Vice President of IMANI Africa, Bright Simons, has expressed concern over the Ghana Investment Promotion Center’s (GIPC) recent decision to seek taxpayer funding after its traditional revenue streams have significantly diminished.

In a tweet on X, Mr. Simons highlighted the unusual financial situation at GIPC, which is now struggling to sustain its operations and is turning to public funds as a solution.

Historically, GIPC has maintained a steady income by offering various services to businesses interested in investing in Ghana.

These services included issuing registration certificates, validating technology transfers, processing work permits, and providing investment data.

Mr Simons noted that the fees for these services were considerable. For instance, classifying a project as a “strategic investment” could cost an investor $10,000, while a technology transfer approval for a $5 million project might carry a fee of $55,000 annually.

These fees enabled GIPC to operate independently, generating nearly 11 million GHS from service fees in the second quarter of 2022, along with an additional 1 million GHS from Ghana’s development partners.

However, by the second quarter of 2024, GIPC reported no income from these sources. The agency has since relied entirely on about $35,000 from the central government to cover salaries and fund its programs.

Mr Simons suggested that this sudden revenue shortfall has forced GIPC to reconsider its self-financing model, leading the agency to advocate for a shift towards becoming primarily tax-funded.

The agency now argues that its operations provide substantial value to the nation, and therefore, the cost should be borne by taxpayers.

“The question is: what happened?” Simons asked, pointing to the confusion surrounding GIPC’s current financial predicament.

While Ghana’s fiscal challenges may have discouraged some investors, Simons implied that this alone does not fully account for the drastic decline in GIPC’s revenue.

Despite a reported 50% drop in investments between 2022 and 2023, the agency noted a 16% increase in inbound investment during the first quarter of 2024 compared to the same period in 2023.

Mr Simons hinted that investors might have become more cautious, choosing not to pay for services that do not significantly enhance their business prospects in Ghana.

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There is something very strange happening to the Ghana Investment Promotion Center (GIPC), the body set up to drive foreign investment into Ghana.

For many years, it derived most of its money from providing services to investors. Businesses hoping to set up in Ghana would pay for registration certificates, technology transfer validation, work permit processing, and data services, etc.

For example, if as an investor you wanted your project classified as a “strategic investment”, GIPC would take a cool $10,000. If you want them to give you some stats on investment trends, it would cost you ~$250. If you have a foreign partner that wants to transfer their technology to you for use in Ghana and GIPC estimates that the technology would be worth $5m, they will charge you $55,000 year. All these fees have allowed the agency a pretty nice existence for a while. But now something strange is happening.

In the second quarter of 2022, GIPC generated nearly 11 million GHS from these service fees and an additional ~1 million GHS from Ghana’s “development partners”. This year, care to know how much they generated from services or from donors in the second quarter?

The agency relied entirely on about $35,000 provided by the central government to pay salaries and run programs. GIPC is now trying to convince the government to forget about the whole concept of a self-financing investment promotion agency. It wants to be predominantly tax-funded. It says that citizens get a lot of value from its existence and should pay for the full privilege.

The question is: what happened? The reader’s first suspicion might be that Ghana’s fiscal crisis has scared away investors who are thus no longer paying GIPC because, well, they are not coming in the first place. But that is true only up to a point. GIPC says there was a drop by 50% in investments coming into Ghana between 2022 and 2023. That is a big drop but it is, obviously, not a drop to zero.

In fact, GIPC says that the first quarter of 2024 saw a 16% increase in inbound investment inflow compared to the same period in 2023. The tone of the agency aligns with the Finance Ministry: the economic recovery is strong and steady. So, where is the service fee income, then?

We could all hazard a guess. Investors may still be trickling in, but they are wising up. GIPC has been collecting fees and doing precious little to enhance the business environment. So, if you can avoid paying somehow, why bother?

Or, perhaps, they – the investors, I mean – make pledges, GIPC captures those as inbound investment, but they actually don’t step up? That could also account for the yawning gap between the record of hundreds of millions of dollars of inbound foreign investment and the searing fact of zero fee income at the country’s main investment agency.

One cue is to be found in a flurry of agreements GIPC signed with UAE/Dubai entities to boost investment into Ghana in 2021/22. The UAE is now Africa’s largest source of investment. Yet, in spite of GIPC’s wooing and frantic agreement signing, including full blown courtship with an obscure entity called X-Fusion, UAE investors have snubbed Ghana for virtually the whole of 2023 and 2024.

Instead of pushing to become a fully tax-funded agency, GIPC needs to review its bouquet of services carefully and ask itself: if we were savvy investors, would we pay for any of this?