There is no escaping that trade has been the top item on the agenda for the UK as it refocuses its global ambitions and a post-Brexit economy. Brexit supporters believe there are plenty of ‘lands of opportunity’ awaiting UK businesses once the European drawbridge has been raised and the nation can again freely sail the seven seas – just as it did centuries ago.
UK business and the government are fully aware it needs to forge new partnerships overseas – with Africa viewed as an ideal trading partner. UK Prime Minister Theresa May, seeking these fresh avenues, emboldened the hopes of African nations on her trade mission in the summer.
May emphasised the desire to see an economically strong African continent saying a “prosperous, growing and trading Africa” was “in all of our interests”, adding the continent’s “incredible potential will only be realised through a concerted partnership between governments, global institutions and business”.
There is increased discussion around the need to promote Africa’s bilateral trade, strengthen human capabilities to sustain growth and ensure that the progress produces visible changes in the lives of the 1.2 billion who live on the continent.
Despite the push towards economic resilience and diversification, most African countries continue to be held back by the lack of scalable initiatives that can transform their economies.
However, things are changing. There is a continent-wide shift that is beginning to emerge across Africa, and many African nations now emphasise the correlation between innovation and socio-economic transformation. African nations are starting to invest in infrastructure in order to become active players in today’s global science-based economy. Ghana is one of the nations who is at the forefront of pushing the African business agenda making the case for renewed investments in the country and across the continent.
The interest is, however, mutual, as recently the UK launched its ambition to generate billions more investment in Africa to trigger transformational growth. As the UK aims to generate up to £8bn (US$10.6bn) of vital public and private investment in Africa to create jobs and boost growth over the next four years, Africa’s expanding population and strong economic growth could translate into especially high returns for investors.
Trade not aid – invest in projects
The nub of any such large-scale bilateral business investment plan is competitive financing, and this is where London is particularly inviting. Though over half of UK investment in Africa is held in mining and extraction, financial services generate the largest amount of earnings (£1.7 billion ($2.2bn)). UK FDI in Africa grew from £19.2bn ($25bn) to £39.5bn ($52.1bn) between 2005 and 2014, representing significant opportunities for African countries and companies looking to do business.
In Ghana, the UK-Ghana Chamber of Commerce is acting as an enabler – convening UK financiers, professional services, and leading companies as partners for every component where beneficial.
Since assuming office in January 2017, President Nana Akufo-Addo has pivoted his agenda on the mantra “Ghana Beyond Aid”. In his inauguration speech, he said: “We will provide vision and direction and shine the light down the path of our entrepreneurs and farmers. We are, indeed, counting on a vibrant private sector to drive growth and create jobs. We will stimulate the creative juices of innovators.”
It is for a vision of a country that is not dependent on international aid but rather focused on trade and investment. It is a vision shared by many of its European partners including Denmark and the Netherlands who have already announced the cessation of development assistance to Ghana and refocused on getting home-based companies to trade with Ghanaian businesses instead.
Thanks to this vision, there is a renewed climate conducive for investments in the country. And this is a perspective already shared by the UK government who have invested a significant portion of UK Aid in private companies (through CDC Group plc) who employ hundreds of young Ghanaians. During Prime Minister Theresa May’s visit to some African countries in August, her minister for Africa, Harriett Baldwin visited Ghana simultaneously announced a new package that would see the creation of some 15,000 new jobs in Ghana and facilitate about £50m ($66m) worth of investments into Ghana. This is a lead many British businesses have already taken, setting up shop in the country.
Also, prudent economic management by Ghana’s fiscally conservative finance minister has stabilised its macro-environment, with Standard & Poor’s upgrading Ghana’s rating from a B- to a B with a stable outlook. The only African country to get a ratings upgrade since Senegal in 2017. Since he took office Ghana’s deficit has been reduced from 9% to 6%, with 2018’s deficit expected to come in around 4.5%. These positive developments should soon begin to translate into real economic gains.
Ghana, a trailblazer
After yet another peaceful election, Ghana has continued to uphold its reputation in Africa as one of the continent’s few strong and politically stable democracies. The country’s peaceful democratic transition has reignited investor confidence in the country, especially with the new government’s pro-business stance. The country’s pro-business reforms have further bolstered trade and investment outlook and despite macroeconomic challenges in recent years, Ghana remains one of the most promising business destinations on the continent.
As per a Deloitte “Invest in Ghana” report, the country offers investors a relatively peaceful business environment compared to the rest of the region with limited discrimination against foreign-owned businesses, a variety of investment incentives, a stable and predictable political environment, a free-floating exchange rate regime, the second-largest and second-most populous economy in West Africa, and endowed with vast natural resources. Ghana presents an enticing prospect for UK foreign direct investment as a combination of government policy and private sector development is in place to firmly position it as “gateway to Africa.”
Once again, there’s an open opportunity for UK enterprises and private businesses to take advantage of what’s happening in the country for their mutual benefit. This might already be happening in a very casual way, but now is the time to quicken the pace and boost the size of these investments.
The doors are open, and Ghana is ready for business. The country has done all the right things to set a path for irreversible growth, and there are great opportunities for investors.
Tony Burkson is the chief executive of the UK Ghana Chamber of Commerce.