Ghana

Economic Overview

The Republic of Ghana is at a pivotal point in its economic journey, navigating a severe macroeconomic crisis while implementing an ambitious IMF-backed reform program. As one of West Africa's most prominent economies and a beacon of democratic stability in the region, Ghana's recent challenges—stemming from unsustainable debt, high inflation, and external shocks—have necessitated a sharp policy pivot. The 2025-2026 outlook is one of gradual stabilization and recovery, contingent on the government's sustained commitment to fiscal discipline, successful debt restructuring, and a rebound in investor confidence.

GDP Size & Growth Trajectory

Prior to its recent crisis, Ghana was one of Africa's fastest-growing economies. However, macroeconomic imbalances led to a sharp slowdown. Real GDP growth decelerated significantly, though it has shown surprising resilience. Growth was estimated at 2.9% in 2023, exceeding initial bleak forecasts.

The outlook is for a gradual recovery as the reform program takes hold. The IMF projects growth to be 2.8% in 2024, before accelerating to 4.4% in 2025. This recovery is expected to be driven by a more stable macroeconomic environment, a rebound in the industrial and agricultural sectors, and renewed private sector investment.

Sector Composition

Ghana's economy is well-diversified, with significant contributions from services, industry, and agriculture.

• Services: This is the largest sector, accounting for approximately 45% of GDP. It is driven by wholesale and retail trade, ICT, financial services, and transport. The telecommunications and mobile money ecosystem is particularly vibrant and is a key driver of formalization and growth.

• Industry: The industrial sector contributes around 32% of GDP. It is dominated by mining and oil and gas extraction. Ghana is Africa's largest gold producer and has a significant oil and gas sector. The manufacturing sub-sector is smaller, focused on food processing and light manufacturing for the domestic and regional markets.

• Agriculture: This sector accounts for roughly 21% of GDP and remains the largest employer. Ghana is the world's second-largest producer of cocoa, which is a critical source of export earnings. The sector also produces staples like yam, cassava, and maize.

Inflation Trends

Runaway inflation has been the most painful symptom of the economic crisis, peaking at over 54% in late 2022. This was driven by a sharp depreciation of the Ghanaian Cedi (GHS), high global commodity prices, and monetary financing of the fiscal deficit.

In response, the Bank of Ghana (BoG) has embarked on an aggressive monetary tightening cycle, raising its policy rate to a multi-year high of 30%. This, combined with fiscal consolidation, has successfully begun to rein in inflation. Inflation is projected to fall significantly, with the IMF forecasting an average of 15% in 2025, moving towards the central bank's long-term target.

Fiscal & Monetary Policy Stance

• Monetary Policy: The BoG is fully committed to a tight policy stance to defeat inflation and anchor the currency. This has been a core pillar of the IMF program.
• Fiscal Policy: The government is undertaking severe fiscal consolidation. This includes aggressive measures to boost domestic revenue, rationalize expenditures, and eliminate monetary financing. The goal is to bring the primary fiscal balance to a surplus to ensure debt sustainability.

Debt Sustainability Indicators

Unsustainable public debt was the trigger for the current crisis. Total public debt reached over 93% of GDP at the end of 2023. In December 2022, Ghana suspended payments on most of its external debt and subsequently entered into a formal debt restructuring process under the G20 Common Framework.

In early 2024, the government reached a landmark agreement with its official bilateral creditors (including China and the Paris Club) to restructure its debt. Negotiations with private commercial creditors (including Eurobond holders) are ongoing. A successful completion of this comprehensive debt restructuring is the single most critical condition for restoring macroeconomic stability and unlocking new financing.

Table 1: Key Macroeconomic Indicators (2023-2026F)

Market Size & Demand Potential

Despite its current economic challenges, Ghana remains an important consumer market in West Africa.

Population Size and Demographics

With a population of over 34 million, Ghana has a sizeable domestic market. Like many of its neighbors, it has a young population, with a median age of around 21, which provides a long-term demographic tailwind for consumption and labor supply.

Urbanization and Consumer Hubs

The country is rapidly urbanizing, with over 58% of the population living in cities. The Greater Accra Metropolitan Area, which includes the capital Accra and the port city of Tema, is the primary economic hub, concentrating much of the country's wealth and consumer spending. Kumasi, in the Ashanti Region, is another major commercial center.

