Ghana boasts of a premier location to business on the African continent. Conditions present include political stability, a growing economy increasing consumer demand accessibility to the wider West African market.
Ghana’s economy continued to expand in 2019 as the first quarter gross domestic product (GDP) growth was estimated at 6.7%, compared with 5.4% in the same period of last year. Non-oil growth was also strong at 6.0%. The relatively high quarterly growth was driven by a strong recovery in the services sector which grew by 7.2% compared with 1.2% in 2018.
The government continued with its fiscal consolidation efforts in 2019 even though there were still challenges in meeting the revenue targets. Fiscal performance for the first half of 2019 showed an overall budget deficit (on cash basis) of 3.3% of GDP higher than the target of 2.9% of GDP. This is because the revenue shortfalls of 1.6% of GDP was higher than expenditure cuts of 1% of GDP.
Private sector credit grew stronger, supported largely by the well-capitalized banking sector. Inflation continued to be in single digits in the first six months of 2019; gradually rising from 9% in January to 9.5% in April 2019 but reduced to 9.1% in June 2019 mainly driven by low food inflation.
Ghana’s current account in the first half of 2019 was estimated at a surplus of 0.1% of GDP supported by favorable trade conditions of Ghana’s three main export commodities—oil, gold and cocoa, resulting in a trade surplus of 2.8% of GDP. The current account surplus, combined with significant inflows to the capital and financial accounts, resulted in an overall balance of payments surplus equivalent to 1.9% of GDP. With the issuance of the $3 billion Eurobond in March 2019, the international reserves significantly improved in 2019 with Gross International Reserves (GIR) of $8.6 billion (equivalent to 4.3 months of import cover) at the end of June 2019.
The Ghana cedi came under considerable pressure in the first quarter of 2019, due to high demand, as importers sought to restock their supplies but, in the second quarter, the domestic currency market became relatively calmer. The Ghana cedi cumulatively depreciated by 8.2% in the year to July 18, 2019.
Outlook: Economic growth is projected to increase to 7.6% in 2019. Non-oil growth is expected to accelerate to 6% as the government’s new policies in the agriculture sector and the promotion of agribusiness begin to take effect. Inflation is expected to remain within the Central Bank’s target range of 6-10% over the medium term.
The pace of fiscal consolidation is expected to slow in 2019 and the overall fiscal deficit is projected at 4.5% of GDP in 2019 and, in the medium term, it will remain within fiscal rule ceiling of 5% of GDP.
Risks and Challenges: Maintaining a fiscal consolidation stance and staying on a sustainable path through the 2020 election cycle will be a challenge over the next two years. Also, Ghana’s energy sector is in dire financial conditions and without remedy, this poses serious fiscal risks in the coming years. The sector is facing high costs from excess power capacity and natural gas supply, which are exacerbating the existing revenue gap. An Energy Sector Recovery Program (ESRP), approved in May 2019, provides an action plan to the government to bring the sector back into financial balance over the next five years.
More than 98% of Ghanaians are Black Africans, although the country is very multiethnic. The Ashanti people are the largest ethnic group in Ghana. Until the 10th century BC, most of Ghana was uninhabited by humans. By the 10th century AD, the Ashanti’s had established a settlement in the area and were later joined by others in the 16th century.
Out of the 26,652,767 people in Ghana, around 50.9% is the male population, while the female population is around 49.1%. With a population growth rate of 2.2%, the total number of births this year (2014) will be approximately 586,361. The population growth rate is fairly high in Ghana.
Most people in Ghana are citizens of Ashanti territories or Ashanti land: 4.7 million in Ashanti, 2.3 million in Brong-Ahafo, 2.2 million living in Central, 2.6 million in Eastern, 2.3 million living in Western, and 4 million in Greater Accra.
Major ethnic groups in Ghana include: Akan (47.5%), Dagbani (17%), Ewe (14%), Ga-Adangbe (7%), Gurma (6%), Guan (4%), Gurunsi (2.5%), and Bissa (1%).
Common languages in Ghana include: Asante 16%, Ewe 14%, Fante 11.6%, Bono (Brong) 4.9%, Dagomba 4.4%, Dangme 4.2%, Dagarte (Dagaba) 3.9%, Kokomba 3.5%, Akyem 3.2%, Ga 3.1%, and other at 31.2%. The English language does function as an official language here as well.
There are about 375,000 registered legal permanent residents in Ghana as well as foreign workers and students.
Salaries & Wages
Ghana National Tripartite Committee (NTC) announced 10 per cent increase in the daily minimum wage for Ghanaian workers starting January 2019.
The daily minimum wage has been raised to GHȻ10.65 from current GHȻ9.68.
A resident person’s worldwide income is assessed for tax. Income from business and investment (from both Ghanaian and foreign sources) is included in determining the resident person’s assessable income.
The business and investment income of a non-resident person is included in the assessable income for a year of assessment if that income has a source in Ghana. Where a non-resident person has a Ghanaian permanent establishment (PE), any income connected with the PE is assessed to tax.
The general corporate income tax (CIT) rate is 25%.
Mining and upstream petroleum companies pay CIT at a rate of 35%, while companies principally engaged in the hotel industry pay a reduced rate of 22%.
The CIT rate for companies engaged in non-traditional exports is 8%, while banks’ lending to the agricultural and leasing sectors pay a CIT rate of 20% on income from those businesses.