Quo Vadis Ghana

On Tuesday, December 17, 2024 I opened GNBCC"s annual Business Breakfast on Ghana's current investment climate , basically to review 2024 as an economic year and discuss anticipated changes in 2025 following the December 7 elections, with a focus on Ghana as a key investment destination.

Invited speakers were HE Jeroen Verheul of the Royal Netherlands Embassy, Mr Vish Ashiagbor , from PricewaterhouseCoopers (PwC), Mr. Charles Opoku Mensah of the Ghana Investment Promotion Centre (GIPC) and Mr. Selassie Ackom of the Ghana International Trade and Finance Conference (GITFiC).

At the opening I congratulated the new President elect HE John Mahama and the NDC with their convincing victory - after I shared my reflections on Ghana’s economic performance over the year 2024 – it is not going well for companies : a lot of complaints about for instance the GRA, high inflation -which makes business more expensive every day- and an almost bankrupt government. Also why do you read in the newspaper that Ghana’s economy expands 7,2% on Q 3 while most companies are in survival modus; also I wanted to know what will happen with the new GIPC act because it has and will not be handled by this parliament during its last sitting; => all matters pending before parliament will elapse or expire when the House ceases to subsist by Midnight Jan 6 2025.

After this intro the Dutch Ambassador, H.E. Jeroen Verheul provided insights into Ghana’s trade relations and investment prospects, emphasizing opportunities that may arise with the installation of a new government in 2025. He stated that the Ghana electorate has foremost voted against the current government looking for an alternative and better future. This past 4 years there was no or little improvement of the business climate? because this current government did no act . Even the new GIPC act has not been past in the Parliament these past 3,5 years. Also he mentioned Ghana did not have a stable exchange rate which affects the predictability of investing & doing business in Ghana. The tax exemption regime is not transparent ; why are tax exemptions handed out ? No clarity from the current government .

Mr. Vish Ashiagbor, Director and Country Senior Partner at PwC, discussed the current state of the Ghanaian economy, addressing key challenges and opportunities. He examined Ghana's program outlook, promises made by the NDC, and economic forecasts from entities such as the IMF, EIU, and Fitch.

2024 will have an average growth of 3,1%? and it is expected that the growth will increase to approx. 5% in 2025. At present the T-Bill rates are 29,88%, BoG policy rate is 27% with an average commercial rate of 31% if you want to borrow money for local investments . This is far too high for any local investor who needs money for expansion etc. Also the Public Financial Management Reforms ?(PFM) has been stalled by this government, also this government lacked discipline to cut expenses . Also the land situation is still bad, no digitalization of who owns what and it remains a source of conflict .

President elect John Mahama promises to waive? a raft of existing revenue raisers / tax handles. On the other hand , he pledges to implement ?projects that will need funding. How does he propose to fund these projects? without taxing ? .

The key risks identified by IMF are : 1) Energy sector challenge, 2) Inflationary pressures, 3) Debt sustainability concerns, 4) External vulnerability, 5) Structural weaknesses and 6) Election driven policy slippage. Also the rating agencies have their concerns and have stated that without progress on structural reforms? Ghana remains widely exposed . They mention fiscal consolidation and PFM reforms ; Property tax reforms for revenue mobilization; energy sector reforms for sustainable debt and agriculture reforms to improve trade deficits (reduce reliance on imports). Still an enormous hill has to be climbed, the 7,2% growth in the Q 3 was foremost in mining and quarry operations as well as in gold; not in the service industry hence ‘ the man in the street is not noticing it’

Mr. Selassie Ackom, CEO of GITFiC, highlighted the macroeconomic state of the West African region in 2025. He centered his discussion on projected GDP growth in countries like Togo, Senegal, Nigeria, and C?te d’Ivoire, comparing Ghana’s role in the regional economic landscape. In a comparison it was shown and expected in 2025 ?that the best and strongest growing economy is Senegal (9,3%) , followed by Ivory Coast with 6,4% and Togo with 5,3%. Ghana with 4,3% ?is doing slightly better as Nigeria (3,16%) . It was noted by the audience that Senegal, Ivory Coast and Togo have a very low inflation rate due to their connection with the Euro.

The final presentation was delivered by Mr. Charles Opoku Mensah, Head of PR & Communication at GIPC, who reflected on the earlier presentations and shared his views on the GIPC Act and expectations for legislative and governmental changes in 2025. He emphasized the importance of fostering a stable and attractive investment climate under the incoming administration.? He mentioned that GIPC brought in 316 million US$ with 108 projects in 2024 and that indeed investors are moving to next door neighbours (Togo and Ivory Coast) . The new GIPC act needs to be resubmitted in 2025 to the new parliament and he expected it will go through in 2025.

Ambassador Verheul concluded the event with his final remarks, reflecting on some of the presentations and questions raised during the session. He asked what growth Ghana wants – the 7,2% growth was foremost in mining and quarry operations as well as in gold; not in the service industry hence ‘ the man in the street is not noticing it’ – growth through mining and gold affects the environment, due to galamsey Ghana will need to import water. What kind of investment does Ghana want to attract ? This important question needs to be answered - what will be Ghana's strategy for growth ..

Also Ghana has done nothing to improve the investment climate; compare it with Rwanda; that country has steered its measures based on the World Bank report on doing business – what measures should you take as a country to improve your investment/ doing business climate – as a result Rwanda is attracting high amounts of FDI (including Africa’s first ?F 1 race this century) . They have a dedicated strategy, Ghana doesn’t.

In December 2022 when Ghana has an inflation rate of 54% for a Zimbabwe scenario meaning hyperinflation. Zimbabwe does not have its own currency anymore, all pensioners lost their savings due to hyperinflation, the economy collapsed – Ghana was at the brink of such an economic disaster and it is not yet safe . It has to change its act otherwise Ghana's government can return immediately to IMF Programme number 18 (after this one has closed) .

The question needs to be answered: Where are you going Ghana - Qua Vadis Ghana

Let us have hope with this new government in 2025 - Merry X-Mas .