Building on several years of robust growth in the sector, Ghana has launched a multifaceted programme aimed at increasing its industrial capacity and output. This wave of new initiatives is designed to strengthen the investment environment for manufacturing and boost the value-added component of the country’s manufactured exports. While challenges remain – notably in terms of taxation and insolvency regulation – these efforts could be set to increase the contribution of the non-oil sector to overall growth and support sustainable diversification.


Manufacturing contributed GHS28bn ($6.1bn) to GDP in 2017, up from GHS23.9bn ($5.2bn) in 2016 and GHS20.5bn ($4.4bn) in 2015, according to the Ghana Statistical Service (GSS). This was equivalent to 11.7% of GDP in 2017. Although manufacturing’s contribution to the economy has decreased slightly over the past decade, this was in large part due to the growth of the contribution of the oil sector to GDP. Indeed, the manufacturing sector grew by an impressive 9.5% in 2017, up from 7.9% in 2016 and 3.7% in 2015.

As the African Development Bank (AfDB) has noted, the value of Ghana’s machinery imports increased four-fold between 2000 and 2017 to $670m, reflecting the country’s growing industrial capacity. With the government’s lower capital investment in recent years, the private sector has become the driving force behind industrial development, according to the bank.

“This is consistent with the government’s private sector-led agenda for economic transformation,” John Defor, director for policy and research at the Association of Ghana Industries, told OBG. According to Defor, the country’s industrial development has benefitted considerably from trade liberalisation, political stability, the rule of law and the Ghana Investment Promotion Centre Act, the latter of which has created a more streamlined environment for private investment. “I see real determination from the government to get industry moving,” Defor added. This strong performance appeared to carry on into 2018, with the non-oil industrial sector growing by 11.1% in the first six months of the year, supporting real GDP growth of 5.4%, according to regional financial organisation Ecobank. Building on this successful expansion of the sector, the government has targeted an industrial growth rate of 7.6% for 2019.

Improved Ecosystem

The country is concentrating on improving the business environment by pursuing macroeconomic stability and pro-business reform. These efforts are intended to improve domestic resource mobilisation and ensure sufficient fiscal space for the government to increase capital expenditure and investment in public services over the longer term. As a result of the state’s efforts towards fiscal consolidation, the debt-to-GDP ratio fell from 40.5% in 2017 to 38.5% in 2018, while Ghana’s fiscal deficit improved marginally over the same period – falling from 5.9% to 5.7% – according to the AfDB. Nevertheless, given these persistently high though declining debt levels and low levels of savings among public and private firms, foreign direct investment (FDI) will prove invaluable in achieving the continued development of industrial capacity.

“There appear to be positive results in terms of government performance thus far,” Hayssam Fakhry, managing director of domestic plastic pipe systems producer Interplast, told OBG. “Macroeconomic indicators are noticeably improving, and the market is therefore characterised by cautious optimism.”

Meanwhile, inflation declined to 9.8% in September 2018 – its first fall below double digits since 2012. This ongoing stabilisation of the country’s inflation allowed the Bank of Ghana (BoG) to cut interest rates by 900 basis points between November 2016 and May 2018. With inflation forecast to remain within the 6-10% target band, the BoG once again cut interest rates in January 2019, reducing its benchmark rate by 100 basis points to 16%. The central bank’s cut to interest rates is expected to provide a boost to capital-intensive industrial firms in the country, who need to borrow to invest and service exiting debt.

“The general outlook is positive,” Kwame NyantekyiOwusu, executive chairman of the domestic business group Inter-Afrique Holdings, told OBG. “The economy is stabilising, and growth is set to continue, making Ghana a strong investment destination.” Nevertheless, Nyantekyi-Owusu highlighted that high interest rates remain an issue for local businesses. “Commercial rates will have to come down to 8-12%,” he told OBG. “There is no reason why Ghana cannot match the low rates seen in Rwanda and Botswana.”

Business Environment

The country’s efforts to improve the investment ecosystem are reflected in its performance in the World Bank’s “Doing Business 2019” report. Ghana improved its score on eight of the 11 categories assessed by the World Bank between 2018 and 2019, while the country ranks higher than the Sub-Saharan African average on all but one category, namely resolving insolvency. Nevertheless, the report highlights that there is substantial room for improvement across a number of metrics.

Ghana scored 59.22 for doing business – up 2.06 points on 2018 – placing it well above the regional average of 51.61 and ahead of neighbouring states such as Côte d’Ivoire (58.00) and Mali (53.50), for example. This placed the country 114th out of 190 countries worldwide, though this put it behind other African economies, such as Kenya, which scored 61st globally. In terms of starting a business Ghana scored 84.29 and ranked 108th, against a regional average of 78.52. This marked a small 0.27 point increase on the 2018 index. A bigger improvement came in the ease of dealing with construction permits, where it scored 66.16, up from 61.90 points in 2018, and ranked 115th in the world, placing it well ahead of the regional average of 57.52. Notably, Ghana also improved 2.52 points in trading across borders, scoring 54.84 points, just over the regional average of 53.59, though only 156th globally. The country received its best ranking in the index in the getting credit category, finding itself 73rd worldwide with a score of 60, compared with a regional average of 42. According to the report, this reflects the increased development of country’s financial services sector, which has been strengthened by an improved legal framework and the creation of a new insolvency law.

