Distinguished Speaker Series on Foreign Direct Investment ; H.E. John Dramani Mahama 

30-08-2024

Distinguished Speaker Series on Foreign Direct Investment ; H.E. John Dramani Mahama 

Dear GNBCC Members,

Yesterday evening our Speaker Series on Foreign Direct Investment (FDI) organised in collaboration with our fellow chambers AmCham, CCI France, Canada Ghana Chamber of Commerce, Spain Ghana Chamber of Commerce, Ghana South Africa Buisness Chamber, Japan External Trade Organisation and Eurocham kicked of in the Movenpick Ambassador Hotel with our 1st guest, former President and current Presidential Candidate (NDC) H.E. John Dramani Mahama.  We had a full house including a number of GNBCC Members – about 25 Members had confirmed their attendance after receiving the invitation.

Background of the FDI Speaker Series which we have sent to all the invited speakers

Ghana has been the preferred destination for FDI within the sub-region over the last two decades and this has spurred economic growth and prosperity for Ghanaians. The FDI inflows trajectory has however been hampered lately with many investors diverting their investment dollars to Cote d’Ivoire, Senegal, and Nigeria. Some of the major issues hampering FDI into Ghana include the following:

  • The sanctity of contracts leading to many disputes which does not augur well for the investment drive of the country.
  • Government decision making on major investments that requires the approval and quick turnarounds to maximize returns.
  • Numerous and ever-increasing regulatory pressures and laws that are not coordinated, making it impossible for the investor and successfully set up in the country.

Harassment from tax authorities and inconsistencies in the interpretation of the laws related to taxation, local content policies, and the slow pace of regulatory approvals within government agencies that deal with the private sector.​

​Issues of our Members about doing business in Ghana

  • Complex regulatory and compliance procedures, excessive taxation of foreign companies, bureaucratic discretion of public entities (the ability to decide how policies will be implemented is very bureaucratic), improper business planning and lack of institutional coordination are the top challenges of doing business in Ghana – according to surveys conducted by the Trade Associations.
  • Issues with Ghana customs such as:
    1. the examining of imported goods (by 8 different and separate agencies)
    2. High benchmark values set by Customs when to assess duties
    3. More than 20 different taxes on agricultural inputs such as seeds, fertilizers and irrigation equipment; also, high import taxes on vaccinations (for 1-day chicks) which cannot be bought in Ghana and must be imported. 
    4. Fertilizer/substrate products are subjected to a total of about 35-40% of the Free on Board (FOB) value in taxes. Irrigation materials are taxed as high as 71% of the FOB value.

  • Issues with local content – example of Minerals Commission, Energy Commission etc. They all have their own set of rules and are demanding 100% Ghanaian ownership as well as 100 % Ghanaian Management as opposed the official definition of a fully indigenous Ghanaian company which is 51% Ghanaian ownership and 80% Ghanaian Management. In this way foreign investors in joint ventures with Ghanaians are forced to disinvest; it also blocks Ghanaian entrepreneurs to attract foreign companies for investment.

Key recommendations:

The market size, the tax regime, the political environment, the legal and regulatory environment, interest rate, and investor protection will be the key factors shaping the investment decisions of (potential) foreign investment

1. Streamline regulatory compliance processes and deepen digitization in public service to address firms' exposure to corruption. High regulatory and compliance cost is identified as one of the key cost components for the firms, and the less synchronization of regulatory and permit processes leads to firms paying extra costs through unofficial channels. Thus, the government must deepen the existing e-government services to ensure that the services are delivered efficiently and reduce the cost of compliance. This will help to reduce the bureaucratic interference of public agencies in the activities of investors.

2.       Review the existing tax regime. Given that the existing macroeconomic challenges have already increased the cost of doing business for firms, the government must review and align the tax frameworks to minimize the incidence of “duplicating taxes” that make it expensive for businesses to operate in Ghana. Reducing the tax burden on businesses is crucial to making the firms competitive and increasing FDI attraction. Furthermore, the government must engage foreign investors to enhance their understanding of the tax administration system and how they can use the electronic platforms to their advantage. For instance, the government must provide capacity building on how firms can access tax exemption available in the provisions.

3.   Collaborate with business chambers to regularly understand the challenges of investors. The findings indicate that most of the businesses heard the investment opportunities through GNBCC, which also suggests that the GNBCC will be their first point of contact when they face challenges. The government must collaborate with the chamber of businesses to be ahead of addressing the obstacles to investment.

4. Increase investors' access to information on support programmes available to investors. Limited access to information was identified as one of the obstacles to doing business in Ghana. The government can work collaboratively with the chambers of businesses to consistently provide regular information on government support in the form of tax reliefs, exemptions, and financing opportunities to investors.

With the falling of FDI globally to developing countries by 7% to $ 867 billion and in the case of Africa, FDI declined by 3% to $ 53 billion, this public engagement with the consortium of leading international trade associations in the country is timely.

Above briefing  provided speaker  H.E John Dramani Mahama the opportunity to elaborate on his plans to reverse the decline of FDI into Ghana through policy prescriptions and lay out his broader economic policies to attract and maintain FDI and develop a road map to assure international businesses not to leave or relocate their operations from Ghana.

Click here to watch the livestream from lastnight's event.

At 1.01.36 you can see the question of our GM Tjalling Wiarda asked

Kindly click here to follow Tjalling Wiarda  on linkedIn for a special content report on last night’s event.

Please expect other Presidential Candidates as speakers in the coming months before December 2024.

Click here for the full report.

Click here for source.

 

GNBCC | News