Nigeria, Africa’s most populous country and the continent’s largest frontier market on July 2, raised $1billion from the global capital markets in two Eurobond issues - a $500 million 5-year bond at a yield of 5.375 per cent and a $500 million 10-year bond with a yield of 6.625 per cent. The offering was four-times oversubscribed due to Nigeria’s strong fiscal position, structurally sound macroeconomic fundamentals and low debt-to-GDP ratios. Despite Nigeria’s success, other African countries such as Senegal, Kenya and Ghana who are looking to tap the increasingly volatile international debt markets for cash in coming months may be in for a rougher and more costly ride. Ghana unlike Nigeria has a budget deficit of almost 12 per cent. And like Kenya its current president has a legal cloud hanging over him. Ghana’s Supreme Court has sat for 39 days hearing an urgent petition by the country’s main opposition leader to overturn the narrowly won December polls. President John Mahama won the elections by 50.70 per cent. Further complicating Ghana’s scheduled July Eurobond issue is the changing outlook for the government’s near-term revenues, GDP growth and forex reserves. The gold mining sector, the country’s second largest export earner is facing imminent contraction due to falling gold prices. In 2012, Ghana’s mining sector contributed 42 per cent of total merchandise exports. According to Ghanaian tax authorities the gold mining sector was the leading contributor to domestic tax collections in 2012, with a total approximate revenue of GH¢1.5 billion ($737million). This amount represents about 27.04 per cent of Ghana’s total domestic collections in 2012. The 2012 collection was itself an increase of 45 per cent on the GH¢1.03 billion collected from the mining industry in 2011 after gold prices surged to $1,500/ounce. Operating companies in Ghana’s mining sector (made up of mostly gold mining companies) contributed about 37 per cent of the total company taxes paid in Ghana in 2012. In 2008/2009 when gold prices were about $1,000/ ounce, Ghana received only about $300million from the sector and FDI sector inflows of about $400 million. With gold prices plunging towards $1,000/ ounce, FDI inflows into Ghana’s gold mining sector and new investments by gold companies will be likely significantly cut back to 2008/2009 levels by about $600million as all global gold companies re-align country units, shut down costly mines, lay off staff and cut back on rising production costs. Total gold mining sector revenues in Ghana in 2012 was over $5.3billion, it is now expected to plunge towards $3billion – a staggering difference of almost $2.3billion. In recent months Ghana has been borrowing expensively on the domestic market at almost 23 per cent to fund government operations, pay striking public sector workers and import fuel for electricity generation. If the Eurobond scheduled for issuance in July is delayed for whatever reason, the local currency, the Cedi will plunge, and a supplementary budget may have to be laid before parliament to raise extra revenues from energy telecommunications and banks companies and importers. Payroll taxes are also likely to suffer as mines such as AngloGold Ashanti and Newmont cut thousands of workers from the payroll and shutdown costly production. Ghana is the world’s 9th largest gold producer and Africa’s second largest gold producer after South Africa. It issued its first Eurobond in 2007 at a yield of 8.5 per cent. Ghana’s international debts were cancelled in 2004 under a Paris Club/IMF Highly Indebted Poor Country’s Initiative. Fitch earlier in 2013 downgraded Ghana from (B+) to (B-). However in recent years the country’s debt-to-GDP load has risen again and is nearing 60 per cent of GDP. By contrast, Nigeria’s debt-to-GDP ratio is 17 per cent and its budget deficits are around two-three per cent In 2017 Ghana will also have to rollover its $750million 2007 Eurobond issue. With US monetary authorities in disarray and the squabbling on the FOMC likely to increase rather than abate ahead of Chairman Ben Bernanke’s 2014 exit, Ghana may yet still plunge ahead with a July Eurobond issue even if it means that it pays eight per cent and subscription for the issue is somewhat tepid.