Monthly Archives: November 2015

11 Economic Insights on Ghana and Gold

IMG_4588

We live in vast world – yet in some ways, it is quite small. I was reminded of this last week when I found myself in a random conversation with a complete stranger who lives in Ghana. Oh, the wonders of Google Hangouts.

Here’s what I initially discovered about Ghana. This small nation in West Africa has a population of 25.9 million and is richly endowed with an abundance of natural resources like diamonds, manganese ore, bauxite and oil. But Ghana is better known for is it’s mother-lode of gold deposits, making it Africa’s 2nd largest gold producer, after South Africa.

Curious about this, I mined for further information about the significance of this precious metal for Ghana’s economic fortunes. Here are 11 nuggets that I was able to unearth:

  1. Ghana has consistently been ranked in the top ten of gold production worldwide.
  2. Ghana’s mining industry accounts for over 5% of the country’s GDP. Gold makes up over 90% of the total mineral exports, and it represents nearly 50% of the country’s revenue.
  3. Because of its heavy dependence on gold exports, Ghana’s economy has been tepid. This is due to the overall price decline of gold from $1,900 per troy ounce in 2011 to below $1,200 in 2015.
  4. Obuasi, a gold mine that has been in operation since 1897 after it was launched by three Ghanaian merchants, has struggled of late amid this fall in gold prices. Today, miners have to dig deeper and manage expenses more closely just to stay afloat.
  5. With gold-mining weighed down by record levels of debt as well as prices that are near a five-year low, a growing number of Ghanaian miners are fearful of having their employer merge with others just in order to survive.
  6. Many parts of Ghana remain unexplored in terms of potential gold production. This particularly holds true for the northern Upper West region of this resource-rich country.
  7. A major policy emphasis on the part of the government is ensuring that modern and environmentally-friendly extraction methods are being used so that the surrounding ecosystem doesn’t become irreparably damaged; this may lead to the closing of some mining operations and an ensuing reduction in exports.
  8. Although known as an epicenter of global gold production, Ghana (like its neighbor Nigeria) has struggled with an energy crisis, meaning that the majority of its citizens have no electricity. This is due to the nation’s lack of infrastructure capital, compounded by broken promises from the government in addressing the issue. Ghanaians affectionately call this DUMSOR (meaning ‘on’ and ‘off’), because of the highly unpredictable energy supply.
  9. In addition to the aforementioned fall in gold prices, other factors that are adversely impacting the Ghanaian economy include a sharp currency depreciation as well as rising inflation and interest rates.
  10. In 2013, Ghana deported thousands of Chinese nationals involved in the illegal mining of gold
  11. Aside from gold, Ghana is the world’s second largest producer of cocoa, behind Ivory Coast. Cocoa is Ghana’s third largest export after oil and gold.
FacebookTwitterGoogle+PinterestRedditShare

3 (not so) Crazy Ways to Save Money

woman-shaking-piggy-bank-shutterstock_96849385-400x400A little while ago, Business Insider published an article about a Google employee who was living out of the back of a truck parked in the company’s corporate parking lot. Brandon, the employee in question, stated that his goal was to save 90% of his post-tax income by living in the truck and eschewing electricity, heating, air-conditioning, a kitchen, toilet or a personal shower. While definitely effective, Brandon’s plan is a little ambitious, and his lifestyle is probably not everyone’s cup of tea. But it did get me thinking about some simple ways one could cut out extraneous spending without having to move into the backseat of a car. Here are 3 not-so-crazy money-saving ideas of mine:

Eat Out Less, Cook More

I definitely enjoy eating out. There’s a lot to like about it. It’s a good way to hang out with friends or to get out of the house and relax. Sometimes, I just don’t feel like putting in the time or effort to cook a nice meal for myself. Which reminds me. I’m not a great cook to begin with. Eating out is a way for me to try new foods which

Could there be a Future for Brick and Mortar?

brickandmortarIn recent times, it has seemed like online shopping is slowly pushing in-store shopping out of the picture. There are a lot of reasons why switching to online shopping makes sense. It doesn’t involve leaving the house and driving to a store, and sometimes sales tax is eliminated or the product is sold at a lower price than in-store. But brick and mortar stores might not be going the way of the dodo.

This week, Amazon opened its first retail store ever. In an ironic twist of fate,the online company that is so often credited with killing brick and mortar bookstores
is now looking to expand by opening its own physical location. Books sold in the store are offered at online prices, and they even come with customer reviews printed on cards. Located in Seattle, the new store primarily appears to be an experiment. As of yet, there are no firm plans to build more stores, but if this one goes well, Amazon hopes to open more locations.

It’s not quite clear what Amazon is hoping to achieve with this store, but it is probably safe to assume that they have legitimate reasons for venturing into the physical realm. Business News Daily reported on a study that found consumers still prefer to purchase in person. Many who participated in the study said they will often use the internet to research and browse before purchasing, but they prefer to make their actual purchases in a physical store.

Finally – Legal Investment in Small Businesses

SECYou no longer have to be super wealthy to invest in a new startup company or small business. On October 30th, the Securities and Exchange Commission (SEC) announced new rules that will make equity crowdfunding legal, something investors and small companies looking to raise money have been waiting a long time for. While not perfect, the rules are a step in the right direction to allow capital to flow freely and efficiently to new business ideas and products, which could unleash exciting opportunities.

