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Thinking Outside The box (Overseas Investment Series)
Rank: Elder Joined: 6/20/2007 Posts: 2,037 Location: Lagos, Nigeria
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Stocks, or fixed income investment outside your country of residence / origin is one of the most difficult decisions to take. Concerns - Cost Of doing business like bank charges due to fund remittance, cost of travelling (peculiar to African countries) - Uncertainty of which product or counter to invest in. - Limited communication options as you are not physically there. - Fear of fund repartriation of proceeds and at times burden of capital gain tax. - Lack of wherewithal to start because of the risk of unknown. - Inadequate information on how to start as the only popular offshore investment is forex trading which I abhor and classify it as gambling. - Uncertainty of which broker to use. AdvantagesStock investment across boarders is an act of creativity - Exchange rate advantage especially when investing in advanced economies. 10% gain in USD is far better than 10% gain in Ksh . - Exposure to other economies instead of being limited within the box (your country) as every country is fragile . Recall Greece, Iceland economic crisis Kenya Election crisis of 2008, Nigeria banking toxic asset crisis of 2009. - Spreading of Risk across different economies. - Exposure to investment in other asset classes. a balanced portfolio consists of Technology, Commodity,Energy, manufacturing, and banking stocks. You cannot invest in Commodity (Gold, metals), Energy (Oil and gas) stocks in Nairobi Stock Exchange. But yes tou can as a world citizen to invest elseway. In this series which I will take you through as time permits from my busy office schedule, I will divide my program (though not sequencial) into two main atreas :- (i) Investing in Other African countries. (ii) Investing Outside Africa with online real time trading account. Based on my past experiences I will share the nitty critty of all of them right from how to open an account, how to fund your account, what to invest on, how to repartriate your proceeds, and the right approach to various markets. In Africa it will be limited to Nigeria, Kenya, Ghana, Uganda and South Africa. But I will classify S/ASfrica in the advanced world. For Overseas I will be looking at US/Canada, Hong Kong, Singapore, Thailand, Australia and New Zealand market, in addition to cross listed European shares in US market as it is not possible for non residents to trade directly in any EU market. Be rest assured all my postings will be based on my practical experience over the years not theories or hearsay. ABOUT YOUNGI am proudly Nigerian, an honest one 48 years by June 7. 7th child in a family of nine. Young actually my pet name. I joined this forum in 2007. I am a computer Scientist by profession and I have been working in Nigerian subsidiary of Italian based oil and gas multinational ENI group (listed in NYSE and Milan, Italy bourse)called Nigerian Agip Oil Company since 1988. Married with 3 kids aged between 8 and 16. Started investing in my local bourse Nigerian Stock Exchange in year 2000. Started off shore investment in Ghana and Kenya in 2004. Started online real time trading in US, Asia and Oceania in 2005. Have experienced market burst and booms in all markets. Hope to voluntary retire from active service a couple of years. Widely travelled to several African countries and Europe / US. I believe in Africa and the unfolding investment opportunities. As a busy scientist my thoughts flow faster than my English grammer, apologies for grammatical errors here and there, The wazua spirit as members is to educate and inform and learn from others within the limit of what we know in any chosen area irrespective of our differences in tribes, nationalities, etc. .
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Rank: Elder Joined: 6/20/2007 Posts: 2,037 Location: Lagos, Nigeria
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FOR YOUR AWARENESSVariety or mixed income streams is the spice of a balanced portfolio that can witstand shocks. Let me categorize them into A, B, C and D. A ACTIVE INCOME Here you work for money or you are on pension after retirement or you are in your private busines SME or a private pension plan. This also includes the great majority of us,,,Salary earners in private and public sectors. B PASSIVE INCOME FROM CAPITAL MARKET (STOCKS) Here you invest in stocks locally or both locally or overseas with varying objectives depending on the individual age and risk appetide (speculation,growth,income) but does not include forex trading as the later at the moment is considered more as gambling. This category also includes mutual fund and other capital market instruments managed by experts on your behalf locally or overseas. C PASSIVE INCOME (REAL ESTATE) This is the aspect of property investment for income (rent), growth (re-sale value) and might be speculation (more on resale value of land) D PASSIVE INCOME (MONEY MARKET) This is investment in Bonds, commercial paper, fixed / demand deposits, cash savings, and also includes saving in other esprcially convertible currencies (pounds sterling, dollar , Euro) as hedge against inflation. Research has shown that it is ideal for an average individual to hold or belong to at least TWO categories. A finacial intelligent individual must have portfolio in at least THREE categories The percentage mix is of varying degrees and and is a subject of debate but what is very important is the awareness. WAZUA seem to comply to a great extent as I can see SME, Stocks,Property, Bonds, Offshore captions on this site. The wazua spirit as members is to educate and inform and learn from others within the limit of what we know in any chosen area irrespective of our differences in tribes, nationalities, etc. .
