Startups and Bitcoins in Ghana

Ghana sits closer to the intersection of two zero meridians than any other country on earth, which literally positions it right in the center of the world. Ghana also takes the central stage of the African political history. Ghana is one of the Black continents' oldest states. Starting from 9th century the large part of the Republic's territory belonged to several indigenous kingdoms (Ashanti, Akwamu, Bonoman, Denkyira and Mankessim).

Ghana had played the key role in the history of European exploration and colonization of the African Continent. In 15th century Ghana was named the Gold Coast. The major colonial powers (Portugal, Sweden, Norway, Netherlands, Germany and the Great Britain) had spread their military outposts alongside of the Ghanaian coastline. As a result, Ghana was converted into the largest Western military camp in Africa.

After 1874 the Great Britain established itself as the Ghana's sole superpower. Realizing that Ghana is not only its major source of mineral resources but also the African rising political center, British authorities provided local politicians with an unprecedented degree of autonomy. In included the national assembly and the participation of local elites in the colonial government (low level positions). At the same time, chosen representatives of Ghanaians aristocracy traveled to United Kingdom and United States to obtain their universities' degrees.

However, in 1957, after it became the first independent sub-Saharan African nation, Ghana, following steps of many other post-colonial African countries, settled on the Marxist-Leninist ideology as the foundation of free Ghana. However, it didn't take too long for the socialist government to discredit itself in the eyes of impoverished local population and to be soon overthrown by the military coup d'etat.

During the following three decades (1970th - 2000th) there had been three different Constitutions adapted in Ghana. Each of them empowered either a military dictatorship and the one-party systems or an autocratic governance, which introduced an intrusive central control over economy and mixed it with some elements of a "guided democracy". In 2004 the local elite abruptly changed its traditional non-liberal political orientation and tried to implement the multi-party democratic Republic in Ghana.

Despite the crucial role, which central government's controlled monopolies had traditionally played in Ghana's economy, privately owned, free-market enterprises have gradually changed the face of Ghana's business. Today, besides old, large, mineral extraction corporations Ghana's economic progress is enhanced by such fledgling industries as IT, solar, bio-tech and computer science. To prove this point, Ghana has developed its own nuclear and cosmos explorations programs.

However, Ghana has paid a heavy price for its policy of free-trade and openness to foreign businesses. Ghana has been identified by independent observers as one of the main African drug trafficking centers. Starting from 2000th Ghana had gradually emerged as the major transit points for South American cartels entering to the European market. Not surprisingly, Ghana's level of corruption is high.

Ghana's Constitution guarantees freedom of speech and information to its citizens. As a general rule Ghana's authorities try to not overstep it too far. Notwithstanding multiple reported cases when some local Ghanaian bureaucrats persecute people for their political opinions expressed in Internet medias, Ghana still remains one of the safest places for Internet bloggers and entrepreneurs in Africa. As a result, Ghana has emerged as one of the most visible spots on the African startups' map.

However, Ghana's positions as the regional tech-leader are seriously undermined by crumbling power generation plants and an outdated telecommunication infrastructure, which was built primarily in 1980-1990th. On top of that, low income population (per-capita is less than $2,000) and over-regulation of finance industries (including severe restrictions imposed on foreign venture capital companies) further undermine local investment climate. As a result, local startup ecosystem heavily relies on government's support and its reach is mostly limited to Ghana's capital - Accra.

Despite previously issued announcements, signed by career Ghanaian bureaucrats, which evoked possibility of crypto-currencies going completely legit in Ghana, in its January 2018 memorandum Bank of Ghana representatives announced that trading and using digital money in Ghana falls outside of the Payments System Act.

It says "The Bank of Ghana wishes to notify the general public that these activities in digital currency are currently not licensed under the Payments System Act 2003 (Act 662) . . . The public is therefore strongly encouraged to do business with only institutions licensed by the Bank of Ghana to ensure that such transactions fall under our regulatory purview".

Although this statement just reinforces the notion that digital currencies are currently unregulated in Ghana, overzealous local officials may also interpret it as a hint on the illicit nature of all crypto-related assets. For a country, which has consistently spent its resources to establish itself as the African technological leader, this resolution can do more harm than good. Among other negative consequences it might result in unnecessary legal restrictions and drive Bitcoin underground.

Business Notes for Startups Founders:

political climate: marginally friendly;
economic climate: moderately friendly;
regions to focus: locally, Sub-Saharan Africa;
industries to focus: e-commerce, media, mobile applications, e-job, marketplaces, entertainment, FinTech, tourism, solar, bio-tech;
major limitations: relatively low Internet penetration (under 30%), high level of corruption, low personal income, limited access to VC and seed money;
stimulus: expanding economy (GDP growth rate about 6%), many new market opportunities, large young population, access to qualify pool of local coders and talents from neighboring countries, potential to became one of major African's technological hubs.
opportunities: many;
Cryptocurrencies and ICOs (outlook): not regulated (moderately negative).
The author: Svyatoslav (Svyat) Sedov
Angel investor and founder of The First International Incubator for Silicon Valley Companies (FirstInternational.In) in the Bay Area, CA, USA.

Twitter: https://twitter.com/SvjatoslavSedof