Ghana's economy was strengthened by a quarter century of relatively sound management, a competitive business environment and sustained reductions in poverty levels, but in recent years has suffered the consequences of loose fiscal policy, high budget and current account deficits and a depreciating currency.
Ghana has a market-based economy with relatively few policy barriers to trade and investment in comparison with other nations in the region. The country is well-endowed with natural resources. Agriculture accounts for nearly one-quarter of GDP and employs more than half of the workforce, mainly small landholders.
The services sector accounts for about half of GDP. Gold and cocoa exports, as well as individual remittances, are major sources of foreign exchange. Expansion of Ghana’s nascent oil industry has boosted economic growth, but the recent oil price crash reduced by half its anticipated oil revenue for 2015.
Production at Jubilee, Ghana's offshore oil field, began in mid-December 2010 and currently produces roughly 110,000 barrels a day. The country’s first gas processing plant at Atubao is also producing natural gas from the Jubilee field, providing energy to several of Ghana’s thermal power plants. As of 2015, the biggest single economic issue is the lack of consistent electricity.
Ghana signed a $920 million extended credit facility with the IMF in April last year to help it address its growing economic crisis. The IMF fiscal targets will require Ghana to reduce the fiscal deficit by cutting subsidies, decreasing the bloated public sector wage bill, strengthening revenue administration and increasing revenues. The challenge for Ghana will come as the Mahama administration approaches the 2016 election cycle, as it faces public dissatisfaction in the midst of economic austerity.
Several British businesses have traded in the market for more than 100 years. New entrants are at the forefront of the oil, financial and telecommunication sectors. Some of the well-known companies operating there include Barclays, Standard Chartered, Vodafone, Tullow, Blue Skies, British Airways, G4S and Prudential.
Strengths of the market:
- English is the official business language and widely spoken
- judicial system based on English common law principles
- large consumer base with a growing middle class
- well-developed financial and legal services
- comparatively well-developed infrastructure compared to most West African countries
- competitive labour force
- developing as a regional hub for opportunities in other west African markets
Challenges of the market:
- erratic power supply nationwide
- obstructive bureaucracy
- a certain level of corruption (rated 63 out of 177 on Transparency International’s corruption index)
- high unemployment and poverty
- a poor (but improving) social infrastructure
Ghana’s economy has maintained an average annual growth of about six per cent over the past six years. In 2013 growth slowed to 4.4 per cent, considerably lower than the 7.9 per cent achieved in 2012. However, growth has been largely driven by service-oriented sectors and industry. These have been growing at an average rate of nine per cent over the five years up to 2013.
The economy is expected to grow at around eight per cent by 2015. This is bolstered by improved oil and gas production, increased private sector investment, improved public infrastructure development and political stability.
Oil reserves are estimated at around two billion barrels. There have been about 23 new oil and gas sites opened since the Jubilee discovery in 2007. Due to the emerging nature of the industry, opportunities exist in virtually every area of the petroleum sector, both upstream and downstream.
Ghana has set the following goals for its energy supply: increase power generation capacity to 5,000 megawatts by 2016; increase the proportion of renewable energy to 10 per cent by 2020; achieve gas-based generation for 80 per cent of the thermal power plants production;
develop a non-congested transmission system; improve and modernise the distribution infrastructure and reduce system losses to 18 per cent. In order to achieve these objectives, there are opportunities for UK companies to help address the country’s energy shortfall. This could be a combination of thermal, hydro and renewable energy.
In the construction sector there exists the possibility for companies to provide services to construct a wide range of different types of buildings, including low-cost residential housing, quality high rise apartments, retirement villages, industrial and warehousing facilities and commercial properties, such as shopping centres, offices and storage space. Provision of construction equipment and building materials represents another opportunity.
Agriculture is another sector where there are good prospects for overseas companies, particularly in the areas of agro-processing (to add value, reduce post-harvest losses and expand demand), agricultural products (cereal, fruit, vegetables, livestock and fisheries), technological and support services and floriculture.
There is also investment potential for UK companies in the health sector in preventive items such as condoms and mosquito nets, as well as in drugs and pharmaceuticals, research and development facilities, hospital equipment, laboratories and health centres. Lastly, the education field also provides opportunities in terms of textbooks for schools, distance learning and construction of libraries.
Between January and April 2014, the total bilateral trade between the UK and Ghana was worth £216 million, an increase of eight per cent from this period in 2013.
UK exports to Ghana include textile fibres, beverages, medicinal and pharmaceutical products, road vehicles, electrical machinery and appliances, machinery specialised for particular industries and iron and steel.