GHANA: An Introduction to Corporate/Commercial

Elections are due to be held in 2020 in Ghana - a year with a promising economic outlook. Ghana is undergoing some dramatic changes that will be the foundation for the next stage of the country’s economic development. Impacts on the economy are expected from several places, including the following:

The African Continental Free Trade Area (AfCFTA)

The business sector in Ghana will witness multiple new changes, with the most significant being Ghana’s role as the host for the AfCFTA Secretariat. It provides the opportunity for the country to become one of the new commercial capitals of Africa, which will undoubtedly be a game changer. Currently, less than one-fifth of African countries’ exports stay within the continent. By comparison, two-thirds of European countries’ exports go to other European countries, and three-fifths of Asian countries’ exports reach other Asian countries. This is all set to change with the implementation of the AfCFTA. Hosting the AfCFTA headquarters in Ghana’s capital, Accra, will impact positively on business in the country, beginning in 2020.

The AfCFTA will hopefully be the starting gun that will trigger a continent-wide economic take-off. With a combined population of more than one billion people and a GDP in excess of USD3.4 trillion, the AfCFTA will change how business is done in Africa, and could potentially transform local businesses into the African corporate giants of the future. The AfCFTA presents immense opportunities across a wide range of sectors, including agri-business, manufacturing, consumer goods, telecommunications, financial services, transportation, infrastructure development and tourism.

Value Addition and the Industrialisation Agenda 

A boost in exports from the AfCFTA is expected to spur industrialisation. Ahead of the AfCFTA, Ghana launched an industrial agenda which focused on the private sector, dubbed the One District One Factory (“1D1F”) project. The 1D1F seeks to decentralise industrial development by encouraging public and private sector investments in existing and new enterprises, as well as the promotion of “strategic anchor industries” (including agro-processing, pharmaceuticals, integrated aluminium, iron and steel, automobile, textiles, industrial salt, petrochemicals, machinery and palm oil) in industrial parks and special economic zones.

Integrated Aluminium Development 

The Government of Ghana is devoting resources to creating what it calls the Integrated Aluminium Project, which will bring together:

(a) Bauxite mining;

(b) An alumina refinery;

(c) Expansion of the existing aluminium smelter operated by the Volta Aluminium Company;

(d) Downstream Aluminium Industries; and

(e) Allied Industries.

The government has commenced the process for private sector involvement in both core and non-core investment areas of the sector. These include bauxite mining, refinery, aluminium smelter and the fabrication of aluminium products in the downstream aluminium sector. A newly created corporation, the Ghana Integrated Aluminium Development Corporation (“GIADEC”), has been set up to coordinate the public sector agencies and private sector parties to help realise the project.

Major Oil Find 

Following recent discoveries of oil by major upstream operators, Ghana is now believed to have reserves of over 2 billion barrels.

Following the approval of the Plan of Development, the Pecan field development will involve over 2,000 service contracts. The recent amendment to regulations to permit exploration operations in marginal fields will see an increase in exploration activities in areas which hitherto would have been relinquished or abandoned.

Another significant development has been Tullow’s exit from the Ghana market. This move leaves a vacuum for new entrants in the upstream oil and gas industry in Ghana to fill.

Banking Sector Reforms 

There have been significant reforms in Ghana’s banking sector aimed at improving banks’ governance and streamlining the sector. A number of poorly run and weakly capitalised banks have been closed and the ensuing consolidation of the sector is expected to lead to a stronger financial system in the country.

Authors: 

Nana Serwah Godson-Amamoo

Benjamin Sackar

Sena Agbeko