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The Report: Ghana 2019

First to independence from colonial rule, Ghana continues to be one of the most stable countries in sub-Saharan Africa. A nation of great diversity in landscapes, languages and ethnicities, Ghana has seen a steady improvement in its people’s well-being over the years. The country is nowadays one of Africa’s fastest-growing economies and is trying to move away from traditional resource dependency. However, it faces the challenge of ensuring the widest benefit from that expansion, particularly given its growing and increasingly urbanised population.

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Sections

  • Country Profile
  • Economy
  • Banking
  • Capital Markets
  • Insurance
  • Energy & Utilities
  • Mining
  • Agriculture
  • Industry & Retail
  • ICT
  • Transport
  • Construction & Real Estate
  • Tourism
  • Health & Education
  • Tax
  • The Guide
  • Table of Contents

Country Profile

In 1957 Ghana became the first African country to achieve independence from a European colonial power, and today it is one of the continent’s most vibrant democracies. The 2016 elections saw Nana Akufo-Addo, now president, speak to voter dissatisfaction with the economy, which at the time was suffering from the protracted downturn in global prices of its chief commodity exports. The election was thus fought on an issue affecting all Ghanaians, rather than on sectarian grounds, while the exemplary behaviour of both presidential candidates and their supporters in the transfer of power also indicated the growing strength of democratic governance in the country. With a GDP of GHS256.6bn ($55.4bn) at the end of 2018, Ghana is also a contender to become the year’s fastest-growing economy worldwide. As it tries to move away from traditional resource dependency, the country now faces the challenge of ensuring the widest benefit from that expansion, particularly given its growing and increasingly urbanised population. This chapter contains viewpoints with Nana Akufo-Addo, President of Ghana; Mahamudu Bawumia, Vice-president of Ghana; Angela Merkel, Chancellor of Germany; and an interview with Rona Fairhead, Minister for Trade and Export Promotion, UK Department for International Trade.

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Economy

Ghana is the second-biggest producer of gold on the African continent, and the world’s second-largest cocoa producer. The country is also home to one of the largest discoveries of oil in recent decades, the production of which is providing the government with a useful revenue stream and driving growth in associated sectors. Nevertheless, the country faces considerable economic challenges with the biggest one arising from its 2019 departure from the IMF’s support framework. Developing the economy while staying within the government’s defined limits for fiscal deficits and external debt remain key challenges. The government’s revised tax policies, however, are likely to strengthen revenue streams and reduce the need to cut expenditures to remain within the targeted fiscal deficit limit. Despite the broadly positive outlook, Ghana’s continued dependence on cocoa, gold and oil exports leaves it vulnerable to volatility in international commodity prices. The government’s longer-term plan to develop other areas of the economy, therefore, is crucial to eliminating this downside risk. This chapter contains interviews with Ken Ofori-Atta, Minister for Finance; Yofi Grant, CEO, Ghana Investment Promotion Centre; Seth Twum Akwaboah, CEO, Association of Ghana Industries; and Reeta Roy, CEO and President, Mastercard Foundation.

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Banking

Ghana’s banking industry has undergone a challenging period in recent years, weathering an economic downturn and a rising tide of non-performing loans. While delinquent debts have undermined sector stability and remain a key challenge, the country’s lenders continue to grow their assets and remain profitable. With a wholesale regulatory reform of the sector well under way, the prospects of continued expansion by a strengthened and revitalised sector are good. Moreover, stronger economic growth and increased stability among lenders is expected to boost sector performance in 2019. Most ratings agencies anticipate a return to loan growth and rising fee incomes as confidence returns to the industry after its recapitalisation. This chapter contains interviews with Ernest Addison, Governor, Bank of Ghana; and Daniel Addo, CEO, Consolidated Bank Ghana.

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Capital Markets

After a surge in stock prices in 2017 that saw the Ghana Stock Exchange (GSE) become the best performing exchange globally, the GSE experienced a significant setback, posting net declines in 2018. Nevertheless, the strong performance of the country’s main index in 2017 has renewed interest in the market as a means of raising capital and made Ghanaian equities a more attractive prospect for investors. While challenges remain, including a lack of variety in investment instruments and low levels of liquidity, the introduction of new minimum capital requirements for banks, coupled with the sustained growth of one of sub-Saharan Africa’s fastest-growing economies, appears set to boost the raising of capital and stock prices over the course of 2019. This chapter contains interviews with Daniel Ogbarmey Tetteh, Director-General, Securities and Exchange Commission; and Alex Asiedu, Managing Director, STANLIB.

