As the economy grew following the discovery of domestic oil in 2007, expectations of increased consumer spending soon followed. Ghana has much to offer retailers: by regional standards, it offers a relatively affluent consumer base in a stable environment; furthermore, the formal retail supply is limited, providing opportunities for growth.

While these supply and demand dynamics are encouraging, recent economic difficulties have presented some obstacles. Indeed, a weak exchange rate environment and high inflation rates have dented consumer appetites and hit a variety of retailers. As such, much of the optimism present at the beginning of the decade has been tempered by a more challenging short-term environment.


Generally, the performance of the sector has reflected that of the wider economy. For example, according to AT Kearney, a global research firm, between 2013 and 2015 retail sales fell by 12.2% to $15bn. As Ghana is a particularly price-sensitive market, the inflationary environment and subsequent decline in spending has especially affected certain goods. For example, the food segment and luxury goods have suffered. High-value imports from the US declined from $105.5m in 2014 to $65.3m in 2015, a drop of 38%. As the retail markup on high-value products is relatively small – ranging from 10% for domestic goods to 20% for US goods – retailers have little room to absorb the effects of price inflation. Depressed spending and rising costs has had a ripple effect throughout the sector.

Sector Drivers

However, the long-term opportunities in the market are promising, thanks in large part to Ghana’s young and growing population. More than 50% of citizens are under the age of 25, providing a stream of tech-savvy and eager consumers to the potential retail market. Although the dependency ratio stands at 73%, most of this comes from the youth dependency ratio, which is 67.2%. As such, the dependency ratio is expected to shrink rapidly in the coming years as the working-age population swells and brings more purchasing power to the consumer base. The country already compares favourably with other African markets in terms of income levels. According to audit, tax and advisory firm KPMG, Ghana is one of just six countries in sub-Saharan Africa in which the middle class – composed of individuals with a daily income of at least $8.44 – exceeds 1m people.

Income has been rising across West Africa and, according to Standard Bank, Ghana had approximately 1.3m middle-class households in 2014. This base should continue to support spending. Personal expenditure is set to achieve a compound annual growth rate of 12% between 2013 and 2020. However, much of this is likely to be absorbed by essentials. As of 2017 food and non-alcoholic beverages account for 41% of household expenditure.

Consumer spending is set to continue increasing through 2030. The population is growing by 2.2% each year, while the consumer base is increasingly concentrated in major cities and their suburbs. Averaging nearly 4.4% per year between 1983 and 2013, urban population growth has outpaced rural growth. The urbanisation rate reached 51% in 2013, marking the first time that more than half the population lived in urban, rather than rural, areas.

High Rankings

These indicate a market ripe for further retail investment and penetration. According to the Consumer Demand Potential Index by NKC African Economics, Ghana ranks eighth on the continent. This is due to a strong business environment, good demographics and a favourable medium- to long-term economic outlook. AT Kearney also recognised these attributes, ranking Ghana 28th globally on its Global Retail Development Index 2016.

Retail Property

This potential has also been reflected in the rapid change in the local retail landscape. In the capital city of Accra, there has been a substantial uptick in the development of formal, organised retail space, led by South African players such as Atterbury. In 2012 Accra Mall was the only organised domestic retail centre. Since then, several formal shopping centres have opened, including West Hills Mall, with 27,300 sq metres of retail space, as well as Junction (11,500), A&C Square (10,000), Oxford Street (6230), Achimota (13,000) and Kumasi City (27,500) malls.

In 2016 Accra contained 103,000 sq metres of gross leasable formal retail space in Accra. This places it just behind the Nigerian mega-city of Lagos, which boasts 121,000 sq metres for a population of between 17m and 21m. According to AT Kearney, a further 170,000 sq metres of space will be brought to secondary cities, such as Kumasi, Takoradi, and Tema, by 2018. According to Knight Frank, a UK-based real estate consultancy, Accra has a shopping mall pipeline of 138,000 sq metres.

Although supply has developed substantially over 2007-17, there is potential for further growth. Formal retail penetration rates are below 5%, according to Jones Lang LaSalle (JLL), a commercial real estate investment management firm. The same is true in the food segment: supermarkets account for only 4% of total food sales, while small convenience stores make up 36% and traditional open-air markets 60%.

As such, citizens are underserved in terms of retail space: Accra only has 46 sq metres of retail space per 1000 people, compared to 730 in Windhoek, Namibia; 119 in Harare, Zimbabwe; 104 in Nairobi, Kenya; and 98 in Kampala, Uganda. In most of Western Europe, countrywide figures of at least 100 sq metres per 1000 people are the norm.

In certain circumstances, this lack of retail space can put pressure on existing facilities. For example, despite the current economic environment, Accra Mall has an occupancy rate of 100%. Much of the potential for growth lies in neighbourhood and community malls of up to 20,000 sq metres, as the country does not currently have sufficient infrastructure to host regional and super-regional malls.


