Mark Badu-Aboagye, Chief Executive Officer of the Ghana National Chamber of Commerce and Industry (GNCCI), has declared that the exit of multinational companies from Ghana is a dent in the country’s image.
According to the GNCCI boss, the mass exit of businesses from a country tells that something is wrong somewhere and must be fixed. To him, the current trend shows that Ghana is gradually losing its position as a preferred destination for foreign businesses in the sub-region.
Badu-Aboagye’s comments follow the exit of Glovo from the Ghanaian market and the rumoured exit of French bank Societe Generale. Though the latter’s exit has been shot down by Hakim Ouzzani, Managing Director of Societe Generale Ghana, the picture is already gloomy per the GNCCI CEO.
In an interview on Joy FM on May 9, Mark Badu-Aboagye said businesses that are likely to be hit hardest when economic factors such as inflation, high interest rates and operational cost increase are those operating on small margins.
“If you take for instance, Jumia and also Glovo, in a situation as we find ourselves with a high operational cost, high interest rates and the rest; you realize that the companies that will fall quickly and earlier are those with the smallest margin,” he noted. Adding that it is because “their business model depends on the ability of the Ghanaian to purchase a product.”
He noted that if the buying power of Ghanaians is lower, those businesses automatically will suffer. The case of Jumia and Glovo is highly delicate because they depend on Ghanaians’ ability to buy. Without buying there is no need for delivery services.
“If Ghanaians are not buying it means Glovo and Jumia will not be there to distribute. And of course, Ghanaians are not buying because sales have gone down. Purchasing power has gone down and the businesses that are supposed to make profits to take care of employees are also closing down.”
He explained that the signal sent by these exits is that Ghana is losing its place as a favourable business environment if it has not been lost already.
“…it looks as if we are if we have not lost it, gradually losing our position as a favourable investment destination in West Africa.”
Also, Professor John Gatsi, Dean of the University of Cape Coast School of Business, earlier expressed concern about the spate of multinational exits from the country. He said the environment is “hostile” to businesses and wondered what the Business Development Ministry is doing about it.
“The recent exit or planned exit from Ghana by multinational companies must be a worry for all Ghanaians. The environment is hostile and unsupportive of businesses. I thought we have a Minister in charge of business development ? What of environment? I thought we have a Minister in charge of industry. Let us be serious. I thought the government should be telling us what is going on.”
Meanwhile, the Founder of the Africa University College of Communication, Kojo Yankah has decided to see the positive side of the exits. He said this is a chance for local entrepreneurs to take up the spaces being left by the foreign corporations.
“Foreign companies leaving Ghana? An opportunity for Local Entrepreneurs! Let’s support local entrepreneurship,” he shared via Facebook.
Which companies have left Ghana?
Glovo
Glovo has become synonymous with food delivery in the country serving many buyers and restaurants. However, it shocked its employees and customers when it announced its exit from Ghana. It said its last day of operation is Friday, May 10, 2024.
Announcing its exit, it said, “While we recognise the potential of the Ghana market, building a stronger position in the market and achieving profitability would require substantial investment over an extended period of time.”
The message clearly showed that it is fleeing the country due to sustainability issues owing to the increasing cost of operations and other related factors.
Jumia Food
Apart from the planned exit of Glovo from the Ghanaian market on May 10, many others have taken the lead years before now. Jumia, one of Africa’s top e-commerce platforms shut down its food delivery services in Ghana in December 2023. It said the food delivery business was unsustainable.
Massmart Holdings Ltd, a South African firm shut down its retail shop, Game, in Accra in December 2022. Before it shut down the Accra-based shop, it announced that it was going to close 14 non-performing shops across Africa. Ghana unfortunately was part of those affected, marking the end of the retailer’s six years of presence in the country.
Unilever
The British conglomerate announced in March 2024 that it will move its tea production from Ghana to Nigeria. Producers of the famed Lipton tea, Unilever is a veteran in the Ghanaian business space but has also suffered from a deteriorating business environment. Its decision to move the tea production to Nigeria is a blow to Ghana and a further dent in Ghana’s reputation as a preferred business hub in the sub-region.
Dark and Lovely
One of the most loved hair brands in Ghana, Dark and Lovely exited the country also citing unfavourable economic conditions. The brand had been operating in Ghana for years and became a household name but owing to the unconducive economic conditions in the country, it left the shores of Ghana.
Nivea
Another popular brand to exit the country is cosmetic manufacturer, Nivea. The German multinational closed its marketing line in Ghana in 2023 citing strategic reasons. However, industry players and observers attributed the departure to unfavourable economic conditions in the country.
Regardless of the reasons for the exit of the above, companies leaving a particular country create a vacuum that needs to be filled. Aside from that, the immediate impact such as job losses is an issue of concern. This thus gives credence to the fear expressed by both Mark Badu-Aboagye and Prof. John Gatsi that the exits are a major concern for the country.
