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Information MemorandumonThe Construction of 30,000 Housing Units for the Security Services in Ghana

US$1.53 Billion Suppliers Credit FacilityforDRAFTDRAFT#DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information Memorandum0Disclaimer This report and the information contained herein is strictly confidential and for the exclusive use of the recipient and others involved in the recipients decisions and is to be used solely for the purpose of evaluating the opportunity described herein. This document may not be photocopied, reproduced, provided or disclosed to third parties, other than the recipients professional advisors, or used for any other purpose.

KPMG is neither responsible for implementing the plans nor for the success of management in achieving the targets therein.#DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information Memorandum1List of Abbreviations ACPAfrican Concrete ProductsCEPSCustoms, Excise and Preventive ServiceEPCEngineering, Procurement and ConstructionFDIForeign Direct InvestmentGDPGross Domestic ProductGPSGhana Police ServiceGAFGhana Armed ForcesGHCGhana CediGIPCGhana Investment Promotion CentreGISGhana Immigration ServiceGLSSGhana Living Standards SurveyGNPCGhana National Petroleum CorporationGOGGovernment of GhanaGPSGhana Prisons ServiceGREDAGhana Real Estate Developers AssociationGSSGhana Statistical ServiceHFCHFC BankIFCInternational Finance CorporationIMInformation MemorandumKPMGKPMG GhanaMOUMemorandum of UnderstandingMWRWHMinistry of Water Resources, Works and HousingNTHCNational Trust Holding CompanySHCState Housing CorporationSSNITSocial Security and National Insurance TrustSPCSpecial Purpose CompanySTXSTX Construction Limited (Korea)STX E & CSTX Engineering and Construction Ghana LimitedTDCTema Development CorporationTITransparency International#DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information Memorandum2Contents PageCompany Profile53STX Construction Limited (Korea)53Financial Analysis56Project Funding56Project Appraisal58Project Risks and Mitigation61OverviewProject Significance63Benefits to Ghana 63Benefits to South Korea64Conclusion65Appendices66Appendix 1 Corruption Perception Index66Appendix 2 Government Oil Revenue67Appendix 3 Disbursement & Repayment68Appendix 4 Cash Flow Excluding Insurance Premium69 PageDisclaimer1List of Abbreviations2Introduction4Ghana5Country Profile5Political5Ghana Compared with Neighbours12Real Estate Market22Housing Conditions22Housing Supply23Housing Demand27Public Intervention42Ghanas Security Forces45Overview45Proposed Project47Project Design50Implementation Plan51#DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information Memorandum3Introduction This document has been prepared to provide information on the proposed 30,000 housing units to be constructed by the STX Engineering and Construction Limited (STX E & C), a Ghanaian-Korean consortium (the Consortium), for the security forces in Ghana at the behest of the Government of Ghana.The Consortium intends to construct 200,000 housing units across the ten regional capitals in Ghana over a period of five years to provide reasonable and affordable accommodation to the Ghanaian population.The Government of Ghana, in a Memorandum of Understanding (MOU) signed with the Consortium, has offered through an off-taker agreement to take up 30,000 of the housing units to house the personnel of the Police Service and the Ghana Armed Forces.The construction of the 30,000 units is expected to cost US$1.53 billion and is to be financed with a syndicated loan facility to be raised from various financial institutions in the Republic of Korea with sovereign backing from the Government of Ghana. The Government of Ghana has agreed for the first phase of the project to commence before the end of 2010.This document covers the following information: The profile of Ghana touching on the economy, the political situation and the population The nascent oil and gas industry and the impact of other key sectors of the economy An overview of the real estate industry in Ghana Assessment of the housing situation of the security services and the need for government intervention Profile of the Consortium and their demonstrable ability to deliver the proposed housing units in time and in the desired quality Financial analysis of project and associated risks and mitigation measures The proposed benefit to the Governments and people of the Republic of South Korea and Ghana from this collaborative efforts#DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information Memorandum4Ghana Country Profile

Geography LocationGhana is located on the west coast of Africa, about 750 kilometres north of the equator. It is bounded on the north by Burkina Faso, on the west by Cote d'lvoire, on the east by Togo and on the south by the Gulf of Guinea (Atlantic Ocean). Tema, the industrial city, which is adjunct to Accra, the capital city of Ghana, is on the Greenwich Meridian (zero line of longitude). Geographically, this makes Ghana the closest country to the centre of the world.

Political SituationGhana was formed from the merger of the British colony of the Gold Coast and the Trans-Volta Togoland. The country gained independence from Britain in 1957 and as such became the first Sub-Saharan African nation to do so. The political landscape was, however, marred by a series of coups which resulted in the suspension of the 1979 Constitution in 1981, followed by a ban on political parties. A new constitution, restoring multi-party politics, was approved in 1992. This constitution shares power amongst the executive, the legislature and the judiciary. Since then, there has been smooth transition of power from one democratically elected government to the other; from J.J. Rawlings to J.A. Kuffour in 2001 and from J.A. Kuffour to J.E.A. Mills (the current president) in 2009. The next presidential and parliamentary elections, scheduled for the last quarter of 2012, are expected to be free, fair and peaceful thus projecting Ghana as one of the most peaceful and democratically matured countries in Sub-Saharan Africa.Ghana is a member of many international organisations including the Commonwealth of Nations, the United Nations, the African Union and the Economic Community of West African States, among others. In comparison to the situation in the other West African countries, and even across the entire continent, the political environment in Ghana can be considered peaceful and significantly stable. The 2009 Failed States Index ranked Ghana as the 53rd state least at risk of failure in the world and the second state least at risk of failure in Africa after Mauritius and ahead of South Africa). This has made Ghana a centre of attraction for several foreign investors looking for opportunities in West Africa. #DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information Memorandum5Ghana Country ProfileEconomic AnalysisThe Ghanaian economy revolves around subsistence agriculture, which accounts for 38% of gross domestic product (GDP) (2008) and employs about 55% based on Ghana Living Standards Survey V, 2006 (GLSS V) of the workforce, mainly small landholders. The industrial and services sectors of the economy have traditionally remained small and undeveloped. However, with increased political stability and government support, the contribution of these sectors, particularly the services sector, to economic growth is expected to continue to improve.Ghanas economy is also heavily reliant on external aid and foreign direct investments (FDIs). In 2008 for example, multi-donor budget support accounted for 50% of the countrys budget. The table below presents major economic indicators for measuring the health of the Ghanaian economy.

Source:(Economic Intelligence Unit)Note:2010 figures are estimatesGross Domestic ProductGhana has made tremendous strides in growing its economy over the past five years. Nominal GDP is expected to more than double by 2010 from a figure of GH11.0 million in 2006. The rapid growth in the GDP can be attributed to the increased government expenditure and favourable prices of domestic goods.The trend in Ghanas real GDP growth rate has been one of peaks and troughs. But on average, it has been on the rise. Real GDP growth peaked at 7.3% in 2008 and declined sharply to 4.7% by the end of 2009, lower than the governments projected rate of 5.9%. The sharp decline could largely be attributed to the downturn in the global economy resulting in a reduction in FDIs, external aid and remittances. For 2010 however, GDP growth is expected to reach 5.4%, as the economy continues on its path of recovery, mainly to be backed by government's expenditure in infrastructure and FDIs.The countrys GDP per capita, based on purchasing power parity, grew from US$1,269 in 2006 to US$1,496 in 2009. By the end of 2010, GDP per capita will reach a level of US$1,549, representing an increase of 22% from the level recorded in 2006.#DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information Memorandum6Ghana Country Profile

Financial IndicatorsFinancial indicators such as consumer price inflation (CPI), lending rates and exchange rates have been presented in the charts below. Overall the countrys financial health is stabilizing after a plunge in the last two years. Year end CPI reached a high of 18.1% in 2008 from a low of 11% in 2006, even though the government was targeting a single digit. This has largely been attributed to high food and fuel prices. This adversely affected lending rates which almost doubled from 16% in 2006 to 31.5% in 2009. However, the current government has embarked on tighter fiscal policies aimed at arresting inflation. Year end inflation for 2010 is projected to be 12% reducing from a high of 18.1%. A single digit inflation rate of 9.44 was achieved at the end of August 2010, which has led to a corresponding drop in the prime rate by the Bank of Ghana to 13.5%. Year end inflation target for 2010 is estimated to be 9.2%**.The domestic currency, the cedi, saw significant depreciation against major international currencies, notably, the dollar and euro. The countrys dependence on imports coupled with oil prices accounted for downward trend in the cedi. In 2007, when the Ghanaian currency was re-denominated, a dollar was exchanged for less than a cedi. By the end of 2009 the cedi had depreciated by more than 50% due to pressure from oil import and the political uncertainty that followed the 2008 general elections. Though there was a further depreciation between 2009 and 2010, the rate was slower than as experienced in the previous year due to the inflow from development partners and the increase in foreign reserves. The cedi has stabilized and is experiencing some minimal appreciation against major trading currencies.

Source:(Economic Intelligence Unit & KPMG Analysis)Source:(Economic Intelligence Unit & KPMG Analysis)Government Budgetary OperationsThe table below presents the governments revenue and expenditure situation.Source:(Bank of Ghana and IMF)Note: * IMF projections

Source:(**BF & T September, 2010)#DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information Memorandum7Ghana Country ProfileGovernment revenue, mainly from direct and indirect taxes, almost doubled between 2007 and 2010. This represented an annual growth of 28% over the period. Grants from foreign entities constituted the other major source of revenue, representing an average of 18% of total revenue earned between 2007 and 2010. Forecast for the next three years shows an increase in revenue to about GH12.1 billion in 2013 from GH 8.1 billion in 2010, representing more than 30% rise. This trend may be as a result of the governments effort to seal all leakages in revenue generation and improvement in revenue mobilisation machinery. Over the forecast period, revenue is expected to be generated mainly from tax with grant component reducing to a proportion averaging 11%. Expenditure is made up of recurrent expenditure such as wages and salaries and capital expenditure. The table shows that government expenditure grew at a rate of 23% between 2007 and 2010, though at a slower rate compared to growth in revenue. However, for each of the years under review, expenditure exceeded income resulting in a shortfall. In 2008, budget shortfall was in excess of GH2.3 billion. Over the forecast period, budget shortfall is expected to decline significantly to GH418 million and increase thereafter. This is as a result of an increase in government revenue mobilization and reduction in expenditure.Balance of PaymentThe country has, over the years experienced unfavourable trade balance. The table below presents balance of payment position of Ghana between 2007 and 2013.

Source:(Bank of Ghana and IMF)Note: * IMF projectionsGold has remained the highest foreign exchange earner and this is depicted in the above table. Between 2007 and 2010, gold earnings have been increasing and constituted more than 40% of total earnings from export. Cocoa is the second largest foreign exchange earner averaging 32% over the same period. Forecast indicates that petroleum export is expected to overtake gold as the largest foreign exchange earner. Oil production is projected to earn in excess of US$3.0 billion in 2011 according to IMF estimates, averaging 35% of the earnings from export. Non-oil imports, which include food and other consumables, remain the major component of imports, which significantly affect the trade balance. For each of the years under review, non-oil imports exceed total earnings from exports. The Ghanaian economy has heavily relied on importation of goods which increases the outflow of foreign exchange. Gross international reserves is expected to almost double from US$3.7 billion in 2010 to over US$7 billion by 2013. This will represent an increase in import cover from 3 months in 2010 to 5 months by 2013. Reserves are expected to be shored up by the inflows from oil export, which is a new revenue source.

#DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information Memorandum8Ghana Country ProfileExternal DebtComposition of LoanGovernment external debt is made up of loans secured from multilateral institutions such as the IMF, bilateral (Paris club and Non-Paris club) and commercial creditors. These are loans secured for specific projects or programmes. The table below presents the total debt stock between 2004 and June 2010.

Source:(Ministry of Finance)

Loans from multilateral institutions constitute about 50% of all external debt. In 2006, Ghana benefited from debt cancellation under the Heavily Indebted Poor Country (HIPC) initiative. This reduced the debt stock from US$6.4 billion to US$2,2 billion in 2006. Since then the external debt stock has been increasing. The Government of Ghana issued an Euro bond in 2007 for an amount of 750 million, which increased the debt stock significantly. Loan TermsMore than 80% of the total debt stock is concessionary, hence with a relatively minimal interest rate averaging 0.75% per annum. Multilateral and bilateral loans have interest rates less than 1% while commercial loans have up to 9%. Loan maturity ranges between 2 years and 50 years. Commercial loans have shorter maturity than multilateral and bilateral loans. A major portion of the debt stock have grace period of up to 10 years.

Source:(Ministry of Finance)#DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information MemorandumGhana Country ProfileDebt ServiceGhanas debt service is made up of principal repayments and interest charges. Annual debt service is presented in the chart below.

Source:(Ministry of Finance)Note:(* Estimates)Total annual debt service for the country is projected to increase from US$315.3 million in 2009 to about US$493.4 million by 2012. This shows an increase of about 16% per annum. Principal repayments constitute 66% of total debt service and remaining made up of interest payments.#DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information MemorandumGhana Country Profile

Source:Fifth Round of the Ghana Living Standards Survey (GLSS V) & KPMG Analysis Population DynamicsAccording to the 2000 Population and Housing Census, Ghanas population was at about 18,412,247, of which about 49.5% are males and the remaining 50.5% females. The Ashanti Region is the most populous region in Ghana, accounting for about 3,187,607 (17.3%) followed by the Greater Accra Region with 2,909,643 (15.8%). The Upper East and Upper West Regions in Northern Ghana have the lowest, each with a population of less than a million. Current 2009 projections (by the Ghana Statistical Services) put Ghanas population at about 23,416,518 with the proportion of males and females remaining the same as the 2000 level.The fifth round of the Ghana Living Standards Survey (GLSS V) puts the urban population at about 43% of the total population for the 2005-2006 period. Ghana has experienced rapid urbanisation, particularly over the last 20 years. Age DistributionAccording to the GLSS V, children under 15 years account for about 40% of the population, while the aged persons (65 years and older) form 4.7%. Based on this structure, the survey shows a dependency ratio of 82. The current dependency ratio means that on average each person of working age (15 64 years) has one additional person to support.EmploymentThe private sector is the largest employer, accounting for two-thirds (66.7%) of employed adults, whilst public service accounts for 28.5%. The proportion of urban public service workers is higher compared to that of their counterparts in the rural areas. On the other hand, those employed by the private sector account for a slightly larger proportion of the employed in the rural areas (69.3%) compared to their counterparts in the urban areas (65.5%). The unemployment rate is estimated at 3.6%, which is much higher in urban areas (6.3%), particularly in Accra (8.9%).Population OutlookThe table below presents population forecast for the country distributed by gender.