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Insurance

The insurance industry in Ghana has plenty of reasons for optimism. A favourable economic backdrop and an emerging middle class have helped to boost the sector’s assets, while the World Bank has forecast the continuation of strong economic growth in 2019. Moreover, the country’s insurance penetration rate stands at less than 2%, according to the latest annual report from the National Insurance Commission, which has expressed its determination to capitalise on this latent market potential, targeting a penetration rate of 10% by 2021. The growth of new business lines such as bancassurance, micro-insurance and mobile insurance should help bring this target into reach. This chapter contains an interview with Keli Gadzekpo, CEO, Enterprise Group.

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Energy & Utilities

The discovery of large offshore oil reserves has had a significant impact on the national balance sheet, with shipments of crude oil representing the second-largest export category in 2017 after gold. Ghana is a relative newcomer to the global hydrocarbons industry, and with proven oil reserves of around 660m barrels and an output of about 126,000 barrels per day, it is a small producer by regional standards, but there is considerable potential for growth. The ongoing expansion of commercial operations into new reserves has led some commentators to identify Ghana as the world’s next oil hotspot, raising hopes that the export of oil and its derivatives can sustain a new era of economic prosperity. Moreover, there are a number of developments to boost the supply of gas feedstock to Ghana’s thermal power stations in the short term, such as the offshore Sankofa field. While these developments are welcome, the principal challenge faced by the sector’s governing bodies is the successful resolution of the payment backlog, which could inhibit much-needed private sector investment. This chapter contains interviews with Paul McDade, CEO, Tullow Oil; and Jonathan Amoako-Baah, CEO, Ghana Grid Company.

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Mining

Ghana is one of the world’s top-10 gold producers and the second largest in Africa. A wave of investments in recent years has boosted production and improved cost efficiency in gold and manganese mining, while the government has acted firmly to improve industry regulation, tackle long-term issues such as illegal activity and environmental damage, and strengthen assaying capacity. Ghana boasts political stability and a strong institutional framework, and these factors are expected to continue to underpin investment in the mining sector in years to come. However, international players will be keen for some clarification with regard to plans to increase state equity stakes in key operating companies. This chapter contains an interview with Eric Asubonteng, President, Ghana Chamber of Mines; and Managing Director, AngloGold Ashanti (Ghana).

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Agriculture

Ghana’s agricultural output increased in 2017 and 2018, driven in large part by government policy and expenditure. According to the Ghana Statistical Service, agriculture grew 5.5% year-on-year in the third quarter of 2018, outpacing general non-oil GDP growth the same year. Industrialisation and productivity improvement programmes are expected to expand the yields from the agriculture sector, as well as create jobs and encourage greater private sector participation. The country has secured considerable funding from multilateral lending organisations and bilateral national partners to finance its ambitious agricultural agenda over the next few years, ensuring a promising outlook for the sector. This chapter contains an interview with Joseph Boahen Aidoo, CEO, Ghana Cocoa Board.

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Industry & Retail

Building on years of robust growth in the sector, Ghana has launched a multifaceted programme to increase its industrial capacity and output. This wave of new initiatives is designed to strengthen the investment environment and boost the value-added component of the country’s manufactured exports. In 2017 manufacturing contributed $6.1bn to GDP, some 12% of the total. Moreover, the combination of a buoyant economy and demographic shifts such as rapid population growth and rising urbanisation levels are driving new trends in the Ghanaian retail sector. International brands and mall developers are becoming increasingly present, and the scope for the expansion of modern retail is considerable, following a decade where GDP grew by between 2% and 14% in any given year. This chapter contains an interview with Michael Okyere Baafi, Executive Secretary, Ghana Free Zones Authority.

