Mon-golian GDP and employs 6,200people – is already rising to thegovernment’s challenge. Thecompany produces about one per-cent of the world’s copper con-centrate, although it sells closerto eight percent, since many coun-tries process and consume whatthey produce.

Erdenet’s General Director, Kh.Narankhuu, says declining cop-per prices have forced the state-owned company to think hardabout the future. “In this situation,we have to put more value

KH. NARANKHUU

General Director of Erdenet

Bank. Inflation and interest rateshave been tamed.

Undoubtedly, the mindset ingovernment has shifted radical-ly during the last decade. Thereis an ongoing commitment totransparency and improving thelegal and regulatory framework,as well as greater accountabilityamong elected representatives.

“The government is much moreaccessible and open to differentthings now. We are trying to ensure that all the people are pos-itively affected,” says Luvsan Er-denechuluun, Minister for For-eign Affairs.

On the cultural front, there areefforts to bolster national identi-

ty through the an-nual celebration ofGenghis Khan’sbirthday – the warrior king whounited the disparatepeople of the regionand established anempire stretchinginto China and Rus-sia – and an appealfor more tourists. In-deed, 2003 has beenlabeled ‘Visit Mon-

golia Year’ by officials. U.S. Ambassador John Dinger

says his top priority is to see Mongolia succeed. As well as USAID contributions of $12 mil-lion a year, this means assistancein consolidating democracy andsmoothing the transition to a mar-

ket economy. Ten years ago, 100percent of Mongolia’s economicoutput was produced by state com-panies; now about 75 percent isgenerated by the private sector.“There has been terrific progress,”says Mr. Dinger. “I think it is insight of completing the process.”

Another priority for the coun-try is development of its infra-structure. There are several flag-ship projects including the am-bitious Millennium Road, a newhighway to run from the Chineseborder through Mongolia to Rus-sia. There are also plans to bringsolar power and cellphones tothe nomadic people, to bring theminto the modern era. Housing andenergy security are other impor-tant issues.

Byamba Jigjid, Minister for In-frastructure, says the Millenni-um Road will help developmentin rural areas across Mongolia.“The road goes through the re-gions, where about 80 percent of

the country’s population resides,”he says. “All the main econom-ic centers are located along theroad. The building of the Mil-lennium Road is planned in thecontext of the regional econom-ic development strategy.”

The key issue is whether Mon-golia can attract enough financ-ing to allow these projects to goahead. It is here that American in-vestors can also play an impor-tant role. Sanjbegz Tumur-Ochir,Chairman of the State Great Khur-al (parliament), says Mongoliavery much values its burgeoningrelationship with Washington. Hebelieves U.S. companies can benefit from this goodwill andtake part in the transformationprocess. “We would also wel-come investment in areas like IT,education, culture, science, so-cial and humanitarian assistance,which would have a substantialimpact on Mongolia’s develop-ment,” he says.

Mining company Erdenet produces one percent of the world’s copper.

NAMBARYN ENKHBAYAR

Prime Minister of Mongolia

The private sectoris seen as vital for

the development of Mongolia

and the nation is determined to play a more

prominent role inthe global economy

into our products,” he says. It isseeking ways to process concen-trate in Mongolia, which meansfinding a technological partnerfrom the west. “We have to go forinvestment and financing,” hesays. “We are looking for a reliable and professional compa-ny to be our long-term strategic partner.”

Mr. Narankhuu says Erdenet isaiming to become a modern western-style company. Earlierthis year, it received its first evercredit risk rating from Standard& Poor’s.

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