A few years ago, shopping in Ghana meant boarding a bus to the city centre and wading through crowds of people into an open market to bargain for items. This practice still continues, but a different retail phenomenon is attracting shoppers away from open markets.
Ghanaian capital Accra’s retail shopping scene has been changing with the development of formal, Western-style malls that also serve as popular hangouts and meeting places, especially on weekends and holidays.
Accra Mall which opened in 2008 with a 21,000m² capacity, attracts an astonishing 135,000 visitors a week, according to Actis, the UK-based property investor which financed the development. South Africa’s Shoprite and Game are the anchor tenants and the mall boasts a one stop shop concept where almost all purchases can be made under one roof.
There are several reasons for this growth in retail property, most notably the 2007 discovery of oil in Ghana and its subsequent production. The country’s economy grew a whopping 14% in 2011, 8% in 2012 and is projected to grow 7.8% in 2013.
Moses Luri, head of retail leasing at Broll Ghana, property manager of both Accra Mall and A&C Mall in the east of the city, explains the growth of shopping malls.
“We have favourable economic conditions here. A growing middle class with disposable income, so now people are actually able to afford some of the brands that they are used to outside the country, or even afford their basic necessities,” he says, adding that people also want to shop in a modern environment.
Last year Marina Mall was opened. It is located in the Airport City area, a multi-purpose shopping and office hub mostly under construction close to Accra’s Kotoka International Airport, and is managed by JHI Properties Ghana, a local subsidiary of a South African property firm.
“Retail is coming up all over the place. I think a lot of people are interested in malls and shops… the setting of the malls where you can go in and you can get everything is more inviting than going to a market where everything is open and it’s crowded and it’s crazy,” says manager of the mall Florence Menson.
This push in new malls is led by South African capital. According to the IMF, the average growth of African economies for last year and this year was between 5% and 6%. South Africa’s economy, the most developed on the continent, is closely tied to the economies of developed nations. However, stagnation in Western economies resulted in South Africa experiencing lower economic growth – less than the continent’s average. Thus, South African brands such as Shoprite, Game, Woolworths, Mr Price and Truworths are looking to other African countries such as Ghana to bolster profits.
Challenges to growth
However, the growth of retail property development is not without its challenges.
“I think the number one [challenge] will be most retailers telling you that the rents are high… import duties seem to be one of the things that they talk about. And then the fact that for new retailers, unfortunately, there doesn’t seem to be any tax breaks for them with regard to the investment that they’re putting into the retail [economy],” says Luri.
Menson highlights another challenge: adjusting to longer working hours.
“I think the people [staff] are not quite ready for working long hours [as demanded in mall situations]. I think human resources management is a huge problem because some of the service providers that we use are not used to these long hours [working on shift basis and closing late at night]. Usually everybody here [in Ghana] works nine to five. Here you have to work till 10pm, you have to work on weekends,” she says.
Menson says the unreliable electricity supply also affects business.
Despite these challenges, Broll Ghana estimates that around 110,000m² of retail space will become available over the next 12- 24 months – in Accra and other cities such as Kumasi and Takoradi (the hub of the country’s oil and gas industry).
There are currently a number of retail property developments underway: the $93m West Hills Mall; One Airport Square and Nester Square, both in the Airport City development; and Oxford Street Mall on the tourist favourite Oxford Street in downtown Osu, Accra.
In Kumasi, the $48m Garden City Mall will open later this year.
The world’s second largest retailer, French firm Carrefour, this year announced it will open shop in Ghana through African distribution company CFAO.
Stability attracts investors
Last week, Ghana’s Supreme Court affirmed the results of the country’s December 2012 election, after a challenge by the opposition. Will this political stability attract more investors?
“We have shown that we have stability,” says Yaw Adu-Koranteng, a research analyst at NDK Asset Management, a local financial advisory firm in Accra.
He says most investors moving into African countries are concerned about risk, especially political risk. “We’ve shown that Ghana is a place where their investments will be safe… I think going forward it’s going to be a plus for Ghana in terms of attracting foreign direct investment.”
Menson says a lot of office buildings are under construction. International companies are also moving into the country and need office space. “The economy out there even in the developed countries is not great, even the Ghanaians who are gone [those living abroad] are coming back home. So, I think there’s a lot of room for growth and a lot of people are seeing the potential in Ghana,” she says.
“If you look at some of the grocery retailers, talk about the likes of Carrefour and talk about the likes of Casino Group, all these [retailers] are looking at Ghana. Talk about international fashion labels and they are all looking at Ghana and so there’s a lot of demand coming from there and that’s fuelling all the projects that we have on the table”, Luri says.