The country also scored reasonably well in terms of the protection of minority investors, ranking 99th and scoring of 51.67, ahead of the regional average of 44.55. Furthermore, it performed respectably in terms of paying taxes (115th), dealing with construction permits (115th) and enforcing contracts (116th). While these scores reflect broad improvements to the country’s business environment – following economic and financial stabilisation and reform of the Ghanaian legal framework – they nonetheless highlight that the country has further to go. Notably, Ghana performed poorly in the index in terms of resolving insolvency, where it ranked 160th and scored only 29.94, below the regional average of 30.80.

Increased Capacity

One of the most notable shifts supporting industrial sector development to have taken place in recent years is the increase in electricity generation capacity. This boost in capacity was coupled with a reduction in energy tariffs introduced in April 2018. Significantly, the country scored 86th in the World Bank’s “Doing Business 2019” report in terms of getting electricity, above territories such as Puerto Rico, Mexico and Kuwait. Furthermore, the country’s score for the category rose 13.04 points between 2018 and 2019 to 74.02. This marked improvement in its international ranking reflects an increase in the reliability of supply, a fall in costs and improvements in the speed of obtaining an electricity connection for a new business. According to the country’s Energy Commission (EC), Ghana’s installed power generation capacity stood at 4320 MW in 2018, up from 3660 MW in 2015. Furthermore, industrial activity accounted for around 26% of the country’s total electricity consumption.

This increase in capacity was achieved by new investment in thermal, hydroelectric and other renewable energy sources. Moreover, these investments have increased the reliability of the country’s power generation, according to the EC. While supply can vary somewhat due to different climactic conditions – having an impact on hydroelectric, wind and solar plants – the EC now sees capacity as outstripping demand. Furthermore, while blackouts and brownouts still occur, their frequency has reduced.

Following a major consultation, the Public Utilities Regulatory Commission introduced wide-ranging electricity tariff reductions in April 2018. Under these provisions special load tariff customers, which include industries that use a lot of power, saw their fees slashed by 25%. These reductions, which are partly thanks to growing installed energy capacity, are expected to provide a major boost to industrial competitiveness. As a result of the changes, the average end-user tariff was expected to be $0.13-0.15 per KWh in 2018, according to the EC. This marks a decrease from the 2013-17 average of $0.17 per KWh, bringing charges closer in line with other emerging economies, such as South Africa, where the average end-user tariff stands at $0.08-0.10, and China and India ($0.07-0.09). “The reduction in electricity tariffs has proven a boon for our sector, making us more regionally competitive,” Richard Adjei, managing director of Ghanaian beverage manufacturer Kasapreko, told OBG. “We are seeing an increasing number of international firms enter the Ghanaian market due to the growth in potential.”

Economic Trasformation

In June 2017 the government unveiled the Industrial Transformation Agenda, which seeks to make Ghana “the most business-friendly nation in Africa to accelerate socio-economic development”. Significantly, the 10-point programme emphasises private sector-driven development and attracting FDI. It also emphasises that Ghana should build on its existing competitive advantages – including its political stability, location, security and legal system – to foster development.

“Ghana serves as an effective base from which to export to Francophone West Africa,” Fakhry told OBG. “The issue of corruption is not large enough to be a major concern and ECOWAS certificates are applied effectively and function well.” Nevertheless, Fakhry highlighted that challenges do remain. “There needs to be a larger pool of registered taxpayers,” Fakhry told OBG. “Clearer rules and increased breathing room for reliable firms might improve this.”

Several of the agenda’s points are development strategies in their own right. The first is the National Industrial Revitalisation Programme, which draws on the findings of a 2013 World Bank report linking industrial development in Africa and economic indicators. The report highlights the falling proportion of industry value added as a percentage of GDP in Ghana. The government programme therefore focuses on providing funding and support for industrial companies, using a stimulus fund of up to $200m. It outlines a plan to provide viable but struggling companies with technical assistance and business development services. The programme seeks to boost companies with a particular potential for job creation, and which have sound financial reporting and good corporate governance, as well as a reasonable track record of commercial performance.

The second pillar of the agenda is the One District, One Factory (1D1F) plan, which aims to facilitate the establishment of at least one medium- to large-scale industrial enterprise in each of Ghana’s 216 districts. The initiative aims to create between 1.5m and 3.2m jobs nationwide by 2021 (see analysis).

Industrial Zones

Another major pillar of the programme is to foster the development of strategic industry clusters through the establishment of special economic zones (SEZs) and industrial parks (IPs). The government has identified several segments for such development. These include, aluminium, pharmaceuticals, agricultural processing, textiles and apparel. The plan aims to establish at least one IP or SEZ in each of Ghana’s 10 regions, and attract both domestic and international investment to the parks and zones. Sites under development in 2018 included the Dawa Industrial Park, which is being developed by local conglomerate LMI Holdings and is located in the Greater Accra Region, and the 5000-acre Greater Kumasi Industrial City and SEZ.


