The advent of the novel Coronavirus pandemic has in many ways disrupted economic activities around the globe, it has disrupted global supply and demand chains, sent shockwaves through economies, thrown off-balance growth projections, increased public debts and fiscal deficits among others.
Ghana, just like the many nations around the globe has not been spared by the devastating effects of the pandemic, as every sector of its economy has had an unpleasant feel of the pandemic.
In this piece, we would look at how the pandemic has affected foreign investment flow into the country amid the pandemic and the initiatives or strategies taken by the country’s foremost investment agency – the Ghana Investment Promotion Agency (GIPC) – to rake in more foreign investment despite the pandemic.
GIPC records $785 million in FDI inflows for first half of 2020
Ghana, despite the adverse impacts of the Covid-19 pandemic made great strides in attracting foreign investments into the country.
The country is said to have recorded a total investment of $869.47 million with total Foreign Direct Investments (FDI) value amounting to some $785.62 million, received by the Ghana Investment Promotion Centre (GIPC) and the Petroleum Commission for the first half of 2020.
Speaking on the strong performance of FDI inflow to Ghana at a press briefing on Friday, October 23, Chief Executive Officer (CEO) of the Ghana Investment Promotion Centre (GIPC), Yofi Grant, asserted FDI inflows surprisingly showed rare strength in the final moments of the second quarter of 2020 to record the current value of $785.62 million.
Total FDI value recorded as at end of the first half of 2020 was quite commendable, especially given the fact that the United Nations Conference on Trade and Development (UNCTAD), had projected global FDI to fall by 40 per cent in 2020 driving the total value of FDI below $1 trillion for the first time since 2005.
Also, the total FDI value of $785.62 recorded for the first half of 2020 represented a 409 per cent increment compared to the $123.26 million recorded for the same period in 2019.
Giving a breakdown of the various components of the FDI received by the Centre, Mr Grant noted that, a total of 69 projects with an estimated value of $688.74 million had been recorded by the Centre, with total foreign component amounting to $627.52 million and local component amounting to $61.22 million.
The increase in FDI into the country placed a positive outlook on the flow of FDI and is indicative of a better trend for economic recovery post COVID-19.
Foreign investors in the country during the much more severe stages of the pandemic in the country were cushioned by government’s Covid-19 incentives.
Government’s incentives included the extension of due dates for the filing of taxes, reduction in tariffs on imported inputs, low interest loans and reduction in utility bills. This was to alleviate the harsh impact of the pandemic on foreign businesses.
Foreign investors operating in the country are estimated to have experienced an average revenue loss of $75,000 in the second quarter of the year due to the COVID-19 pandemic.
General trading sector leads FDI inflow with $246 million
Of the total investments recorded for the first half of 2020 – 69 projects in all with FDI value of $785 million – the services sector led the number of registered projects with 25 projects followed by the manufacturing and export trade sector with 21 and 11 projects respectively.
However, in terms of total investments per sector, the general trading sector recorded the highest amount of $246.05 million and was closely tailed by the mining exploration sector with $231.02 million.
The 69 projects are spread across six regions – Greater Accra, Central, Western, Eastern, Ashanti and Volta – and are to provide a total of 14,052 jobs for Ghanaians when fully operational.
UK the largest contributor to FDI inflows to Ghana
The United Kingdom (UK) was identified as the largest contributor of Foreign Direct Investments (FDI) to Ghana by the Centre when the Covid-19 pandemic was much more pronounced and visible in the country.
A report on the performance of FDI inflows for the first half of 2020, made available to norvanreports by GIPC, revealed that FDI value of $238.90 million out of the total $785.62 million recorded for the first half of the year was from the UK, making UK the country with the largest investment value share in FDI inflows to Ghana.
Following the UK in terms of FDI value share were the Netherlands and US with 191.50 million and 66.25 million respectively.
German Cooperation, GIPC sign €762,000 financing agreement to promote investment
GIPC in boosting investments into a Covid-19-stricken Ghana, signed an agreement worth €762,300 with the German Federal Ministry for Economic Cooperation and Development (BMZ) to mobilise investments and promote job-creating growth of enterprises in the country.
