Overseas Business Risk – Ghana
Political and Economic
Ghana is a maturing democracy and held successful elections in 1992, 1996, 2000, 2004, 2008 and 2012.
Ghana’s December 2012 presidential and parliamentary elections were close, but did not go to a second round. The losing New Patriotic Party challenged the outcome at the Supreme Court, alleging electoral fraud. A public and highly transparent, but protracted, review by the Supreme Court ruled in August 2013 in favour of the National Democratic Congress incumbent, John Dramani Mahama, concluding that electoral irregularities had not affected the final outcome. The opposition New Patriotic Party accepted the ruling; there was no unrest.
The 2012 elections, and the peaceful challenge to the results, reinforced Ghana’s reputation as a stable and maturing democracy in the region. The next elections will be in 2016.
Ghana’s political stability has been matched by impressive economic output, driven by oil production in recent years. GDP growth was in the 7 to 8 per cent range in 2013 and is forecast to remain there into the medium-long term. Ghana’s economy is dependent on commodity exports; cocoa, gold, timber and, recently, crude oil which together constitutes about 80% of exports and the country is therefore susceptible to commodity price volatility. Oil constitutes about 30% of its imports. The downward trend in the international cocoa and gold prices affected the country’s exports in the first half of 2013.
Getting a grip on public spending is an important priority for the government, but a challenge to achieve. The fiscal deficit target (9% for 2013) has been missed for the second year in a row – the government has now accepted that it will end up above 10%, as predicted by the IMF in June. Both the government’s revenue and growth projections to 2016 are ambitious given the proposals set out in the budget.
Inflation is continuing on an upward trend, reported as 13.1% in October 2013, and domestic debt is expected to amount to 54% of GDP for 2013. The interest payments to service this increasing debt are estimated by government at about 23% of total 2013 revenue, set to rise to 25% in 2014. At the moment, much of the domestic debt is paid for by foreign investors. Ratings agencies downgraded Ghana this year to a ‘B’. The government has committed to gradually reducing the deficit through increased revenue collection and gradual fiscal consolidation, as stated in the November budget.
For 2014, the Government projects that growth will be driven largely by the agriculture and industry sectors, with 8% growth overall in 2014 rising to 10% by 2016. In 2016 Ghana’s second oil production facility, in the TEN fields, should come on stream.
Ghana offers a relatively stable investment environment and, as a result, has witnessed steady increases in inward investment, topping USD 3 billion in 2012. Although Ghana’s investment environment is considered one of the strongest in sub-Saharan Africa, it is not without its challenges. Corruption remains a problem and investment procedures can lack transparency. Additionally, operational challenges associated with developing countries (weak infrastructure and an unreliable power supply) are present. In the resource sector, especially the new oil sector, disputes have occurred between companies and the government over revenue issues, but this is not an unusual occurrence in countries where new resource finds are made that trigger revisions to the existing fiscal regime.
Despite this, British businesses continue to see Ghana as a valuable investment base in West Africa, and there are already many existing and flourishing flagship UK companies in market across multiple sectors. With the recent entry of one the UK’s biggest life insurance companies into the market, a growing local insurance sector could provide an important domestic funding stream for infrastructure projects, and help de-risk Government spending.
Ghana is also a favoured country of choice for SME’s making their first steps exporting into Africa – the range of companies showing interest is almost unparalleled.
In terms of investment, Ghana is currently ranked 64th out of 183 countries as measured by the ease of doing business in the 2013 World Bank’s Doing Business Report and is ranked 15th among the 50 economies that made the largest strides in making their regulatory environment more favourable to business since 2005.
More information is available in FCO Travel Advice.
Ghana’s human rights record is generally good. There is an independent judiciary and free and active press. The law allows workers to form and join unions, with a few exceptions for those providing essential services. Unions operate free of Government interference.
Among Ghana’s biggest human rights challenges are the criminal justice system (prison conditions, large number of prisoners on remand for long periods of time), corruption, and issues relating to poverty in the North of the country, and in rural communities more generally, where children are more likely required to work rather than attend school.
Bribery and Corruption
Bribery is illegal. It is an offence for British nationals or someone who is ordinarily resident in the UK, a body incorporated in the UK or a Scottish partnership, to bribe anywhere in the world.
In addition, a commercial organisation carrying on a business in the UK can be liable for the conduct of a person who performs services for it – like an employee or agent – but is neither a UK national or resident in the UK or a body incorporated or formed in the UK. In this case it does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere. Please refer to The Bribery Act 2010 for more information on UK bribery standards.
President Mahama has taken a clear public stance against corruption but tackling it in all its forms is a challenge. In 2013, Ghana was ranked 63rd of 177 countries in Transparency International’s corruption perception index (CPI).
UK businesses should be aware of the existence in Ghana of variations of the 419 scam, including those involving enticing foreign businessmen into bogus deals. Some of these scams involve contacts claiming to represent either the British High Commission in Accra or the Ghana High Commission in London. If in any doubt about the bona fides of the contacts, please contact by telephone the relevant office. Visit the Business Anti-Corruption portal page providing advice and guidance about corruption in Ghana and some basic effective procedures you can establish to protect your company from them.
Read the information provided on our Bribery and corruption page.
The Centre for the Protection of National Infrastructure also provides protective security advice to businesses. The threat from terrorism is constant, but low risk.
Read the information provided on our Terrorism threat page.
Protective Security Advice
Read the information provided on our Protective security advice page.
Ghana is a member of the Paris Convention for the protection of Industrial Property 1883 (Stockholm Act of July 14 1967), Convention on establishing the World Intellectual Property Organisation (WIPO) of July 14, 1967 and the World Trade Organisation – TRIPS Agreement. In Ghana, Trademarks are registered by the Registrar of Trademarks and the trademarks registry is located at the Registrar General’s office which is a department of the Ministry of Justice. Service marks in Ghana are not registrable, although the new Trade Mark Bill makes provision for the protection of service marks and well known trade marks to comply with the provisions of the TRIPS agreement.
Read the information provided on our Intellectual Property page.
As with Bribery and Corruption above, organised crime exists in Ghana, albeit at a lower level than elsewhere in sub-Saharan Africa. Main areas of organised crime activity are drugs trafficking, human trafficking and people smuggling. There is also an illegal cross-border small arms trade in the North.
Read the information provided on our Organised crime page.
More information is available on overseas business risk in a range of markets.