Top 15 Industries to Invest in Ghana in 2015

This article was culled from Doing Business in Ghana 2015.

Many of the industries with the highest growth potential in Ghana over the next ten years are in the services sector, but not all. For example, oil and agriculture will have segments with very rapid growth. Below is a very brief snapshot of where we see opportunities.

Agriculture

The agricultural sector is a key driver of the Ghanaian economy, contributing an estimated 21.3% for 2013 of the GDP. The sector contributes over 50% to national employment while growing at an annual rate of 5.3% (end of 2012).

There is a greater opportunity in the local investment of crops and livestock as Ghana imports over US$450 million worth of rice alone annually and also substantial amounts of chicken, meat and dairy products.

Tax holidays from 3 to 5 years exist for companies involved in agro processing.Companies engaged in the processing of waste products enjoy a seven-year tax holiday from date of commercial production.This makes the field of the agro-processing to add value for the local agricultural produce a great place for investment.

Opportunities abound for the services sector in agriculture.These include irrigation, heavy equipment hiring.Companies are also needed to provide post-production services in transport, packaging and There are further opportunities in the development of agricultural finance and insurance.

Inadequate and inappropriate storage facilities are constraints to agricultural production, thereby contributing to high post-harvest losses and low returns for farmers and processors. Opportunities therefore abound for the storage side of agricultural businesses with solar storage facilities the new trend

Financial services (banks and other financial institutions)

In Ghana, the financial services industry is categorized into three main sectors:

Banking and finance (including non-bank financial services and forex bureaus);
Insurance; and
Financial market/capital markets.

The institutions include both foreign and local major banks, rural and community banks, savings and loans companies and other finance and leasing companies.

As at the end of 2012, there were:

26 univerasl banks

136 Rural and community banks

145 non-bank financial institutions

333 forex bureaus

43 insurance institutions (life and non-life)

2 re-insurance institutions and

54 insurance brokerage firms

There is a high demand for various financial services in Ghana, as supported by the consistent high growth of companies in the banking sector. The relatively underdeveloped financial services sector in neighboring countries is an opportunity for financial service firms in Ghana to supply needed services in those countries.

Following Ghana’s oil discovery in commercial quantities and on-going exploration activities, enormous opportunities exist for the banking and financial sector to finance and insure the numerous large-scale transactions taking place.

There is also a tax rebate for institutions financing the agricultural sector.

Availability of skilled professionals this sector due to the improved academic and training institutions available makes this sector lucrative.

Construction

Investment to deliver infrastructure is very viable and this shows how investment into construction hasn’t been consumed yet indicating how the construction of Ghana’s infrastructure is not yet complete. The construction sector in Ghana is expanding rapidly with a recent 20% growth in 2011 making it the second largest contributor to the National GDP in that financial year. With the booming real estate industry and high demand for infrastructure development, Ghana provides a wide range of possibilities for companies entering the market.

Most non-emergency government contracts for road construction are open to both local and international companies through a process of competitive bidding. There are many smaller local companies that would also be seeking partnership for financial assistance, equipment and training.

Key market opportunities in Ghana’s construction sector are dominated by residential and commercial development. The residential market is the most active, registering an estimated 85,000 transactions per annum over the past decade. Ghana’s housing deficit is currently hitting the one million mark with its annual housing requirement of about 130,000 units outstripping its supply of about 45,000 units. Property development will maintain its healthy growth and forward progress. The construction and building industry will continue to drive the economy.

Crude Oil

Foreign-based companies continue to enter the market and in sectors, such as oil and gas, the recent introduction of the local content laws means that a large number of foreign companies operating in Ghana require local partnerships in order to be allowed to do business. The discovery of oil in 2007 in Ghana’s Jubilee Field is worth $1.5 billion to $2 billion has driven many oil and gas investors to Ghana.

Due to the emerging nature of the industry, opportunities exist in virtually every area of the petroleum industry, both upstream and downstream. (GIPC,

Upstream Petroleum Sector:

Geophysical (Site surveys, seismic data acquisition, processing and interpretation)
•Basinmodelling
•Geological Studies
•Biostratigraphy Sequence Stratigraphy
•Sedimentology
•Geochemistry
•Geochemical Studies
•Geographical Studies
• Equipment supply and/ or leasing (boats, barges, aircrafts, etc.)
• Supply of casings for boreholes

Drilling Products and Services:

