Attitude toward Foreign Direct Investment
The GOG states that increasing FDI is a priority and acknowledges that attracting FDI requires an enabling legal environment. However, implementation and enforcement of the laws, policies, and actions needed to attract FDI has not kept pace.
In the past, the government passed laws to encourage foreign investment and replaced regulations perceived as unfriendly to investors. The 2013 Ghana Investment Promotion Center (GIPC) Act regulates investments in almost every sector, except minerals and mining, oil and gas, and the industries within Free Zones. Sector-specific laws further regulate banking, non-banking financial institutions, insurance, fishing, securities, telecommunications, energy, and real estate. In oil and gas specifically, these laws include specific local content requirements that could discourage international investment. Foreign investors are required to satisfy the provisions of the investment act as well as the provisions of sector-specific laws. In general, GIPC has streamlined procedures and reduced delays. More information on investing in Ghana can be obtained from GIPC's website, www.gipcghana.com.
Other Investment Policy Reviews
Ghana has not conducted an investment policy review (IPR) through the OECD.
Ghana has been a World Trade Organization (WTO) member since January 1995. The WTO last conducted a Trade Policy Review (TPR) in May 2014. The TPR concluded that the 2013 amendment to the investment law raised the minimum capital that foreigners must invest to levels above those specified in Ghana's 1994 GATS horizontal commitments, and excludes new activities from foreign competition. But it was determined that overall this would have minimum impact on dissuading future foreign investment due to the size of the companies traditionally seeking to do business within the country. An Executive Summary of the findings can be found at: https://www.wto.org/english/tratop_e/tpr_e/tp398_e.htm
Laws/Regulations on Foreign Direct Investment
GIPC regulates foreign investment in acquisitions, mergers, takeovers and new investments, as well as portfolio investment in stocks, bonds, and other securities traded on the Ghana Stock Exchange.
The GIPC Act specifies areas of investment reserved for locals, which include small-scale trading, operation of taxi and car rental services with fleets of fewer than 25 vehicles, lotteries (excluding soccer pools), operation of beauty salons and barber shops, printing of recharge scratch cards for subscribers of telecommunication services, production of exercise books and stationery, retail of finished pharmaceutical products, and the production, supply, and retail of sachet water. The law further delineates incentives and guarantees that relate to taxation, transfer of capital, profits and dividends, and guarantees against expropriation.
GIPC registers investments and provides assistance to enable investors to take advantage of relevant incentives. GIPC registration can be filled out online at www.gipcghana.com.
The Government of Ghana has no overall economic or industrial strategy that discriminates against foreign-owned businesses. In some cases a foreign investment may enjoy additional incentives if the project is deemed critical to the country's development. American and other foreign firms are able to participate in government-financed and/or research and development programs on a national treatment basis.
Once all necessary documents are submitted, GIPC states that new investments will be registered within five working days. However, the actual time required for registration can be significantly higher (sometimes up to one month).
Although registering a business is a relatively easy procedure, the process involved in establishing a business is lengthy, complex, and requires compliance with regulations and procedures of at least five different government agencies including GIPC, Registrar General Department, Ghana Revenue Authority (GRA), Ghana Immigration Service, and Social Security and National Insurance Trust (SSNIT).
The World Bank's 2016 Doing Business report states that the average time to start a business in Ghana is 14 business days. This places Ghana 102 out of 189 – down from 96th in 2015.
GIPC requires foreign investors to satisfy a minimum capital requirement. The minimum capital required for foreign investors is USD 200,000 if they do a joint venture with local partners or USD 500,000 for enterprises that are wholly owned by foreign investors. Trading companies either entirely or partly-owned by foreigners require a minimum capital contribution of USD 1,000,000 and are required to employ at minimum 20 skilled locals. Capital contributions may be satisfied by remitting convertible foreign currency to a bank in Ghana or by importing goods , entering into lease agreements, incurring construction costs, or making local purchases valued at the required amounts This minimum capital requirement does not apply to portfolio investments, enterprises set up for export trading, or their branch offices.