Ghanas population is projected to increase to over 31 million by 2025. The represents an absolute increase of 12.4 million from the figure recorded during the 2000 Population and Housing Census. The proportion of male to female is also expected to be equal over the next 25 years.Source:(Ghana Statistical Service)#DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information Memorandum11Ghana Ghana compared with NeighboursGhana has had a stable political and economic environment compared with its neighbours Togo, Burkina Faso and Cote dIvoire. PoliticalFive successful successive democratic elections have been conducted since 1992. Cote dIvoire for example has experienced some level of political instability, which saw most of the landlocked countries in West Africa channeling their imports through Ghanas ports. Togo and Burkina Faso have not had smooth political transitions like that of Ghana. Ghana has been described variously as the beacon of hope and also as the oasis in the desert compared to the entire West African sub-region. On the fight against corruption, Ghana ranks high compared to its neighbours. The chart below presents the performance of Ghana against neighboring countries in terms of Corruption Perception Index (CPI).Ghana ranked ahead of all the other West African countries on the CPI scale. This means that it was less corrupt than all three neighboring countries and Nigeria. On a global scale, the country ranked 67 out of 180 countries in 2008 and even though the country slipped to the 69th position in 2009 it was still the least corrupt nation within the West African sub-region. This implies that investors have more confidence dealing with the public institutions in Ghana as they are regarded as less corrupt. Economy The chart below presents GDP at market prices, per capita income and GDP per capita based on purchasing power parity (PPP). Per capital income was approximately US$670 lower than that of Nigeria and Cote dIvoire, which registered US$1,142 and US$1,052 respectively. Nigeria has been the leading producer of oil on the African continent whilst Cote dIvoire has been the leading producer of cocoa which is also one of the main export commodities of Ghana. Moreover, GDP per capita based on PPP is estimated to be about US$1,550, slightly lower than that of Cote dIvoire but higher than the other two neighbouring countries. Ghana is set to be producing oil and it is projected that GDP will grow significantly in the next two years.Source:(Transparency International)Source:(International Monetary Fund, World Economic Outlook Database, April 2010)

#DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information Memorandum12Ghana Ghana compared with NeighboursDoing Business in West AfricaThe World Banks report on doing business presents quantitative indicators on business regulations and the protection of property rights that can be compared across 183 economies over time. Ghana is ranked amongst a number of West African countries, the results of which are presented in the chart below.Source:(Doing Business 2010, The World Bank)Ghana ranked 92 in the world, in terms of the ease with which investors can do business in the country. Additionally, the country is rated 41 in protecting businesses in the country.Of all the neighbouring countries, the Burkina Faso is the one that comes close to Ghanas ranking, taking the 147th position. Nigeria ranks 57th in terms of protecting businesses and 125th in terms of the ease with which one can do business. Despite the general global economic downturn, Ghana achieved some level of macro-economic stability with a positive real growth recorded in 2009. Although the country was affected by the economic crises, high gold prices and low oil prices helped to sustain the economy. Ghana is growing economically but this has also come with its own associated problems such as population growth and urbanization. Rapid urbanization is being experienced in major cities of the country such as Accra and Tema. The growth in population has come without a corresponding growth in infrastructure such as housing. The housing situation in the country has been described as one having a huge deficit, estimated to be in excess of 1.0 million. With businesses set to thrive in the coming years, employment opportunities are expected to be created, which will in turn increase household disposable incomes. Demand for accommodation is expected to increase when household incomes increase and this will require the housing market to be responsive.

#DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information Memorandum13GhanaIndustry - Oil and GasOverviewSince 2001, there have been significant foreign direct investments in the oil sector. The Ghana National Petroleum Corporation (GNPC) has been at the forefront of oil exploration and has licensed about twelve companies to undertake deepwater and shallow water explorations. These activities have led to four major discoveries in commercial quantities. These discoveries are discussed below.Keta BasinDevon Energy operating in the Keta Basin of the Volta Region discovered oil in 2006. The discovery is estimated to contain a total of 618 million barrels of oil. Devon is still in the process of firming up all the oil prospects in the area. Jubilee FieldTo date, the Jubilee Field is the major significant discovery made since oil exploration started. A consortium, including major oil firms like Kosmos Energy and Tullow Oil announced the oil find in 2007 and it is estimated to contain over 800 million barrels of oil. This Field is currently being developed to produce the first oil by the end of 2010.Tweneboa FieldIn March 2009, the Tweneboa-1 exploration well, in the Deep Water Tano licence 25 kilometres from Jubilee, discovered a highly pressured light hydrocarbon accumulation of up to 1.4 billion barrels of oil equivalent. The Consortium is still in the process of appraising the Field to determine the recoverable oil deposits.

#DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information MemorandumGhanaIndustry - Oil and GasSummary of Major DiscoveriesFieldYear of discoveryRegion Estimated Quantity (Barrels)Keta Basin2006Volta600 millionJubilee (Phase 1)2007Western800 million 1.8 billionTweneboa 2009Western1.4 billionOwo2010WesternYet to determineOwo FieldTullow Oil has also found a significant quality light oil in the Deepwater Tano licence offshore Ghana, known as Owo Field. Results of drilling have established Owo as a major new oil field requiring further appraisal. The table below presents a summary of the discoveries.

Jubilee and Tweneboa Fields in Perspective#DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information MemorandumGhanaIndustry Analysis - Oil and Gas

Source:(Ministry of Finance) Jubilee Field ProductionThe consortium led by Tullow Oil (UK firm), the unit operator of the Jubilee Field, is in the process of producing oil in commercial quantities by the end of 2010. Phase 1 of the Jubilee Field development involves the completion of 17 wells, comprising a combination of nine production wells, which will be used to bring oil and gas from the underground reservoir to the surface. These wells will be connected to the floating production storage and offloading (FPSO) facility that was leased by the Government of Ghana. The facility arrived in Ghana middle of this year hence production of oil is on schedule. Project Cash Flow At its peak, some 120,000 barrels of oil per day could be extracted making Ghana a net oil exporter for a short while, and the overall period of activity could span over two decades. Based on the fiscal regime in place, and a price assumption of US$55 per barrel, the IMF estimates potential gross revenue to peak at $2.28 billion in 2013 and 2029. The following table presents the expected revenue from the first phase of production.#DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information MemorandumGhanaIndustry Analysis - Oil and GasGovernment RevenueGovernment revenue from the phase 1 of the Jubilee Field is expected to be composed mainly of royalties, taxes and other entitlements. This is presented in the table below.

Source:(Ministry of Finance)Over a twenty-five year period, the Government of Ghana is expected to earn a cumulative revenue in excess of US$3.0 billion. Peak revenue per annum is estimated to be US$551.8 million in 2012 but this will decline significantly to less than US$100.0 million by 2020. Average annual revenue is estimated to be US$125.0 million over the 25-year period.It must be noted that revenue is expected to fluctuate depending on the price of crude oil on the international market. Appendix III provides the cash flow schedule when oil price is US$65 per barrel. Total revenue over 25 years under this scenario is estimated to be in excess of US$4.7 billion, averaging US$186.0 million per annum.#DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information MemorandumGhana will from the end of 2010 earn revenue from a new source, crude oil export, from the development of the first phase of the Jubilee Field. Even with this new revenue source, the country will still experience deficit as importation of refined oil is likely to continue as the country has not put in place measures to refine oil to be produced.The Government of Ghanas revenue from the oil industry will mainly be from royalties, taxes and other entitlements. Revenue to the Government is expected to peak at US$551.8 million in 2012 and will decline significantly to US$0.57 million by 2020. However, prospects remain positive with the discovery of other fields with commercial quantity of oil. It is believed that the development of these oil fields will improve the revenue position of the country. Despite the discovery of oil, the country still expects to earn revenue from traditional export commodities such as gold and cocoa.GhanaIndustry Analysis - Oil and Gas#DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information MemorandumMining IndustryGhana is well endowed with mineral resources such as gold and diamond. The country is second to South Africa in the production of gold and has three of the worlds largest gold producers. These companies are Newmont, Anglogold Ashanti and Goldfields. The location of concessions is presented in the table below.Major Mining CompaniesCompanyConcessionRegionNewmont Ghana LimitedAhafo MinesBrong AhafoAkyem MinesEasternAnglogold AshantiIduapriem WesternObuasiAshanti Goldfields Ghana LimitedTarkwaWesternDamangMost of the mines are located in the Western and Ashanti regions of the country. Apart from the area being mined by the companies, exploratory activities are still being carried out. Newmont for example has been granted a licence to mine gold in the Akyem Mines in the Eastern Region.Impact on Economy and ProspectsThough the country produces other minerals such as diamond, bauxite and manganese, gold is the major foreign exchange earner. The table below shows the contribution of gold production to GDP. Source:(Bank of Ghana and IMF)Note: * IMF projectionsGhanaOther Industries

Since 2007, gold output has been rising in nominal values and its contribution to GDP has also been rising. By 2010, it is expected to constitute 17% of estimated GDP after which it will reduce to 13% in 2011. Though output from gold export is expected to keep rising, its contribution to GDP will fall steadily to about 11% by 2013. The reason for the drop is the revenue from oil export, which will be a new revenue source. Cocoa IndustryCocoa, is the second largest foreign exchange earner and the main cash crop in Ghana. Ghana exports cocoa to European and Asian countries for processing. The Ghana Cocoa Board is the body mandated to purchase, market and export cocoa produced in Ghana. The Board licenses companies to buy cocoa from the farmers and in turn buys the produce from the companies for export.Impact on Economy and ProspectsCocoa like any other export commodities is subject to fluctuation in market prices. The table below shows earnings from cocoa export from 2007 to 2010 and projection for the next three years.#DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information MemorandumIndustry AnalysisOther IndustriesCocoa output has been increasing and is projected to reach over US$2.0 billion by end of 2010, representing 12% of GDP. Revenue from export is expected to decrease after 2011 due to falling prices in cocoa on the world market. The Government is committed to increasing the quality and quantity of cocoa produced in the country. The Board has therefore set a medium term target of hitting 1,000,000 tonnes per year. This will increase the revenue to be earned from export even in the face of falling market prices. Given the anticipated growth in the mining and cocoa industries as well as the additional revenue source, the economy of Ghana looks set to expand.

Economic OutlookOutlook for Ghanas economy remains buoyant as the government embarks on tight fiscal policies. The inflow of oil revenue and favourable gold prices are all expected to underpin the positive outlook. The table below gives the economic outlook for the country, with indicators projected for the next five years. Source:(International Monetary Fund, World Economic Outlook Database, April 2010)

Real GDP growth is expected to hit an all-time high of 20.1% in 2011 mainly due to oil revenues and will smoothen out at an average of 5% onward. This is envisaged to reflect in other indices such as per capita income, which will increase by 28% from US$754.7 in 2010 to US$963.4 in 2011. Current account position of the country is also expected to improve reducing significantly from about 12.8% of GDP in 2010 to approximately 5.0% in 2015. Inflation is also expected to halve from 10.6% in 2010 to 5.0%. The drop may be attributed to stable domestic food prices coupled with gradual reduction in imported inflation. Source:(Bank of Ghana and IMF)Note: * IMF projections#DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information MemorandumGhanaOutlook

The fiscal position of the Government of Ghana indicates a deficit as expenditure far exceeds income. Though revenue is expected to increase mainly due to production of oil, this will only reduce the deficit the country has experienced over the past years. Even with the new source of revenue, the countrys fiscal position will remain in the negative. Additionally, trade balance is expected to improve, though will continue to remain in the negative. Analysis of the external position revealed that the country has a huge amount of debt from multilateral and bilateral institutions. Over 80% of the debt is on concessionary bases with minimal interest rates and a grace period hence making it possible for government to service the loans. Given the countrys fiscal and balance of payment situation, additional debt is likely to put a strain on the economy. It is estimated that average yearly revenue from the first phase of Jubilee Field production will constitute about 20% of the projected yearly debt service. It is expected that additional fields will be developed in the coming years which will supplement the revenue expected from oil production. The financial position of the country has not provided the government with enough funds to provide basic infrastructural facilities like housing and roads. Housing development has faced its challenges and the government is making efforts to provide decent accommodation to public sector workers and security agencies.#DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information MemorandumReal Estate Market Housing ConditionsHousing ConditionsGhana has experienced a rapid growth in population which in turn has propelled housing requirements. Housing development has been described as one that precedes proper planning, hence poor housing conditions have become evident. Various efforts have been used by different governments to find a solution to the growing demand for accommodation and its associated urban sprawl. Traditionally, communal living has dominated the countrys housing as evidenced by the large proportion of enclosed housing units known as compound houses. The chart below illustrates the types of houses based on the 2000 Population and Housing Census.

Housing TypesCompound houses, which are enclosed units with shared facilities, constitute the largest proportion (45%) of housing in the country. This is followed by detached or separate and semi-detached units with a share of 25% and 15% respectively. Flats or apartments have a share of 4%, which may be explained by the fact that the concept of vertical housing development has not been well grounded in the housing delivery process. Also flats are more common in major cities where due to land unavailability, there is the need to maximize space. In recent times, apartment development has become commonplace especially in Accra and it appears this trend is likely to continue.

Housing StockAccording to the 2000 Population and Housing Census, total housing stock stood at 2,181,975 units representing an increase of 81.2% over the 1984 census housing stock. With a population of 18.9 million, it is estimated that nine persons lived in one house. Based on population projections and the annual supply of housing estimated to be in the region of 45,000 units, stock of housing is projected to be 2,631,975. This also translates into about nine (9) persons per house. Other types of housing, which constitute more than 10% of the total housing stock include huts, kiosks, shops and structures that may be described as uninhabitable. Source:[2000 Population and Housing Census, Ghana Statistical Service]Source:[2000 Population and Housing Census, Ghana Statistical Service]#DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information Memorandum22Real Estate Market Housing Supply

The 2000 Population and Housing Census showed that the total number of housing units in the ten regional capitals constituted about 13% of total housing stock. The table presents housing stock as recorded during the last two censuses for the ten regional capitals. Accra, in 2000, had the largest number of housing units with a little over 131,355. This is followed by Kumasi with a total of 67,434 units. Between 1984 and 2000, the largest increase in housing units was recorded in Takoradi, representing 391%, followed by Kumasi and Accra with 276% and 129% respectively. Housing SupplyFormal Housing (10%)Informal Housing (90%)State Housing Company

