The U.S. Department of State’s Investment Climate Statements provide information on the business climates of more than 170 countries and economies that are or could be markets for U.S. businesses. Economic officers around the world prepare the statements. The Investment Climate Statements are also references for working with partner governments to create enabling business environments that are not only economically sound, but address issues of labor, human rights, responsible business conduct, and steps taken to combat corruption. The reports cover topics including Openness to Investment, Legal and Regulatory Systems, Protection of Real and Intellectual Property Rights, Financial Sector, State-owned Enterprises, Responsible Business Conduct, and Corruption.”
To access the ICS, visit the U.S. Department of State Investment Climate Statements website.
Executive Summary of 2024 ICS for Ghana
Ghana’s economy in 2023 struggled to emerge from the economic headwinds it faced in 2022. Gross Domestic Product (GDP) growth, which reached 5.1% in 2021, slowed to 3.1% in 2022, and further down to 2.9% in 2023. Inflation, which reached just over 54% in December 2022 in conjunction with the rapid depreciation of the Ghanaian cedi and global supply chain constraints and fiscal shortfalls, continued to negatively affect the economic outlook, even as it fell from its peak. Russia’s invasion of Ukraine exacerbated these strains, provoking food and gas price hikes. Ghana suspended debt service payments on most of its external debt in December 2022 but concluded an IMF Staff-Level Agreement (SLA) for a $3 billion, three-year arrangement under the Extended Credit Facility (ECF) the same month. In May 2023, the IMF Board approved the program in order to support Ghana’s balance of payments and economic recovery. Ghana has received two tranches of disbursements, totaling $1.2 billion as of January 2024. The economy has shown signs of stabilization since the implementation of the IMF program, as inflation dropped to 23.2% in February 2024. However, among the burdens still weighing heavily on government finances are the sizeable arrears in the energy sector.
The economy remains highly dependent on the export of primary commodities such as gold, cocoa, and oil, and consequently is vulnerable to slowdowns in the global economy and commodity price shocks. In general, Ghana’s investment prospects are in flux, as the Government of Ghana seeks to attract FDI in agro-processing, mining, and manufacturing, but investor confidence is relatively low. The government has made attracting foreign direct investment (FDI) a priority to support its industrialization plans and to overcome an annual infrastructure funding gap.
Challenges to Ghana’s economy include high government debt, particularly energy sector debt, low revenue mobilization, corruption, high youth unemployment, and inefficient state-owned enterprises. Ghana has a population of 33.8 million, with over 14 million potential taxpayers, but only six million of whom file their annual tax returns. As Ghana looks to spur economic recovery and move beyond dependence on foreign aid, it must develop a solid domestic revenue base, while also reducing government expenditures. On the energy front, Ghana has enough installed generation capacity to meet current demand, but it needs to improve the management of its state-owned power transmission and distribution system to reduce commercial and technical losses.
Among the challenges hindering foreign direct investment are costly financial services, a lack of transparency and stakeholder engagement, corruption, under-developed infrastructure, a complex property market, costly and intermittent power and water supply, the high costs of cross-border trade, a burdensome bureaucracy, and an insufficiently skilled labor force. The enforcement of laws and policies is weak, even where effective and just laws are on the books. Public procurements are sometimes opaque, and there are often issues with delayed payments. In addition, there have been troubling trends in investment policy, with the passage of local content regulations in the petroleum, power, and mining sectors that may discourage needed future investments.
Despite these challenges, Ghana’s abundant raw materials (gold, cocoa, and oil/gas), relative security, and political stability make it stand out as one of the better locations for investment in sub-Saharan Africa. Investment laws protect investors against expropriation and nationalization and guarantee that investors can transfer profits out of the country, although international companies have reported high levels of corruption in dealing with Ghanaian government institutions.
Among the most promising sectors are agribusiness and food processing; ICT and business-related services; textiles and apparel; downstream oil, gas, and minerals processing; construction and real estate; and mining-related services subsectors.
The government has acknowledged the need to strengthen its business enabling environment to attract FDI, and is taking steps to overhaul the regulatory system, improve the ease of doing business, and restore fiscal discipline. The government has therefore presented a bill to Parliament to amend the Ghana Investment Promotion Centre (GIPC) Act, 2013 (Act 865). Among other things, the amendment seeks to allow non-Ghanaian citizens to participate in enterprises currently reserved for Ghanaians, and it would eliminate the minimum foreign capital requirements for wholly owned foreign enterprises and joint ventures. The law will, however, maintain the USD 1 million foreign capital requirement for establishing a trading business.
To access the full text of the 2024 ICS for Ghana, visit the U.S. Department of State Investment Climate Statements website.
Economic
Please see the section on the Economy in the introduction to this report under Doing Business in Ghana.