Doing business in Ghana in the emerging oil and gas sector as well as other sectors.
Benjamin Okyere
Ghana is an economic and political pioneer in Africa and thus doing business in Ghana will benefit from these qualities. The first country to gain independence in Sub-Saharan Africa from colonial rule, and the origin of pan-Africanism and the African Union through the efforts of Africa’s man of the Millennium and first president Dr. Kwame Nkrumah. At independence Ghana was considered to be the former British colony with the highest literacy rate of all other colonies, and this has translated to a well educated workforce today. The country also has a rich cultural heritage, which the tourism industry benefits from, together with a warm and welcoming population and popular historical and environmental tourist locations. Economic and Political Stability In a West African region fraught with political and economic instability, Ghana has been an oasis of economic and political progress and stability. Ghana attained a Middle Income Economy state in 2010, and GDP in Ghana was growing at an average of about 6% annually over the last five years according to the African Economic Outlook. Furthermore, economic growth is expected to reach 8.3% in 2011 in line with the global economic recovery, government investment in the developing oil sector, and the expected revenues from the new oil discoveries. Businesses can exploit this emerging sector when doing business in Ghana.
Major Economic Sectors
According to the African Economic Outlook, agriculture accounts for approximately one third of GDP, while the industrial sector contributes 28%. Growth in services dropped from 9.3% in 2008 to 4.6% in 2010. Consequently, growth in industry in 2010 was also about 4.3 percentage points lower than in 2008. Exports are a major part of Ghana’s GDP but are not diversified in terms of products and destinations. Ghana is a major gold and cocoa exporter, accounting for over 70% of exports in 2009 and 42% and 30% of exports respectively. Manufacturing accounts for only 9% of output, despite the rhetoric of successive governments to encourage industrialization. The Jubilee oilfield which is reported to contain up to 3 billion barrels of light oil was discovered in 2007 and many more discoveries are being made after many years of speculation and exploration. When doing business in Ghana, all these economic sectors can also be exploited. With an estimated population of 24 million, Ghana is often viewed as the gateway to the West African region with an estimated population of 245 million in 2002. Furthermore, the seaports of Tema and Takoradi are often used for shipping goods to the country and the sub-region. Therefore, businesses should consider this when doing business in Ghana.
Starting a Business
There are 7 procedures to start a business when doing business in Ghana, which take up to 7 days and costs approximately 20.3% of income per capita. According to the World Bank when doing business in Ghana these procedures include:
1. Check for availability of company name and submit company documents to obtain a incorporation certificate (1 day). GHC 5 per search; complete set of Incorporation forms – GHC 10; GHC 50 for registration of a limited company; GHC 10 filing fee for Forms 3 and 4; GHC 2 per certification of regulations (3).
2. A Commissioner of Oaths authenticates forms required for the certificate to commence business (1 day simultaneously with other procedures). This costs GHC 2.
3. Obtain from the Registrar-General’s Department the certificate to commence business (2 days simultaneously with other procedures). 0.5% of the stated capital as commencement tax + GHC 10 (registration fee with the Internal Revenue Service).
4. Deposit paid-in capital in an account (1 day).
5. Apply for business licenses at the Metropolitan Authority (7 days). GHC 91.5 (varies, depending on the nature of the business).
6. Inspection of work premises by the Metropolitan Authority (1 day simultaneously with other procedures).
7. Apply for social security (1 day simultaneously with other procedures).
Prospective Business Development Areas
In the communication sector, the African Economic Outlook maintains that the government is facilitating the development of reliable, cost-effective and world-class communications infrastructure and services, for a knowledge-based environment when doing business in Ghana. Furthermore, government continued to provide the enabling environment to promote competition among telecommunications operators in the sector resulting in tremendous growth in telephone subscriptions of fixed line and mobile telephone sub-sectors according to the African Economic Outlook. This sector continues to enjoy growth and competition, with more opportunities for investment for doing business in Ghana. There have been major infrastructure projects in rural and urban water supply and sanitation with the government as the main investor; construction of affordable housing; flood control programs; and coastal protection programs, which all require private sector investment. Major projects are also underway in the transport sector, including rail, maritime and aviation, which government is seeking more private investment. Therefore, these sectors together with the agricultural sector, which requires more industrialization and diversification, and the emerging oil and gas industry, will still require major investment and private sector competition when doing business in Ghana.
References
World Bank (2010), “Doing Business in Ghana 2011,” New York.
African Economic Outlook, “Ghana”
