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The Report: Ghana 2012

Located on Africa’s western coast, Ghana is home to 24m people and a variety of ethnic groups. The country is divided into 10 administrative regions and has a strong executive branch, a unicameral legislature made up of 230 members, and an independent judiciary. While a large portion of the country’s GDP – 30% – comes from the agriculture sector, the oil sector is growing rapidly and attention from investors abroad is expected to increase as oil revenues continue to grow. Ghana is a member of a number of international organisations, including the UN, the WTO, the African Union, and the Economic Community of West African States (ECOWAS).

Country Profile

This chapter takes a look at Ghana’s history, trade relations and its impact on the regional and global stage. This chapter contains interviews with Mahatir Mohammad, former Prime Minister of Malaysia; Stephen O’Brien, UK Under-Secretary of State for International Development; and viewpoints from President President John Dramani Mahama and Fernando Pimentel, Brazilian Minister of Development, Industry and Foreign Trade.

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Economy

In just the past few years, Ghana’s economy has undergone major transformations and has been shaped by a number of encouraging trends, including a rising per capita income, increased capital spending, higher commodities prices and an improved government fiscus. The economy grew by 14.4% in real terms in 2011, the highest rate of growth recorded worldwide that year. Much of this was due to the start of oil production, though non-oil growth remained strong, at 8%. The IMF has forecast growth in 2012 to occur at a rate of 8.8%. Ghana was the third-largest recipient of foreign direct investment in Africa in 2011, receiving $3.2bn. This chapter contains interviews with Kwabena Duffuor, Minister of Finance and Economic Planning; George Aboagye, CEO, Ghana Investment Promotion Centre; Jim O’Neill, Chairman, Goldman Sachs Asset Management; and Kofi Amoah, Owner, PVI Holdings, and Board Member, SIC Insurance Company.

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Banking

Ghana has a relatively active banking sector, with 27 universal banks, 135 rural banks and 49 non-bank financial institutions, including leasing firms, mortgage providers, and savings and loan institutions. The contribution of the banking and insurance sectors to GDP has risen steadily in recent years, from 2.7% of GDP in 2006 to 5.2% in 2010. Deposits have also been on the rise, increasing from $2.6bn in December 2007 to $7.6bn in September 2011. The sector is currently seeking to provide a greater variety of technology-enabled banking services and increase the ability of banks to lend and fund major projects in other sectors of the economy. This chapter contains an interview with Samuel Ashitey Adjei, Managing Director, Ecobank Ghana; and a viewpoint by Kofi Wampah, Acting Director and Deputy Governor, Bank of Ghana.

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Capital Markets

While activity and liquidity on Ghana’s capital markets are both still relatively low, transaction values have been on the rise and certain reforms are set to inject significant funds into the market in 2012. As of March 2012 there were 34 companies listed on the Ghana Stock Exchange (GSE). The GSE’s value reached $264.4m, the highest to date. The agro-processing and petroleum industries have been among the best-performing sectors in the GSE in 2012. The government is seeking to undertake reforms that will increase liquidity, including pushing firms with few shares to dilute them. Further measures, such as increased tax incentives, might also be instated to boost listings. This section contains an interview with Kofi Yamoah, Managing Director, Ghana Stock Exchange (GSE); and a viewpoint by David Awuah-Darko, Managing Director, IC Securities. In conjunction with IC Securities, OBG provides analyses and data for five major shares on the GSE.

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Insurance

While the insurance penetration rate in Ghana stands at just 2-3%, authorities are currently in the process of putting into place the institutions necessary to increase awareness of insurance policies and capitalise the market. The sector is made up of 41 insurers, 23 non-life and 18 life. The non-life segment is driven primarily by motor insurance, which is the main source of profit for the government and corporations. The life segment has been expanding in recent years and life premiums are expected to exceed non-life premiums in the next five years, with premium income in the segment having jumped by 52% year-on-year in 2010. This section contains an interview with Richard Kwame Asante, Chairman, National Pensions Regulatory Authority.

