Costly and Slow: Business Registration Challenges Hinder Ghana’s Economy

Ghana’s business environment has made notable progress in recent years, but there are still significant challenges holding back the growth of new and small businesses. IMANI’s Economic Report (March 2025) highlights that while the country has a solid legal framework for business startups, practical issues like high costs and lengthy registration processes remain major hurdles for entrepreneurs.

Regulatory Framework: Strengths and Weaknesses

In terms of business entry, Ghana’s regulatory framework is fairly solid, with the country scoring 71.87. This places it close to the lower-middle-income average of 80.43, suggesting that the laws governing business startups are relatively robust.

However, there are persistent challenges in areas like digital public services and transparency. Ghana’s score in this area is just 38.83, well below the average of 52.08 seen in similar economies, indicating a significant gap in the efficiency and accessibility of digital tools that businesses rely on.

“While the rules on the books may seem decent, the practical challenges of starting a business, such as lengthy registration processes and high costs, remain a major hurdle,” IMANI notes in the report.

High Costs and Lengthy Registration Process

A major concern highlighted by IMANI’s report is the high cost and lengthy duration of registering a business. Ghana’s score of 12.25 in the “Business Entry” category is significantly lower than the 57.30 average of comparable economies. This stark contrast points to bureaucratic delays, complex paperwork, and high fees that many entrepreneurs must contend with when trying to formalize their businesses.

“These figures indicate that the practical challenges, like long delays and high registration costs, are a significant deterrent to new business owners,” IMANI pointed out. “Small businesses, particularly those from under-resourced backgrounds, often find these barriers too overwhelming to overcome.”

The extended registration process not only discourages entrepreneurs but also pushes many to choose the informal sector, where they can avoid the red tape altogether. However, this route prevents them from accessing vital resources such as funding, government support, and market opportunities, ultimately stifling their growth and innovation potential.

The Impact on Small Businesses

For small businesses, the difficulties associated with registering a formal enterprise are especially damaging. Without the ability to easily and affordably register, many entrepreneurs face an uphill struggle to grow and compete in the market. This lack of access to formal financial services prevents them from scaling and hinders their ability to expand.

“The challenges with registration are more than just bureaucratic hurdles; they are barriers to innovation and the growth of the private sector,” IMANI highlighted in the report.

Recommendations for Reform

IMANI’s Economic Report stresses the need for comprehensive reforms to tackle these challenges. To improve the business entry process, IMANI recommends digitalizing the registration system, reducing registration costs, and improving the transparency of public services. These changes would make it easier for entrepreneurs to navigate the process and create a smoother pathway for starting a business.

“The system needs to be simplified, and the process made more accessible,” IMANI emphasized, calling for reforms that would streamline business registration and facilitate easier entry into the formal sector.

Additionally, IMANI advocates for stronger public services that promote fair competition and market entry, helping to level the playing field for new businesses and encouraging a more dynamic and competitive market.

Creating a More Conducive Business Environment

While Ghana has made strides in fostering a business-friendly environment, the practical challenges, particularly in business registration, continue to be a significant barrier. By addressing these issues, Ghana can unlock its entrepreneurial potential, allowing small businesses to thrive, compete, and contribute to the country’s economic growth.

Source: The High Street Business