Chairman's Statement

Global economic performance

In 2025, the global economy transitioned into a new phase marked by trade fragmentation and shifting financial preferences. The introduction of United States tariff sanctions disrupted established trade flows and triggered retaliatory measures, resulting in a sharp slowdown in global trade growth from 2.7% to 0.2%. Global economic growth moderated slightly to 3.2%, reflecting the broader impact of these disruptions. In response, central banks increased their gold holdings, reducing their reliance on dollar-denominated assets. This shift supported commodity prices and strengthened growth in resource-rich regions, particularly Sub-Saharan Africa, where growth reached 4.1%. While geopolitical tensions persisted, adaptive supply chain adjustments helped maintain relative stability.

Sub-Saharan Africa (SSA)

Sub-Saharan Africa sustained its economic momentum in 2025, with growth holding steady at 4.1%, broadly in line with the 4.0% recorded in 2024. This resilience was supported by macroeconomic stabilisation and reform efforts in key economies, despite a challenging external environment marked by uneven commodity prices, still tight borrowing conditions, and a deterioration in global trade and aid flows.

Inflation continued its downward path across most of the region, with the median inflation rate declining to 4.5% in 2024 and projected to stabilise between 3.9% and 4.0% over 2025 - 2026, down from a peak of 9.3% in 2022.

However, risks remain firmly on the downside. Debt service costs are rising fast, squeezing budgets and the space for development spending, while twenty countries are now either in or at high risk of debt distress.

Notwithstanding these pressures, several countries delivered above-average growth:

Tanzania: The Central Bank of Tanzania reported that Mainland Tanzania's economy grew by 5.9% in 2025, slightly below the initial forecast of 6.0%, while Zanzibar expanded by an impressive 6.8%. This compares favourably with the 5.5% recorded in 2024 and reflects continued strength across multiple sectors. Exports of goods and services rose by 10.2%, led by gold exports surging 37.4% to approximately USD 4.7 billion, while international tourist arrivals reached 2.29 million. Private sector credit expanded strongly at 23.5%, and inflation remained stable at 3.6%, well within target. Public debt continued to be managed prudently, with fiscal discipline broadly intact.

Mauritius: Real GDP growth eased to approximately 3.2% in 2025, slowing from 4.7% in 2024, as the post-pandemic recovery cycle matured and some earlier growth tailwinds faded. Higher interest rates and a slowdown in construction activity dampened investment, while softer tourist arrivals constrained activity in the services and recreation sectors. Accommodation and food services provided some offset, with that sub-sector advancing 9.2%, reflecting continued demand from international visitors. Inflation is projected to decline toward 3.5% by the end of 2025, supported by lower global energy prices, though public debt approaching 90% of GDP remains a concern requiring sustained fiscal consolidation going forward.

Kenya: Kenya's economy gained traction in 2025, with GDP expanding by 4.9% in Q1 and 5.0% in Q2, supported by easing monetary policy and a rebound in the construction sector, a recovery from the 4.7% full-year outcome in 2024. A macroeconomic outlook for 2025 pointed to real GDP growth of around 5.0%, supported by stronger agriculture and key services sectors. On the price front, annual inflation fell to 3.6% by March 2025, down sharply from 7.7% in 2023 and 4.5% in 2024, reflecting a notable easing of price pressures. The central bank lowered its policy rate to 10.00% in April 2025 from 10.75% in February 2025, creating space for private-sector credit recovery, though fiscal pressures and high business costs remain challenges to watch.

Stock market performance in SSA

In 2025, we saw another year of strong equity market performance across our selected African markets, reflecting improving investor sentiment, resilient corporate earnings and, in several cases, supportive macroeconomic conditions. Against this backdrop, Epack delivered a notable year-to-date return of 62.46%, with its share price rising to GHC10.44 from GHC6.430 at the start of the year. This was a strong outcome that compared favourably with several of our selected markets and further underscored the value created within the portfolio over the period.

Egypt's equity market also recorded a strong year in 2025, with the EGX30 rising by more than 40%, marking its fifth consecutive annual gain, while total market capitalisation increased by 45.8% to approximately US$62 billion. This performance was supported by lower inflation expectations, rate-cut momentum, stronger trading activity and renewed investor participation. Among the larger counters, Commercial International Bank (CIB) and TMG Holding were cited among the principal drivers of performance.

Kenya's NSE 20 Share Index surged by 56% in 2025, its strongest performance in more than a decade, while the MSCI Kenya index returned 52.2% in dollar terms, closing at 1,391.28 points. The rally was driven by improved macroeconomic stability, lower inflation, easing interest rates and stronger corporate earnings. Among the leading blue-chip performers were Safaricom, KCB Group, and EABL, which rose by 66.3%, 58.1%, and 49.9%, respectively, while strong gains were also recorded in smaller counters such as Kenya Power and KenGen.

Malawi's stock market delivered the most extraordinary performance among our selected markets in 2025. The Malawi All Share Index (MASI) closed the year at 598,062.80 points, up from 172,039.93 at the end of 2024, representing an annual gain of about 247.63%, while market capitalisation rose to approximately MWK32.56 trillion. The rally was driven by strong domestic demand for equities as an inflation hedge and by substantial gains across financial and investment counters. During the year, notable performers included National Investment Trust, Standard Bank Malawi, NICO Holdings, FDH Bank and National Bank of Malawi.

The equity market in Ghana experienced a significant growth in 2025, with the Ghana Stock Exchange Composite Index (GSE-CI) reaching a record high of 79.40% year-on-year. This growth was largely driven by strong interest in financial stocks, leading the Financial Stock Index (FSI) to an impressive 94.83% increase, 15.43% above the GSE-CI. Market capitalisation surged by 54.5% to GHC172.04 billion. The year ended with twenty-two gainers and just one stock lagging. Although total volume traded fell 22.21% to 771.57 million shares, turnover rose 73.75%, bolstered by significant price jumps.

Top-performing stocks included Clydstone, which soared by 1433.33%, Ecobank Ghana at 344.44%, GCB Bank at 284.61%, and Access Bank at 211.54%. TotalEnergies and Societe Generale also recorded notable gains. Overall, 2025 was a year of exceptional growth and optimism, setting a positive tone for 2026 and signalling sustained momentum and continued investor confidence.

Domestic economic performance

The disruption triggered by Trump-related tariff measures created a favourable external environment for resource-rich economies such as Ghana. Ghana capitalised on these shifting global dynamics, with total export earnings rising sharply to USD 31.25 billion, driven predominantly by gold exports, which accounted for USD 20.97 billion, or 67% of the total. This reflects a strong 63% year-on-year increase in export receipts. The operational role of GoldBod proved pivotal in consolidating gold exports and enhancing foreign exchange inflows, with approximately USD 10 billion in support significantly strengthening liquidity conditions. Consequently, real GDP growth accelerated to 6.0%, underpinned by robust expansion in the services sector (8.0%) and strong agricultural growth (6.8%), while industrial activity remained relatively subdued at 2.3% due to weak oil production.

Fiscal developments

On the fiscal front, 2025 marked one of the strongest turnarounds in Ghana's history, as the overall deficit narrowed to 1.8% of GDP and the primary balance shifted from a 3.0% deficit in 2024 to a 1.5% surplus on a commitment basis. This disciplined performance was anchored in transformative structural reforms, most notably the amendments to the Public Financial Management (PFM) Act, which established a mandatory 1.5% primary surplus rule and a 45% debt-to-GDP limit to prevent future debt distress. Furthermore, amendments to the Public Procurement Act introduced a strict Commitment Authorisation System, ensuring no new projects were started without verified funding. Total revenue and grants for the year reached GHC226.5 billion (16.0% of GDP), driven by the overperformance of the NHIL and GETFund, and by non-tax revenue from state-owned enterprise dividends, which effectively cushioned the shortfall in oil receipts. Total expenditure was contained at GHC251.7 billion (17.8% of GDP) through rigorous oversight and a landmark audit of the nation's arrears. The strong appreciation of the cedi, combined with successful debt restructuring, caused total public debt to plummet from 61.8% of GDP in December 2024 to 45.3% by December 2025, officially moving Ghana from "high risk" to a "moderate risk" of debt distress.

External development

The external sector demonstrated exceptional resilience in 2025, with the trade balance posting a USD 13.8 billion surplus and the current account surplus expanding to 8.3% of GDP, a massive leap from the 1.9% recorded in 2024. This surge was primarily fueled by gold exports, which saw earnings jump by over 60% to USD 21 billion.

These robust inflows, supported by the Bank of Ghana's Domestic Gold Purchase programme and IMF disbursements, enabled gross international reserves to reach a historic USD 13.8 billion, translating into 5.7 months of import cover, up from 4.1 months in 2024.

Exchange rate development

The cedi appreciated markedly, gaining 41% against the dollar, 31% against the pound, and 24% against the euro. Interbank rates settled at GHC 10.45/USD, GHC 14.06/GBP, and GHC 12.27/EUR, while retail rates remained slightly elevated. This performance was driven by strong forex inflows and consistent interventions.

Inflation

Inflation declined sharply from 23.8% to 5.4%, driven by exchange rate appreciation and lower import costs. Food inflation fell to 4.9% and non-food inflation to 5.9%. Lower fuel prices and tax relief measures supported the disinflation process.

Monetary conditions eased significantly, with the policy rate reduced to 18% from 28%. Treasury bill yields declined to 11-12%, while the Ghana Reference Rate fell to approximately 15%. Lending rates declined to around 22%.

Outlook for 2026

The global economic landscape entering 2026 is more complex than anticipated. Global GDP growth is expected to moderate from 3.2% in 2025 to 3.1% in 2026, while global inflation is projected to rise moderately in 2026, driven by surging energy and fertiliser prices linked to the Middle East conflict, before easing again in 2027, which has introduced a fresh layer of uncertainty.

For Sub-Saharan Africa (SSA), the picture is one of hard-won resilience under renewed pressure. The region entered 2026 with the strongest economic momentum it had seen in a decade, with regional growth reaching 4.5% in 2025 - the fastest pace in over a decade - underpinned by a combination of favourable external conditions and sound domestic policy choices. However, the prevailing geopolitical tensions have introduced some uncertainty into the near-term outlook. Regional growth is therefore projected to moderate slightly to 4.3% in 2026, with varying performance across countries and some downside risks stemming from global uncertainty and underlying macroeconomic vulnerabilities within the region.

For Ghana and other resource-rich Sub-Saharan African countries, these external developments present a mixed outlook. On one hand, higher commodity prices are expected to support export earnings and government revenues. On the other hand, higher fuel and food import costs may put pressure on fiscal balances and household budgets. To help ease these pressures, we expect the government to implement targeted measures in the agricultural sector, including expanded support for fertilisers and seeds, as well as increased investment in irrigation, to strengthen local food production and reduce exposure to global price increases. Supported by a relatively stable currency, we anticipate that headline inflation will gradually settle within the Bank of Ghana's target range of 8% plus or minus 2 percentage points by the end of the year. At the same time, real GDP growth is expected to remain firm at around 6%, supported by increased public spending in key sectors such as industry and agriculture.

Our outlook for this year remains firmly positive, as the Fund is set to deliver another positive return. The portfolio is anchored by fundamentally strong companies that continue to deliver consistent earnings and dividend income. These factors are expected to support overall return performance, even in the face of potential risks arising from the appreciation of the Cedi and its impact on the Fund's ex-GSE investment. Our growing exposure across Sub-Saharan Africa continues to offer diversification and opens access to high-growth opportunities beyond our domestic market. Overall, while we remain attentive to the evolving environment, we are confident that the Fund is well-placed to continue delivering steady and sustainable growth for our shareholders.