A Good Exchange of Business Experiences


A Good Exchange of Business Experiences

First of all I want to wish our King Willem Alexander with his birthday and his 10 years on the throne.

Long live the King!!!

This morning I took part in the G20 compact with Africa Initiative meeting at the World Bank in Accra together with my colleagues from France, Germany, Canada, India, Hungary, Catalonia . A meeting organised by the Ministry of Finance , headed by the Director Ms Yvonne Quansah , External Resource Mobilization & Economic Relations Division. She started with a presentation on the background of the G20 Compact with Africa which provides a framework for boosting private investment and increasing the provision of infrastructure in Africa. Basically she explained the measures Ghana has taken on the macro economic, the business and the financing level to improve the Foreign Direct Investment climate.

For instance on the macro economic level she mentioned macroeconomic stability, ensuring sustainability of public debt (over time), increasing Domestic Resource Mobilization, ensuring sound public investment management and improving the performance of parastatals such as TOR -Tema Oil Refinery, ECG - Electricity Company of Ghana etc. Please mind the above is what is needed to get Ghana healthy. On the business level items such as strengthening the legal and regulatory frameworks to reduce uncertainty, establishing investor protection and dispute resolution mechanisms etc. Finally on financing level items such as supporting efficient risk mitigation instruments, broadening private finance etc. After this introduction she went over the status of the reforms concerning the business framework explaining what already has been done and where the commitments are from the Ghana government. An impressive list mentioning the progress since 2018 especially on legalisation .

After she spoke she wanted to hear from us - the different business council or chambers- being on the ground , in the field , speaking regularly with the companies who have already invested in Ghana , what is the feedback about Ghana - Ghana as an investment destination .

Everybody mentioned the GIPC act - the Ghana Investment Promotion Act - although mentioned as part of the new reform commitments in the presentation of the Director - the GIPC act is still the same meaning a high treshold for foreign investors when they want to invest in Ghana. You need to bring at least US$ 200,000.00 into Ghana and change that in the local currency if you want to start up your own business with a local Ghanaian partner . Although the money stays with the investing company ; you need to transfer it in the local currency (GHS). We have been advocating for long to lower the treshold; to dish out US$ 200,000.00 from your cash flow is for the majority of the companies too high , secondly changing it into Ghana Cedis , certainly in Q 4 of 2022 when inflation was high (>50%) and the Cedis dropped considerably towards the Euro or US$ , would be a destruction of your investment kitty. Neighbouring countries have much lower tresholds and my members are not vulture capitalists who quickly come , fill their pockets and run. Our investors are for the long term.

The second item mentioned by all Chambers & Councils was the Ghana Revenue Authority (GRA) and their (sometimes) aggressive behaviour towards (foreign) companies. Most companies are inundated with tax audits, even about the same years from different GRA departments. Not you are innocent until proven guilty but basically you are guilty, you are underpaying and we are going to punish you. This sounds harsh but this is the experience a number of companies have . The Director told us that they want to set up a joint meeting with the GRA to address these complaints.

Thirdly the issue concerning local content was mentioned: state commissions such as the Minerals Commission, the Energy commission, the Petroleum Commission, the NCA (National Communications Authority) are all commissions who are making new rules and regulations for their sector overruling the GIPC and hence the agreements with foreign investors who invested in Ghana. For instance companies in the value chain of Mining such as warehousing, freight forwarding and transport need to change their shareholding toward a 100% Ghanaian owned shareholding ; these are companies who are already indigenous Ghanaian companies with 51% Ghanaian shareholding. If they do not act , they cannot continue supplying to those mining companies . They need to sell, stop and leave the country or try to supply outside the mining. The scare of the foreign investment community is that within time these rules will expand to other sectors of the Ghana economy basically pushing out foreign investment.

I was very happy to see that notes were taken, discussion followed . Next to the Director of the Ministry of Finance, also Ministry of Trade & Industry and other officials were present. Only by clearly mentioning the challenges the foreign investment community has, and the willingness of our Ghana counterparts to hear us and communicate on these issues, maybe solving them, only then we create a truly win win situation and improve on the ease of doing business in Ghana. We are thankful to the Director Ms Quansah of the Ministry of Finance for this opportunity.

Writtten by:

Tjalling Wiarda,

General Manager, GNBCC

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