Ghana and SA: growing together

Mineworker at AngloGold Ashanti mine in Ghana A mineworker at AngloGold Ashanti’s
Obuasi mine in Ghana. The company was
formed out of a merger between South
Africa’s AngloGold and Ghana’s Ashanti in
a deal worth US$1.4-billion.

Janine Erasmus

South Africa maintains bilateral relations with most African nations in trade, politics and other spheres. One of its most active partners is the West African coastal country of Ghana, which, like South Africa, has shown an impressive economic performance over the past few years.

South Africa’s economic ties with Ghana have strengthened steadily since the countries established formal diplomatic relations in May 1994, a month after South Africa’s first democratic elections. Ghana is the second-biggest export market for South African goods in Africa, after Nigeria.

South Africa’s Department of Trade and Industry puts the country’s 2006 exports to Ghana at R1.7-billion, while imports from Ghana were worth R82-million.

Ghana is rich in natural resources, good foreign-exchange earners; gold, timber, cocoa, diamond, bauxite, and manganese make up the bulk of the country’s exports. An oilfield discovered in 2007 is estimated to hold up to 3-billion barrels of oil.

Although it celebrated 50 years of independence in 2007, Ghana has only developed into a stable democratic nation over the last decade. The country is rebuilding its economy after many years of military misrule and economic mismanagement.

Offering generous incentives for foreign investors, the country has introduced macroeconomic reforms to slash inflation, debt, poverty and unemployment, aimed at stable growth which, in turn, will result in increased foreign investment.

Real gross domestic product growth (GDP) averaged 5% from 1983 to 2006 and has since hovered around the 6% mark. After successful World Bank debt relief in 2004, and following further cancellations by donors, Ghana’s external debt, about $6-billion in 2001, has almost entirely been written off.

Similarly, South Africa’s economy has been completely overhauled since the end of apartheid-era sanctions and mismanagement. Bold macroeconomic reforms have boosted competitiveness, growing the economy, creating jobs and opening the country up to the markets of the world.

This has led to unprecedented economic growth, averaging at 5% in every quarter since the beginning of 2004. In the fourth quarter of 2007, South Africa recorded its 33rd quarter of uninterrupted expansion in real GDP since September 1999 – the longest economic upswing in the country’s history.

Investing in Ghana

South Africa is the 14th-largest foreign direct investor in Ghana, mainly in mining but also in communication, beverages, retail and franchising.

One of South Africa’s biggest gold producers, AngloGold, signed a merger deal with the Ghanaian gold-mining company Ashanti Goldfields in 2004 to form Johannesburg-based AngloGold Ashanti. The deal was worth US$1.4-billion and brought the percentage of South African investment to more than 60% of total foreign investment in Ghana’s mining sector.

Other South African companies operating in Ghana are mobile provider MTN, Standard Bank, brewing giant SABMiller, retailers Woolworths and Shoprite Checkers, petrol company Engen, satellite television supplier Multichoice, fast food chains Nando’s and Steers, and South African Airways, which operates four weekly flights between Johannesburg and Accra.

Woolworths operates two stores in Ghana, while Shoprite Checkers, which claims to be Africa’s largest food retailer, has since 2003 traded there as the budget supermarket chain Usave.

In 2007 the first store using the Shoprite name opened in Accra Mall. The store, says the company, is ultra-modern and indistinguishable in terms of equipment, layout and ambience from those in South African. It sources its goods locally wherever possible.

Portuguese chicken franchise Nando’s has been in Ghana since 2000, with restaurants in Accra and the country’s second-largest city, Kumasi.

In 1997 South African Breweries bought 50.5% of shares in listed company Accra Breweries Limited in a deal worth R38-million. This made South African brands such as Castle Lager and Milk Stout available alongside existing local beers.

South African telecommunications company MTN is now the biggest mobile provider in Ghana after the deal with former Investcom subsidiary Areeba, which saw MTN acquiring the entire share capital of Areeba for US$5.5-billion in July 2006. The company was the title sponsor of the 2008 MTN Africa Cup of Nations football tournament, held in Ghana.

Bilateral co-operation on many fronts

The countries have also entered into a number of official agreements, in investment, defence, tax, arts and culture, and mining and mineral beneficiation.

In May 2007 South African Minister of Foreign Affairs Nkosazana Dlamini-Zuma and her Ghanaian counterpart Nana Addo Dakwa Akufo-Addo co-chaired the inaugural session of the Permanent Joint Commission for Cooperation.

Topics on the agenda included the status of bilateral political and economic relations between the two countries, greater cooperation between South Africa and Ghana on the UN Security Council, and other areas of cooperation such as defence, arts and culture, tourism and immigration.

McArios Akanbong, Counsellor for Economic Affairs in the Ghana High Commission in Pretoria, says that South Africa is perceived to be politically neutral and economically advanced. It is therefore an attractive investment partner and the Ghanaian government, through the Ghana Investment Promotion Centre, has been actively encouraging local companies to enter the market.

The rise of Ghana

In 1957 Ghana was the first British colony in sub-Saharan Africa to achieve independence from British colonialism, becoming a republic in 1960. In the years that followed the government alternated between military and civilian, until the fourth republic was established in 1993. The current president is John Kufuor, elected in 2000.

Today, Ghana boasts one of the best-performing economies in Africa. According to the World Bank, the country’s growth and poverty reduction strategy has shown remarkable success. Overall poverty has declined from 52% in 1992 to 28% in 2006, and Ghana is on course to exceed the United Nations’ 2015 Millennium Development Goal of halving poverty.

The World Trade Organisation has lauded Ghana for achieving high growth rates and decreasing inflation. The organisation also commended Ghana’s improved fiscal situation and substantial progress in poverty reduction.

Ghana is the current chair of the African Union. It is one of South Africa’s close partners in furthering the objectives of the New Partnership for Africa’s Development in the West African region, which promotes an integrated socio-economic development framework for Africa.

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