This information is derived from the State Department's Office of Investment Affairs’ Investment Climate Statement. Any questions on the ICS can be directed to
Last Published: 8/1/2017

Capital Markets and Portfolio Investment

Private sector growth in Ghana has been constrained by financing challenges. Businesses continue to face difficulty raising capital on the local market. While credit to the private sector has increased, levels have remained stagnant over the last decade and high government borrowing has driven up interest rates beyond 25 percent and crowded out private investment.

Capital markets and portfolio investment are gradually evolving. For a long time, the government had become highly dependent on the domestic capital market to raise funds for its budget. Over the last several years, the domestic debt stock has shifted towards short term securities (maturities of one year or less), which now make up more than half of total marketable securities. The longest term domestic bonds are 10 years, but government plans to issue about $1 billion of 15-year domestic bonds between April to June 2017. Foreign investors are only permitted to participate in bond auctions with maturities of two years or longer. In 2016, foreign investors held about 23percent (valued at $3 billion) of the total outstanding securities. Authorities are working to expand the secondary market to improve liquidity.

The rapid accumulation of debt over the last decade has raised debt sustainability concerns. In 2007, only three years after reaching its highly indebted poor countries (HIPC) completion point, Ghana became the first sub-Saharan African country after South Africa to issue a Eurobond. The $750 million issuance was followed by additional Eurobonds in 2013 ($1 billion), 2014 ($1 billion), 2015 ($1 billion), and 2016 ($750 million) as global investors chased yields in frontier and emerging markets. Total public debt, roughly evenly split between external and domestic, now stands at nearly 73 percent of GDP. Following the government’s strategy of increasing demand for longer-dated bonds, short-term debt declined from a share of 45 percent in 2015 to 38 percent in 2016.

The Ghana Stock Exchange (GSE) has 40 listed companies, 4 government bonds and 1 corporate bond. Both foreign and local companies are allowed to list on the GSE. The Securities and Exchange Commission regulates activities on the Exchange. There is an 8 percent tax on dividend income. Foreigners are permitted to trade stocks listed on the GSE without restriction. There are no capital controls on the flow of retained earnings, capital gains, dividends or interest payments. The GSE composite index (GGSECI) has exhibited mixed performance.

Money and Banking System

Banks in Ghana are relatively small with the largest in the country, Ecobank Ghana Ltd., holding assets totaling about $1.3 billion. Out of the 33 banks in Ghana, 16 are domestically controlled and the remaining 17 are foreign-controlled. In total, there are 1,342 branches distributed across the ten regions of the country. Central bank regulations require existing banks to maintain a minimum capital base of 60 million Ghana cedis (USD 16 million), while new banks entering the market are required to have 120 million Ghana cedis (USD 32 million) in capital.

Overall, the banking industry in Ghana is well-capitalized with a capital adequacy ratio of 17.8 percent as of December 2016, which is above the 10 percent prudential and statutory requirement. As of December 2016, the non-performing loans ratios had increased to 17.3 percent – up from 14.9 percent in 2015 and 11.3 percent in 2014. Lending in foreign currencies to unhedged borrowers poses a risk and widely varying standards in loan classification and provisioning may be masking weaknesses in bank balance sheets. The Bank of Ghana is commissioning a special diagnostic audit to assess industry underwriting and credit evaluation practices, and has additional plans to strengthen the financial sector framework.

Recent developments in the non-banking financial sector indicate increased diversification, including new rules and regulations governing the trading of Exchange Traded Funds. Non-banking financial institutions such as leasing companies, building societies and savings and loan associations have increased access to finance for underserved populations, as have rural and mobile banking. Currently, Ghana has no “cross-shareholding” or “stable shareholder” arrangements used by private firms to restrict foreign investment through mergers and acquisitions.

Foreign Exchange and Remittances

Foreign Exchange

Ghana operates a free-floating exchange rate regime. The Ghana cedi can be exchanged for dollars and major European currencies. Investors may convert and transfer funds associated with investments provided there is documentation of how the funds were acquired. Ghana's investment laws guarantee that investors can transfer the following transactions in convertible currency out of Ghana: dividends or net profits attributable to an investment; loan service payments where a foreign loan has been obtained; fees and charges with respect to technology transfer agreements registered under the GIPC Act; and the remittance of proceeds from the sale or liquidation of an enterprise or any interest attributable to the investment. Companies have not reported challenges or delays in remitting investment returns. For details, please consult the GIPC Act and the Foreign Exchange Act guidelines.

Ghana's foreign exchange reserve needs are largely met through cocoa, gold and oil exports, government securities, foreign assistance, and private remittances. Fiscal problems and the fall in commodity prices have led to a steep depreciation of foreign reserves and inflation rates reached a six year high of 19.2 percent in March 2016. The ongoing IMF program should continue to provide Ghana with stronger fiscal stability as long as the Government of Ghana adheres to the program’s guidelines and recommendations.

Remittance Policies

There is a single formal system for transferring currency out of the country through the banking system. The Parliament passed the Foreign Exchange Act in November 2006. The Act provided the legal framework for the management of foreign exchange transactions in Ghana. It fully liberalized capital account transactions, including allowing foreigners to buy certain securities in Ghana (i.e. those with tenor of 3 years and higher). It also removed the requirement for the Bank of Ghana (the central bank) to approve offshore loans. Payments or transfer of foreign currency can only be made through banks or institutions licensed to do money transfers. There is no limit on capital transfers as long as the transferee can identify the source of capital.

In February 2014, the government announced limits to foreign exchange withdrawals in an effort to stem the deterioration of the cedi and prevent the dollarization of the currency. By June, these limits were lifted, making it clear that this technique will only be used as a short term measure to deal with urgent economic concerns. However, companies have expressed concerns over a requirement to now submit all invoices valued in cedis.

Sovereign Wealth Funds

Ghana’s only sovereign wealth fund is the Petroleum Holding Fund, which is funded by oil profits and flows to the Ghana Heritage Fund and Stabilization Fund. The Petroleum Revenue Management Act (PRMA), passed in 2011, spells out how revenues from oil and gas should be spent and includes transparency provisions for reporting by government agencies, as well as an independent oversight group, the Public Interest and Accountability Committee (PIAC). Section 48 of the Petroleum Revenue Management Act, 2011 (Act 815) requires the fund to publish an audited annual report by the Ghana Audit Service. The fund’s management meets the legal obligations. Management of the Ghana Petroleum Fund is a joint responsibility between the Ministry of Finance and the Bank of Ghana. The Minister develops the investment policy for the GPF, and is responsible for the overall management of GPF funds, consults regularly with the Investment Advisory Committee and Bank of Ghana Governor before making any decisions related to investment strategy or management of GPF funds. The Minister is also in charge of establishing a management agreement with the Bank of Ghana for the oversight of the funds. The Bank of Ghana is responsible for the day-to-day operational management of the Petroleum Reserve Accounts (PRAs) under the terms of Operation Management Agreement. MOFEP 2016 Annual Report Petroleum Funds

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Ghana Economic Development and Investment Law