Tema Development Corporation

Social Security and National Insurance Trust

Private Real Estate DevelopersPrivate individuals building on incremental basisHousing Supply Housing supply in Ghana has traditionally been the responsibility of individual homeowners. This had been the trend until the introduction of public housing with the setting up of the State Housing Corporation in the mid 50s. Ghanas housing delivery system can broadly be segmented into two formal housing and informal housing supply. Informal HousingThe informal housing supply is a household-led incremental housing development using personal savings and in some cases personal loans. It is estimated that more than 90% of the total housing supply has come from the informal sector. Individuals are more comfortable building on incremental basis rather than accessing the more formalized process of using mortgages. Due to the lengthy nature of the construction period, the informal sector is rather expensive in terms of time and costs. Formal Housing Formal housing provision has been pursued from two-pronged approach public housing development and private real estate development. A. Public HousingThe Government of Ghana, through three major state institutions, has supported housing delivery. These institutions are the State Housing Company (SHC), Social Security and National Insurance Trust (SSNIT) and the Tema Development Corporation (TDC). Source:[2000 Population and Housing Census, Ghana Statistical Service]#DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information Memorandum23Real Estate Market Housing Supply State Housing CompanySHC was established in 1955 as a corporation to construct houses and to provide long-term housing finance. In 1995, the State Housing Corporation was converted into a Limited Liability Company and has operated ever since as a commercial enterprise focusing on the development of land, housing, and plots for sale to institutions and individuals in Ghana and abroad. To date, SHC has provided in excess of 28,000 housing units countrywide. Social Security and National Insurance TrustSSNIT is in charge of the nations pension scheme and has real estate as part of its investment portfolio. The Trust has investments in commercial and residential properties. As part of its investment strategy, SSNIT has engaged in the development of apartments in the regional capitals to service public workers. SSNIT has been providing public sector workers one, two and three bedroom flats in regional capitals on rental basis. Total number of housing units provided is in excess of 8,000 units.The Trust has sold most of these properties to occupants or interested purchasers. Currently, it has about 782 units countrywide for sale and the table below presents prices of units available for each location.Prices of Used Houses (GH)City Bed-sit1 bedroom2 bedroom 3 bedroomAccra11,698-16,400 24,60028,700Kumasi-13,30014,400 16,00024,000Koforidua16,800 23,800Cape Coast9,800 11,00014,70019,680Takoradi5,7007,60012,600 20,000Sunyani16,400Tamale12,000 12,250Bolgatanga11,000Wa10,600Ho6,40013,000 16,300Average Price7,93312,90014,60824,127Source:[SSNIT]On the average, a used bed-sit is being sold for GH7,933 (US$5,471) with Accra having the highest price of GH11,698 (US$8,067). One and two bedroom units average GH12,900 (US$8,897) and GH14,608 (US$10,074) respectively. Three bedroom units are in the region of GH24,127 (US$16,639). Note:[1 US dollar equivalent to 1.45 Ghana cedis]Target Customers of SSNITThe main customers of SSNIT residential properties are contributors to the social security scheme. This therefore includes public and private sector workers who make monthly contribution to the Fund. #DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information Memorandum24 Tema Development CorporationTema Development Corporation commenced its operations in 1952 as a government agency aiming to develop the Tema Township. The corporation has evolved into its present form, through a number of structural and legislative changes and is now operating under a designated legal framework. Since its restructuring in 1992, TDC has undertaken six housing projects. The corporation's major activities are construction of houses, management of rental units and leasing plots for private and large-scale real estate development. The combined efforts of these bodies has not been sufficient to meet the rapid growth in accommodation requirement hence the entry of private real estate developers.Real Estate Market Housing SupplyB. Private Real Estate Developers (Ghana Real Estate Developers Association)Over the past two decades, private real estate developers have entered the housing market and have been involved in the supply of housing for middle and high income earners in Ghana. GREDA, an umbrella organization of private real estate developers has been formed to regulate the industry. The top five GREDA companies that account for roughly 75% of the groups residential property development are Regimanuel-Gray, Parakuo Estates, NTHC Properties Ltd, ACP Estates Ltd, and Manet Housing Company. The IFC in 2005 estimated that the private estate developers have produced housing units in the region of 20,000 since their entry in the early 90s. Given that annual production from the real estate developers is about 1,000 units, we estimate that current number of housing units produced by GREDA is in the region of 30,000 units. The table below summarises a sample of developers using the database of Ghana Home Loans, the second largest mortgage company in Ghana.Out of the 56 developers, 90% produce housing units above $50,000 while 2% provide units less than $20,000. This is indicative of the target group of these developers, which is middle to high net worth individuals. A significant proportion (45%) of the total developers produce housing in excess of $100,000. Source:[Ghana Home Loans Brochure]The data also shows that some developers provide some quantities of luxury units, though on a smaller scale. Properties costing more than $100,000 are mainly located in prime residential areas such as Airport Residential Area, Ridge and Cantonments. Such properties are usually furnished with kitchen, air conditioners, recreational facilities and also provided with security.

Home Payment TermsPayment terms for purchasing a housing unit varies from developer to developer and also depends on the state of completion of the unit. Where the housing unit is completed and ready for occupation, developers would normally require full payment of the price. Where the house is under construction various terms are agreed. The following table presents payment terms for a sample of developers operating within the middle to high income group. #DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information MemorandumReal Estate Market Housing SupplyThe table above shows that developers have structured payments into at least three instalments. This allows them to pre-finance projects using prepayments made by potential purchasers. It also allows developers to sell units before completion. However, this arrangement changes when the potential purchaser is accessing a mortgage facility. Some developers require the initial deposit and a letter from the prospective lender indicating the lenders willingness to finance the remaining proportion. Typical Home Payment Terms Mid & High IncomeDeveloperDeposit (1st Payment)2nd Payment3rd PaymentFinal PaymentRegimanuel-Gray40%40%

Roofing level20%

Completion and hand overNTHC Properties 30%

Substructure up to floor bed 30%

Superstructure 30%

Floor, wall and ceiling finishing doors and windows10%

Plumbing, electrical fittings and painting hand over Lakeside Estate50% 40%

Roofing level10%

CompletionAkuaba 30% 40% 30% - 40%

Before or after roofing30% - 40%

Completion10%

Handing overSandpark Properties 20%20%

Lintel level30%

Roofing30%

CompletionAyensu River Estates30% - 40%

30%- 40%

Lintel levelFinal payment

Completion and hand over#DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information MemorandumReal Estate Market Housing DemandHousing RequirementHousing requirement is a function of population and household size. The 2000 Population and Housing Census provides a 25-year housing need, which is presented in the table below.Source:[2000 Population and Housing Census, Ghana Statistical Service & KPMG Analysis]Note:(* Figures are estimates)In 2000, total household population was 18.6 million and with a household size if 5.1, actual housing need was estimated to be 3,660,044. However, actual housing units available was about 2.2 million, a shortfall of about 1.4 million units. Based on a 5-yearly population projection, and assuming the same household size of 5.2 persons, it is estimated that 2.2 million units will be needed within the next 25 years. This translates into an average of 91,000 units per annum. With an estimated housing supply of 45,000 by the Ministry of Water Resources Works and Housing, annual shortfall is in the region of about 45,000. Based on population projections obtained from the GSS for the regional capitals, we have also projected housing need for the period 2010 to 2015.

#DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information Memorandum27

Real Estate Market Housing Demand

Average growth rate is estimated to be 4% for the ten cities surveyed. Kumasi is the city with the highest growth rate of 5%, which may be explained by the southward migration from the three northern regions. Cape Coast is the city with the least growth rate of 1.4% per annum. Based on the population projections, we have estimated the housing needs for the ten regional capitals over the next five years.Kumasi has the largest annual increase in housing requirement with over 23,000 units followed by Accra which requires about 16,000 units per year. The ten cities have a total housing requirement in excess of 46,000 per year. These number represents total housing need and does not indicate affordability.

Source:[2000 Population and Housing Census, Ghana Statistical Service & KPMG Analysis]Source:[2000 Population and Housing Census, Ghana Statistical Service & KPMG Analysis]#DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information MemorandumGreater Accra Region- AccraPopulation2.3 million (2010 estimate)Economy

