Ghana Country Profile 2007 Summary
Core Content
The Ghana Country Profile 2007 is part of the World Bank Group's Enterprise Surveys, which aim to assess the business environment and firm performance across various sectors. The report provides an overview of key indicators related to the business environment, including corruption, regulations, taxes, infrastructure, trade, crime, and informality, as well as financial and workforce characteristics of firms in Ghana.
Main Topics and Indicators
Business Environment Obstacles
- Key Challenges: The business environment in Ghana is shaped by various obstacles that impact firm operations and productivity.
- Top Constraints: The report highlights the most significant constraints faced by firms, benchmarked against the Sub-Saharan Africa region and the low-income group.
- Graphs: The first graph presents the top 10 constraints as identified by firms, while the second graph breaks down the top 3 constraints by firm size.
Average Firm
- Firm Characteristics: The report provides data on the average firm in Ghana, including its age, gender composition, and ownership structure.
- Ownership Breakdown: Most firms are sole proprietorships (65.0%), with a smaller share being closed shareholding companies (24.9%) and open shareholding companies (0.5%).
- Female Participation: Female participation in management and ownership is notable, with 44.0% of firms having female ownership and female top managers data not available for the average firm.
Infrastructure
- Challenges: Infrastructure deficiencies, such as electricity outages, water shortages, and telephone delays, significantly affect firm operations and productivity.
- Impact: These issues increase operational costs, disrupt production, and reduce profitability.
- Delays: The delay in obtaining electrical connections is 24.4 months, while water connections take 15.7 months and telephone connections take 184.3 months.
Trade
- Export and Import Activity: A significant percentage of firms engage in foreign trade, with 24.4% of firms being exporters.
- Trade Constraints: Trade involves customs delays, licensing requirements, and transport risks.
- Performance Metrics: The average time to clear direct exports is 7.8 days, and imports take 6.8 days. Export losses due to theft and breakage are minimal, at 0.1% and 1.7% respectively.
Regulations, Taxes, and Business Licensing
- Regulatory Burden: Regulations, taxes, and business licensing are key factors that affect firm productivity and investment decisions.
- Time and Effort: Senior management spends 3.2% of their time dealing with government regulations, and firms have an average of 4.3 visits with tax officials per year.
- Licensing Delays: The days to obtain an import license is 10.3, construction permit is 41.5, and operating license is 6.4.
Corruption
- Corruption Indicators: The Graft Index measures the proportion of times firms are asked or expected to make unofficial payments for public services.
- Corruption Levels: 27.1% of firms in Ghana reported experiencing corruption, which is higher than the Sub-Saharan Africa average of 17.4%.
- Gifts and Bribes: A significant percentage of firms expect to make gifts to secure government contracts, import licenses, and construction permits.
Crime and Informality
- Crime Impact: Crime imposes security costs on firms and affects their perception of the court system.
- Perception of Fairness: 59.8% of firms believe the court system is fair and impartial.
- Informality: 66.4% of firms are formally registered when they started operations, indicating a moderate level of informality in the private sector.
Finance
- Funding Sources: Most firms rely on internal finance for investment (86.6%), with bank finance accounting for 9.6% and trade credit for 1.8%.
- Financial Services: 27.3% of firms use external financing for working capital, and 128.2% of the loan amount is required as collateral.
- Bank Access: 22.2% of firms have bank loans or credit lines, and 83.5% have checking or savings accounts.
Key Information
- Income Group: Ghana is classified as a low-income country.
- Population: Approximately 23.5 million.
- GNI per Capita: US$590.
- Region: Sub-Saharan Africa.
- Sampling Method: The surveys are stratified by industry, firm size, and geographic region.
- Data Sources: All indicators are based on firm responses to surveys conducted by the World Bank and IFC.
