Ghana’s economy had expanded at an average of seven percent per year since 2017 until the coronavirus pandemic reduced growth to 0.4 percent in 2020, according to the Ministry of Finance. Between 2017 and 2019, the fiscal deficit narrowed, inflation decreased, and GDP growth rebounded, driven primarily by increases in oil production. Ghana saw a 9 percent growth rate in the first quarter of 2019 and closed that year with a 6.5 percent GDP growth rate. Indicating a recovery from the pandemic, the Ghana Statistical Service reported a 6.6 percent growth rate in the third quarter of 2021, marking the fastest growth in GDP since the pandemic began. The International Monetary Fund (IMF) expected growth to rebound to 4.7 percent in 2021 from the shock of COVID-19 and by 6.2 percent in 2022. The economy remains highly dependent on the export of primary commodities such as gold, cocoa, and oil, and consequently is vulnerable to slowdowns in the global economy and commodity price shocks. In November 2020, Ghana launched the 100 billion cedi (about $13 billion) Ghana COVID-19 Alleviation and Revitalization of Enterprises Support (Ghana CARES) Program to address the effects of the virus on the economy. In 2020, the government also launched Ghana’s National Adaptation Plan Process by which it expects to develop strategies to build resilience against the impacts of both climate change and crises such as COVID-19. In general, Ghana’s investment prospects remain favorable, as the Government of Ghana seeks to diversify and industrialize through agro-processing, mining, and manufacturing. It has made attracting foreign direct investment (FDI) a priority to support its industrialization plans and to overcome an annual infrastructure funding gap.
Challenges to Ghana’s economy include high government debt, particularly energy sector debt, low internally generated revenue, and inefficient state-owned enterprises. Ghana has a population of 31 million, with over 14 million potential taxpayers, but only six million of whom filed their annual tax returns. As Ghana seeks to move beyond dependence on foreign aid, it must develop a solid domestic revenue base. On the energy front, Ghana has enough installed power capacity to meet current demand, but it needs to reduce the cost of electricity by improving the management of its state-owned power distribution system.
Among the challenges hindering foreign direct investment are: costly and difficult financial services, lack of government transparency, corruption, under-developed infrastructure, a complex property market, costly and intermittent power and water supply, the high costs of cross-border trade, a burdensome bureaucracy, and an unskilled labor force. Enforcement of laws and policies is weak, even where good laws exist on the books. Public procurements are sometimes opaque, and there are often issues with delayed payments. In addition, there have been troubling trends in investment policy over the last six years, with the passage of local content regulations in the petroleum, power, and mining sectors that may discourage needed future investments.
Despite these challenges, Ghana’s abundant raw materials (gold, cocoa, and oil/gas), relative security, and political stability, as well as its hosting of the African Continental Free Trade Area (AfCFTA) Secretariat make it stand out as one of the better locations for investment in sub-Saharan Africa. There is no discrimination against foreign-owned businesses. Investment laws protect investors against expropriation and nationalization and guarantee that investors can transfer profits out of the country, although international companies have reported high levels of corruption in dealing with Ghanaian government institutions. Among the most promising sectors are agribusiness and food processing; textiles and apparel; downstream oil, gas, and minerals processing; construction; and mining-related services subsectors.
The government has acknowledged the need to strengthen its enabling environment to attract FDI, and is taking steps to overhaul the regulatory system, improve the ease of doing business, and restore fiscal discipline.
1. Openness To, and Restrictions Upon, Foreign Investment
3. Legal Regime
4. Industrial Policies
5. Protection of Property Rights
6. Financial Sector
7. State-Owned Enterprises
Ghana has 94 State-Owned Enterprises (SOEs), 51 of which are wholly owned, while 43 are partially owned. While the president appoints the CEO and full boards of most of the wholly owned SOEs, they are under the supervision of line ministries. Most of the partially owned investments are in the financial, mining, and oil and gas sectors. To improve the efficiency of SOEs and reduce fiscal risks they pose to the budget, in 2019 the government embarked on an exercise to tackle weak corporate governance in the SOEs as well as created the State Interests and Governance Authority (SIGA), a single institution, to monitor all SOEs, replacing both the State Enterprises Commission and the Divestiture Implementation Committee.
As of December 2021, only a handful of large SOEs remain, mainly in the transportation, water, banking, power, and extractive sectors. The largest SOEs are Electricity Company of Ghana (ECG), Volta River Authority (VRA), Ghana Water Company Limited (GWCL), Ghana Ports and Harbor Authority (GPHA), Ghana National Petroleum Corporation (GNPC), Ghana National Gas Company Limited (GNGC), Ghana Airport Company Limited (GACL), Consolidated Bank Ghana Limited (CBG), Bui Power Authority (BPA), and Ghana Grid Company Limited (GRIDCo). Many of these receive subsidies and assistance from the government. The list of SOEs can be found at: https://siga.gov.gh/state-interest/ .
