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Economic and Commercial Brief

Economy Overview

Ghana’s rapid growth was halted by the COVID-19 pandemic, the March 2020 lockdown, and a sharp decline in commodity exports. The economy had grown at an average of 7 percent in 2017-19, before experiencing a sharp contraction in the second and third quarters of 2020.

The economic slowdown had a considerable impact on households. The poverty rate is estimated to have slightly increased from 25 percent in 2019 to 25.5 percent in 2020.

The overall fiscal deficit doubled to 15.2 percent in 2020. Public debt increased to 81.1 percent of GDP in 2020, placing Ghana at a significant risk of debt distress. Growth firmed up further in first and second quarters 2021 despite a sharp contraction in mining and the pandemic’s second wave.

Provisional fiscal data for first half of 2021 suggest that the authorities cut spending to make up for revenue shortfalls. The overall fiscal deficit was 5.1 percent of GDP.

Headline inflation remained relatively low at 7.8 percent in June 2021, as the pandemic-induced food price shock eased, prompting the Bank of Ghana to reduce the policy rate by 100 basis points to 13.5 percent in May to support the recovery. However, inflation inched up 9.7 percent in August due to higher food and non-food inflation.

Fueled by the domestic recovery, imports expanded faster than exports in early 2021 while external demand for commodities remained subdued. As a result, the current account deficit widened from 0.8 percent of GDP in 2021’s second quarter to 1.3 percent of GDP in 2021’s second quarter. 

Outlook

Ghana’s economy is projected to recover gradually over the medium term, thanks to commodity price growth and strong domestic demand. Ghana received $1 billion equivalent in the recent IMF SDRs allocation, part of which will go to support economic recovery.  Growth is expected to average 5.1 percent yearly in 2021-23. After declining by 1.7 percent in 2020, real per capita GDP is projected to return to its pre-COVID-19 level in 2021.

The fiscal deficit is expected to remain high as the government implements its economic support program. It is projected to narrow to 14 percent of GDP in 2021 and 9.5 percent by 2023 - still above Ghana’s 5 percent ceiling.

Source: World Bank


Commercial Relations

Trade

India is one of the major trading partners of Ghana. Bilateral trade crossed US$ 1 billion mark in 2011-12 and over US$ 2.2 billion in 2020-21. Ghana has a positive trade balance with India. The trade figures for the last few years are as follows :

(in US$ million)


Year

India’s exports to Ghana

India’s Imports from Ghana

Total Trade

Balance of Trade

2016-17

682.27

1938.54

2620.82

-1256.27

2017-18

635.78

2710.05

3345.83

-2074.27

2018-19

717.33

3763.41

4480.74

-3046.08

2019-20

617.42

1773.55

2390.97

-1156.13

2020-21

862.50

1374.96

2237.46

-512.46

2021 – 22 (Apr - Feb)

1005.68

1423.21

2428.89

-417.53

(Source: Department of Commerce, Government of India)

India’s major exports to Ghana include pharmaceuticals, packaging materials, rice, electrical equipment, transport vehicles, agricultural machinery, etc. India’s major import items are gold, mineral fields, edible fruits and nuts, wood and articles of wood, etc.

Investment

According to Ghana Investment Promotion Centre (GIPC) Indian companies have invested in more than 700 projects with total investment of around US$ 1.73 billion in between September 1994 and December 2019. India brought in US$61.57 million with 9 projects between January to June 2021. From April to June 2021, India was the leading source by FDI value with US$59.11 million in the second quarter of 2021. Star Cement Limited is a wholly owned Indian company that deals in manufacturing of cement. Its total investment is US$ 53 million. Crumb processing Ghana Limited is also an Indian Joint venture company with an estimated investment value of US$ 3.9 million. They deal in manufacturing, growing, purchasing, and processing of natural rubber.


Development Cooperation


Ghana was included as one of the nine West African countries under the GOI’s TEAM 9 initiative launched in 2004. India has been supporting Ghana’s development by providing assistance in setting up projects through provision of Lines of Credit and grants. Some of the projects have been completed while a few are in various stages of implementation. Amongst the recent projects are the India-Ghana Kofi Annan Centre of Excellence for ICT; the Flag Staff House (Presidential Complex); the Pan African E-Network Project and Rural Electrification Project. Two projects under EXIM Bank of India’s Line of Credit were successfully commissioned – Komenda Sugar Plant on 30 March 2016 and Elmina Fish Harvest & Processing plant had been completed and handed over to the Government of Ghana in May 2017. A Line of Credit facility for supply of 104 fire tenders to Ghana National Fire Services was also completed on 3rd December 2016.


