African multinationals are here
The marriage of resources of the two companies will create AngloGold-Ashanti - the largest gold mining company in the world. And for the record, this new organisation with over 7.3million ounces of annual gold output is African.
Despite the perceived odds of doing business in Africa, indigenous companies are rapidly rising to the challenge and undertaking multinational expansion often seen to be the preserve of large American or European groups.
Our cover story is about Ashanti Goldfields. We have chosen this story to highlight the near irreversible trend as African companies pursue regional business opportunities.
If Africa was to seek a symbol of its economic potential and select a role model to represent its future, Ashanti is likely to be high on the list.
Ashanti has a special place in the hearts of Ghana's 20million citizens. The gold mining giant is one of the unique symbols of the transformation of the Ghanaian economy.
Founded more than 100 years ago, the Ghanaian miner was heavily run down in the 1970's. Its status revived in the 1980'sdue to its forthright management style and positive economic changes in Ghana.
Ashanti now accounts for about 40 percent of the Ghana's foreign earnings, replacing cocoa as the country's biggest hard currency provider.
Next to the government, Ashanti is the biggest employer. In terms of its weighting on the Ghana Stock Exchange, Ashanti commands nearly 70 percent of market share. As a brand, Ashanti has grown with a huge measure across Africa, Europe and the America's. In Ghana, Ashanti created the first taste of shareholding on the stock market for thousands of ordinary citizens. Although the company has not paid any dividends in the last three years, shareholders have been steadfast in their commitment. Ashanti often has to hire a football stadium to accommodate nearly 33000 minority shareholders during annual general meetings.
With the Anglo deal in place, weary shareholders may soon have good reason to brave the tropical sun to annual meetings. AngloGold has had one of the highest dividend payouts to shareholders in the gold sector over the past five years. It should soon begin to offer returns to Ashanti shareholders.
Lacking money and struggling to survive about 15 years ago, Ashanti has now risen from a ramshackle past to be one of the biggest gold miners in the world.
Presiding over Ashanti's remarkable journey is a man who has shown resilience and business vision - Sam Jonah. Dr Jonah began his career working underground at Obuasi mine, before taking up a company scholarship and a place at the Camborne School of Mines in Britain.
Under Jonah's leadership, Ashanti has been transformed. It was floated in 1994 and is now listed on several stock markets including London and New York.
Ashanti faced serious financial difficulties in 1999. When the company went public in 1994, the Ghana government had55 percent and UK based Lonmin 45 percent. Jonah says the Ghanaian government sold down, "and in the process we acquired four listed companies, which brought about some minor dilution of existing shareholder positions. We've had to confront a situation in which the two leading shareholders -the Ghanaian government and Lonmin were not keen on dilution". The difficulties, says Jonah, resulted in Ashanti resorting to fund its expansion through debt. At the peak of the troubles, Ashanti's debt was over $700m.
The spate of acquisitions however led to the expansion of Ashanti's interest from its lucrative operations in Obuasi to 12gold mines across Africa.
Ashanti's triumph in the face of difficulties is a sign that businesses in Africa can survive and thrive. In addition to watching the bottom line, Jonah says African companies" must learn to play the role of cheerleader, pioneer, educator and lobbyist to governments. Africans must compete hard for capital investment and create the stable environment for business to flourish". We could not agree more.
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