The cooperation between the two parties aims at addressing investment promotion challenges reinforced by the coronavirus pandemic to help maintain and create new jobs in Ghana.
The move become imperative for GIPC due to the need to maximise developmental support to retain investment, encourage follow-on investment and achieve greater local economic impact on the back of a decline in foreign direct investment around the world.
GIPC, just like most investment promotion agencies around the world focused primarily on keeping investors in the country, strengthening their resilience, and encouraging restructuring to preserve companies and safeguard jobs.
“This joint effort comes at a crucial time for Ghana in the global context, where governments are designing more strategic and innovative ways to promote investment and boost economic growth,” highlighted the Chief Executive Officer of GIPC, Mr Yofi Grant at the signing ceremony of the cooperation in December.
GIPC woos diasporas, targets $3 billion investments from diasporas
To increase foreign investments into the country, GIPC turned its attention to the African diaspora particularly Ghanaians in the diaspora to encourage them to invest in Ghana.
This saw the Centre organize a special Business Breakfast Meeting between it and African diasporas in which the Centre pointed out to them the various investment opportunities present in the country.
The Diaspora Business Breakfast Meeting held under the theme, Creating Connections – Building Ghana Together, was aimed at harnessing the network of opportunities within the diaspora and engage diasporas ready and willing to invest in the Ghanaian economy to support government’s ‘Ghana Beyond Aid agenda.’
In turning its attention to investments from diasporas, GIPC expected to rake in over $3 billion as investments from the African diasporas. The Centre’s projection was based on the annual remittances received formally into country.
Ghana, in 2019 alone, received $3.5 billion in remittances through formal channels. The country on average receives $2 billion annually in remittances.
Research has revealed, that the amount received could be much higher than the annually reported amount as a lot more remittances go through informal channels.
Ghana looks to investor-friendly reforms and digital transformation to drive post-pandemic recovery
GIPC also partnered with the Oxford Business Group (OBG) to overhaul its regulatory system and establish a one-stop shop for investors as part of broader efforts to boost FDI amid the pandemic.
In a Covid-19 Response Report (CRR) produced by both institutions, the report elaborated steps taken to enhance Ghana’s business environment by promoting transparency and accountability, which included the launch of an online delivery tracker documenting progress of government’s infrastructure projects.
The report among others, also examined issues that included the national push to improve food security and self-sufficiency, which became more important with the arrival of the pandemic and will be driven forward through large-scale agricultural modernization efforts.
The Covid-19 Alleviation and Revitalisation of Enterprises Support (CARES) programme, an expansive, Ghs 100 billion economic response with Ghs 70 billion investments from the private sector was another key focus of the report.
Investment law postponed
An investment law revised and presented to the Cabinet by GIPC for passage into law by Parliament was postponed to 2021.
Generally, the revisions sought to further liberalize Ghana’s investment laws in order to attract more foreign investments as the current investment law was drawn up in 1995 when there were very few liberalized developing economies to compete against Ghana.
But now, there are more than 100 ‘emerging/frontier’ markets in competition for Foreign Direct Investment.
The revisions also sought to facilitate greater local participation and content in industries so far dominated by foreign interests. But the strategy adopted in the draft revision of the investment code is focused more on facilitating increased local capacity and competitiveness rather than at trying to simply legislate compulsory greater local participation.
Confusion over Boeing service station in Ghana
The setting up of a plane service station in the country by American plane manufacturer, Boeing, in the country especially during the Covid-19 era would have been a great investment boost for the nation’s investment scene as well as a show of confidence in the country’s aviation sector.
But that was not to be, as assertions of Boeing setting up a service station in the nation’s capital to service planes on the African Continent was debunked by GIPC.
CEO of GIPC, Yofi Grant, speaking in a media engagement described as erroneous, assertions that sought to suggest that Boeing is readying itself to set up a service centre in the country.
“We’ve been in discussions with them over the possibility of setting up a centre in Ghana and that has been happening for quite sometime now, but its not like they are coming today or tomorrow.”
“The most important thing is that we are looking to bring global players into the Ghanaian market and interestingly there are many of them who are interested, and so what I would like to say is that if they (Boeing) are interested then yes we are open for business and look forward to not just Boeing but also any other major player in the aerospace industry in setting up in Ghana,” he told norvanreports when quizzed about the matter.
