Business
Ghana making changes to investment law to protect local businesses
Law makers in Ghana have revised investment laws to rectify the abuse of sectors reserved for citizens of Ghana by foreign investors, particularly in the retail and trading sectors.
The bill, when given presidential assent, will increase the minimum capital requirement of foreigners to engage in retail trade from US$300,000 to US$1 million in cash or goods in Ghana.
The Ghana Investment promotion Center (GIPC), the body responsible for the encouragement and promotion of investments put forward the amendment bill to its Act 478, to among other things protect the Ghanaian entrepreneur from unfair competition by unscrupulous foreign businesses.
The amendment, however, encourages foreign investors to engage in large scale value added trading activities that would not interfere with activities of the local traders.
Seeking to broadly position Ghana as the hub for business in West Africa, the bill also extensively ropes in all enterprises including mining and petroleum concerns that were not previously covered by the GIPC Act 478.
The law will also ensure increased efficiency in the coordination of investments, improved investment promotion strategies and a comprehensive dissemination of information on investment in Ghana.
The Bill is making it mandatory for all enterprises including Ghanaian businesses to register with the GIPC to enable the coordination of all activities of investors.
The Bill introduces a provision that requires Ghanaian partners in joint ventures to have not less than 30 percent equity participation and prohibits the transfer of that equity to a non-Ghanaian in order to avoid the circumvention of the higher foreign capital requirements.
Foreign companies are also prohibited from venturing into the production of packaging materials, manufacture of furniture and wood products, and manufacture of sanitary products.
They will also, subject to that provision, not engage in services connected to the oil and gas, and mining industries, as well as the manufacture of generic pharmaceutical products.
Foreigners will not be allowed to operate taxi or car hire services in an enterprise that has a fleet of not more that twenty-five vehicles. They will be prohibited from operating beauty salons or barber shops and prohibited from printing mobile phone credit vouchers.
The present law has been in existence for almost 15 years.
Source: The Africa Report