Doing Business In Ghana (eBook)

John E. Spillan is Professor of Management in the School of Business at the University of North Carolina at Pembroke, USA. He is the co-author of Doing Business in Latin America: Challenges and Opportunities, Crisis Management in the New Strategy Landscape, and Crisis Management in the New Strategy Landscape. Domfeh Obed King is CEO of Nuistdok Consulting, Kumasi, Ghana. He has an MBA degree in Business Administration and Management from Nanjing University, China. He has published in Journal of Global Marketing and other publications.

Doing Business In Ghana 3
Contents 5
List of Figures 6
List of Tables 7
1 Introduction to Doing Business in Ghana 8
1.1 Introduction 8
1.2 The Thrust of the Book 10
1.3 The Structure of the Book 11
1.4 Background 11
1.5 History of Business in Ghana 14
1.6 Self-Rule 15
1.7 Why Study Ghana 16
1.8 Who Will Benefit 18
1.9 Discussion 18
1.10 Conclusion 19
References 19
2 Current Business Environment 20
2.1 Introduction 20
2.1.1 Current Business Environment of Ghana 21
2.1.2 Major Trends of Business Activities in Ghana 22
2.2 Ghana’s Strength 22
2.2.1 Oil and Gas 23
2.2.2 Forests Endowment 24
2.2.3 Mining 25
2.2.4 Political and Institutional Stability Benefits 25
2.2.5 Domestic and Regional Markets 25
2.2.6 Potential Remittances 26
2.2.7 Manufacturing Sector Opportunities 26
2.2.8 Regional Integration Opportunities 26
2.2.9 Corruption Minimization 27
2.3 Challenges and Weaknesses 27
2.3.1 Inadequate Skilled Labor 27
2.3.2 Difficulty in Obtaining Land Titles 28
2.3.3 Absence of Intellectual Property Rights 28
2.3.4 Bottlenecks in Establishing Business 28
2.4 Description Business Ventures in Ghana 29
2.4.1 The Agricultural Sector of Ghana 29
Agricultural Sector Investment Incentives and Opportunities 30
Agricultural Sector Tax Benefits and Exemptions Investment 30
Agro-processing Opportunities 30
Agricultural Sector’s Floricultural Segment 30
Agricultural Sector Challenges 31
2.4.2 The Distribution, Technology, and Services 31
The Cross-Border Trading 31
The Access to Credit 31
2.5 The Service Sector 32
2.5.1 Banking and Finance 32
Minimum Capital Requirements 33
Systems of Banking and Payment 33
Ghana Interbank Payment and Settlement System (GhIPSS) 33
Capital Markets 34
Demutualization 34
Other Relevant Matters 34
Foreign Currency Dealings 35
Exchange Controls 35
2.6 Challenges and Weaknesses in the Financial Sector 35
2.6.1 Investment Opportunities and Incentives 36
2.6.2 Credit Reference Bureaus 36
2.6.3 Discovery of Oil 36
2.6.4 Tax Exemptions 36
2.6.5 Ghana’s Competitive Advantage in the Banking Sector 37
2.7 Service Sector (Tourism) Travel to Ghana 37
2.7.1 Festivals 37
2.7.2 Forts and Castles 38
2.7.3 Museums and Other Attractions 38
2.7.4 Beaches and Lake Resorts 38
2.7.5 Waterfalls 39
2.7.6 National Parks and Gardens 39
2.7.7 Other Places of Interest 40
2.7.8 Lodges and Hotels 40
2.8 Tourist Sector Challenge and Opportunities 40
2.8.1 Challenges 40
2.8.2 Opportunities 40
2.9 ICT Sector and Its Attributes 41
2.9.1 Information and Communication Technology (ICT) 41
2.9.2 Ghana’s Initiatives on ICT 42
2.9.3 Ongoing ICT Projects in Ghana 42
2.9.4 Market in the ICT Sector 42
2.9.5 Market Trends 43
2.9.6 Investment Opportunities 43
2.9.7 The Real Estate Sector 44
2.9.8 Real Estate Types 44
2.9.9 Residential Properties 45
2.9.10 Affordable Housing Project 45
2.9.11 Commercial Properties 46
