In 2009, when Barack Obama was preparing his first official trip to Sub-Saharan Africa as President of the United States, he could not leave out Ghana from his tight schedule of official visits. It was the final bit of recognition the country needed to show the rest of the world that it had arrived: Ghana is now an African powerhouse.
Nestled between Togo, Burkina Faso and Cote D’Ivoire, Ghana has consolidated itself as a beacon of democracy in a turbulent region. Since obtaining independence from Britain in 1957, Ghana transitioned from tumultuous military rule and uprisings to eventually settle down as a stable and prosperous country in the 1980s.
It has certainly not been easy, but over the past three decades, Ghana has established itself as an African leader, despite its small size. It is one of the fastest-growing economies in the region, and is one of only a handful of countries expected to meet the Millennium Development Goal of halving poverty rates by 2015.
At a recent national economic forum Ghana’s Minister of Finance, Seth Terkper, stated that the rebasing of GDP in 2010 and onset of oil production in 2011 boosted growth and was the final push Ghana needed to transition to low- and middle-income country status, from its previous classing as low income country (see Fig. 1).
This in turn has led to the reclassification of the country by donors, as well as multilateral institutions, which has implications for official development assistance. Terkper also mentioned that Ghana has made significant progress towards the achievement of the Millennium Development Goals in the areas of poverty reduction, improving access to education, reducing gender disparities in primary education and providing access to improved water sources.
Prospects for growth
In terms of growth potential, Terkper believes that many projects are on the agenda to support Ghana’s growth objectives, including the increase of crude oil production from existing and new oil fields, gas production to improve the supply of energy, investments in port infrastructure through the Tema and Takoradi Port Development Project, the rehabilitation and modernisation of existing railway lines that will further contribute to improved transport infrastructure, investments in key sectors (see Fig. 2) that will reduce the infrastructure deficit and boost Ghana’s long-term growth potential, and further expansion of the services sector. The finance minister fully expects Ghana to become a hub for financial and transportation services in the very near future.
Ghana has also been working hard on the image it presents to the rest of the world. The country is keen to draw a line between itself and its more troubled neighbours, and emphasise the traditional hospitability and friendliness Ghanaians are famous for. The appreciation of the role Ghana plays in the African continent can probably be best described by the fact that Ghana is the first and only African country that has welcomed Queen Elizabeth, and three consecutive American presidents, on state visits.
It is all part of a concerted effort by President John Dramani Mahama’s government to boost investment into the country. Ghana’s burgeoning oil industry is full of promise, but will still need some injection of capital before it can live up to its potential.
“Ghana’s wealth of resources, democratic political system and dynamic economy make it undoubtedly one of Africa’s leading lights. Gaining the world’s confidence with a peaceful political transition and a grounded and firm commitment to democracy has helped in expediting Ghana’s growth in foreign direct investment (FDI) in recent years,” said Mahama. “Building on significant natural resources, our dear nation is committed to improving its physical infrastructure.”
According to Mawuena Trebarh, CEO of the Ghana Investment Promotion Centre (GIPC), the country is under no illusion as to what investors’ main criteria are for choosing investment destinations; namely, an investment climate where they can run a profitable business. Trebarh believes that Ghana fulfils many of the requirements foreign investors look for, such as favourable labour conditions, strategic global positions, and a welcoming finance and funding environment. “We regard investors in Ghana as prosperity partners and as such we have structured our service delivery to ensure a seamless induction into Ghana for investors to quickly and efficiently achieve the prosperity that they are looking for,” she said.
Foreign interest
Recent research by the United Nations Development Organisation (UNIDO) presented in Accra last year corroborates Trebarh’s analysis. It concluded that FDI had increased in Ghana by three percent in 2012, a rise worth $3.3bn. The report also suggested that this increase defied the general trend for declining FDI in the region. During the same period, Nigeria saw its FDI revenues drop by 21 percent. According to Frank Van Rompaey, UNIDO’s Accra representative, foreign investors surveyed for the report ranked Ghana’s political and economic stability, transparency of regulation, and local market conditions as the key factors influencing their decision to invest.
“Ghana has attracted the attention of well-known international businesses, investing in all sectors of our economy. All these investors have come to Ghana because they know we have a wonderful… social, political and economic environment in which they can invest, grow and be successful,” explains the president. “Ghana has recently embarked on an ambitious but achievable reform programme to improve the investment climate for both local and international investors. These efforts have paid off tremendously, with Ghana being recognised by the World Bank Doing Business Report 2014 as the Best Place for Doing Business in the ECOWAS [Economic Community of West African States] Region. Also, during the difficult times last year, when most countries did not show good growth levels due to the global economic downturn, Ghana had an economic growth rate of 7.4 percent, provisionally.”
Mahama is certainly backing up his words. His government, which aims to ramp up investment, has approved a number of laws and incentives, including a bill passed by parliament in 2013 to encourage joint ventures in the retail sector, allowing foreign partners to contribute capital of up to £1m, increased from $300,000. The government has also backed initiatives like the GIPC, which regulates and promotes FDI.
If the current and future governments manage to continue attracting this level of interest from foreign and domestic investors, there is little doubt that in no time at all Ghana will not only be a regional powerhouse but a global one. It certainly has the resources for it; all it needs now is the investment and initiative to explore them.
