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The second fastest-growing economy in the world in 2011

Article - September 13, 2012
Ghana experienced record-breaking growth, while attracting foreign direct investments, principally from the United States
Although much of the financial world is struggling to recover in the aftermath of an international economic recession, the Sub-Saharan African country of Ghana’s GDP grew by a record-breaking 13.4% last year, making it the one of the fastest growing economies in the world in 2011. 

With the monetary policies of the Bank of Ghana significantly contributing to this growth and stability the country has reached a single digit inflation rate of only 8.5% and has attracted a great deal of foreign direct investment (FDI).

“The stability, democratic potential and policy frameworks that we have been able to implement have led to increasing confidence on a daily basis in Ghana as a destination for FDI,” says Deputy Minister of Trade, Dr. Joseph Samuel Annan, adding that Ghana has been a role model for other countries in the region being the first to gain independence as well as put a modern infrastructure in place. “The overall investment climate is such that FDI has increased exponentially. Last year it increased by approximately 500%.”

“The overall investment climate is such that FDI has increased exponentially. Last year it increased by approximately 500%.”

Dr. Joseph Samuel Annan,
Deputy Minister of Trade

Much of the FDI originally came as a result of the Jubilee Oil Field discovery, especially from the United States, the top investor in the oil sector in Ghana, investing $407.2 million alone in the first quarter of this year.

“We are building partnerships between the United States and Ghana,” says Alhaji Muhammad Mumuni, Minister of Foreign Affairs and Regional Integration, who recently visited Washington DC striking a deal of more than $1.2 billion dollars of future investments from the American government in Ghana. “That partnership should reflect an increase in the volume, quality and balance of trade and in FDI, to build a strong and resilient economy capable of producing sustainable jobs for the people of Ghana.”

Although much of these investments have gone to the energy sector, Ghanaian officials continually seek diversification to ensure a sustainable economy. Although 5-6% of the economic growth of the nearly 14% was due to the oil and gas sector, the remainder can be attributed to other integral components of the economy, such as agriculture.

“The Jubilee discovery has had a much wider impact on the economy at large, and that also attracts investments to other sectors,” explains the CEO of the Ghana Chamber of Commerce and Industry (GCCI), Emmanuel Doni-Kwame, noting that investors are attracted to Ghana in part because the return on investment is quite high. “With this kind of stability, once you invest money, it is really safe to do business here.”

On a local level, 92% of businesses in Ghana are small and medium-sized enterprises (SMEs). The GCCI has just released a five-year plan to enable SMEs grow by using modern entrepreneurial principles and strategies.

“We want to encourage as many SMEs who are making revenue and having some kind of impact on the economy to register. We want to assist in building their capacity and formalize the way they do things,” explains Mr. Doni-Kwame, citing help with bookkeeping or benefits from the government among some of the incentives to get involved with the GCCI’s program.

Along with this initiative to help SMEs grow, the industry has been modernizing greatly with a 10% increase in mobile banking. Ghanian Minister of Finance and Economic Planning, Kwabena Duffuor states: “Mobile banking is everywhere. Farmers use cell phones, so the penetration becomes easier. That is why you are seeing the banking industry experiencing a boom.”