Ghana in Focus Special: Tackling the Soaring Costs of Construction in Ghana - A Guide for International Investors

The latest episode of Ghana in Focus, tackles a pressing issue: the soaring costs of construction in Ghana. As building material prices continue to climb, this episode serves as an essential guide for those who want to build their property in Ghana.

Kwame opens the episode by discussing the significant increase in building material prices over the past two years. Cement, for example, has seen its price double or even triple. This drastic change is attributed to a combination of factors including the depreciation of the Ghanaian cedi against major foreign currencies, increased import duties, and inflation.

Kwame emphasizes the urgency of starting construction projects now, despite the escalating expenses. The financial landscape is rapidly evolving, and delays could mean even higher costs in the near future. For instance, a three-bedroom house that could be built for $70,000 just a few years ago now requires a much larger budget.

Kwame provides practical advice on converting Ghanaian cedi prices into dollars, pounds, and euros, helping international investors better grasp the financial implications. This detailed breakdown is invaluable for anyone considering investing in Ghana’s real estate market.

Kwame delves into the reasons behind the soaring costs. One primary factor is the depreciation of the cedi. At the beginning of the year, the exchange rate was 10 cedis to a dollar, but by mid-year, it had increased to 15.5 cedis to a dollar. This depreciation increases the cost of imported materials, which are a significant component of the construction industry in Ghana.

The episode also explores the lack of local production as a critical issue. Even materials that are supposedly manufactured in Ghana, such as cement, rely on imported components. This dependency on foreign goods makes the construction industry vulnerable to global market fluctuations and currency depreciation. Additionally, transportation costs within Ghana are high due to rising fuel prices, adding another layer of expense.

Despite these challenges, Kwame provides actionable solutions for international investors. He suggests considering alternative building materials like bricks, recycled plastics, and raffia wood, which can be more cost-effective than traditional methods.

Sources:
Price of Iron Rods, Cement, etc - Building in Ghana (youtube.com)
Alternative building ideas:
https://youtu.be/tTVEuSE2WKM   ---- Rafia palm/wood
https://youtu.be/HUF1CAcbIZo    ----- Brick house

Transcript

Speaker 1: 0:02

Kwaba. Welcome to this week's edition of Ghana in Focus with myself, kwame, ghanaian broadcaster, writer, journalist, podcaster and entrepreneur. And in this week's edition of Ghana in Focus, we're looking at building, the cost of building materials in Ghana and why, if you are wanting to build a property in Ghana, you should think of doing it now, alright, so that's the theme for this week's Gardening in Focus building in Ghana, looking at the cost of building materials. So, before we get into the show, before you get into the show, if you like what you hear, please share to your friends, family, social media networks. And if you have not subscribed to Ghana in Focus, please do. You can subscribe to Ghana Africa in Focus on YouTube, where we are, and also you can also subscribe to the channel via Spotify. So, with Spotify, we're going to try and get 800 followers by the end of the year. So far we've got nearly 500, so thank you very much to all those who have subscribed on Spotify. Just look out for Ghana African focus on Spotify, click follow, meaning that you've been notified by Spotify every time I upload a new podcast. Alright, and if you want to do business in Ghana, buy land, buy property, you know we do offer a consulting session whereby we can tell them, make a package for you. So, if you are interested in having a session with myself, I've got more than 10 years of experience in Ghana in terms of buying land, buying property, starting business or have you. So if you want to have a conversation with myself, I'll leave my email address in the fullness to the show. Just email me and we can arrange to book your session. All right, and if you want to donate to the show, help us with the cost and continue to bring great content from Ghana, from Africa. Again, you can donate and I will leave you the link where you can donate as little as three euros a month to the show.

