Inside the politics, diplomacy and reality of Ghana’s GIPC levy on foreign traders
Since 2013, Ghana’s Investment Promotion Center (GIPC) Act has governed investment in all sectors of the economy and outlines the government’s investment framework, but the implementation of the legislation, some experts said it could end up increasing the burden on domestic and international investors.
Specifically, the GIPC requires foreign investors to satisfy a minimum capital requirement. The minimum capital required for foreign investors is USD 200,000 if they do a joint venture with local partners or USD 500,000 for enterprises that are wholly owned by foreign investors.
Trading companies either entirely or partly-owned by foreigners require a minimum capital contribution of USD 1,000,000 and are required to employ at least 20 skilled locals. Capital contributions may be satisfied by remitting convertible foreign currency to a bank in Ghana or by importing goods valued in this amount. This minimum capital requirement does not apply to portfolio investments, enterprises set up for export trading or their branch offices.
Apparently, this law was made at the instance of indigenous traders who complained that Nigerians were unfairly dominating small-scale trading in Ghana.
A taste of what is to come was seen during August 2019 closure of land borders by the Nigerian government over smuggling and security challenges. Ghanaian traders and manufacturers complained bitterly that hundreds of truckloads of goods meant for the Nigerian market were seized in Nigeria due to the closure and retaliated by shutting Nigerian businesses.
The main issue here is the conflict between the protection of national interests and the welfare of citizens which clashes with the ideals of sub-regional cooperation for the economic and social benefits of all within the region.
