The Chief Executive of the Ghana Investment Promotion Centre (GIPC), Yofi Grant has defended the centre’s recent decision to abolish the capital requirement for foreign businesses.
Under Section 28 of the GIPC Act, foreign individuals seeking to engage in joint ventures in Ghana were previously required to invest a minimum of $200,000, while those intending to enter the retail sector had to provide $1 million.
During his address at the second Ghana EU Business Forum in Accra, Mr Grant highlighted that this change is aimed at fostering a more competitive business landscape and attracting a greater influx of investors to Ghana.
“Firstly, there was a conceptual misunderstanding because that money remains the company’s money; it is not deposited anywhere. According to our records and the research we have conducted, nearly every foreign investor entering this market ultimately brings more than $500, 000,” he explained.
Grant further stated, “Therefore, this requirement should not have been an issue. However, it still poses a psychological barrier, especially when dealing with SMEs and SMIs in joint ventures. For instance, in a 50-50 joint venture, if the foreign partner must contribute at least $200,000, the local investor is also expected to match that amount. Unfortunately, many SMEs lack the necessary capital to invest in their businesses”.
Some local trading associations have criticized the review, viewing it as detrimental and antagonistic towards Ghana’s trading community.
They have also accused the government of enabling foreign, particularly Asian, entities to dominate the local retail market.
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