Land Drilling Rigs, Swamp Drilling Rigs, Petroleum Engineering & Consultancy Services
• Offshore Drilling Rigs (jack-ups, semi- submersible rigs, submersible rigs etc.)
• Offshore Rig Towing Services, Rig Move/Positioning Services
• Drilling Mud , Chemicals, Mud Logging & Mud Logging Services
• Drilling Site Preparation, Well Control & Blow-out Prevention
• Under-water Inspection, Sand Control, Fish & Fishing Tools
• Dry-dock facilities for offshore supply vessels, tugboats, & offshore rigs
• Measurement While Drilling (MWD) & Logging While Drilling (LWD) Services
• Casing & High Pressure Pumping ,Tubing Services ,Tools & Cased-Hole Electrical Logging
• Directional Drilling & Survey as well as Drilling &Work over
• Surface & Bottom Hole Sampling & Tubing Conveyed Perforation ( TCP)
• Fluid Filtration, Solid Control and Laboratory & Pilling Services as well as PVT Analysis
• Mechanical Wireline Services and Petro physical& Reservoir Data Services
• Coil Tubing & Electrical Line and Production Logging
• Oil Field Waste Management, Jetty and Shore Support Services and Rigless Workover Services
• Well Production Testing, Wellhead Maintenance & Well Completion Services
• Supply of drilling materials and equipment (drill bits, drill pipes, drill collars, cone bits etc.)

Production Support Services:

Wireline Services & Pipeline Laying/ Inspection
• Production Chemical Supplies & Management
• Engineering Design, Procurement/Construction of production facilities
• Corrosion Engineering & Environmental Engineering Services
• Blow Out Central Services & Flow Line Construction
• Oil Expand Terminal Design and Construction & Crude Oil Lifting
• Fire Fighting system Design and installation & 2/3 Phase Meter Supplies
• Supply & Maintenance of Safety Equipment
• Gas Valve Supplies & Installation

Reservoir Engineering:

Consultancy Services
• Simulation
• Economic Analysis
• Complete Field Study

Down Stream Sector Business Opportunities (Marketing, Storage, Distribution, Transport, Refining):

Technical Partnership
• Field Development Contractor Financing
• Gas utilization
• Refineries maintenance
• Pipeline/ Depots construction and maintenance
• Petroleum Products haulage
• Petroleum products marketing
• Petrochemicals
• Gas Development/conversion
• Butanisation project
• Fertilizer plants
• Vehicular fuels
• Methanol / MTBE plants

Gas Sector Opportunities

The government in December 2008 finalised plans for the establishment of an onshore natural gas processing plant to process the natural gas that will be produced from the jubilee oil and gas field.
The first phase entailed a 150million ft.3 gas processing plant at Atuabo which is at least 50 km East of Effasu and 100km West of Takoradi. An 8km2 land area has been acquired to be developed into a petrochemical industrial park to house the gas processing plant and ancillary industries. The Atuabo Gas Processing Plant began commercial production of gas on April 1st 2015.
Opportunities available in this sector include:

Production, transmission, distribution of Natural Gas –independent ownership
• Natural Gas Liquids (NGLs) – these liquids have high market value and find application either in their raw state as solvents, feed stock (for production of various chemicals) and liquid fuel or fractionated into their components, viz.: LPG, Natural Gasoline etc
• Natural Gas-Fired Equipment
• Independent Power Plant (IPP)
• Industrial market, commercial market and residential market
• Domestic natural gas sales and distribution
• Compressed natural gas as, (NG) automotive fuel, Gas Liquids (NGL), Gas to Liquid Conversion (GTL), Methanol etc
• Ammonia/fertilizer plants

– not just among oil and gas sector companies but also among companies across a wide range of sectors, which are anticipating a resulting boost in Ghana’s economic growth.

Energy

Electricity accounts for 69% of modern energy used in the economy.

Electricity generation and distribution is largely state owned. However, the Government of Ghana has in recent times engaged in discussions with various investors regarding the construction of power plants. This is important because the country is going through its worst power crisis to date.

Ghana loses about 2% to 5% of GDP annually as a result of lost economic output due to the insufficient and unreliable power supply. There is therefore huge demand for investors in this sector.

American multinational conglomerate, General Electric (GE) has already realized this opportunity and is currently building a 1000-megawatt (MW) thermal power plant in Ghana. The GE initiative is a pure independent power producer (IPP) which means GE will finance the deal. The deal was signed on January 28, 2015 and it is a 1billion dollar deal.

