Investment opportunities in Ghana

Ghana is one of the best places to do business in West Africa. The country has emerged as a recognized business destination for investors seeking favorable business conditions. The country's government is committed to pursuing policies that reduce the overall cost of doing business in order to increase investor confidence in Ghana.

According to the UNCTAD World Investment Report 2022, foreign direct investment (FDI) inflows into Ghana increased from US$1.88 billion in 2020 to US$2.61 billion in 2021, driven by extractive industries projects. In 2021, FDI volume reached US$41 billion. Ghana's largest investment economies are South Africa, the Netherlands, France, Mauritius and China. In 2021, the main investors were Singapore, Australia, India and China. FDI flows were mainly directed to the services sector, oil and gas, manufacturing, trade, construction and agriculture. Ghana holds annual investment summits to position itself as a hub for foreign investors in West Africa. COVID-19 Mitigation and Enhancement of Relief for Enterprises (CARES) Initiative — program worth 16 billion US dollars for 2020-2024 — aims to attract investment in the agribusiness, fertilizer, automobile assembly, aluminum and steel industries through fee waivers, specific loans and public-private partnerships (Coface).

Ghanaian authorities are making efforts to simplify complex and time-consuming procedures for starting a business, while offering tax incentives. In addition, Ghana is one of the most democratic countries in Africa and has a large inexpensive labor force, a significant agricultural base, abundant natural resources and stable institutions. It is also one of the most open economies to foreign ownership in the region. Major ongoing reforms include dematerialization of tax, legal and business registration processes. In addition, the issuance of construction permits, operating permits and identification numbers is being automated and digitized. In addition to these reforms, a program to improve the efficiency of the energy sector was initiated. In January 2022, Ghana was removed from the EU gray list of countries with a high risk of money laundering.

Strengths of investing in Ghana:

• more developed infrastructure compared to most West African countries;
• political s tability (1st place in the Global Peace Index in West Africa — IEP, 2020) and sustainable growth;
• skilled and trained workforce;
• significant consumer base with an emerging middle class;
• a hub for opportunities in other West African countries and access to other ECOWAS countries;
• 100% foreign ownership allowed;
• expanding stock market

Government measures to stimulate FDI

Investment incentives vary slightly depending on the law under which the investor operates. For example, while all investors operating under the Free Zones Act are entitled to a ten-year corporate tax holiday, investors operating under the GIPC (Ghana Investment Authority) Act are not. Tax benefits vary depending on the sector in which the investor operates. All laws relating to investment contain certain incentives. The GIPC Act allows import and tax exemption for inputs, equipment and parts imported for investment purposes. Chapters 82, 84, 85 and 89 of the Customs Harmonized Commodity Tariff Code establish a zero rate for these types of products. The Ghanaian tax system is replete with tax incentives that significantly reduce the effective tax rate. Minimum incentives are specified in the GIPC Act and are not applied in an ad hoc or arbitrary manner. Once an investor registers under the GIPC Act, he is entitled to the benefits provided by law. The government has the right, at its discretion, to provide the investor with additional exemptions from customs duties and tax benefits beyond the minimum specified in the law.

Free trade zone (FTZ) companies have a 10-year exemption period, after which they pay 15% corporation tax on export sales.

Discount is available to production companies located outside Accra and Tema. In the regional capitals (except Accra and Tema) the rebate is 75% of the standard corporate tax rate of 25%, and in all other places it is 50% of the standard tax rate.

Tax holidays are provided from the beginning of activity in the following cases:

• Agricultural enterprises, agro-processing and waste processing companies, rural banks and venture capital companies pay a corporate tax of 1% for a period of 5 to 10 years.
• Real estate companies pay a corporation tax of 1% for five years on income from certified affordable housing, subject to certain restrictions.
• Entrepreneurs aged 35 and under are given a five-year corporate tax holiday if they are involved in a specific business. Businesses that are eligible for exemption include manufacturing, ICT, agro-processing, energy production, waste management, tourism and creative arts, horticulture and medicinal plants. Such entrepreneurs also enjoy discounts on corporate tax rates ranging from 5% to 15% for five years after the tax holiday.
• Private universities are exempt from corporate tax if they reinvest 100% of their profits in the university's activities.
• Employers receive an additional tax deduction for hiring new graduates into their workforce, which ranges from 10% to 50% of such employees' wages.

Sectors for investment in Ghana

Mining sector

Ghana's mining industry accounts for 5% of the country's GDP and minerals account for 37% of total exports, of which gold accounts for over 90% of total mineral exports. Thus, the main focus of Ghana's mining industry is gold. The country is the second largest gold producer in Africa. Ghana is also a major producer of bauxite, manganese and diamonds. There are 23 major mining companies producing gold, diamonds, bauxite and manganese, as well as more than 300 registered small-scale mining groups and 90 mining support services companies.

