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Primed for win-win partnerships

Article - November 14, 2014

World-class firms take advantage of ghana’s favourable investment climate and drive Ghana’s economy forward through partnerships

ANTHONY GRENDON, MANAGING DIRECTOR OF ACCRA BREWERY LTD

All across Ghana, public and private sector entities are entering into strategic, long-term partnerships to further the country’s development in key areas. A string of megaprojects have attracted the participation of world-class firms from industrialised nations who are taking advantage of Ghana’s democratic institutions, rapid growth, favourable investment climate and willingness to engage with the private sector to achieve major public works.

“If you look at recent reports that reflect the potential of Ghana, you soon realise the massive opportunity that exists,” says Anthony Grendon, Managing Director of Accra Brewery Ltd (ABL). “African regional reports talk about Accra and Kumasi as some of the more desirable cities to do business in on the continent. The more investor-friendly press and attention that Ghana can receive will only aid and fuel international funding and support. Current investors in the country will benefit from and contribute towards this momentum. The message we are sending is one of confidence in the future and faith in the government to make the required fiscal adjustments.”

ABL is one of Ghana’s most iconic brands. Its success using local ingredients in the creation of unique, value-added products reflects the aspirations of many businesses in the country. “Our past can often dictate our future, so reflection is important,” Mr Grendon continues. “The history of Accra Brewery has proven that it is a truly Ghanaian company. Often we are just seen as a beer company. I like to think that Ghanaians see ABL as their trusted and preferred supplier of beverages.” The original business was registered in 1931 in Switzerland as the Overseas Breweries Limited. In April of 1975, local registration took place to pave the way for Ghanaian participation and Accra Brewery Ltd was born. In 1997 SABMiller plc, then South African Breweries, acquired controlling interest in the company. “In more recent times the key milestones have been the acquisition of the number one water business in Ghana, Voltic Natural Mineral Water, and owning the number one beer brand in Ghana with our iconic ‘Charlie’ – Club Premium Lager,” says the MD. The shrewd Voltic acquisition has given ABL, the oldest brewery in West Africa, an 85 per cent share in Ghana’s mineral water market.

Significant reforms to Ghana’s tax system, now administered by the Ghana Revenue Authority (GRA), have been essential to the process of facilitating the growth of companies like ABL, and creating a transparent, fair and equitable investment climate. In December 2009, the GRA replaced three separate tax revenue agencies, taking over the administration of taxes and customs duties in the country with a new mandate to simplify, modernise and streamline domestic tax and customs operations. GRA is at the end of the process of creating one electronic platform for administrating all domestic taxes, representing a huge logistical success following the 2009 reorganisation and a major step forward in the ease of doing business in Ghana.

“We need a tax system that is friendly to investors in general,” explains George Blankson, Commissioner General of the GRA. “A minimum tax burden and administration of taxes in the most transparent way, to make them predictable, is the best way. The shift from the previous paradigm, where you gave exemptions to attract investors, gave way to a fair and transparent collection of taxes, and using resources to develop the economic, business and infrastructural environment to attract investors. We are no longer focused on using exemptions as bait for investors, but the on creation of a conducive environment. Taxpayers and investors are often not worried as much about the level of tax, as with the predictability of tax burdens, so they can do planning. Where you have discretion, they cannot do planning, and that hurts the investor even more than the level of tax itself. We try to ensure taxpayers that the tax system is transparent.”

“In Ghana, especially in the last decade, the private sector leads the growth process and the modernisation of the economy,” Mr Blankson continues. “We have generally referred to the private sector as the engine of growth for the economy; and not only the private sector from within Ghana. When we look outside Ghana, we are talking about foreign direct investment (FDI). Economic policies are being designed to attract as much FDI as we can, to make Ghana an attractive destination for investors. With private capital mobilised from outside, the growth and development of Ghana will be huge.”

“We are not looking just for money from investors,” adds Joe Tackie, CEO of Private Sector Development Strategy II, Office of the President.

“We are looking to gain experience from foreign partners in terms of business strategy. The interaction with foreign partners drives the economy forward. We must have a global mindset and be ready to import and assimilate global knowledge. The world is flat and brings about business opportunities.” The strategy, led by the office of President John Mahama, aims to make the country an attractive place for local and international entrepreneurs to start up businesses, encourage investors to put money into the economy and give incentives to businesses to create secure, well-paying jobs.

“Public-private partnerships (PPPs) are the logical way for Ghana to grow,” adds Rashid Pelpuo, Minister of State for Public-Private Partnerships and Private Sector Development. “More and more, the thinking is that we need the private sector to share the risks. PPP is one of our key areas in investment needs, to get the private sector as a partner. Ghana is ripe for that, because where there are economic challenges, business can flourish.”

To help catalyse this process, Ghana has worked with multilateral institutions like the World Bank to supply the technical and financial support to generate a pipeline of bankable PPP projects. Demonstrating this desire to bring in private-sector partners, this year Ghana agreed on a $600 million plan with Lonrho Ports, a subsidiary of London-based Lonrho Plc, to build and operate a new, dedicated oil services terminal in western Ghana, called the Atuabo Freeport. The terminal is expected to save 20 days of travel time for rigs operating off the coast of West Africa, which currently travel to South Africa for repairs and maintenance. The strategic plan is to create the right environment for oil-related businesses to come in and create jobs, while providing valuable services to a blossoming industry. “That is a very innovative approach,” Mr Pelpuo says of the Atuabo Freeport. “Without that facility, if we produce oil in great quantities, we have to repair our ships outside of the country. Businesses should take advantage of these opportunities, so we can work together and establish a working relationship over time. We can sign a PPP agreement and work with them for many years.”

A similar approach informed the decision to partner with Cox Oil, a Texas-based company, to build a $600 million refinery at Ghana’s Takoradi Port. The new, state-of-the-art refinery will supplement aging installations and provide the necessary infrastructure to bring value-added petroleum products to Ghana, as well as exports to the West African region. Recently announced initiatives to set up two new gold refineries follow this pattern, aiming to capitalise on Ghana’s abundant natural resources by allowing the local population to participate in the creation of world-class refined products, while generating income and supporting the wider economy.
In the food sector, meanwhile, companies like ABL and Blue Skies serve as informative examples of how moving up the value chain creates a win-win scenario for businesses, investors and the wider population. Blue Skies adds value to Ghana’s produce by processing and packaging it within the country, as well as employing more than 2,500 people and sourcing fruit from in excess of 150 local farms. By shipping a finished product from Ghana, Blue Skies generates superior revenues and creates numerous employment opportunities that would not possible with the export of raw materials. Blue Skies currently sells products in two leading British supermarkets, Waitrose and Sainsbury’s, and has plans to expand in Europe and the Americas.

“Seventeen years ago, we had 35 people,” says Anthony Pile, Chairman of Blue Skies. “Now have 2,500 just in Ghana, and four other factories sprinkled across Africa and South America. We have excellent air links and we have a qualified workforce; there is no reason why we can’t process raw materials here. Ghana has got to look at its mindset and focus on processing. Ghana has to become an export economy. It has to export industrial products with added value at source. That way, it could make a big profit.”

This approach has also helped ABL to create a locally integrated supply chain. “When you have a brand or product that utilises domestic raw materials immediately your value chains are inextricably connected,” Mr Grendon, ABL’s director, explains. “ABL provides jobs for thousands of Ghanaians as well as supporting the livelihoods of farmers through our brands that utilise locally produced raw materials. Our interest in our farmers does not stop there; we also assist them with new techniques and farming processes to facilitate productivity.” 

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