About Us Economic & Commercial Brief

High Commission of India

Accra (Ghana)

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ECONOMIC AND COMMERCIAL BRIEF

Ghana is considered as the gateway to West Africa and to the African continent for investor because of its political stability, economic liberalism, abundant natural resources, low crime rate, respect for rule of law and comparatively large and diverse economy. The country is one of the fastest growing economies in the ECOWAS sub-region over the last five years, until falling oil prices and the pandemic outbreak plunged the country into economic recession. Ghana is classified as high risk of debt distress.

According to IMF, Ghana’s GDP growth decelerated from 6.5% in 2019 to 0.5% in 2020 due to the impact of COVID-19 pandemic. The economy rebounded because of strong agriculture (cocoa), mining (gold) and services sectors and ended year 2021 at 5.4%, with an even higher non-oil GDP growth at 6.9%. Public debt to GDP ratio increased from 61.2% in 2019 to 74.4% in 2020 and further rose to 76.6% at the end of 2021, reflecting some key events during the period such as energy IPPs payments (about GHs16bn) and counting) and financial sector clean-up cost (about GHc25bn since 2018), fiscal deficits in election years of 15.2% of GDP in 2020 compared to the 8% average from 2017 to 2019. Ghana’s debt interest payment has increased from -15.2% GDP in 2020 and reached -13.9% GDP in 2021.

The economy suffered significantly since early 2022, plunging the country into a full-blown economic recession. Inflation rose from 13.9% in January to 37.2% in September, and some analysts believe the actual level is more than twice the official rate – possibly as high as 98%. Petrol and diesel prices have jumped by 88.6% and 128.6% respectively. Most public transport fares have increased by over 100% since January 2022. Likewise, water and electricity tariffs have risen by 27.2% and 21.6% respectively this year. According to the World Bank, Ghana has the highest food prices in sub-Saharan Africa, with prices soaring by 122% since January 2022.

The World Bank has classified Ghana as high risk of debt distress. Problems began when international credit rating agencies downgraded the country to junk status due to its unsustainable and growing debt. The relegation denied access to global capital markets and prevented the raising of the US$ 2-3 billion Eurobond required to service its debts and support the Ghana cedi, which then went into free-fall. The country’s interest rate of 30% and lending rate of 35% are the highest in Africa. The Ghana cedi has become the worst performing currency globally after it lost 40.1% of its value to the US dollar and the IMF revised Ghana’s projected growth rate for 2022 from 5.2% to 3.2%.

The major problem is rising debt, which stands above 80% of GDP and is projected to reach 104.6% by the end of 2022. Ghana has been thrust into debt distress as 70% of its total revenue must go towards debt servicing. This leaves little room for other statutory obligations or investment in education, health and infrastructure. As per Bank of Ghana, the country’s Gross International Reserves fell to US$ 6.6bn, equivalent to 2.9 months of import cover in September 2022, compared with the December 2021 figure of US$ 9.7bn, equivalent to 4.3 months of import cover. The size of Ghana’s economy is estimated at about US$ 72bn and about 70% of revenue is expected to be spent to service its debt.

While the government blames the economic crisis on COVID-19 and Russia’s invasion of Ukraine, the political opposition and some civil society organisations believe state mismanagement is largely responsible. Ghana started its negotiations for a bailout of $3 billion (€3.07 billion) with the institution in late September. The government has said it hopes to reach a deal by the end of the year.

Outlook

According to World Bank, Ghana’s GDP is expected to grow at 3.5% in 2022 and average 3.3% over 2022-2024 as macroeconomic instability and corrective policy measures depress aggregate demand. The weakening impact of high inflation and elevated interest rates on private consumption and investment will be reinforced by monetary and fiscal tightening. Forecast in 2023 on the supply side are: agriculture is expected to grow at 2.2%, given high input prices and issues with cocoa plants; industrial output is projected to grow by 2.4% from 3.8% projection of 2022, as the oil and gas sector slowly recover from the technical difficulties experienced in the past 2 years; services are expected to grow by 2.7% as high domestic inflation erodes the purchasing power of consumers. The fiscal deficit is projected to remain high in 2023, at 9.2% of GDP, and beyond.

Bilateral Trade

India is among the five top trading partners of Ghana. Bilateral trade between India and Ghana crossed the US$ 1 billion mark a decade ago (US$ 1.2 billion in 2011-12) and has since been on the rise, largely due to increase in India’s import from Ghana. Total trade saw an astounding growth rate of 35.2% in 2014-15 (US$ 1.9 billion) and a record 85.9% in 2015-16, and reached US$ 3.6 billion but dropped sharply to US$ 2.6 billion in 2016-17. Bilateral trade grew at a rate of 27.6% in 2017-18 (US$ 3.3 billion) and 33.9% in 2018-19 (US$ 4.4 billion) but sharply declined by 46.6% in 2019-20 (US$ 2.39 billion). As economies slowly recovers from the pandemic, bilateral trade grew by 16.5% growth to US$ 2.6 billion in 2020-21.

