USED HEAVY EQUIPMENT
LEASING VENTURE (FOCUS ON CONSTRUCTION AND MINING SECTORS)
FREDUAH A. PREMPEH: PROJECT LEAD, RESEARCH, ANALYSIS, COMPILATION
1st
MANAGING Partner (ABP COMMUNICATIONS)
S.B. AGYAPONG: PROJECT COORDINATOR
GABE OZOR (CEO): ZAMEK GLOBAL LTD
An ABP communications group project
0.1 EXECUTIVE SUMMARY
Following the tremendous growth of Ghana’s economy (21 % percent expected growth rate, 2011
figures), the need and focus for increased investment in heavy machinery to fuel the ever expanding
demand within the construction and mining sectors, has spurred the development and establishment of
allied / related services and products for these sectors.
The following paper attempts to highlight the predicted impact of establishing a plant pool to service the
leasing needs of private, governmental and institutional audiences in this vibrant West African nation.
In order to get a balanced view of the tremendous market potential of this proposed idea, the
consultant (Strategic Management Consult) in consultation with Ebony Marketing Intelligence,
undertook the following research, analysis, and compilation project, aimed at uncovering, the
opportunities, challenges, and pitfalls.
This cardinal objective is strategically achieved by first examining the current general state of both the
construction and mining industries in Ghana.
The targeted market potential and the equipment (in this case heavy equipment) needs of this segment
are examined. An outline of Zaemek Global and its top management team is next identified as a driving
force in the supply end of needed product input (heavy machinery)
The projected outline components (without actual figures) of a business plan are next presented. It
concludes by forcefully predicting the success of the intended leasing company venture by summarizing
important aspects of the paper. An action timeline for project implementation wraps the argument for
the call to action.
OUTLINE OF PAPER
The following key points make up the outline of the paper:
- A brief background of Ghana’s construction and mining industries
- Challenges facing the construction and mining sectors
- The case for establishing a plant pool venture
- The Ghanaian market for heavy equipment
- Potential projects that would utilize the heavy equipment’s provided by the venture
- Competitive strategy
- Components of a plan for establishing a heavy equipment plant pool venture
- Unique role of ZAEMEK AS A KEY SUPPLIER of equipment for the construction and mining
sectors
- Timeline of action plan.
- Conclusion
0.2 BACKGROUND
WHAT IS CONSTRUCTION?
The process or art of constructing; the act of building; erection; the act of devising and forming; fabrication; composition. The form or manner of building or putting together the parts of anything; structure; arrangement.
GHANA’S CONSTRUCTION INDUSTRY
Ghana is anticipating extensive development in many sectors in the coming years, and has recognized that the
current infrastructure will struggle to support this growth. For this reason, construction has been identified as an
important part of the national development agenda. There will be many opportunities for companies and investors
entering into this industry in the next few years. Local and international companies of all sizes compete for
government and private contracts.
Ghana’s construction industry encompasses every modern day constructional project comparable to any
world class project. These include such areas as roads, buildings, bridges, etc. The following gives an
insight into the tremendous progress chalked to date.
Hyper growth in Ghana's real estate and infrastructure development have opened up a wide-spread need for
construction products and services for commercial buildings, housing units and transit construction. Ghana's
construction and building industry is doing very well, and is a significant contributor to the national economy in terms
of both GDP and job creation.
The government is the major developer in the construction industry, dominating both in terms of contracts offered and
funds allocated to projects. Billions of dollars in taxes are spent every year on construction projects. Donor funded
projects and foreign direct investment are also considerable contributors to the industry. Additionally, much of the
money coming into the country from Ghanaians living abroad goes into real estate and other development projects.
CHALLENGES
Several challenges confront the construction industry in Ghana, in terms of priority; some of these
challenges outweigh others. Taken together however key challenges standout, include but not limited to
the following:
Availability of Modern Equipment – without proper funding, companies are forced to use outdated equipment and machinery that is not only inefficient, but also dangerous. Access to modern equipment and training on use is essential. There are significant opportunities for investment or partnership in this area.
