In this interview with The Worldfolio, Tony Burkson, CEO of the UK Ghana Chamber of Commerce (UKGCC) discusses the bilateral trade relations between the two nations and how the chamber aims to foster bilateral trade and commercial relations
President Akufo-Addo has promised to put Ghana back on track and has opened the door to business, focusing on private sector empowerment and aiming to make Ghana the most business-friendly economy in Africa. How has the UKGCC embraced the proposals from this new administration and are you optimistic?
The current government has a very pro-UK and pro-European approach to doing business, which is a very transparent and open way of doing business. For British companies, Ghana suddenly becomes a whole lot more interesting because companies feel like they can compete on equal footing. They can come in and provide their services without a need necessarily to do anything other than simply competing with other players in the market.
In this region, Ghana is probably one of the most stable and conducive environments to do business, and so it is always a good place to start if you have a West Africa strategy or an Africa strategy.
The general feeling in my travels to the UK is that people feel like Ghana is now an interesting destination for British firms.
The general consensus is that “Ghana is open for business,” as President Akufo-Addo said during his inauguration speech and I think British companies realize that.
Brexit has supposed a global geopolitical shift. This shock has opened the door to bilateral talks between many UK partners who may now have to renegotiate trade agreements before it formally exits the EU. How will Brexit impact UK trade relations with Ghana? Is there an opportunity here?
Brexit actually presents an opportunity for Ghana. Contrary to what a lot of people write about in the press, UK firms, generally, have become very comfortable exporting to the EU and have not been generally as adventurous as those of other countries when it comes to Africa. I think for a lot of companies in the UK, Africa is this faraway, scary place.
As a result of Brexit, I believe that is going to change. UK companies are going to increasingly need to find new markets to do business in. Ghana as a former British colony, and being English-speaking, is in a good position to become one of these markets.
The second point as well is that Ghana and the UK will probably end up doing a bilateral agreement. The EPA was meant to be a regional agreement between West Africa and EU, but Nigeria sort of vetoed it and refused to sign. Even still, I think Ghana and the UK will sign a bilateral version of it.
Exports to the UK continue to increase, and the UK has a lot of what Ghana needs. We are moving into the industrialization phase of our economy here. The British have already been through the industrialization phase, so there is British expertise that can helpful here in Ghana.
For example, the agribusiness sector. In Ghana, we have avocado seasons – a period where there’s an abundance of avocado. So why isn’t somebody setting up a guacamole factory here? Ghana has the capability and we have the product - all we need is the technical expertise to set up the factory.
Things like that are areas where British technology and British know-how can add a lot of value. Because what you do with industrialization is, you start with the agricultural space. You start producing extra from your natural plants that you grow here and you start exporting that and use that revenue to then start producing more complex goods and services.
Blue Skies is an example of a success story, you have Ghanaian fruit leaving Ghana in the morning and arriving next day in the UK.
The UK Ghana Chamber of Commerce was launched in September 2016, and has become one of the only 4 UK Chamber of Commerce in the African continent with Kenya and South Africa and Morocco. What have been the key elements for the UK to decide to establish a Chamber of Commerce in Ghana and how does the UK government support the Chamber?
The UK government has a target of one trillion exports from SMEs in the UK. And so, you needed an entity that could support these SMEs to export products into different markets.
The chamber was formed to promote trade between our two countries. I think trade between Ghana and the UK is about a billion pounds at the moment. When you consider the historical context, that’s quite a low number.
Our goal in the short medium term is to become the first point of call for British firms -- “I want to do business in Ghana.” And also for Ghanaian firms -- “I want to invest in the UK.” We want them to stop with the chamber first and then we can introduce them or find them partners and so on.
We get probably 10 to 50 inquiries every week from companies in the UK saying they would like to come to Ghana and do business here. This tells me clearly that UK companies feel comfortable with Ghana.
We are part funded by the British government. We don’t know how long that fund is going to continue for. But most of our funding comes from our members. We currently have over 60 members. And these members are British and Ghanaian companies, so the likes of Tullow Oil, Vodafone, Vivo Energy and many others; have all joined the chamber and they support our activities. We have regular monthly events where UK firms and Ghanaian firms meet in Accra.