Speaker 1: 2:11

All right, so let's get into the podcast, looking about building in Ghana, ie the cost of building materials in Ghana. So over the last couple of years, you know and this coincides with the economic challenges in Ghana, you know, the cost of building materials has doubled, in some cases tripled, in the past two years, making building in Ghana challenging, say the least, but also it's getting quite expensive. So, for example, you you know, three or four years ago, if you had seventy thousand euro dollars, that could easily build you in Ghana a free, a nice three-bedroom house, yeah, and that includes, you know, the toilet, the bathroom, kitchen, etc. Yeah, and then paint it and those kind of things. But today, that same 70,000 US dollars. We're not able to do that because of the increasing costs of building materials in Ghana. You know that has rapidly increased in the last two years. So, for example, increase in the last two years. So, for example, cement a couple years ago was about 35 to 40 gallon cedars. Now that same cement down to 35 to 45 gallon cedars have now doubled. So we're looking at about over 100 gallon cedars for one bag of cement.

Speaker 1: 3:39

Yeah, and what I would also advise you to my listeners, particularly if you're listening from the US, uk, europe, you, europe, in terms of US, all the prices that are quoted in Ghana cities you can divide by 15, because 15 cities to a dollar. So that will give you a rough estimation of what the building materials are in US dollars. Again, for my UK audience, you know it's 18 cities to a dollar, so to a pound, what the building materials are in US dollars, again, for my UK audience, you know it's 18 cities to a dollar, so to a pound. So the price of that you hear, or rather that you will see on a video that I'll post to you about building in Ghana, particularly the cost of building. You know you can divide it by 18 cities to a pound. That is if you are in the UK and in Europe, if you're listening, in many Europe it's about 14 euros. Sorry, one CD is 14 euros. So, again, you know you can divide the prices that you hear by 14 to get the actual amount in euros. So you know that will give you at least a rough idea as to how much it will cost in US dollars, uk pound sterling or euros for you to look at building costs in Ghana.

Speaker 1: 4:54

Well, right, and on that, you know I'm going to leave a very, very educated video, an informative video that will give you the prices of building materials in Ghana as of May. So May last month, yeah, last month, may 2024, yeah, caveat is since that video that I'll play, leaving the footnotes for you to give you first that evidence as to the costs of building materials in Ghana. Since then prices have increased. So this is why I'm saying about the inflation in Ghana is ridiculous, because prices in Ghana, you know, increase every week, yeah, not even every month. Every week, yeah, in some cases every day. So this video is a caveat to the video that I will put in the footnotes that this video is looking at the cost of building materials in Ghana as of May 2024. Alright, so the reason why burning materials you know the cement, iron, rods, paint etc. Has increased in Ghana over the last couple of years.

Speaker 1: 6:10

Basically, there's three things in my mind that has caused a rapid increase in the cost of burning materials in Ghana. One is the city depreciation against the dollar in the cost of burning materials in Ghana. One is a city depreciation against the dollar. So at the beginning of the year, 10 Ghana cities could buy you 1 euro dollar. Today, yeah, 23rd June 2024, it is now 15.5 cities to 1 euro dollar. So you do the math yourself, showing you the increase from January, when it was at 10 Ghana cities to 1 dollar.

Speaker 1: 6:57

Again we look at the pound. Beginning of the year it was about 14 cities to £1 sterling. Now it's 18 pounds. Sorry, 18 cities to £1 sterling. So again, choose the rapid depreciation of the city from the start of the year. That's one thing.

Speaker 1: 7:20

Two, ghana I said before in other videos, other podcasts, ghana, their tree and porch, same thing, and in the building sector, it's no different. So the iron rods, the paint that you use to paint your property, some of the wood that is used to make the l you know, some of the wood that is used to make the lint of the ceiling or the roof, rather, some of the you know shingles that is used to make the roof, some of the um, you know, uh, the roofing sheets you know that is used to make your roofs. You know, let alone the kitchen, uh, sanctuary ware, your toilets, your bathrooms, the flush doors, security doors, etc. All these things are imported into the country and, as I mentioned before on other podcasts, the criminal activity at the port, ie officials at the port of Ghana are charging US dollars to clear goods at the port. So if you are bringing in tiles, iron rods into the country, security doors into the country, these wicked, crooked port officials, instead of charging Ghana cities, which is the local currency, these criminals at the ports are charging US dollars in order for people to clear their goods. So there's been ads, so that. So so the businesses or the importers who are importing these things, these building materials, into country because of this import duty in dollars, then put up the markup that they would charge onto the customer and that again has a dominant effect at the cost of building materials in Ghana.