While the Government of Ghana does not actively promote adherence to the OECD Guidelines, SIGA oversees corporate governance of SOEs and encourages them to be managed like Limited Liability Companies to be profit making. In addition, beginning in 2014, most SOEs were required to contract and service direct and government-guaranteed loans on their own balance sheet. The government’s goal is to stop adding these loans to “pure public” debt, paid by taxpayers directly through the budget.
8. Responsible Business Conduct
There is no specific responsible business conduct (RBC) law in Ghana, and the government has no action plan regarding OECD RBC guidelines.
Ghana has been a member of the Extractive Industries Transparency Initiative since 2010. The government also enrolled in the Voluntary Principles on Security and Human Rights in 2014.
Corporate social responsibility (CSR) is gaining more attention among Ghanaian companies. The Ghana Club 100 is a ranking of the top performing companies, as determined by GIPC. It is based on several criteria, with a 10 percent weight assigned to corporate social responsibility, including philanthropy. Companies have noted that Ghanaian consumers are not generally interested in the CSR activities of private companies, with the exception of the extractive industries (whose CSR efforts seem to attract consumer, government, and media attention). In particular, there is a widespread expectation that extractive sector companies will involve themselves in substantial philanthropic activities in the communities in which they have operations.
Liberia offers opportunities for investment, especially in natural resources such as mining, agriculture, fishing, and forestry, but also in more specialized sectors such as energy, telecommunications, tourism, and financial services. The economy, which was severely damaged by more than a decade of civil wars that ended in 2003, has been slowly recovering, but Liberia has yet to attain pre-war levels of development. Liberia’s largely commodities-based economy relies heavily on imports even for most basic needs like fuel, clothing, and rice – Liberia’s most important staple food. The COVID-19 pandemic disrupted many sectors of the economy, which contracted in 2019 and 2020. However, the World Bank and IMF expect per capita GDP to return to pre-COVID-19 levels by 2023. Growth will be driven mainly by the mining sector, although structural reforms are also expected to increase activity in agriculture and construction.
Low human development indicators, expensive and unreliable electricity, poor roads, a lack of reliable internet access (especially outside urban areas), and pervasive government corruption constrain investment and development. Most of Liberia lacks reliable power, although efforts to expand access to the electricity grid are ongoing through an extension from the Mount Coffee Hydropower Plant, connection to the West Africa Power Pool, and other internationally supported energy projects. Public perception of corruption in the public sector is high, as indicated by Liberia’s poor showing in Transparency International’s 2021 Corruption Perceptions Index, where Liberia ranked 136 out of 180 countries. Low public trust in the banking sector and seasonal currency shortages result in most cash being held outside of banks. To remedy this, the Central Bank of Liberia (CBL) in 2021 initiated a plan to print and circulate additional currency. The new printing and minting will provide 48 billion Liberian dollars through 2024. The CBL and commercial banks have also successfully pushed the adoption of mobile money, which Liberians access through their mobile phones to make everyday purchases and pay bills. However, the government has yet to activate the “national switch,” meaning banking instruments like ATMs and mobile money accounts remain unintegrated and are not interoperable.
The government-backed Business Climate Working Group (BCWG) works with public and private sector stakeholders to explore how to create a friendlier business environment. International donors also work with the government to improve the investment climate, which ranks toward the global bottom by most global measures. Despite these numerous challenges, Liberia is rich in natural resources. It has large expanses of potentially productive agricultural land and abundant rainfall to sustain agribusinesses. Its rich mineral resources offer significant potential to investors in extractive industries. Several large international concessionaires have invested successfully in agriculture and mining, though negotiating these agreements with the government often proves to be a lengthy and byzantine struggle. The fishing industry, long dormant compared to pre-war levels, is making improvements that should make it more attractive for investment.
1. Openness To, and Restrictions Upon, Foreign Investment
3. Legal Regime
4. Industrial Policies
5. Protection of Property Rights
6. Financial Sector
7. State-Owned Enterprises
Liberia has approximately 20 state-owned enterprises (SOEs), which are governed by boards of directors and management teams overseen by government ministries. All are wholly government-owned and semi-autonomous. The president of Liberia appoints board members and directors or managers to govern and run SOEs. The Public Financial Management (PFM) Act defines the requirements for SOEs.
