Ghana inspires confidence and caution

Ghana’s remarkable growth story remains a big inspiration to international investors. However, compared to three years ago, confidence in the country’s economy is tempered with caution as investors watch how the government will prevail over short-term challenges.

Expressing views which they said reflect the current global assessment of Ghana among foreign investors, leading French multinationals with interests in the country said they are still upbeat about investing in Ghana, while recognising that important fiscal reforms must be implemented to address high inflation, expensive credit, and large budget and current-account deficits.

“Ghana has experienced a very sharp growth story in the past 10 years, but there are some imbalances which you have to tackle -- such as budget deficits, external deficits and inflationary pressure,” Alexandre Maymat, the Deputy Head of International Banking and Financial Services at Société Générale S.A., told the B&FT in Paris, France.

Mr. Maymat, who supervises Société Générale Ghana and the bank’s wide international network in Africa, Asia and the Mediterranean, added that he remains very optimistic about Ghana despite the challenges.

“I believe in the next few years Ghana will witness a higher development of its oil fields, and I think in the medium-term the fundamentals are good to maintain a lasting growth story.”

The sentiments were echoed by Stephen Decam, Secretary-General of the French Council of Investors in Africa (CIAN), who said the council’s 130 members -- made up of French industrial and service companies involved in Africa -- see Ghana as one of Africa’s best investment destinations.

He, however, admitted that the deterioration in government finances and high inflation are weak points for the country. This view is consistent with CIAN’s 2014 Annual Report, which said “although Ghana continues to enjoy strong growth, its public finances are worrying”.

Mr. Decam, a former board-member of CFAO Ghana, the local subsidiary of French automobile and equipment distribution giant CFAO Group, compared Ghana’s fiscal stabilisation policies to ongoing budget rationalisation in France, saying he is confident the country will overcome its current problems.

He said the top-three favourable indicators of Ghana’s business environment, according to CIAN’s membership, are the country’s aviation infrastructure, tax environment and the security of individuals. The main weak points are water and electricity supply and real-estate legislation.

Executives of French construction and energy group Eiffage also told the B&FT they have plans to scale-up their activities in Ghana, and are eyeing potential opportunities to develop public-private partnership projects, as well as investments to modernise energy infrastructure.

Eiffage, whose energy subsidiary is building transmission lines for the Ghana Grid Company, is keen to undertake further contracts in the energy sector, said Mustapha Kamar, Export Sales Director of Eiffage Energie.

Existing contracts in Ghana are worth about €100million, with financing coming mainly from Société Générale, he said.

For Proparco, the development finance institution held by French aid agency Agence Française de Développement (AFD) and private shareholders, Ghana and Côte D’Ivoire are the engines of its business in West Africa and will remain so for the foreseeable future.

The company will increase financial support to Ghana’s private sector through new credit lines and portfolio diversification, according to Marie-Hélène Loison, Deputy Chief Executive Officer.

“We believe the country has very good prospects for economic growth; but of course there’s been some concern about the deficit, which has led to high interest rates. Nevertheless, the long-term picture is positive.”

Other investors who spoke off-record said Ghana’s inflation rate, which sits at 14.5 percent, is an issue of concern as it increases wage costs and the general cost of operations. All were unanimous in their view that the success of government’s measures to restore economic stability will give them more to cheer about.