Foreign investors worried over biting business climate
Delegate of the German Industry and Commerce in Ghana, Mr Patrick Martens, has posited that Ghana can become the hub for businesses targeting the West African market if the business climate is supported with a predictable legal framework, transparency and good governance.
Advertisement
He said the country’s competitive advantage was not in its market size or a larger demand base, but in its business climate which must be further strengthened with a stable and predictable legal framework to entice businesses to operate for the long haul.
Mr Martens said this in an interaction with the Daily Graphic ahead of a business forum for investors in the country. The delegation of German Industry and Commerce in Ghana (AHK Ghana) is organising the forum to create opportunity for people in industry, local and foreign, to discuss how to make the country’s investment climate friendlier.
On the theme, “Business and Investment Climate for Foreign Companies in Ghana", participants in the forum will address questions relating to whether there is a third way to develop Ghana’s economy in co-operation with foreign investors in the face of free market versus protectionism.
Rationale for forum
The forum, slated for Kempinski Hotel, Gold Coast City on Wednesday, May 4, 2016, is part of, AHK Ghana’s efforts at fostering trade and investments in Ghana. The institution has been promoting Ghana in Germany and Europe as a favourable investment destination.
Explaining the rationale behind the theme, Mr Martens said the forum was premised on observations by foreign investors of a seeming change of priorities in the country’s industrial and investment policies over the past two years.
“The Ghana Investment Promotion Centre (GIPC) Act was first amended and now there is the downstream local content policy. Last year, a new Customs Act, 2015, Act 891 came into effect which introduced some customs duties. These changes and amendments have created some form of confusion,” Mr Martens stated.
Large informal sector
He said the structure of the Ghanaian economy was such that about 80 per cent of businesses were in the informal economy, which left only about 20 per cent of businesses in the formal sector, and made the government the single biggest employer.
However, players in the formal sector, which include financial institutions, mining, oil and gas and telecommunication and construction companies were mostly foreign direct investments (FDIs) which happened to be the major taxpayers and job creators.
“Therefore, we think that we should have a climate that whenever there are amendments, reforms or new laws are coming up, we should be engaged to make some inputs.”
Such engagements, he said, would forestall conditions of trial and error laws where laws and policies were introduced and overnight withdrawn or later amended because portions were not good enough from the outset, and stressed that “this does not create the best possible business climate”.
He contended that many of the FDI investments had been in the country for many years, with some buying out others, which were the positive sides to show how it was doing business in Ghana.
Mr Martens said the intention was not to pit businesses against policy makers, but a forum for frank discussions about the policy framework that impacted the businesses of foreign companies in Ghana and the best way to enhance the growth of the Ghanaian economy through a friendlier business environment.