By: Anthony Sedzro
Ghana must remove capital limits for investors who want to invest in the country. Many years of having capital limits in place have not achieved anything worthwhile for the country, according to Reginald Yofi Grant, Chief Executive Officer (CEO),
Ghana Investment Promotion Centre (GIPC).
Yofi Grant, who assumed office as the Chief Executive Officer of GIPC, since January 2017 this year, said he did not understand why Ghana must ask foreign investors to prove that they have US$200,000 or US$1 million available before they are allowed to do business in the country. As a country looking for investment, having capital limits automatically keeps out some categories of investors, he reasoned.
The GIPC CEO was speaking at the American Chamber of Commerce Ghana’s (AMCHAM’s) 3rd luncheon meeting at the Fiesta Royale Hotel, Accra on March 30. He was speaking on the topic, “Initiatives to Promote Investment (FDI) in Ghana,” and the event was meant to allow him to tell the AMCHAM members his plans and programs to attract and facilitate investment in the country, and also how he will improve the service culture at GIPC.
“We have noticed that even the issue of capital limit for investors can be a stumbling block in investment attraction, and many investors will just turn their backs due to capital limits so, we are reviewing how we can change that,” the GIPC CEO said.
“So, why does a joint venture need to prove that it’s bringing in US$200,000 before you give them a license [to operate]. In any case, they are probably bringing a business that may be worth a US$1 million or half a million [dollars] so why do you keep a barrier there? Remove it and get 10 companies that want to invest US$150,000 each, it will be more than a company that wants to invest a million [US dollars]. Why does a wholly-owned foreign company that wants to invest [in Ghana] need to prove that it is bringing in half a million dollars? It is neither here nor there. His business is probably bigger than that,” Grant argued.
Currently, a foreign investor who wants to engage in general retail trade needs a capital of US$1 million while, if that the investor forms a joint venture with a Ghanaian, he needs UD$200,000.
Grant also said he did not understand why certain business sectors have been reserved for Ghanaians as those sectors seem to look down on the contributions that local investors could make to the economy. Businesses such as barbering, hairdressing, taxi business and so on are reserved for Ghanaians only.
“… [Industries reserved for Ghanaians] haven’t protected any indigenous producers and people in business. What they’ve done is to disincentivise and discourage people willing to invest in Ghana,” he says and continued further, “So why do you put limits there that says some areas are only limited to Ghanaians and that is the one that really amazes me because what are those areas?…barbering and hairdressing, driving and taxi business, trading in a market…why should I say that these are the only areas reserved for Ghanaians? The market is Ghanaian. No place should be reserved for a foreigner or Ghanaian. Create opportunities for businesses. Simple.”
According to the GIPC CEO, the investment law, in its current form, is not fit for its purpose.
“So what? You reserve that only Ghanaians can drive as taxi drivers. So, Uber [the California-based taxi hiring company] can’t operate in Ghana? Because that is what the law says. So if Uber is operating in Ghana, it is operating illegally because that is a taxi service,” he explained.
“So this is a mind-set that we have to change, the business and investment environment. We will work to remove the capital limits…” he assured the packed hall.
Yofi Grant, who has more than 30 years’ experience as a former investment banker and is a former Executive Director at Databank Financial Services, said, looking at the total Foreign Direct Investment (FDI) coming into Ghana in the last six years, the figures have been flat. GIPC, under his leadership and, under this new government, want to change and increase the values significantly. Last month, at a meeting with the media, he said that by close of this year, Ghana’s FDI must reach US$5 billion; an ambitious target that will more than double the total FDI recorded in 2016. In 2016 the country recorded FDI of US$2.7 billion.
He said a number of investment reforms will be carried out to make this possible, starting with the ‘nuisance’ taxes that were abolished or reduced by the Finance Minister. The CEO also said the time it takes for registering a business will be shortened, as Mauritius, the number one place to do business in Africa is Ghana’s example at investment reform.
“…We will try to shorten significantly the time it takes to register and start a business. We are working on it and, with technology as the platform that we’ll use; we will (also) further remove some of the taxes…”
“Averagely it takes 14 days to register a business in Ghana. In Rwanda it’s 4 days. We believe that we can move it to 1 day. Machines don’t think, they just follow orders. You (investors) will have your registration,” the investment boss said of Ghana, the best place to do business in West Africa, according to the World Bank’s Ease of Doing Business report.
The GIPC boss outlined further measures the government will be undertaking to attract more investors.
“…So, create the space for companies to invest and be able to produce. That is, taking off a number of the taxes that eat away their capital, making sure you fix electricity and for which we thank the MCA (Millennium Challenge Corporation) that gave us US$500 million to help us fix electricity, a key requirement if you want to industrialise.”
“Additionally, government has indicated that it will have a US$100 million that will help companies that suffered under the energy crisis and (we) are labouring after a very strong exercise to understand where those companies are, [to know] whether they will survive or not. So there are some very interesting reforms that are taking place,” Grant disclosed.
He said the desire to increase investment and reduce unemployment is key for the government.
“We also want to change from an economy of exporting raw materials and resources into one of value-adding, productivity and industrialisation, so we came out with the concept of ‘One-district-one-factory’, such that we democratise business in the country and in every corner of this country. There is a possibility of some business taking place so that our kids who come out of school, or don’t even go to school, will have a better chance of a job, no matter where it is…and the usual yearly rural and urban migration will be stemmed,” he added.
Joe Mensah, the President of AMCHAM and Ghana Country Manager for Kosmos Energy, in his opening remarks said US$5 billion FDI target is possible because the oil and gas industry alone could invest about US$1.8 billion.