2.9.12 Industrial Properties 46
2.9.13 Recreational Properties 46
2.9.14 Construction Finance 46
2.9.15 Home Purchase Finance (Mortgage Market) 47
2.9.16 Investment incentives 47
2.10 Ghana’s Energy Sector 47
2.10.1 The Current State of the Energy Sector 48
2.11 Oil and Gas Upstream 48
2.11.1 Brief History of the Oil and Gas Industry in Ghana 48
2.11.2 Investment in the Oil and Gas Sector in Ghana 49
Local Content Requirements (Equal Participation of Ghanaian Investors) 49
Downstream Oil and Gas 50
Downstream Development 50
Upstream Oil and Gas 50
Establishing Petroleum Regulatory Authority 51
Investments in the Energy Sector 51
2.12 Electricity 52
2.12.1 Brief Background 52
2.12.2 Generation of Power 52
2.12.3 Hydropower 52
2.12.4 Renewable Source of Energy 53
2.13 Thermal Energy Sector 54
2.13.1 Osagyefo Power Barge 54
2.13.2 Private Sector Initiatives in the Energy Sector 55
2.14 Mining 55
2.14.1 Mining Tax Regime 56
2.14.2 Mineral Rights 56
2.14.3 Ghana Chamber of Mines 56
2.14.4 Benefits 57
2.14.5 Challenges in the Mining Sector 57
2.15 Regulatory Framework 57
2.15.1 Registration Requirements 58
2.16 How Globalization Is Affecting Market Structure and Business Opportunities 58
2.16.1 Definition of Globalization 58
2.16.2 Globalization, Market Structure, and Business Opportunities 59
2.16.3 Economic and Educational Benefits of Globalization 59
2.16.4 Business Expansion via Technological Advancement 60
2.16.5 Quality Products and Price Advantage 60
2.16.6 Free Capital Transfer, FDI, and Communication 61
2.16.7 Increase in GDP 61
2.16.8 Cultural Impacts 62
2.16.9 Easy Spread of Global Health-Related Problems 62
2.17 Globalization and Its Disadvantages 62
2.17.1 Disparity and Unhealthy Competition 62
2.17.2 Losses at the Domestic Firm 63
2.17.3 Trade and Technological Change 63
2.17.4 Conflicts and Monopoly 63
2.18 Trade Blocs: EU and AU 63
2.18.1 Definition 63
2.18.2 Types of Regional Trade Blocs EU 64
2.18.3 Main EU Blocs 64
2.18.4 The North American Free Trade Area (NAFTA) Trade Bloc 65
2.18.5 Other American Blocs 65
2.18.6 Asia-Pacific Trade Bloc 66
2.18.7 African Union 66
AU Objectives 67
Monitoring the Integration Process of AU 67
Achievements of AU 67
2.19 Challenges 69
2.20 Conclusion 70
References 71
3 Historical Perspective on Doing Business in Ghana 74
3.1 Introduction 74
3.2 Background 75
3.3 Import Substitution Versus Domestic Economic Liberalization Versus Export-Led Growth 76
3.4 Debt Issues 78
3.5 Infrastructure 79
3.5.1 Ghana’s Ports 80
3.5.2 Ghana’s Transport 80
Roads 81
Railways 81
Air Travel 81
Water Transport 81
3.6 Power Crisis 82
3.6.1 The 2006–2007 Crisis 83
3.7 Specific Businesses That Have Thrived or Failed 83
3.8 Discussion 84
3.9 Conclusion 85
References 86
4 Cultural Issues Affecting Business Activities in Ghana 88
4.1 Introduction 88
4.2 National Culture and Subcultures 88
4.2.1 Ghana’s Cultural Policy 89
4.2.2 Ghanaian Cultural Components 91
Language 91
Ghanaian Cuisine 92
Main Staple Foods 92
National Holidays 92
4.2.3 Ghana National Flag, Colors, and the Black Star 93
4.2.4 Ghana’s Coat of Arms 94
4.2.5 Ghana National Anthem 95
4.2.6 Other National Symbols of Identity 96
4.2.7 Independence Day Celebration 96
4.3 Social Structures in Ghana 96
4.3.1 Marriage and Family 97
4.3.2 Family Unit 98
4.3.3 Medicine and Health Care 98
4.4 Religions in Ghana 98
4.4.1 Days of Worship 99
