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The Ghana ECONOMIC OUTLOOK & BUSINESS STRATEGY Conference 2ND EDITION Theme: STRATEGIES TO ATTRACT FOREIGN DIRECT INVESTMENTS 28th NOVEMBER, 2013
BEST WESTERN HOTEL, AIRPORT, ACCRA
After the successful “Ghana Economic Outlook & Business Strategy 2013 (EOBS)” Conference held in November 2012, it’s second edition will take place in November 2013 with a focus on government’s strategies to creating an enabling environment that could see Foreign Direct Investments (FDI) into the country increasing to USD 10 billion by the year 2016.Sector Ministers and heads of Governmental agencies responsible for creating such an atmosphere to attract foreign investors to partner their local business collaborators to drive this quantum jump in FDI will lay out their strategies and plans for the year 2014.Industry and corporate CEOs will also have the chance to unveil their strategies for the next year. It is a “not-tobe-missed” event for top executives seeking those special insight that can make a difference to the bottom line.
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African Markets the amount and frequency of funds that can be sovereign wealth funds (SWFs). The heritage and Managing natural resources drawn from the stabilisation account to make up stabilisation funds will serve different purposes, the shortfall are clearly defined. This should ensure with the former intended to smooth government that the government can maintain its spending spending in the short term and the latter designed commitments, while avoiding the temptation to provide returns for future generations through to scale up expenditure for reasons of political investment and savings schemes. The rules expediency. governing the movement of revenue into and in 2004 to almost 3m fine oz in 2012. Tensions between the mining companies and the people living in
mining areas are not uncommon and occasionally boil over into violence. The activity of illegal, often Chinese, minersrole is source of tensions. civilhas society groups Ghana Ghana: A potential African leader inanother technology? The traditional of the agricultural sector asFurthermore, the engine ofmany growth changed overinthe pastare two concernedwith thatagriculture’s the mining sector’s to government local communities is not a decades, share ofcontribution GDP falling from 40% in the coffers mid-90sand to around 25% currently. The fair reflection of the of profit from their industrial and services sectors have become the main drivers of growth. and anderived estimated 12.1% inoperations. 2012, according to This the was compounded in 2011 Ghana’s mobile telecommunications sector is level this saw does not meangrowth that the era of when the impact theworld’s onsetGSS. of oilHowever, production industry surge over 40%, only contributing among the most developed in Africa, Ghana isbenefiting one ofofthe largest exporters of manganese, although itbycontributes a small growth is Rather, the Economist from deregulation in the late 1990s, which heralded to overall real GDP growth of double-digit 14.4%. Such a rate ofover. growth was inproportion nature, but share of total exports, dwarfed by gold, cocoa and now oil. Onlyone-off a small ofpolitical Ghana’s stability Intelligence Unit expects that competition andrailway an era of strong subscription growth and fierce and a generally favourable environment should ensure growth remains round 7-7.5% substantial bauxite reservesbusiness are currently mined. The absence ofthat reliable services to the handle market growth will increasingly hinge on trends competition between a number privately owned level inofthe medium term. substantial shipments is a major constraint on both manganese and bauxite mining. The government in mobile Internet use. The ITU already credits service providers. Although competition has been has long stated its objective of establishing an integrated aluminium industry (bauxite mining and Ghanaians with having the deepest mobile Internet good for consumers, bringing prices down, it has aluminium refinery and production) in the country, but little firm progress has been made. penetration in Africa, but there is still a long way eroded the operators’ margins. Average revenue Commodity exportsfell (US$m) just 14% of Ghanaians Internet per user (ARPU) from Land US$9.7/month in 2008 laws are deficient, evento bygo; African standards. Landwere ownership is users vestedinin local chiefs, who are 2003 2004 2005 2006 2007 in 2010. 