- Other challenges of less import with regards to the direction of this paper include but not limited to the following: Poor project management, Worker training difficulties
- Limited freight services
DEFINITION OF MINING
The process or business of extracting ore or minerals from the ground
GHANA’S MINING INDUSTRY
Ghana has a long and prosperous mining history. More than 100 years ago, it was one of the first countries in West Africa to explore gold mining. Today, Ghana produces over 2 million ounces of gold per year. Minerals make up 35% of the country's export income. Gold is the major money-maker, with other minerals including manganese, bauxite and diamonds. Quarrying in Ghana consists mostly of smaller-scale operations that produce sand, gravel, cement, limestone, and granite. Large and small-scale mining operations provide an estimated 524,000 jobs for Ghanaians.
Past Investment An estimated $6.7 billion was invested in Ghana's mining and minerals sector between 1994 and 2008. This large influx of capital boosted the productivity of the industry, and led to $2.2 billion in gold exports in 2008.
Financial Incentives In recognition of the significant contributions gold and mineral exports make to the Ghanaian economy, the erstwhile government of the PNDC and later NDC, and subsequent governments including the NPP, made mineral exploration and exportation a significant part of the Economic development agenda. These programs introduced financial incentives and tax breaks for companies in the mining industry and set up institutions and regulations to oversee industry activities.
Major Companies Over the past 80 years, many foreign companies have entered the mining and quarrying industry in Ghana. Today, some of the biggest players in gold mining include Anglo Ashanti, Golden Star, Newmont, Gold Fields, and Kinross. Major players in mining other minerals include Alkoa, Ghana Manganese and Consolidated Diamonds.
CHALLENGES:
A UNIQUE TECHNOLOGICAL DRAWBACK FOR SUAME MAGAZINE
The absence of technical and technological partnerships between government and industry
hinders opportunities for local firms to access opportunities in the mining supply chain that
is according to artisans in Suame, Kumasi.
The artisans who work at the Suame light industrial area in Kumasi say the mining
companies are unable to patronize local products and services due to issues of
standardization.
A World Bank report released on Monday says mining companies can boost economic
growth in West Africa by purchasing more equipment, supplies and services from local
companies. It focuses on Ghana, Guinea and Senegal.
The study titled “Increasing Local Procurement by the Mining Industry in West Africa” shows
that raising the share of local procurement by mining companies would spread the benefits
of mining more evenly across a country’s economy, creating jobs and stimulating the
sustainable development of local enterprises.
World Bank’s Vice President for the Africa region, Obiageli Ezekwesili, said buying local
goods and services is a catalyst for private sector development and sustainable growth.
The report recommends that West African governments work with mining companies,
suppliers, and civil society to strengthen definitions and indicators for measuring local
procurement. It also tasks mining companies to develop and implement local procurement
plans.
But George Amankwah, President of the Suame Magazine Industrial Development
Organization (SMIDO), say the low production capacity of local industries must first be
addressed if they are to seize local procurement opportunities.
“These [mining companies], they cannot buy just anything from your end unless it is well
tested…. If not except we buy the finished products from say Britain, Germany, China and
then supply to them, but to manufacture it here, I don’t think it’s easy”, he observed.
Players in Ghana’s mining sector, a couple of years ago, responded positively to a business
advocacy by artisans at the Suame cluster by awarding engineering sub-contracts worth
thousands of Ghana Cedis for the artisans to supply and fix spare parts of heavy-duty
vehicles.
The mutually beneficial partnership was to integrate local technologies in mining and reduce
the cost of importing engineering parts by the mining companies.
This could not be sustained because, according to Mr. Amankwaah, “our main challenge is
that we don’t have industrial machines…for example industrial fanon, which one can use to
mould or design spare parts”.
He noted that inspite of their expertise the local firms cannot access funding from the
commercial banks nor support from the government to purchase the requisite industrial
machinery for production.
Mr. Amankwah has therefore asked the World Bank to play a lead role in joint-venture
partnerships to build local capacity in manufacturing spare parts and other industrial
materials.
“We want them to come to our aid by sitting down with us, listen to our needs and see how
best they can get us such machines for us to work with. If that happens we can produce
and even create market for ourselves and even beyond Ghana”, the SMIDO President told
Luv Fm.
