President Mahama’s High-Stakes Gamble: Is Ghana Giving Away Too Much to Foreign Investors?
In past days, I have received numerous emails and calls from colleagues and friends seeking my perspective on President John Dramani Mahama’s government’s announcement to revise the Ghana Investment Promotion Centre (GIPC) Act, specifically the removal of minimum capital requirements for foreign investors. This policy shift, in my view, carries significant implications for Ghana’s economy and its broader investment landscape. Under the current framework, the GIPC Act 2013 (Act 865) stipulates the following thresholds:
- US$200,000 for joint ventures with at least 10% Ghanaian shareholding.
- US$500,000 for wholly foreign-owned firms.
- US$1,000,000 plus the employment of at least 20 Ghanaians for trading enterprises.
President Mahama has defended the proposed reform by highlighting Ghana’s comparative advantages of an increasingly educated workforce, strategic port infrastructure, strong energy potential, and a growing digital economy. He positions Ghana as “the next frontier for investment,” pointing to a relatively stable cedi, the dynamism of the fintech sector, and transformative policies such as the 24-Hour Economy initiative as evidence of the country’s readiness for expanded international partnerships. The pressing question remains: Is Ghana giving away too much?
My view is not necessarily but provided the reform is targeted, sequenced, and hedged with appropriate safeguards. Removing capital thresholds can indeed spur investment, particularly in technology, renewable energy, and specialized services where upfront capital requirements may not be the best determinant of long-term value. However, without strong institutional checks, this policy could risk crowding out local businesses, undermining employment protections, or opening loopholes for exploitative practices.
Importantly, Ghana’s gamble is not unprecedented. For example, Singapore allows private firms to register with as little as S$1 in paid-up capital, the United Kingdom sets a symbolic £1 minimum for private limited companies, while requiring higher thresholds only for public companies and Kenya has abolished most minimum capital requirements, retaining thresholds only in specific sectors. Similar reforms have been undertaken across the world with mixed outcomes. Globally, three broad models can be observed:
- Liberal Approach – Countries such as Bahrain, the UAE, Saudi Arabia, and Rwanda impose no minimum share capital for most sectors and permit 100% foreign ownership. This has significantly boosted their attractiveness to foreign investors.
- Regional Peer Approach – Common in Asia (e.g., Thailand, Indonesia, Malaysia, Vietnam), this model applies sector-specific thresholds rather than blanket rules, tailoring requirements to the type and scale of business activity.
- Mixed Control Approach – Some EU countries retain targeted restrictions, ownership limits, or FDI screening, primarily to safeguard national security or strategic industries.
By contrast, countries that maintain high thresholds such as Ethiopia, where foreigners must invest at least US$200,000 (or US$150,000 in joint ventures often deter smaller, innovative investors.
If Ghana keeps the US$1m trading carve-out as some official commentary suggests while scrapping capital floors for production, services, and tech, it can protect micro-retailers yet still open higher-value segments to SMEs. The reform must be coupled with fit-for-purpose screening beneficial ownership, track record, performance-linked visas/permits, and compliance audits like tax, labor, environment to ensures “open” doesn’t mean “anything goes.” Above all, after care is helping bona fide investors to expand and localize supply chains to delivers more jobs than any entry hurdle ever did, as Rwanda’s model demonstrates. This is why the problem may be as Ghana always enact good policies, but its sustainability becomes a problem. I think if this is enforced strategically there will be Increased Foreign Direct Investment (FDI) as wider range of foreign investors, which could lead to more diverse and numerous foreign investments. It will also enhance competitiveness, create jobs, aid in technology transfer and economic diversification. Rather than relying on static capital requirements, Ghana should tie investment approvals to time-bound performance milestones. These may include job creation targets, local procurement ratios, and compliance with tax obligations within 12 to 24 months. Work and residence permits should be contingent upon meeting these milestones, following the models of Kenya and other East African countries, thereby aligning investor incentives with national development goals.
