Economic overview
Ghana’s economy relies heavily on agriculture, which accounts for a fifth of output. Cocoa is particularly important, but it leaves the country vulnerable to shifts in global commodity prices and the success of harvests. The country has gained economic diversity in recent years as foreign investors—encouraged by more than a decade of political stability—have funded development in manufacturing, construction and tourism. The discovery of oil in 2007 also reduced dependence on agriculture; output is expected to reach 250,000 barrels per day by 2020.
Ghana enjoyed a period of strong economic growth from 2010 to 2013, thanks to the start of oil production, robust government spending and rapid credit growth. But low oil prices, a sharp currency depreciation, high inflation, severe power shortages and reduced public spending have since curtailed growth. Economists expect the Ghanaian economy to expand by about 3.5% in 2015—roughly half of 2013’s rate of growth and down from 4% growth in 2014.
Business travel industry insight
About 1.2 million international travelers visited Ghana in 2014. The U.S. is the biggest source of inbound travel, followed by Nigeria, the U.K. and neighboring Ivory Coast. Measured in local currency, business travel spending grew by more than a fifth in 2014 and continues to expand. Oxford Economics expects that growth to stretch into 2016.
Best Western and Marriott have opened hotels in the oil city of Takoradi. But they are exceptions. Most international hotel chains operate only in the capital, Accra, and generally have just one property there. Kempinski is among new entrants to the Accra market.
African airlines operate more than 80% of flights departing from Accra. Regional airline Starbow and low-cost carrier Africa World Airlines are the dominant carriers, primarily providing domestic connections to Kumasi, Tamale and Takoradi. Africa World Airlines flies to Nigeria, as well, in competition with Nigerian airline Arik Air.
Opportunities
- In April, the International Monetary Fund announced a US$918 million, three-year loan to Ghana intended to stabilize the economy, spur growth and create jobs.
- The government forecasts rising oil output and the launch of a gas-processing plant will drive economic growth above 8% by 2017.
- Although recent economic setbacks have fostered citizens’ dissatisfaction with the rate of improvement in living standards, Ghana has made a significant progress in poverty reduction. The country’s poverty rate was 24% in 2013, down from 52% in 1991, according to the World Bank.
Challenges
- Rapid currency devaluation against the U.S. dollar has led to high inflation. Inflation rose to 17.3% in August from 16.4% in January, according to World Bank data.
- In response to currency weakness, Ghana’s central bank has increased interest rates, driving up the cost of investment.
- Deficient infrastructure and ongoing power shortages discourage industrial development. The lack of reliable electricity also fuels popular discontent.
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