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Nigeria & Ghana: Key Facts for Setting Up Locally

In the past couple of years, Africa has emerged as a lucrative place for global companies to expand to. There are some major reasons for this, including fast-growing populations, efforts to industrialize, and the upgrading of infrastructure.

In 2018, Ghana was named as one of the top ten fastest growing economies in the world, while Nigeria was listed as the biggest economy in Africa in 2019, both indicating great potential for companies, domestic and foreign, to flourish.

For companies that are looking to expand into countries like Ghana or Nigeria, it is important to take some things in to consideration when choosing the best place for a company to expand to.  And although both countries are relatively close and lie in the same region, there are some key differences to look at.

Employment Benefits:

In Ghana, employees are entitled to 15 working days of paid time off per year.   In addition, women are entitled to 12 weeks of maternity leave. While there are no laws in Ghana on paternity leave, the government is working on passing legislation to grant fathers leave.  The termination procedure is quite straightforward but allows for employee protection against unfair dismissals.  In addition, the notice period is based on the length of employment, and the employee is not entitled to any severance pay by law.

For more information see: https://papayaglobal.com/countrypedia/country/ghana/

On the other hand, employees in Nigeria only receive 6 days of paid time off per year.  Like Ghana though, maternity leave lasts for 12 weeks and there are no current laws that give fathers paternity leave benefits.  The termination process in Nigeria is very straight forward, with the only requirement being that proper notice is given to the employee and varies on how long the employee has been employed. Employees are not entitled to severance pay unless it has been agreed upon in the employment contract.

For more information see: https://papayaglobal.com/countrypedia/country/nigeria/

Infrastructure:

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In Africa in general, there is lack of infrastructure that makes growth in Africa less appealing to major companies.  Although with its’ own challenges as planning and execution do not always converge, this is drastically changing as governments are investing tens of billions of dollars to change this, making foreign investments into the local economies more attractive. This provides a huge opportunity for companies as it is opening a totally new market for them to expand to.

Ease of doing business:

Ghana has become a place where it is relatively easy to conduct business.  This is largely due to the result of competition that has naturally emerged from presentation of new opportunities. Because of this, the government has made efforts to reduce the bureaucracy involved for companies to register and operate.  In addition, there are a growing number of talented professionals that also help in the ease of doing business in Ghana.

Nigeria has successfully moved itself up in ranking from 146th place out of 190 to 131st place on the World Bank’s Doing Business 2020 index.  However improved, there are many hurdles companies face when it comes down to running a business. Factors such as bureaucratic policies and laws still are in need dire need for reform.

Corruption Ranking:

Transparency.org’s current Corruption Perceptions Index (CPI) places Ghana 80 out of 180 countries while Nigeria is 146 out of 180.  While both are placed low on the list, Nigeria has had to shut down its borders due to ongoing issues with smuggling, making it harder for companies to operate, especially for businesses that deal in trade.  For some companies, this could mean the difference between success and failure.

While both Ghana and Nigeria offer vast opportunities and potential for great success for companies looking to expand, it is important to consider the risks as well as the benefits.  With both countries growing economically and making strides towards opening the doors to global companies, the development of infrastructure and policies are just as important for a company to take into consideration.

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Written by How Africa

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