This month Ghana celebrates 60 years of independence and, with a growing middle class, an energetic start-up scene and a new pro-industry government, the west African country presents myriad opportunities for canny entrepreneurs and investors. Director presents a guide to doing business in Ghana…
In 2009, on one of his first international trips, President Obama travelled to Ghana and delivered a rousing speech to the Ghanaian parliament. “I’ve come here to Ghana for a simple reason,” he said. “The 21st century will be shaped by what happens not just in Rome or Moscow or Washington, but by what happens in Accra as well.”
Obama went on to praise the country’s health and security, its prosperity and the strength of its democracy. It was a golden time for the west African nation – gold, cocoa and the discovery of oil forming the cornerstone of the republic’s economy and helping fuel an economic boom.
Ghana then was a fast-growing economy (GDP would subsequently grow 14 per cent in 2011) and, although economic growth has slowed and glitches have been sizeable, with a new government in office, Ghana now looks set to become west Africa’s poster child once more.
Accra’s energy and hunger for international success is palpable the moment you land at Kotaka international airport – hoardings in the arrivals hall shout about the new terminal in construction that will increase the airport’s capacity from its current 2.4 million visitors a year by a potential further five million passengers. Neon signs from international banks – Barclays, Stanbic, Ecobank – gaze down on traffic and gleaming new five-star hotels punctuate the skyline. And, last September, the UK-Ghana Chamber of Commerce was launched to help UK businesses identify market opportunities, and to help Ghanaian businesses looking to export to the UK or partner with a British business
Ghana’s history of commerce began in 1482, when the first Portuguese settlers disembarked and began trading in gold, ivory and timber. The slave trade overtook gold as the main export over the next century as the Dutch, English, Danish and Swedish followed, seeking their fortune. The Dutch took control in 1642, ruling until 1807 when the British became dominant and banned the slave trade – the Gold Coast officially became a British crown colony in 1874.
In March 1957 Ghana declared independence, the first sub-Saharan African colony to do so. But celebrations were short-lived, as within seven years Ghana – essentially a one-party state – descended into a chaotic two decades of military rule and destabilising coups, until the new constitution was created in 1992 and a multiparty system was restored.
This new chapter in Ghana’s history essentially gave it the political stability to become a serious economic player. In 2007 – as the US and UK were heading towards a financial meltdown – Ghana collectively cheered as oil was discovered offshore, but then suffered heartbreak as the worst floods for 30 years caused devastation, wiping out much of the annual harvest. Two years later, though, the country secured a $600m three-year loan from the IMF, and offshore oil production began in 2010.
In 2013, the rising price of old drew thousands of Chinese to Ghana, with many taking jobs in unlicensed mines, leading to a damaged economy and environment, and many deaths. Over 4,700 illegal miners were deported by the end of that year. Unrest grew from 2014 onwards, as John Mahama – who served as president until January of this year – oversaw both a spluttering economy and frequent electricity outages, making life difficult for businesses. Last December, Mahama was defeated by pro-business opposition leader Nana Akufo-Addo, who won the presidential election with 53 per cent of the votes. With the 72-year-old human rights lawyer now in office, Ghanaians are cautiously optimistic that his pro-enterprise manifesto might put the country back on the road to success.
“Business froze a bit up to the election, but that happens almost every time,” explains leading Ghanaian businessman Keli Gadzekpo, CEO of insurance and property giant Enterprise Group. “We haven’t had a good go of it in the last few years – all kinds of things have got in the way – but the next four years will be more stable. Now the election is over, we can get to a point of more macroeconomics and stability. In every aspect of our national life we are, at best, only just starting out, so structurally there is opportunity.”
Gadzekpo has had personal experience of starting up in Ghana, having left a lucrative career with KPMG in Washington DC to set up Databank in 1990 with partner Ken Ofori-Atta, who was appointed last month as Ghana’s new finance minister. “We didn’t pay ourselves for nearly two years,” says Gadzekpo, though Databank is now one of west Africa’s most successful financial enterprises.
Wealth of opportunity
“Whatever industry you are in, there is probably an opportunity for you in Ghana,” he says. “I’m not aware of any industry that has matured. Even financial services, which has developed, is still only serving seven to 10 per cent of our population – so there is scope for so much more. Everything in Ghana is up for grabs, it just depends on your skillset and what you do. Take the logistics chain for oil – we have never had it before, so that area is one of high opportunities and least local competition.”
Any entrepreneur, irrespective of nationality, can set up a business enterprise in Ghana (in accordance with laws passed in 1962–63), and according to the Ghana Investment Promotion Centre, seemingly every industry imaginable is stated as an opportunity: tourism, telecomms, real estate, oil and gas, manufacturing, mining, banking, agriculture and more. However, Gadzekpo says that it’s the relatively new and growing middle class that provide the strongest reasons for British businesses to look at Ghana. “The growing middle class is a macro thing, an economic phenomenon brought about by the productivity and growth of the economy,” he says. “For example, 10 years ago our GDP was $20bn (90.4bn cedi, £16.1bn). Now, it’s around $37bn.”