Although it is difficult to forecast exact numbers, Ghana’s potential benefits can be framed in terms of direction and scale. In 2023, the GIPC recorded about US$650 million in FDI projects, with an expected 8,000 jobs. If Ghana follows international patterns, the removal of capital requirements could yield a single-digit to low-double-digit percentage increase in new foreign-owned company registrations within one to two years. This could translate into US$65–130 million in additional annual FDI inflows in the short run, alongside thousands of new jobs, especially in labor-intensive service sectors. The risks, however, include the costs of monitoring compliance to prevent fronting, and the possibility of increased competition for Ghanaian micro-retailers if safeguards on the trading sector are weakened. If carefully managed, however, the potential gains in employment, skills transfer, and sectoral diversification far outweigh the risks. For the purposes of emphasis, the most immediate concern will be the potential displacement of local micro-enterprises, particularly in retail and petty trading. This is why retaining higher thresholds in the trading sector is a necessary safeguard. Then the risk of fronting and round-tripping, where investors use local proxies to evade restrictions or create paper companies with no substantive operations. Care must be taken so that exploitation of Local Businesses as foreign companies might compete directly with small and medium-sized local enterprises, potentially leading to the displacement of domestic firms which has been the case of GUTA and the Nigerians.
To enforce these safeguards, Ghana must implement streamlined but rigorous screening mechanisms. This could involve the creation of a risk-based KYC/AML unit within the Ghana Investment Promotion Centre (GIPC), integrated with the Registrar-General, the Ghana Revenue Authority, Bank of Ghana, Minerals Commission, Environmental Protection Agency, and Immigration services. Investors in high-risk sectors should undergo beneficial ownership verification and competency tests, such as professional licensing requirements, to ensure sectoral expertise and reduce the risk of abuse. Protecting Ghanaian micro, small, and medium enterprises (MSMEs) must remain a core objective. A Market Impact Test should assess the potential effect of foreign entry into saturated micro-sectors, preventing displacement of local businesses. Support mechanisms such as supplier development programs and credit guarantees can facilitate partnerships between local firms and foreign investors, ensuring that FDI complements rather than replaces domestic enterprise. Finally, transparency and accountability are essential for building trust and ensuring compliance. Ghana should establish a public monitoring dashboard that reports quarterly on investment approvals, realized FDI, jobs created, local content ratios, and enforcement actions. Such transparency strengthens political buy-in, deters malpractice, and signals to both local and international stakeholders that Ghana’s investment climate is open yet responsibly managed.
In conclusion, President Mahama’s reform is ambitious and, if thoughtfully structured, has the potential to reduce bureaucratic hurdles, expand the investor base, and attract job-rich foreign direct investments. However, without clear sector safeguards, robust screening mechanisms, and effective post-entry enforcement, Ghana risks welcoming low-quality capital and inadvertently undermining micro-retailers, the very issues the previous capital thresholds were meant to address. Ultimately, whether this initiative proves a high-stakes gamble or a strategic recalibration or reset will depend less on the headline claim of “no minimum capital” and more on the details Parliament enacts and the capacity of institutions tasked with implementing them.
Dr. Bernard Tetteh-Dumanya is a distinguished Ghanaian financial economist and consultant with nearly three decades of experience spanning academia, corporate finance, and agribusiness. He has held pivotal roles at institutions such as UBA Ghana, SIC Financial Services, Empretec Ghana, and the Swiss International Finance Group, reflecting his profound understanding of global finance. Renowned for pioneering efforts in risk management, compliance, and corporate strategy, Dr. Tetteh-Dumanya has significantly contributed to Ghana’s financial landscape. His expertise encompasses venture capital, business and financial reengineering, and fundraising, playing a crucial role in the growth and development of numerous entities. Driven by a commitment to capacity development, he has provided consultancy services to a diverse array of local and multinational organizations, including GIZ, AGRA, SNV, DANIDA, and USAID. As the CEO of SGL Royal Kapita, he has introduced innovative investment services targeting Ghana’s agriculture sector, aiming to support farmers and agribusinesses in achieving financial stability and growth. Beyond his professional endeavors, Dr. Tetteh-Dumanya is an influential columnist, offering incisive analyses on Ghana’s economic policies and advocating for strategic financial mechanisms to enhance the nation’s economic sovereignty.
For inquiries, Dr. Tetteh-Dumanya can be reached at: mafioba@yahoo.com
