Posted on :
26 Jun, 2017
26 Jun, 2017
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Job Description
Job Title: International Advisor
Project Overview and Role
Background for Scope of Work(SOW)
Deep, liquid capital markets are fundamental to economic growth because they help channel the domestic savings of a nation to their most productive uses, and in so doing enable the private sector to
invest, produce, and create jobs.However, a crucial step in developing capital markets is to develop the domestic buy-side, that is, to encourage greater participation of local and regional institutional investors such as pension funds and insurance firms in domestic capital markets. Most fundamentally, these large pools of savings can evolve into important sources of long-term finance for economic growth, for infrastructure, for example. In addition, a well-functioning buy side reduces an economy’s reliance on foreign portfolio investors, increasing macroeconomic resilience to shocks caused by sudden capital inflows and outflows.
Quote from Capital Markets in the East African Community: Developing the Buy Side a paper prepared by the Milken Institute Center for Financial Markets, January 2017.
Since being selected as a Partnership for Growth (PFG) country, the Government of Ghana (GOG) has engaged in extensive analysis and consultations with the U. S. Government (USG) in developing a Joint Country Action Plan (JCAP) to assist Ghana to sustain and broaden its economic growth by addressing two key constraints that inhibit private sector development and participation in the Ghanaian economy: unreliable and inadequate supply of electric power and lack of access to finance.
The two main goals of the PFG JCAP are:
The PFG Technical Working Group on Increasing Access to Finance (also known as the PFG ?Access to Finance Team?) has 5 overall goals:
PFG JCAP Goal 4, ?Broaden and deepen the financial sector? along with Goal 5, ?Encourage development finance and support SME access to finance? are the focuses of this SOW through the promotion of the shares and bonds listed in the capital markets for institutional investors for consideration as investments, i.e., the ?demand side? for securities, to balance the ?supply side? of SMEs looking for alternative financing to bank loans, through the issuance of equity (via shares) and/or debt (via bonds) on the GSE, GAX or GFIM.
Responsibilities
Objective of SOW
The objectives of this scope of work (SOW) are two-fold:
Regarding objective (1) above, the advisor is to determine among other things:
Regarding objective (2) above, the advisor is to determine the feasibility of issuing infrastructure bonds in Ghana, recommend the size of such issuances (in GH Cedi), and recommend the terms of such bonds, e.g., 3 year, 5 years, 7 years, or some other tenor. Interest rate scenarios are to be assessed as to ratings needs, collateral or security needs, and issuing sources. Recommendations as to utilization of funds would be made after speaking with GOG officials and market stakeholders. A key finding is the likelihood of interest payments and principal repayments.
This SOW is combining the two objectives as both are complimentary to the other. The reality in Ghana today is that the demand side, e.g., pension fund money, has nowhere in the capital markets to invest, as there are some equities available (with the requisite size perhaps, but not with the liquidity) but there are no long term debt instruments available except for GOG bonds. The institutional (and other) investors need good options for long-term investments; the issuance of infrastructure bonds is a source to meet this demand and allow SMEs additional sources of income. Both developments of realizing a greater demand in capital markets instruments and increasing the supply of capital markets instruments will foster economic growth in Ghana.
To this end, support is required from an international Advisor to engage with the GOG through the National Pensions Regulatory Authority and the Securities and Exchange Commission of Ghana, and possibly with the Ghana Stock Exchange and its subsidiaries (i.e., GAX and GFIM). For the SOWs objectives to be met, there needs to be developed strategies and work plans
(1) to build a consensus for the institutional investors to realize benefits that can be gained by investing in the capital markets which includes the diversification of assets within their portfolios as well as
(2) to realize the offerings of long-term, infrastructure-related investments to meet long-term liabilities of institutional investors and the overall development of Ghana.
Activities and Tasks
The advisor will analyze the overall understanding of the capital markets of the institutional investors, in particular the pension funds, and their capacity and desire to invest in the capital markets, i.e., in shares and corporate and infrastructure bonds.
As a tie in to the above activities to develop the demand side of the capital markets, the advisor is also to explore the feasibility of the GoG or a commercial institution issuing an infrastructure bond to develop the infrastructure (which may be for roads, hospitals, other health facilities, schools, electricity or other sources of power, etc.) within Ghana, where 100% of the proceeds will be applied to developing the infrastructure, and the interest payments and eventual principal repayment will be able to be made in full and on time. The infrastructure bond in particular would appeal to the resource sizes of institutional investors and thus help create additional supply of capital markets instruments available to meet the demand for such instruments. The advisor is to determine whether or not, among other things, the GOG would have to (partially) guarantee the performance of the bond payments, the need for a rating on such bond, the estimated interest rate (if fixed, and otherwise, recommend a floating interest rate with other characteristics such as puts and calls, or even a zero interest bond), and the recommended term for the bond.
The international Advisor will perform the following tasksReview documents of the NPRA, SEC, GSE, Insurance Regulator, and the Bank of Ghana.
Review documents of the NPRA, SEC, GSE, Insurance Regulator, and the Bank of Ghana.
Review documents of institutional investors, particularly those of pension funds, or their regulatory bodies, to determine the allowances of capital markets investments into the portfolios.
Deliverables
The international Advisor will produce the following deliverables:
All deliverables must be submitted in English, using the USAID-FinGAP report template, to USAID-FinGAP.
Post of Duty
Home base/telework (approx. 30 days LOE); up to three round-trips to Accra, Ghana (approx. 50 days LOE in Ghana, including travel days); a total of 80 LOE days, whereas the home and on-site days may vary.
Estimated from mid-June through November 2017. This may be adjusted accordingly.
Requirements
Minimum qualifications: