Euroget Group: Construction of Hospitals, Financial Services and Gold Refinery in Ghana

Interview with Dr Said Deraz, Chairman and CEO of Euroget Group

What is the Euroget Group?

The Euroget Group is involved in many activities such as the construction of hospitals, banking and financial services to raise funding for any projects done by Euroget De Invest, the gold sector under the name of Gold Coast Refinery Ltd in Ghana, and reclamation of the agricultural land and agriculture either in Egypt or in Ghana. We entered West Africa in 2008 and we have signed a credit agreement with the government to supply them with and finance eight hospitals for the Ministry of Health and one military hospital for the Ministry of Defense. The total commercial value is 620 million and it was concession alone against 1.6% interest for a four-year grace period. The processing takes about six years to obtain the correct guarantee of our financing for the project. Once that happens and by the power of our balance sheet, we enter directly into the international market where the funds for the hospitals are. This month, we delivered two hospitals, one regional hospital and one district hospital in Madina. The military hospital is 500 beds and will be delivered between September and October this year. Another three district hospitals will be delivered between November and December this year.

What differentiates you from other companies in this specific sector? Can you reproduce this in another country in Africa? Why has this worked here?

This is the first public-private partnership in Africa between the private sector and the governmental sector. The government gave financing guarantees and secured and confirmed it for 18 years. The private sector through their service raised the financing to deliver the social projects for the people. This is the first public-private partnership business model that has succeeded in Africa. This business model is guaranteed for everyone: the contractors, the suppliers, the government, the company, the investors who invest in the fund. The model is zero risk. You deliver to the government, so the government honors their obligation. When we raise funds, we put it in an escrow account – no access for the government, no access for Euroget, no access for anyone. We establish a cash fund management unit to control everything. We pay the contractors through this and when they deliver their work and it is approved by the government, they receive their payment from the bank. This business model was created by Euroget De Invest and implemented in Ghana.

What other sectors are you present in?

The Euroget Group is involved in many activities such as the construction of hospitals, banking and financial services, the gold sector in Ghana, and agriculture either in Egypt or in Ghana.

Gold Coast Refinery is our presence in the gold sector. Ghana is among the top ten producers of gold worldwide. They produce around 103 tons, but they have issues with the sector being unorganized. There is no policy for the mining and the refining at the same time as there is in South Africa, for example. We do not like establishing gold refineries in countries where they are not producing gold. There are many in Switzerland, the UK, America, Canada, Australia, but we would like to establish something in a country or an area which produces the gold, for example, in Burkina, Mali, Niger, Sierra Leone, Liberia, Ivory Coast, Ghana. All these subregions produce more than 350 tons per year. They use other refineries so we would like to do the refining in the same area. This is why we established the second largest gold refinery in Africa after Rand. Rand is now going into the gold investment sector so the refining has become very important for all of Africa. Today, Africa is producing a lot of gold in Sudan, Tanzania, Mozambique, South Africa, everywhere, but they do not have refineries. The location of our refinery is genius because we insisted with the government to establish it near the airport so that the gold can be easily taken in and out of the country. We succeeded in convincing the government and they have granted us the free zone and we have self-export, four kinds of ISO currently, and we are working to get the London Bullion Market Association approval. We are in a very advanced negotiation with the government to give them the current interest of 15% which we announced at the event of the capitalization of the Ghana standardization with the Ghana Standards Authority. We do the assay, melting, refining, and storage in our vault. Our refinery is about three acres. We commissioned it in November 2016. We spent 2017 testing the machines. In 2018, we exported the refined gold of 39 and 49. We do not have any issue with the supply of the gold once we buy the gold, but you cannot buy 4 billion dollars of gold to export it. This is why we went to the government to assert an agreement that when we buy 30% or 40% from the production of gold to refine it and assay the rest, it will be added value for the government. Secondly, we have a lot of people who would like to invest in the refining of gold. Banks also have an appetite for that. Therefore, the supply of gold from the area is not a big issue. The market is open and we can find it. The main purpose to establish a gold refinery in this area is to organize the gold sector and to find benefit and work for the local people. Today, for example, if we calculate the prices of the production of gold, Ghana produces about 4 or 5 billion dollars of gold. This is the most important issue. When the Prime Minister went to Dubai, they told him they received 7 billion dollars of gold from Ghana per year. But when he came back, he found that the declaration was only about 2 to 2.2 billion. So, there are gaps. If we can organize the gold sector, Ghana will not need to go to the international market to borrow money. It will take the correct taxes, the correct servicing, the correct producing, we will control the sector. If we take this business model and we put it in another country and another country, the sector will be very organized. If we organize what we do here, we can do it anywhere else. We do not need to establish big refineries in that case. We shall put in the unit of assay, laboratory and melting and then send it to the mother company in Ghana. The second phase of gold that we will start is a school for jewelry, workshops for artisans, and expos and fairs. The expos will be for several fashion themes. For example, one month is Arabian Fashion, the next month is Indian fashion, the third month is African fashion. The kind of jewelry will be continually rotating. In the area of Airport City there are hotels, markets, and all these people will work servicing the people that will come. The purpose of our division is to establish a gold complex. You will have refining, jewelry, a jewelry school where you train the people. The jewelry school is not only for Accra but for the entire country and the subregion.

