Investors raise eyebrows over regulatory environment

Some investors in the country have raised concerns about the escalating cost of doing business, particularly occasioned by unfavourable regulatory regime and the local content policy, which they argue is misplaced.

The businesses, many of which are of European descent, cited several regulatory rigidities such as the Ghana Investment Promotion Act (as amended) 2013, (Act 865), which imposes quotas and spells out high initial capital.

The delegation of German Industry and Commerce in Ghana (AHK Ghana) organised the forum in Accra to create opportunities for people in industry, local and foreign investors to share ideas on how to make the country’s investment climate friendlier.

Dubbed “Business and Investment Climate for Foreign Companies in Ghana," participants voiced their concerns about how laws and regulations in the country are having negative impact on their business.

The Managing Partner at Kuenyehia and Partners, Mr Kimathi Kuenyehia, who was a panel member, said the GIPC Act (Act 865) was an unfriendly law keeping investors away from the country.

He was of the view that the minimum capital required for foreign investors was high. Provisions in the law such as quotas for hiring foreign workers, for instance, cause the country to miss out on the opportunity to make itself the leading destination for foreign direct investment inflows. 

The Executive Director of European Business Organisation (EBO-Ghana), Mr Nico Van Staalduinen, said after the country encouraged foreign investors to set up in Ghana, other laws made it challenging to operate.

He said the local content law, for instance, was a discriminatory legislation that would only prevent investors from investing in the country.

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“I am not against the local content legislation, but I think Ghana will do itself a little good if it trains people to occupy positions at the upstream level rather than focusing on formulating laws that provide lower jobs at the downstream level,” he said. 

Response 

The Head of Legal of the GIPC, Ms Wendy Nimako Boateng, in a sharp rebuttal, said “the Act has never, since its inception, been for foreign investors only; it has been for investors and here I mean local and foreign alike. We do not discriminate”.

According to her, one thing the centre has noticed is that most investors, no matter their level, are not ready to know what is in the Act for them. As a result, they do not even know that some of the benefits of the law can help them cut cost.

She said it was surprising that both the local and foreign investors were not taking advantage of the incentives by only registering the business with the GIPC.

“The new Act increased the investment threshold as well as prescribed considerable incentives for investors, and not to their detriment,” she noted. 

The GIPC Act 2013 (Act 865) replaced Act 1994 (Act 478). Under the Act, the minimum capital required for a retail business is US$1 million, while foreign investors who participate in enterprises have to show a minimum capital of US$200,000, with wholly owned foreign enterprises showing a minimum capital of US$500,000.