What business opportunities are there in Ghana


Ghana is fully integrated into the world economy again. More than 30 years of classic IMF structural adjustment programs and ambitious development projects by the relevant international donor community have put the once run-down 'gem' on the Gold Coast back on track. However, the most important export goods gold, cocoa and precious wood still dominate the economy, and Ghana continues to be one of the most important gold producers and, with a world market share of more than 20%, one of the most important cocoa producers, without cocoa or chocolate being consumed as a refined raw material. It is only slowly that there are Ghanaians who produce high-quality chocolate and thus create value in their own country. However, the prices of these two raw materials are still being set on the stock exchanges in the western metropolises, every major fluctuation has a direct impact on Ghana's economy and will probably remain an Achilles heel of the Ghanaian economy for the time being. The gold price fell to around US $ 1,063 towards the end of 2015, but has since increased to US $ 1,674 (beginning of March 2020) due to the economic effects of the COVID-19 pandemic. Towards the end of March the price fell to US $ 1,629, but then topped the US $ 2,000 mark in a historic rally in August 2020. In mid-December 2020, the price was US $ 1,883. However, the country earned international praise from the Revenue Watch Institute for its sometimes exemplary regulation and handling of the mining sector. It is now becoming apparent that Ghana has risen to become the largest gold producer in Africa, overtaking South Africa. In the long term, oil exports will probably replace gold exports in terms of value, even if world market prices averaged between US $ 50 and 60 per barrel in 2017. Towards the end of 2018 the price stabilized at US $ 60. At the beginning of 2020, the oil price for high-quality oil rose to 68 US $. By mid-February, however, it fell well below the US $ 60 mark again and at the beginning of March even to US $ 50 due to the global COVID-19 crisis. Within a short time, the oil price collapsed and was only around US at the end of March - $ 23. At the beginning of May 2020 the oil price for high-quality crude oil recovered somewhat, but remained well below US $ 30. It was not until the beginning of June 2020 that the oil price rose again, meandered and was at US $ 52 on the stock exchanges in mid-December 2020 . Oil and gas production off the coast has only just begun. One look at Nigeria and Angola is enough to see what profound upheavals the resource energy raw material can cause in the Gulf of Guinea. According to current knowledge, the oil reserves amount to 660 million barrels. The initially over-ambitious production target of 120,000 barrels per day first had to be reduced to around 80,000 barrels. In August 2016, the exploitation of another oil field (TEN) began, which initially produced around 20,000 barrels per day. After the end of the maritime border disputes in the production area with its western neighbor Côte d'Ivoire in September 2017 and the increased oil prices, Ghana was able to expand its investments and explorations and increase production to 180,000 barrels per day.

In addition to the considerable oil reserves, there are also considerable natural gas deposits under the sea floor, which, based on current knowledge, should amount to more than 20 billion cubic meters of natural gas, but are not yet extracted. Rather, the 'Associated Gas' released during oil production is flared and partially injected again, but there are concrete plans to feed the natural gas to the Aboadze thermal power station near Sekondi-Takoradi, the new 'El Dorado', for the purpose of generating electricity. Ghana is heavily dependent on gas supplies from Nigeria, which according to the contract amount to 120 million 'standard cubic feet' and reach Ghana via the 'West African Gas Pipeline' (WAGP). So far, problems have repeatedly arisen on both sides. While Nigeria frequently failed to keep its promises, Ghana repeatedly ran into financial difficulties. At the end of June 2016, WAPG temporarily suspended gas delivery because the Ghanaian side once again failed to meet its payment obligations. As a result, the precarious power supply that had existed for years deteriorated again. In the meantime the situation has eased somewhat and Ghana is now even exporting electricity to the neighboring Cote d'Ivoire. Hydropower to generate electricity for industry at the huge Akosombo Dam, and traditional uses of kerosene and charcoal are still prevalent for households.

Electricity generation and with it the inadequate energy supply have improved - at the end of 2018, an installed capacity of 4,400 MW was available nationwide, although 3,800 MW can be regarded as reliable. The government is committed to promoting renewable energies, although their share is only around one percent. In a first step, as part of the NEIP program, a Greenhouse EstateProject that is to be expanded into the largest of its kind in Africa in the medium term. Towards the end of the severe energy crisis under the previous government of President Mahama, new electricity capacities were built up with the help of external energy companies such as Karpowership and longer-term take-or-pay delivery contracts for liquefied gas were concluded. Ghana now has considerable overcapacity and purchase commitments, which have entailed considerable financial risks and could cost more than USD 10 billion on the national budget in the election year and in the next legislative period.

The current annual cost of unused energy is approximately $ 500 million. In addition, nearly $ 3 billion in debt weighs on the electricity sector, in which the Electricity Company of Ghana (ECG), the Ghana Grid Company (GRIDCO) and the Northern Electricity Distribution Company (NEDCO) are responsible for transmission and allocation. Almost half of the unpaid bills are due to government institutions and companies as well as technically caused energy losses and reduced electricity prices. The multi-year Energy Sector Recovery Program (ESRP) adopted in May 2019 aims to find a medium-term solution to the crisis with the help of the World Bank. The termination of the concession for the privately organized Ghanaian-international consortium Power Distribution Services (PDS), announced by the government and the ECG in October 2019, may represent a major setback for the reform efforts, as there are considerable legal and financial risks. In addition, the government did not paint a good picture on this complex matter.

It remains to be seen whether the energy resource oil / gas will turn out to be a curse or a blessing for Ghana. What is certain is that it accelerates economic and social transformation processes in what is still an agrarian economy. The ongoing rural-urban migration into the two huge metropolitan areas of Accra and Kumasi testifies to these processes of change, to which agriculture is also subject. On the one hand, they fuel the service sector and, on the other hand, they expand the informal sector. In Ghana, too, smallholders have become an interesting target group for investors and donor organizations with an affinity for digital, who are convinced that with the help of digitalization they can integrate smallholders into the formal economic sector and at the same time significantly and sustainably increase their yields. Despite numerous positive trends, self-sustaining growth is still a long way off, so that Ghana will also need massive international support for the foreseeable future. Rising direct investments from abroad, especially from China, lavish transfer payments from Ghanaian citizens and people of Ghanaian origin in the overseas diaspora, growing tourism and loans from the relevant international development institutions such as the World Bank, IMF and African Development Bank are making a significant contribution to growth and modernization. In February 2015, the time had come again: Ghana received an urgently needed structural and aid program worth US $ 940 million from the IMF, spread over three years, so that the ailing economy could regain its footing and implement long-overdue reforms such as the reduction of subsidies for gasoline and electricity. At the end of August 2017, another IMF delegation was in Ghana to discuss a new loan. The result was positive and Ghana received $ 94.2 million from the extended credit facility program. Nevertheless, despite the noticeable will to reform, there are considerable deficits, as the World Bank's Doing Business 2020 index from 2019 shows, which places Ghana in 118th place out of 190 countries, only in the lower middle field. On April 2, 2019, the finance minister announced the end of the extended IMF credit facility.