Ghana: Stepping up investment

Although moderately sized, Ghana’s tourism industry has been a major focus of attention from both public and private sector investors in recent years. Developments in infrastructure, promotion and diversification of products should help the country boost both visitor arrivals and revenues.

In his State of the Nation speech in Parliament in late February, President John Dramani Mahama reaffirmed the government’s commitment to the sector. The president said the government would continue investing, and that the newly formed Ministry of Tourism, Culture and the Creative Arts would enhance interaction among the government, industry bodies, civil society and international partners.

The new ministry’s main role will be facilitate cooperation between the government and already established bodies in tourism, culture and the arts, such as the Ghana Tourism Authority (GTA) and the National Commission on Culture.

Following Mahama’s speech, the newly appointed minister for tourism, culture and creative arts, Elizabeth Ofosu-Adjare, further outlined Ghana’s strategy for the sector.

As well as highlighting the potential of domestic tourism – rising disposable incomes among Ghanaians makes them a growing market for the travel and leisure sector in their own country – the new minister pointed out some of the challenges the industry faces. These include the need to improve sanitation at beaches, markets and other attractions, and tackle environmental threats to natural scenery and fauna that imperil the ecotourism segment that Ghana seeks to develop.

To a significant extent, the new ministry will be building on work done by its predecessors, with Ghana continuing to follow a familiar tourism development path, but with an intensification of efforts and investment. The Tourism Act of 2011, which laid the foundations for the Development Fund, placed an emphasis on sustainable development and intensifying promotion outside and within the country, as well as on improving regulation. It established the GTA, which replaced the Ghana Tourism Board and was given an extended range of powers and greater access to funding, including through the Tourism Development Fund, which has a wide mandate.

The Tourism Development Fund is financed by a recently established tourism levy, in effect since October 2012, which imposes a 1% fee on tourism activities, usually passed on to the customer. The levy gives the tourism sector an autonomous and direct source of revenue and allows the fund to invest in a range of activities across the sector, from promotion and education to market research and infrastructure construction.

“We want that fund to promote Ghana, not only through improving infrastructure, developing roads, cleaning beaches, or constructing a marina, but also through a proper advert to use it as a stepping stone to development,” Bruce Potter, the general manager of Holiday Inn at Accra Airport, told OBG.

The government’s initiatives have certainly helped stoke greater private sector interest in the sector as well, with new developments looking to piggyback on the increased public sector spending.

In February the Ghana Tourist Development Company announced it had acquired more than 1000 ha of land to develop a resort at Osudoku in the Greater Accra region. The deal was made with local investors and will allow the company to hold some of the land in trust for the construction of tourist facilities, which are likely to include a hotel as well as recreational attractions. Reports suggest that it will target both local and foreign tourists, but no timeline for construction has been set yet.

Ghana has historically had a shortage of top-end resorts and hotels; in recent years, rising visitor numbers – particularly of well-heeled business travellers – have not always been matched by an expansion in four- and five-star hotels. As a result of a lack of competition, prices for existing hotels can sometimes be high relative to the quality of their facilities and services.

However, this is changing as international chains and local investors establish new hotels and resorts. The 260-room Mövenpick in Accra opened in late 2011, and Belgium-based hotel investor and management firm Rezidor is expected to open a 168-room hotel in 2013 branded by Radisson Blu. A new five-star Kempinski Hotel, with 269 rooms, several restaurants and 7000 sq metres of retail space, is also slated to open this year adjacent to the Accra International Conference Centre, the State House and National Theatre.

A Best Western hotel in Takoradi, amidst the country’s burgeoning hydrocarbons industry, is set to open in October 2013, and resorts like the Ankobra Beach Resort are opening up Ghana’s oft-neglected coastline to tourism.

For years Ghana’s main tourism selling point was that it was an easy, safe and friendly, and it could rely on a steady stream of visitors from its diaspora, as well as core markets such as the UK, with which it has historical links. However, visitor figures have been fairly modest and far below what the country has the potential to achieve, which in turn has sharpened the government and the private sector’s focus on boosting Ghana’s broader appeal, including its varied landscapes, range of traditional cultures, and potential for adventure and ecotourism. The aim now will be to increase the flow of private, as well as public, investment.