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ICT

With one of the region’s highest levels of mobile data penetration and a thriving start-up scene, Ghana’s ICT sector is one of the most active parts of the economy, and the government recognises that ICT is a central economic driver and enabler, becoming increasingly active in its support of the industry, while also working to tackle new threats such as cybercrime in its goal of developing Ghana’s middle-income status. Broadband internet is a growing necessity to support businesses of all kinds, thus Ghana is currently rolling out 4G networks. Economic and demographic factors mean that this is a fast-growing market, with a young generation increasingly enthusiastic about communications and technology. This chapter contains interviews with Kenneth Ashigbey, CEO, Ghana Chamber of Telecommunications; and William Senyo, Co-founder and CEO, Impact Hub Accra.

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Transport

A range of game-changing infrastructure projects are set to reshape Ghana’s transport sector over the next half-decade, and 2019 should be a year of redoubled investment by the government. The country’s two main ports continue to expand, the budget for road development has increased by nearly 150%, the long-awaited transformation of the railway network is progressing and a new national airline is scheduled to join Accra’s new airport terminal. Public-private partnerships are central to this expansion, and local firms are joining a growing list of partners from Asia and Europe. The efforts of successive administrations to harness the expertise, technology and capital of domestic and foreign companies continue to bear fruit, and a commitment to improving transit systems as a key to unlocking broader economic growth should create further opportunities for private partners in 2019. This chapter contains an interview with Solomon Asamoah, CEO, Ghana Infrastructure Investment Fund.

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Construction & Real Estate

A budget prioritising infrastructure investment, one of the world’s fastest-growing economies and strong demand from demographic growth are the main factors driving the Ghanaian construction and real estate industries. In the construction sector public projects to build and improve roads, railways and social infrastructure are in the pipeline, in addition to the $5bn in UN-backed investment in affordable housing to address the country’s shortage. The sector’s growth has led to renewed calls for the establishment of an official body to regulate and promote construction business, particularly to support domestic companies and tackle malpractice. As for the real estate sector, thanks to a robust economy and the government’s reform programme, various segments, from high-end residential real estate to industrial and logistics property, are performing strongly. Growth is set to continue through 2019, though investors are keeping an eye out for downside risks and segments in which there is oversupply.

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Tourism

With significant potential to drive economic growth and job creation, the tourism sector is increasingly an area of focus for investment in Ghana. While the Bank of Ghana lists the sector as the fourth-highest foreign currency earner behind gold, cocoa and remittances, Ghana still has some way to go to become a destination of choice on the continent. Significant funding has therefore been committed to developing the sector through investments in infrastructure and skills development. With hotel capacity set to increase and a prominent profile in international circles as a safe and investment-friendly destination, Ghana’s tourism sector looks on track to continue growth. For sustained development, however, Ghana must address some key infrastructure bottlenecks. Chief among these is the road network outside of the Greater Accra Region, which must be developed and expanded to improve access to other parts of the country. This chapter contains an interview with Catherine Afeku, Minister for Tourism, Arts and Culture.

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Health & Education

Ghana’s economic development is leading to heightened demand for specialised private health services, while on the public side; the government has made commitments to improve universal health coverage and is implementing plans to tackle specific challenges such as non-communicable diseases and a shortage of health professionals. Such commitments to legal reform and public resource provision will help spur further investment; however, challenges remain, including weaknesses in the National Health Insurance Scheme and high pharmaceutical and health care costs, all of which tend to have the greatest impact on low-income citizens. As for the education sector, the government has prioritised educational reform in recent years in a bid to improve access at all levels of the system. To this end, in 2018 the state introduced its Free Senior High School policy, an initiative which provides free tuition for attendees at all public secondary schools. On top of this, to improve learning outcomes and help fulfil demand in the job market for certain skills, the authorities have also encouraged greater investment in education infrastructure and strengthened technical and vocational education and training. This chapter contains an interview with Kwaku Agyeman-Manu, Minister of Health.

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Tax

In conjunction with PwC, this chapter explores the taxation system and Ghana’s efforts to build an investor-friendly environment. This chapter contains a viewpoint with George Kwatia, Tax Partner, PwC Ghana.

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The Guide

This section includes information on hotels, government offices and other listings, alongside useful tips for visitors on topics like currency, visas, language, communications, dress code, business hours and electricity.

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Table of Contents

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