Overview of the Construction Market in Ghana

Ghana’s construction market has experienced significant growth over the past decade, driven by government investments in infrastructure development, urbanization, and economic expansion. The sector is a crucial contributor to the country’s economy, accounting for more than 15% of Ghana’s annual GDP in recent years23. This article provides an in-depth analysis of the Ghanaian construction market, including its current state, key sectors, challenges, and future prospects.

Current State of the Market

As of 2023, the Ghanaian construction market was valued at approximately $9.9 billion13. Despite facing challenges such as inflation and payment delays from the government, the sector remains vibrant and is expected to achieve an average annual growth rate (AAGR) of more than 5% from 2025 to 202813. This growth is primarily driven by investments in the energy sector, including renewable energy and oil and gas projects13.

Key Sectors in the Construction Market

The Ghanaian construction market is segmented into several key sectors, each with its unique growth drivers and challenges:

1. Infrastructure Construction
   • Overview: This sector includes projects such as rail infrastructure, road infrastructure, and other infrastructure developments. Public and private investments in road, rail, and port infrastructure are expected to support the sector’s growth during the forecast period1.
   • Projects: Notable projects include the Keta Port Project and the expansion of rail networks across Ghana and into neighboring countries2.
2. Energy and Utilities Construction
   • Overview: This sector encompasses electricity and power, oil and gas, telecommunications, sewage infrastructure, and water infrastructure projects. The government’s focus on renewable energy and oil and gas projects will propel the sector’s growth1.
   • Projects: Projects like the West Africa Petroleum Hub and Takoradi Gas Tank Farms are significant contributors to this sector2.
3. Institutional Construction
   • Overview: This sector includes educational buildings, healthcare facilities, research facilities, and religious buildings. Investments in the educational and healthcare sectors will drive growth in this area1.
   • Projects: The “Agenda 111” hospitals project is a major initiative in this sector4.
4. Residential Construction
   • Overview: This sector focuses on single-family and multi-family housing. Public and private investments in affordable housing will support sector growth1.
   • Opportunities: Ghana has a largely untapped market for affordable housing, presenting significant opportunities for investors4.
5. Commercial and Industrial Construction
   • Overview: Commercial construction includes leisure and hospitality buildings, office buildings, and retail facilities. Industrial construction involves manufacturing plants and waste processing facilities. Government investments in the manufacturing sector will drive industrial growth1.
   • Opportunities: The recovery of the tourism sector will support commercial construction, particularly in hotel and restaurant projects1.

Challenges Facing the Construction Market

Despite its growth potential, Ghana’s construction market faces several challenges:

• Payment Delays: Delays in government payments for projects, especially in the road sector, are a significant issue. As of April 2023, these arrears were estimated at $1 billion2.
• Inflation: The Construction Producer Price inflation rate was 20.9% year-on-year in April 2023, affecting project costs and profitability2.
• Skilled Labor Shortage: The industry struggles with a lack of skilled labor, which can impact project timelines and quality5.
• Inadequate Funding: Insufficient funding for projects can hinder their completion and impact sector growth5.

Opportunities and Future Prospects

Ghana’s construction market offers numerous opportunities for growth and investment:

• Infrastructure Development: The need for upgraded transportation networks and infrastructure presents opportunities for foreign investors, particularly in road and rail projects2.
• Affordable Housing: The demand for affordable housing is high, making this a promising area for investment4.
• Government Initiatives: Policies like “One District, One Factory” and the “Agenda 111” hospitals project have attracted local and foreign investors, creating opportunities for construction companies4.
• Urbanization and Middle-Class Expansion: As Ghana’s population urbanizes and the middle class grows, demand for residential and commercial buildings will increase, driving sector growth4.

Industry Players and Market Dynamics

The construction industry in Ghana is diverse, with players ranging from small indigenous contractors to multinational construction companies. The Ghana Chamber of Construction plays a crucial role in promoting industry activities and advocating for its interests2. The market is competitive, with opportunities for both local and foreign companies to participate in various sectors.

Regulatory Framework and Investment Environment

Ghana is known for its stable political environment and business-friendly conditions, making it an attractive destination for foreign investment4. The government has implemented policies to encourage investment, such as the 2013 Local Content Law, which aims to increase local participation in the economy2. However, navigating the regulatory environment can be complex, and understanding local content requirements is essential for foreign investors.

Conclusion

Ghana’s construction market is poised for significant growth, driven by government investments in infrastructure and energy sectors, as well as urbanization and economic expansion. Despite challenges such as payment delays and inflation, the sector offers substantial opportunities for investors, particularly in affordable housing and infrastructure development. As Ghana continues to develop its economy and infrastructure, the construction market is likely to remain a vital component of the country’s growth strategy.

Jervais Straker, Construction Editor

References

1. GlobalData. Ghana Construction Market Size, Trends and Forecasts by Sector. [Accessed 2024].
2. U.S. Department of Commerce. Ghana – Construction and Infrastructure Industry. [Accessed 2024].
3. Alpha Prime Group of Companies. The Size of Ghana’s Construction Industry. [Accessed 2024].
4. ConstructAfrica. Ghana Construction Market Report 2023. [Accessed 2024].
5. Afrika.vc. Ghana’s Construction Market: Size and Trend Analysis. [Accessed 2024].
6. ResearchGate. The Construction Sector in Ghana. [Accessed 2024].
7. GlobeNewswire. Ghana Construction Market Forecast Report 2024-2028. [Accessed 2024].
8. ResearchGate. The Construction Industry and Its Linkages to the Ghanaian. [Accessed 2024].