Ghana improves ranking to 16th on Africa Investment Index 2018
Ghana’s ranking on the recently published Africa Investment Index for 2018 has improved from a previous 18th in 2016 to 16th and it is expected to move up in next year’s ranking.
The Ghana Investment Promotion Centre which set a target to attract $5 billion foreign direct investments (FDIs) into the country announced it recorded $4.37 billion in the first three quarters of 2017.
In comments emailed to ghanabusinessnews.com, Prof. Mthuli Ncube, the Managing Director and Head of Quantum Global Research Lab, publishers of the Index, said Ghana´s relatively good growth performance has been mired by exchange rate risk and the sequential current account deficits (since 2004).
“Despite these standoffs, Ghana´s economy’s good performance momentum seems to continue,” he said, adding, “However, to further mend investment attractiveness Ghana should improve local currency stability, ease inflationary pressure and improve the current account. The current account may observe some marginal improvements on account of rising commodity prices, oil and gold – Ghana´s main commodity exports. However, Ghana must diversify its production base and exports,” he noted.
Prof. Ncube argued further that when a country runs a current account deficit for a long period, it is building up liabilities to the rest of the world as these need to be financed by flows in the financial account that consequently need to be paid back.
“For countries like Ghana, much of the borrowed foreign funds have been used to pay for imports of consumer goods that the country does not produce. Hence, the country´s ability to repay the debt comes into question, as it fritters away funds on spending that yields no long term productive gain, thereby reducing inwards investors’ appetite to explore domestic investment opportunities in terms of FDIs,” he added.
Meanwhile, the Vice President, Dr Mahamudu Bawumia has said Ghana is the best investment destination in Africa because government is committed to pursuing business-friendly programmes and policies to improve the business climate for domestic and foreign investments.
The President, Nana Addo Dankwa Akufo-Addo also assured private sector investors that Ghana was a safe destination for their investments, as government’s push is making the country a business-friendly one on the continent.
“Ghana is endowed with great potential, where security and the rule of law are upheld, where investments are secure,” he told the 6th Africa CEO Forum, held in Abidjan, Cote d’Ivoire on Monday.
The annual Africa Investment Index, according to Quantum Global Research Lab is meant to paint a picture of the investment attractiveness of countries in the medium term. Among others the Index also seeks to provide a snapshot of the investment climate in the 54 African countries and give a ranking of these countries according to their attractiveness.
Three North African countries led by Morocco are among the top 10 countries on the Index. The countries are Morocco, Egypt, Algeria, and Botswana at fourth, followed by Cote d‘Ivoire, South Africa, Ethiopia, Zambia, Kenya and another West African country, Senegal.
The Index uses six criteria for the ranking. It uses economic growth factors, liquidity factors, risk factors, business environment factors (doing business indicators), demographic factors and a measure of social capital using the Facebook penetration rate, the publishers say.
By Emmanuel K. Dogbevi
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