Mining

Significant mining investment has been attracted into the country over some 20 years of stable multi-party democracy. The mining sector has therefore been an important part of Ghana’s economy, with gold accounting for over 90% of the sector. The mining sector has produced 4,313,190 ounces of gold, which is the highest ever in the history of the country, resulting in export revenues of more than $5.6 billion. Ghana is the second largest gold producer in Africa and the 9th largest producer in the world. The sector directly contributed 38.3% of Ghana’s total corporate tax earnings, 27.6% of government revenue and 6% GDP in 2011.This has included the development of a database on goods & services required by the mining industry; Investing in gold mining and services provides a huge opportunity

Inventories of iron, limestone, kaolin, salt, diamond and other industrial mineral resources exist, but are not exploited on a large scale. This also presents an opportunity for investors.

Tourism

Ghana, is seen by travelers as one of the friendliest countries in Africa. Ghana is endowed with interesting tourist attractions, ranging from the warm sandy beaches of the Atlantic coast to rich tropical forests and unique wildlife. There are also cultural attractions such as handicrafts, traditional clothes (e.g. Kente), local cuisines, and several colorful festivals organized throughout the year. Ghana is also known for its historical European-built forts and castles that played a major part in the transatlantic slave trade. Opportunities abound in the setting up of resorts and hotels along these areas. Ghana is also one of the West African countries never affected by the Ebola disease. Ghana is easily accessible from various parts of the world.

E-tailing/ E-commerce

This is a sector that is gradually gaining grounds in the bigger cities with the growing middle class and an increase in internet penetration. The payments system is in place, logistics are improving, and online providers are trusted. Many retailers will adapt, often with far fewer physical locations. Lamudi, Tisu.com, Jumia are all foreign owned.

Until recently, most goods were carried by individual truck owner–operators. As express parcels become a bigger industry on the back of e-tailing, e-commerce companies themselves are investing billions in modern warehouses and trucks. Zoobashop and Jumia are committed to investing on its own logistics.

Ghana provides a perfect place for investment in information technology due to its democratic stability and a young budding talents and opportunities in the country.

Education

Private universities are the places to invest. Ghana has become the center of education for its neighbors, notably Nigeria. Currently there are about 51 private universities affiliated to the Government universities.People are willing to spend on tutoring and support for their children is almost unlimited. As the middle class becomes wealthier, the increased ability to spend will drive market growth.

Healthcare

The shortcomings of the mainstream public healthcare system in Ghana are not likely to be overcome quickly. Patients are looking for solutions where both cost and quality are more certain, and private and foreign companies are being encouraged to deliver. Investing in specialist hospitals is the key.

Entertainment and Leisure

Ghana has a burgeoning entertainment and leisure industry. Investment in movie theaters has yielded 100% profits for companies like SilverBird, the only operators of movie cinemas in Ghana; they have enjoyed monopoly for a long time. Currently aside indoors movie cinemas, Ghana lacks indoor multi-purpose arenas which could be used to stage music concerts and also host both international and local conferences/summits.The only available auditorium currently being used in the whole of Ghana is the Accra International Conference Center with a capacity of about 1600 people in its plenary hall. An investment into a modern state of the art multipurpose arena which will house hotels, shopping malls, restaurants, travel centers etc. with over a 5,000 to 10,000 capacity auditorium space will result in massive profits.

Telecommunication

Ghana is home to some of Africa’s largest, most successful telecom giants. The pace at which Ghanaian consumers have embraced mobile communication services is very impressive. According to the Ghana’s National Communication Authority, As at the end of January 2015, the total mobile subscriptions in the country was 30,629,604, meanwhile, the country’s population was estimated at 26,566,240 so the number of mobile subscribers is even greater than the country’s population since most Ghanaians use more than one mobile networks. When marketing is done correctly, Investing in a telecoms company can be very profitable

12.1 Internet/Wireless Services

Ghana, in 1999 had a total population number of 18,599,549 and 20,000 people out of that number was internet users. According to Internet world Statistic, this number continued to rise from 2,085,501 internet users out of a population of 24,791,073 in 2011 to 3,568,757 internet users out of a population of 25,292,392 as at June 30 2012.

Research conducted on the growth and usage of internet in Ghana shows that 40.6% of Ghanaians depend on the internet as a means of gathering information on products and services.

Study on the growth and usage of internet in Ghana also shows that 33% of Ghanaians make use of online communication always, 25% made use of it frequently, with 30% using it occasionally. It just goes to suggest just how much communicating online has become part of the Ghanaian socio-cultural environment.

