Topic of the Week - TWEEK
GHANA’S OIL BOOM
The prospects for Small business
Emmanuel A. Codjoe - London 23 December 2011
In Ghana, close to 80% of all commercial activities are from small businesses, according to the 2003 industrial census by the Ghana Statistical Service, which also suggests that there is no evidence this trend has changed. The majority of business enterprises in Ghana can be described as small or even micro as they employ less than 10 people, including the owner. But their importance to the Ghanaian economy cannot be overemphasised as these businesses provide economic growth, poverty reduction and employment generation. Despite these important beneficial contributions to the economy, official government development policy has largely been geared towards addressing the interests of medium- and large-scale enterprises. Since 2010 Ghana has joined the ranks of oil producing countries. According to the Bank of Ghana, in the 11 months of 2011, the country has imported crude oil to the tune of $1.2 billion while imports of oil products were $1.4 billion, amounting to a total of $2.6 billion. The total value of Ghana’s crude oil exports was $2.6 billion over the same timescale. The World Entrepreneur Society (WES) takes a look at Ghana’s oil boom and links this new dimension to Ghana’s economy with the need for small entrepreneurs to explore new avenues for growth and expansion.
GHANA’S ECONOMIC TREND
Since 2001, the Ghanaian economy has undergone drastic changes, especially in the expansion of the service sector – banking, insurance, telecommunications, hospitality, education. Economic growth has been consistently positive, averaging 6 per cent over the last decade. In 2007 Ghana discovered oil in commercial quantities with actual production taking place three years later, in December 2010. Whilst this development has raised hopes about the potential for further growth in the economy, it has also been accompanied by great trepidation as there are fears about the likelihood of biased-growth in the oil and oil-related sectors at the expense of other sectors, notably agriculture and manufacturing. Evidently, the growth witnessed in the services sector, especially in finance and telecommunications has presented numerous business opportunities for Ghanaian and foreign investors.
THE SMALL BUSINESS BOOM?
Small enterprises have not been left out of this boom, often taking advantage of the growth in mobile telecommunications. They provide a range of business services, such as call credit transfer services, sale of call credits, sale and servicing of mobile phones, also the provision of telephone call services and allied communication related activities, such as photocopy and printing services, internet cafes and secretarial services. Small enterprises are also actively engaged in sectors, such as commerce, transportation, catering and hospitality. However, with the changing Ghanaian economy and the recent oil boom; what prospects lie ahead for small enterprises as they attempt to expand their scope and activities in emerging areas of growth. The emergence of the oil sector presents a great opportunity for small enterprises. Whilst it is evidently impossible to compete with oil giants who engage in the heavy lifting activities of oil drilling and processing, there is scope of greater participation by small enterprises in allied and support services. These include transport services, small-scale engineering projects, and bespoke business, financial and legal services needed in a nascent oil industry. It all depends on the small entrepreneur to take the initiative.