According to the Constitution of Ghana, all minerals in their natural state, wherever found within the territory of Ghana, are the property of the Republic of Ghana and are held in trust by the President for the benefit of the people of Ghana. The Government of Ghana has the right of first refusal to purchase all minerals in the country, which is exercised through the Minister of Lands and Natural Resources.

The mining industry is regulated by the Minerals Commission (MRC), which operates under the Ministry of Lands and Natural Resources. The industry is regulated by the Minerals and Mining Act 2006 (Act 703 Minerals and Mining Act) and related regulations. The Minerals and Mining Act gives the Minister broad powers to classify or reclassify land for exploration and to negotiate, grant, cancel, suspend or renew mineral rights. The law applies equally to all investors, whether Ghanaian or foreign, except in cases of small-scale mining.

Oil and gas production

Oil and gas exploration in Ghana began in 1896. Active exploration in the years leading up to early 2000 was led by the Ghana National Petroleum Corporation (GNPC). In 2001, the government decided to move away from this approach, opening up exploration opportunities to international oil companies and private investors. In 2004, the government issued offshore oil exploration and production licenses (called blocks) to various international companies. In July 2007, Tullow Oil and Kosmos Energy discovered commercial quantities of oil in the western region of Ghana, calling the area the Jubilee Field. Ghana's energy sector has expanded significantly since its opening. Production at the field began in 2010 and has since grown from 7,000 barrels per day in 2009 to gross production of 78,000 barrels per day in 2018. Ghana's crude oil production is projected to reach 500,000 barrels per day by the end of 2024, exceeding the current average production level of 110,000 barrels per day.

The oil and gas sector faces different requirements in terms of state ownership and local content. The Petroleum (Exploration and Production) Act 2016 (Act 919) requires local participation. All entities applying for petroleum exploration licenses in Ghana must form a consortium in which the government-owned Ghana National Petroleum Corporation (GNPC) will hold a minimum 15% book interest and local equity will own a minimum 5%. All licenses are issued by the Petroleum Commission. Exploration licenses must also be approved by Parliament. In addition, local content rules define domestic procurement requirements for the full range of goods, services, hiring and training associated with petroleum operations. The rules also require local shareholder participation for all suppliers and contractors. These requirements are increasingly being applied to further activities in this sector. The Secretary of Energy must approve all contracts, subcontracts, and purchase orders valued at more than $100,000. Failure to comply with these rules may result in criminal penalties, including up to five years' imprisonment. The Petroleum Commission charges registration fees and annual renewal fees to foreign oil and gas service providers, which, depending on the company's annual revenue, range from US$10,000 to US$150,000, compared to US$8,000 to US$140,000 for local companies.

Under the Minerals and Mining Act 2006 (Act 703), foreign investors are prohibited from obtaining a small-scale mining license in an area less than or equal to 25 acres (10 hectares). The law requires local participation, under which the government acquires a 10% interest in all mineral rights of the enterprises at no cost. To qualify for any mining license, a foreign company must be registered in Ghana either as a branch or as a subsidiary registered under the Companies Act of Ghana or the Corporate Private Partnership Act. Non-Ghans can only apply for industrial mineral rights if the proposed investment is US$10 million or more. The Minerals and Mining Act provides for a stability agreement that protects the holder of a 15-year mining lease from future changes in legislation that could impose a financial burden on the license holder. When investments exceed US$500 million, tenants can enter into a development agreement that contains elements of a stability agreement and more favorable financial terms.

The Minerals and Mining Act 2015 requires a mining lessee to “…pay royalties to the Republic at the rate and in such manner as may be prescribed”. The Minerals Commission implements the law. In December 2020, Ghana passed the Minerals and Mining (Local Content and Local Participation) Regulations 2020 (LI 2431) to expand specific provisions of the mining regulations that require mining entities to source goods and services from local sources. The Minerals Commission periodically publishes an updated list of local purchases. As of 2023, this list is in its fifth edition and includes 50 categories of goods and services with a number of requirements.

Oil and gas refining

The National Petroleum Authority (NPA) is the legislative body that regulates, controls and monitors the petroleum refining industry in Ghana to ensure efficiency, growth and satisfaction of stakeholders.

Several oil marketing companies operate in Ghana, including Chase Petroleum Ghana Limited, Agapet Oil Company Limited, Oando Ghana Limited, Vivo Energy Ghana, Total Ghana Limited and Ghana Oil Company Limited, among others.

The Ministry of Energy is responsible for the development, monitoring and evaluation of policies, programs and projects in the energy sector in Ghana. The Ministry is also implementing the government's National Electrification Program, the goal of which is — to ensure reliable power supply to all populated areas for 30 years. The Ministry has a divided structure with separate operational functions for generation, transmission and distribution of electricity.