Accra is the administrative and economic centre of Ghana. A large proportion of the population in the city are economically active with about 45% of them employed in the formal sector and 40% in the informal sector. Over 70% of Ghana's manufacturing capacity is located within Accra. The current inflation rate in the Greater Accra Region is about 5.7% which is the second lowest compared to other regions in the country.The estimated GDP for the Greater Accra Region is about $3.0 billion as at the end of 2009 (the highest among the regions). GDP per capita income is estimated to be about US$800 for the 2009 fiscal year. Industry informationThe main economic activities in the city are financial and non-financial services, commerce and manufacturing, urban farming, fishing, quarrying, construction. Personal incomeAbout 5% of household income are earned from agriculture; 56% from formal employment; 24% from non-farm self employment; and 14% from rent, remittances and other activities. (Ghana Living Standards Survey, 2006). Source of citys revenueThe main source of revenue for the Accra Metropolitan Assembly is funds from the Government. They also raise funds from rates and fines for licenses and offences, etc.Housing developmentsGrowth in the demand and supply of housing units in Accra has been very rapid over the years. The provision of housing units by the Government through state institutions like State Housing Company and SSNIT has not been able to satisfy the huge demand in the city, paving way for the entry of over 100 private real estate developers into the ever increasing market in Accra. Currently, real estate developers account for most residential properties in Accra. Housing penetration rate is very high in Accra with about 95% of the real estate developers in the country are located in Accra. The city has the largest number of housing stock and the second largest in terms of annual housing need. Developed sites include Airport Residential, Ridge, East Legon, Dansoman, and West Legon. New developing areas are on the periphery of the city which includes Katamanso, Oyibi, and Kwabenya, Ashanti Region- KumasiPopulation2.0 million (2010 estimate)EconomyGeographically, Kumasi is centrally located as a transit point for movement up north and down south. Of particular significance is the large number of self-employed people involved in trading which is quiet characteristic of the city.The current inflation rate in the Ashanti Region about 11.72% which is the third lowest among the ten regions in Ghana. The estimated GDP for the Ashanti region is over $2.5 billion as at the end of 2009GDP per capita is estimated to be about US$590 for the 2009 fiscal year. Industry informationThe people are mostly involved in the production of cocoa and timber, mining, light manufacturing, wholesale and retail trade and financial servicesPersonal incomeAbout 21% of household income are earned from agriculture; 26.5% from formal employment; 34% from non-farm self employment; and 18% from rent, remittances and other activities (Ghana Living Standards Survey, 2006). Source of citys revenueThe main sources of revenue for the Kumasi Metropolitan Assembly include external development partners, property rates, municipal bond issues, counterpart funds from communities and Government. Housing developmentsKumasi is one of the fastest developing cities after Accra and has a range of modern luxurious housing units put up by individuals. The traditional housing units in Kumasi are mostly compound houses. Housing penetration rate is quiet high in Kumasi where most buildings are developed by individuals rather than estate developers.Developed sites include Kwadaso, Santase, and Ahodwo. Developing sites are on the urban fringes and include Odiom, Femesua, and Kentinkrono.Real Estate Market Housing Demand Analysis of Regional CapitalsSTX intends to build 30,000 units in the ten regional capitals. The following tables present demographic characteristics of the cities, economy, industry and the state of housing development.#DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information MemorandumNorthern Region- TamalePopulation259,380 (2010 estimate)Economy

Inflation is relatively higher up north compared to the southern part of Ghana and this is not different in Tamale. The current inflation rate in the Northern Region is about 11.89% The estimated GDP for the Northern Region is about US$900 million.GDP per capita is estimated to be about US$430 for the 2009 fiscal year.Industry Mostly involved in the production of cereals, legumes and other foodstuffs; livestock; handicrafts and servicesPersonal incomeAbout 68.5% of household income are earned from agriculture; 10% from formal employment; 14% from non-farm self employment; and 7.5% from rent, remittances and other activitiesSource of citys revenueSources of revenue for the city are twofold; internally generated funds such as rates, land, fees and fines, licenses, rent and investment; central government funds such as District Assemblies Common Fund, central government project interventions like Urban Environmental Sanitation Project, European Union, etc.Housing developmentsTamale has a mix of modern and traditional settlements. The traditional settlements in the region are mainly circular compound houses made up of mud and thatch and forms the majority of housing units in the city. General housing penetration rate is low.Real Estate Market Housing Demand - Analysis of Regional CapitalsWestern Region- Sekondi-TakoradiPopulationAbout 379,109 (2010 estimate)EconomyThe people of Takoradi are mostly engaged in commerce (33%), with a good number also involved in agriculture, manufacturing, agro-processing and services. Activities in the city are significantly influenced by the presence of a harbour.The current inflation rate in the Western Region about 12.7% which is moderate compared to other capital regions in the country. The estimated GDP for the Western Region is in about $1.3 billion as at the end of 2009GDP per capita income for the city of Takoradi is estimated to be about US$570 for the 2009 fiscal year. Industry informationThe main industrial activities include commerce, fishing, farming, livestock and poultry, manufacturing, agro-processing and services. Plans are far advanced to start Ghanas oil production in the city by the end of 2010.Personal incomeAbout 45% of household income are earned from agriculture; 24% from formal employment; 21% from non-farm self employment; and 10% from rent, remittances and other activities (Ghana Living Standards Survey, 2006). This trend is likely to change when the oil production in the city starts.Source of citys revenueSources of revenue for the city include internally generated funds such as rates, land, fees and fines, licenses, rent and investment; central government funds such as District Assemblies Common Fund.Housing developmentsTakoradi is one of the well developed capital cities in Ghana. Aside the traditional compound houses in the city, there has been an increase in the number of modern housing units in the city which are being developed by both individuals and real estate developers. Housing penetration rate is currently moderate but this is expected to be very high in some few years to come due to the influence of the oil production in the city. Regimanuel-Gray, the leading real estate developer in the country has been developing properties for the middle to high income earners. New developing sites include the estates located at Essipon. #DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information MemorandumVolta Region - HoPopulation83,746 (2010 estimate )EconomyThe main economic activities are farming, fishing, animal rearing, petty commerce and tourism. The economy of the Ho Municipality is not particularly buoyant even though the potentials are there to be exploited.The current inflation rate in the Volta Region is about 14.23% which is quiet high compared to other regions in Ghana. The estimated GDP for the Volta region is in excess of $680 million as at the end of 2009GDP per capita for the region is estimated to be about US$400 for the 2009 fiscal year. Industry informationThe formal sector is made up of people mainly involved in public service, private construction and services. The informal sector is mainly made up of farmers involved in the production of food crops, quarrying and trading activities. Tourism is another major income earner in the city. Personal incomeAbout 40% of household income are earned from agriculture; 17% from formal employment; 30% from non-farm self employment; and 13% from rent, remittances and other activities (Ghana Living Standards Survey, 2006). Source of citys revenueThe main source of revenue for the metropolitan assembly is the District Assembly Common FundHousing developmentsResidential land area constitutes a sizeable portion of the land use of the city. The State Housing Company (SHC) is the major estate developer in the city. Compared to other capital cities, housing penetration rate is moderate.Real Estate Market Housing Demand - Analysis of Regional CapitalsEastern Region - KoforiduaPopulation111,873 (2010 estimate)EconomyKoforidua is one of Ghanas oldest cocoa-producing centres and serves as the administrative and commercial center for the region. The people are mainly involved in farming and services.The current inflation rate in the Eastern Region is about 3.6% which is the lowest compared to the other regions in the country. The estimated GDP for the Eastern Region is about $1.2 billion as at the end of 2009. GDP per capita income is estimated to be about US$550 for the 2009 fiscal year. IndustryThe economy of the area is divided into three sectors, namely the agricultural (28.1%), industrial (27%) and the service (44.5%) . Industrial activities mining and quarrying. The city has some of the major banks in the country including Barclays, Merchant Bank, Commercial Bank and Agricultural Development Bank.Personal IncomeAbout 43% of household income is earned from agriculture; 21% from formal employment; 28% from non-farm self employment; and 8% from rent, remittances and other activities (Ghana Living Standards Survey, 2006). Source of citys revenue

Koforidua is a town in the New Juaben Municipal which derives its revenue from two main sources, namely traditional/locally generated and external including grants from central government and other donor funds. The major sources of the internally generated funds includes but not limited to basic and property rates, licenses, fees and fines and investments. Housing Development

