Time to deliver stable investment climate for investor confidence

Our country, like many nations on the continent, stands at a pivotal point in its development trajectory.

Our growing youthful population is increasingly demanding better social services and sustainable development.

With the educated population growing, creating a stable and positive investment environment is essential for the growth of key sectors like telecoms or energy - the main drivers of the economy. Both industries serve as vital components of national development, driving economic growth and social progress.

As Collins Nweze, Assistant Business Editor at The Nation, a Nigerian newspaper and media organisation, points out in his recent article, titled ‘The importance of fostering positive investment environment in Africa’, fostering such an environment anywhere in the world is particularly critical, as it unlocks potential by attracting investment and economic development as well as security and a myriad of other positive consequences that bring any country to the future.

Power Generation

Also, we have just seen in the press that Trafigura’s Ghana Power Generation Company (GPGC) has served notice to the government that it has commenced the process to implement the arbitration in its favour following the failure of the government to pay up its US$134 million judgement debt.

It is encouraging that the government issued, last week, a response stating that “The Government of Ghana remains committed to honouring its obligations under the Settlement Agreement with Trafigura with the view to bring this matter to a closure.”

https://www.graphic.com.gh/news/general-news/ghanas-finance-ministry-moves-to-settle-outstanding-debt-to-trafigura.html?highlight=WyJ0cmFmaWd1cmEiLCJ0cmFmaWd1cmEncyJd

These developments show that there is a way to bring our country to the future we want. Painfully to some, it does require careful regulation that balances the need for innovation with fair competition and investment protection.

Regulating industries like telecoms and energy is a complex task. We have seen how Europe is criticised for being overregulated. That is a problem they need to tackle, but a better problem than faulty regulation.

Priorities

Every administration should prioritise sectors that are not just economic engines (energy, construction, telecommunications, banking and others) but also integral to public infrastructure and national interest. Specialised and experienced regulators are needed to ensure that both sectors continue to thrive while safeguarding public interests.

After reading Nweze´s article I tend to agree with him that in Ghana, regulation of the telecom industry and, in my opinion, the energy sector as well, must walk a fine line between promoting innovation and ensuring fair play in a way that attracts the local and foreign investment necessary for long-term growth.

Regulators

Regulators must serve as technical experts, and lawmakers must establish broad policies. We need both and a proper division of responsibilities creates a system where regulators can resolve disputes and foster a competitive business environment.

Maintaining such an environment is key to attracting investment and driving growth. We have seen countries try other routes, but with little or no success. Short-term political goals often conflict with the long-term stability that industries like telecoms and energy need. This should be obvious to everyone, and I don´t need to provide ample examples on this.

Hence, independent regulatory bodies provide a necessary counterbalance, ensuring that the industries are shielded from political pressure that could harm their future prospects.

We have recently seen a country in Europe appointing a political figure as the governor of the country’s central bank,  a choice that seems shocking to this argument. In the telecom sector, a recent situation in Ghana serves as a clear example of the challenges regulators face.

There was a dispute between a mobile network operator (MNO) and a tower company when the MNO apparently failed to pay for infrastructure services. After months of negotiations and mounting unpaid debts, the tower company cut off access to its infrastructure, sparking regulatory intervention.

While the Ghanaian regulator ordered the reconnection of services, the underlying issue of unpaid debts, and its impact on investment, remained unresolved, it appears.

Such incidents highlight the importance of clear and robust regulations that protect both operators and infrastructure providers. Without fair and timely resolution of such disputes, Ghana, as any country would, risk damaging its investment climate, particularly for foreign investors, who rely on predictable, stable and transparent regulatory environments.

Energy sector

Similarly, the energy sector in Ghana faces its own challenges with regard to attracting investment. Like telecoms, energy infrastructure is costly to develop and maintain, requiring significant capital inflows.

Regulatory stability is key to ensuring that international investors are willing to commit long-term capital to projects like power generation and distribution.

In both sectors, the role of regulators in maintaining a balance between innovation and investment protection is critical. Ensuring that companies can operate in a fair, competitive environment while also protecting consumer interests is essential to sustainable growth.

Ultimately, we all know what fosters a favourable investment environment –clear regulations, transparency, and accountability are crucial to attracting long-term investments, stable prices, and good service quality for consumers. 

Innovation

Thus, Ghana’s regulators face the challenging task of maintaining a balanced and fair market that encourages innovation while protecting investments. I am of the idea that we have what it takes for Ghana to create an environment that fosters growth and ensure that vital sectors continue to support the nation’s economic and social progress.

Ghana’s economy is recovering; inflation now stands at 20.9 percent after hitting a high of 54 per cent in 2022. The cedi has seen some respite but trading around GH¢16 to the dollar.

Though foreign direct investment has seen a major drop, it is predicted to start picking up again. Despite these headwinds, the telecoms sector saw an entrant which came through the acquisition of an existing business.

This shows that Ghana‘s economy and specifically its telecom industry has significant room for growth. All that the industry requires is a much more robust and independent regulator that will be transparent and accountable.