What are the UKGCC expectations towards increasing trade in the upcoming years?
If we can get our trade from one billion to about 1.4 billion in the next four years that would be a good place to be. I don’t want to put a number on it but I think you want to see substantial increases.
How do you do that? If you have more platforms where British companies interact with Ghanaian firms, and that is what we do at the chamber. We actively promote the chamber to UK companies and SMEs. And we say to them, “If you’re looking for a Ghanaian partner, we can find you that Ghanaian partner.”
So sometimes, it might be a UK firm that needs a Ghanaian company to help it promote its product in Ghana. So, the chamber actually has this service. We call them “Market Entry Services.” And we go out and we find you a partner. We are speaking to companies like Weetabix and a lot of other UK firms. And they say, “We want to come in to Ghana.” And we find them partners. And once we find them their partner, we leave the two of them to trade and go on.
How would you describe the business and investment climate in Ghana? What are the main challenges?
The biggest thing that’s happened in the last six months is that we have a government that, first of all, is financially credible. We have a government that has put fresh credibility and fresh discipline and record what it does.
Our microeconomic situation is not the best. Our debt-to-GDP ratio is over 70%. Inflation is probably 12.8%. So on the phase of it, the macro is not the most promising. But the new government has already shown that it intends to do the sort of things that allow you to fix the macro situation.
So, for example, the government has reduced statutory payments to different states and institutions and has set a really straight talk to reduce the deficit from 10.3% last year, in cash terms, to 6.5%.
There needs to be better reform of the tax sector in Ghana. The government is looking to do that anyway, and they’re looking at reforming tax exemptions. We have to be clear that if somebody is going to invest their money in this country, they’re bringing their hard-earned currency; you need to make it worth their time. And tax incentives and tax reform is some of the things that would encourage people to come.
Franklin Templeton, the emerging market investment firm, has recently made a big bet on Ghana by buying Ghana’s 15-year bond – over $2 billion worth. For a fund manager like that to make such a big bet, it must mean that people are beginning to believe that the current government is good for its word. If it says it’s going to fix the fiscal indiscipline that has been here in the last few years and it’s going to do that.
If you want to grow the small- to medium-scale companies because those are the companies that will drive our economy, you can’t charge them 30% interest rates. We need to find a way to drive our interest rates down and if the government gets the macro situation right, that will happen.
What investment opportunities would you highlight?
The financial sector in Ghana is interesting. First of all, we have too many banks. We have about 30 banks and we have 5 million people with bank accounts. There needs to be consolidation in the banking space, a big major bank could come in and buy a couple of smaller banks and put them together.
Insurance is another area where there is a large opportunity. Our insurance penetration is incredibly low compared to other countries that are similar to us in GDP and size. We already have one UK insurance company, Prudential, who have bought a local insurance company and rebranded. Prudential is a member of the chamber as well.
Agribusiness is always going to be exciting, there is no question about that, because Ghana has a lot of raw materials. We have avocado, we have cashew, mangoes, cocoa and much more.
What the government wants to do is to start adding value. Because at the moment, we are just exporting wholesale. We pick from the ground and we sell it.
We have been independent for 60 years. Ninety-five percent of our revenue, as a country, comes from digging things from under the ground and selling them to somebody else. I think that is an indictment on what the journey has been.
It’s important for Ghana to add value to our products and then export them and thanks to agreements like the EPA and the potential agreement with the UK, we already have a market.
Why would you encourage other companies to join the UK Ghana Chamber of Commerce?
We are here on the ground, we understand what is happening, people talk to us. We understand what the government is thinking on the policy-side. We understand where the opportunities are. We know people, we know companies, and we interact with companies. Our board is made up of people who stay in business – people in Ghana.
By joining the chamber, you have access to a wide network of really credible business people who can guide you into the Ghana space. I’m quite happy that in six months, 60 companies have joined us. Our goal is to grow the chamber to 100 companies. That is a real target.