Last week, the Ghana Investment Promotion Centre officially threw down the gauntlet, publicly providing an assurance that it would successfully oversee efforts to attract at least US$3 billion in Foreign Direct Investment in 2021. The promise was made during a breakfast meeting with corporate chieftains from the private sector who GIPC’s chief executive, Yofi Grant, wants to partner to achieve the target. The GIPC’s second quarter CEOs Breakfast Meeting was held under the theme: “Understanding Ghana’s Taxes and Exemptions Regime Towards Increasing Investor Confidence in the Business Environment.”.
In normal times a US$3 billion target would not be seen as hugely ambitious. But these are not usual times; the United Nations Conference on Trade and Development, UNCTAD, reckons that global FDI slumped by some 42 percent in 2020 due to the effects of COVID 19.
However, last year, Ghana attracted the third largest quantum of FDI in all of Africa, of US$2.65 billion, behind Egypt which attracted the most, and only marginally behind Nigeria, Africa’s most populous nation and the continent’s largest economy.
Instructively, while most other countries around the world, Africa inclusive saw their FDI inflows falling dramatically, Ghana’s inflows rose by 139 percent, indicating its ability to buck the global trend.
This was not simply a flash in the pan, Ghana got off to of bright start this year too, attracting some US$500 million in FDI during the first two months of the year. If this rate of attracting FDI inflows can be maintained for the rest of the year, GIPC’s target will indeed be met.
“With all the tax exemptions and amendments that have been put in place, especially during this era of global difficulty, Ghana has increased investor confidence in the business environment. And I am pleased to say that in 2020, total FDI into Ghana was in the region of $2.65 billion. It was the third-largest in Africa, after Egypt and Nigeria,” he explained.
“This is very commendable because, during the pandemic, the UNDP and UNCTAD predicted global FDI flows would shrink by 42%. And of course, Africa would have been the worst hit in that regard. So, it’s interesting that despite the pandemic, Ghana was still able to maintain attractiveness. And I believe the fact that we engage with the private sector is one of the reasons why there’s still confidence in the market.”
Actually, the timing of Ghana’s FDI inflows last year are as instructive as their quantum. After the inflows slumped in response to the initial panic of the international investment community in response to the initial outbreak of the COVID 19 virus, during most of the first half of the year, the inflows picked up in late June as both infection and fatality figures began to decline from their lower than originally anticipated peaks and consequently government began pulling back from its most severe socio-economic restrictions on movement and economic activity. Since then, inflows have risen back to their customary levels and even the spectre of a second wave of infections at the turn of the year has not stifled the renewed enthusiasm of international investors in Ghana’s huge economic potentials going forward.
Indeed, adding on local counterpart investment, the total investment registered through GIPC was even higher at the equivalent of US$2,796.49 million.
However the 139 percent rise in FDI for 2020 has to be taken into context; it was still less than the peak of nearly US$4 billion chalked up in 2018 – indeed in that year, total FDI was over US$6 billion when inflows into the upstream oil and gas industry, the solid minerals mining industry and free zones are included, these being separately registered with the Petroleum Commission, Minerals Commission and the Ghana Free Zones Authority respectively. However, FDI inflows slumped significantly in 2019 for reasons still unidentified and this is why the 2020 figures reflected such a sharp increase over the previous year despite the effects of COVID 19.
But government will be looking up to GIPC to do even better than its own target for 2021 and indeed the subsequent two years as well. The ambitious Ghana CARES programme envisages that private investment will provide GHJc70 billion of the GHc100 billion in total,programme financing over its three tear tenor, and considering the limited financial capacity of the local private sector, most of this would have to come from abroad.