Strange “Strategic Advisor” pops up in Ghana’s Eurobond default saga
The government needs 95%+ of Eurobond investors to sign up to the restructuring
Word on the street is that a few days to the “early consent deadline” of 20th September, Ghana’s Finance Ministry and their Eurobond restructuring advisors started to get jittery. They didn’t like the rate of signups.
As discussed in the previous post, whilst Eurobond investors have up to 30th September to sign up, those who do so by the 20th get 1% of their principal paid to them as an inducement fee. The point of such an arrangement is obviously to ratchet up momentum.
Technically speaking, the government of Ghana needs 75% of all its Eurobond investors to submit their consent for a smooth restructuring since with this number they can override the resistance of “holdouts” who don’t want to sign with less legal friction. But Zambia completed a similar exercise in June during which 95% of its Eurobond investors signed.
Such large numbers can signal a sort of confidence and may also have the psychological effect of deterring holdouts from deciding to proceed to court anyway notwithstanding the “supermajority override” clauses in the majority of Eurobond contracts they signed.
Ghana’s restructuring is more complicated than Zambia’s
Ghana’s hurdles are bigger than Zambia’s were. Zambia had borrowed only $3 billion through the Eurobond market. Ghana, on the other hand, has been the 4th largest Eurobond borrower, clocking up an impressive $13.1 billion over 15 years. In fact, adjusted for GDP size, it is by far the largest Eurobond seller in Africa.
Its investor base is also far more fragmented. It sold a lot more Eurobonds to pan-African and domestic investors than Zambia ever did. Mobilising such a larger, more diverse, group is naturally going to be harder.
Some analysts also feel that Ghana’s early consent fee being lower than Zambia’s (1% rather than 1.5%) may have played a role in why the early participation rate is reportedly lower than Zambia’s, but this is merely consistent with Ghana having learnt from Zambia’s experience and squeezing private investors harder in order to please the IMF and its rich country creditors earlier in the day. Keeping the IMF and the Paris Club (rich countries) happy, naturally, helped Ghana to speed up its restructuring process (~22 months instead of Zambia’s ~44).
Enter the Guru
Anyway, as soon as the reported jitteriness started to build up, some African-focused business intelligence wires suddenly flashed across subscriber screens the presence of a Franco-Ivorian guru in the camp of Ghana, one Ibrahim Magassa, Chairman of Algest Investment Bank.
Where did this grand personage descend from into the mundane affairs of Ghana’s Eurobond matters?
The first time the government acknowledged his role as a “strategic advisor” was in July 2024, when the Finance Minister was briefing the press about the country having reached an “agreement in principle” with its Eurobond creditors. So what?
My little beef with the Guru’s manifestation
First, Ghana has too many “advisors” in this whole Eurobond restructuring affair. The official ones that everyone knows, and whose work receives official recognition in the formal notices, are British law firm, Hogan Lovells (advising on legal matters), and Lazard Frères, the French asset management firm that is part of the Lazard Group, and has been retained to advise on the commercial-economic terms.
Yet, Ghana is also advised by Global Sovereign Advisory, another Paris-based firm. It has even engaged the counsel of world-renowned Professor Lee Buchheit, a longtime thinker on sovereign debt matters, whose position has grown increasingly favourable to struggling debtor countries like Ghana.
At one point, it even entertained hiring Cygnum Capital and extend its engagement to include green bonds. After court intrigue scuttled that, Cygnum headed instead to Zambia where it recently structured a small, $200 million, green bond for local listing.
Besides these technical advisors, Ghana has, moreover, courted various investment banks around the world to beef up its lobbying capacity and bolster the preparations for its roadshows to whip up enthusiasm for the Eurobond exchange offer ahead of the September 30th deadline.
Why Algest “Investment Bank”?
So, why exactly, in the name of high finance, is Algest Investment Bank and the great Ibrahim Magassa needed in this affair? If an African advisor is essential, well, there are gazillions of them in the most sophisticated places all over the world.
Apart from the inexplicable nature of this move, I have other, more pressing, concerns.
There is no investment bank registered in France, Ivory Coast or Congo-Brazaville, the three countries in which Algest says it has offices, called “Algest“.
At this point, I am pretty certain that Algest is limited to “Algest Consulting”, a company, registered in 2011 in France, and that it is NOT and has never been an “investment bank”.
Yet, Grand Monsieur Ibrahim Magassa constantly refers to his outfit as an “investment bank”. Journalists are primed to describe him as the Chairman of an investment bank. See this video for instance. To be an “investment bank” is to be licensed to be one. Not merely to aspire to that status.