Consumer Spending & Market Access

Consumer spending has been severely hit by the high inflation and economic slowdown. However, the market is resilient. A formal retail sector is established in major cities, and the high penetration of mobile money facilitates digital commerce. As the economy stabilizes and inflation falls, a rebound in consumer confidence and spending is expected.

Business Environment

Ghana has historically been regarded as one of the easier places to do business in West Africa, with a strong democratic tradition and a commitment to private sector development.

Ease of Doing Business & Regulatory Reforms

The country has a track record of implementing pro-business reforms. The Ghana Investment Promotion Centre (GIPC) is the government agency responsible for facilitating and promoting investment. It acts as a one-stop-shop for investors.

However, recent economic instability and tax measures aimed at fiscal consolidation have created a more challenging environment. Bureaucracy and corruption remain concerns for businesses operating in the country.

Company Registration Process

The registration process is managed by the Office of the Registrar of Companies (ORC). The process has been digitized to improve efficiency and involves reserving a company name, submitting incorporation documents, and registering for a Tax Identification Number (TIN).

Tax Regime

• Corporate Income Tax (CIT): The standard rate is 25%.
• Value Added Tax (VAT): The standard rate is 15%, in addition to other levies that bring the effective rate higher.

As part of the IMF program, the government has introduced several new tax measures to boost revenue, which investors should carefully review.

Political Stability & Governance

Ghana's primary competitive advantage is its strong and stable democracy.

Political Environment

Ghana is a presidential republic and is considered one of Africa's most successful democracies. It has a long history of peaceful elections and orderly transfers of power between its two main political parties, the New Patriotic Party (NPP) and the National Democratic Congress (NDC). The political environment is stable, with robust democratic institutions, a free press, and an active civil society. The next general election is scheduled for December 2024, and while expected to be highly competitive, it is anticipated to be peaceful.

Rule of Law & Investor Protection

The legal system is based on English Common Law. The judiciary is independent and considered one of the stronger and more reliable in the region. Property rights are protected, and the GIPC Act provides guarantees against expropriation. Ghana is a signatory to international arbitration conventions, providing recourse for foreign investors.

Infrastructure Readiness

Ghana has relatively well-developed infrastructure compared to many of its regional peers.

Transport and Logistics

• Ports: Ghana has two major deep-water ports. The Port of Tema, near Accra, is one of the largest and most efficient container ports in West Africa, having undergone a major expansion. The Port of Takoradi is the primary hub for the oil and gas industry.
• Airport: Kotoka International Airport (ACC) in Accra is a major regional hub for both passenger and cargo traffic.
• Road Network: The country has a decent road network connecting major cities, though infrastructure in rural areas is less developed.

Energy Sector

The energy sector has faced challenges but is a key area for investment. Ghana is an oil producer, but its production has been maturing. The country's power grid has suffered from periods of instability ("dumsor"), but significant investments are being made to improve generation capacity and grid reliability. There is a strong focus on increasing the share of renewable energy, particularly solar, in the energy mix.

Sector-Specific Opportunities

1. Agriculture and Agro-processing

The cocoa sector remains central, but there are major opportunities in value addition. Instead of exporting raw beans, investment is needed in local processing to produce cocoa liquor, butter, and finished chocolate. There is also significant potential in commercializing other crops like cashews, shea, and horticultural products for export.

2. FinTech

Building on a high mobile penetration rate and a well-established mobile money ecosystem, the FinTech sector is booming. Opportunities are vast in digital payments, lending, InsurTech, and cross-border remittances, serving both the domestic market and the wider West African region.

3. Renewable Energy

The government is actively promoting investment in renewable energy to improve grid stability and reduce reliance on fossil fuels. With abundant solar resources, there are significant opportunities for independent power producers (IPPs) to develop utility-scale solar farms and provide off-grid solutions.

4. Mining

Ghana remains Africa's top gold producer. While dominated by large multinational corporations, there are opportunities for junior mining companies and service providers to the sector. The government is also looking to formalize the artisanal mining sector and promote the exploration of other minerals like bauxite and lithium.

5. Manufacturing & Assembly

With its stable political climate and access to regional markets through ECOWAS, Ghana is an attractive location for light manufacturing and assembly. This includes consumer goods, pharmaceuticals, and automotive assembly.