The state-owned company Volta River Authority (VRA) produces electricity in the country. It owns and operates Akosombo Hydroelectric Power Station, Kpong Hydroelectric Power Station and TAPCO, located in Aboadse. VRA is also a minority joint partner with the private company TAQA, which owns and operates the Takoradi International Power Company thermal station, also located in Aboadze.

Bui Power Authority (BPA), another government agency, is implementing the Bui hydroelectric project, and several private independent power producer (IPP) projects have been licensed and are in various stages of development. The Energy Commission (EC) is responsible for technical regulation of the electricity subsector, including licensing of operators. In addition, the EC advises the Minister of Energy on issues related to energy planning and policy.

The Public Utilities Regulatory Commission (PURC) is an independent regulator responsible for economic regulation of the energy sector, specifically approving rates for electricity sold by distribution companies to the public. Its functions also include monitoring the quality of services provided to electricity consumers.

Information and communication technology (ICT) sector

ICT has been a critical component of Ghana's economic growth in recent decades. The country has created a stable environment for innovation and ICT development under the supervision of the Ministry of Communications, which is responsible for promoting the development of reliable and cost-effective world-class communications infrastructure and services, and the National Communications Authority (NCA), which are the main regulators of the communications industry. The country's ICT industry includes telecom operators, Internet service providers, very small aperture terminal (VSAT) operators, software manufacturers, broadcasters, ICT educational institutions, internet cafes, etc. Infrastructure base of the sector includes licensed gateway operators, submarine cable networks, privately licensed VSAT systems, fixed wire networks, wireless mobile operators, public telephone systems, telecentres, dedicated data networks, public distribution networks (cable, television, DSL, etc. .), backbone Internet networks throughout the country, public access points and broadcast systems.

Telecommunications subsector

Ghana's telecommunications sector has experienced significant phases of growth over the past two decades. The major players in the telecom sub-sector are MTN, Vodafone and AirtelTigo. MTN has a large market share. Among other players — Glo.

Broadcast subsector

The broadcast sub-sector has also experienced significant growth over the years. This became possible thanks to the development of technological infrastructure in the country.

Software development subsector

Software development — a growing sub-sector that has attracted a lot of interest in recent years, with more and more software companies emerging within it. The demand for these services is growing due to the ever-increasing automation of processes. Despite significant interest, the market is still underdeveloped: most software companies either develop websites or engage in retail sales, adapting existing software applications as necessary. The government recognizes this sector as a priority and provides it with incentives such as the ability to carry tax losses forward five years.

Supporting services subsector

This subsector includes all services that contribute to the smooth operation and/or distribution of products from the other three subsectors. This sector includes service providers, IT support providers, manufacturers and retailers. Licensing and Authorization The NCA, as the sector regulator, is responsible for obtaining, reviewing and issuing licenses and permits to various sector participants. A company wishing to operate in the telecom sector in the country must submit an application to the NCA and adhere to various guidelines issued by the authority.

Digitalization of the economy

To promote the digitalization of the economy, NCA introduced and completed a number of projects in 2018 aimed at strengthening the protection and safety of ICT consumers to promote confidence in the increased use of digital products and services in Ghana. These include:

• NCA Computer Emergency Response Team (NCACERT); 
• Common Platform (CP) for monitoring government revenues in the telecommunications sector;
• NCA Compliance Testing and Type Approval Laboratories;
• Broadcast monitoring center; 
• Communication monitoring center.

These initiatives aim to strengthen the technology base for Ghana's digital agenda.

In an effort to improve the country's ICT infrastructure, the expansion of the Eastern Corridor fiber optic backbone project has been completed. at 165 km. This extension will extend from Accra to Ho and will connect with the main government project that ran from Ho to Bawku. Project "Eastern Corridor" will allow connecting 120 settlements located along the route to communications. The infrastructure was created to facilitate the use of technology in education, healthcare, e-governance, agriculture and other sectors. With the creation of this infrastructure, it is expected that telecommunication companies will provide their services in these localities.

Mobile banking

Mobile money — a fast growing phenomenon in Ghana. Only three telecom operators offer mobile money services in the country. These are MTN, Vodafone and AirtelTigo. This growth was accelerated by the launch of the country's first mobile money interoperability system through Ghana Interbank Payment and Settlement Systems Limited in May 2018. With the launch of this new system, users can transfer money from one mobile money account to another across different networks without restrictions.

