Ghana - 1-Openness to and Restriction on Foreign InvestmentGhana - Foreign Investment
Policies Towards Foreign Direct Investment
The Government of Ghana has no overall economic or industrial strategy that discriminates against foreign-owned businesses. The government has made increasing FDI a priority and acknowledged the importance of having an enabling environment for the private sector to thrive. Officials have announced plans to undertake regulatory and other reforms to improve the ease of doing business and make investing in Ghana more attractive. The government also plans to hold an annual business summit.
In the past, the government passed laws to encourage foreign investment and replaced regulations perceived as unfriendly to investors. The 2013 GIPC Act regulates investments in almost every sector, except minerals and mining, oil and gas, and the industries within Free Zones. Sector-specific laws further regulate banking, non-banking financial institutions, insurance, fishing, securities, telecommunications, energy, and real estate. In the oil and gas sector, these laws include specific local content requirements that could discourage international investment. Foreign investors are required to satisfy the provisions of the investment act as well as the provisions of sector-specific laws. New GIPC leadership has pledged to work in closer collaboration with the private sector to address investor concerns but there have been no significant changes to the laws as of yet. More information on investing in Ghana can be obtained from GIPC's website, www.gipcghana.com.
Limits on Foreign Control and Right to Private Ownership and Establishment
Ghana is one of the more open economies to foreign equity ownership in Sub-Saharan Africa. Most of its major sectors are fully open to foreign capital participation.
U.S. investors in Ghana are treated the same as any other foreign investor. All foreign investment projects must register with the Ghana Investment Promotion Center (GIPC). Foreign investments are subject to the following minimum capital requirements: $200,000 for joint ventures with a Ghanaian partner; $500,000 for enterprises wholly-owned by a non-Ghanaian; and $1 million for trading companies (firms that buy or sell imported goods or services) wholly owned by non-Ghanaian entities. Trading companies are also required to employ at least 20 skilled Ghanaian nationals.
Ghana’s investment code excludes foreign investors from participating in eight economic sectors: petty trading; the operation of taxi and car rental services with fleets of fewer than 25 vehicles; lotteries (excluding soccer pools); the operation of beauty salons and barber shops; printing of recharge scratch cards for subscribers to telecommunications services; production of exercise books and stationery; retail of finished pharmaceutical products; and the production, supply, and retail of drinking water in sealed pouches. Sectors where foreign investors are allowed limited market access include: telecommunications, banking, fishing, mining, petroleum, and real estate.
The 1992 Constitution recognized existing private and traditional titles to land; however, freehold acquisition of land is no longer permitted. There is an exception for transfer of freehold title between family members for land held under the traditional system. Foreigners are allowed to enter into long-term leases of up to 50 years and the lease may be bought, sold or renewed for consecutive terms. Nationals are allowed to enter into 99-year leases.
Oil and Gas
The oil and gas sector is subject to a variety of state ownership and local content requirements. The Petroleum (Exploration and Production) Act (2016, Act 919) mandates local participation. All entities seeking petroleum exploration licenses in Ghana must create a consortium in which the state-owned Ghana National Petroleum Corporation (GNPC) holds a minimum 10 percent stake. The Petroleum Commission issues all licenses, but exploration licenses must be approved by Parliament. Further, local content regulations specify in-country sourcing requirements with respect to the full range of goods, services, hiring, and training associated with petroleum operations. The regulations also require mandatory local equity participation for all suppliers and contractors. The Minister of Energy must approve all contracts, sub-contracts, and purchase orders above $100,000. Non-compliance with these regulations may result in a criminal penalty, including imprisonment for up to five years.
The Petroleum Commission applies registration fees and annual renewal fees on foreign oil and gas service providers, which, depending on a company’s annual revenues, range from $70,000 to $150,000, compared to fees of between $5,000 and $30,000 for local companies.
Per the Minerals and Mining Act, 2006 (Act 703), foreign investors are restricted from obtaining a small scale mining license for mining operations less than or equal to an area of 25 acres (10 hectares). Non-Ghanaians may only apply for industrial mineral rights if the proposed investment is $10 million or above. The Act mandates compulsory local participation, whereby the government acquires 10 percent equity in ventures at no cost. In order to qualify for a license, a non-Ghanaian company must be registered in Ghana, either as a branch office or a subsidiary that is incorporated under the Ghana Companies Code or Incorporated Private Partnership Act.
The Minerals and Mining Act provides for a stability agreement, which protects the holder of a mining lease for a period of 15 years from future changes in law that may impose a financial burden on the license holder. When investment exceeds $500 million, lease holders can negotiate a development agreement which contains elements of a stability agreement and more favorable fiscal terms. Parliament passed a new Minerals and Mining (Amendment) Act (Act 900) in December 2015. One significant provision of the new act requires the mining lease-holder to, “…pay royalty to the Republic at the rate and in the manner that may be prescribed.” The previous Act 703 capped the royalty rate at six percent. The Minerals Commission implements the law.
