Ghana’s Economy one of the fastest growing in 2011
Ghana, which recently graduated to a lower middle-income economy has an economic environment that is stable, prudently managed, with strong regulatory frameworks and sound financial system.
In 2008, GDP growth in Ghana was 7.2 percent, 5.9 per cent in 2009, and 6.5 per cent in 2010. For 2011, Ghana is projected to expand its economy by 13.4 per cent mainly as a result of the commencement of oil production, with an expected drop to 10 per cent in 2012. Monetary policy in Ghana is also firm with well regulated banking and financial systems. The prime rate is currently 13.5 per cent with efforts underway to lower it and create room for credit expansion to small and medium sized businesses.
Ghana has a reasonably strong infrastructure base. Energy generation is targeted at 5,000MW by 2015 and additional investments are underway to make Ghana a net energy exporter through the West Africa Power Pool project. Also, the telecommunication infrastructure is robust and fast-expanding, and road networks are fairly good although additional investments are needed to expand the road system and upgrade to all-weather roads throughout the country. In respect of rail networks, this is being modernized but more investments are required, particularly to link the network with our neighbouring countries – Burkina Faso, Togo, Cote d’Ivoire. The ports and harbours have also been modernized to increase throughput and serve land-locked neighbourin countries. There is also the need for the development of inland water transportation systems.
Ghana was ranked by the International Finance Company in its 2009 Doing Business Report as the best place to do business in West Africa and the Commonwealth Business Council in its 2008 African Business Award recognized Ghana for having “the best investment climate” in Africa.
Ghana is Open to Foreign Investment
Attracting foreign direct investment continues to be a priority for the Government of Ghana. The Government of Ghana recognizes that attracting foreign direct investment requires an enabling legal environment, and has passed laws that encourage foreign investment and replaced some that previously stifled it.
The Ghana Investment Promotion Center (GIPC) Act, 1994 (Act 478), governs investment in all sectors of the economy except minerals and mining, oil and gas, and the free zones. Sector-specific laws also regulate banking, non-banking financial institutions, insurance, fishing, securities, telecommunications, energy, and real estate. Foreign investors are required to satisfy the provisions of the investment act as well as the provisions of sector-specific laws.
The only pre-condition for foreign investment in Ghana is financial; the GIPC requires foreign investors to satisfy a minimum capital requirement. Once this is met and all necessary documents submitted, investments are supposed to be registered within five working days.
The minimum capital requirement is, however, not applicable to portfolio investment, enterprises set up for export trading (operating inside or outside of Free Zones), or branch offices. Other regulations and procedures include those of government agencies such as the Registrar General’s Department, the Internal Revenue Service (IRS), Ghana Immigration Service, and the Social Security and National Insurance Trust (SSNIT) and where applicable the Environmental Protection Agency.
The principal law regulating investment in minerals and mining is the Minerals and Mining Act, 2006 (Act 703), which amended the 1984 and 1994 laws. It addresses different types of mineral rights, issues relating to incentives and guarantees, and land ownership. The Minerals Commission (www.mincomgh.org) is the government agency that implements the law. Non-Ghanaians may invest in mining, except in small-scale (artisanal) mining, which is reserved for Ghanaians.
The Petroleum Exploration and Production Law, 1984 (PNDCL 84), known as the Petroleum Law, regulates oil and gas exploration and production in Ghana. The Ghana National Petroleum Corporation (GNPC) (www.gnpcghana.com) is the government institution that administers this law.
Conversion and Transfer Policies
Ghana operates a free-floating exchange rate policy regime. Ghana has no restrictions on the transfer of funds associated with investment, provided documentation about how the funds were acquired is available.
Ghana's investment laws guarantee that investors can transfer the following in convertible currency out of Ghana: dividends or net profits attributable to the investment; payments in respect of loan servicing where a foreign loan has been obtained; fees and charges in respect to technology transfer agreements registered under the GIPC law; and the remittance of proceeds from the sale or liquidation of the enterprise or any interest attributable to the investment.
Expropriation and Compensatio
Ghana’s investment laws provide guarantees against expropriation and nationalization, although the 1992 Constitution provides some very limited exceptions to these laws where it is in the interest of national defense, public safety, public order, public morality, public health, town and country planning or the development or utilization of property in a manner to promote public benefit after agreement is reached for the prompt payment of fair and adequate compensation.