E-commerce

The concept of e-commerce in Ghana is evolving as the digital literacy rate of the population increases, driven by the advent of smart devices, the technological savvy of the young population and the improvement of technological know-how in the country. Entrepreneurs are creating online stores to meet the needs of this part of the population. The introduction of convenient payment platforms such as mobile money has also contributed to the growth of this business. Top online marketplaces in Ghana include Tonaton, Olx, Jumia and Tisu, among others. Thanks to the developing country and the willingness of the population to look for new shopping opportunities in search of quality and affordable goods, new entrants are increasingly given opportunities. However, e-commerce businesses are currently facing the challenge of distributing products due to the poor addressing system in the country. It is expected that this problem will be solved with the introduction of the GPS digital addressing system.

4G operations for mobile services

In December 2018, the National Communications Authority awarded Vodafone Ghana a 2x5 MHz spectrum block in the 800 MHz band for 4G spectrum deployment and beyond. Vodafone Ghana has now joined industry leader MTN as the only two telcos with licenses to roll out 4G services in the country

Service sector

The services sector remains the largest contributor to Ghana's GDP. The sector includes trade, repair of vehicles and household goods; hotels and restaurants; transport and storage; information and communication; financial and insurance activities; real estate, professional, administrative and public administration; education; healthcare; commodity, social and personal services. The services sector is also the largest employer, according to the Integrated Business and Institutional Survey, which was launched by the Ghana Statistical Service (GSS).

Agricultural sector

The sector is estimated to employ about 36.1% of Ghana's workforce, the majority of whom — smallholders who farm primarily for subsistence. The main agricultural products in Ghana are cereals (industrial, staples, fruits and vegetables), livestock, fisheries and forestry/logging.

Regulatory Framework The Ministry of Food and Agriculture (MFA) is responsible for the development and implementation of agricultural policies and strategies in Ghana. It is supported by GIPC, the Environmental Protection Agency (EPA), the Ministry of Fisheries and Aquaculture Development, the Forestry Commission and others. Existing laws and regulations governing the agricultural sector include the Fisheries Act 2002 (Act 625), the Plants and Fertilizers Act 2010 (Act 803), the Fisheries Rules 2010 and the National Premix Fuels Guidelines.

In April 2017, the government launched a new agricultural initiative called Planting for Food and Jobs (PFJ). As part of this initiative, the government has committed to:

• subsidize prices for improved seeds by 50% for individual farmers;
• subsidize fertilizer prices by 50% for individual farmers;
• provide farmers with free consulting services;
• provide post-harvest marketing opportunities through the National Food Supply Company; 
• implement e-agriculture, a technology platform to monitor and track farmers' activities and progress through a database system. 

In 2018 and 2019, the Akufo-Addo Program for Economic Transformation (AAPET) was introduced to modernize and transform the agricultural sector. Key features of AAPET are the elimination of duties on agricultural processing equipment and machinery, the introduction of a grant funding mechanism for aspiring agribusinesses, the creation of a GH400 million fund to finance sustainable agriculture and crop insurance schemes, the launch of a pension scheme for cocoa farmers, and the provision of technical assistance and tax breaks to support processing, packaging and farmers' market access.

Other key government agricultural initiatives include:

• launch of PFJ's livestock model called "Growing for Food and Jobs" (RFJ); 
• launch of PFJ model "Planting for Export and Rural Development" (PERD); 
• creation of two industrial facilities worth US$216 million for the import of agricultural machinery and equipment; 
• construction of 30 new warehouses to increase the country's storage capacity; 
• Establishment of cattle ranches in selected areas to resolve persistent conflicts between Fulani herdsmen and food farmers.

The Government of Ghana is committed to supporting and protecting private investors in the agricultural sector. Ghana is known to offer agribusinesses easy access to export markets in Europe at a lower cost than other investment destinations in Africa. Agricultural processing businesses are given a five-year tax holiday, after which they are eligible for location-based tax breaks that can reduce the corporate income tax rate to 1-5%. There are also exemptions from import duties on some agricultural and industrial machinery and equipment.

Real estate sector

With an urbanization rate of 3.51% and a growing middle class, demand for real estate in Ghana is expected to remain strong. As part of efforts to overcome the real estate shortage in Ghana, the government has introduced a number of tax incentives for the sector. For example, certified low-cost housing companies are entitled to pay corporate tax at a reduced rate of 1% for five years. In addition, certain categories of real estate companies are exempt from VAT. These measures, among other things, led to an increase in the construction of residential buildings, industrial complexes, commercial properties, shopping centers and other real estate projects. Acquiring land in Ghana can be a cumbersome process, despite several attempts by the government to make it easier. There are four categories of land in Ghana based on how it is owned. Each category has its own method of acquisition, and some lands cannot be privately owned. GIPC provides assistance to potential investors regarding the procedures and relevant agencies that need to be dealt with when legally acquiring property. This helps investors avoid fraud when purchasing property.