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Rank: Elder Joined: 6/20/2007 Posts: 2,037 Location: Lagos, Nigeria
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safeguards before investing off shoreBefore you venture overseas, gain sufficient practical experience in your local bourse to avoid losses. You definately require some gestation period to study and understand where you are heading to. I pencilled down Nairobi bourse to invest in 2002 but did not make the practical move until 2004. I took time to study the market in terms of the fundamentals and my first two counters were KCB at 58 and KPLC at 79 bob. You do not need to rush. From your local burse you must be able to deal with bears an d bulls and also the basic fundamentals PE, PBR,NAV,EPS , DIV YIELD,EXCEPTIONAL ITEMS,CASH FLOW STAT, BAL Sheet, PL Account etc Charity begins at home, they say. The wazua spirit as members is to educate and inform and learn from others within the limit of what we know in any chosen area irrespective of our differences in tribes, nationalities, etc. .
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Rank: Elder Joined: 6/20/2007 Posts: 2,037 Location: Lagos, Nigeria
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BE AWARE OF DIFFICULTIES IN INVESTING IN AFRICAN COUNTRIESIn the absence of on line real time trading in Africa, and due to capital market regulations it is almost not possible to invest without your physical presence in the respective countries you want to invest in. This is rather an expensive venture especially when looking at at on the short term. The initial amount we invested in Kenya in 2004 was far less than the following costs to travel from Nigeria to Kenya {= - Cost Of Air Ticket - Hotel Accomodation - Risk Of travelling to a place that you do not know any body with the associated cultural shock. When we arrived in the night on a KQ flight with my family around 23 hours, it was a big suprise to all of us that the Methodist Guest House Lavington Green van has the steering on the right, Also it was a big suprise that ceiling fans and air conditioners are not used in most kenya apartments. In Essence the big task is you need to travel to the country you want to invest, as you have to fill physical forms (KYC know your customers), submit your identioty documents for sighting. Now Uganda has added finger print to register any client on CDS. Prior to this you would have spent a lot of maney on phone calls. In essence for the first time personal contact is mandatory before you can follow up from there. Most clients that invest in African countries are ussually institutional investors or fund managers, so the logistics cost to travel is a tiny portion of the amount they will invest. It is a new or a strange thing for an african retail investor to invest in another african country. There is also the problem if dividend collection because a kenyan shilling dividend check posted to me in my nigerian address is a worthless paper. This is subject for another day. It was worthwhike from my experience to invest as a retail investor in sister african countries although it is much easier in advanced world with online real time trading account. The wazua spirit as members is to educate and inform and learn from others within the limit of what we know in any chosen area irrespective of our differences in tribes, nationalities, etc. .
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Rank: Elder Joined: 6/20/2007 Posts: 2,037 Location: Lagos, Nigeria
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LET PART OF YOUR FUNDS BE MANAGED BY FUND MANAGERSThere is no way you will be more knowlegeable than the best fund managers, give part of your funds to be managed by intelligent well tested fund manager either locally or overseas. When I look inwards to me country Nigeria, I did not see any fund manager that manages part of their portfolio off shore that is thinking outside the box. After much reseasrch, I came across two fund managers in Africa that satisfied or were close to satisfying my needs :- Dry Associates in Kenya Databank of Ghana (Epack, Bfund and Mfund) There may be numerous other ones I do not know about The wazua spirit as members is to educate and inform and learn from others within the limit of what we know in any chosen area irrespective of our differences in tribes, nationalities, etc. .
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Rank: New-farer Joined: 2/4/2010 Posts: 16 Location: Switzerland
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Costs of investing in other African stock markets
Hi all…
I made the experience that it was not very difficult or expensive to invest as a small shareholder direct in African stocks.
I live in Europe and was very interested in some African markets. All I had was the internet. So what was I doing?
1. Make some market research
2. Find a stockbroker (they are usually named on the website of the local stock exchange)
3. Visit the website of the stockbroker of your interest (check that they do not only business with institutional investors)
4. Write an kind email to the broker and ask about the local rules for registering and financial regulations of the country
5. Fill any required forms (The broker will help you during the whole process and normally open an local account)
6. Transfer some funds
7. Make your research (if necessary the broker can send you research info and annual reports from the companies of your interest)
8. Place an order to buy
I already have done this in Kenya and Botswana, without any problems..
