Michael Okyere Baafi, Executive Secretary, Ghana Free Zones Authority: Interview

Interview: Michael Okyere Baafi

What factors have led to Ghana’s improved ranking in the World Bank’s ease of doing business index?

MICHAEL OKYERE BAAFI: We are changing the way we do business in Ghana, and – due to ongoing reforms – we are confident that the country will continue to rise in the index. These successes have been underscored by a revolution in the business mindset. For years businesses in Ghana have followed the same path and progress has been static, largely due to low ambition and confidence. Accra can do it like London, but first we need to believe that it can and that this change is good. One example of change is our effort to digitise all operations. Previously, processes such as visa or business registration took months or years, which, naturally, was off-putting for investors. Looking to the medium term, Ghana has many advantages beyond simply being a peaceful country. Our geography is such that we are at the centre of major trading routes, and we are prioritising efforts to position the nation as a springboard into neighbouring francophone countries. Domestically, there are vast infrastructure projects on the horizon that will create great opportunities for international investors. Key to these plans is the government’s long-term strategy for a highly skilled, educated workforce, as carried out by the newly implemented, universal and free secondary education programme. This scheme is set to increase the competence and output of businesses in Ghana and see our place in the index continue to rise.

What makes Ghana’s free zone network unique?

OKYERE BAAFI: Ghana operates a two-tier system of free zones. Generally speaking, free zone companies tend to be located in one place, within special economic zones or export processing zones, for example. Our system includes this enclave arrangement, but also a “single factory” provision, which allows a company to take advantage of free zone incentives without the geographical limitations that conventionally accompanies them. In Ghana, most free zone companies are located outside of enclaves, which gives them operational autonomy and allows them to locate closer to their supply chains, customers and employees.

This does, of course, bring with it certain challenges. For example, it can be tough to guarantee staffing numbers to ensure the monitoring of remote companies. Additionally, the system is more expensive to run than conventional free zones. We are also encouraging Ghanaian companies to build their regional export portfolios alongside international firms. It is important that domestic firms with the potential to expand are able to work alongside international companies. In, say, 20 years time, when overseas players exit the market, we want Ghanaian firms to be able to take the reins. Local investors must be introduced to the international sphere at an early stage, and this is something we are working to ensure. Ultimately, Ghana is a small country in terms of population, therefore international business is key to maintaining private sector growth.

How will the system develop over the coming years?

OKYERE BAAFI: Due to the expansion of the sector we are focusing on oil and gas free zones in 2019. Efforts will be concentrated on small- and medium-sized oilfield service providers, ultimately culminating in an enclave at Sekondi in the Western Region. The core advantage of this site is that there will be a gas pipeline and new rail link passing through it. We are looking to emulate the best practice of free zones globally and learn from successes elsewhere. For example, the enclave in Tangier is connected to the port via rail and provides a great boon for export businesses.

For a free zone to be attractive today much more is required than tax exemptions and other fiscal incentives. Global competition is such that more holistic elements, such as good schools, are necessary to attract investors. In 2019 a new free zones act will go through Parliament, and this will establish in law a large number of the new policies that we are currently implementing.