Interview : Yofi Grant
How is Ghana’s current macroeconomic stability translating into increased capital inflows?
YOFI GRANT: The global investor community is keenly observing the positive performance of the economy. Key macroeconomic indicators are improving, with the debt-to-GDP ratio down from 56.8% of rebased GDP in 2017 to 55.5% in 2018, the current account deficit falling from 9% to 6.5% and inflation dropping from 15.4% to single digits. In addition, for the first time since 1998 Ghana has a positive trade balance. Meanwhile, in 2017 GDP growth was projected at 7.9%, but by the year’s end it had reached 8.1%. These figures are notable, and they demonstrate that the government is working in the right direction, which is attracting significant global attention. There is a correlation between economic development and investor interest, but observers know that Ghana’s current success is not the usual African story. It is true that the country is resource rich, and this encourages a baseline of interest, but when coupled with effective government initiatives such as the One District, One Factory plan, and the Planting for Food and Jobs programme, which have a natural investor appeal, we can see that the country is repositioning itself as a hub for West Africa.
To what extent is the high cost of financing undermining efforts to attract investment?
GRANT: High borrowing rates in Ghana remain an obstacle, although there are solutions. Much of the investment we are trying to attract is equity investment, rather than debt. As it stands, the cost of doing business in Ghana is high, and this is especially true for local firms. Moreover, it is particularly difficult to acquire capital for an existing business. However, this opens the door for partnerships and joint ventures between foreign and local investors.
In addition, we are working to improve the wider business environment. Critical to this is ensuring access to land for businesses and removing the bureaucracy inherent in registering a company. Nowadays, the global economy revolves around competition, and it is not just assets that are important, but also ease of access and operation; the question is, however, how do we remove these barriers. Our principal duty here is to ensure that, as we bring in foreign direct investment, we also create opportunities for Ghanaians to participate in international markets.
How can the momentum of increased oil output help attract investment in non-oil sectors?
GRANT: Ghana’s oil output is very encouraging at present. The most important part of our energy story is the shift to gas, which will allow us to achieve a reliable and efficient power supply. Without this, the prospects for industrialisation are low. However, given the fact that these energy problems will be solved, there is a good foundation for non-oil growth.
I suspect that agriculture and agro-processing will help drive development in the mid-term. There are 8m ha of fallow land in Northern Ghana, which we are transforming into the region’s breadbasket. We are a tropical nation and have great conditions for growing fruits, which have proven attractive to the international market, alongside our more developed exports such as shea butter, cashew and of course cocoa.
In addition, the country is experiencing an industrial turn. Due to vast bauxite reserves, we are in the process of creating an integrated aluminium industry. Ghana is also endowed with iron ore and manganese stocks, which means there are prospects for steel production, and our significant lithium reserves are attractive to high-end technology developers, all of which will give the country the opportunity to truly industrialise. These are just some examples of the opportunities that exist in Ghana.
Nevertheless, basic considerations need to be resolved, such as the stability of the power supply and easing of the country’s regulatory regime.
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