Summary of Key Indicators
| Indicator |
Ghana |
Small Firms |
Medium Firms |
Large Firms |
Sub-Saharan Africa |
Low Income |
| Corruption Indicators |
|
|
|
|
|
|
| Graft Index |
27.1 |
23.7 |
41.1 |
17.4 |
19.4 |
25.4 |
| % of Firms Expected to Give Gifts to Tax Inspectors |
18.1 |
14.6 |
36.1 |
1.3 |
18.4 |
26.0 |
| % of Firms Expected to Give Gifts for Government Contract |
61.2 |
47.8 |
70.5 |
82.7 |
34.8 |
42.8 |
| % of Firms Expected to Give Gifts for Construction Permit |
47.6 |
27.6 |
65.0 |
83.3 |
26.3 |
34.9 |
| % of Firms Expected to Give Gifts for Import License |
38.8 |
42.8 |
66.6 |
7.4 |
16.5 |
23.2 |
| % of Firms Expected to Give Gifts for Operating License |
22.6 |
22.4 |
34.8 |
3.6 |
20.4 |
27.4 |
| Regulations, Taxes, and Business Licensing |
|
|
|
|
|
|
| Days to Obtain Import License |
10.3 |
7.6 |
10.3 |
14.0 |
18.8 |
15.9 |
| Days to Obtain Construction Permit |
41.5 |
15.0 |
69.3 |
26.8 |
51.0 |
52.2 |
| Days to Obtain Operating License |
6.4 |
5.5 |
5.6 |
12.8 |
25.5 |
21.9 |
| Senior Management Time on Regulation (%) |
3.2 |
2.8 |
4.6 |
3.4 |
7.6 |
8.0 |
| Average Number of Tax Visits |
4.3 |
4.4 |
4.6 |
2.9 |
2.7 |
2.5 |
| Open Shareholding Company (%) |
0.5 |
0.0 |
0.0 |
6.1 |
2.5 |
2.9 |
| Closed Shareholding Company (%) |
24.9 |
13.9 |
43.7 |
67.5 |
25.6 |
23.7 |
| Sole Proprietorship (%) |
65.0 |
77.5 |
46.8 |
8.2 |
56.2 |
55.8 |
| Average Firm Indicators |
|
|
|
|
|
|
| Age (years) |
15.3 |
13.2 |
17.7 |
26.2 |
12.9 |
12.6 |
| % of Firms with Female Top Manager |
N/A |
N/A |
N/A |
N/A |
15.2 |
13.4 |
| % of Firms with Female Participation in Ownership |
44.0 |
39.6 |
54.5 |
54.4 |
31.8 |
31.4 |
| Private Domestic (%) |
94.6 |
98.3 |
89.4 |
77.5 |
80.9 |
87.1 |
| Private Foreign (%) |
4.9 |
1.5 |
10.4 |
18.9 |
14.5 |
10.2 |
| Finance Indicators |
|
|
|
|
|
|
| Internal Finance for Investment (%) |
86.6 |
90.3 |
84.5 |
70.9 |
79.8 |
80.8 |
| Bank Finance for Investment (%) |
9.6 |
6.4 |
10.6 |
24.3 |
10.4 |
8.4 |
| Trade Credit for Investment (%) |
1.8 |
1.2 |
4.9 |
0.0 |
3.4 |
2.9 |
| Equity, Sale of Stock for Investment (%) |
0.6 |
0.0 |
0.0 |
4.8 |
1.6 |
2.6 |
| Other Finance for Investment (%) |
1.4 |
2.1 |
0.1 |
0.0 |
4.8 |
5.2 |
| Working Capital External Financing (%) |
27.3 |
23.3 |
34.1 |
42.8 |
26.0 |
24.7 |
| Value of Collateral (% of Loan Amount) |
128.2 |
114.8 |
117.5 |
162.8 |
149.8 |
172.4 |
| % of Firms with Bank Loans |
22.2 |
13.0 |
36.6 |
61.3 |
22.7 |
21.8 |
| % of Firms with Checking or Savings Account |
83.5 |
78.3 |
95.2 |
97.1 |
86.3 |
82.6 |
Infrastructure Indicators
| Indicator |
Ghana |
Small Firms |
Medium Firms |
Large Firms |
Sub-Saharan Africa |
Low Income |
| Number of Power Outages (per month) |
9.7 |
9.8 |
8.8 |
10.7 |
10.5 |
16.1 |
| Value Lost Due to Power Outages (% of Sales) |
5.6 |
5.4 |
6.2 |
5.5 |
6.5 |
7.7 |
| Number of Water Shortages (per month) |
10.6 |
12.1 |
12.4 |
5.7 |
7.2 |
8.6 |
| Average Duration of Water Shortage (hours) |
17.5 |
15.7 |
21.6 |
15.3 |
10.2 |
9.1 |
| Delay in Obtaining Electrical Connection (months) |
24.4 |
25.5 |
18.1 |
44.7 |
31.2 |
35.0 |
| Delay in Obtaining Water Connection (months) |
