By: Anthony Sedzro
Ayesha Bedwei, a Tax Partner at PricewaterhouseCoopers (PwC) Ghana, is of the view that Ghana should be cautious in selecting the sort of Foreign Direct Investment (FDI) that comes into the country. “I don’t believe that all foreign investment is good. We should exercise some selectiveness [in our FDI choices],” Bedwei cautioned.
She was speaking as a panel member at an economic roundtable organised by the American Chamber of Commerce (AMCHAM) Ghana in conjunction with the Ghana Association of Restructuring & Insolvency Advisors (GARIA) at the Movenpick Ambassador Hotel, Accra on 16th February, 2018. The event was on the topic “Ghana’s Economy: Moving from Stabilization to Growth” and the panelists discussed among other things, the current state of the Ghanaian economy and future prospects and the tax outlook for Ghana and the USA.
Ghana is the best place to do business in West Africa according to the World Bank’s Ease of Doing Business rankings as well as the second highest recipient of FDI in West Africa, after Nigeria. But, according to Ayesha Bedwei, Ghana must be very deliberate in selecting the kind of FDI it receives. She explained that Ghana must do a needs assessment of the economy to determine its core strengths and then channel specific FDI into those sectors. This will promote economic growth and enhance employment opportunities.
“The government has to assess the economy and determine where its strengths are, the available resources, and the skills needed to develop those resources. This is a painstaking exercise, and I find that it is not always conducted as effectively as it should be,” says Ayesha, who is also head of Corporate Responsibility and Diversity & Inclusion, responsible for PwC’s West Market Area. She went on:
“Once that exercise is done, we will be in a better position to determine (for example) the kind of skills we want our graduates to have, where our shortfalls are and where FDI is most needed.”
The PwC Ghana executive explained to GB&F magazine that when the government wants to negotiate investment deals for the country, it should make use of its homegrown professionals and experts to ensure that Ghana derives maximum benefit. Another point she made was that, in offering incentives to investors, Ghana must ensure that it is a win-win situation. “When we get the kind of investment we need, we must have the requisite clauses in place, in the various agreements we negotiate, which will benefit us as a nation. Effective monitoring, enforcement of laws and regular reporting is required in order to make these arrangements sustainable.”
Speaking at the same forum, economist and former Chairman of Unilever Ghana, Ishmael Yamson, said he was rather in full support of granting incentives to investors to attract every kind of FDI. “I think there is nothing wrong in granting aggressive incentives and benefits to attract investment. What is important is how we monitor, manage and execute it. Even Britain and America give incentives so why should anybody come and tell us that don’t give incentives [to investors],” Yamson, who is a former Board Chair of the Ghana Investment Promotion Center (GIPC), explained. He continued: “This hotel (Movenpick Ambassador Hotel) was built because the investor got incentives. Can he take the hotel away? It is still employing Ghanaians. What we need to do is a cost-benefit-analysis to see whether in 5 or 10 or 30 years this investment will inure to the benefit of Ghanaians. Don’t just look at what we are giving away and overlook what we are getting in return,” he advised.
According to Ayesha Bedwei, there is enough money the government can generate internally from taxes without being overly-dependent on foreign investment. She believes that only a few people pay taxes in Ghana, and if the government widens the tax net, more revenue will come in to offset the suspected fall in FDI if Ghana adopts the theory of selective FDI attraction.
Majority of Ghanaians work in the informal sector. Indeed, about 80 percent of businesses and individuals working in the informal sector do not pay taxes. This is exactly where government must look to get more people to pay the requisite taxes, according to the Tax Partner at PwC Ghana. “Widening the tax net means that there are a lot of people and businesses in the country who are not paying taxes so the burden is very high on the few who are paying,” Bedwei hinted. “ “A lot of this is going to rely on the government deploying people and the Ghana Revenue Authority (GRA) empowering themselves to go possibly from business to business demanding to see whether they are registered and requiring them to comply Paying taxes is mandatory, not voluntary.”
Ayesha, who is the Africa Energy Tax Leader at PWC, explained. “It is going to have to be a mass exercise involving a lot of “boots on the ground” because, of course, these people are in the informal sector, so there is no addressing system by which they can be located. The tax authorities will have to go to particular areas where there are traders, shops, restaurants, and approach them through this exercise. If they are able to capture the businesses, then the individuals will follow.” she added. Other speakers at the event were Felix Addo, Vice-President of AMCHAM Ghana and Henry Kerali, World Bank Country Director for Ghana.