SA business takes off in Ghana

17 August 2005

According to a new study by the South African Institute of International Affairs (SAIIA), South African business is taking off in Ghana – and the country is set to become a stepping-stone into the rest of the West African region.

The report – “Glimpse of Hope in West Africa” – found that the relationship between South Africa and Ghana has improved greatly since the early 1990s, with both countries undergoing political liberation and economic expansion. Ghana’s first democratic elections were held in 1992, and South Africa’s in 1994.

For the research, 26 South African companies operating in Ghana were interviewed. The survey covered mining, retail, insurance, transport, tourism, banking, telecommunication, construction, services, franchising, manufacturing, fishing, advertising, aviation and energy.

South African investors see Ghana as a “beacon of hope” in the volatile and conflict-ridden West African region, the report says. Since 1992 Ghana has become a stable democracy striving to rebuild its shattered economy after decades of military misrule and economic mismanagement.

Its economy now offers generous government incentives for foreign investors, sound macroeconomic reforms to slash inflation, debt, poverty and unemployment, and the implementation of International Monetary Fund (IMF) programmes aimed at stable growth.

South African exports to Ghana increased from R21.7-billion in 1992 to R1 162-billion in 2003, while imports from the country rose from R4-billion to R52.5-billion over the same period.

Alternative to Europe
South Africa has taken advantage of this new strength by increasing trade and investment with Ghana.

Although a late entrant to the country’s market – historically dominated by Britain, France and Germany – South Africa has actively promoted its brands and products, offering an alternative for Ghanaians who, for a long time, have had to rely on European goods and investments.

Ghana is now South Africa’s second-largest trading partner in West Africa, after Nigeria.

South African investor confidence has been bolstered by Ghana’s educated and skilled workforce, vast mineral and agricultural resources, the official use of English and a shared colonial legacy.

South Africa companies can also use their operations in Ghana as a springboard to other West African markets, as the country shares borders with a number of states that lack direct trade routes to South Africa.

South African investment is in a wide range of Ghana’s economic sectors, with mining the largest and most lucrative. Other sectors with significant South African investment are multimedia communication, beverages and franchising.

SA companies currently doing business in Ghana include AngloGold Ashanti, Goldfields, SABMiller, Woolworths, Engen, Hytec Engineering, Afripa Telecom, African Explosives Limited, Multichoice, Alliance Media, Steeledale, Stanbic Bank, Shoprite Checkers, Sherwood, Steers, SAA and 3M South Africa.

Optimism and incentives
The SAIIA study found that most South African firms intend to keep doing business with Ghana. They are optimistic about the country’s political and economic prospects and confident in an administration credited with many economic reforms and investment incentives.

Incentives to invest in the country include low equity requirements, full ownership, low corporate taxes, tax holidays, tax rebates on establishing companies in certain regions, exemptions from customs duty on some import items, and investment guarantees that profits and dividends will be transferable out of the country.

Ghana has an ample supply of skilled, educated and low-cost labour for many South African firms, the study found.

South African companies have found that in-house training for managerial positions need seldom be lengthy and rigorous, because Ghanaians are already highly skilled. Moreover, English is the official language in Ghana; most of the country’s West African neighbours are French-speaking.

Most importantly, the study found, Ghana’s stable political climate has attracted foreign investors averse to the risks associated with political and economic instability in the rest of the region. South African and other foreign firms see Ghana as a safe destination for investment.

SouthAfrica.info reporter