Greetings,
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Rank: Elder Joined: 6/20/2007 Posts: 2,037 Location: Lagos, Nigeria
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DRY ASSOCIATES INVESTMENT BANK OF KENYAwww.dryassociates.comI was particularly interested in FRANKLIN TEMPLETON MUTUAL FUNDS which they are agents. Here one have option to invest in a basket of 41 mutual funds in various foreign currencies The problem I had was that the minimum capital to invest was USD 5,000 which from my judgement was on the high side as I could not afford it. I always believe in starting small and building up over time if the returns is encouraging. I recommend this product for those who can afford it and they (dry associates) have investment advisors to guide you on a product that suits your risk appetide and the conditions attached (like minimum tenure). Their website, call or visit can give you further guidance. Be aware I am not their clients, but have visited their westlands office in one of my trips to Nairobi.The wazua spirit as members is to educate and inform and learn from others within the limit of what we know in any chosen area irrespective of our differences in tribes, nationalities, etc. .
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Rank: Elder Joined: 6/20/2007 Posts: 2,037 Location: Lagos, Nigeria
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(A) DATABANK OF GHANA EPACK PRODUCTwww.databankgroup.comVITAL STATISTICS Year Of Incorpotation Of databank =1990 Start date of E-pack = 1996 Base Value = 100 Current value =8,207.16 Year To date gain = 3.74 percent Number Of clients = 200,000 Volume= 2 Million USD The beauty of the E-pack product is that this mutual fund managers invest in the following ten African stockmarkets on behalf of clients {- Ghana Nigeria Kenya South Africa Mauritius Morroco Egypt Namibia Uganda Tanzania Their long term returns is superb. they returned minus 8% in 2009 which is very minima;l considering the global economic melt down but to their credit they returned average of 45 % in the last 12 years 1996 - 2008Less than 30 PERCENT of the portfolio is exposed to the tiny Ghana market. Investing in Databank E-pack product is like investing in the whole of Africa markets put together, with their professional expertise the risks and gains are well spread. For more details please check their website. The wazua spirit as members is to educate and inform and learn from others within the limit of what we know in any chosen area irrespective of our differences in tribes, nationalities, etc. .
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Rank: Elder Joined: 6/20/2007 Posts: 2,037 Location: Lagos, Nigeria
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DATABANK OF GHANA BFUND PRODUCTBFUND means balanced fund this means 50 percent of the funds is invested in Ghana equities and nine african stock markets listed above The Other 50 percent is invested in Ghana fixed income securities like Demand (fixed deposits), govt /corporate bonds, commercial papers and other fixed income products. For details check out www.databankgroup.comI subscribed to this product just last year to create a balance to over exposure to only equities. The wazua spirit as members is to educate and inform and learn from others within the limit of what we know in any chosen area irrespective of our differences in tribes, nationalities, etc. .
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Rank: Elder Joined: 6/20/2007 Posts: 2,037 Location: Lagos, Nigeria
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VERY PATHETIC BUT LEARN FROM THISDR B a Nigerian studied Finance in Howard University US up to masters level graduated with special honours in 1981. He worked as a consultant in Citibank and rose to the position of chief financial analyst with citigroup USA in 1987. As a savvy investor, he consistently bought citigroup shares and accumulated six digits over the years. Cumulative quarterly dividends of citigroup amounted to 2.85 USD per share in 2007. I met DR B (year 2007) in BA flight from Lagos to London as we discussed he told me in addition he returned to Nigeria in 1988 and was given appointment as senior Manager in Union Bank of Nigeria, the second biggest bank by market cap oin Nigeria. He rose to Executive director and voliuntary retired in 2005 (2 years back) when we met in April 2007. He was on holidays to London then. Through personal investment, some companmy fringe benefits being converted to shares for directors and periodic bonuses issued to share holders by corporate action by union bank, he accumulated circa 9 million shares of Union bank, going then at 38 naira (about 19 Ksh) per share in 2007, the dividend then was 1.50 naira. If this is added to his Citi Bank hiolding, this is a reasonable amount for retiree. I told him my effort to diversify that I have invested in Kenya and Ghana market, he went to a big laughter. He said what should me from Nigeria a bigger economy invest in Ghana and Kenya, that it is a terrible waste of time. Unfortunately, due to US economic problems that is sublime mortgage crisis, Citi Bank went under due to toxic assets from 52 USD per share to 1.00 USD per share in 2008. It is just picking up but it is now less than 4 USD per share. A year after in Nigeria in september 2009 union bank shares nose dived from from the peak of 38 naira in 2007 to 3 naira due to non performing loans in their books which they have been covering up. Neither Citi Bank nor Union bank has declared a dime dividend then. Worst of all I asked recently for this senior acqaintance, I was told he suffered stroke, was flown abroad, and later returned to Nigeria. At the moment the wife and children do not allow anybody to visit him. This is very pathetic. I believe it pays to diversify accross sectors, across geographical boundaries, across currencies, and let experts manage some of your funds, as especially if you are 40 and above and you want to retire in piece. Consider also other asset classes like real estate, fixed income securities as a leverage, Nobody knows tomorrow.