0.3 THE CASE FOR ESTABLISHING A HEAVY EQUIPMENT
PLANT POOL:
ARABIAN JERUSALEM TRADING COMPANY: (BRIEF CASE STUDY)
The burgeoning construction sector in many African countries has harbingered good times for companies manufacturing construction machineries and equipment as well as those selling used and refurbished heavy equipment and machinery. The appreciable increase in real estate and construction activities in African countries has resulted in a substantial surge of demand for concrete mixers, bar-bending and cutting machines, excavators and backhoes and earth rammers.
UAE-based Arabian Jerusalem Equipment Trading Company, a prominent dealer of new and used construction machinery has registered a considerable increase in the sale of excavators and backhoes to African countries.
“All our machineries are selling really well. We have registered a 30 per cent increase in our net sales to the African continent,” said Ehab Murad, managing director of Arabian Jerusalem Equipment Trading
Company.
The construction machinery industry in Africa, worth approximately US$9 million is undergoing a steady transformation by moving from a low volume, intensive use of equipment structure to high volume, specific use one. In the coming years, the major segments of construction machinery that are expected to grow are excavators, loaders, dozers, dumpers and cranes, say industry analysts.
“The rapid growth in the overall economy of many African countries has accentuated the need for improving infrastructure. Governments, development authorities and even companies have begun investing in infrastructure development projects in several African countries. Moreover, many African governments have invested heavily in irrigation and mining projects across the continent. All these factors have contributed immensely to the increased use of construction machinery,” says Ehab Murad.
UNRESERVED AUCTIONS Unreserved auctions managed by internationally acclaimed companies have also benefited from the flurry of activity in the construction, mining and irrigation sectors in many African countries. Many auctioneers of used and refurbished machineries are riding the boom wave with many bagging orders from African countries. Most of them have managed to bag substantial orders from Africa with many registering as high as a 20 per cent increase in sales to African nations. “Many construction majors working on African projects have really opened the markets in Africa for us,” says Keith Lupton, sales manager for World Wide Auctioneers in Dubai. “We are getting steady orders from these companies to supply machinery and equipment for their projects in Africa. In recent times, we have supplied construction machinery to Zambia, tower cranes to Mauritania, general construction equipment to Djibouti
(worth over $400,000) and general agriculture and construction machinery to Equatorial Guinea,” he says.
“We have also been getting regular enquiries from real estate contractors and construction companies in many East African countries like Uganda, Tanzania and Kenya. Not to mention the steady increase of demand from South Africa,” says Keith Lupton. “Demand for later model caterpillars and rough terrain cranes have been especially strong from Africa,” he says.
RIPPLING EFFECT
The boom has started a rippling effect touching various other spheres of activity that are not directly related to the construction industry. Manufacturers of ancillary products such as crane ropes, cables, pulleys and buckles too are benefited from the boom.
“We do not cater to the construction industry directly, but that does not limit us to supply crane ropes and shackles to many construction companies. A lion’s share of our orders these days come from construction companies,” sums up a leading manufacturer of crane cables and pulleys in the UAE.
0.4 THE GHANIAN MARKET FOR HEAVY EQUIPMENT
(USED AND NEW)
The market for heavy equipment for construction and mining in Ghana is dominated by a combination of large, mid-sized and small operators. The following is a brief snapshot of current players in the used and new heavy equipment machinery market in Ghana.
JOSPONG COMPANY
J.A. Plant Pool Ghana Ltd. is a private limited liability company, registered under the laws of Ghana with
Head Office in Accra and branches in all the 10 (ten) regional capitals. The company is registered to carry
out the business of plant pool, rentals/leasing of heavy Construction equipment, as well as Mining,
Forestry, Agricultural and Sanitation machinery and equipment. They also deal in Trucks and Luxurious
Buses.
J. A provides the complete service support for all our equipment or products. Periodic maintenance is
customized to suit customers’ specific needs and equipment operational requirement. They offer
assistance to our clients in the areas of fuel nozzle test bench, hydraulic pump test, fuel injection test
bench, transmission and engine test bench.