India’s growing import was the main caused for increased and/or decreased bilateral trade in most years. India’s export has been more or less constant in its growth, except for the two years it contracted (at -7.0% in 2012-13 and -13.9% in 2019-20) in the last decade. The balance of trade is in Ghana’s favour, but the gap has diminished in the last three years.

(In US$ million)

Rank

Year

(Apr-Mar)

Export

Import

Total Trade

Trade Balance

71st

2010-2011

579.77

159.75

739.52

420.02

67th

2011-2012

800.35

341.01

1,141.37

459.34

69th

2012-2013

744.12

277.61

1,021.74

466.51

64th

2013-2014

831.48

370.56

1,202.04

460.92

54th

2014-2015

680.39

1,257.60

1,938.00

-577.21

41st

2015-2016

623.73

2,981.27

3,605.01

-2,357.54

46th

2016-2017

681.03

1,938.54

2,619.57

-1,257.52

43th

2017-2018

635.78

2,710.05

3,345.84

-2,074.27

41th

2018-2019

717.33

3,763.41

4,480.74

-3,046.08

50th

2019-2020

617.42

1,773.55

2,390.97

-1,156.13

45th

2020-2021

862.50

1,374.96

2,237.46

-512.46

53th

2021-2022

1,109.46

1,497.77

2,607.24

-388.31

48th

2022-2023

(Apr-Sep)

539.86

1,320.50

1,860.36

-780.64

(Source: GoI’s Department of Commerce. (https://commerce.gov.in/trade-statistics/)

The major items of India’s exports to Ghana are engineering goods/agricultural machinery, drugs and pharmaceuticals, chemicals, vehicles and parts, electrical and electronic goods, plastics and articles thereof, iron & steel and articles thereof, beverages & spirits, cereals, and textiles. India imports from Ghana are gold, cocoa, cashew nuts, wood and timber.

India’s Investment in Ghana

India is among the top investors in Ghana. In 2021, India was the 2nd investors by number of projects with 25 [after China] and 3rd by value of FDIs worth US$ 98.84 million [after Singapore and Australia]. India’s FDIs constituted 7.61% of Ghana’s total FDI of US$ 1,298.66 million in 271 projects during Jan-Dec 2021. India’s FDIs in 2020 was US$ 34.87 million in 11 projects which represents 1.32% of Ghana’s total FDIs of US$ 2,650.97 million in 279 projects in 2020.

Between 1994 and 2021, Indian companies (wholly-owned and JVs) made FDIs of US$ 2.2 billion in 870 projects. Indian investments are spread across diverse sectors such as pharmaceuticals, construction, manufacturing, trading, agro-processing, etc. See table below.

FDIs by Indian (wholly-owned and JVs) companies from 1994 to 2021

Sl. No.

Sector

Number of projects

FDIs (US$ million)

1.

Agriculture

45

377.04

2.

Building & Construction

54

74.18

3.

Export Trading

126

49.73

4.

General trading

170

149.72

5.

Liaison

39

399.40

6.

Manufacturing

275

1,114.36

7.

Service

120

55.64

8.

Tourism

41

6.25

Total

870

2,226.32

Source: Ghana Investment Promotion Centre (GIPC)

Recent Business Exchanges

Trade chambers/associations in Ghana and India have over the years. CII and FICCI have MoUs for cooperation with the Association of Indian Industries (AGI) and the Ghana National Chamber of Commerce and Industry (GNCCI).

As part of trade promotion activities, chambers/associations and export promotion councils (EPCs) organized business events with focus on Ghana, in partnership with the Mission, which actively promote such events, by disseminating information, soliciting participants, confirming speakers, dignitaries. Some recent ones in which Ghana participated at ministerial level are:

  • The India-Africa ICT Expo & Conference (14-15 September 2022) was launched in Accra and addressed by Mr. Michael Okyere Baafi, Deputy Minister of Trade. The previous India-Africa ICT Expo & Conference in virtual mode (5-6 October 2021) was addressed by Mrs. Ursula Owusu-Ekuful, Minister of Communication and Digitalization.
  • The 17th CII-EXIM Bank Conclave 2022 on India Africa Growth Partnership (19-20 July 2022) was attended by Ghanaian delegation led by Mrs. Mavis Hawa Koomson, Minister for Fisheries & Aquaculture. The 16th CII-EXIM Bank Conclave 2021 on India and Africa Project Partnership (from 13-15 July 2021) in virtual mode was addressed by Mr. Alan Kyerematen, Minister of Trade and Industry; Dr. Matthew Opoku Prempeh, Minister of Energy; Ms. Shirley Ayorkor Botchwey, Minister for Foreign Affairs and Regional Integration; and Mr. Kwaku Asante Boateng, Deputy Minister of Railways.
  • A Business Opportunities between India and Ghana, jointly organised by CII, HCI and AGI on 16 February 2022, was addressed by Mr. Alan Kyrematen, Minister of Trade and Industry, Mr. Kwaku Ampratwum-Sarpong, Deputy Minister of Foreign Affairs & Regional Integration, and Mr. Yofi Grant, CEO, Ghana Investment Promotion Centre (GIPC).

