Economic overview
Ghana has long been a country that, in the African panorama, “works” in a virtuous way. That is, it combines satisfactory performances – among African countries it is generally in the high rankings along a whole series of economic, political, social, technological and other indicators – with great reliability over time.
The continuity of the results achieved is clearly visible, first of all, in the almost forty years of substantially uninterrupted growth started in 1984. The graph compares the variations in the country’s GDP compared to those of some other well-performing sub-Saharan economies, albeit only in a more recent, and regional expansion rates. In the long term, Ghana exhibits a positive trend that anticipated the emergence of the sub-Saharan area as a whole during the twenty years that began in the second half of the nineties. Accra had already repeatedly shown that it knew how to lead the transformation processes in Africa with early independence in 1957, economic reforms in the 1980s, democratic reforms in the early 1990s, up to the progress in digitization of more recent years. But it’s not just about when.
Ghana’s economic expansion has remained stable for a long time – and above the regional average – although not always as brilliant as that of other countries (the anomalous peak of 14% for 2011 is due to the start of oil extraction). Since the beginning of the period under consideration, there has never been a recession, not even in 2020 (+ 0.4%) when 70% of sub-Saharan countries went under. The rebound with 4.7% in 2021 and 6.2% expected for 2022 is also substantial.
Moreover, this is not a small economy for the region, but much larger than the geographical dimension (Ghana is only the 32nd sub-Saharan country by extension) or demographic (only 13th, with 31 million inhabitants). ) could make you imagine. With a GDP of around $ 75 billion, Accra is the fifth largest economy after Nigeria, South Africa, Ethiopia and Kenya.
Focused on the export of three major commodities – gold, cocoa and oil – economic activity has made limited progress in the manufacturing sector, more marked in the development of services, positioning itself, in particular, as an aspiring technological hub in West Africa.
As for other countries in this area, the coastal zones of the South are more advanced than the inland ones of the North, that is, more densely populated and economically more dynamic and modern. In the Ghanaian case, however, ashanti is added to the areas bordering the Gulf of Guinea, a region moved more towards the center of the territory to which a large part of the entrepreneurial establishment and the middle classes belong, as well as a reference basin for the government currently in office. The other side of the Ghanaian development coin is thus a poverty which, although greatly reduced at the national level, has gradually become concentrated in the northern regions.
Main sectors of industry
The primary sector is supported by the cultivation of cocoa, located mainly in the Ashanti Region, whose export is the strength of the entire national economy. Ghana is in fact the second largest cocoa producer in the world, with an average of 350,000 tons per year. Other important cultivated products are palm oil, peanuts, coffee, tobacco, sugar cane and coconut. Growing are the cultures of corn, cassava, sorghum, millet, rice and ginger. While the livestock sector, based mainly on sheep and goats, is weak, the fishing sector is growing and aspires to improve itself more and more through the implementation of new technologies.
Mineral resources are substantial and focus on the extraction of gold (Ghana is the seventh largest producer in the world), diamonds, bauxite and manganese. Since 2011, the extraction of oil and natural gas has resulted in an increase in Gross Domestic Product and is being improved
The real estate sector has become an important sector of the Ghanaian economy, particularly in the large cities of the south, such as Kumasi or the capital, Accra. Recent developments have led to a boom in the private and public real estate construction sector, bringing millions of dollars into the country’s economy; this was due to recent policies to facilitate investments in the sector carried out by the Ghanaian government.
Taxation for businesses in Ghana
Personal Income Tax: Income derived from any gainful activity in Ghana is taxable, regardless of where the payment is made. This includes income from employment in any form: wages, salaries, overtime, bonuses, bonuses, allowances, etc., income from self-employment or business.
Pay As You Earn (PAYE) – is a form of withholding tax whereby the employer is obliged to deduct the tax from the wages paid to their employees and pay it back to the GRA. The employer’s obligations consist of: submitting monthly returns relating to taxes deducted from the income of its employees; in the monthly payments to the GRA, in the presentation of an annual return for each employee.
The tax rates applicable to employees’ income of resident subjects are shown in the following table.
Compensation of employees of non-residents are taxed at a fixed rate of 20%.
Taxation of legal persons
The corporation tax applies to the profits of companies residing wherever they are produced. A company is resident in Ghana if it is incorporated under the laws of Ghana or if its management and control are exercised in Ghana at any time of the fiscal year. Non-resident corporations are subject to tax only on their income accrued or derived from a Ghanaian source.
Taxable income is made up of profits and and is calculated by subtracting the exempt income and the deductible amounts from gross income. Capital gains are taxed separately at a rate of 15%. Losses can be deducted from taxable income and carried forward in the five years following the one in which they occurred.
The standard rate is 25%. However, there are different rates that apply to income from specific business activities. The following are subject to the 8% rate: income from non-traditional exports; rural or cooperative funds, after a 10-year exemption period. The rate, on the other hand, is equal to 20% on income deriving from loans granted by banks to agricultural enterprises, on the income of financial institutions deriving from loans to leasing companies and for companies mainly engaged in the hotel sector. Oil companies are taxed at a maximum rate of 50%, currently reduced to 35% by virtue of the country’s oil agreements; Mining companies that carry out mining activities are generally subject to a tax rate of 35%.
Investing in Ghana
The opportunities are numerous and span various sectors: electrical equipment, industrial machinery, food, construction materials, hotels and restaurants, agriculture and fishing, etc.
Ghana represents the fifth destination market for Italian exports to sub-Saharan Africa, according to Sace 2018 data, and the data show a potential increase in the coming years. Recent investments have been made by Italian companies in the hydrocarbon sector (Eni), catering, transport. In addition, as a result of the government program “Ghana Private Sector Development Fund” (GPSDF), the intervention of the private sector in the economic and commercial field has been facilitated. Ghana also benefits from the facilities provided by the bilateral “Interim Economic Partnership Agreement” with the European Union under which all EU imports from Ghana, with the exclusion of weapons and ammunition, enjoy a “duty free quota free” access regime (ie no customs duties or quotas are provided for). Ghana is also a member of the Economic Community of West African States and therefore also benefits from the related facilities in terms of trade with other member countries. Foreign companies interested in investing in Ghana can count on a low cost of personnel (the average monthly salary is estimated to be around 5,110 Cedi, corresponding to around 880 euros).