Ghana's Commercial Environment: Advancements Yet Challenges Persist
In the heart of West Africa, Ghana is making significant strides in improving its infrastructure, particularly in the areas of ports and digital services. This progress, coupled with the country's membership in the African Continental Free Trade Area (AfCFTA), offers broader market access and solidifies Ghana's reputation as one of the most attractive business destinations in the region.
However, challenges persist. The country's financial sector, while more developed than many of its neighbours, faces high interest rates that particularly affect Small and Medium Enterprises (SMEs). To address these issues, Ghana is implementing a multi-faceted approach that includes fiscal reforms, institutional strengthening, regulatory adjustments, and targeted support measures.
One key strategy is the recapitalization and strengthening of the National Investment Bank (NIB). Ghana has injected GH¢450 million in cash, issued GH¢1.5 billion in bonds, and transferred GH¢500 million worth of government shares in Nestle Ghana Ltd to NIB. This recapitalization has improved NIB’s capital adequacy, preserved depositor funds worth GH¢6.4 billion, saved over 900 jobs, and sustained an indigenous Ghanaian bank to support the financial sector and credit availability.
Regulatory and bureaucratic reforms are also on the agenda. Ghana plans to simplify regulations, enhance inter-agency coordination, digitize land registries, and standardize contracts. These measures aim to reduce bureaucratic delays and provide clarity to investors, thus speeding up project approvals and delivery.
Innovative infrastructure financing and development models are encouraged, with blended finance, public-private partnerships (PPPs), and user-pay models being proposed to close the investment gap in infrastructure. This approach mobilizes private capital alongside public resources and improves project bankability.
Fiscal and monetary policy coordination is another essential component. The government enforces policies such as pricing government contracts exclusively in local currency to stabilize the Ghanaian cedi, thereby reducing exchange rate risks and improving cost predictability for businesses.
To attract more investment, Ghana announced it would scrap the minimum capital requirement for foreign investors, lowering entry barriers and enhancing competitiveness as an investment destination. The government also recognises the need to improve access to financing for SMEs, a crucial step in stimulating private sector investment and creating jobs.
Addressing key structural issues, such as bureaucratic inefficiencies, high financing costs, and infrastructure challenges, will determine whether Ghana remains a top investment destination in West Africa. While Ghana ranks well in governance and anti-corruption efforts, regulatory unpredictability remains a concern.
Business registration processes in Ghana are becoming more streamlined due to digital reforms, a move that should drive economic growth. However, challenges such as electricity reliability, power supply issues, and transportation costs persist. To address these obstacles, Ghana needs to expand vocational training to align with market needs, ensuring its growing, youthful population provides a strong labour force.
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Sources: - Delays in business approvals due to bureaucratic inefficiencies slow growth in Ghana. - The Business Ready 2024 report identifies bureaucratic delays, high financing costs, and infrastructure challenges as hindrances to Ghana's growth. - To drive economic growth, Ghana needs to enhance regulatory consistency to boost investor confidence. - Electricity reliability remains an obstacle in Ghana's infrastructure. - Ghana needs to expand vocational training to align with market needs. - Transportation costs are obstacles in Ghana's infrastructure. - Ghana has a growing, youthful population that provides a strong labor force. - Power supply issues persist in Ghana. - Businesses in Ghana face high borrowing costs, limiting expansion opportunities. - To attract more investment, Ghana needs to improve access to financing for Small and Medium Enterprises (SMEs). - Addressing key structural issues will determine whether Ghana remains a top investment destination in West Africa. - Ghana ranks well in governance and anti-corruption efforts, but regulatory unpredictability remains a concern. - Business registration processes in Ghana are becoming more streamlined due to digital reforms.
- To further bolster Ghana's position as an attractive business destination, the finance sector needs to address the high interest rates that particularly affect Small and Medium Enterprises (SMEs) by implementing fiscal reforms, institutional strengthening, regulatory adjustments, and targeted support measures.
- In addition to streamlining business registration processes through digital reforms, addressing key structural issues such as electricity reliability, power supply issues, and transportation costs will be crucial in ensuring sustained economic growth and positioning Ghana as a top investment destination in West Africa.