Business Delegation visit

There was a lull in business delegation visit to Ghana due to challenges arising from the pandemic and travel restrictions, lockdown. With the opening of the country and relaxed Covid protocols this year, trade delegation visits from India have resumed and four have successfully concluded their visit, namely-

  • 48 Indian companies in the agriculture sector, led by Assocham, visited Ghana and participated at the Agritech West Africa 2022 (23-25 March 2022).

  • 50 Indian companies in pharmaceuticals and medical devices companies, led by FICCI, participated at the West Africa Pharma & Healthcare (27-29 April 2022).

  • 30+ Indian companies in ICT and telecom organised by PEPC participated in their flagship event, India-Africa ICT Expo & Conference (14-15 September 2022).

  • 36 Indian companies in the energy sector, led by ICC, showcased their products and technologies at the Power & Energy Ghana Expo 2022 (14-16 November 2022)

Trade promotional activities

Mission collaborates with local and Indian partners and organizes business events, buyer seller meets (BSMs) to provide platform to Indian companies/exporters and potential Ghanaians traders/importers to interact and discuss trade and business. Activities held so far this year include India-Ghana Business Summit on “Strengthening India-Ghana business relations, post-Covid“ (6 April 2022); Business Meet on “Exploring Opportunities in Pharmaceuticals & Healthcare in Ghana” (26 April 2022) and virtual Buyer Seller Meets (BSMs) organised with PEPC on plastics (2 August 2022); with ESC on ICT (28 July 2022); with TEPC on ICT and telecom (25 March 2022); with PEPC on plastic (23 February 2022); with MPEDA on marine products (11 February 2022).

Development Cooperation

Ghana was included as one of the nine West African countries under the Government of India (GoI)’s TEAM 9 Initiative launched in 2004. India has been supporting Ghana’s development by providing assistance for projects through concessional Lines of Credit (LoCs) and grants. Since 2003, GoI extended 10 LoCs, with aggregate value of US$ 390.27 million, to Ghana. Most of the LoC-funded projects have been completed while a few (or 3 LoCs) are yet to be executed and at various stages of implementation. Perhaps the most outstanding projects are the Flagstaff House/Presidential Complex in the heart of Accra (under LoC) and the India-Ghana Kofi Annan Centre of Excellence for ICT, popular known as AITI-KACE (i.e. Advance Information Technology Institute-Kofi Annan Centre of Excellence) with a supercomputer set up in 2003 (under Grant). The table shows the 10 GoI’s LoCs extended to Ghana.

In US$ million

Sr. No

Amount

Purpose of Line of Credit (LoC)

1

15.00

Rural Electrification

2

27.00

Rural Electrification; Agricultural and Transportation projects

3

60.00

Rural Electrification project (US$ 30 million)

Construction of Presidential Office (US$ 30 million)

4

25.00

Railway Corridors; Agro Processing Plant;

Foreign Service Training Institute (US$ 5 million)

5

21.72

Improved Fish Harvesting & Fish Processing Project;

Waste Management Equipment and Management Support Project

6

35.00

Sugar Plant

7

24.54

Sugarcane Development and Irrigation Project

8

150.00

Strengthening of Agriculture Mechanization Services Centres

9

30.00

Rehabilitation and Upgradation of Potable Water System

10

2.01

Construction of Foreign Service Training Institute

Total

390.27

Source: EXIM Bank of India (https://www.eximbankindia.in/lines-of-credit)

For project exports from India, especially in the infrastructure sector, Exim Bank of India, in April 2011, collaborated with ECGC Ltd. and introduced Buyer’s Credit under Government of India’s National Export Insurance Account (BC-NEIA) programme, and provides funding and facilitates project exports from India. Under Buyer’s Credit, Exim Bank of has provided three loans to the Government of Ghana, viz. US$ 447.17 million for Tema-Akosombo-Mkpakadan railway project, US$ 158.62 million for Tamale to Walewale road project phase-1, and US$ 24.98 million for the Assembly Plant for Tractors, Backhoe Loaders, etc.

Under Ministry’s (MEA)’s e-VidyaBharati and e-AarogyaBharati (e-VBAB) Network project, the Telecommunications Consultants India Limited (TCIL) has signed a MoU with the Government of Ghana on 26 August 2019 for participation in the e-VBAB Network Project. The project seeks to provide quality, affordable and effective tele-education and tele-medicine (including continued medical education and tele-medicine consultation) services by linking educational institutions and hospitals in India with those in participating countries in Africa through internet. Ghana was the pilot country for implementation. Under the e-VidyaBharati (tele-education) projects, 591 Ghanaian students were awarded scholarship to pursue UG/PG/Diploma programmes in six prestigious Indian universities in the last three academic sessions which commenced in January 2020, July 2020 and January 2021. TCIL has partnered with KNUST University for implementing the e-VBAB Project in Ghana and an e-Learning Centre was set up and launched in November 2021.

November 2022

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