In the face of the hardships presented by the COVID-19 pandemic, the roll out of distinct interventions by government has alleviated the harsh impact of the pandemic on foreign businesses. The extension of due dates for the filing of tax, reduction in tariffs on imported inputs, low interest loans and reduction in utility bills according to most businesses had played a significant role in dealing with the adverse impact of the pandemic on their activity.
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 according to the Ghana Investment Promotion Centre’s recent survey on the “Impact of Coronavirus (COVID-19) on Foreign Investors in Ghana” conducted between April 1-June 12, 2020.
Per the findings of the survey, a majority of businesses which represented 51.43 percent of the respondents had been severely impacted by the pandemic. In terms of revenue, 51.4 percent of the respondents sampled by the Centre had experienced losses in excess of 100,000 dollars whiles the rest pegged their losses between
100,000 dollars and less than 1,000 dollars.
The impact of the pandemic according to the survey was unraveled with the strict lockdown measures imposed worldwide – which caused a severe disruption to demand and supply value chains. This saw most companies experience payment and repayment delays, financial constraints and a reduction in demand for products and services which translated into revenue losses.
With regards to employment, 40 percent of foreign investors foresee a permanent reduction in their workforce in the ensuing months. Meanwhile most workers have had to stay home temporarily due the pandemic. Despite the downturn in activity experienced by various industries and businesses, sectors such as manufacturing, food processing, e-Commerce, agriculture and healthcare have remained resilient and present opportunity for growth and investments.
Moving forward, more interventions such as a reduction in the cost of data, further reduction in taxes for manufacturers, tax exemptions on Capital Expenditure as well as the re-opening of borders will be required to cushion businesses as the detrimental effects of the pandemic unfolds.
Impact of Covid-19 on FDI flows
The COVID-19 pandemic came at a time where global FDI had been experiencing a downward trend. Accordingly, the pandemic has exacerbated the decline in the flow of FDI. The United Nations Conference on Trade and Development has projected FDI to drop by 40 percent due to the disruptions to Global Value Chains (GVC) influenced by the lockdowns.
In the case of Ghana, the survey revealed a downward trend in FDI flow from the month of April to June 12, 2020 when the survey was completed. Within the period, the Ghana Investment Promotion Center registered 13 projects with an FDI value of 9.29 million dollars.
Regardless of the initial slowdown in FDI values as indicated earlier, a total of 21 projects had been registered by the end of the quarter, that is June 30, 2020 which saw the value of FDI shoot up to $207.98 million dollars. The development therefore places a positive outlook on the flow of FDI into the country and indicative of a better trend for economic recovery post COVID-19.
NB: Despite the intention to have a much bigger sample size for the survey, implications of the COVID-19 made it difficult for responses to be collected. However, we recognized a common trend with the responses.