Ghana's legal system is based on British common law. The judiciary comprises both the lower courts and the superior courts. The superior courts are the Supreme Court, the Court of Appeal, and the High Court. There is also a growing interest in alternative dispute resolution, especially as it applies to commercial cases. The judiciary also operates "fast-track" (computerized) high courts to expedite action on some cases. In March 2005, the government established a commercial court to try commercial claims.
The Court also handles disputes involving commercial arbitration and other settlement awards, intellectual property rights, including patents, copyrights and trademarks, commercial fraud, applications under the Companies Code, tax matters, and insurance and re-insurance cases. A distinctive feature of the commercial court is the use of mediation or other alternative dispute resolution mechanisms, which are mandatory in the pre-trial settlement conference stage.
Ghana signed and ratified the Convention on the Settlement of Investment Disputes in 1966, which allows for arbitration under ICSID – the International Center for the Settlement of Investment Disputes. Ghana is also a signatory and contracting state of the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "New York Convention").
Right to Private Ownership and Establishment
Ghana’s laws recognize the right of foreign and domestic private entities to own and operate business enterprises and private entities may freely acquire and dispose of their interests in Ghana. When a foreign investor disposes of an interest in a business enterprise, the investor is entitled to repatriate his or her earnings in a freely convertible currency.
Protection of Property Rights
The legal system recognizes and enforces secured interest in property, both chattel and real. The protection of intellectual property is evolving. Since December 2003, Ghana’s Parliament has passed all six bills designed to bring Ghana into compliance with WTO TRIPS (Trade-Related Aspects of Intellectual Property Rights) requirements. The new laws are: Copyright, Trade Marks, Patents, Layout-Designs (Topographies) of Integrated, Geographical Indications, and Industrial Designs. Implementing legislation necessary for fully effective implementation has not been passed.
Efficient Capital Markets and Portfolio Investment
Private sector growth in Ghana has been cons trained by limited financing opportunities for private investment. Banks in Ghana are relatively small with the minimum capital base for banks in Ghana established at 50 to 60 million Ghana Cedis.
Among the non-banking financial institutions are leasing companies, building societies and savings and loan associations. In addition, the Ghana Stock Exchange (GSE) is one of the best performing bourses in emerging markets. It is open to all foreign buyers, subject to some limited restrictions. Both foreign and local companies are allowed to list on the GSE. The Securities Regulatory Commission regulates the activities on the Exchange.
Ghana has a large pool of relatively inexpensive unskilled labor. English is widely spoken. Labor regulations and policies are generally favorable to business.
Labor management relations are fairly good. A revised Labor law (Act 651) passed in 2003 became effective in March 2004. The new law unified and modified the old labor laws to bring them into conformity with the core principles of the International Labor Convention, to which Ghana is a signatory.
Under the 2003 Labor Law, the Chief Labor Officer issues collective bargaining agreements (CBA) in lieu of the Trade Union Congress (TUC). Also, instead of the labor court, a National Labor Commission has been established to resolve labor and industrial disputes. Finally, the Tripartite Committee that determines the minimum daily wage now has legal backing and public and private employment centers can be created to help job seekers find work.
There is no legal requirement for labor participation in management. However, joint consultative committees in which management and employees meet to discuss issues affecting business productivity are common. There are no statutory requirements for profit sharing, but fringe benefits in the form of year-end bonuses and retirement benefits are generally included in collective bargaining agreements.
Foreign Trade Zones/Free Ports
To make it easier for free zone developers to acquire the various licenses and permits to operate, the Ghana Free Zones Board (www.gfzb.com) provides a "one-stop approval service" to assist in the completion of all formalities. Under the law, a company qualifies to be a free zone company if it exports more than 70 percent of its products. Among the incentives for free zone companies are a ten-year corporate tax holiday and zero duty on imports. Free Trade Zones were established in May 1996. The law also permits the establishment of single factory zones outside or within the areas mentioned above
Major Foreign Investors in Ghana
Major foreign investments in Ghana are mainly in mining, off-shore oil exploration and manufacturing. Great Britain is Ghana's leading foreign investor with direct investment exceeding USD 750 million. In terms of registered projects, India is one of the largest foreign investor country in the Ghana.
Trade between Ghana and India
Over the years trade between Ghana and India has been in India’s favour. Between 2001 and 2002 imports from India amounted to US$ 88 million. From 2002 to 2003, the figure increased to US$ 128 million. Total trade for 2003-04 was USD 212.8 million, and as of 2007-208 trade as reported had short up to US$947.62 million, Total trade for 2010-11 is 178.62 million US$, with India’s share of it as US$807.14.