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Mining

Mining and quarrying, excluding oil and gas, accounted for 2.7% of Ghana’s real GDP in 2011, having grown 19% that year. The country has been producing higher levels of many minerals, including bauxite, silica, coltan, gold and manganese. Gold in particular has been a major boon to the sector given the investor flight to gold that occurred in the wake of the global financial crisis. Indeed, gold production grew 6.3% in 2011 and many of the country’s producers saw significant increases in profits that year. With mineral exports accounting for nearly 40% of total exports and more than 28% of government revenue, investment in the sector has been increasing and prospects for growth are strong. This chapter contains interviews with Mike Hammah, Minister of Land and Natural Resources; and a dialogue between Peter Anderton, Senior Vice-President, AngloGold Ashanti, and Daniel Owiredu, Senior Vice-President of Operations, Golden Star Resources.

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Energy

Since the discovery of offshore oil reserves in 2007, the Ghanaian government has reached a number of important decisions regarding production and distribution, and set the aim of reaching production in just 42 months. Crude oil output accounted for 6.8% of GDP in 2011, the first year of hydrocarbons production, and production is expected to be increased to 120,000 barrels per day by mid-2013. However, more questions are also now being raised regarding the long-term sustainability of oil production, the costs to producers and the best ways to engage with international oil companies. The government and producers alike are now faced with issues of infrastructural development, with the need to maximise the benefit of the industry to local communities and establish gas production and transport facilities being particularly pressing. This chapter contains interviews with Joe Oteng-Adjel, Minister of Energy; and Kwesi Botchwey, Chairman, Ghana National Gas Company.

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Agriculture

As the country’s largest employer, the agriculture sector accounts for 28.3% of GDP and produces cereals, grains, fruits, vegetables, shea nuts, starchy staple crops and cotton, among other plants. Cultivated in six of the country’s 10 regions, cocoa is Ghana’s top agricultural export, rising to a value of $1.42bn in 2009. Indeed, having produced a record 1m tonnes in 2011, Ghana is the world’s second-largest cocoa producer, behind only its neighbour, Cote d’Ivoire. Recent years have brought greater numbers of private-sector players, including a number of foreign investors, who are investing in crops like palm oil and facilitating the logistics in creating local processing facilities and enabling value-added activities. This section includes an interview with Anthony Fofie, CEO, Ghana Cocoa Board.

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Transport

Accounting for 10.1% of GDP in 2011, the transport sector in Ghana is comparable to several other countries within the same income bracket in the region. Major increases in imports and exports in recent years, along with the relatively recent development of oil and gas production, have helped push the expansion of transport and logistics in the country, with traffic at the two seaports having grown significantly. The country must now focus on creating a more integrated transport network, which could eventually make it a transport hub for the sub-region. This will include extending the all-season road network and upgrading its existing roads and highways. This chapter includes an interview with Geoffrey White, Director and CEO, Lonrho.

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Industry

Ghana’s industrial sector is still quite small and import-reliant, with manufacturing making just a modest contribution to GDP. The sector has traditionally been based around a few key products, including cement, metals and agricultural products such as cocoa. However, a new five-year plan for the 2011-15 period has established the aim of increasing industrial competitiveness. This will largely be achieved through upgrading technology, improving the manufacturing value chain, putting in place more incentives and regulations for producers and raising work safety standards. The outlook for the retail sector, meanwhile, is optimistic, particularly given rising purchasing power and improved distribution networks. This chapter contains interviews with Hannah Tetteh, Minister of Trade and Industry; and Ashok R Mohinani, Executive Director, Mohinani Group.

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Tourism

As a stable country with rapid economic growth, Ghana hopes to capitalise on its image as a well managed a peaceful West African state to attract tourists. While the sector still makes up a relatively small portion of GDP, at 2.3%, the government is hoping to increase its contribution to the economy and become a more competitive African tourism market. Ecotourism remains the foundation of the sector in Ghana, with its dense forests and wild array of wildlife habitats. Major goals for the sector include launching stronger promotional campaigns and developing industry-specific education and training – already available at several of the country’s educational institutions – in order to provide higher service quality. This chapter features an interview with Reto Wittwer, President and CEP, Kempinski Group.

