Brief: Land and Ghana’s search for yield

Ghana was one of the fastest growing countries in the world in the two years prior to 2020 and the coronavirus pandemic. However, the Ghana Stock Exchange (GSE) has struggled consistently since 2017.

The comparison with fixed income yields at home and abroad, and local currency volatility, have played their role but so too have the travails of the local financial services industry. Between 2017 and 2019, central bank authorities citing governance failings and liquidity/solvency crises initiated a regulatory ‘clean up’ exercise that reduced the number of licensed commercial banks from 34 to 23 institutions. During the same period, there was the high-profile clamp down on the apparent ponzi scheme at Menzgold. The matter is still in the courts and depositors without their funds.

Ghana’s economy is beginning to show signs of recovery from the 2020 slowdown, see – New Numbers. And new regulatory measures have been introduced in the financial services industry. Nevertheless, the above experience has burnt fingers. According to sources working in real estate locally, high net worth Ghanaians looking for ‘more interesting’ opportunities than are available from government bills are increasingly looking to acquire land. They cite the 2018-19 rollercoaster in their land enquiries explicitly.

Investors do so in the context of the 2019 Land Bill, passed in July 2020, and signed into law last December[1]. Its provisions touch on digitisation, spousal acquisition, sanctions for fraud and other malpractice, an expansion of Customary Land Secretariats and new alternative dispute resolution mechanisms; all of which have the potential to reduce disputes and losses in the sector.

Clients should pay particular attention to the still outstanding digitisation of processes at the Land Commission. Frustrations in this area are among the most frequent sources of frustration to would-be buyers.

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[1] The Land Act 2020 (Act 1036)

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