A presentation to Irish Companies at the EnterpriseIreland’s Opportunities in Financial Software andServices in Africa Conference.

GHANA: PROSPECTS AND OPPORTUNITIES TO ACHIEVE SUCCESS

1. Present the demographic/socio-political outlook of Ghana

2. Present the economic overview of Ghana

3. Discuss the market overview of the financial services sector

4. Recommend market entry strategies for Irish companies which would like to invest in Ghana.

IN THIS PRESENTATION, I WILL:

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DEMOGRAPHIC/SOCIO-POLITICAL OUTLOOK OF GHANAPOPULATION

The World Bank estimates Ghana’s population as at 2013 to be about 25.9 million Ghanaians with a population growth rate of 2.2%. Males account for 50.9% of the population while females also account for 49.1% of the population.

Out of a total population of 21.35 million Ghanaians aged 5 years and above, 54.2% are economically active (employed and unemployed).

THE PEOPLE

There are 56 Ghanaian dialects, of which Akan, Dangbe, Ewe, Kasem, Gonja, Dangbe, Ga, Dagbani and Nzema are the major languages. The official language is English but French and Hausa are two other foreign languages spoken in the country. 2

DEMOGRAPHIC/SOCIO-POLITICAL OUTLOOK ON GHANAGOVERNANCE

Ghana practices a multiparty democracy based on a constitution. Currently, there are two major political parties namely New Patriotic Party and the governing National Democratic Congress. However, there exist other minor political parties in the country.

This fourth republican constitution which came into force in 1992 provides a unitary state governed by a president (and Cabinet) and a Unicameral Parliament.

A decentralized central government administration has been fostered at local government level where there are 10 Regional Co-ordinating Councils, 110 Metropolitan, Municipal and District Assemblies which serve to involve grassroots participation in the formulation and implementation of government policies and the general development of their areas of jurisdiction.

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ECONOMIC OVERVIEW

The economy has been strengthened by a quarter century of relatively sound management, a competitive business environment, and sustained reductions in poverty levels. In late 2010, Ghana was recategorized as a lower middle-income country with a GDP per capita of US$1,349.

In 2012, the economy revolved around services, which accounts for 50% of GDP and employs 28% of the work force. Growing output towards economic industrialization has made Ghana remain one of the most economically sound countries in all of Africa.

CONTRIBUTION OF SERVICE SECTOR

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ECONOMIC OVERVIEW

Growth in the services sector was led by the information and communication subsector with a growth of 24.7%, followed by the hospitality subsector with 13.7%, financial and insurance activities with growth of 12.1%, and health and social services with an 11.2% growth.

The industrial sector contributed 28.1% to total GDP and grew by 9.1% for the year.

With the oil find, the agricultural sector contributed 21.3% to total GDP.

SECTORIAL CONTRIBUTION TO GDP

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MARKET OVERVIEW OF FINANCIAL SERVICES SECTOR

COMPOSITION OF THE FINANCIAL SERVICES SECTOR

a. Banking Industry: 27 universal banks, 137 rural and community banks, 58 non-banking financial institutions (including finance houses, savings and loans, leasing and mortgage firms).

b. Insurance Industry: As at January 2014, the insurance industry was made up of 26 non-life companies, 19 life companies, 2 reinsurance companies, 63 broking companies 1 loss adjuster, 1 reinsurance broker, 1 oil and gas company and 4,537 insurance agents.

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MARKET OVERVIEW OF FINANCIAL SERVICES SECTOR

COMPOSITION OF THE FINANCIAL SERVICES SECTOR

c. Capital Markets: Ghana Stock Exchange, Securities and Exchange Commission, listed companies, 16 Licensed Dealing Members (or Stock Brokerage Companies), 3 Registrar Service Providers, Custodians, Investment Bankers, Fund Managers, etc.

Currently, there are 53 listed Companies, 10 brokerage firms, 5 mutual funds and 1 unit trust companies on the Ghana Stock Exchange

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MARKET OVERVIEW OF FINANCIAL SERVICES SECTORMARKET TRENDS

The Ghanaian market continues to demonstrate some unique characteristics such as:

a. Continuous growth as insured seek to self-insure more of their risks

b. Tougher competition for many finite products.

c. A growing presence in both life and non-life re-insurance.

Most banks and financial institutions now employ cutting-edge technologies to roll out their products to their Ghanaian customers.

A more sophisticated consumer who wants nothing short of the best.

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MARKET OVERVIEW OF FINANCIAL SERVICES SECTOR

MARKET TRENDS

• The Ghanaian insurance market is a thriving one with huge potential for growth in both the life and non-life markets.

• The competition is however keen in the life insurance market as a result of the anticipated passage of the separation of Life and Non-Life businesses and an increase in the capital requirement to ¢7billion.

• The need for insurance firms to spread their risks in order to reduce the impact of risk during any catastrophe led to the creation of the Ghana Reinsurance Company, which is mandated to receive legal cession 20% of premium as reinsurance.

