The World Bank and the European Union (EU) Delegation to Ghana jointly hosted a one-day event on Ghana’s Business Environment on the 13th of March 2023. The event took place at the Labadi Beach Hotel in Accra, Ghana and was attended by over 120 private and public sector representatives with over 80 participants joining online. The event provided a forum to hear the views of international and domestic investors on the current business climate in Ghana, while offering stakeholders information on support provided by the World Bank Group to improve the country’s business climate.
H.E. Irchad Razaaly, the Ambassador of the European Union to Ghana, in his welcome remarks stated that the overall investment climate is not at a level expected of Ghana, a solid democracy, with robust institutions, and an anchor for regional stability.
This is reflected in the statistics showing stagnating investment inflows and companies abandoning their investment projects due to the cumbersome regulatory framework and moving operations to neighboring countries (such as Côte d’Ivoire and Senegal) where the regulatory framework is considered more conducive to investments. He added that since the adoption of the Ghana Investment Promotion Centre (GIPC) Act 10 years ago the total FDI flows have stagnated below US3bn dollars per year and European Union investments in the country declined. Despite an overall economic rebound in 2021, he noted that Ghana performed below average. Ambassador Irchad Razaaly said that as of 2021, European Union companies had disinvested a total of Euros 120 million from the country, mainly due to the challenging regulatory framework. He also underlined the importance of passing a modern, investor-friendly Ghanaian Investment Code (reforming the GIPC Act) to provide clarity on the legal and regulatory framework for FDI.
Mr Pierre Laporte, World Bank Country Director, Ghana, Liberia, Sierra Leone, after welcoming participants, said that the COVID-19 pandemic and spillover effects of the war on Ukraine had hurt investor prospects, which are exacerbated by recent macroeconomic developments in Ghana. These compounding events are jeopardizing businesses, and their associated jobs in Ghana, and leading to higher levels of investment policy uncertainty.
“More jobs are needed, especially in higher productivity industries and service sectors, which continue to be constrained by a challenging business environment, fiscal consolidation has had adverse effects on economic growth, and consequently private investment becomes more critical to sustain growth and maintain jobs and livelihood for Ghanaians” said Mr Pierre Laporte “Fiscal reforms therefore need to be accompanied by key reforms to improve the investment climate to help Ghana attract, retain, and grow more private investment he added.”
Hon Ken Ofori-Atta, Minister of Finance in his welcome statement, said the global business environment has changed dramatically over the last three years. He attributed this development to the implications of the Russian invasion of Ukraine and the lingering effects of the pandemic, had weighed heavily on the global growth prospects. Ghana, he noted was not spared this development, leading to an overall annual year on year inflation was 54 per cent in December 2022, compared to 12.5 percent in 2021. He pointed out that it is within this environment that Ghana in July 2022 sought assistance from the IMF.
“The IMF staff level agreement secured a policy-focused on restoring macroeconomic stability; bringing debt to sustainable levels in the medium term; supporting some structural reforms especially in energy sector,” said Hon Ken Ofori-Atta. “This decision would enable government to ensure that the poor and vulnerable are protected through this period and also help the country work alongside its development partners and the private sector to promote inclusive growth, create jobs for Ghana which has a high demography of young people.”
The challenge is therefore, to invest in training the country’s human capital. He pointed out that it was based on that the government has come up with comprehensive policy agenda which emphasizes that together with the private sector the government is anchoring Ghana’s medium-term growth on competitiveness, integration, adaptation, and innovation to raise the per capita GDP from $2500 to $4500 by 2030. He pointed out that despite several reforms carried out to improve the business environment, the government has been listening to feedback from the private sector to strengthen the consultative process, be it in the development and roll out of tax reforms, ensuring tax exemption and localization regime and promote a coherent private sector participation.
The Minister of Finance observed that it is in the wake of this feedback that the World Bank was called upon by government to assess and help inform the discourse on policy options to enhance investment generation and retention from domestic and foreign sources. He stated this assessment is already driving reform toward strengthening the core protections of investors, while simultaneously addressing barriers of entry to FDI.
