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A standout for investors

Article - November 14, 2014

High returns, political stability and a strict regulatory and legal framework make Ghana the standout destination for investment in West Africa


The recent economic headwinds facing Ghana have cooled one of the world’s hottest economies, but even as growth pulls back from the blistering pace seen in 2011-2012, its economy continues to hum along with a 5 per cent annual expansion forecast for 2014-2015, picking back up to 8 per cent by 2016, according to the IMF. This period has only served to illustrate the country’s mature economic policy, stability and its solid long-term prospects.

These indicators help explain the international community’s optimistic posture toward Ghana, whose high returns, strict regulatory and legal framework, and political stability make it the standout destination for investment in West Africa.

“It’s important to keep in mind that Ghana has a very promising future,” affirms Jon Benjamin, the British High Commissioner to Ghana. “It is stable politically. It is an open society. There is transparent, open democracy with the rule of law, a functioning judicial system, and clear laws for investors. Ghana has got all that.”

Mr Benjamin points to the UK’s centuries-old association with Ghana that not only encompasses close-knit ties at the government level, but the huge network of human relations that the two countries share, including the British-Ghanaian diaspora in the UK who number into the hundreds of thousands.

This dynamic relationship forms part of the bedrock of the UK’s engagement in Africa. Annual trade between the two nations has already surpassed £1 billion, helping propel the UK past the United States as the number one investor on the continent, with $4.6 billion in FDI last year alone.

“Investment is not about today or tomorrow, it is long term,” Mr Benjamin explains. “In that sense, Ghana, way beyond its immediate economic challenges, has terrific prospects.”

As commonwealth members with a common history, ties between Ghana and the UK have flourished in recent years, as Ghana transitions to middle-income status, thanks in large part to the sound governance and economic policy that has brought in an influx of foreign capital.

“Practically in every sector, there is investment from the UK, either FDI or joint ventures,” says Hanna Tetteh, Ghana’s Minister for Foreign Affairs and Regional Integration. “Because of similarities in our legal and administrative systems, we understand each other’s systems, and that is a very important point for doing business.”

Leaders in both countries share core values that have helped foster closer economic and political ties. “One of the key things is a commitment to human rights, rule of law and good governance,” adds Ms Tetteh. “We have a record of peace and stability in a competitive democracy, respect for rule of law, respect for property rights and the commitment to build strong institutions that are independent of political entities.”

Like many countries in Africa, Ghana hopes to use its recent progress to leverage key investments in infrastructure. “If Africa wants to be competitive, we need to build infrastructure,” explains Sir Samuel Essen Jonah, Executive Chairman of Jonah Capital. “How do you finance it? You can only finance it if government laws create the enabling environment that let others see potential returns, and bring their money. The government on its own cannot build infrastructure. It can create incentives.”

Apart from placing confidence in Ghana benefiting from the African momentum, Sir Jonah, a businessman with vast experience, brings up one more interesting element that not only pushes Ghana’s present, but also promises a bright future. Sir Jonah’s faith lies in the youth. “I take a lot of encouragement from the youth” he proclaims, “Young people are (the) country’s forward path to innovation and entrepreneurship. The youth gives one a sense of hope. They encourage you. Ghana will make it.”

Ghana’s extensive campaign of engagement with the international investment community will be on display in London’s Savoy Hotel at The Global African Investment Summit (TGAIS) on October 20-21. TGAIS will bring together investors managing hundreds of billions of dollars with key leaders from Africa’s most dynamic economies, including Ghanaian President John Mahama and three other African heads of state.

“Ghana has begun the process of ensuring that investment promotion focuses on things that are critical for development,” adds Mawuena Trebarh, CEO of the Ghana Investment Promotion Centre. “Clearly, infrastructure is at the top of the list.”

To do this, Mrs Trebarh concedes, the country must do all it can to bring in investments from all over the world.

“Ghana has been strong in showcasing its portfolio of investments,” she continues. “We have a geographical advantage in access to the other West African countries within the sub-region. All the conditions are right for investing. UK interest is something we will support in every way possible.”

Moreover, Ghana as a partner promotes mutually beneficial relationships. Apart from looking into gaining experience, Ghana has on offer a wealth of knowledge. Mrs Trebarh emphasises the unique attributes that Ghana can teach foreign investors in the business arena. She reflects on the fact that Ghanaian businessmen come from communities where some of the toughest questions arise, which inspires the development of an entrepreneurial spirit to address certain social and development requirements.

She adds, “If I have to say anything about what Ghana can teach, it is the experience of the new Africa and the reality that this is really where all the opportunities singularly lie, as far as this global economic dynamic is concerned. Ghana will be able to teach the investment community what it really means to do business responsibly on this continent.”