Ghana’s construction industry ranked 6th most attractive in Sub-Saharan Africa

Ghana’s construction industry value of $9 billion is ranked 7th in Sub-Sahara Africa, Fitch Solutions, research arm of ratings agency, Fitch, has said.

The country’s risk profile also places it as the 6th most attractive market in the region.

According to Fitch Solutions, research arm of ratings agency, Fitch, the country’s construction industry which grew by 14.2 per cent in the first quarter of this year was reasonably attractive, compared to many of its peers in the region.

The report said contractors were exposed to less political risk than in many other markets on the African continent.

“In addition, we note that the generally lower complexity and shorter time frame of road construction projects will reduce their exposure to longer-term political and economic risks,” it said.

Fitch Solutions further said construction firms in the road construction sector benefit from a comparatively attractive labour market, characterised by a large, expanding workforce, strong female participation, and low labour costs.

The country’s competitive wage costs, it also said were supported by comparatively high levels of productivity and moderate requirements for labour tax and social contributions.

“Despite the presence of strong labour unions, labour costs remain highly attractive on a regional and global scale, particularly for foreign investors,” it explained.

“Nonetheless, investors face risks associated with the country’s high severance pay requirements and rigid wage determination structures, which limit firms’ flexibility in adjusting their labour requirements in response to economic shocks,” it added.

Africa’s most populous nation, Nigeria is ranked 1st in terms of the construction firm industry value on the continent.

Namibia and South Africa are however the most attractive construction markets in the region, placing 1st and 2nd respectively. Fitch Solutions

S. Africa’s Massmart to sell 14 Game stores in Ghana, other East and W.A countries

Massmart is disposing of all its general merchandise Game stores in West and East Africa to stem losses in that struggling business, chief executive Mitch Slape said, after the Walmart majority-owned retailer reported a narrower half-year loss.

Like its peer Shoprite Holdings, forays into African markets including Nigeria have been marred by currency volatility and constrained consumer demand, making it difficult to operate profitably on the continent once touted as the next bright growth spot for retailers.

As part of a turnaround plan to stabilise the business, Massmart had said it would review its store portfolio outside of Southern Africa.

That review has now resulted in the disposal of 14 stores across Ghana, Nigeria, Uganda, Kenya and Tanzania.

“The performance and the complexity in running those businesses is something that frankly we needed to address. We’ve commenced a formal sales process, we’re currently in discussions with potential purchasers to take on those stores,” Slape told investors.

Through the disposal of non-core and underperforming assets and store closures, Massmart hopes to sharpen management’s focus and invest in high returning assets and online.

Slape said the move will result in an annual profit before interest and tax improvement of $50.24 million.

Game sales from the rest of the Africa stores fell by 18.6 per cent in rand terms in the 26 weeks ended June, and by five per cent in constant currencies, due to continued currency weaknesses, Massmart with presence in 12 African countries said.

Game reported a narrower trading loss of 347.3 million rand in the period.

Through additional lower overheads, reduced Africa exposure and possible further store closures or disposals, Game will be in a break even position, Slape said.

“But that is not enough. Achieving break-even performance isn’t going to be sufficient for us to be satisfied, we’ve got to really get Game back to a healthy level of profitability and performance,” he said.

Group chief financial officer Mohammed Abdool-Samad said he hopes Game would break even in the next 12 months. Reuters