Interview: Amanda Jean-Baptiste

How does the growth of Ghana’s middle class impact demand in the high-end segment?

AMANDA JEAN-BAPTISTE: The country’s middle class is growing and becoming wealthier, and as that happens consumption patterns also change. They increase their level of discretionary expenditure away from basic needs, and their tastes become more aspirational. This is already a well-observed trend of the African consumer, not just on the continent, but also in places like the UK and Dubai, where retailers have already woken up to the strength of African buyers. There has already been a response from fashion and clothing retailers, entertainment, and other leisure sectors to cater to this aspirational middle class. As an example, over the last three years there has been an emergence of restaurants in Ghana boasting high-end dining experiences. The consumer behaviour of Ghanaians highlights the evolution of a maturing market with a greater focus on leisure and entertainment, which have proven resilient even in changing macroeconomic conditions.

What obstacles have you faced in Ghana in terms of mixed-use developments?

JEAN-BAPTISTE: Mixed-use schemes are inherently more complex projects. A greater amount of time needs to be spent upfront planning these developments in order to decide on the best use of the site and to ensure that the various asset classes have synergies. Sustainability, security and accessibility must govern the design and operation of the retail, hotel, residential and parking components. Furthermore, the interaction patterns of different end-users must be managed properly to ensure health, security, safety and acceptable use of space.

The Exchange project in Accra, for instance, has been modelled on modern, mixed-use developments in the UK and Europe, as well as recent developments in South Africa, while still maintaining a West African – and, more specifically, Ghanaian – context that addresses the needs of owners and guests.

To what degree has investor confidence changed over the past two years?

JEAN-BAPTISTE: Investors have justifiably expressed concern over the last 18 months, not just with Africa, but with all emerging markets. Weak commodities prices, a slowdown in China, and currency volatilities have impacted valuations and threatened investment outcomes. However, during this period Actis raised its largest real estate fund yet. I think this is a reflection of investor confidence in the underlying fundamentals of market growth and expansion, which are noticeably above the global average in Ghana.

Additionally, an increase in foreign direct investment (FDI) would clearly create more opportunities for private investment and public-private partnerships in real estate in Ghana. Up until now foreign investment in real estate has been limited to a handful of private equity funds with medium-term investment horizons. Increasing FDI can bring in a variety of funding able to operate in different areas of the capital structure. Foreign investors may also operate on the demand side, for example, by providing credit facilities to retail groups or mortgage financing to residential buyers. In our markets what is clear is that there are still structural constraints brought on by a lack of funding and expertise, both of which can be brought in through successful partnerships with foreign capital, investment and knowledge.

I am not keen to encourage more competition in our markets, but we still need to get the success stories out there. Investors need to see that because of local know-how and deep sector expertise, firms are able to manage risk. They need to understand that there are superior returns to be made in these markets. We need to challenge the myths and false perceptions about markets on the African continent.