What is the single biggest legislative change on the horizon in the next 18 months?
Over the next 18 months we expect to see legislative changes to facilitate increased digitalisation of economic activity generally and revenue management in particular. The latter is driven by the need to scale revenue mobilisation in view of COVID-19. Regarding the former, and as with the rest of the world, Ghana is beginning to embrace laws centred on digitalisation. This is supported by recent promulgation of legislation to address important issues such as cybersecurity and fintech. Given the fast pace of innovation in these areas, there is need for legislation to keep in step in a bid to remain relevant and sufficiently regulated to maintain investor and user confidence in order to promote robust activity.
In the short term, there is an Electronic Transactions Levy (E-levy) proposed, which is envisaged to include the informal sector in the tax bracket and widen the nation’s tax net.1 An approval of this E-levy would mean that electronic transactions covering mobile money payments, bank transfers, and inward remittances will be charged at a rate of 1.75%, to be borne by the sender, except inward remittances which will be borne by the recipient.2 All transactions that add up to GHS100 (approximately USD16) or less per day (which is about GHS3000 or USD486 per month) will, however, be exempt from this levy. Although the effect of imposing such a levy is debatable, this move emphasises the importance of the sector.
Regionally, Ghana has also ratified the African Continental Free Trade Agreement (AfCFTA) aimed at strengthening economic integration and promoting free access to goods and services across the African continent.
What sectors do you expect to see increased investment and / or financial movement in over the next 18 months?
Sectors expected to see increased investment in the coming months include fintech, IT, clean energy and infrastructure.
The remarkable surge in the use of digital technologies is expected to continue due to existing norms limiting physical interaction and the commitment to transforming Ghana’s economy through digitalisation. An example of this shift towards digital transformation is the issuance of the National Identification Card (GhanaCard) which is a valid biometric verification document issued by the National Identification Authority to Ghanaians and permanently resident foreign nationals for the purpose of proof of identity, citizenship and residence of the holder. GhanaCard is rapidly becoming the main identification document, with developments such as the card number replacing the TIN and the re-registration of all mobile numbers to include GhanaCard details.
Where do you see the key areas of growth or opportunity for businesses operating in your country?
A distinctive area of opportunity is fintech. Cashless transactions have become big in Ghana with data revealing that 80% of the adult population uses mobile phones, with 30 million mobile money accounts.3 The implementation of mobile money operability systems has made it possible to transfer money seamlessly across different mobile money providers and between bank accounts and mobile wallets. Recent data showed an over 120% increase in the value of digital transactions between February 2020 and February 2021 as compared to 44% between February 2019 and February 2020. Also, it is reported that the ICT industry in Ghana recorded a GDP increase rate of 5.7% as compared to its 2017-2019 linear trend.4
What sectors have been most impacted by COVID-19 and what have businesses in that sector done to cope with these challenges or potentially benefit from opportunities arising?
Sectors badly hit by COVID-19 include tourism and trade and manufacturing. Trade and manufacturing have been negatively impacted by the global challenges facing logistics across the globe. According to the Ghana Statistical Service average decrease in sales in this industry was 60%. This corresponds to an estimated loss of GHS115.2 million.5
A May 2020 report by UNESCO Ghana, reported that “cultural institutions and facilities including museums, theatres and cinemas are losing millions in revenue each day, and many have had to let go of their staff.”6 It has been noted that “economic activity (in this sector) has been massively disrupted.”7
Other than the implementation of mandatory COVID-19 protocols, it is not clear that stakeholders in the sector have instituted measures to streamline and sustain revenue by for example, encouraging domestic tourism in the absence of mass inflow of foreigners.
In terms of the legal services market, what growth are you seeing on the horizon in the next 18 months?
We expect to see sustained demand for legal services in the areas of fintech and IT. Given Ghana’s regional commitments under the AfCFTA and international commitments under COP26 we are poised for increased demand for legal services in the area of trade and clean energy.
Over the last 18 months we have seen a distinct increase in interest and demand for legal services in relation to data protection, fintech as well as employment law queries relating to work from home arrangements, redundancy and compulsory vaccination requirements. Arbitration and dispute resolution practices have remained active dealing with tax disputes and termination of employment and commercial contracts. Market entry support has been relatively balanced with market exits with an interest in restructurings.
What is the general business mood in-country in the next 18 months?
Ghana’s economy recorded a growth rate of 0.4% in 2020 as compared to 6.5% in 2019 and a projected 4.7% for 2021.8 There continues to be concern about the level of debt burden that the country faces. This places significant pressure on the country’s fiscus and will necessitate more aggressive tax collection strategies in addition to an increase in the number of areas of economic activity that will be targeted by taxes. Thus, the business mood in the country is hopeful and expected to progressively rebound. The approach generally appears much more targeted with investors following specific opportunities.
2Republic of Ghana, The Budget Statement and Economic Policy of the Government of Ghana for the 2022 Financial Year (17th November, 2021) at para. 316
3“Transforming An Economy Through Digitalization - The Ghana Story” delivered by the Vice President of the Republic of Ghana, Dr. Mahamudu Bawumia on November 2nd , 2021, paragraph 30
4Policy Brief, “Distributional effects of the COVID-19 pandemic in Ghana” (download footnote 4 PDF above)
5How COVID-19 is affecting firms in Ghana (download footnote 5 PDF above)
6United Nations Educational, Social and Cultural Organization (Ghana) Briefing Note No. 4 (May 2020): COVID-19: Socio-Economic Impact in Ghana (download footnote 6 PDF above) (last accessed on 29 November 2021)
7Ibid, pg. 2
8Republic of Ghana, The Budget Statement and Economic Policy of the Government of Ghana for the 2022 Financial Year (17th November, 2021), pg.12.