Ghana’s economy had expanded at an average of seven percent per year since 2017 until the coronavirus pandemic reduced growth to 0.4 percent in 2020, according to the Ministry of Finance. Between 2017 and 2019, the fiscal deficit narrowed, inflation decreased, and GDP growth rebounded, driven primarily by increases in oil production. Ghana saw a 9 percent growth rate in the first quarter of 2019 and closed that year with a 6.5 percent GDP growth rate. Indicating a recovery from the pandemic, the Ghana Statistical Service reported a 6.6 percent growth rate in the third quarter of 2021, marking the fastest growth in GDP since the pandemic began. The International Monetary Fund (IMF) expected growth to rebound to 4.7 percent in 2021 from the shock of COVID-19 and by 6.2 percent in 2022. The economy remains highly dependent on the export of primary commodities such as gold, cocoa, and oil, and consequently is vulnerable to slowdowns in the global economy and commodity price shocks. In November 2020, Ghana launched the 100 billion cedi (about $13 billion) Ghana COVID-19 Alleviation and Revitalization of Enterprises Support (Ghana CARES) Program to address the effects of the virus on the economy. In 2020, the government also launched Ghana’s National Adaptation Plan Process by which it expects to develop strategies to build resilience against the impacts of both climate change and crises such as COVID-19. In general, Ghana’s investment prospects remain favorable, as the Government of Ghana seeks to diversify and industrialize through agro-processing, mining, and manufacturing. It has made attracting foreign direct investment (FDI) a priority to support its industrialization plans and to overcome an annual infrastructure funding gap.
Challenges to Ghana’s economy include high government debt, particularly energy sector debt, low internally generated revenue, and inefficient state-owned enterprises. Ghana has a population of 31 million, with over 14 million potential taxpayers, but only six million of whom filed their annual tax returns. As Ghana seeks to move beyond dependence on foreign aid, it must develop a solid domestic revenue base. On the energy front, Ghana has enough installed power capacity to meet current demand, but it needs to reduce the cost of electricity by improving the management of its state-owned power distribution system.
Among the challenges hindering foreign direct investment are: costly and difficult financial services, lack of government transparency, corruption, under-developed infrastructure, a complex property market, costly and intermittent power and water supply, the high costs of cross-border trade, a burdensome bureaucracy, and an unskilled labor force. Enforcement of laws and policies is weak, even where good laws exist on the books. Public procurements are sometimes opaque, and there are often issues with delayed payments. In addition, there have been troubling trends in investment policy over the last six years, with the passage of local content regulations in the petroleum, power, and mining sectors that may discourage needed future investments.
Despite these challenges, Ghana’s abundant raw materials (gold, cocoa, and oil/gas), relative security, and political stability, as well as its hosting of the African Continental Free Trade Area (AfCFTA) Secretariat make it stand out as one of the better locations for investment in sub-Saharan Africa. There is no discrimination against foreign-owned businesses. Investment laws protect investors against expropriation and nationalization and guarantee that investors can transfer profits out of the country, although international companies have reported high levels of corruption in dealing with Ghanaian government institutions. Among the most promising sectors are agribusiness and food processing; textiles and apparel; downstream oil, gas, and minerals processing; construction; and mining-related services subsectors.
The government has acknowledged the need to strengthen its enabling environment to attract FDI, and is taking steps to overhaul the regulatory system, improve the ease of doing business, and restore fiscal discipline.
1. Openness To, and Restrictions Upon, Foreign Investment
3. Legal Regime
4. Industrial Policies
5. Protection of Property Rights
6. Financial Sector
7. State-Owned Enterprises
Ghana has 94 State-Owned Enterprises (SOEs), 51 of which are wholly owned, while 43 are partially owned. While the president appoints the CEO and full boards of most of the wholly owned SOEs, they are under the supervision of line ministries. Most of the partially owned investments are in the financial, mining, and oil and gas sectors. To improve the efficiency of SOEs and reduce fiscal risks they pose to the budget, in 2019 the government embarked on an exercise to tackle weak corporate governance in the SOEs as well as created the State Interests and Governance Authority (SIGA), a single institution, to monitor all SOEs, replacing both the State Enterprises Commission and the Divestiture Implementation Committee.
As of December 2021, only a handful of large SOEs remain, mainly in the transportation, water, banking, power, and extractive sectors. The largest SOEs are Electricity Company of Ghana (ECG), Volta River Authority (VRA), Ghana Water Company Limited (GWCL), Ghana Ports and Harbor Authority (GPHA), Ghana National Petroleum Corporation (GNPC), Ghana National Gas Company Limited (GNGC), Ghana Airport Company Limited (GACL), Consolidated Bank Ghana Limited (CBG), Bui Power Authority (BPA), and Ghana Grid Company Limited (GRIDCo). Many of these receive subsidies and assistance from the government. The list of SOEs can be found at: .
While the Government of Ghana does not actively promote adherence to the OECD Guidelines, SIGA oversees corporate governance of SOEs and encourages them to be managed like Limited Liability Companies to be profit making. In addition, beginning in 2014, most SOEs were required to contract and service direct and government-guaranteed loans on their own balance sheet. The government’s goal is to stop adding these loans to “pure public” debt, paid by taxpayers directly through the budget.
8. Responsible Business Conduct
There is no specific responsible business conduct (RBC) law in Ghana, and the government has no action plan regarding OECD RBC guidelines.
Ghana has been a member of the Extractive Industries Transparency Initiative since 2010. The government also enrolled in the Voluntary Principles on Security and Human Rights in 2014.
Corporate social responsibility (CSR) is gaining more attention among Ghanaian companies. The Ghana Club 100 is a ranking of the top performing companies, as determined by GIPC. It is based on several criteria, with a 10 percent weight assigned to corporate social responsibility, including philanthropy. Companies have noted that Ghanaian consumers are not generally interested in the CSR activities of private companies, with the exception of the extractive industries (whose CSR efforts seem to attract consumer, government, and media attention). In particular, there is a widespread expectation that extractive sector companies will involve themselves in substantial philanthropic activities in the communities in which they have operations.