NUTS & BOLTS

Ghana 2018 | EXECUTIVE GUIDE | REVIEW

Opportunities for FDI abound, especially in infrastructure, oil production, and agriculture, and Ghana has taken steps to reduce bureaucratic delays and streamline the investment process for foreigners.

Ghana is projected to be the fastest-growing economy in Africa in 2018. The nation had seen growth slow over the past two years as oil prices fell and placed fiscal pressure on the country, but fiscal consolidation measures are expected to bring Ghana's economy back on to a firm fiscal standing. As such, global investors are eager to take advantage of what the Gold Coast has to offer. Opportunities for FDI abound, especially in infrastructure, oil production, and agriculture, and Ghana has taken steps to reduce bureaucratic delays and streamline the investing process for foreigners. Social unrest remains an obstacle, with attacks on oil pipelines in the north of the country a frequent source of disruptions, but the general mood is one of optimism as Ghana looks to 2018.

Coming 120th on the World Bank's 2018 Ease of Doing Business Rankings, a drop of 12 spots from the year before, Ghana still lags behind global standards in resolving disputes and enforcing contracts, although it moved slightly ahead of the Sub-Saharan African average. The country still holds a reputation for long bureaucratic delays with regards to paying taxes and starting a business, although digitalization of government-to-business and government-to-customer services has played, so far, a big role in improving this condition. Regulations related to construction permits, for example, are now available online, increasing investor awareness and streamlining the process of obtaining building concessions. Another significant indicator comes from the World Bank's Distance to Frontier metric, which measures, on a scale from zero to 100, the distance a country's business environment is from the current global standard. Ghana, at 57.24, is well behind the OECD average, but above the Sub-Saharan African average of 50.43. All told, however, both international and domestic institutions are aware of the structural changes needed in order for Ghana to turn its natural resources and growing population into stable economic development.
Despite structural obstacles, Ghana saw strong FDI growth in 2017. Through the first three quarters of the year, Ghana Investment Promotion Centre (GIPC) reported that the country saw USD4.37 billion in FDI, well ahead of the pace needed to meet its goal of USD5 billion in FDI for the calendar year. Areas that saw significant foreign investment included free zones with USD241 million, the minerals sector with USD513 million, and petroleum with USD358 million. Through the first three quarters of 2017, China represented the largest investor in terms of number of projects, but the Netherlands represented the largest source of FDI value, with more than USD2.4 billion invested through the first nine months of the year. GIPC estimated that these projects represented more than 12,200 new jobs, a mark of the wide-scale effects such investment can have on the labor market.

FDI is regulated in Ghana through the 2013 GIPC act, which gives the same body oversight over foreign inflows across all sectors except for mining, oil, and gas. Most Ghanaian sectors are fully open to FDI; investors must coordinate with GIPC, but are then free to attain full ownership as long as the investment has a value greater than USD500,000 (USD1 million for firms that buy or sell imported goods). Mining, petroleum, banking, and telecommunications allow for only partial access for foreign investors, and there are a number of regulations on how foreign investors must coordinate with the Ghanaian government if they want to launch new drilling or mining operations. GIPC has taken steps in recent years to digitize and streamline the registration process, but delays are still frequent and clearance is needed from several agencies to obtain approval. In terms of taxes, Ghana has a corporate tax rate of 25%, though mining and upstream petroleum companies pay 35%. It also has a National Fiscal Stabilisation Levy that applies to the financial and telecommunications industries; firms that qualify pay a 5% tax on their accounting profit. Personal income is taxed at a progressive rate that is capped at 25% above GHS31,600, though there are no local or state-level taxes.