The National Insurance Commission (NIC) imposes nationality requirements with respect to the board and senior management of locally-incorporated insurance and reinsurance companies. At least two board members must be Ghanaians, and either the Chairman of the board or Chief Executive Officer (CEO) must be Ghanaian. In situations where the CEO is not a Ghanaian, the NIC requires that the Chief Financial Officer be Ghanaian. Minimum initial capital investment in the insurance sector is 15 million Ghana cedis ($4 million).
The National Communications Authority (NCA), under the Electronic Communications Act of 2008, regulates and manages the nation’s telecommunications and broadcast sectors. For licenses for 800 MHz spectrum for mobile telecommunications services, Ghana restricts foreign participation to a joint venture or consortium that includes a minimum of 35 percent indigenous Ghanaian ownership. Applicants that do not reach 35 percent Ghanaian ownership within 13 months from the effective date of the license risk severe penalties. In 2013, a portion of Ghana’s 4G Long-Term Evolution (LTE) bandwidth was auctioned under restrictions that prevented foreign-invested enterprises (FIEs) from being directly involved.
There are no significant limits on foreign investment or differences in the treatment of foreign and national investors in other sectors of the economy.
Other Investment Policy Reviews
Ghana has not conducted an investment policy review (IPR) through the OECD in recent times. UNCTAD last conducted an IPR in 2003.
The WTO last conducted a Trade Policy Review (TPR) in May 2014. The TPR concluded that the 2013 amendment to the investment law raised the minimum capital that foreigners must invest to levels above those specified in Ghana's 1994 GATS horizontal commitments, and excludes new activities from foreign competition. But it was determined that overall this would have minimum impact on dissuading future foreign investment due to the size of the companies traditionally seeking to do business within the country. An Executive Summary of the findings can be found at: https://www.wto.org/english/tratop_e/tpr_e/tp398_e.htm
Per the Ghana Investment Promotion Centre (GIPC) Act, all foreign companies are required to register with GIPC. Registration can be completed online at http://www.gipcghana.com. While the registration process is designed to be completed within five business days, the process often takes significantly longer. With the exception of the extractive industries, international companies are free to establish a business in Ghana without prior approval of GIPC. However, the Ghanaian business environment is unique and guidance can be extremely helpful. In some cases, a foreign investment may enjoy certain tax benefits under the law or additional incentives if the project is deemed critical to the country's development, which makes registration with GIPC beneficial.
Although registering a business is a relatively easy procedure, the process involved in establishing a business is lengthy, complex, and requires compliance with regulations and procedures of at least five different government agencies including GIPC, Registrar General Department, Ghana Revenue Authority (GRA), Ghana Immigration Service, and Social Security and National Insurance Trust (SSNIT).
According to the World Bank’s 2016 Doing Business Report, it takes 10 procedures and 72 days to establish a foreign-owned limited liability company (LLC) that wants to engage in international trade in Ghana. This is longer than the regional average for Sub-Saharan Africa. Foreign investors must obtain a certificate of capital importation, which can take 14 days. The local authorized dealer must confirm the import of capital with the Bank of Ghana, which will then confirm the transaction to GIPC for investment registration purposes.
Most companies or individuals considering investing in Ghana or trading with Ghanaian counterparts find it useful to consult with a local attorney or business facilitation company. The Embassy maintains a list of local attorneys which is available through the embassy’s Foreign Commercial Section (www.export.gov/ghana). Specific information about setting up a business is available at the GIPC website: http://www.gipcghana.com/invest-in-ghana/doing-business-in-ghana.html.
Note that mining or oil and gas sector companies are required to obtain licensing/approval from the following relevant bodies:
Ghana Investment Promotion Centre
Post: P. O. Box M193, Accra-Ghana
Telephone: +233 (0) 302 665125, +233 (0)302 665126, +233 (0) 302 665127, +233 (0) 302 665128/ +233 (0) 302 665129
Telephone: +233 (0) 302 244318254/ 244318252
Petroleum Commission Head Office
Plot No. 4A, George Bush Highway, Accra, Ghana
P.O. Box CT 228 Cantonments, Accra, Ghana
Telephone: +233  302 953392 | +233  302 953393
No. 9 Switchback Road, Cantonments, Accra
P. O. Box M 248
Telephone: +233 (0) 302 772 783 /+233 (0) 302 772 786 /+233 (0) 302 773 053
Ghana has significantly liberalized both inward and outward foreign investment policies, but it has no specific outward investment policy. It has entered into bilateral treaties with a number of countries to promote and protect foreign investment on a reciprocal basis. A few Ghanaian companies have established operations in other West African countries.Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.
Ghana Economic Development and Investment Law