The city is one of the fastest developing towns in Ghana. It has a mix of modern and traditional buildings in a serene atmosphere. Present in the town are a good number of compound houses and bungalows as well as detached and semi-detached houses. Generally, housing penetration rate is moderate, but most of the houses are being developed by individuals.Developed sites include Adweso estates while developing sites are at the periphery of the city.#DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information MemorandumCentral Region- Cape CoastPopulation94,669 (2010 estimate) EconomyMostly featured in the citys economic activities is agriculture. About 70% of the people are farmers who cultivate food crops including maize, cassava and cocoyam while poultry, turkey, rabbits, pigs, sheep, grass-cutter and goats form the main livestock that are reared. Fishing activities and trading are also very high in the city of Cape Coast The current inflation rate in the Central Region about 11.95% which is one of the highest among the ten regions in Ghana. The estimated GDP for the Central region is in excess of $1.2 billion as at the end of 2009GDP per capita income for the city of Cape Coast is estimated to be about US$670 for the 2009 fiscal year. Industry informationThe people are mostly involved in the fishing, farming, manufacturing, quarrying, trading and services.Personal incomeAbout 38% of household income is earned from agriculture; 27% from formal employment; 26% from non-farm self employment; and 9% from rent, remittances and other activities (Ghana Living Standards Survey, 2006). Source of citys revenueThe main source of revenue for the Cape Coast metropolitan assembly include the Central Government, NGOs, Embassies, and other donor agencies. They also rely on internally generated funds from rates and fees on properties, etc.Housing developmentsResidential land area constitutes a sizeable portion of the land use of the city. The State Housing Company (SHC) is the major estate developer in the city. It intends to provide more affordable and alternative forms of housing, particularly for the citys ever-growing population. Housing penetration rate is moderate.Real Estate Market Housing Demand - Analysis of Regional CapitalsUpper West Region- WaPopulation97,818 (2010 estimate)EconomyCurrent inflation rate in the Upper West Region is 18.89% which together with that of the Upper East is the highest among the regions in Ghana. The estimated GDP for the region is over US$92 million.GDP per capita income is estimated to be about US$152 for the 2009 fiscal year which is the lowest among the capital cities in Ghana.IndustryVegetable cultivation, animal rearing, artifacts, production of cereals and other foodstuffsPersonal incomeAbout 50% of household income are earned from agriculture; 20% from formal employment; 21% from non-farm self employment; and 9% from rent, remittances and other activities. Source of citys revenueRevenue generated by the Wa Municipal Assembly comes from internally generated funds such as rates, land, fees and fines, licenses, rent and investment; central government funds such as District Assemblies Common Fund, central government project interventions like Urban Environmental Sanitation Project, European Union, DFID,etc.Housing developmentsThe traditional settlements in the city are village houses of round mud-walled structures connected by walls forming large compounds. Like other parts of northern Ghana, housing penetration rate is very low#DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information MemorandumUpper East Region- BolgatangaPopulation63,681 (2010 estimate)EconomyAgriculture is the main economic activity for the people of Bolgatanga. They are mainly involved in the production of tomatoes.Current inflation rate in the Upper East Region is 18.89% which together with that of the Upper West is the highest among the regions in Ghana. The GDP of the Upper East Region is estimated to be about US$170 million.GDP per capita income for the city of Bolgatanga is estimated to be about US$178 for the 2009 fiscal year.IndustryVegetable cultivation, animal rearing, artifacts, production of cereals and other foodstuffsPersonal incomeBolgatanga has the second lowest per capita GDP among the ten capital cities. About 57% of household income are earned from agriculture; 11% from formal employment; 26% from non-farm self employment; and 6% from rent, remittances and other activities (Ghana Living Standards Survey, 2006). Source of citys revenueRevenue generated by the Bolgatanga municipal comes from internally generated funds such as rates, land, fees and fines, licenses, rent and investment; central government funds such as District Assemblies Common Fund, central government project interventions like Urban Environmental Sanitation Project, European Union, DFID etc.Housing developmentsThe traditional settlements in the city are village houses of round mud-walled structures connected by walls forming large compounds. General housing penetration rate is very low as with most part of northern Ghana.Brong Ahafo Region- SunyaniPopulation83,040 (2010 estimate)EconomyThe main economic activity in Sunyani is agriculture. The people are mainly involved in the production of foodstuffs like yam, cassava and plantain. A good number of them are also involved in animal farming.Inflation in the region currently stands at 16.69% which is the second highest among the ten regions.The GDP of the Brong Ahafo Region is estimated to be over US$1.3 billion which is one of the highest among the ten regions in Ghana.GDP per capita income for the city of Sunyani is estimated to be about US$637 for the 2009 fiscal yearIndustryCocoa and timber production, food crops cultivation and financial vicesPersonal incomeAbout 56% of household income are earned from agriculture; 20% from formal employment; 16% from non-farm self employment; and 8% from rent, remittances and other activities (Ghana Living Standards Survey, 2006). Source of citys revenueRevenue generated by the city comes from internally generated funds such as rates, land, fees and fines, licenses, rent and investment; central government funds such as District Assemblies Common FundHousing developmentsThe traditional housing units in Sunyani are mostly compound houses inhabited by tenants or members of an extended family. Housing penetration rate in the city can be described as moderate, with most of the buildings being owned by private individuals. Real Estate Market Housing Demand - Analysis of Regional CapitalsSurvey of the ten cities revealed that three main cities Accra, Kumasi and Takoradi hold prospect for residential development. These cities have the highest concentration of economic activities and have high income per capita. This is also supported by the concentration of private real estate developers in these three cities. #DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information Memorandum

Real Estate MarketHousing Demand - Analysis of Regional CapitalsAccra/Tema Middle to High Income AreasClassification House typeNo of BedroomsPrice/Rent (US$)Area (Sqm)Payment TermsSelling Used Detached235,000 - 50,000

N/AN/A370,000 - 100,000490,000 - 150,000Newly providedSemi-detached134,16529Developer starts construction upon payment of 50% of the proposed selling price of the unitTema251,000100Detached254,300993 89,670124Detached with garage375,4052024194,250387Flat284,50093KwabenyaRenting Used Detached2500N/A Full payment made initially3800455051500 Sample House PricesPrices of used and newly built housing units have been collated for five cities. Used properties are normally supplied by individuals who intend to dispose of their houses. Prices of new housing units were obtained from private real estate developers operating in the area. Prices of units vary depending on location of the property. Properties located in prime residential areas command high prices. New residential developments are currently being undertaken at the outskirts of the urban centres where land prices are relatively cheaper than the main city centre. #DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information Memorandum

Real Estate MarketHousing Demand - Analysis of Regional CapitalsAccra Prime AreasClassification House typeNo of BedroomsPrice/Rent per month (US$)Area (Sqm)Payment TermsLocationSellingNewly providedApartment2234,00013640% initial payment30% after six months and 30% on completionAirport Residential Area3373,000198Penthouse4455,000344Townhouse4618,000430Renting Apartment22,50013633,500198Penthouse43,500344Townhouse44,000430SellingNewly providedApartment2270,00020330% initial payment30% second payment40% on completionCantonments3330,0003024400,000356Penthouse3450,000380Townhouse4480,000400RentingNewly providedApartment22,50020333,00030244,500320Penthouse 43,500380Townhouse44,000400SellingNewly providedApartment3226,00015030% initial payment30% second payment40% on completionRidgePenthouse3457,600205Townhouse4650,00028040% initial deposit30% at roofing and 30% on completionRentingApartment32,600Penthouse35,850SellingNewly providedApartment 2270,000203OsuTownhouse4600,000354Prices of units vary depending on location of the property. Properties located in prime residential areas command high prices. Locations such as Airport Residential Area, Ridge and Cantonments have luxury apartments and townhouses with prices ranging between US$200,000 and US$600,000.#DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information Memorandum

Real Estate MarketHousing Demand - Analysis of Regional CapitalsKumasiClassification House typeNo of BedroomsPrice/Rent (US$)Area (Sqm)Payment TermsLocationSellingUsed Detached237,000338,500450,000558,000TakoradiClassification House typeNo of bedroomsPrice/Rent (US$)Area (Sqm)Payment TermsLocationSelling Newly provided Semi-Detached 160,0008240% initial payment40% at roofing level20% on completionEssipon272,00096388,5001213 + Garage98,820143Detached174,00092288,0001103115,0001563 + Garage + quarters 145,700201Renting Newly providedDetached3800#DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information MemorandumReal Estate Market Housing Demand - Analysis of Regional CapitalsClassification House typePrice (US$)Area (Sqm)Payment TermsLocationSelling Used Semi detached $59,000 188.66N/aCapeCoastSelling Used Semi detachedGH45,000N/aN/aHoCompared with the other cities like Accra, Takoradi has high house prices. This may be due to the limited supply of real estate developers in the city. When the petroleum industry becomes fully operational, the prospect of increased demand for real estate will be high.Demand for housing is heavily influenced by the availability of mortgages for potential purchasers to access. Currently, there are a number of mortgage institutions in the country who provide funds for home purchase. This is expected to provide opportunities for workers with regular income stream to own homes. #DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information MemorandumReal Estate MarketHousing Demand - Mortgage MarketMortgage SupplyPresently, four institutions provide mortgages in Ghana. These are Ghana Home Loans Limited, HFC Bank Limited, Fidelity Bank Limited and Ecobank Ghana Limited. Additionally, some banks provide mortgage loans to their staff as part of employee benefits. Among these banks are SG-SSB, Amalgamated Bank, Barclays Bank and Ghana Commercial Bank.

