Bank of Ghana Survey records private foreign capital inflow of GH¢1.5 billion in 2007 with business entities giving strong signals to expand over the next three years.

The Bank of Ghana embarked on a survey to monitor the scale and composition of private cross border capital flows and investor perceptions in Ghana. The survey findings will help improve coverage in compiling Balance of Payments (BOP) statistics; provide estimates of Ghana’s International Investment Position (IIP) and provide a basis for formulating policies that would improve the investment climate. Questionnaires were administered to a representative sample of 286 business entities in nine (9) major sectors of the economy. The survey was conducted between October-November 2008 with a response rate of 81.47% which is high for such surveys.

Highlights of the Survey Report

• Ghana had a sizeable private foreign capital inflow of GH¢1,538 million equivalent to 10.9 per cent of GDP (or US$1,589 million) in 2007. This brings the stock of such inflows to GH¢4,328 million (or US$4,471 million) at the end of 2007. The inflows comprised direct equity investments of GH¢854 million (including reinvested earnings of GH¢330 million); trade credits (GH¢304 million); and loans (GH¢361 million). Private foreign capital outflows were estimated at GH¢98 million in 2007 raising the stock of private cross border assets to GH¢597 million. The net International Investment Position (IIP) of the private sector stood at GH¢3,731 million at the end of 2007.

• Sectors with the highest foreign direct equity investment flows in 2007 were transport, storage and communication (GH¢163.4 million), banking (GH¢58.9 million), and mining and quarrying (GH¢48.1 million), which together accounted for 82.0 percent of total FDEI flows. Other sectors that benefitted from such flows were real estate/property services (GH¢20.8 million), construction (GH¢12.4 million) and manufacturing (GH¢13.8 million).

• Foreign direct equity investments to Ghana originated mainly from Europe (60.7%) and Africa (38.0%). The top ten sources of FDEI inflows in 2007 were Mauritius (27.9%), France (19.4%), British Virgin Islands (18.4%), United Kingdom (16.9%), United States (5.9%), Togo (3.4%), Norway (3.3%), Israel (3.2%), Nigeria (2.1%) and Switzerland (1.9%).

• The survey also showed that the stock of private sector debt increased to GH¢2,469.55 million in 2007, mostly in long-term maturities. The sectors with the highest private sector debt flows in 2007 were banking (GH¢366.2 million), mining and quarrying (GH¢218.6 million), transport, storage and communication (GH¢144.8 million) and manufacturing (GH¢131 million).

• The survey of investor perceptions signaled inflation as the main economic factor which impacts negatively on business activities. Labour market rigidities such as staff turnover, wage levels, costs of skilled labour, and restrictions regarding hiring of expatriates also had negative effects on enterprises. Domestic market size, access to international, regional and domestic finance and credit, and efficiency of banking, telecommunication and internet services were viewed as positive.

• Business entities gave strong signals to expand their activities over the next three years by improving existing facilities, investing in technology and capacity building, diversifying products and services, recruitment of more local staff and construction of new buildings and structures to enhance their operations indicating strong confidence in the Ghanaian economy.

For further enquiries or a copy of the full Survey Report, please contact The Director, Research Department, Bank of Ghana Email: sec.research@bog.gov.gh or visit www.bog.gov.gh