15.7 |
11.9 |
19.7 |
12.0 |
29.4 |
33.0 |
| Delay in Obtaining Telephone Connection (months) |
184.3 |
255.6 |
17.6 |
28.0 |
30.7 |
29.6 |
Trade Indicators
| Indicator |
Ghana |
Small Firms |
Medium Firms |
Large Firms |
Sub-Saharan Africa |
Low Income |
| % of Exporter Firms |
24.4 |
18.0 |
34.9 |
51.1 |
9.9 |
10.2 |
| % of Firms Using Foreign Inputs |
51.1 |
51.1 |
49.3 |
54.6 |
60.7 |
60.8 |
| Average Time to Clear Direct Exports (days) |
7.8 |
8.7 |
5.7 |
8.8 |
7.5 |
7.8 |
| Average Time to Clear Imports (days) |
6.8 |
3.1 |
7.3 |
9.4 |
13.6 |
14.7 |
| Losses During Export Due to Theft (%) |
0.1 |
0.0 |
0.2 |
0.0 |
1.4 |
1.6 |
| Losses During Export Due to Breakage or Spoilage (%) |
1.7 |
0.0 |
0.9 |
3.2 |
1.9 |
1.8 |
Crime and Informality Indicators
| Indicator |
Ghana |
Small Firms |
Medium Firms |
Large Firms |
Sub-Saharan Africa |
Low Income |
| % of Firms Believing Court System is Fair |
59.8 |
61.5 |
49.0 |
71.8 |
43.1 |
40.0 |
| Security Costs (% of Sales) |
1.2 |
1.0 |
1.9 |
0.9 |
2.0 |
1.6 |
| Losses Due to Theft, etc. (% of Sales) |
0.9 |
0.9 |
1.0 |
0.5 |
1.7 |
1.3 |
| % of Firms Formally Registered |
66.4 |
63.3 |
69.9 |
83.1 |
80.9 |
85.5 |
Innovation and Workforce Indicators
| Indicator |
Ghana |
Small Firms |
Medium Firms |
Large Firms |
Sub-Saharan Africa |
Low Income |
| % of Firms with International Certification |
6.7 |
1.0 |
16.5 |
29.4 |
14.2 |
11.5 |
| % of Firms with External Auditor Review |
34.4 |
23.1 |
56.6 |
72.7 |
43.4 |
37.3 |
| % of Firms with Website |
8.2 |
4.5 |
11.0 |
30.6 |
18.2 |
17.1 |
| % of Firms Using Email for Communication |
27.1 |
19.9 |
35.9 |
63.9 |
46.4 |
43.2 |
| Average Number of Temporary Workers |
1.7 |
1.1 |
3.2 |
3.4 |
5.4 |
6.9 |
| Average Number of Permanent Workers |
22.4 |
8.6 |
34.6 |
154.0 |
26.9 |
31.9 |
| % of Full-Time Female Workers |
34.8 |
33.7 |
40.4 |
26.7 |
24.5 |
21.7 |
Key Findings
- Corruption remains a significant challenge in Ghana, with a high incidence of informal payments expected for government contracts and licenses.
- Infrastructure issues, particularly electricity and water supply, are major constraints for firms, with significant delays in obtaining services.
- Trade is an important activity, but customs delays and transport risks add to the operational costs.
- Financial services are underutilized by small firms, with a heavy reliance on internal financing and high collateral requirements.
- Informality is relatively low, with 66.4% of firms being formally registered.
- Workforce diversity is evident, with female participation in full-time employment at 34.8%.
Conclusion
The Ghana Country Profile 2007 highlights the challenges and opportunities in the business environment, particularly in the areas of corruption, infrastructure, and financial access. While the private sector is dominant, improvements in regulations, infrastructure, and access to financial services are essential for enhancing productivity and competitiveness. The report serves as a valuable resource for policymakers and researchers to understand and improve the business environment in Ghana.