No economy is safe . It can happen to anybody, even the smartest investor. The wazua spirit as members is to educate and inform and learn from others within the limit of what we know in any chosen area irrespective of our differences in tribes, nationalities, etc. .
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Rank: Elder Joined: 6/20/2007 Posts: 2,037 Location: Lagos, Nigeria
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MY OWN PERSONAL EXPERIENCEThis one happened to me this year, We have been accumulating the shares of the best performing bank and the most capitalized bank in Nigeria called First Bank of Nigeria. Last year it Returned a pre-tax profit of 53 Billion naira, dividend of 1.35 naira per share and a bonus of 1 for 6. First bank is best known for consistent performance and annual bonus and dividend issue to share holders. The bank is more than 100 years old. The shocker came just last week. Due to non performing loans that was written off her pretax profit plummetted from 53 Billion of last year to 11 billion. Dividend this year is 10 Kobo ie less than a tenth of last year dividend, plus a consolatory bonus of 1 for 8.We have a comfortable six digits of first bank shares accumulated over the years. You can now understand the reason I wrote the post A Rethink Of Kenya marketSee details below in Reuters news agency because First Bank of Nigeria is the heart beat of Nigeria Stock Exchange. The caption was Nigeria First Bank Disappoints share fallswww.reuters.com/article/idUSLDE63J25020100420The wazua spirit as members is to educate and inform and learn from others within the limit of what we know in any chosen area irrespective of our differences in tribes, nationalities, etc. .
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Rank: Elder Joined: 6/20/2007 Posts: 2,037 Location: Lagos, Nigeria
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DATABANK OF GHANA MFUNDLet me digrace a little, I young of all people is the last person to consider investing in fixed income securities. I regard it as a lazy man's job. How can you give a financial institution 100K with 10% interst without collateral and the same institution give out same 100k to a customer with collateral at an interest rate of 18 %. Well well, I realised that it is important to have a levearage on your investible funds through fixed income returns. MFUNDDatabank Mfund is money market mutual fund that the investment horizon is in fixed income securities like bonds, commercial papers, fixed deposit all within Ghana. This is very useful as fund invested is guaranteed and increase is assured depending on prevailing interest rate. WHY GHANA ? 1 USD = 1.4 GH Cedis 100 Naira = 1 GH Cedi 46 Ksh= 1 GH Cedis At the moment the prevailing interest or the cost of funds is above 20 percent, one of the highest fixed deposit returns in sub saharan Africa. This acts as a leverage because in bearish years like 2008 and 2009 databank Mfund returned a tidy 22 % in Ghana cedis. The highest interst rate in nigeria is 11 %. I see a superior currency advantage here as the new Ghana cedis is a stronger currency than Nigerian naira ocoupled with a good interest rate. I subsscribed to it in 2009. In addition non citizens cannot invest directly on govt or corporate bonds except indirectly through fund managers like databank. For details vist www.databankgroup.com. The wazua spirit as members is to educate and inform and learn from others within the limit of what we know in any chosen area irrespective of our differences in tribes, nationalities, etc. .
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Rank: Elder Joined: 6/20/2007 Posts: 2,037 Location: Lagos, Nigeria
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EYE ON FAN MILK OF GHANAFan Milk of Ghana, a solid stock one should like to have in his / her own portfolio. The darling of fund managers (Databank of Ghana included). http://af.reuters.com/ar...s/idAFJOE63Q08M20100427
From 2011 upwards Ghana is a country to watch in terms of GDP growth Besides your neigbouring Uganda 2010/11 projected GDP growth is 7-8 % http://af.reuters.com/ar...le/idAFJOE63S0CR20100429The wazua spirit as members is to educate and inform and learn from others within the limit of what we know in any chosen area irrespective of our differences in tribes, nationalities, etc. .