GHEL (Ghana heavy equipment company)
Ghana Heavy Equipment Ltd. (GHEL) is a limited liability company, solely owned by the Government of Ghana. It used to be called Heavy Equipment Division of the erstwhile Ghana National Trading
Corporation (GNTC). The company has its head office in Accra, with branches strategically located in Kumasi to cater for the middle zone, and Tamale to cater for the Northern zone.
MANTRAC GHANA LTD
Mantrac Ghana Limited is an authorized dealer for Caterpillar products in Ghana. It provides Caterpillar machines for wide and varied applications in the construction, agricultural and mining development sectors of the economy and a complete range of lift trucks and warehousing equipment for material handling needs.
SMTMULTITECHGHANA
SMT MULTITECH GHANA is Authorized Dealer of Construction Equipment and Volvo Trucks in Ghana.
0.5 POTENTIAL PROJECTS THAT WOULD UTILIZE THE HEAVY EQUIPMENTS PROVIDED BY THE VENTURE
ACP HOUSING PROJECT
In November 2009 the Ministry of water resources, works and housing of Ghana, signed a memorandum of understanding with J GAP for the construction of 75,000 affordable housing units in the republic of Ghana. J Gap has partnered with American Capital Partners to accomplish this objective. The chief coordinating officer of ACP Dr Gabriel Ayisi has indicated the very high potential for ACP to utilize some of Zaemeks product lines in undertaking the project
MINING INDUSTRY
A representative of major mining firms in Ghana, Gordon Hordibert, has indicated the very high likelihood of promoting the venture to most or all mining companies who might need some of the products lines offered by the venture for their mining operations.
SMALL SCALE CONSTRUCTION PROJECTS
The coordinator of this project / study (SB Agyapong,) and Mr Botsio ( one of the ventures principals), have individually been in touch with a couple of contractors who have indicated the desire and
willingness to lease some of these heavy equipment’s to undertake projects, once the venture is up and running
0.6 COMPETITIVE STRATEGY
We hope to be very competitive through our pricing and marketing strategies which would focus on positioning our
equipment line slightly below prevailing market rates for the first two years of operations, until such a time when we
would become very well-known and gradually increase our rates to comparable market levels
0.7 COMPONENTS OUTLINE OF A BUSINESS PROJECTION FOR A PLANT POOL VENTURE
Setting up a successful plant pool venture would require the compilation of some basic projection
indicators which would in turn be based on some basic assumptions of the required inputs for the venture.
The following attempts to paint the picture of what would be required for such a venture:
It is expected that the venture would begin with a minimum number of heavy equipment products
including the following:
- Crane
- Backhoe
- Grader
- Bulldozer
- Etc.
Specific components of a plan would include
Start-up Funding
Start-up Expenses to Fund $............................
Start-up Assets to Fund $...............................
Total Funding Required $..............................
Assets Non-cash Assets from Start-up $
Cash Requirements from Start-up $
Additional Cash Raised $
Cash Balance on Starting Date $
Total Assets $
Liabilities and Capital Liabilities Current Borrowing $
Long-term Liabilities $
Accounts Payable (Outstanding Bills) $
Other Current Liabilities (interest-free) $0
Total Liabilities $
REQUIRED CAPITAL
Capital Planned Investment
Investor 1 $.................................
Investor 2 $...................................
Investor 3 $....................................
Investor 4 $.....................................
Investor 5 $.....................................
Investor 6 $...........................................
Additional Investment Requirement $
Total Planned Investment $
Loss at Start-up (Start-up Expenses) $
Total Capital $............ Total Capital and Liabilities $............. Total Funding $..............
MANAGEMENT / PRINCIPALS OF THE VENTURE
The following is a list of initial management personnel /principals who would run the venture:
Dr Gabriel Ayisi:
Freduah A. Prempeh
S B Agyapong
Benn Botsio
GENERAL ASSUMPTIONS:
The following are some general assumptions factored in place regarding the venture:
-that interest rates obtained from financing sources would be pegged at manageable levels to enable the
procurement and loan repayment obligations
-That it is assumed (based on factual research ) that a ready market exits for the procured equipment’s to enable the
realization of revenues to begin covering incurred cost and eventually enable breakeven and takes off stages of the
venture.