There is increase in internet usage in Ghana and this seems to be increasing each year, however, more can be done to enhance its growth. According to a study by Ookla, Ghana was ranked number one African country with the highest speed and 72nd in the world ranking with an average speed of 5.13 megabits per second ahead of Kenya in 2nd place and South Africa in 6th place in Africa.

12.2 Mobile Commerce

Mobile commerce services like mobile money has also become very popular andcould even become a major blow to many banks in Ghana. As the number of mobile phone subscribers in Ghana increases, so does the market for mobile money services. The majority of Ghanaians lack any formal bank account.

A study by Kwami Ahiabenu II reports on how mobile money could change the shape of financial transactions in the country. He states that an estimated 80 percent of Ghanaians are “unbanked” – meaning they conduct their transactions outside the banking sector with no access to financial services. Products like “mobile money,” that enable safe and secure money transfers without the use of a bank account, could have a major impact on this unserved segment of the population. Mobile money gives anyone with a mobile phone the ability to transfer money, make cash payments and conduct other financial transactions over the phone. It is not surprising therefore that most consumers in Ghana will rather transact using mobile money.

MTN, a telco in Ghana currently has a total Mobile Money customer base of about 6 million and monthly transaction volume of GHC 50 million ($12,500,000) . With the low numbers in terms of the banked in Ghana, Ghana has about just 4.5 million bank accounts, the Mobile Money provides a huge opportunity to investors since it complements the restricted number of bank branches in Ghana

Railway Transportation

Ghana’s road network is facing a lot of challenges, because bulky goods which should have been shuttled via the railway system are being carried on the roads, due to Ghana’s over-reliance on the road transport system, there has been enormous pressure brought on the roads as a result of the almost defunct railway industry. Road transport is the predominant mode of transport in Ghana, accounting for 94% of freight and 97% of passenger traffic movements.

The railway sub-sector currently has a very small share of the national transport market, with less than2% of freight, mainly bulk minerals, and less than 1% of passengers. The ever increasing volumes in freight transport, especially with the advent of Ghana’s oil and gas industry demands that a vibrant railway sector needs to be developed to help tackle the emerging consequences of the growth.

Railways will provide an easier and more efficient means of freight movement on the main network particularly on Ghana’s Western line. Goods that could be transported include mineral ores, cocoa, cement, timber, food stuff etc.

Pharmaceutical

The pharmaceutical industry in Ghana continues to outperform markets in the sub-region, despite the fact that the country imports majority of its drugs, a survey report by the Business Monitor International (BMI) a marketing research company has said.

According to the report, Ghana’s headline expenditure projections for pharmaceuticals would rise from GH¢480 million or $311 million in 2011 to GH¢572 million or $319 million in 2012; an increase of more than 19.1 per cent in local currency terms and more than 2.6 per cent in US dollar terms.

Assessing the pharmaceuticals industry’s risk and reward ratings, the BMI report indicated that Ghana’s score was stable, remaining in 18th position among the 30 key markets in the Middle East and Africa (MEA) surveyed in its first quarter 2013 of the pharmaceutical risk/reward ratings (RRR) matrix.

In February 2010, Adcock Ingram, a giant in the South African Pharmaceutical Industry invested over $16 million by acquiring a 60 per cent stake in the Ghanaian owned publicly listed Ayrton Drugs, a partnership that analysts strongly predicted would be mutually beneficial to both companies which has currently made both partners a fortune due to the increasing demand for pharmaceutical drugs.

Technology, Software, Cloud Computing and Big Data

The upsurge of the service industries: telcos, banks, insurance, financial services etc. has made high technology software and big data to be in high demand from corporations.

The services sector has expanded substantially over the last ten years, characterized by branch expansion and increased capitalization as institutions move to meet growing demand for consumer services across the country.

This is due to the continued economic growth, foreign investment, increasing diversification and a number of large investments in both the private and public sectors in Ghana.

For instance, New technologies are helping to drive a wave of innovation across the banking services sector as banks create new and accessible banking channels and take banking services to previously unbanked parts of society. New products and a growing customer base translate to increased pressure on banks to manage and secure their data. By the nature of their business, financial firms are required to store immense amounts of data under incredibly strict compliance with a number of regulators.

Ghana is now shifting to the era of Big Data with multinationals like IBM and Hewlett-Packard taking opportunity of these findings. Banks, telcos and financial institutions in Ghana are all shifting to Big Data as client’s sensitive big data needs continues to increase and the amount of data continues to grow at an exponential rate to reflect the growth in the sector. Industry statistics estimate that banks in our markets spend between 7-10 percent of their operating income on managing data.