- Ghana Ties 24-Hour Economy Incentives to Jobs, Investment and Productivity Targets
Ghanaian businesses seeking state incentives under the government’s flagship 24-Hour Economy Programme will have to demonstrate measurable improvements in employment, investment and productivity, as policymakers move to prevent tax concessions and other forms of support from becoming open-ended subsidies to private companies.
Augustus Goosie Tanoh, Presidential Advisor on the 24-Hour Economy initiative, said beneficiary companies would be assessed against agreed performance benchmarks before being allowed to continue enjoying incentives under the programme.
The approach represents an effort to introduce greater discipline into Ghana’s use of investment incentives, an area that has often attracted concern over whether tax exemptions and concessions generate enough jobs, exports, investment and productivity to justify their cost to the public purse.
“We agree with businesses on what targets we as a country believe they will achieve based on their own submissions about the business and their business prospects,” Mr Tanoh said on the sidelines of a Business Outsourcing Services Association of Ghana roundtable in Accra.
Employment creation is expected to be one of the principal indicators used in evaluating companies, alongside capital investment and productivity improvements.
The performance-based approach is significant because the government’s 24-Hour Economy strategy is intended to go beyond simply extending business operating hours.
Its broader objective is to encourage companies to invest in additional productive capacity, introduce multiple work shifts and expand employment across manufacturing, services, logistics and other value chains.
The policy challenge is ensuring that the fiscal incentives needed to encourage such investment do not become a permanent drain on government revenue.
Mr Tanoh said incentive packages would therefore include sunset clauses, generally limiting concessions to between four and five years.
“You can’t have incentives for the rest of the time. After four or five years, those incentives drop off so that support can be extended to other sectors and value chains,” he said.
That provision could become one of the most important features of the incentive architecture.
Tax holidays, import-duty exemptions and other concessions can lower the initial cost of investment, particularly in an economy where businesses face relatively high financing, energy, logistics and regulatory costs.
Every tax concession represents revenue government does not collect, potentially reducing resources available for infrastructure, education, healthcare and other public expenditure.
The economic case for offering such support therefore depends on whether the additional investment and employment generated outweigh the fiscal cost.
Under the proposed 24-Hour Economy framework, government is attempting to make that trade-off more explicit.
Companies receiving public support will be expected to demonstrate that the concessions are producing identifiable economic outcomes.
The government also plans to establish a public register identifying companies benefiting from incentives, while annual company reports will be used to assess whether businesses are meeting the conditions attached to those concessions.
“If a company receives incentives because it is investing significantly in the economy, that information will be on a public register and its annual reports will show whether it is meeting the requirements for which the incentives were granted,” Mr Tanoh said.
A public register could address one of the persistent criticisms of investment incentives in developing economies: that decisions over tax concessions can be opaque, leaving taxpayers unable to determine which companies are benefiting and what the economy is receiving in return.
If implemented rigorously, the model could shift Ghana’s incentive framework towards a more contractual relationship between the state and private capital.
Government would provide temporary fiscal support, while companies would commit to measurable employment, investment and productivity targets.
The effectiveness of that system, however, will depend heavily on monitoring and verification.
Job-creation targets, for example, would need to distinguish between genuinely additional employment and workers companies might have hired even without government support.
Investment commitments would similarly require verification, while productivity gains can be difficult to measure consistently across sectors with very different operating models.
The policy will therefore require clear baseline data, credible reporting standards and consequences where companies fail to meet agreed benchmarks.
Without those mechanisms, performance-based incentives risk becoming performance-based in name only.
Mr Tanoh said the ultimate objective is to ensure that economic returns generated by supported businesses exceed the cost of the concessions provided.
Further details of additional incentive packages are expected to be announced in the coming months.
Government may, however, face another challenge: some companies are apparently unaware of incentives for which they already qualify.
“We have met businesses looking for incentives and when we open the statute books, we discover they already qualify for some of the incentives. In many cases, they simply do not know,” Mr Tanoh said.
The 24-Hour Economy Secretariat’s workplace readiness programme is consequently helping businesses identify existing incentives and understand the requirements for accessing them, particularly companies preparing to expand investment or introduce shift-based operations.
Mr Tanoh argued that incentives remain necessary because of Ghana’s comparatively high operating costs.
“At this point in time, incentives play an important role in reducing costs and increasing competitiveness. It is something we must take very seriously,” he said.
Existing legislation also provides scope for large investors, particularly companies committing more than US$50 million, to negotiate tailored incentive arrangements under specified conditions.
That flexibility could help attract large-scale investment, but it also reinforces the need for transparency around the economic returns attached to preferential treatment.
For Ghana, the broader test is whether the 24-Hour Economy can turn fiscal incentives into an instrument for structural transformation rather than simply another mechanism for reducing corporate tax liabilities.
Well-designed concessions could encourage firms to invest in machinery, technology and additional shifts while lowering the marginal cost of creating formal jobs.
Poorly targeted incentives, however, could transfer public resources to businesses for investments they would have undertaken anyway.
The proposed sunset clauses, public register and performance reviews are therefore important beyond the individual companies receiving support.
Together, they amount to an attempt to establish a clearer bargain between government and business: temporary preferential treatment in exchange for measurable economic value.
Whether that bargain produces the industrial expansion and employment envisioned under the 24-Hour Economy will ultimately depend on enforcement.
The credibility of the framework will not be determined by how many incentives government grants, but by whether companies that receive them actually deliver the jobs, investment and productivity improvements promised and whether support is withdrawn when they do not.