ADDITIONAL COMPONENTS OF THE BUSINESS PLAN
Once all known and required data is assembled for the final business plan, the following components of the business
plan will be completed:
-Particular equipment’s to purchase
-Loans amount raised to finance the purchase
-Investor equity and share issues
-PLAN MONTH (3 YEARS)
-CURRENT INTEREST RATES
-LONG TERM INTEREST RATES
TAX RATE (PER YEAR)
BREAK EVEN ANALYSIS
PROJECTED PROFIT AND LOSS………………………………………….
PROFORMA PROFIT AND LOSSS…………………………………………………………
PROJECTED CASH FLOW………………………………………………………
PROJECTED BALANCE SHEET…………………………………………
RATIO ANALYSIS…………………………………
0.8 ZAEMEK GLOBAL AS A NICHE SUPPLIER TO GHANA’S CONSTRUCTION AND MINING INDUSTRIES
BACKGROUND:
ZAEMEK GLOBAL, LTD.
Diversified Products & Specialty Equipment Company
2012 PRAIRIE RIDGE DRIVE
PLAINFIELD, IL. 60586
(630)484-6224
THE COMPANY – THE TEAM & LEADERSHIP
Zaemek Global Ltd. was established in the mid to late 1990’s as G-Chem, Inc. and later ZAEMEK GLOBAL
LTD. in the mid 2000s. While the company has evolved, it’s past and present mission of serving
developing countries as a bridge for technical [Techno] exchange and specialty equipment supply
remains the same.
The founder of the company is Gabe Ogbozor. Gabe is a Scientist by training. Trained and educated in
the United States, he has an advanced graduate degree in Organic and Analytical Chemistry. Until
finding G-CHEM and ZAEMEK, he practiced professional Chemistry in the Research Triangle Park area of
North Carolina. Following that, he served as Research Director and Business Development Director for a
Bio-tech company affiliated with the University of Illinois at Urbana-Champaign.
Gabe’s interest and scope of business vision widened in the course of his international business
interactions, trade mission, and travels around the world. As a result of his worldly exposure, he
discovered not only business opportunities but also technical needs in the developing countries that
ZAEMEK GLOBAL could fill. According to Gabe, “The one obvious thing I observed in my interactions in
the developing countries is lack of modern equipment and machineries. This is amid deep knowledge,
good craftsmanship, and high skill levels in these countries and communities”.
Further in his observations, he found that developing countries inherent infrastructure development
problems is not the lack of will or man power but most often the lack of proper tools and equipments to
do the job right. It is abundantly clear that unavailability of proper tools and modern equipments
compromises overall productivity and the quality of finished jobs and products. Needless to say that
these shabby jobs, due to lack of equipments, in most cases amount not only to huge economic wastes
but also compromises national and public safety.
This is where ZAEMEK GLOBAL comes in. Hence, Zaemek supply and provides equipment and support
services to a wide range of industries in both private and public sector. Industries served include but not
limited to Transportation, Agriculture, Construction, Mining, Chemical/Petrochemical, and Oil & Gas.
Equipment type’s ranges from minimally used to equipment’s in Like-New condition. Recurring service
and spare parts are also made available and affordable.
One could say that while ZAEMEK continue to foster its international expansion that the company’s
success thus far undoubtedly comes from the efforts of its management team. The profile of President
and Chief Executive Officer of the company is summarized as below:
GABE OGBOZOR – President/CEO
____________________________________________________________________________________
CAREER SUMMARY
Accomplished leader with demonstrated management skills and global expertise. Defined company
mission and goals and developed strategy for achieving set goals and objectives. Established
relationships and built business ties across international borders. Customer focused, proactive, goal
focused, and adaptable with strong commitment to quality and excellence.
COMPETENCIES
Business Planning Business Development Cost Containment
Supply Chain Management Negotiations International Trade
Revenue Optimization Problem Resolution Team Building & Leadership
PROFESSIONAL EXPERIENCE
G-CHEM, INC., Urbana, IL.
Zaemek Global, Ltd, Plainfield, IL.
