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Ghana FOREIGN INVESTMENTS AND ASSISTANCE
Despite efforts to increase private capital participation in
the Ghanaian economy, in the early 1990s foreign investments
continued to be sparse, and the economy relied heavily on aid and
loans. By 1991 the external debt exceeded US$4 billion, and it was
nearly US$4.3 billion in 1992, an amount equal to the level of
assistance provided by donors over the previous decade. The country
continued to experience trade and service deficits despite
increased exports.
Investment
Despite efforts to induce foreign investment in the economy,
interest has been restricted primarily to the mining sector.
Although at least eleven mining companies enjoyed some foreign
participation by 1990, the government had succeeded in creating
only two joint ventures in former state enterprises outside the
mining industry.
In 1985 the government adopted an investment code to encourage
foreign investment. It excluded the petroleum and mining sectors
for which the government introduced a separate code in 1986, it
offered special conditions for agriculture, manufacturing (for
export, using local raw materials, and for the production of
agricultural equipment, spare parts, and machine tools),
construction, and tourism. Agricultural projects were given a 45
percent corporate income tax allowance, a 100 percent allowance on
plant and equipment, and a 10 percent investment allowance. In
manufacturing and construction, the investment allowance was 7.5
percent, with depreciation and capital allowances of 40 percent and
50 percent, respectively, the latter two halved in subsequent
years. Finally, in tourism, the investment allowance was 7.5
percent, and the depreciation allowances were 50 percent for plant
and 20 percent for buildings, which also were halved in subsequent
years. In all cases, imports required for the projects were
exempted from duties. Additional tax reductions were granted to
projects located in Kumasi and Sekondi-Takoradi, while other areas
(excluding Accra-Tema) were given even larger reductions.
Some activities (retail and wholesale trade, except where
employed capital was over US$500,000; land transport; travel;
advertising; estate agencies) were reserved for Ghanaian-owned
firms. Foreign investors were required to supply a minimum of
US$60,000 in the case of partnerships with Ghanaians, or US$100,000
in the case of fully owned enterprises. Only net foreign exchange
earning ventures were allowed to be fully owned by foreigners. The
code guaranteed investments against nationalization, and where
disputes needed arbitration, they were to be settled through
existing international forums. Transfers abroad were allowed for
dividend payments, debt servicing, charges for technology
transfers, or liquidation of enterprises. Implementation of the
code and processing of applications by potential investors were
made the responsibilities of the Ghana Investment Center.
In mid-1993 Minister of Finance Kwesi Botchwey announced that
a new investment code had been presented to Ghana's parliament.
Under the new code, minimum foreign capital requirements for joint
ventures will be dropped from US$60,000 to US$10,000, and the
minimum for fully owned foreign enterprises will be reduced to
US$50,000. Companies established solely for export will be exempt
from the minimum capital requirement. The new code outlaws
government expropriations and provides a five-year tax holiday for
the agricultural and real estate sectors.
Data as of November 1994
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