SOEs employ more than 10,000 people in sea and airport services, electricity supply, oil and gas, water and sewage, agriculture, forestry, maritime, petroleum importation and storage, and information and communication technology services. Not all SOEs are profitable, and some citizens and advocacy groups have called for SOEs to be dissolved or privatized. Liberia does not have a clearly defined corporate code for SOEs. Reportedly, high-level officials, including some who sit on SOE boards, influence government-owned enterprises to conduct business in ways not consistent with standard corporate governance. Not all SOEs pay taxes, or do so transparently, and SOE revenue is not always transparently reported or adequately reflected in national budgets.
8. Responsible Business Conduct
Liberian authorities have not clearly defined responsible business conduct (RBC). The Liberian Environmental Protection Agency (EPA), however, includes RBC requirements in policies such as the National Disaster Risk Reduction and Resilience Strategy (2020-2030), the National Climate Change Response Strategy (2018), and the National Adaptation Plan (2020-2030). Foreign companies are encouraged, but not required, to publicly disclose their policies, procedures, and practices to highlight their RBC practices.
Some non-governmental organizations (NGOs), civil society organizations (CSOs), and workers organizations/unions promote or monitor foreign company RBC policies and practices. However, NGOs and CSOs monitoring or advocating for RBC do not conduct their activities in a structured and coordinated manner, nor do they tend to monitor locally owned companies.
Most Liberians are generally unaware of RBC standards. Generally, the government expects foreign investors to offer social services to local communities and contribute to a government-controlled social development fund for the area in which the enterprise conducts its business. Some communities complain that these contributions to social development funds do not reach them. The government frequently includes clauses in concession agreements that oblige investors to provide social services such as educational facilities, health care, and other services which other governments typically provide. Foreign investors have reported that some local communities expect benefits in addition to those outlined in formal concession agreements.
Liberia is a member of the Extractive Industries Transparency Initiative (EITI). The National Bureau of Concessions monitors and evaluates concession company compliance with concession agreements, but it does not design policies to promote and encourage RBC. Some NGOs report that several concessions have violated human or labor rights, including child labor and environmental pollution. Liberia has several private security companies, but the country is not a signatory to the Montreux Document on Private and Security Companies. Private security companies are regulated by the Ministry of Justice, and they perform a range of tasks such as providing security or surveillance to large businesses, international organizations, diplomatic missions, and some private homes.
Liberia has laws against economic sabotage, mismanagement of funds, bribery, and other corruption-related acts, including conflicts of interest. However, Liberia suffers from corruption in both the public and private sectors. The government does not implement its laws effectively and consistently, and there have been numerous reports of corruption by public officials, including some in positions of responsibility for fighting corrupt practices. On December 9, 2021, the United States Treasury Department sanctioned Nimba County Senator Prince Yormie Johnson under the Global Magnitsky Act for personally enriching himself through pay-for-play funding schemes with government ministries and organizations. In 2021, Liberia ranked 136 out of 180 countries on Transparency International’s Corruption Perception Index . See http://www.transparency.org/research/cpi/overview .
The Liberia Anti-Corruption Commission (LACC) currently cannot directly prosecute corruption cases without first referring cases to the Ministry of Justice (MOJ) for prosecution. If the MOJ does not prosecute within 90 days, the LACC may then take those cases to court, although it has not exercised this right to date. The LACC continues to seek public support for the establishment of a specialized court to exclusively try corruption cases.
In October 2021 the Liberia Anti-Corruption Commission (LACC), with the Swedish International Development Cooperation Agency (SIDA) and the United Nations Development Program (UNDP), launched “The Anti-Corruption Innovation Initiative Project.” LACC will hire at least 15 officers around the country who will report on corruption to the LACC. LACC is also developing a national digital platform for the public to report corruption.
Foreign investors generally report that corruption is most pervasive in government procurement, contract and concession awards, customs and taxation systems, regulatory systems, performance requirements, and government payments systems. Multinational firms often report paying fees not stipulated in investment agreements. Private companies do not have generally agreed and structured internal controls, ethics, or compliance programs to detect and prevent bribery of public officials. No laws explicitly protect NGOs that investigate corruption.
Liberia is signatory to the Economic Community of West African States (ECOWAS) Protocol on the Fight against Corruption, the African Union Convention on Preventing and Combating Corruption (AUCPCC), and the UN Convention against Corruption (UNCAC), but Liberia’s association with these conventions has done little to reduce rampant government corruption.