President – CEO, 1997 - Present
Develop strategic priorities that will guide Zaemek’s international business and market expansion efforts.
Clearly define client needs by developing informational resources, perceptively evaluating input, creating visualizations and concepts, and decisively responding to individual client equipment needs.
Establish and maintain effective liaison between Zaemek and its worldwide customers.
Drive sales, manage assertively to meet delivery timelines, and elevate level of cooperation between Zaemek and its clients. Maintain awareness of evolving regulatory changes and advise customers of any changes in official protocols.
SCIENTAGE CORP., Urbana, IL
Research/Business Development Director, 1994 - 1997
Designed protocols, developed methods, executed studies and wrote reports for clients in support of registration of regulated products. Wrote reports to the specifications of regulatory agencies and client’s requirements.
Maintained quality and integrity of information and management operations related to study execution and data analysis. Maintained strict adherence to GMP (Good Management Practices), standard operating procedure and client protocols.
Implemented a broad program of effective and high quality technical support and problem solving services in response to the needs of company’s clients.
Made funding and capital needs recommendations. Provided detailed quarterly reports to Board of Directors, senior management, and alliance partners.
SPECIAL ATTRIBUTES
Congenial personality with extensive expatriate experience and strong interpersonal skills
Negotiation abilities and reasonably compromising
Multi language skills and amenable characteristics to different cultures
Professional and personal travel experience in Africa, Asia, and Europe
FINANCING
Zaemek realizes the constraint financing can pose to equipment procurement and therefore offer
financing options that will make equipment procurement possible. Zaemek uses the Export and Import
(Ex-Im) bank of the United States among others as one of the options. Ex-Im financing qualifications
varies from country to country and qualification rules for Ghana can be summarize below as categorized
Government backed projects:
Medium term financing for government backed projects will require the full faith and credit of the government.
Ministry of Finance notification to Ex-Im bank that the transaction is of the highest priority and would conform to IMF program limits on non-concessional debt.
Private transactions:
Will need three years of audited financial statement, trade references and bank reference. Bank guarantee is required
Financial and financing information is disseminated through our chief financial officer Mrs. Tess
Morrison. Tess’s profile is summarized below. Tess comes from the commercial banking and financing
background and has wealth of experience in helping governments, companies, and businesses move
forward.
Financial and financing information is disseminated through our chief financial officer Mrs. Tess
Morrison. Tess’s profile is summarized below. Tess comes from the commercial banking and financing
background and has wealth of experience in helping governments, companies, and businesses move
forward.
Tess Morrison M.B.A., C.G.B.P.
EXPERIENCE Corporate, direct import and export, overseas U.S. subsidiary
management, international and domestic corporate banking, various
international and domestic marketing consulting projects, promoting
exports for states government.
CORPORATE/ Zaemek Global Ltd
International Trade Management Services (ITMS)
GOVERNMENT Director 7/08-Present
EXPERIENCE Helping companies and governments in international trade and financing.
Illinois International Trade Center and Africa Business Center
at the University of Illinois at Urbana-Champaign
Director 1/97 – 6/30/08
Worked to strengthen Illinois export sales via direct counseling,
liaising with trade organizations and banks and sponsoring/teaching
seminars/workshops. My specialty was export financing (pre- and post-
export)
Minnesota Trade Office 10/92-11/96
International Trade Representative
Worked to increase Minnesota exports. Responsible for export
financing, Sub-Saharan African countries and an industry specialty.
Liaised with trade organizations, taught exporting techniques,
counseled companies on international marketing and financing
techniques.
NATUREL, INC. 3/90-10/92
President Consulted for various projects and companies involved in international
marketing. Developed business plans/marketing strategies for start-up
companies to assist in locating financing. Direct imports and exports.
KATUN COPORATION 1/87-
2/90
Manager International Administration 5/89-2/90
General Manager (Hong Kong) Ltd. 4/88-
5/89
Manager International Customer Service 1/87-
4/88
Set-up Italian sales subsidiary, designed various computer tracking reports
In Hong Kong: All aspects of starting a new warehouse/office/distribution center servicing Far East customers. Furnished, hired, trained, and budgeted.