This is evident driving through the suburbs – notably Osu and the new Airport City – with their high-rise designer apartments, sushi restaurants and a mass of suburban detached houses in construction. “A lot of these are being built by a diaspora that is returning and investing,” says marketing consultant Maree-Antoinette Ferguson, a Ghanaian who was brought up in London, lived in Sydney and returned to Accra four years ago. As we look over the metropolis from rooftop bar SkyBar25, she tells Director: “The middle class has a lot of money – this rooftop bar scene is very ‘LA’, and very popular with our entrepreneur community.” She points to a huge hangar in the distance. “That’s Casa Trasacco – it’s full of Italian furniture, the décor trend at the moment.”
Gym culture and yoga are also big, Uber has been downloaded onto phones, the boutique Mango has already set up in Accra, and excited whispers say that Zara is planning to open soon. “Everyone has smartphones and wants what’s trending globally,” says Ferguson. “The Kardashians are really popular here, as are kale and cupcakes – one entrepreneur came over from west London to start a cupcake boutique a couple of years ago. It’s always busy.”
Gadzekpo agrees that the impact of phones has been enormous, and not just for consumers. “Smartphones and tech are opening up the informal sector,” he says. “To people like me in insurance who want to reach those guys, they never used to be on the end of the phone, certainly not in a data way.” Sophi Tranchell, CEO of Divine Chocolate, agrees. “Farmers may not have access to running water or electricity, but most now have mobile phones,” she says. “It has made a big difference in running our cooperative of 85,000 members, spread across western, central and eastern regions.”
Doing business in Ghana isn’t without its challenges, though. The economy still has a struggle ahead, and although its 2016 estimated economic growth of 3.6 per cent exceeded the IMF’s 3.3 per cent target, the decline in inflation has been slower than expected. Only last month, minister of monitoring and evaluation Dr Anthony Akoto Osei said the government will seek to extend the IMF Extended Credit Facility programme of $918m to December 2018 (it was due to be repaid April 2018). The programme, agreed by the previous government, aims to restore debt sustainability and macroeconomic stability to foster a return to high growth and job creation, while entrenching fiscal discipline and protecting social spending.
By far the country’s biggest problem has been four years of ‘lights off’ – frequent power outages that have meant no electricity for 12, 24 or 48 hours at a time – which have led to food being spoilt, babies being delivered by phone light and manufacturing businesses laying off staff and closing factories. The blackouts are blamed on cyclical power shortages linked to varying water levels at the Akosombo hydroelectric dam (which contributes about half the country’s supply), poor management of oil revenues and a growing middle class who need more energy to power their lifestyles.
In 2015, the IMF called the electricity crisis “the single-most important risk” to Ghana putting its economy back on the path to sustainable strong growth. But the business community is confident the new government will invest in power infrastructure as a matter of urgency. Tranchell says: “The new government is setting out its stall as pro-industry, committing to a factory in every area, which is popular, and embracing the entrepreneurial spirit. There are lots of bright young Ghanaians getting into business and social enterprise, a great workforce wanting to do well. So there are many opportunities for great partnerships.”
And, as Gadzekpo wisely concludes: “In Africa most of the markets that we see are basically still frontiers, so [there’s] no need to jump on the horse and just gallop away with your big dream. You can achieve the dream carefully and in a measured manner, by starting small.”
Doing business in Ghana: Divine Chocolate
In 1997, the farmers of the Kuapa Kokoo (KK) cooperative in Ghana voted to set up their own chocolate company. The following year Divine was born, with KK as the largest shareholder and Twin – the NGO that helped set up the company – recruiting Divine’s first managing director, Sophi Tranchell. She first flew into Accra in 1999, on her way to Kumasi to meet the farmers of Kuapa’s National Executive Committee.
“KK has its HQ in Kumasi – a five-hour drive or 45-minute flight from Accra. It has two places on Divine’s board, which meets four times a year, including once in Ghana, so a Divine team will be in Ghana, not just for board meetings, but also for Kuapa’s AGM, as well as trips with journalists, customers and researchers. Accra is an important hub for Divine, as it’s where we have important meetings with DfID’s office in Ghana, Cocobod [Ghana Cocoa’s marketing company], Fairtrade’s west Africa office and the British High Commissioner.
“I’ve now been travelling to Ghana for 18 years, and the experience has been one of politeness, friendliness – they always say “akwaaba” (welcome) – and willingness to help. Ghana is in the same timezone as the UK and the formal language is English, which makes doing business relatively easy, and their financial and legal rules are also similar.
“However, we’ve learned a lot about how land passes through the generations, and how Ghanaians might answer requests with what they think you want to hear rather than what is possible. You have to learn to ask questions in different ways. They are not impressed by celebrity, and hold education in high esteem. We’ve learned about the position of women in the cocoa communities, and have supported KK in their many initiatives to ensure membership of KK gives women more opportunities and power.”
See the story of Divine Chocolate