Ghana has been ranked among one of the top 10 attractive investment destinations in Africa for 2019 in spite of the turbulent banking sector clean-up exercise in which nine banks were resolved.
A study by Rand Merchant Bank Ltd (RMB), the corporate and investment banking arm of FirstRand Limited of South Africa, placed the country among the top 10 destinations due to anticipated strong growth.
It showed that the country’s economic growth would be driven predominantly by the hydrocarbons sector, with a continued ramping up of oil and gas production expected.
In its latest annual study known as ‘Where to Invest in Africa’, the Johannesburg-based RMB said: “Ghana has strong growth rates focused around the oil and gas sector, while the non-oil sector growth is supported by pro-business reforms.”
Nigeria and Cote d’Ivoire are the two other West African countries in the top 10.
The other countries in the top 10 list included Egypt, South Africa, Morocco, Ethiopia, Kenya, Rwanda and Tanzania.
The findings, however, show that Ghana dropped from fifth to ninth place in the 2019 rankings mainly as a result of a downward review of the 2018 growth rate by the International Monetary Fund (IMF).
RMB analysts and co-authors of the study, Ms Celeste Fauconnier and Mr Neville Mandimika, explained that the drop was also due to the need of the country to focus on fixing weaknesses in its banking sector.
“Competing economies have shown greater improvements in both the economic and operating environment indices,’’ Ms Fauconnier and Mr Mandimika said.
“Structural strength could help Ghana attain its 2019 growth forecast,” they added.
In the 2019 budget, the government is aiming to grow the economy by 7.6 per cent this year.
In April 2018, the IMF reduced the 2018 outlook from 8.9 per cent estimated in October 2017 to 6.3 per cent.
The Head of Corporate, Commercial and Investment Banking at First National Bank Ghana, the local unit of RMB, Mr Victor Yaw Asante, said the lack of access to financing, corruption, weak governance and inadequate and efficient infrastructure remained fundamental problems of doing business in Africa.
“In Ghana for example, private-sector investment is low and it could change through more business environment reforms, increased infrastructure and financial market development,” he added.
The latest report is the eighth edition of the Where to Invest in Africa.
It further showed that efficient infrastructure was crucial in uncovering opportunities and unlocking Africa's growth potential.
According to the World Bank, the lack of efficient infrastructure shaves up to 2.6 per cent off African average per-capita growth rate and places a significant strain on human development.
The African Development Bank’s most recent estimation of infrastructure needs is between US$130 billion and US$170 billion annually, but the continent’s available capital is insufficient to achieve this, says Ms Fauconnier.
She added that the shortfall presented an opportunity for businesses involved in the development or financing of infrastructural projects.
In assessing the most attractive investment environments in Africa, RMB again considered two important conditions for viable investment namely; economic activity and the operating environment.