4.5 Values and Attitudes in the Ghanaian Society 100
4.5.1 Funerals 101
4.5.2 Lateness and Absenteeism 101
4.5.3 Discrimination 101
4.5.4 The Concept of “Dwanetoa” 102
4.5.5 Male Chauvinism 102
4.6 Ghana’s Educational System 103
4.6.1 Educational Structure 103
4.6.2 Medium of Instruction of Ghanaian Education 104
4.6.3 Educational Institutions in Ghana 104
4.6.4 The Education Sector and Agencies of Ghana 104
4.6.5 Ghana Education Service 105
4.6.6 Other Agencies in the Education Sector 105
4.7 Manners and Customs in Ghana 105
4.7.1 Abusive Gestures and Taboos in Ghana 106
4.7.2 Law and Order 106
4.7.3 Dress 106
4.7.4 Titles and Business Cards 107
4.7.5 Conclusion 107
References 108
5 The Political Climate and Entrepreneurship in Ghana 110
5.1 Overview Of Chapter 110
5.2 Introduction to Ghana’s Political Climate 110
5.3 Regional Political Issues That Affect Business in Ghana 112
5.3.1 The Executive, Constitution, and Foreign Policy of Ghana 113
5.3.2 The Ministry of Foreign Affairs, Regional Integration 113
5.3.3 The Ministry of Trade and Industry 114
5.3.4 Private Sector Development (PSD) 114
5.3.5 Ghana’s Bilateral Investment Agreements 115
5.3.6 Challenges to Ghana’s Regional Issues 116
5.3.7 Transparency and Regulatory Issues 117
5.4 Political System 118
5.4.1 The Executive and the Cabinet 118
5.4.2 The Legislature 119
5.4.3 Customary Law 120
5.4.4 Local and Regional Government 121
5.5 Political Risk 121
5.5.1 Political Risks and Ghana 123
5.6 Judiciary and the Judicial System 125
5.6.1 Judiciary and the Legal System 126
5.6.2 Dispute Settlement 126
5.6.3 Traditional Laws 127
5.7 Contracts and Agreements 128
5.7.1 Contract Requirements 128
5.7.2 Consideration 129
5.7.3 Competence 129
5.7.4 Legal Purpose 129
5.8 Entrepreneurship 130
5.8.1 Entrepreneurial Process 130
5.8.2 Benefits and Obstacles to Entrepreneurship 131
5.8.3 Wealth Creation 132
5.8.4 Obstacles to Entrepreneurship 132
Infrastructure 132
Transparency, Regulation, and Standards 132
Access to Finance and the Banks 133
Corruption 133
Human Capital, Education 134
Unnecessary Competition 134
Fear of Uncertainty 134
Tax System 135
5.8.5 Youth Entrepreneurship Support 135
5.9 Conclusion 136
References 136
6 The Economic Climate of Ghana 140
6.1 Introduction 140
6.2 Introduction to Ghana’s Economic Climate 140
6.3 Ghana’s Monetary System 145
6.3.1 Interest Rate Developments in Ghana 146
6.3.2 Exchange Rate Developments in Ghana 147
6.3.3 Inflation Targeting and Whipping Inflation in Ghana 148
6.3.4 Financial Liberalization 149
6.3.5 FDI Flow Patterns 150
6.4 Economic Systems in Ghana 151
6.4.1 Typology of Economic Systems in the Region 152
6.4.2 Evolving Comparative Advantage 154
6.4.3 Geographic Influence on Business 154
6.4.4 The Ashanti Region 155
6.4.5 The Eastern Region 156
6.4.6 The Brong Ahafo Region 156
6.4.7 The Central Region 157
6.4.8 The Greater Accra Region 158
6.4.9 The Northern Region 159
6.4.10 The Upper East Region 159
6.4.11 The Upper West Region 160
6.4.12 The Volta Region 160
6.4.13 The Western Region 161
6.4.14 Comparative Cost of Doing Business Over Time in Ghana 161
6.4.15 Economic Transactions and Changes in Ghana 163
6.4.16 Market-Oriented Structural Reforms in Ghana 163
6.4.17 Labor Market Protection and Rigidities in Ghana 164
6.4.18 Labor Laws and Employment in Ghana 164
6.4.19 Labor Contract and Agreements in Ghana 165
6.4.20 Labor Union 165
