GHANA – Market Information
The economy of Ghana has a diverse and rich resource base, including the manufacturing and exportation of digital technology goods, automotive and ship construction and the exportation of diverse and rich resources such as hydrocarbons and industrial minerals. These have given Ghana one of the highest GDP per capita in Africa. Owing to a GDP debasement in 2011 Ghana became the fastest growing economy in the world, differences with neighboring economies are likely to be overstated due to underfunded statistical agencies in surrounding countries. The Ghanaian domestic economy in 2012 revolved around services which accounted for 50% of GDP and employed 28% of the work force. Besides the industrialisation associated with minerals and oil, industrial development in Ghana remains basic, often associated with plastics. Ghana is Africa’s second-biggest gold producer after South Africa and second-largest cocoa producer. It is also rich in diamonds, manganese ore, bauxite, and oil. Most of its debt was canceled in 2005, but government spending was later allowed to balloon. Coupled with a plunge in oil prices, this led to an economic crisis that forced the government to negotiate a $920 million extended credit facility from the IMF in April 2015.
DOING BUSINESS IN GHANA
Ghana has attracted the attention of well-known international businesses, investing in all sectors of the economy. All these investors have come to Ghana because they know we have a wonderful conducive social, political and economic environment in which they can invest, grow and be successful.
Building on significant natural resources, the nation is committed to improving its physical infrastructure. Moreover, 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 Region". Also with the difficult times during last year where most countries did not show good growth levels due to the global economic downturn, Ghana had an economic growth rate provisional of 7.4%. As happy as they are to receive such recognition, they are even happier to see increased investments and re-investments in Ghana as a result of these ongoing reforms. Ghana has a solid tradition of investments in agriculture and agro-processing. The financial services and telecommunications sectors are fast gaining ground, providing dynamic and innovative services to the most diverse customers in the world. Further opportunities exist in manufacturing, ICT, and Tourism. Mineral deposits including gold and diamond abound, and with the discovery of oil, Ghana's famous black star has never shone brighter.
THE AFRICAN ODYSSEY
Ghana's economy is expected to grow by 6-8% in the near term, with services and manufacturing growing at over 9% and agriculture at 3%. The thriving services sector employs about 30% of the country's workforce. Transportation & storage, energy & power, hospitality and banking & finance are the rapidly growing sub-segments. Ghana has created a successful business-enabling environment for inward Foreign Direct Investment (FDI), which averaged USD 3bn per year from 2009 to 2012. Investment opportunities are multi-fold, varying from banking & finance to energy, power, transportation and other infrastructure sectors. The country has clear and extensive regulations in place with an investor friendly regulatory environment. A young economically active population, combined with rapid urbanization, represents rising domestic growth opportunities. Ghana has received a "High" overall score for Doing Business by the World Bank.
SUBSAHARAN AFRICA : STRONG REGIONAL DYNAMICS
IMF's latest Regional Economic Outlook for Sub-Saharan Africa (2015) projects that region is set to grow at 4.5% in 2015. While this rate will be at the lower end of the range experienced over the last few years, Sub-Saharan Africa will remain among the fastest growing regions of the world. Though the region's oil exporters have been hard hit by price decline, for the rest of the region, growth prospects remain favorable. These countries are enjoying the benefits of lower oil import bills although some are also feeling the impact of lower prices for their non-oil commodity exports. Growth is projected to be particularly strong in most low-income and the more fragile countries, and this will help to reduce poverty levels and increase consumption.
THE GROWING MIDDLE CLASS
Africa now has the fastest-growing middle class in the world. Some 313 million people, 34% of Africa’s population, a 100% rise in less than 20 years, according to the African Development Bank. It is projected to have the largest number of middle class by 2050 and investment experts says that means there is the need for increased financial inclusion on the continent. Accra is poised to be the fasted growing city in attracting high-net-worth individuals (HNWIs) this is according to the latest study by New World Wealth and AfrAsia. There are approximately 163,000 millionaires living in Africa (as of June 2015), with combined wealth holdings of US$670 billion.
The automobile sector of Ghana has been a driver of growth of the country as it is one of the most visible sectors to receive foreign investment. Indian automobiles major Mahindra and Mahindra, has invested heavily in the country and has made it as a regional hub for the manufacture of its Sports Utility Vehicles.The nation’s first Ghanaian carmaker Kantanka Automobile Company says after years of vigorous research and tests it was now determined to release into the global market strong, robust, durable and reliable cars. The manufacturing base in Accra can currently produce around 100 cars a month. Ghana is a multicultural and ethnically diverse West African nation and is the 9th largest African economy. It was one of the first African nations to declare independence from the colonial rule and features one of the freest social and cultural societies on the African continent.
On the Ibrahim Index of African Governance, Ghana ranks as the 7th best economy in Africa, which implies a relative safety of foreign investment in the region. Also, Ghana ranks relatively high in the ease of doing business index and also has an extremely high freedom of press rating, which makes it a good emerging market to invest in.
Currently, most of the consumers belong to the affluent class; hence the automobile industry in Ghana presents massive opportunities for the future as the burgeoning middle class is largely untapped in the country. One of the issue in Ghana that has been impeding the growth of the automobile sector is the lack of financial inclusion in the country. Most people do not have access to financial loans and other options like lease that make owning an automobile easy. To address this concern, the Mahindra group has tied up with the Fidelity Bank Ghana to provide financial assistance to consumers looking to buy its vehicles. Such initiatives are a must if widespread ownership of automobiles is to be achieved. Several bottlenecks like the presence of a large grey market and poor road conditions exist but the automobile industry is likely to address these issues as time goes by and become a powerhouse of the Western Africa region in the future. Some of the key players in Ghana’s automobile industry are:
• Mahindra & Mahindra
Ghana’s automobile industry was initially characterised by major household makes like Nissan, Toyota, Hyundai, Kia in the affordable car segment; and Jaguar, Land Rover, BMW, and Mercedes Benz in the luxury segment. Around this time, Japan Motors Trading Company and Auto Parts were the only licensed distributors of Nissan vehicles in Ghana; Toyota Ghana Company Limited was the only authorised dealer of Toyota cars in Ghana, while Hyundai Motors and Auto Plaza were sole dealers of Hyundai vehicles in Ghana. In the luxury segment, Silver Star Automobile was the sole distributor of Mercedes Benz vehicles while Mechanical Lloyd had the franchise for Land Rover and BMW vehicles. Mechanical Lloyd later lost the Land Rover franchise to Alliance Motors who were already the sole distributors of Jaguar vehicles in Ghana. The industry from the beginning of 2000 however took a new turn with new firms entering the market, introducing newer franchises. Prestige Motors came in with the Peugeot franchise as well as Tanink Ghana Limited introducing Alfa Romeo, and recently Jeep and Chrysler. However, in what the traditional automobile firms describe as the emergence of the grey market of Ghana’s automobile industry, Stelin Automotive entered the market selling Mitsubishi and later Toyota vehicles from Dubai. The African automotive industry is expected to grow at a CAGR of 7.48%, Africa’s automotive industry is the most underdeveloped automobile market in the world. Barring South Africa and some small nations, the African automotive market lags behind the global industry. One of the main reasons for the stunted growth has been the extremely low average income and the lack of a sizeable middle class. Also, the extremely high lending rates have made ownership of a car restricted to the wealthy and prosperous. Ghana, a very promising market of the future, has a car loan interest rate of 26%. To achieve the objective of making Ghana the transportation hub in the sub-region, the Ministry is continuing to pursue the development of transport infrastructure and improve the delivery of services and therefore, the following programmes in the various sub-sectors are being pursued in the 2013 financial year.