While occupancies and rents have largely remained stable, the operating costs – reflected in rental rates – have begun to eat into many retailers’ profit margins. The situation is becoming untenable and the market looks set for change. According to JLL’s property clock, which projects rent prices, retail rents in Accra are set to fall. Most contracts are based on a fixed rent with a turnover clause, whereby tenants pay a percentage of their turnover to the landlord if it exceeds a certain threshold.

In 2016 monthly rents ranged from $30 to $80 per sq metre for line stores, according to JLL. For anchor tenants, rents ranged from $11 to $19 per sq metre per month. However, while well-established retail centres can maintain their rent levels, newer entrants often struggle to generate the same rental income. According to a September 2016 report released by JLL: “Rents in new shopping centres are likely to be [one-]third lower than prevailing market rents, with retailers very cautious of signing leases on new schemes.” Indeed, the report suggests that new retail space will struggle for commercial viability in the short term, as supply continues to enter the market with insufficient demand to meet this.


In terms of retailers, South African brands dominate the market. Shoprite, the South African supermarket chain, serves as an anchor tenant for many local mall developments. Additional South African and other international brands present in the country include Game, Woolworths, Mr Price, KFC, Apple, Mango, Nespresso and Samsung.

Furthermore, Pick n Pay, a South African supermarket chain, may also enter the country in the near future. In April 2017 the company announced that it would join the Ghanaian and Nigerian markets within the next two years. If the move comes to fruition, it will offer additional competition to Shoprite in the grocery segment of the local market.


Despite the positive medium-term outlook for the sector, the current situation is potentially more difficult for a number of retailers and mall owners. Current economic constraints in the local market are preventing Ghana from ranking higher on retail indices. The NKC Consumer Demand Potential Index score fell precipitously in 2016 due to “weak fiscal finances, which have contributed to a widening current account deficit, a depreciating currency, increasing levels of inflation, high interest rates and an increase in tax rates”.

Since around 2012 rising public debt, weakening currency and escalating inflation have posed significant challenges. At the climax of many difficulties in 2015 and 2016, the inflation rate topped 18%, while benchmark interest rates climbed to 26%. Although the situation has improved in 2017, it is still a challenging environment for retail growth. In October 2017 the inflation rate was 11.6%, while the Bank of Ghana had reduced interest rates to 21%. Consequently, annual economic growth has slowed, falling below 4% for much of 2015-17.

This has various implications for the sector. The industry is highly dependent on imports, which have become increasingly expensive as a result of the depreciation of the cedi. Furthermore, many developers and investors borrowed in foreign currencies but are generating returns in cedis, creating a mismatch between their expected and actual returns.

Changing the structure of business may solve a number of problems facing not only the sector, but also the wider economy. “Players who manage to properly execute a vertical integration strategy will be able to be more responsive to changes in Ghanaian consumer patterns and increased demand in the long term,” Ramesh Sadhwani, joint group managing director of Melcom Group, told OBG. This type of flexibility could help retailers adjust to an ever-changing domestic and global market.

Consumer Confidence

While conditions are not optimal for market entry, they are beginning to improve. The IMF forecasts GDP growth of 5.9% for 2017 and 8.9% for 2018. This expectation of recovery is also reflected in improving consumer sentiment. According to the Nielsen Consumer Confidence Index, perceptions of the market were looking up as early as the third quarter of 2016. In that period, personal finance sentiment improved by eight percentage points, while immediate spending intentions rose by six percentage points. At the same time, half of Ghanaians said they had spare cash, a marked improvement over the second quarter of the year, at which point just 34% of respondents claimed this.

The general trend of positive attitudes continued in the fourth quarter of 2016, when Ghana’s Consumer Confidence Index increased by two points. However, some experts caution against getting carried away. “In the backdrop of improved confidence levels, businesses need to adjust to the altered daily habits that consumers are displaying to deal with the tough market conditions,” Abhik Gupta, managing director of Nielsen East and West Africa, commented in the report. “As consumers have been forced to reduce consumption, only buying on an immediate-need basis, businesses need to meet these new consumers’ realities with agility, [as well as] flexible product offerings, packaging and pricing.”


As such, a positive outlook for the sector is tempered by the realities of the operating environment. Indeed, margin pressures and reduced consumer spending are persisting. However, there is ample reason for optimism, especially in the longer term. Ghana remains an attractive opportunity for retail investment. Once the economy improves and spending picks up, the supply-and-demand balance of formal retail offerings is likely to shift once again to one of undersupply. While it may not be the biggest market on the continent, Ghana offers a stable business environment and a growing – and increasingly affluent – population. These factors should draw in new brands and developers in coming years.