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Construction & Real Estate

Fuelled by public infrastructure maintenance and expansion, private real estate development and individual residential construction, Ghana’s construction industry has been growing steadily, with sector output increasing by 91.8% between 2006 and 2010. With demand for individual family houses – particularly in the low-income bracket – on the rise and plans in place to develop a number of new cities in the Western Region, this trend looks set to continue. Additionally, with the rise of a middle class in the country, it seems the real estate sector – traditionally a very limited market – is beginning to pick up. The housing demand is high and there is a current annual supply gap of 30,000 residential units. This chapter contains interviews with Stephen Jennings, CEO, Renaissance Group; and Emmanuel Botchwey, Executive Chairman, Regimanuel Gray.

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Telecoms and IT

Broad activity has increased dramatically over the past several years with the establishment of three new undersea links: the West Africa Cable System, Main One and Glo-1. While the pace of IT development is strong, particularly in comparison with other countries in the region, more efforts must be made to ensure connectivity outside of urban centres, which will mean lowering the prices of broadband and hardware to make these technologies more accessible to the average Ghanaian. The country’s telecoms market, too, is one of the most competitive on the continent. Mobile penetration has soared from 2.4% in 2001 to 84.9% in 2011, well ahead of the developing world average of 78.8%. Providers are seeking to boost revenues with non-voice services, though penetration is still relatively low. This chapter includes an interview with Herman Chinery-Hesse, Founder, The SOFTtribe.

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Media & Advertising

The media market in Ghana is widely considered to be one of Africa’s freest and most competitive, with a variety of outlets across a number of types of media. The country has made strides in recent years with legislation that ensures the population’s right to access government information and in proposing a broadcasting bill that will lay out stricter regulations regarding the ownership of broadcasting organisations, providing a framework for the industry. Economic and media liberalisation has led to the growth of a highly competitive advertising industry, with new agencies emerging regularly. Advertising spending in 2011 amounted to $177.4m, with the communications industry, particularly telecoms, leading the pack, accounting for 17% of advertising spending. This chapter features an interview with David Ampofo, Managing Director, Channel Two Communications and host of Time with David.

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Health & Education

The health sector has undergone major reforms over the course of the past decade, including the provision of more developed services and infrastructure in rural areas and the introduction of the National Health Insurance Scheme. The sector has seen a shift to preventive care, with greater numbers of Ghanaians visiting health facilities. The provision of health care infrastructure is also increasing, with a total of 3217 health facilities in the country. The education sector has also undergone a series of reforms in recent years. It has seen higher primary and secondary enrolment rates and a tripling in the number of tertiary educational institutions over the past decade, with the private sector now playing a bigger role in the sector. This chapter contains an interview with Franklyn Many, Rector, Ghana Institute of Management and Public Administration.

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Tax

In conjunction with Deloitte, OBG provides an overview of the Ghanaian taxation system, exploring the options and investor-friendly environment for businesses in the country. This chapter contains a viewpoint from Felix Nana Sackey, Managing Partner at Deloitte & Touche.

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Legal Framework

In partnership with Bentsi-Enchill, Letsa & Ankomah, OBG introduces the reader to different aspects of the Ghanaian legal system. This chapter includes a viewpoint on oil-backed borrowing by Kojo Bentsi-Enchill, Senior Partner and Head of Energy & Natural Resources at Bentsi-Enchill, Letsa & Ankomah.

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The Guide

This section includes an article on some of the country’s historical touristic attractions and a profile of boxing legend Azumah Nelson. It also provides the reader with an overview of local etiquette and business practices, information on hotels and resorts, and contact information for local government agencies and services.

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Table of Contents

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