The programme also emphasises diversification of the country’s industrial sector, as well as boosting the broader business environment for new firms. As part of this strategy, the authorities are seeking to encourage small and medium-sized enterprises (SMEs) in order to increase domestic employment. To this end, the government established an industrial subcontracting exchange in 2017 to link SMEs to larger companies in order to strengthen domestic supply chains and boost value added. The agenda also contains an export development programme, which seeks to encourage business to take advantage of the African Growth and Opportunity Act (AGOA) and the ECOWAS-EU economic partnership agreement (EPA). AGOA was passed by the US Congress in 2000 and aims to boost economic relations between the US and Sub-Saharan Africa. Ghana ratified the interim EPA with the EU in August 2016, securing free access to the EU market – the world’s largest single market – for certain Ghanaian exports, with a view towards boosting trade, investment and employment. Ghana already has trade worth GHS25.6bn ($5.5bn) with the EU, which is Ghana’s main market for its agri-business products, including processed cocoa and canned tuna.

As part of these plans the government also hopes to develop the domestic market. It aims to do this by enhancing local retail infrastructure to ensure that increased domestic production arising from the 1D1F plan and other initiatives can rapidly and efficiently reach consumers. The government hopes to achieve this by rationalising permits and paperwork and fostering dialogue between the private and public sector through annual summits to review the implementation of business reforms and address challenges as and when they emerge.

Making Progress

Ghana’s efforts to develop the industrial sector already appear to be bearing fruit with a range of new investment projects being announced. In January 2019 Unilver Ghana – the local branch of the international consumer goods group – opened three new plants at its site in Tema, the port city 20 km east of Accra. These facilities include a biomass boiler to provide the complex with steam, and a factory for oral care products, including the production of the company’s Pepsodent line. Speaking to local media, Gladys Amoah, managing director of Unilever Ghana, stated that the new investment project would reduce the company’s reliance on imports, thereby strengthening its local supply chains and supporting the growth of domestic employment.


In November 2018 Japanese car company Nissan signed an initial agreement with the government to establish an assembly plant in the country. Nissan already has a 32% market share in Ghana and a plant in neighbouring Nigeria, Mike Whitfield, the company’s managing director for Africa stated at the press conference announcing the deal. According to Whitfield, the company sees Ghana as the “gateway to West Africa” and intends to expand its presence in the country and region over the long term.

Shortly before this, in September 2018, the government signed a similar deal with German automaker Volkswagen for the creation of the company’s second plant in West Africa. The firm already operates assembly plants in Nigeria, Kenya and Rwanda, as well as a factory that produces complete units in South Africa. As part of the project, the company has announced it intends to develop a sales and service network, with a training centre for production and after-sales.

A third agreement was signed with Chinese heavyduty truck manufacturer Sinotruk in October 2018, with a view to serving the West African market. Upon becoming fully operational the new facility will be able to assemble 1500 trucks each year. These deals dovetail with the development by the government of a new automotive industry policy, which was announced in late 2018. The policy aims to provide improved regulatory guidelines for the industry and boost FDI. Increased automotive manufacturing is expected to reduce the country’s reliance on the export of raw materials, and move into higher-value manufactures. Currently, unprocessed commodities account for more than 80% of Ghana’s export revenue.


While a range of new industrial sectors are currently under development, legacy industries are also being revived. In 2018 the government established the Ghana Integrated Bauxite and Aluminium Development Authority (GIBADA), which aims to significantly expand the activities of the state-owned Volta Aluminium Company (VALCO).

The firm has a production capacity of 200,000 tonnes of primary aluminium, but is currently running at around 20% of its full capacity. GIBADA is set to use the revitalised firm to mobilise the country’s bauxite reserves, which, at an estimated 700m tonnes, are the third-largest reserves in the world, according to the Ghana Chamber of Mines. The mobilisation of these resources, as well as falling electricity prices and investments in the country’s transport and logistics sector are expected to facilitate an increase in activity in this segment. “Creating an integrated aluminium value chain is a real opportunity for Ghana,” Dan Acheampong, CEO of VALCO, told OBG.


Ghana’s investment landscape benefits not only from plentiful natural resources and a relatively skilled workforce, but also from political stability and internal security. In order to leverage these assets the government has set about building a competitive business environment; launching a far-reaching industrial development strategy and undertaking a range of reforms aimed at streamlining procedures and improving the country’s regulatory framework. The state has also committed itself to fiscal consolidation and has successfully brought down inflation and cut interest rates, while still reducing energy tariffs, all changes that are expected to increase the competitiveness of the sector on a regional and international level. While further progress remains to be made in areas including taxation and insolvency regulation, these efforts are already bearing fruit, with the country increasing its score across a range of metrics in the World Bank’s “Doing Business 2019” report and a host of major new manufacturing projects being unveiled, most notably in the automotive segment.