How investors shun the savannah zone

The savannah zone, made up of the three northern regions and portions of the Brong Ahafo and Volta regions, is still the least fanciful place for local and international investors seeking places in the country to set up their businesses.

This is in spite of the competitive advantage that the area offers businesses in the areas of direct access to foreign markets, relatively cheaper labour, easy access to land and an exclusion from the hustles and bustles of city life.

Out of a total of 120 investment projects registered with the Ghana Investment Promotion Center (GIPC) in the first nine months of this year, only three of them were registered in the Brong Ahafo and Northern regions, with the remaining three regions in the zone – the Upper East and West and the Volta regions – recording no projects.

The situation was not different in 2014, when out of a total of 184 projects (worth some US$4 billion) registered within the 12-month period, only four of them, were registered in the Volta and the Northern regions.

The other three regions in the savannah zone – the Brong Ahafo and the two Upper regions – did not record investments in that year, according to data on FDI inflows pieced together by the GRAPHIC BUSINESS.

The situation was, however, better in 2013, when, out of a total of 418 investment projects (worth US$3.94 billion) registered in that year, 22 of them set up in the five regions in the zone.

The 12 projects were valued at US$1.42 billion.

Thus, within the three-year period (2013, 2014 and the first nine months of 2015), only 29 out of the 722 investment projects (worth a total of US$9.68 billion) were registered in the savannah zone.

This resulted in the continuous marginalisation of the area's economic fortunes, which translates into increased poverty, deprivation and a scanty contribution to national economic output, measured by gross domestic product (GDP).

SADA's perspective

Over the years, the savannah zone has suffered from underdevelopment, partly prompting various government to respond with some specialised policy initiatives that are aimed at helping alleviate the plight of the people.

The latest is the Savannah Accelerated Development Authority (SADA), which was established in 2010 as an independent and autonomous corporation to provide a framework for the comprehensive and long-term development of the savannah zone.

Its Chief Executive Officer, Dr Charles A. Abugre, said the low investment inflows into the area was the result of a combination of factors, most of which result from wrong perceptions.

"One reason is promotion and marketing. If you talk of the savannah zone, the perception out there is that it is isolated, remote, far and hot but you could actually see it as the most land-linked area to neighboring countries, full of plenty arable land and human resource," he said in an interview.

The situation, he said had been worsened by the marginalisation of the area by both the government and private sector in the areas of resource allocation.

Despite the voluminous nature of the savannah zone, Dr Abugre said available data indicated that it received the least of central budget allocations and only 16 per cent of total loans and advances in the country.

This, he said combined with the poor nature of infrastructure in the area to scare investors off from siting their businesses in the zone.

Responding to enquiries on why the savanna zone continuous to receive less investment inflows, an economist and Managing Director of InvestCorp, Mr Sampson Akligoh, said the trend could be blamed on the lack of "supporting factors needed to attract investments into the country."

"For the private sector, even before a business sets up, it will be thinking of that three-year break even and things like that but if it realises that the factors are not entirely there to support that, then the investor becomes a bit reluctant," he said.

Like Dr Abugre, Mr Akligoh said perceived lack of skilled labour, access to markets and ports were drawbacks, which, when addressed could help reverse the trend.

"Going forward, I think we need to aggressively market the area as a place that is connected to foreign markets and the other half of the country and also home to some skilled human resource and arable landmass. I think the GIPC also needs to identify some business opportunities in the afar and market them to investors. There may be challenges in the zone, yes, but not to the extent that business would want to come," the SADA CEO said.

The MD of InvestCorp also called for national policy direction that would help open up the place for mines tempts.

"I think the future of Ghana is how we can develop local competitive advantage to help diversify the location of companies."

"If we do not get the local government to be internally competitive through policy decisions, companies will remain concentrated. It is not in the interest of the private sector to promote diversification; the private sector’s motive is more about location advantages and incentives," he explained. — GB