Speaker 1: 9:09

And lastly, another reason why you know the cost of building materials in Ghana shut up, particularly over the last two years, is that you know the fact that Ghana does not make anything is also a fact that if we had made even the cement that is made in Ghana, supposedly some of the elements of the cement, yeah, that companies like Gachem, which is ghana cement company, or diamond cement company, or jatat cement company, some of the elements that go into making the cement, that is of it imported. So your prime quality, which is cement and cement is used to make the blocks that is also used to build the houses. Yeah, because we don't make that key element of the cement. Yeah, there's a key chemical component that goes into the cement. Because that's not made in Ghana, that's imported is a key reason why you know burn materials goes up and add to that transportation. So because of the dollar, of the city, dollar depreciation, the price of fuel basically goes up in Ghana every single month. So this then has a knock done offence on transportation. So when you are transporting goods from A to B, that is affected by the cost of fuel and also the transportation fees that a driver or a company who kids from A to B would charge you.

Speaker 1: 10:59

So these are some of the key reasons why building materials in Ghana have doubled, in some cases tripled, in the last two years, and so if you're wanting to build in Ghana, you better off doing it now, because I don't see, you know, particularly this year, as we are in an election year in Ghana there's going to be an election on December the 7th. I don't see prices of these building materials coming down any sooner, and given the fact that you know, like I said, we import a lot of things when it comes to building materials, as well as the rapid inflation, yeah, then, if you are thinking of building property in Ghana, you know, then you better do it right now, and so last week I told you about the land in Ghana, which was very, very affordable, particularly if you are in the west, and I hope some of you have made contact already with RealBoth in terms of the land and the culture of the land and making sure that land is legit. Now you want to build on the land, so this is why we're doing this video or doing this podcast rather to give you an indication as to the cost of building materials in Ghana. So, like I say, if you want to build in Ghana, this is very, is very important for you because this will give you a first-hand impression as to the costs of raw materials or building materials in Ghana.

Speaker 1: 12:34

Again, in this video I'll also leave alternatives, because you know, about a couple years ago I did a series on building in Ghana and in that series we looked at alternatives to the traditional way of building with blocks and cement. So, you know, because of this astronomic cost in building materials in Ghana, you may want to consider alternative means of building your property in Ghana. So there's things like bricks, there's also recycled plastics and there's also rougher wood, amongst others. So I will leave you the video in the funnest of a show where, again, you can get valuable information as to alternatives to building in Ghana, should you want to. You know, build your property in Ghana, you know, with bricks or you know, or even still, containers or raffle wood, because, like I said, the costs of building materials are very, very expensive in Ghana right now and I didn't see that coming now and I didn't see that coming down. I didn't see prices coming down any sooner.

Speaker 1: 13:47

All right, so I'm going to sign up for now, but, like I said, you know, please watch the videos that I'm going to leave in the front of the show telling you, a about the costs of building materials in Ghana and, b looking at alternative means of building a property in Ghana. If you decide that you don't want to build a property with cement and ironwork and blocks, all right. So thank you very much for listening to this edition of Ghana in Focus and, as always, if you like what you hear, appreciate to your friends, your family, social media networks. Please subscribe to the Ghana, africa in Focus podcast on YouTube and also Spotify. You want to get, at least, you know, 800 followers on Spotify, so look out for Ghana, africa in Focus on Spotify, click, follow and that you when you show that you get a new release every time I upload a new video. And also same with YouTube as well. We're trying to get about 200 subscribers by the end of the year. So, again, look out for Ghana, africa and Africa on YouTube and subscribe and hit the notification bell, and that means YouTube will notify you every time I upload a new podcast. Alright, so thank you very much for listening.

Speaker 1: 15:07

In the next edition of Guardian Focus we've got a special. In the dying months of the Nana Adedankwa Akufo-Addo presidency we'll be doing a special looking at the legacy of the Akufo-Addo administration over the last eight years. It's going to be very, very powerful. You don't want to miss that. So until then, thank you for listening to Ghana In Focus and we'll see you next week for some more Ghana In Focus.