Country Trade Risk Index (ERI) 90.08
Country Risk Reference Rating 6 (6/9)
Country Risk Outlook Stable
Economic and trade risks
Since China and Ghana established diplomatic relations on July 5, 1960, there have been no major differences in diplomatic relations. The economic and trade cooperation between the two countries continues to develop. Successive Ghanaian governments have a positive attitude towards China-Ghana economic and trade cooperation and have high expectations. The two countries have signed economic and technological cooperation agreements such as the Agreement on Welfare, Peace and Protection of Investments, the Agreement on Economic and Technical Cooperation, trade agreements and investment protection, and cultural cooperation, and have established a joint economic and trade committee. In 2012, China-Canada trade volume reached US$5.43 billion, a year-on-year increase of 56.5%. Among them, China’s exports were US$4.79 billion, a year-on-year increase of 54%; China’s imports were US$640 million, a year-on-year increase of 77.8%. China mainly exports mechanical and electrical products, textiles, and high-tech products, and imports manganese ore, logs, cocoa beans, and scrap metal from Ghana.
Investment risk
The Ghanaian government actively improves the investment environment and regards attracting foreign investment as an important part of economic development. Its business and investment environment is in a good state among southern African countries. To encourage foreign investment, the government gradually reduces corporate income taxes, approves land use permits for companies, and imports production-related machinery, equipment and accessories. Specially approved enterprises do not need to pay import duties when importing the above-mentioned materials. After years of hard work, all conditions related to investment have gradually become complete and mature. According to the 2013 Doing Business Report released by the World Bank, Ghana ranks 64th among 185 economies in the world, basically the same as the 2012 ranking. It ranks fifth among 46 economies in sub-Saharan Africa, second only to Mauritius, South Africa and other countries.
Legal risks
Ghana’s legal system has the characteristics of English common law and is relatively more advanced than other African countries. People are accustomed to solving problems through lawyers and courts. On July 18, 2013, the Ghanaian Parliament passed an amendment to Bill 478, which clearly defined and restricted the fields and methods of foreign investment. The purpose was to optimize the foreign investment structure and enable it to better promote Ghana’s economic and social development. The bill stipulates that the Canadian party’s equity in the joint venture shall not be less than 30%, and this share shall not be transferred to foreign citizens or enterprises; at the same time, the bill will increase the minimum capital for foreign investment in Ghana’s retail trade from the previous US$300,000 to US$100. million, and requires all businesses, including local businesses, to register with the Ghana Investment Promotion Center.
Overall risk
After the general election, the Ghanaian government once again achieved a smooth transition, and the political situation remained basically stable. However, Ghana’s society is deeply divided, and issues such as tribal conflicts and deteriorating public security have posed certain hidden dangers to political stability. Ghana’s economy is growing rapidly, but its industrial structure is relatively single, it is highly dependent on the outside world, its inflation level is high, and its economy has certain vulnerabilities. Ghana’s government deficit is high, public debt and foreign debt burdens are rising, and medium- and long-term risks deserve attention. Factors such as Ghana’s higher inflation and twin deficits also bring certain risks of depreciation and volatility to its currency. Since the establishment of diplomatic relations in 1960, economic and trade cooperation has continued to develop. However, China has a large trade surplus with Ghana, which is not conducive to the long-term stable development of trade. Competition among enterprises and conflicts with local traders have intensified, causing concern and dissatisfaction among local officials and people. Chinese investors should seek advantages and avoid disadvantages, and be fully prepared to guard against various risks while seizing investment opportunities and adapting to the investment environment.
Based on the analysis and assessment of the current overall situation, Ghana’s country trade risk index (ERI) is 90.08, the country risk reference rating is 6 (6/9), the country risk level is high, and the country risk outlook is stable. (Issuing agency: China Export and Credit Insurance Corporation)
