Revise capital requirement for foreign investors - GIPC urged

The Managing Partner of Kimathi & Partners, Mr Kimathi Kuenyehia, has called for the review of a section in the Ghana Investment Promotion Centre (GIPC) Act, 2013 (Act 865) that calls for a minimum capital of US$200,000 before a foreign investor can enter into a partnership with a Ghanaian investor.

He said the law must be revised if the policy objective was to encourage more young Ghanaian entrepreneurs to enter into partnership with foreign investors. He explained that under the new GIPC law, a Ghanaian needs to raise a minimum of 10 per cent equity in order to partner a foreign investor who must invest a minimum capital of US$200,000 in order to do business in Ghana. 

“So the point I’m making is that the 10 per cent equity of US$200,000 which works out to US$20,000 is too high for a Ghanaian start-up. Therefore, this will discourage young start-ups from forming partnerships with foreign investors,” Mr Kuenyehia said in an interview with the Daily Graphic in Accra after he made a presentation at a business forum organised by the delegation of German Industry and Commerce in Ghana (AHK Ghana).

The forum was held to create opportunities for people in industry, local and foreign investors to share ideas on how to make the country’s investment climate friendlier. On the theme “Business and Investment Climate for Foreign Companies in Ghana,” the forum gave opportunity to participants to voice their concerns on how laws and regulations in the country were having a negative impact on their business.

“Because the amount of money is a lot, if it is not revised what will happen is that investors will rather go to neighbouring countries which do not have such limitations to invest their capital. That is the first problem about the law,” he explained.

He said since the government’s policy was to encourage partnerships with Ghanaian businesses through the local content policy over the next three to five years, it was crucial for the country to adopt steps to encourage Ghanaian start-ups to enter into those partnerships. 

Quotation in context 

Touching on the May 6, 2016 report of the paper titled “Investors raise eyebrows over regulatory environment,” he said the report quoted his views out of context. Explaining further, Mr Kuenyehia said when it came to the view that investors were leaving the country, the opposite was rather the case, as his firm, for instance, had attracted more clients this year.