Ghana's Foreign Direct Investments Have Fallen Significantly Since 2017. Time to Panic?
In 2024, Ghana's FDI was only $400 million compared to $663 million in 2023
“Deep Dives” is our weekly edition where we go long on a news story and examine it with more depth
At one point in time, Ghana’s foreign investments were high.
Over the last few years, Ghana’s Foreign Direct Investment (FDI) has been on the decline.
According to data from the Ghana Investment Promotion Centre (GIPC) quarterly reports, FDI has been steadily on the decline.
Bad Business Environment?
After Ghana opted for a $3 billion IMF deal in 2022, the country had to adopt several initiatives to dig itself out of its hole
Implemented an E-Levy which put a 1% tax on all mobile money transfers
Implemented and kept a COVID Levy which put a 1% tax on all purchases
Raised Value Added Tax (VAT) to 15%
All these initiatives plus high inflation, pushed some businesses like Nivea Ghana to move their operations elsewhere.
The foreign exchange rate which had climbed to $1 = 16 GHC didn’t help.
Changes To Investment Requirement with New Bill Amendment
In 2024, The Ghana Investment Promotion Center (GIPC) wanted to make changes to the GIPC Act.
The current Act prescribes minimum capital requirements for foreign shareholders of Ghanaian companies.
Foreign investors are required to invest the following amounts in cash or capital goods and by way of equity investment
$200,000 for joint ventures (with a Ghanaian holding at least 10% equity participation)
$500,000 for wholly owned foreign companies
$1,000,000 for trading enterprises.
The new amendment seeks to eliminate the minimum capital requirements imposed on foreign investors under the GIPC Act.
However, the minimum capital requirement for trading enterprises will be maintained to protect the local economy.
The amendment to the Bill, however, was not passed in 2024.
What Happens Next
The new Ghana government would need to incentivize business prospects to set up in Ghana. That might include tax incentives and tax breaks.
The New Parliament in its next session might pass the GIPC Amendment Act to help with foreign investments.
Will Ghana’s Office of Business Registration finally get its online business platform to work to ease the registration of businesses? That remains to be seen.