GIPC wins award for Best Investment Promotion Agency in West and Central Africa
GIPC was awarded the Best Investment Promotion Agency in West and Central Africa at the Annual Investment Meeting (AIM) Investment awards 2020 for the strong performance of FDI inflows to Ghana amid the pandemic.
It was the fifth consecutive year that GIPC had clinged the prestigious award.
Having been acknowledged five consecutive times not only endorses the Centre as being the best and finest among its peers, but also an endorsement for the diligent and notable efforts by the Government of Ghana to establish a conducive business environment comparable to none on the continent.
“This is a clear indication that we are on the right path to establishing Ghana as the preferred destination for Foreign Direct Investments (FDI) critical to the realization of a ‘Ghana Beyond Aid’,” said Yofi Grant, Chief Executive Officer of GIPC at the award ceremony held in Dubai.
GIPC won the 2020 year award for its submission of the P.E Power Ltd project valued at $551,000,000. The P.E Power project – a project in the energy sector – is a joint venture between Americans, British, Israeli, and Mauritanian investors.
The Annual Investment Meeting (AIM), an initiative from the UAE Ministry of Economy of the United Arab Emirates, is the World’s leading Investment-focused event aimed at enriching institutional, corporate and individual investors with relevant information for future investment decisions in high growth regions.
GIPC holds ‘Taste of Ghana’ event to promote investment
GIPC in partnership with the Ghana Tourism Authority (GTA) and Grow Unite Build Africa (GUBA) organized the maiden edition of the ‘Taste of Ghana’ cultural event that sought to promote Ghana’s arts, culture and heritage to prospective investors.
It sought to explore investment opportunities and woo prospective investors into various sectors of the Ghanaian economy.
The unique event projected the beauty of Ghanaian culture and heritage, bringing together Ghanaians and the African Diaspora. The event primarily fostered an informal networking session for all attendees, and encouraged the support and patronage of Made in Ghana products.
The event saw a rich display of Ghanaian culture focusing on kingship heritage from the Mantse Agbonaa in the Greater Accra Region to, Anloga in the Volta and Manhyia in the Ashanti Region. Also on display, were the various Ghanaian delicacies and African wears.
After a successful maiden edition, GIPC noted that it will be looking at institutionalizing the event to attract investors to invest in for instance the traditional music, food, clothing and beverage industry.
GIPC investment projects for 2021
Due to the Covid-19 pandemic, most of the investments projected registered by GIPC and to be undertaken in 2020 were not realized. But going into 2021 and with eased restrictions in the country, some investments projects to be overseen by the Centre include the following;
- EPL Power Operations Limited: This is a joint venture between the Netherlands and Ghana with total estimated cost of US$ 238 million. It entails operation and maintenance of bridge, power project and related activities.
- Chirano Gold: With estimated cost of US$ 231.05 million, this project entails the exploration of minerals.
- Matrix Industries: This project involves the manufacturing of paper products, aluminium products and packaging of products. The project is a Joint Venture between India and Ghana and is estimated at US$ 11.4 million.
- Rainbow Paints Limited: A Joint Venture project between Kenya and Ghana involved in manufacturing of paints, paints coating and its related products. Its estimated cost is estimated cost of US$ 4.2million.
- Magnate Precious Metals Limited: This is a Joint Venture (China and Ghana) project entailing the export of gold and other precious metals. The total estimated value is US$ 2.6 million.
- K-Frontiers Limited:The project activity entails general trading, I.T services and real estate development. It is a wholly owned Nigerian project with estimated cost of US$ 2 million.
- Karida Agro Trading Company Limited: The project involves the importation and sales of agro chemicals, farm machinery and general agriculture. The total estimated cost is US$ 1.5 million.
GIPC has noted that it remains cautiously optimistic about the flow of FDI to Ghana and will continue to assiduously pursue worthwhile investments for economic development as well as support Government initiatives such as the COVID-19 Alleviation and Revitalisation of Enterprises Support (CARES) Programme, to help bolster the Ghanaian economy towards recovery and remain resilient pre and post the Covid-19 pandemic.
