Ghana’s selling points

Ghana is one of the leading lights for political and economic development in Africa, most assessments of the continent’s potential have solidly confirmed.

Well noted for its political stability and sound governance, Ghana’s updat
ed economic profile makes it an adorable attraction for international investment and economic cooperation – with country-to-country partnerships being cultivated across Asia and other emerging markets recently.

The country’s respected political reputation as a growing and stable democracy is one of its selling points in ongoing efforts to brand the republic as a global destination-of-choice for work and pleasure.

At the recent Brand Ghana Strategy Conference in Accra, a senior presidential staffer, Commodore Steve Obimpeh, said of the branding exercise: “The strategy is to make Ghana marketable and relevant in the world.”

He affirmed that the mandate of the Brand Ghana Office is to establish a compelling image for Ghana through creating, coordinating and harmonising a persuasive brand-strategy for the country.

To propel the economy to new heights in an increasingly competitive global terrain, Ghana is resolved to attract sizeable investments into its key economic sectors to boost growth, create jobs and put every idle resource to work.

A recent development that should excite the investor-community is the disclosure by the Ghana Statistical Service that the size of the country’s economy had been previously understated, by as much as US$13billion.

Now, with US$30billion worth of production and consumption taking place in the economy, the scale of investment opportunities has been expanded immensely - adding to the already vast, underutilised pool of resources in several sectors.

In fact, if Ghana manages 7% real annual GDP growth between 2011 and 2015, consistent with current estimates, the size of national output would increase by 40% in real terms – and potentially rise twofold at market prices.

This year alone the forecast is for real GDP to grow by 12.3%, including 5% real GDP contribution from the oil sector.

Ghana promises not just political stability, but economic stability as well. At the macro level stability has not only been achieved, but judging by the policies of the last decade, it appears also to be a priority for all governments.

Despite a jolt to this stable trend in 2008, the main indicators – inflation, currency stability, the fiscal and current-account balances and the size of the national debt – look well anchored and should be supportive of output and wealth-creation in the real economy.

Economy-wide price-level increases have remained below 10% per annum for ten consecutive months and management of the currency against volatility has been conscientious and generally conducive to current-account stability.

For global investors, the attractiveness of Ghana is reflected both by the opportunities for investment and the friendliness of its investment laws. The potential for industrial development is massive because of Ghana’s strength in agriculture.

In 2010, the total value of estimated output in agriculture was US$8.8 billion, and growth in the sector averaged more than 6% in the last three years. For 2011, agricultural-sector growth is expected to be 6.2%. The next frontier for Ghana’s agricultural development is value-addition to create a viable agro-processing industry.

The food and beverage industry is also set for robust growth on the back of rising consumer spending as economic growth impacts household-income and wealth. Private consumption expenditure on final goods and services – at nearly GH¢30 billion – accounts for some two-thirds of GDP, and has been increasing, in real terms, by more than 4% each year since 2006.

A recent report by market intelligence firm, Business Monitor International (BMI), put forward a strong consumer view on Ghana, describing its food and drink industry as West Africa’s most promising long-term prospect.

Per-capita food consumption went up 5.69% last year, the report found, and forecast it to reach consolidated growth of 84.19% by 2015. Mass grocery retail sales were also seen quadrupling in the next five years.

These trends present opportunities for strong sales and earnings growth, especially for established consumer-goods companies, as the fruits of breakneck economic growth continue to kick in, the report said.

The authors observed, most profoundly, that “given the strength of its economic outlook and the fact that its business environment is fairly attractive by regional standards, Ghana looks increasingly competitive as a destination for multinational consumer-facing investment, with many of the world’s biggest firms looking to increase their African exposure.”

The stunning rise of the services sector over the last decade has made it the largest contributor to GDP, providing more than half of national output. Year after year, the financial-services industry has gained added sophistication as the government and regulators seek to position it to better fuel economic activity and growth.

The extent of financial intermediation is expanding by 13% each year, according to official data. This trend is consistent with the pace of economic growth, and captures somewhat the impact of capital movements into the economy by sub-regional banks and insurers.

Between 2008 and 2010, the total asset base of the banking sector swelled by 63% to GH¢17.4 billion – equivalent to some US$11.75 billion. The sector is fairly stable and profitable, and continues to be a rich source of innovation in the economy.

In information and communications, the allure of Ghana’s market has brought some of the most respected global players to the industry. Mobile-phone penetration has witnessed an impressive increase to 74.2%, and more growth is expected in the market for data-services as the use of broadband widens.

Ghana’s tourism potential is underexploited, say many observers, and tourism development is an important showcase in the quest to draw investments into the economy. The greatest scope lies in infrastructure development to serve the tourist sector, which has been growing by 4% annually, but with room to achieve more.

After much anticipation, Ghana’s first commercial oil was drawn from the Jubilee field in December 2010, marking the climax of years of exploration and production activity in the offshore west of the country.

An initial production capacity of around 50,000 barrels per day was announced by the field’s developers, with output expected to ramp up to 120,000 barrels per day by the third quarter of this year.

Infrastructure for the development of associated gas resources is being erected in the Western Region to provide fuel to power-generating plants for cheaper, increased energy supply. The president has also disclosed plans to utilise gas resources to usher Ghana into a new era of industrialisation – through the creation of an integrated aluminium industry and a petrochemical sector.

Thus, the oil resources will not only fatten the public purse but give fresh impetus to key economic sectors, mainly industry, enabling the attraction of global investment and capital for accelerated progress.

Source:B&FT