Do you want to do that here in Ghana or abroad?

If we establish the school here, people will come from the different areas to learn here.

What do you need to accomplish this project? Do you need investors or other countries to join the project?

Anyone who would like to invest in gold can come, through banking or through international routes and regulation. We do not take cash or other money so they can invest. Gold is like any other investment. It is a money sector. The gold refinery is like the bank business. Instead of you buying only gold, you can invest in the entire gold complex. You can establish a certificate of ownership in Dubai and sell in the international market. Under all these lines, you can find a way.

What are you looking for in the agricultural sector?

Today, we look to big countries like Egypt, for example. Egypt today has a population of about 105 to 110 million and they are living in only the River Nile area. By the end of the day, they will face problems with the irrigation, particularly after the dam in Ethiopia. They will stop being able to plant rice, sugar cane, etc. Instead of importing from Brazil or India, there are cooperations between Egypt and the African countries under the African Union. Why not invest in the agriculture in the countries where they have no problems with water, such as Ghana, Liberia, etc.? We planted the rice, the corn, and other crops which do not exist in Egypt and we export directly to them. We share with the government and we have 20,000 acres in the Volta region. We have a very good and successful event with the community there. The main purpose of this is to plant the kind of seeds which are needed here. You have the market and the people here are ready to work in agriculture. The only thing missing is the investment to inject funds for the equipment and the advanced technology for the agriculture. You have a lot of countries which have every advanced technology like Italy, China, France, etc. We can import and make a transformation of the technology instead of what is traditionally used here.

Is the idea to attract these partners in order to collaborate with them and then export to these countries?

Exactly. And we can make the same model in other countries. The countries in Africa are so rich but it is not manageable. They are missing the investment and investors entering the space. There is bureaucracy to deal with, but you have that in the UK and the Middle East and everywhere. Why must everyone concentrate on the bureaucracy in Africa? We talk about this because we are not reaching to be in the top level of the international countries yet. No country in Africa has reached this level. We talk about transparency, but we have to work on it. The other countries must give support because if we look to the history, you build your country from its resources. The French spent more than 130 years in Africa. They took the phosphate, the manganese, the bauxite, the gold, everything. The UK did the same. So, this is the time now to invest in this country and we support that.

What are you doing in the financial sector?

BAFIS is our financial service banking and financial engineering arm working to ensure the funding for the other three sectors.

What is the advantage of having that in house?

As with any arranger, they take their fees. The fees will be reinvested within the same group. This means that instead of working with others, we work within the same company. We also have a presence in the health sector in Egypt under the name Delina, which services radiology. It is a new and important sector of our group.

Project yourself into the long term. What would you like to have achieved with the group? What is your vision?

We want to enter into the international market. We want to find multinational companies that can do the same implementation of their business model anywhere in Africa or any country needing development.

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