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Rank: Elder Joined: 6/20/2007 Posts: 2,037 Location: Lagos, Nigeria
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INVESTING IN GHANA 1You can invest in Ghana in two ways (i) Investing in mutual funds (ii) Opening stocks investment account with a broker. I have earlier exhausted the mutual funds aspect using the databankgroup as the fulcrum. You can equally look at cal bank mutual fund products. BROKING A/C Open a CSDA(Central Securities Depository Account) with any of your preferred stockbrokers by filling some physical form. Copies of the following will be required Your Internationalpassport Two Passport photoghraphs You will also complet Stockbroking new client a/c form. Be aware that opening CDSA a/c takes several days sometimes weeks or months before your a/c is opened. I use databank group but there are numerous other good stock broking firms. Most banks have stockbroking arms. Useful websides for further info :- www.databankgroup.com www.calbrokersghana.comwww.ibrokerghana.comwww.stockforumghana.comwww.gse.com.gh ========> GSE website The wazua spirit as members is to educate and inform and learn from others within the limit of what we know in any chosen area irrespective of our differences in tribes, nationalities, etc. .
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Rank: Elder Joined: 6/20/2007 Posts: 2,037 Location: Lagos, Nigeria
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INVESTMENT IN GHANA 2DIVIDEND PERSPECTIVE Dividends are Ghana Cedis denominated, how does a non resident retail investor cash his / her dividend check ? In the CSDA form itself there is a portion to indicate your bank account details for EFT of dividend. The wazua spirit as members is to educate and inform and learn from others within the limit of what we know in any chosen area irrespective of our differences in tribes, nationalities, etc. .
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Rank: Elder Joined: 6/20/2007 Posts: 2,037 Location: Lagos, Nigeria
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Investment in ghana 3Suggested Dividend Solution. Amal Bank Of Ghana has a special checking account for non residents called amal non resident account. That is the account that I use for dividend collection. For Further details and specific requirement visit www.amalbank.com.ghNon resident account can be opened within 2 working days The wazua spirit as members is to educate and inform and learn from others within the limit of what we know in any chosen area irrespective of our differences in tribes, nationalities, etc. .
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Rank: Elder Joined: 6/20/2007 Posts: 2,037 Location: Lagos, Nigeria
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INVESTING IN GHANA 4The non resident account for dividend payment with Amal bank can be opened the same time you open your CSD account as this will afford you a chance to supply your banking account details at the point of opening the CSD . You have the option to open both Cedi Denominated and USD checking account or only Cedi account. The wazua spirit as members is to educate and inform and learn from others within the limit of what we know in any chosen area irrespective of our differences in tribes, nationalities, etc. .
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Rank: Elder Joined: 6/20/2007 Posts: 2,037 Location: Lagos, Nigeria
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INVESTING IN GHANA 5iBROKER PERSPECTIVE The stockbroking arm of CAL bank (quoted in GSE) have an "online ?" stockbroking product called ibroker. www.ibrokerghana.comI have been nosing around to locate any non resident retail subscrber to the widely advertised product but none yet. For now my only reservation for the product is that when you buy shares, paper certificates are still issued, that means they are yet to embrace electronic CSD account. The wazua spirit as members is to educate and inform and learn from others within the limit of what we know in any chosen area irrespective of our differences in tribes, nationalities, etc. .
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Rank: New-farer Joined: 2/4/2010 Posts: 16 Location: Switzerland
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Great compilation of information about investing in Ghana!
Thank you for this very useful work!
Ghana is on my list of pending cases, and now it will be much easier to start.
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Rank: Elder Joined: 6/20/2007 Posts: 2,037 Location: Lagos, Nigeria
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INVESTING IN GHANA 6Still on the non resident bank account I suggest you go for both Cedi & USD denominated accounts . The main advantage of USD account is it gives you the choice to wire funds to your account and also issue a USD denominated check. Be aware quite unlike Kenya if you wire fund in any particular convertible currency (Sterling, USD, Euro), it has to be received in GHANA bank with the same currency. Automatic conversion to local or other currencies are not permitted. IllustrationMr Ngige a Kenyan wire 1,000 USD to his cedi denominated AMAL bank account in Ghana. The USD 1,000 when it hits Amal bank, will not be automatically converted to Ghana Cedis as what obtains in Kenya. The money with hang, or forwarded back to MR Ngige. If Mr Ngige has opened a USD account in Ghana, he would have been able to wire from his Kenya USD account to his Ghana USD account without problems. This is also applicable to most west African banks. The wazua spirit as members is to educate and inform and learn from others within the limit of what we know in any chosen area irrespective of our differences in tribes, nationalities, etc. .
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