What is Equity Crowdfunding?

Many people are familiar with the idea of crowdfunding in general — raising money from a large group of people. The two biggest crowdfunding platforms are Indiegogo and Kickstarter. But have you ever noticed that both platforms only allow you to receive products in exchange for your contribution? In other words, you may get a t-shirt or the first product that rolls off the assembly line, but you can’t have an ownership stake in the company: that would have been illegal.

This problem became glaringly obvious to people when Oculus Rift, a virtual reality headset in development, was purchased by Facebook for $2 billion. The project was initially launched on Kickstarter, and those who helped get the company off the ground were given an early prototype of the product in return. But when Facebook made the acquisition, these backers received nothing because they didn’t actually have any shares in the company.

Previously, only accredited investors, or those who were already wealthy, were able to participate in these investments. Now there is the potential for anyone to invest in companies looking to raise capital. This is important for a number of reasons.

For Peet’s Sake: Who’s Roasting Who?

IMG_4578

I have always been a coffee house aficionado. The cacophony of sounds emanating from caffeine-buzzed coffee drinkers and pulsating espresso machines appeals to my love for vibrant and hip locales.

Starbucks, which is largely credited with bringing specialty coffee to America, was my first orientation to this whole craze. As a young entrepreneur in Chicago back in 1993, I would indulge in an espresso at my favorite Wacker Drive location, amid a sea of boisterous traders from the Chicago Stock Exchange. Few of us at that time pondered the effect this coffee house trend would have on the culture of American society.

Many years later while on a business trip to San Francisco, my client recommended that I break rank with Starbucks and try a place called Peet’s Coffee & Tea. Amusingly, I thought my client was referring to some lowly guy named Pete who perhaps had a ramshackle vending cart on a downtown street corner nearby. Instead, I was excited to discover a Peet’s store which evoked a pleasant atmosphere and a strong coffee aroma (that can cling to your clothing if you hang around in there too long).

Earnings Stagnation: How Will People Cope?

IMG_4579

Since the Great Recession of 2008, the U.S. economy has struggled to regain full momentum. This is most evident when you examine the earnings of most middle-class Americans. And a recent report by the U.S. Department of Labor seems to suggest that this trend shows little sign of abating.

The findings of this employment cost index report suggest that paychecks of U.S. workers grew at a very tepid rate this summer, rising a paltry 0.6% during the July-September period, compared to the April-June period. Overall during the past 12-months, pay and benefits have risen only 2%; well below the 3.5% to 4% that most labor economists feel is indicative of a healthy economy.

What all of this signifies is that there’s still an ample supply of workers for businesses to hire at much lower pay rates; an indication that the job market has yet to return to full health. Over the past year, employers have added 2.2 million new jobs which has resulted in a decline in the unemployment rate from 5.9% to a seven-year low of 5.1%. Nevertheless, wage advancement remains sluggish.

There is also the issue of the 6.5 million (at last count) Americans working part-time who really wish to work full-time. That accounts for about 2 million more workers than prior to the recession. And it is important to keep in mind that the unemployment figures have been skewed even further because millions more Americans have ceased looking for work altogether, even though they would take a job if offered one.

Federal Reserve officials view wages and salaries as the key metric in assessing the economy’s true health, because a sustained uptick in wages would signify a leveling out of the unemployment rate. As unemployment drops, businesses are often forced to increase their pay in order to attract and retain talent.

Unfortunately, according to many economic analysts, there are no signs of this trend occurring in the foreseeable future.

Upping The Minimum Wage: Help or Hindrance?

There has been a ton of media chatter this year about efforts by several states to boost the minimum wage. And for good reason, since wages are a hot issue, particularly among those Americans working in service-related jobs.

Unfortunately, the collateral damage is starting to rear its ugly head in states that have recently boosted the legal minimum wage. Take Seattle for example, which has been a hotbed of talk on this issue. According to the St. Louis Federal Reserve, which has been monitoring this development, the Emerald City began to experience declining numbers of restaurant employees around the first of the year, when the minimum wage increased to $9.47 per hour. This represents the highest minimum wage in the nation. The reported loss of 1,300 jobs between January and June is the largest drop off since the Great Recession of 2008. Moreover, 1,000 restaurant jobs were lost in May, following the minimum wage increase in April, the largest one-month job decline since a 1,300 drop during that recessionary period. This is in contrast to a national increase in restaurant jobs to the tune of 130,700, an overall 1.2% increase in employment in the Seattle area and a 3.2% restaurant employment increase in the State of Washington (excluding Seattle) – all during this recent period.

The bottom line is that small businesses like mom-and-pop restaurants and coffee houses lack the greater profit margins needed to withstand the expenses associated with a minimum wage increase. So they resort to cutting staff and reducing hours, paying fewer workers more money. Even well-funded enterprises like McDonald’s are reportedly pondering labor-saving methods like self-checkout kiosks, robots on the food production line and robots to manage expenses, all of which would lead to an overall reduction in staff numbers.