6.4.21 Losses of Human Capital Due to Out-Migration 166
6.4.22 Development Implications of Migration for the Origin Countries 167
6.4.23 Informal Economy 168
6.4.24 The Role of the Informal Sector in Ghana 170
6.4.25 Contribution to National Output 170
6.4.26 Job Creation and Income Distribution 171
6.4.27 Skills Acquisition in Training 171
6.4.28 The Important Role in Increasing the Pace of Innovation 171
6.5 The Commercial System 172
6.5.1 Free Trade Blocs, Bilateral Treaties in Ghana 172
6.5.2 EPZ of Ghana 172
6.5.3 Investor – State Dispute Settlement in Ghana 173
6.5.4 Future Economic Trends in Ghana 174
6.5.5 Natural Resources Nationalism 175
6.5.6 The Debate About Investment Incentives in Ghana 176
6.6 Conclusion 178
References 179
7 Establishing Business in Ghana 183
7.1 Introduction 183
7.2 Background 184
7.3 Investment in New Venture Business: Financial Issues, Financial Markets, Business Start-Up, Financing Alternatives, Exchange Rates, Projecting Cash Flows, and Risk Analysis 185
7.3.1 Financial Issues 185
7.3.2 Exchange Rates 186
7.3.3 Risk Analysis 187
7.4 Financing Alternatives (Including Microfinance) 188
7.4.1 Microfinance 188
7.5 Agencies and Licensing 189
7.6 Physical Infrastructure and Supply Chain Management 190
7.7 Negotiation Patterns and Partners 192
7.8 Corporate Social Responsibilities 194
7.9 Making a Choice 194
7.10 Setting Up a Business in Ghana 195
7.10.1 Domestic Legal Issues 195
7.10.2 Company Registration 196
Resident Businesses, Entity Registration Requirement 196
Foreign Company Registrations 196
7.10.3 Tax Identification Numbers 197
7.10.4 Legal/Regulatory Agencies for Registration 197
7.10.5 Processes Involved in Business Registration 197
7.10.6 Ghana Investment Promotion Centre (GIPC) 198
7.10.7 GFZB and Act 199
Minerals Commission 199
Environmental Protection Agency 199
Petroleum Commission 200
Ghana National Petroleum Corporation (GNPC) 200
Ghana Revenue Authority 200
Ghana Immigration Service (GIS) 201
Visitor’s Permit 201
National Communication Authority 201
Social Security and National Insurance Trust 202
Importance of the Framework 202
Challenges of the Framework 202
Unnecessary Bureaucracies and Delays 202
Bribery and Corruption 202
Over Centralization of the Framework 202
Inadequate Equipment, Logistics, and Infrastructure 203
Illiteracy 203
Checking Illegal Businesses 203
Registrar General Department and Internal Revenue Services 203
Suggestions for the Registration Framework 203
7.11 Discussion 204
7.12 Conclusion 205
References 205
8 Commercialization 207
8.1 Introduction 207
8.2 Background 208
8.2.1 The Marketing Management Function in Ghana 210
8.3 Market Research 212
8.4 Where Are the Markets? 213
8.5 Regional Differences 214
8.5.1 Regional Integration and Trade 214
8.6 Other Marketing Information Needed to Do Business in Ghana 215
8.6.1 Ghana’s Customer-Oriented Business Culture 217
8.7 Planning 218
8.7.1 Equipment Needs 219
8.8 The Marketing Mix: Global Marketing 220
8.8.1 Product Strategy 220
8.8.2 Place (Channel) Strategy 222
8.8.3 Promotion Strategy 223
8.9 Pricing 223
8.10 Marketing Strategies 224
8.11 Marketing and the Informal Markets in Ghana 226
8.12 Discussion 227
8.13 Conclusion 229
References 229
9 Conclusion 232
9.1 Summary of Current Business Environment 232
9.2 Identifying the Countries with the Best Environments for Doing Business 234
9.3 Themes for Further Exploration 236
References 236
Index 237