Ms Hania Kronfol, Senior Private Sector Specialist, World Bank provided an overview presentation on Ghana’s investment climate and World Bank Group support on this agenda. She noted that although Ghana has been relatively successful in attracting FDI in the past, it is facing declining levels, and has struggled with persistently limited FDI diversification. She described World Bank Group support to reform different investment climate areas in Ghana through a variety of instruments (including lending and advisory), such as: supporting business legal and regulatory reform, strengthening investment promotion, improving quality infrastructure, facilitating access to finance; and facilitating access to serviced land for investors.
The morning’s proceedings continued with a panel discussion on business views on the investment climate in Ghana. The panel, moderated by the CEO of the Association of Ghana Industries (AGI), Mr Seth Twum-Akwaboah, aimed to discuss the key investment climate challenges faced by the international business community in Ghana, as well as concrete ways to address these challenges and implement reforms. Panelists included: Mr. Tjalling Yme Wiarda, General Manager, Ghana Netherlands Business and Culture Council; Mr. Grant Webber, President Ghana South Africa Business Council; Ms. Jean Ng, Regional Director, West & Central Africa Enterprise Singapore; Ms. Mary Kwarteng Darko, PwC – Associate Director, Tax Services; Mr. Hakim Ouzzani, Managing Director, Société Générale Ghana; Mr. Asad Nazi, CEO, Silver Star Auto Limited.
In reaction to questions on the uncertainty of Ghana’s economy and business climate, Hon. Ken Ofori Atta reminded participants of the challenging international macroeconomic and political circumstances that have exacerbated the challenging business environment in Ghana. He also compared Ghana with Japan of 40 years ago. He likened Ghana to a good, well-built car which, which unfortunately now has four flat tires. The government will need to replace or repair these tires so that Ghana can again continue down the road of economic growth and reach its high level of potential.
The event continued in the afternoon with two technical workshops based on areas of support provided by the World Bank Group to improve Ghana’s business environment. Two inter-related topics were covered: (i) the legal framework for investment facilitation and investment retention, including discussion of the Ghana Investment Promotion Centre (GIPC) Act; and (ii) business regulation and facilitation with a focus on how a bottom-up approach can help drive the regulatory reform agenda in a low-data context.
The first session included presentation by Ms. Daniela Gomez Altamirano, Private Sector Specialist, World Bank and Mr. Yofi Grant, CEO of the GIPC, and was moderated by Mr Yaw Afriyie, the Deputy CEO of the GIPC. Ms. Daniela Gomez Altamirano opened with a summary of key insights from a legal review conducted by the World Bank Group, benchmarking the GIPC Act against international good practices. She outlined recommendations for revisions to the GIPC Act to support a more business-friendly environment and spoke more broadly on good practices related to investment laws across the investment lifecycle including investment entry, protection, and linkages. Mr. Grant highlighted the long-term benefits of GIPC Act reforms which would benefit Ghana by diversifying FDI inflows for long-term, sustainable growth.
The final session, presented by Mr Jean Nicolas Arlet, Private Sector specialist, World Bank focused on the regulatory reform agenda through a bottom-up approach and drawing lessons learned for Ghana. It included discussion of the Business Regulatory Reform Unit (BRR) of the Ministry of Trade and Industry (MOTI). The presentation concluded with three questions for participant discussion:
How can private sector liaise more closely with the government of Ghana during the reform governance cycle?
Are all the right actors included in the regulatory reform governance cycle?
How can firm participation be boosted, particularly with regards to the e-engagement tools of the BRR-MOTI?
Participant exchanges included discussion of an important e-engagement tool hosted by MOTI, the BRR portal, available to the private sector for early engagement with regulators. There was consensus, however, that the portal was not widely known among the participating business community. Further socialization by MOTI would be needed to help increase awareness and use of this platform.
The event was carried out as part of the African, Caribbean and Pacific States (ACP) Business-Friendly Programme, funded by the European Union and the Organisation of African, Caribbean and Pacific States.
