Head of the European Union (EU) Mission to Ghana, Ambassador Diana Acconcia, wants the country’s policies relating to foreign investments addressed.
Notable among the policies are the country’s tax laws as well as some regulatory requirements for foreign businesses by the country’s foremost investment agency, the Ghana Investment Promotion Centre (GIPC).
Speaking in an interview, Ambassador Acconcia noted that most foreign investors from the EU feel over-burdened by the tax regime in the country which mostly targets the formal sector alone and leaves out the informal sector.
“Ghana has an issue with revenue generation and we all want it to be resolved. But one thing we have realised is that – because it is difficult to tax the informal sector – the investors feel they are a target of taxation as tax rates have the tendency to change; and this change is what the investors don’t really like. It doesn’t give them the time and space to adapt,” she stated.
Ambassador Acconcia went further to express concerns about some aspects of the GIPC law which EU investors assert make the country’s business environment unfriendly.
Despite several complaints made about some aspects of the GIPC law by EU investors, steps to have them addressed by the appropriate bodies have not been taken.
“There are also some concerns about certain aspects of the investment climate in Ghana, particularly how certain policies can change at any time. These issues have been there for a long time. For example, the entry requirements in the GIPC law for certain kinds of investments is quite high for the SMEs in Europe which want to do business here. We have complained about this to the GIPC and we were told they are changing it, but we are still waiting for that,” she said.
Besides the concerns raised by the EU Head of Mission, several investors – both local and foreign – have expressed similar worry about some provisions in the GIPC law which they believe create an unfair business climate for them.
For instance, the Ghana Union of Traders Association (GUTA) has constantly been in a tussle with Nigerian traders over their engagement in retail trade, which they argue the GIPC law reserves for indigenes only – a situation that has created tensions between the two countries in recent years.
Other foreign investors have also complained of capital requirements in the law, describing them as exorbitant and a disincentive to investment in the country.
In response to the complaints by both local and foreign investors, GIPC has indicated that it is still in the process of making an amendment to its laws to reflect current practical conditions on the ground.
In an earlier comment made on the subject during a media interaction last year, Chief Executive Officer (CEO) of GIPC, Yofi Grant, admitted that certain provisions in the GIPC law are no longer conducive to the current investment climate.
“The truth is that we ourselves are concerned that there may be obstacles within the [GIPC] law to creating the sort of attractive investments that we want. Every country goes through reforms to ensure that, as they change their economic direction, they treat the legal framework to make it facilitate what they want – and that’s exactly what we are doing.”
“As new developments come in, we need to make sure that we are in consonance and not totally far away from those new developments. Just last year, Ghana became the host nation of the AfCFTA – and that in itself has an investment component that we had not taken cognisance of before we started the process of amending it.”
“So, now that we are clear that AfCFTA is going to go ahead, we need to ensure that our own investment laws are not compromised or do not suffer but are in consonance with what will be provided by the AfCFTA and ECOWAS, and other regional pacts that we have signed. We want to ensure that we are not disadvantaged in any way,” he said.
Presently, a revision of the country’s investment laws has been completed by GIPC and laid before Parliament for approval.
Generally, the revision seeks to further liberalize Ghana’s investment laws in order to attract more foreign investments.