2008 2009 2010 2011 2012 10% to US$6/month in 2010, according to the Ghana responsible for allocating its2011, use. Itupisfrom not covered by normal legal convention, but by statutory and OilStatistical Service (GSS) and 0 is estimated 0 to have 0 0 0 of the fastest 0 0 speeds 0 2,779 3,120 Ghana some Internet customary law. Therefore, while theenjoys allocation of land is theoretically clear, in practice land deals have been around US$5/month827 in 2012. Meanwhile, Gold 839 946 1,277 ahead 1,734 2,246and South 2,551Africa 3,804 4,920 5,630 Africa, of both often become very messy andintransactions often fallKenya through, even when a substantial sum has been according to the International Cocoa 818 Telecommunication 1,071 908 1,178according 976to US-based 1,225 network 1,422 2,028 1,781 in 2012 testing 1,660 paid as a deposit. Recovering this money through the courts is difficult. Firms wishing to acquire land Union (ITU), others) Ghana has had the highest Total (including 2,563 2,705 2,802 company, 3,727 Ookla, 4,172 5,270 5,840 of 7,960 12,785 13,731 with an increasing number must be prepared to face a drawn-out and expensive procedure. The government has shown a renewed investment/revenue as operators attempt Unit to calculations Sources: Bank of Ghana;ratio The Economist Intelligence and estimates. techpreneurs taking advantage of this situation. in 2013 recentambitious times. The Minister of Lands and Natural Resources develop their networks. commitment to tackling the issues In March plans were announced
The business environment
Oil and gas
for the construction of a new tech-hub in Ghana, Ghanaisjoined themean world’s oil producers on City. December 15th 2010, when dubbed Hope The US$10bn project aimsthe to then president, John Atta with the tightening of margins, likely to (% change, year on year) provide working and at living space for up to 75,000 that the sector’s contribution overall the economic Mills,toopened valves in a televised ceremony a floating platform around 60 km off the Atlantic 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 people. While we have doubts as to whether such anmoment in Ghana’s growth will slow in the coming There is coast.years. The long-anticipated start to commercial production was a significant Total GDP 5.9 6.2 6.5 7.1 6.5 4.0 14.4 7.1 ambitious project will8.4 get off the that 8.0 ithas is struggled evidence that this is already happening: the it has brought history. However, risks and, domestically, theground, government to manage Agriculture 4.7communication 5.6 subsector 2.8 of GDP 3.2 being planned -1.7 illustrates 7.4 the optimism 7.2 in this key 5.3 0.8 2.6 information and expectations. Many Ghanaians have been disappointed with the impact oil revenue has had on their Industry 4.5 4.3 in 2010, 17% 7.0 in 2011 8.9 sector of 6.1 15.1 4.5 6.9 41.1 7.0 the economy. recorded real growth of 24.5% The increased Real GDP growth saturation of the market, combined
standard of living, expecting a more rapid transformation from a commodity whose production drove a
Services 11.0 11.2 13.4 6.2 7.7 8.0 5.6 9.8 8.3 8.8 14% increase in overall real GDP growth in 2011. Part of the issue is that the government has not so far Sources: Ghanaian authorities; The Economist Intelligence Unit.
Ghana 8Economic data
received significant revenue from the industry. as exploration costs weigh on the exports generated. The fiscal revenue that has been generated has Demographic largely goneand on social paying back arrears that have built up data © The Economist Intelligence Unit Limited 2013 in recent years amid weak public expenditure management. a 2011
2004-11 (av)
latest available
The UK-listed the largest foreign player inPopulation Ghana’s oil in the (m)industry, with a 36% share25.0 Real GDP (PPP US$ bn at 2005 prices) 66.1b Tullow is50.2
According to53.7 the company’s full-year financial results Nominal GDP (US$ bn at PPP) Jubilee field.75.0 Area (sq km) for 2012, the field has already 238,533
yielded 55m14.4 barrels of oil since production Output during 2012 averaged 77.6 72,000 7.6 commercial Under 5 mortalitybegan. rate (per 1,000 live births) barrels/day3,001.8 (b/d)—somewhat less than envisaged at the start of the year, reflecting productivity issues 2,314.0 HIV/AIDS (% of people aged 15-49) 1.5 at some of the wells. However, Tullow reports that these problems have now been overcome, resulting Budget balance (% of GDP) -4.0 -4.9 Human Development Index ranking (out of 186) 135 in a jump in production to around 110,000 b/d by the end of 2012. Capacity is put at around 120,000 41.0 Public debt (% of GDP) 42.2b b/d, although this is expected to be expanded in the coming years, given some promising results in 15.0 Money market interest rate (%) 14.0b other oil blocks. GDP (% real change pa)
GDP per head (US$ at PPP)
Consumer prices (% change pa; av)
8.7
13.1
Development gas reserves, both those associated with the oil discoveries and Current-account balance (% of GDP) -9.4 of Ghana’s -7.7
stand-alone gasfields, has2.9 not been as rapid as development of the oil industry. However, this is Foreign-exchange reserves (US$ bn) 5.5 1.5 4Exchange rate LCU:US$ (av) a Actual. b Economist Intelligence Unit estimates.
1.1
© The Economist Intelligence Unit Limited 2013
Sources: The Economist Intelligence Unit; UN Statistics Division; UNDP; World Bank. © The Economist Intelligence Unit Limited 2013
11
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