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MARKET OVERVIEW OF FINANCIAL SERVICES SECTOR

MARKET TRENDS

• In February 2003, Bank of Ghana introduced the Universal Banking License (UBBL) which is expected to bring more competition within the industry.

• Banks are required to hold 10% of the cedi and forex deposit base with Bank of Ghana on a daily basis as primary reserves and 35% of their deposit base in cedi denominated.

• The minimum capital for deposit and non-deposit taking micro-finance institutions was raised in August 2013 to GH¢300,000 and GH¢500,000 respectively.

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OPPORTUNITIES

KEY IT OPPORTUNITIES FOR THE FINANCE SECTOR:

• Cyber security solutions

• Anti-money laundering solutions

• Customer relationship management solutions

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OPPORTUNITIESWider Markets for the Financial Sector

Through the implementation of the Financial Sector Strategic Plan (FINSSP), the Government of Ghana intends to promote the evolution of a financial sector which is appropriate for the needs of a country currently at a middle income status.

The deployment of modern I.C.T platforms will not only expand the operations of the financial sector but will foster the creation of an industry that is capable of meeting the expectations of a country which is growing in sofiscation.

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The amended Banking Act 738 has led to the creation of International Financial Services Centre (IFSC) by the government.

The specific focus of Ghana’s International Financial Service Centre is to be a regional hub for financial activities in Africa. This is set to increase the competitiveness of the Ghanaian financial sector.

Irish companies can export key technological solutions to augment banking operations. Priority must be given to the exportation of technological solutions that can promote customer service delivery and the speed of the delivery of services.

OPPORTUNITIES

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OPPORTUNITIES

OFFSHORE BANKING- The Government of Ghana introduced the concept of offshore banking as a key aspect of its financial sector development strategy, with a view to making Ghana a gateway to financial services in West Africa and linking the Ghanaian economy to global markets.

For this reason, there is the imperative for financial institutions to build the capacity to meet this enlarged scope of banking operations. Financial service related exports must concentrate on the exportation of technologies capable of transforming the operations of these institutions into one that is capable of serving the sub-region and global markets.

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WIDER MARKET FOR INSURANCE COMPANIES

The future of the insurance market looks bright especially with the anticipated introduction of a common currency for the West African sub-region. This will provide great opportunities for companies to explore into the neighbouring countries.

OPPORTUNITIES

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OPPORTUNITIES

Value Adding Processing The Ghanaian government is also hoping to encourage the expansion of local value added processing of the country’s natural resources with the objective of increasing foreign exchange earnings.

PROVISION OF EQUIPMENT TO CONSTRUCTION AND MINING COMPANIES- The Ghanaian construction industry keeps growing with major construction activities in the roads, highways and bridges sectors, coastal works and residential accommodation. Construction equipment, particularly re-conditioned equipment, is likely to continue to be a promising sub-sector.

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BARRIERS TO ENTRY• Entrenched local interests can derail or delay new entrants

• Local Content Policies- Trading companies are required to employ at least 1 Ghanaian nationals

• Tariffs- Import tariffs, quotas on the volume of imports and other import duties/restrictions impede the volume of exports and market penetration of imports in the country.

• Procedure for Clearing Imports- The procedure involve in clearing imports in the nation’s ports are cumbersome and may take longer than expected especially for new entrants.

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BARRIERS TO ENTRY

Prohibition of Imports to Selected Industries- Some industries and economic activities within the country are a preserve for nationals hence foreign participation in those industries and key economic activities is considered a violation of the country’s statutes.

Legal Requirements of Partnership- In some cases, government legislation may require a partnership between foreign and Ghanaian-based institutions before foreign companies can import commodities in the country.

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RECOMMENDED MARKET ENTRY STRATEGY

Partnerships with Ghanaian Companies- Irish companies can choose to partner selected companies in Ghana to commence operations in the country after which Irish companies can establish themselves as independent business entities in the country.

Contracting Local Consulting Firms to Assist in Business Registration Processes- Success also exists for contracting Ghanaian-based institution to assist Irish companies in the procedures and processes involved in the registration and commencement of operations of the said Irish company.

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RECOMMENDED MARKET ENTRY STRATEGY

EXPLORING OPPORTUNITIES OFFERED BY THE GHANA FREE ZONES BOARD

Established on 31st August, 1995 by an Act of Parliament to enable the establishment of free zones in Ghana for the promotion of economic development, to provide for the regulation of activities in free zones and for related purposes.

The main objectives of the programme is the:

1. Transfer of technology

2. Diversification of exports

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CONCLUSION

Ghana is the preferred import destination in West Africa as a result of the relatively stable political climate of the country, good governance and the prospects that the local economy holds for Irish exporters.

The mantra of referring to Ghana as the gateway to the West African sub-region clearly illustrates the prospects that exists in Ghana and for that matter West Africa.

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END OF PRESENTATION

THANK YOU