Ghana is a place with several business opportunities—from mining to the retailing of household supplies to farming. Due to its growing economy, youthful population, stable political environment, and abundance of various natural resources, including oil, the country attracts entrepreneurs and investors from all over the world.
However, despite Ghana’s promising prospects, starting and running a business in Ghana is not without its fair share of challenges. Entrepreneurs, both locals and foreigners, who dream of starting businesses in the country face obstacles before being able to actualize their dreams.
What are some of the challenges of doing business in Ghana? And how can entrepreneurs overcome them? In this article, we’ll explore eight (8) key challenges that you need to be aware of before taking the plunge and establishing your business in Ghana’s business landscape.
Challenges of doing business in Ghana
1. Bureaucracy and Red Tape
If you’ve ever thought that starting a business is as simple as having a brilliant idea and getting down to work, think again. In Ghana, as in many countries, navigating the bureaucratic maze can be a tough challenge. Registering a business, obtaining the necessary permits and licences, and ensuring compliance with local regulations can be a time-consuming and complex process. Entrepreneurs must often engage in a dance of paperwork and patience as they try to get their businesses off the ground.
Registering your business with the GRA and obtaining your licence (where applicable) can sometimes take up to 6 months or more of back and forth with the agencies involved. When trying to navigate this challenge, understand the processes involved and build relationships with officials who can help you streamline the process. Also, working with a local business consultant can help you move things along faster.
2. Access to Capital
While Ghana’s economy is on an upward trajectory, securing the necessary funding to start or expand a business can be a daunting task, especially for small and medium-sized enterprises (SMEs). The lack of access to affordable financing options can stifle entrepreneurial dreams. Entrepreneurs often find themselves struggling to convince banks or investors of their business potential, which can delay or even deter the launch of promising ventures.
It is, therefore, crucial to expand your options when searching for capital rather than limit them, while making sure your documents are intact and convincing, including your business proposal and business plans.
Related: How to start a business in Ghana with little or no capital
3. Infrastructure Challenges
Ghana, like many developing countries, faces issues related to infrastructure. Reliable power supply has been one of the country’s major challenges that businesses have had to deal with in the past and still continue to deal with. Things like stable internet connectivity and efficient transportation are also some of the essentials that businesses need for smooth business operations, which Ghana struggles with.
Entrepreneurs in Ghana must deal with occasional power outages, slow or unstable internet, and inadequate transportation infrastructure. These challenges lead to disruptions in operations and also bring additional costs to businesses. If you must start your business in Ghana, then you must figure out a backup for things like electricity.
4. Corruption
Corruption remains a challenge in many parts of the world, and Ghana is no exception. While measures have been continuously put in place to reduce corruption and improve transparency, it still poses a threat to businesses. Corruption can manifest when dealing with government agencies and local authorities, leading to delays, extra costs, and a sense of frustration among entrepreneurs. Knowing the fundamental laws of the country concerning your business and its operations can help you when dealing with corrupt institutions or people.
5. High Taxes
Ghana currently imposes heavy taxes on businesses. With a corporate income tax (CIT) of 25% and 35% for businesses in the mining and upstream petroleum sectors, the country stands as one of the countries with the highest CIT in Africa. There are also frequent changes in tax regulations and rates, which can be a significant burden for businesses. Navigating the intricacies of the tax system requires professional expertise, and even then, staying up-to-date with the ever-changing tax laws can be a demanding task.
6. Competition
There is fierce market competition, particularly in sectors such as retail, hospitality, and telecommunications. Therefore, entering the market with a new business can be daunting since established players already have a firm foothold. Taking the telecommunications sector as an example, MTN has the largest market share and companies like AT and Vodafone find it hard to compete. So entering the telecommunications sector will mean you will be dealing with a lot of competition as a new business.
To succeed, entrepreneurs must first find innovative ways to differentiate their products or services and carve out a niche in the market. This will require intensive market research, attentive business planning, and a lot of expertise on your team.
7. Problems With Conducting Market Research
Successful businesses are built on a foundation of in-depth market research, which includes understanding consumer preferences, behaviour, and local demand. Since inadequate market research can lead to misjudgments and misalignments with the market, entrepreneurs must do the groundwork in order to get all the necessary information.
However, it can be quite difficult to get access to information in Ghana, especially if you are handling the research yourself. There isn’t a lot of information online and certain institutions tend to hold back from sharing information. This can lead to you failing to understand the nuances of the local market and ending up with products or services that simply do not sell.
Work with firms that provide market research to entrepreneurs to help you navigate the problems of market research and the pitfalls that come with inadequate market research.
8. Currency Fluctuations
Ghana’s currency, the Ghanaian Cedi, is subject to fluctuations, as is the case with most currencies. The country saw the Cedi at its worst so far in 2022, when it affected a lot of businesses. These fluctuations can impact the profitability of businesses, especially those engaged in international transactions. Entrepreneurs who fail to anticipate and manage these currency risks may find their profit margins eroding or, worse, suffering significant financial losses.
Conclusion— Challenges of doing business in Ghana
There you have it, the eight (8) major challenges of doing business in Ghana.
Although entrepreneurs face a myriad of challenges, it’s important to note that Ghana’s growing economy, political stability, and vast potential make it an attractive destination for business. Especially for businesses looking to expand their operations into Africa.
While the road may be rough, you can find ways to overcome these obstacles through careful planning, local partnerships, and a good understanding of the local business environment. Engaging with local business networks and seeking guidance from professionals familiar with the Ghanaian market can also be invaluable in addressing these challenges.
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