Investment environment in Investment environment in Ghana Ghana

Paul Hare Paul Hare p.g.hare@hw.ac.ukp.g.hare@hw.ac.uk &&

Felicia Owusu Fofie Felicia Owusu Fofie f.owusu@hw.ac.ukf.owusu@hw.ac.uk

IntroductionIntroduction Why Ghana?Why Ghana?

• Politically - Stability 4Politically - Stability 4thth republican republican constitution in 1992. Hope of Africa? - constitution in 1992. Hope of Africa? - multi-party democracymulti-party democracy

• Economically - progress towards Economically - progress towards establishing a market-based economy establishing a market-based economy

• Legally - rule of law to boost its trade Legally - rule of law to boost its trade and investments and protecting and investments and protecting intellectual property rights. intellectual property rights.

Introduction continued Introduction continued Why Ghana?Why Ghana?

• Socially - combating corruption, producing Socially - combating corruption, producing policies to reduce poverty, increasing avenues policies to reduce poverty, increasing avenues for primary health care, providing better for primary health care, providing better educational opportunities, protection of human educational opportunities, protection of human rights and workers’ rights as well as trying to rights and workers’ rights as well as trying to limit certain child labour practiceslimit certain child labour practices

• Culturally – it ascribes to certain informal rules Culturally – it ascribes to certain informal rules and norms with strong religious beliefsand norms with strong religious beliefs

Introduction continuedIntroduction continued What in Ghana?What in Ghana? Chosen the manufacturing sector which Chosen the manufacturing sector which

accounts for 69% of the Ghanaian accounts for 69% of the Ghanaian economy economy • Wood and furniture industry which accounts for Wood and furniture industry which accounts for

19 % of the manufacturing sector19 % of the manufacturing sector• And the food processing industry which And the food processing industry which

accounts for 12% of the manufacturing sector accounts for 12% of the manufacturing sector • Use empirical social research to investigate Use empirical social research to investigate

how investments have been selected and how investments have been selected and locatedlocated

Introduction continued Introduction continued From the map below it is easy to From the map below it is easy to

classify Ghana as one of the classify Ghana as one of the minorities of the developing minorities of the developing countries that are now at the countries that are now at the “bottom of the global economic “bottom of the global economic system” Collier (2007)system” Collier (2007)

Introduction continuedIntroduction continued Ghana and countries bordering it Ghana and countries bordering it

have two or three of the have two or three of the characteristics of a failing state characteristics of a failing state described by Paul Collier; described by Paul Collier;

• Conflict trapConflict trap• Natural resource trapNatural resource trap• Landlocked with bad neighboursLandlocked with bad neighbours• Bad governance Bad governance

Efforts Efforts It opted for debt relief under the Heavily It opted for debt relief under the Heavily

Indebted Poor Country (HIPC) programme Indebted Poor Country (HIPC) programme in 2002, and reached its cin 2002, and reached its ccompletion Point completion Point in 2004.in 2004.

It prepared and begun to implement a It prepared and begun to implement a comprehensive Growth and Poverty comprehensive Growth and Poverty Reduction Strategy (GPRS), maintain Reduction Strategy (GPRS), maintain macroeconomic stability and undertake macroeconomic stability and undertake key structural reforms and social key structural reforms and social measures.measures.

Efforts continued Efforts continued It has adopted a framework that It has adopted a framework that

attracts most development partner attracts most development partner assistance which encompasses assistance which encompasses • Private sector competitivenessPrivate sector competitiveness• Human resource developmentHuman resource development• Good governance and civic Good governance and civic

responsibilityresponsibility

Attracted attention Attracted attention Attracted the attention of IMF’s Multilateral Debt Attracted the attention of IMF’s Multilateral Debt

Relief Initiative which approved 100 percent relief Relief Initiative which approved 100 percent relief on all debt incurred by Ghana to the IMF before on all debt incurred by Ghana to the IMF before January 1, 2005 that remained outstanding.January 1, 2005 that remained outstanding.

This means a total of US$381 million, or US$316 This means a total of US$381 million, or US$316

million excluding remaining assistance under the million excluding remaining assistance under the HIPC Initiative in debt relief become available in HIPC Initiative in debt relief become available in early January in 2006 to allow Ghana to increase early January in 2006 to allow Ghana to increase spending in priority areas to reduce poverty, spending in priority areas to reduce poverty, promote growth, and to make progress towards promote growth, and to make progress towards achieving the MDGs achieving the MDGs

Outcomes Outcomes In spite of its economic progress in the last In spite of its economic progress in the last

decade with high and sustained growth, it is decade with high and sustained growth, it is believed fiscal indicators have worsened sharply. believed fiscal indicators have worsened sharply.

The IMF notes fiscal deficit, including grants of The IMF notes fiscal deficit, including grants of about 5 percent of GDP, rose to just below 10 about 5 percent of GDP, rose to just below 10 percent of GDP in 2007 and increased further in percent of GDP in 2007 and increased further in 2008. 2008.

This is coupled with a rise in Government debt This is coupled with a rise in Government debt despite the recent debt relief that helped reduce despite the recent debt relief that helped reduce the debt burden from 77 percent of GDP in 2005 the debt burden from 77 percent of GDP in 2005 to below 40 percent of GDP in mid-2006 to below 40 percent of GDP in mid-2006

Our questionOur question 51 years into independence, are there 51 years into independence, are there

indications that Ghana is determined to indications that Ghana is determined to reach middle-income status? reach middle-income status?

What barriers or obstacles hold Ghana What barriers or obstacles hold Ghana back from performing even more strongly back from performing even more strongly on the road to middle-income status? on the road to middle-income status?

What kind of strategy and policy should What kind of strategy and policy should Ghana and its partners pursue to achieve Ghana and its partners pursue to achieve key development objectives? key development objectives?

Finally, where is Ghana expected to be in Finally, where is Ghana expected to be in 2015 in terms of income, poverty 2015 in terms of income, poverty reduction, and progress towards fulfilling reduction, and progress towards fulfilling the main MDG? the main MDG?

AnswersAnswers

We hope to interview some We hope to interview some industrialists, firm owners, policy industrialists, firm owners, policy makers and some elite politicians to makers and some elite politicians to find answers to these questions!!!!!!!find answers to these questions!!!!!!!

References References Collier, P. 2007. Collier, P. 2007. The Bottom Billion: Why The Bottom Billion: Why

the Poorest Countries are Failing and What the Poorest Countries are Failing and What Can be Done About it Can be Done About it Oxford: Oxford Oxford: Oxford University Press.University Press.

DFID 2004. UK welcomes Ghana's debt DFID 2004. UK welcomes Ghana's debt relief. DFID - London. p. 1.relief. DFID - London. p. 1.

International Monetary Fund. 2008. International Monetary Fund. 2008. Ghana: Ghana: 2008 Article IV Consultation-Staff Report; 2008 Article IV Consultation-Staff Report; Staff Supplement; Public Information Staff Supplement; Public Information Notice on the Executive Board Discussion; Notice on the Executive Board Discussion; and Statement by the Executive Director and Statement by the Executive Director for Ghanafor Ghana. Washington: International . Washington: International Monetary Fund.Monetary Fund.

References References World Bank. 1999. World Bank. 1999. World World

development Indicatorsdevelopment Indicators. Washington . Washington DC: World Bank.DC: World Bank.

World Bank - Ghana. 2008. Country World Bank - Ghana. 2008. Country Brief World Bank.Brief World Bank.

World Bank. 2007. Background and World Bank. 2007. Background and Ghana ’s Current Growth Context. Ghana ’s Current Growth Context. World Bank.World Bank.