The global economy is becoming more competitive and every country is trying to improve its efficiency and ease of doing business to attract global capital. Amongst the West African States, there is usually a comparison between Nigeria and Ghana about which is better for doing business. However, Ghana is usually rated above Nigeria.
But the truth is that both countries are good for business when considering some factors.
Nigeria has the largest population in Africa and is one of the countries with the largest populations of young people in the world which sums up the large workforce necessary for a business to survive.
Also, the so-called ‘Giant of Africa’ is known to have the largest economy in Africa, and with a pool of natural resources useful for raw materials.
All of this and more connotes that Nigeria has a large market potential favorable for doing business. However, the country also has a lot of drawbacks for business, like insecurity, bad government policies, etc.
Ghana, on the other hand, is a country with a fast-growing economy. It has consistently been a country with an excellent political landscape and macroeconomic resilience.
The former ‘Gold Coast’ country deserves full credit when it comes to good governance which takes into account national security, business rules, human development, and global effects. All of which determine the success of any business.
Before you make your final decision between the two countries, it’s wise to consider several factors in relation to your type of business. Hence, in the following, you’ll find comparisons between Nigeria and Ghana, about which is better for business.
Which of Nigeria and Ghana is better for business?
Let’s consider some more factors for comparison:
The state of Nigeria’s infrastructure Is pathetic. Even though the country is ranked the largest economy in Africa, it lacks quality infrastructure such as a good road network, electricity, and a good water supply.
Businesses can only thrive well in a country if more is invested in economic infrastructure, however, the Nigerian government spends less on infrastructure. Hence, the reason why investors find it hard to start a business in Nigeria.
While Ghana on the other hand is doing great regarding infrastructural development. Within Africa, Ghana is regarded as a country that has aggressively pursued electrification. The road sector also enjoyed an annual growth rate of 8%. All this is responsible for flexibility in running a successful business in Ghana.
The level of development, investment, and adoption of new technology is indicative of the productivity level of an economy. The rate of technological development in a country is also a determinant of business expansion.
In terms of technological advancement, Nigeria ranks higher than Ghana. Nigeria is a fast progressing country in technological advancement which is also evident in the high population of its youth.
Ghana also has a suitable environment that supports technological innovation. Even though the country is small in size, they are also technologically inclined and driven.
Both countries support the rapid growth of businesses through the use of technological equipment.
Also Read: How to start a tailoring business in Nigeria
3. Social and human development
The level of social and human development is an indication of the level of progress and productivity of a country.
There is not much difference between the 2019 human development index(HDI) of both countries. However, Ghana’s HDI is higher than that of Nigeria – while Ghana has 0.611, Nigeria has 0.539.
It means that Ghana is slightly better in terms of standard of living, healthcare, education, and financial opportunities.
4. Business ease
Ghana outperformed Nigeria in this aspect again. According to the world bank, Nigeria ranked 131 out of 190 countries in the ease of doing business index in 2019. Whereas, Ghana ranked 118 the same year.
It means that registering property, getting credits, dealing with construction permits, and taxes are more difficult in Nigeria than in Ghana.
That’s why in recent times, Nigeria lost some potential investment from Amazon and Twitter to Ghana. Even Google shifted their AI research center to Accra in Ghana.
Also, some tech giants like Fan milk and Shoprite moved their operational headquarters to Ghana.
5. Good governance
This factor is also very important. Good governance takes factors such as security, rules of law, economic diversification, business regulation, control, etc into account.
Ghana is also doing better currently in terms of good governance. The country has a more stable government policy that favors business growth.
In terms of security, Ghana is also safer for citizens and foreign investors. There are more records of kidnapping and terrorism in Nigeria. Also, in general, the crime rate in Ghana is lower than that of Nigeria – 46.25 to 64.17 respectively
Also Read: How to write an application letter
General Pros and Cons of doing business in Nigeria
Pros of doing business in Nigeria
1. High population growth: Nigeria is one of the countries with the largest population in the world and with little available means of sustaining her demands. This means it is the right place to do business due to the large workforce and increasing needs of citizens.
2. Untapped resources: Nigeria is a country blessed with numerous natural resources. For over three decades, Nigeria has solely depended on crude oil, which means there are still lots of mineral resources yet untapped. And with a dip in the oil price, there is currently a plan for diversification to other resources.
3. Increasing consumer base: Nigeria has more than 62% of its population under 25 years of age and 23% make up the middle class. With the increasing youth population, the demand for educational services and consumable goods also increased. Hence, starting a business in such an economy will yield success.
Cons of doing business in Nigeria
1. Lack of infrastructure
3. Poor power supply.
4. Inconsistent government policy.
General Pros and Cons of starting a business in Ghana
Pros of doing business in Ghana
1. Ghana has a more stable power supply necessary for business growth.
2. Easy access to the construction permit. The government made it easy for business owners to have their construction permit by strengthening construction quality control.
3. Access to credits.
4. Stable government policy
Cons of doing business in Ghana
1. Small market size
2. Huge setup cost
Starting a business in both Nigeria and Ghana will yield success. However, you have to check the kind of business you are starting and choose the best place for it.