10. Political and Security Environment
President Weah’s inauguration in January 2018 marked the first peaceful transfer of power in Liberia from one democratically elected president to another since 1944. International and domestic observers have said midterm senatorial and special elections since then have been largely peaceful, although there were reported instances of vote tempering, election violence, intimidation, and harassment of female candidates. Liberia’s relatively free media landscape has led to vigorous pursuit of civil liberties, resulting in active, often acrimonious political debates, and organized, non-violent demonstrations. Liberia adopted a press freedom law in 2019, but there have been reports and instances of violence and harassment against the media and journalists. Numerous radio stations and newspapers distribute news throughout the country. The government has identified land disputes and high rates of youth and urban unemployment as potential threats to security, peace, and political stability.
The United Nations Mission in Liberia (UNMIL), a peacekeeping force, withdrew from Liberia in March 2018 and turned over responsibility for security to the government. Protests and demonstrations may occur with little warning. The Armed Forces of Liberia and law enforcement agencies, including the Liberia National Police (LNP) , Liberia Immigration Service (LIS) , and Liberia Drug Enforcement Agency (LDEA) , maintain security in the country. There are also many private security firms. Most security personnel are in the capital city Monrovia and other urban areas. The effectiveness of soldiers and police is limited by lack of money and poor infrastructure.
11. Labor Policies and Practices
With a literacy rate of just under 50 percent, much of the Liberian labor force is unskilled. Most Liberians, particularly those in rural areas, lack basic vocational or computer skills. Liberia has no reliable data on labor force statistics, such as unemployment rates. Government workers comprise the majority of formally employed Liberians.
An estimated four out of five Liberian workers engage in “vulnerable” or “informal” employment. Many work in difficult and dangerous conditions that undermine their basic rights. The Ministry of Labor (MOL) largely attributes high levels of vulnerable and informal employment to the private sector’s inability to create employment. There is an acute shortage of specialized labor skills, particularly in medicine, information and communication technology, and science, technology, engineering, and mathematics (STEM). Migrant workers are employed throughout the country, particularly in service industries, artisanal diamond and gold mining, timber, and fisheries.
The predominantly female workers who sell in markets and on the streets face significant challenges, including a lack of access to credit and banking services, limited financial literacy and business training, few social protections or childcare options, harassment from citizens and local authorities, and poor sanitation within marketplaces. Through the Bureau of Small Business Administration (SBA) at the Ministry of Commerce and Industry, businesses owned by female informal workers are being formalized using a “one-stop shop” registration mechanism. Development partners are also designing programs aimed at empowering women businesses and entrepreneurs.
Liberia’s labor law, the 2015 Decent Work Act, gives preference to employing Liberian citizens, and most investment contracts require companies to employ a defined percentage of Liberians, including in top management positions. In 2021, the Ministry of Labor issued an order that restricts certain employment opportunities in commercial business establishments with branches in Monrovia and other parts of the country to Liberians. The order was the result of a memorandum of understanding between the Ministry of Labor and the Liberia Chamber of Commerce calling for the creation of five hundred jobs for new college and university graduates.
Foreign companies often report difficulty finding local skilled labor. Child labor is a problem, particularly in extractive industries. The Decent Work Act guarantees freedom of association and gives employees the right to establish labor unions. Employees can become members of organizations of their own choosing without prior authorization. Workers, except for civil servants and employees of state-owned enterprises, are covered by the Act. The Act allows workers’ unions to conduct activities without interference by employers. It also prohibits employers from discriminating against employees because of membership in or affiliation with a labor organization. Unions are independent from the government and political parties. Employees, through their associations or unions, often demand and sometimes strike for better compensation. When company ownership changes, workers sometimes seek payment of obligations owed by previous owners or employers.
The Decent Work Act provides that labor organizations, including trade or employees’ associations, have the right to draw up constitutions and rules regarding electing representatives, organizing activities, and formulating programs.
There were no major labor union-related negotiations affecting workers or the labor market during 2021.
While the law prohibits anti-union discrimination and provides for the reinstatement of workers dismissed because of union activities, it allows for dismissal without cause provided the company pays statutory severance packages. The Decent Work Act sets out fundamental rights of workers and contains provisions on employment and termination of employment, minimum conditions of work, occupational safety and health, workers’ compensation, industrial relations, and employment agencies. It also provides for periodic reviews of the labor market as well as adjustments in wages as the labor conditions dictate. The government does not waive labor laws to attract or retain investment, but the National Investment Commissions (NIC) provides investment incentives based on economic sectors and geographic areas (see Investment Incentives in section 4 above).
The MOL does not have an adequate or effective inspection system to identify and remedy labor violations and hold violators accountable. It lacks the capacity to effectively investigate and prosecute unfair labor practices, such as harassment or dismissal of union members or instances of forced labor, child labor, and human trafficking.
14. Contact for More Information
U.S. Commercial Service Contact Information
Phone: (+231) 77-677-7000