The principal law regulating investment in minerals and mining is the Minerals and Mining Act, 2006 (Act 703). This law addresses different types of mineral rights, issues relating to incentives and guarantees, and land ownership. Ghana restricts the issuance of mining licenses based on the size of the mining operation. Foreign investors are restricted from obtaining a small scale mining license for mining operations that equal an area less than 25 acres (10 Hectares). Non-Ghanaians may only apply for industrial mineral rights if the proposed investment is $10 million or above.
The 2006 Minerals and Mining Act provides for a stability agreement, which protects the holder of a mining lease for a period of 15 years from future changes in law that may impose a financial burden on the license holder. When investment exceeds USD 500 million, lease holders can negotiate a development agreement which contains elements of a stability agreement and more favorable fiscal terms. Due to an increase in illegal mining and the need to clarify fiscal obligations of mining companies, Parliament passed a new Minerals and Mining (Amendment) Act (Act 900) in December 2015, which updated some sections of the original Act. One significant amendment will require the mining lease-holder to, “…pay royalty to the Republic at the rate and in the manner that may be prescribed.” The previous Act 703 capped the royalty rate at six percent. The Minerals Commission (http://www.eservices.gov.gh/MINCOM/SitePages/MINCOM-Home.aspx ) is the government agency that implements the law. Small-scale (artisanal) mining is reserved for Ghanaian investment.
The Petroleum Exploration and Production Law, 1984 (PNDCL 84), also known as the Petroleum Law, regulates oil and gas exploration and production. The law deals extensively with petroleum contracts, the rights, duties, responsibilities of contractors, and compensation payable to those affected by activities in the petroleum sector. The Petroleum Commission is charged with enforcing this law. A revision of PNDCL 84 regarding exploration and production is under Parliament consideration. Overall, the revision is viewed as a significant improvement over the existing law, although several loopholes need to be closed if the law is going to reflect global standards in accountability and transparency.
Ghana regulates the transfer of technologies not freely available in Ghana. According to the 1992 Technology Transfer Regulations, total management and technical fee levels higher than eight percent of net sales must be approved by GIPC. The regulations do not allow agreements that impose obligations to procure personnel, inputs, and equipment from the transferor or specific source. The duration of related contracts cannot exceed ten years and cannot be renewed for more than five years. Any provisions in the agreement inconsistent with Ghanaian regulations are unenforceable in Ghana.
All foreign companies are required to register with the Ghana Investment Promotion Center (GIPC), http://www.gipcghana.com, the government agency responsible for foreign investment in the country. This registration takes approximately 11 days to complete.
The purpose of the GIPC is to act as a one-stop shop for economic, commercial and investment information for international companies and business people interested in starting a business or investing in Ghana. With the exception of the extractive industries, international companies are free to establish a business in Ghana without prior approval of GIPC. However, the Ghanaian business environment is unique and guidance can be extremely helpful. Also, certain tax benefits are available under the law, which make registration with GIPC beneficial.
The World Bank Investing Across Boarders (IAB) indicates that takes 10 procedures and 72 days to establish a foreign-owned limited liability company (LLC) that wants to engage in international trade, in Ghana. This is longer than the IAB regional average for Sub-Saharan Africa. Foreign investors must obtain a certificate of capital importation, which can take 14 days. The local authorized dealer must confirm the import of capital with the Bank of Ghana, which will then confirm the transaction to the Ghana Investment Promotion Centre (GIPC) for investment registration purposes. http://iab.worldbank.org/data/exploreeconomies/ghana#starting-a-foreign-business
Specific information about setting up a business is available at the GIPC website: http://www.gipcghana.com/invest-in-ghana/doing-business-in-ghana.html.
Note that mining or oil & gas sector companies are required to obtain licensing/approval from the following relevant bodies.
Ghana Investment Promotion Centre
Post: P. O. Box M193, Accra-Ghana
Telephone: +233 (0) 302 665125, +233 (0)302 665126, +233 (0) 302 665127, +233 (0) 302 665128/ +233 (0) 302 665129
Telephone: +233 (0) 302 244318254/ 244318252