Supervised exports (30% of company sales). Forwarders, Letter of Credit, Customs. Cut freight costs by 25%. Supervised Duty Drawback, repaying company $50,000.
BANKING
EXPERIENCE Wells Fargo Bank Minnesota N.A. 9/80-12/86
Vice President, Bloomington, MN, Small Business
Assistant Vice President, Minneapolis International
Bloomington: Manager of division designed to service companies with annual sales less than $10mm. Increased business by 10%.
Minneapolis: Proposed financing packages to insure smooth operations at the lowest cost, developed and implemented marketing plans for international services and new business. Taught seminars.
Bank of America N.T. & S.A. 5/77-
8/80
Assistant Vice President, San Diego International International Lending Officer, Los Angeles International San Diego: Section Head for U.S. international customers. Responsible
for new business development, budget, branch’s largest customers.
Los Angeles: Lending Officer for U.S. based Japanese customers. Responsible for all aspects of international lending, acceptance financing, Letters of Credit, foreign exchange and receivable financing.
ADDITIONAL
INFORMATION Am a Certified Global Business Professional. Have lived and traveled
extensively throughout the U.S., the Far East and Europe; traveled in
Russia, Africa, Brazil and Peru. Enjoy languages with French, Japanese
and Spanish my strongest in comprehension.
FOLLOWUP FINANCIAL OPTIONS STATEMENT FROM TESS MORRISON AFTER
INITIAL CONFERENCE AMONGST KEY STAKEHOLDERS
From Tess:
Dear All: I am following up with an outline of the financing options which we discussed. Eximbank will
allow US banks to give medium terms to foreign buyers of US equipment (both for new and used). They generally require that a company has been in the same line of business at least 3 years and have certain
financial ratios that they wish to see. In addition, for many countries they require in addition to a company's financials a bank guarantee. This is the case for Ghana. Initially if we can get Exim backing,
you would need to wire transfer 15% of the invoice price to Zaemek Global prior to his being able to ship
the goods. The remaining 85% plus the fees (Exim, bank, my 1% of the financed amount) would be termed out over the life of the loan. Repayment is usually every 6 months, equal principal, declining
interest. Interest is a fixed/floating where by it is fixed every 6 months to the going Prime/LIBOR + (to equal Prime) rates. Rates are usually around US Prime, perhaps a bit higher right now since our Prime is
so low (around 4% p.a.) Our rates are expected to hold pretty much through 2014 unless we hit a patch
of high inflation, which is not for seen currently. Once you have established that you are prompt on your repayments, it is common to be able to buy additional goods with new term loans. When you order
equipment, you may also want to order some spare parts (those most likely needing replacement due to harsh conditions, etc.) since they would be termed out over the life of the loan. Ordinarily we can only
give up to 180 days for spare parts. (No down payment, full payment at the term date.)
Here are the financial ratios that Exim wants to see:
A. Positive operating profit and net income in each of last 2 fiscal years.
B. Positive cash from operations in last fiscal year.
C. EBITDA/debt service (including Ex-Im Bank debt if more than 25% of total debt) is at least 1.5 for last fiscal year.
D. Total liabilities (excluding Ex-Im Bank debt) do not exceed 1.75 times tangible net worth at end of last fiscal year.
E. Ex-Im Bank exposure does not exceed 40% of tangible net worth at end of last fiscal
year. F. Interim statements disclose no material adverse change in financial condition.
My suggestions: Buy some equipment outright to start the business, show a profit and try to build the
financial statement so that with a bank's guarantee I can fight to allow you to borrow prior to your 3 year
anniversary.
I am not certain whether having a government guarantee (preferably from the Ministry of Finance, will need to check to see whether other Ministries would be acceptable) along with a letter from the Ministry
of Finance stating that the project is of the highest government priority and would conform with IMF
program limits on non-concessional debt will be sufficient for a brand new venture. I believe that it would work if we can show that the company has expertise in the field, etc. Will need to check and can do that
when I know that we could have the government backing and letter and the approximate amount of the first set of equipment.