Government of Ghana signed a Buyers’ Credit agreement with EXIM Bank of India for US $ 398.33 million for Tema-Akosombo railway line on 22 November 2016. The project has been extended to cover upto Mpakadan and consequently the credit assistance has been enhanced to US$ 447.17 million. This project is expected to be completed by July 2021.


A LOC for US$ 5 million was signed by Government of Ghana in 2016 for construction of Foreign Policy Training Institute, which is currently under implementation. An additional LOC of US$ 2 million has also been approved by the Government of India for construction of extended facility of FSI as requested by the Government of Ghana. LoC agreements of US$ 150 million for Agriculture Mechanization and US$ 30 million to upgrade Potable Water Supply System in Yendi Town were signed in April 2019 and are currently under implementation.


The Government of Ghana has signed and ratified International Solar Alliance Framework Agreement, an initiative of Government of India, for solar resource rich country to harness renewable source of energy to complement their energy mix for development.

A MOU was signed on 26 August 2019 between the Government of Ghana and TCIL for participation in the e-VBAB (tele-education & tele-medicines) Network Project. Ghana was the pilot country to roll out the e-VBAB Network Project. Under the e-VBAB Network Project, tele-education & tele-medicine services from India shall be offered to African countries through specially developed web based platforms. The e-VBAB Network Project seeks to provide good quality, affordable and effective tele-education and tele-medicine (including continued medical education and tele-medicine tele-consultation) services by linking educational institutions and hospitals in India with those from participating countries in Africa using the medium of internet. The project is currently under implementation.

An MOU was signed on 27 April 2022 between AGI and FICCI in the presence of the the deputy trade Minister and the High Commissioner of Inida, Accra, to cooperate in activities towards promotion of trade and investment between India and Ghana.

Recent Business Exchanges

There has been active cooperation between the trade associations of Ghana and India over the years.

In July2021, the 16th edition of CII-EXIM Bank Conclave 2021 was virtually attended by Hon. Dr. Matthew Opoku Prempeh, Minister of Energy; Hon Minister Alan Kyerematen, Minister of Trade and Industry; Hon. Shirley Ayorkor Botchwey, Minister for Foreign Affairs and Regional Integration; and Hon Kwaku Asante Boateng, Deputy Minister of Railways.

In August 2021, Hon. Dr. Matthew Opoku Prempeh, Minister of Energy, virtually participated in the International Solar Alliance (ISA) Regional Ministerial Meeting for the Africa Region.

In September 2021, Hon. Dr. Owusu Afriye Akoto, Minister of Agriculture, virtually participated in the CII India Africa Agriculture & Food Processing Summit.

In October 2021, Hon. Dr Eric Nkansah representing the Minister of Education virtually participated in the CII India-Africa Higher Education & Skill Development Summit.

Also in October 2021, Hon. Ursula Owusu-Ekuful, Minister of Communication and Digitization, virtually participated in the India Africa ICT Expo & Conference.

The High Commission of India (HCI) organized seven buyer-seller meets in the period 2021/2022. Some of the meetings/business seminars held during 2021/ 2022 period are :

1. In April 2021, the India Business Forum (IBF) was held in physical format at the HCI.

2. In October 2021, the HCI and the Agricultural and Processed Food Products Export Development Authority (APEDA) organized an India-Ghana Virtual Buyer Seller Meet (BSM) on Agro and Processed Food Products.

3. In November 2021, the HCI and the Electronics and Computer Software Export Promotion Council (ESC) organized a Virtual B2B Meet on "Trade & Investment Opportunities between Indian & Ghanaian Electronics Companies" dealing in various Electronics items, IT Hardware and Telecom Equipments.

4. In December 2021, a Chemical B2B was held by the HCI and CHEMEXCIL on chemical products including agro, textile, and cosmetics.

5. In December 2021, during the India Ghana Dialogue, the High Commissioner highlighted democratic consolidation in India in 75 years since independence & its significance for Ghana

6. In February 2022, HCI and the Marine Products Export Development Authority (MPEDA) organized a V-BMS on marine products.

7. In February 2022, HCI and Plastics Export Promotion Council (PEPC) organized a Virtual B2B meeting on plastic products.

8. In April 2022, FICCI/ WegVoraus’s West Africa Pharma & Healthcare show was held in Ghana and attended by the High Commissioner of India, Accra, Mr. Sugandh Rajaram; the Deputy Minister of Trade and Industry of Ghana, Mr. Michael Baafi, and Association of Ghana Industries CEO, Mr. Seth Akwaboah.

As part of trade promotion activities, Mission is also interacting with local business leaders regularly to promote bilateral economic and commercial activities.



April 2022