And a curious background too
My other concern is that Monsieur Magassa has a bit of a complicated pedigree. He first gained some attention beyond Ivorian circles when a Committee of Experts set up by the United Nations (UN) Security Council to monitor sanctions on Ivory Coast implicated him as a financial intermediary in an oil for arms scandal more than a decade ago during the Gbagbo regime.
Consequently, when he returned to Ivory Coast in 2012, he was grabbed on the orders of Interior Minister, Hamed Bakayoko, by the Direction de la Surveillance du Territoire (DST), headed by Inza Diomandé, as a civil war profiteer and kept in DST dungeons before his file was eventually transferred to the regular Police. As a result, he languished for months in MACA, Abidjan’s main prison complex.
A year later, the Ivorian state lost interest in the matter for the simple reason that Amadou Gon Coulibaly, then the Prime Minister, appeared to have warmed up to him.
The redemption of a Guru to be
A few years thereafter the 44-year old investor began to appear in a few of the transactional records of the most high-profile infrastructure financing activities of the Ivorian State.
He was picked as an advisor, working on the government side, in the setup of a facility for the Road Maintenance Fund subscribed to by seven African and international banks, including the likes of UBA, Attijariwafa Bank, BGFI, and BNP Paribas.
Even though all the technical work had been done by Ecobank and Africa Link, Prime Minister Coulibaly still insisted on the Grand Monsieur associating with the transaction. Algest thus acquired the first notch on its decidedly light CV.
Power Broker
In the years to follow, Monsieur Magassa would revert his earlier misfortunes with the security services to the extent that when an employee, Doumbia Souleymane, offended him, he is reported to have influenced the Police to keep him in cells for more than two years without trial.
A spirited campaign by human rights activists to draw attention to the case has now been scrubbed off the internet except for traces on a few social media sites.
Magnanimous Benefactor
No doubt that over the years, Monsieur Magassa has improved his standing with the Ivorian political elite. These days, top Ministers like Hon. Kobenan Kouassi Adjoumani, responsible for the agriculture and rural development portfolios, take to social media during his birthdays to sing his praises, clearly without voice training. Triggering viral memes of incredible hilarity. Some Algest affiliates even appear to be full-time employed in the Ivorian Prime Minister’s office.
Monsieur Magassa has been known to stage massive musical spectacles in the bucolic seaside resort of Grand Bassam. Throughout South Comoé, his generosity, as sang about by Minister Adjoumani, has become legendary. Locals call him by his preferred title, Waraba. Waraba means “the lion”.
And seeing as he has now been welcomed into Ghana as a top advisor of the President himself, on a strategic basis, mind you, he is expected to lay out a philanthropic campaign alongside his advisory duties. The people of Newtown, a struggling inner city patch of Accra has been designated as the first beneficiary.
A Guru’s pitch
Sources say that in meetings with Ghana’s seniormost officials in Paris and Accra, Monsieur Magassa has convinced powers that be that he has significant influence with wide swathes of the investment industry and could even speed up new infrastructure bond issuances as soon as the restructuring is done.
It is true that Monsieur Magassa does have links with some investors like former Lazard Frères principal, Cedric Chaboud, who took over French fund manager, SPGP, in 2013, and attempted to expand with acquisitions in the UK.
Still, our sources list a long litany of aspects of Algest’s and Monsieur Magassa’s rather obscure pedigree that simply do not add up, certainly not up to the status he has been conferred with as a “strategic advisor” capable of fixing Ghana’s current international “investment reputation” deficits.
Ghana needs less glamour and more slog
If anything, the government should worry more about the poor showing on the structural benchmarks of its IMF program as it prepares for the third review of its program in less than two weeks.
Serious concerns about the lack of progress in establishing a truly autonomous Bank of Ghana and a truly autonomous and effective Fiscal Advisory Council, not the one considered packed with regime loyalists by many analysts (including amendment of the relevant laws), are just two of the issues causing friction with the IMF.
There are also serious worries about delays in revamping the digitalisation strategy for tax administration; addressing the chronic insolvency challenges of the National Investment Bank (NIB); redoing the reference rate that guide the interbank forex market; removing the gap between the ineffectual e-procurement system and the national accounting platform, called GIFMIS; and coming up with a plan to ensure that the $3.8 billion in loans from foreign governments that Ghana secured before its 2022 default, but which are yet to be disbursed, do not derail the country’s debt sustainability.
Rather than chasing miracle working gurus with a penchant for the dramatic, it would serve the government of Ghana well to focus on the tedious and unglamorous, but all too necessary, work of implementing reforms to prevent backsliding into another debt default.
International investors would take that far more seriously than any incantations the Great Waraba whispers into their ears.