HEAVY EQUIPMENT
Zaemek is uniquely positioned to serve the equipment needs of the construction and mining sectors of
Ghana through the provision of the necessary products, equipment and services.
With specific regards to the project under consideration, is capable and ready to supply an extensive range
of products including but not limited to the following construction and mining equipments:
- Bulldozers
- Cranes
- Backhoes
- Excavators
- Articulated dump trucks
- Assorted mining equipments
- Etc
The following pages give a visual snapshot of some products immediately available from Zamek. This is
in addition to numerous other equipment’s not featured.
0.9 SAMPLE PRODUCTS TO BE SUPPLIED BY ZAMEK GLOBAL FOR THE PROPOSED VENTURE.
It is important to note that Zamek Global intends to supply any requested heavy duty machinery for the
proposed venture covering both the constructional and mining needs of targeted audiences. The following
sample products are presented as a representative of machines.
SAMPLE MINING EQUIPMENTS SUPPLIED BY ZAMEK
ABOUT ABP COMMUNICATIONS
ABP is startup integrated marketing, research, consulting, and communications firm (amongst other
services provided). Our services are uniquely provided within six operational units. These units consist of
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1. Concept to production: CTP (Advertising division)
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for excellence without sacrificing the unifying focus of the group to corporate objectives. A team of top
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attainment of corporate and divisional goals.
Our operations prides itself on its unique model which projects the brand concept /unique selling
proposition of “TOTAL SOLUTIONS…TOTAL SUCCESS”, a strategy built around the combo idea approach
to service provision.
0.10 TIMELINE OF ACTION PLAN:
Based on the above analysis, we estimate the following timeline action plan to guide all efforts leading to the eventual
realization of this venture
1- APRIL - Determine all specific equipment’s that would be needed to begin the venture based on specific
needs on the ground in Ghana
2- MAY – JULY : Determine and finalize all arrangements relating to financing sources and options for
procurement, Also finalize business plan and all the components required
3- AUG – OCT : Complete all arrangements necessary to enable procurements of specific required machines
4- NOV-DEC: Take delivery and begin realizing initial returns from the supply of the equipment’s to the end
user.
CONCLUSION:
The forgone discussed paper represents a snapshot of potential opportunities in Ghana’s construction and
mining industries with specific emphasis on the projected impact of various heavy machinery equipment.
It is important to note that the final outcome of the study’s projected business plan could either be rolled
out on a Plant pool venture basis, or implemented as a direct procurement of heavy equipment machines
designated for end users with immediate end use needs (construction projects, mining projects, other
related projects) already secured and ready for implementation.
The single most critical aspect of ensuring the smooth implementation of the venture or deal, hinges on
securing the most appropriate financing options from the loan guarantee end and supplier ( in this case
Zaemek Global’s ), financing options end. We are confident of securing the right mix and balance of
loans, guarantees, and financing options for the success of the venture.
Another factor worth focusing on is the short, mid, and long term scalability of the venture. This is
essential to ensuring that the venture can adapt and grow to changing needs from the demand and supply
end for heavy equipment’s within the local Ghanaian market.
It is important to note that Images of sample heavy equipment reflected in this study in no way represents
the entire range of heavy equipment machinery available from Zamek Global. Additional sample images
of available product lines will be reflected in the very final study which would also incorporate finalized
details and necessary projected figures for the business plan.
All things being equal and assuming that current growth indicators continue to cast a positive reflection
on the industries under review, then the principals involved in the above discussed venture can safely
assume that expected ROI in heavy equipment machinery can only result in a win –win outcome for
their investment and the economy of Ghana.
ADDITIONAL SOURCES:
-Ghana in need of a construction development agenda (Ghanaweb article by By Dr D.K. Ahadzie )
-Ghanacommerce.com
-Ghana heavy equipment limited
-Ghanabusinessnews.com (challenges facing Ghana’s construction industry)
-Jospongroup.com
-AFRICAN BUSINESS PAGES (Africa-business.com)
-KOFI ADU DOMPREH (LUV FM web post) “Challenges in Ghana’s mining industry”
CONTACT INFO:
ZAEMEK GLOBAL:
ABP COMMUNICATIONS