The respective market shares of these companies as at 2008 are presented below:Market ShareBank Amount (GHM)Share(%)HFC Bank37.930.03%Ghana Home Loans34.127.02%Barclays Bank31.524.96%Fidelity Bank14.911.81%GCB6.65.23%SG-SSB1.20.95%Amal Bank0.0170.01%Total126.217100.00%Types of Mortgage ProductsAmong the products offered to the market are: First Time Buyers Buy to Let Equity Release Refinance Home CompletionTo qualify for any of these products, the intended property needs to be sited in marketable location. This is to facilitate sale of the property in the event of default.

Mortgage Deposits & TenureWith the exception of HFC Bank which requires a minimum deposit of 20% of the mortgage amount or forced value of the property from clients, all the other companies require a minimum of 25%. Thus, mortgage financing can only be secured for up to 80% of the value of the property. Mortgage companies provide varied tenure for the various types of mortgage products. Dollar-denominated mortgages have an average of 15 years while cedi-denominated mortgages have up to 20 years.Mortgage PricingMortgage pricing refers to the costs of borrowing for the purchase of a house. These costs include interest rates, processing fee, insurance and legal fees.Interest RatesMortgages in Ghana are denominated in Ghana cedi or the United States dollar. Rates denominated in Ghana cedi are variable depending on changes in interest rates while dollar denominated mortgages are relatively fixed due to the stable nature of the dollar to the cedi. Annual percentage rates for mortgages denominated in the domestic currency average 30%. Though interest rates are on the decline mortgage rates appear to be high. Dollar-denominated mortgages have rates averaging 14% per annum. Interest RatesUS$GHGhana Home Loans Limited13.75%-HFC Bank Limited13.00 14.00%32.00%Fidelity Bank Limited14.00 15.00%30.00%Ecobank Ghana Limited14.00%26.80%Source:[HFC Bank, 2008]Source:[Market Survey]#DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information MemorandumReal Estate MarketHousing Demand - Mortgage MarketProcessing FeeIn addition to the interest charges, mortgage companies charge clients for the administrative tasks involved in processing client documents. This amount ranges between 1% and 2.5% of the loan amount.Other charges include legal fee, valuation fee, insurance premium (life and hazard) and refundable security deposit.Processing FeeUSDGHcGhana Home Loans Limited$200 + 1.0% 1.0% +HFC Bank Limited1.5%1.5%Fidelity Bank Limited1.5%1.5%Ecobank Ghana Limited2.5%2.5%Source: (Market Survey]Mortgage AffordabilityAffordability of mortgages is a function of mortgage pricing, house price and the income level of purchasers. To assess whether houses to be provided by STX is affordable, income levels of public sector workers were obtained and categorized into income brackets. This is presented in the table below.

The analysis in the table shows that over 90% of public sector workers earn monthly income less than GH500 (US$345). About 8.6% earn between GH500 (US$345) and GH1,000 (US$690) whilst just over 1% earn above GH1,000. The bulk of the demand for housing is within the income bracket that is less than GH500 (US$345). Analysis of mortgage affordability using cedi-denominated and dollar-denominated mortgages in Ghana is presented in the following tables.Source: (Controller and Accountant General]#DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information MemorandumReal Estate Market Housing Demand - Mortgage MarketDollar-Denominated MortgageThe schedule presents dollar-denominated mortgage facilities at an interest rate of 14% over a 15-year period. Cedi-Denominated Mortgages The table below presents a mortgage schedule for a cedi-denominated mortgage at an interest rate of 32% for 20 years.According to Bank of Ghana regulations, a bank may not deduct more than 40% of an employees salary for loan servicing. Thus, the maximum loan-to-income ratio is expected to be 40%. This raises the qualifying income of workers, thus significantly reducing the number of mortgage-eligible workers in Ghana. Based on the table above, the minimum income for a potential borrower to qualify for a mortgage is estimated to be GH543 per month. Given the income levels of public sector workers, over 90% of them cannot afford houses costing 15,000 dollars or more.

#DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information MemorandumReal Estate MarketHousing Demand - Mortgage MarketMonthly repayments under the cedi-denominated mortgage finance present higher figures owing to the increased interest rate charged (32%). The relatively high rate used is reflective of the unstable nature of the local currency. The schedules shows that less number of workers will be eligible for mortgage financing under this option. Consequently, the qualifying income of workers needs to be high in order to qualify for financing. That is for a GH21,750 (US$15,000) house, the minimum income to qualify for a mortgage is estimated to be GH1,089 per month.In general, the formal private sector pays high salaries relative to the public sector. STX can therefore target the formal private sector and Ghanaians in the Diaspora since their income levels can better finance mortgage repayments. It is estimated that about 50% of the home buyers in the formal sector are Ghanaians living abroad, using the real estate market as an investment channel.Mortgage institutions have designed various mortgage products to allow households to own their homes. However, the costs of borrowing and the low income levels of workers is hindering the smooth operation of the mortgage market. This problem is also compounded by the high house prices as mortgages are a function of a number of factors including house prices. An affordable housing scheme will enable the general public access mortgage facilities.#DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information MemorandumReal Estate MarketPublic InterventionsGovernment InterventionIn order to mitigate the deficit in housing, the Government has embarked on direct and indirect means to encourage housing development. Directly, the Government engaged local firms to design and develop affordable units for public servants. Affordable Housing ProjectThe table below summarizes the affordable housing project that was initiated by the Government in 2006.

The plan was to build over 100,000 units in selected locations across the country. This project was solely to be financed by the Government of Ghana and executed by local construction firms. Currently, less than 5,000 units are still under construction in four locations in the country, which means over 95,000 units are yet to be constructed.Tax IncentivesThe Government is indirectly facilitating the development of more residential homes through the provision of tax incentives to prospective investors. According to the Ghana Investment Promotion Centre 1994 (Act 478), tax benefits and exemptions include the following: Five-year tax holiday on income from sale or letting of residential and commercial premises, while payment of stamp duties may be deferred for a period not exceeding five years Ghana currently has a backlog of housing needs yet to be met. With the discovery of oil, Ghanas national output is expected to increase hence boosting per capita income and purchasing power. Additionally, the influx of expatriates into the oil industry will require the development of more residential units. The acute accommodation shortage extends across the various facets for the economy and its has become more evident in the security services. The Police Service and Armed Forces are severely challenged in providing homes for existing and new recruits. Though the Government has intensified its effort to minimize the housing deficit, these efforts are inadequate to meet the needs of the citizenry.Source:[Ministry of Water Resources, Works and Housing]#DRAFT 2010 KPMG Ghana, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Ghana. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.Information Memorandum42Real Estate MarketLand AcquisitionLand Ownership and SupplyThree broad categories of land ownership exist in Ghana. Land for residential development can be obtained from any of the categories below. State/Vested lands Customary ( stool) lands Private/individual lands

State and Vested LandsState and vested lands are managed by the Lands Commission of Ghana. State lands are lands compulsorily acquired by the government for public use. The ownership right is transferred from the original owner to the government. Vested lands however are private lands belonging to stools or skins but vested in the State