Reference – Evan Pickworth
GHANA’s 30% local participation and foreign investment registration laws are only weeks away from approval in Parliament, if there are no amendments, says the country’s top investment official, Mawuena Trebarh, who reports directly to the president.
The new laws will affect foreign investors looking to invest in one of the world’s fastest-growing economies. They will need to register with Ms Trebarh’s Ghana Investment Promotion Centre (GIPC) and ensure local participation as Ghana tries to boost local skills and create jobs by growing strategic industries and improving infrastructure.
The GIPC will “co-ordinate” investors’ activities.
Related empowerment legislation is likely to require 30% local participation for core workers, but it has been reported that in the energy sector, for example, local participation as high as 80% after five years has been proposed, and for 50% of management staff to be Ghanaian when a company starts operating.
“We can’t use the excuse there is not enough expertise in the country,” said Ms Trebarh.
She denies the registration process could hamper the free market as the aim is to expand the market rather than deny entry to foreign companies. She says the GIPC’s role is more about assisting foreign businesses throughout their ventures — guiding them through tax and customs requirements, providing connections and research, and encouraging reinvestment.
“It is about getting rid of red tape and rolling out the red carpet,” said Ms Trebarh.
She said Ghana’s approach to local participation was different from South Africa’s empowerment legislation and its intent to transform the post-apartheid economy, as the focus was on maximising local expertise and building a professional skills base.
“It makes good business sense and lends an opportunity for international investors to look at local partners and expand new opportunities,” she said.
This week, Ms Trebarh met top private sector business officials across insurance, banking, mining, tourism, information technology and media in South Africa. She plans to return soon for bilateral discussions with government agencies.
Ghana’s economy grew 7.3% in 2012, but inflation, a weakening cedi, corruption and poor infrastructure development remain major hurdles.
Under President John Dramani Mahama, who took up the mantle in July 2012 following the sudden death of John Atta Mills from illness, the new legislation ties in with an ambitious programme to improve the investment climate in Ghana.
The president wants to receive regular reports on progress by the GIPC and is establishing a technical committee across different departments such as tax, customs and the GIPC to ensure investment processes run smoothly.
“The president takes this very seriously,” said Ms Trebarh.
The programme includes tax holidays of up to 10 years, tax credits for small businesses, investment guarantees and custom duty exemptions on imported industrial plant, machinery and parts. Ghana’s corporate tax rate, at a maximum of 25%, is competitive compared with South Africa’s 40%.
A Ghana-South Africa business forum is planned for later in 2013 to cement ties and encourage more collaboration with African business partners. About 50% of Ghana’s exports go to South Africa. In 2010, there were 11 South African businesses in Ghana, and now there are 40.
Ghana will also host a pavilion at the Southern African International Trade Exhibition (Saitex) and Africa’s Big Seven (an event for the food and beverage industry) taking place from June 30 to July 2 at Gallagher Convention Centre in Midrand, Gauteng. Several prominent Ghanaian companies will unite under a “Ghana Means Business” banner, exhibiting a range of food and beverages.
Services companies exhibiting at Saitex will include business, tax and financial services providers, organisational development consultants, petroleum forecourt retailers, and firms involved in water and sanitation, mining, building and construction services.
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