GHANA Investment Guide
Openness to Foreign Investment
Ghana's Investment Act of 1994 encourages foreign investment. Foreign
investors are not subject to differential treatment on taxes, prices, or access
to foreign exchange, imports, and credit. Steps have been taken to remove a
number of legal and administrative impediments to foreign investment.
The minimum required equity for foreign investors is US$10,000 (in joint
ventures) or US$50,000 (for enterprises wholly-owned by a non- Ghanaian).
Trading companies either wholly or partly owned by non-Ghanaians require
minimum foreign equity of US$300,000 and the firm must employ at least 10
Ghanaians. The higher minimum investment required in trading companies is meant
to be a disincentive for foreigners to engage in this kind of activity.
The Ghana Investment Promotion Center (GIPC) is responsible for the promotion
of direct investment in Ghana. Investment in mining and petroleum
exploration are regulated by the Minerals Commission and the Ghana National Petroleum
Corporation respectively. Portfolio investment is overseen by the Ghana Stock
Exchange. The categories of business activity closed to foreign investment have
been reduced to four: petty trading and hawking, operation of taxi and car hire
services, lotteries and betting arrangements and the operation of beauty salons
and barber shops.
With respect to Ghana's privatization program, foreign investors comprise most of the bidders
for these enterprises. Few local investors participate in this process except
in partnership with foreign firms. There is no evidence that American investors
are at a disadvantage in bidding for firms being privatized.
Currency Conversion and Transfer Policies
Reliance on interbank and private foreign exchange bureaus is rising. The Ghana foreign exchange auction was eliminated in 1992 to promote use of these mechanisms. There are no restrictions on the conversion and transfer of funds. Ghanaian cedis are easily exchanged for dollars and most major European currencies. Ghana's hard currency needs are met largely through gold and cocoa export revenues and donor assistance.
Expropriation and Compensation
The 1994 Investment Code guarantees that foreign-owned enterprises shall not be subject to expropriation or nationalization unless the taking is in the national interest for a public purpose. Payment of fair and adequate compensation in convertible currency is guaranteed for enterprises so acquired by the state. There is no reason to suspect that the Ghanaian Government's constructive attitude toward foreign investment is likely to change. American investors have not been subject to differential or discriminatory treatment in Ghana.
Dispute Settlement
There have been no significant investment disputes in recent
years involving U.S. or other foreign investors. Ghana's legal system is based on British
common law. Lawsuits are allowed and usually begin in high court. The 1994
Investment Act addresses dispute settlement procedures and provides for
arbitration when disputes cannot be settled by other means. In 1996, the Ghana Arbitration Center was established to strengthen the
legal framework for protecting commercial and economic interests, in order to
bolster potential investor confidence in Ghana. Ghana does not currently have a bankruptcy
statute.
Performance
Requirements and Incentives
The Ghana Investment Promotion Center Act of 1994 does
provide incentives for foreign investors. These include tax holidays, capital
allowances (accelerated depreciation), location incentives and other
inducements. They are specified in the statute and are not applied
capriciously. Ghana does not currently impose
trade-related investment measures. In general the Ghana Investment Promotion Center has played a constructive role in attracting foreign investment
and does not have a mandate to employ performance requirements or other similar
measures.
Private Ownership
Rights
The laws of Ghana recognize the right of foreign and domestic private entities to own and operate business enterprises. The ability to acquire and dispose of business interests is well established.
Protection of Property Rights
The Ghanaian constitution and established case law provide for protection of property rights in Ghana. The protection of intellectual property is an evolving area of law. Progress has been made in recent years to afford protection under both local and international law. Ghana is a member of the World Intellectual Property Organization (WIPO) and the English-speaking African Regional Industrial Property Organization (ESARIPO).
Transparency of Regulatory System
The Government of Ghana has been moving toward liberalization and deregulation. The Ghana Investment Promotion Center (GIPC) Act of 1994 codified the government's desire to present foreign investors with a liberal foreign investment regulatory regime. Screening of foreign investment has been eliminated and the prerequisites for establishment of a business in Ghana are now quite minimal. The GIPC has established a one-stop-shop to eliminate the bureaucratic bottlenecks investors go through.
Political Violence
Overall, Ghana offers a
relatively stable and predictable political environment for American investors.
There is no indication at the present time that the level of political risk in Ghana will change markedly over the near
term.
Corruption and Crime
While corruption exists in Ghana, it is somewhat less prevalent than in many countries.
American businesses have reported being asked for "favors" in the
past.
Publicly the Government
is committed to ensuring that government officials do not use their positions
to enrich themselves. At the same time, lower level officials dealing with
issuing licenses, permits, etc. are often poorly paid and see such payments as
necessary parts of their incomes.
The 1992 Constitution provides for the establishment of a Commission on Human Rights and Administrative Justice (CHRAJ). Among other things, the Commission is charged with the responsibility to investigate all instances of alleged and suspected corruption and the misappropriation of public monies by officials, as well as take appropriate steps, including reports to the Attorney General and the Auditor General, resulting from such investigations. Some of the high-profile corruption cases that have been investigated by the Commission have involved senior-level officials. The commission, headed by a respected jurist, has been given the mandate to prosecute alleged offenders if it feels that it has enough evidence to institute legal proceedings. The President himself has publicly discouraged the payment of bribes by urging businessmen and women who are asked for such payments to report the matter to the highest levels of Government, including his office.
Labor
Ghana has a large pool of inexpensive,
unskilled labor. Labor regulations and policies are generally favorable to
business. Labor-management relations are fairly good.
International Investment Agreements
Bilateral investment agreements exist with the following
countries: the United
Kingdom, Northern Ireland, the Republic of China, Romania, Denmark, and Switzerland. These agreements normally run for
ten years and were signed and ratified between 1989 and 1992. Italy and France are currently working on similar arrangements. The
possibility of agreements with the U.S.,
Germany, India, Pakistan, South Korea, North
Korea, and Belgium is being considered.
Foreign Trade Zones
A Free Trade Zone was established in May, 1996. The Free Zone consists of a parcel of land near the Tema steelworks in the Greater Accra Region and two other sites located at Mpintsin and Ashiem, near Takoradi. The sea ports of Tema and Takoradi, as well as the Kotoka International Airport, and all the lands related to these areas are a part of the free zone.
Taxation
The corporate income and branch tax rate is 35 percent, and capital gains are
subject to a five percent tax. Tax rates of eight percent and 25 percent apply
to investments in non-traditional exports and hotels, respectively.
Manufacturing companies in regional capitals, excluding Accra and Tema, are subject to 26.25
percent income tax, and other manufacturing companies are subject to a 17.5
percent income tax. Dividends and interest are subject to a 10 percent
withholding tax. A 50 percent income tax applies to petroleum companies except
for those companies in agreement with the Government, on which a separate tax
is levied. In addition to the corporate income tax, mining enterprises are
taxed an additional 25 percent on their carry-forward balance.
Stock Market
The Ghana Stock Exchange had 22 listed companies by the end of the 1990's.
While cocoa, banking and brewing enterprises are prominent, the Ashanti
Goldfields greatly determines the course of market fluctuations.
For more information, visit: