Foreign direct investment (FDI) in Ghana

FDI in Figures

According to UNCTAD's World Investment Report 2024, FDI inflows to Ghana declined by 10.4% year-on-year in 2023, amounting to USD 1.35 billion. By the end of the same period, the stock of FDI stood at USD 47.36 billion. From January to December 2023, the Ghana Investment Promotion Centre (GIPC) recorded FDI worth USD 649.58 million. These investments were expected to create 13,523 jobs once operations reached full capacity. The focus sectors for these investments included manufacturing, services, general trading, export trading, building & construction, agriculture, and liaison. Ghana ranks as the third-largest recipient of FDI in West Africa, accounting for roughly 20% of the region’s stock, and the tenth recipient in Africa. Investments are primarily concentrated in oil and gas facilities, gold mining, agriculture (particularly cocoa), and export fruits. Ghana's top investing economies include South Africa, the Netherlands, France, Mauritius, and China, according to the IMF. In the first half of 2024, FDI attracted 69 registered projects, which amounted to USD 179.07 million (GIPC). In the same period, the manufacturing sector led with the highest number of registered projects, totalling 29. This was followed by services with 19 projects, general trading with 11, and both export trade and building and construction, each with 3 projects. Tourism recorded 2 projects, while liaison and agriculture each had 1 project. Out of the total, 53 projects are located in the Greater Accra region, while the other regions include Ashanti, Eastern, Central, Western, Northern, and Upper East.

Ghanaian authorities have been making efforts to simplify complex and lengthy procedures for foreign investors while offering tax incentives. Ghana boasts democratic governance, a large and cost-effective labour force, abundant natural resources, and stable institutions, making it one of the most open economies to foreign equity ownership in the region. Nonetheless, challenges such as bureaucracy, corruption, weak productivity, difficulty in obtaining financing services, underdeveloped transport infrastructure, ambiguous property laws, frequent power and water cuts, and an unskilled labour force hinder FDI. Major ongoing reforms include the dematerialization of tax, legal, and business registration processes. In 2022, Ghana was removed from the EU grey list of high-risk money laundering countries. While Ghana's major sectors are generally open to foreign capital, there are specific minimum capital requirements for foreign investments. Certain sectors are excluded from foreign investment, including petty trading, taxi and car rental services with fewer than 25 vehicles, lotteries (excluding soccer pools), beauty salons, printing of recharge scratch cards, production of exercise books and stationery, retail of pharmaceutical products, and production, supply, and retail of sealed pouch drinking water. Additionally, foreign investors have limited access to sectors such as telecommunications, banking, fishing, mining, petroleum, and real estate. Ghana ranks 101st among the 133 economies on the Global Innovation Index 2024 and 112th out of 184 countries on the latest Index of Economic Freedom.

What to consider if you invest in Ghana

Strong Points

Strong points of investing in Ghana include:

• more developed infrastructure compared to most West African countries
• political stability (ranks 1st for the Global Peace Index in West Africa - IEP, 2020) and steady growth
• skilled and trainable labour
• sizeable consumer base with an emerging middle class
• hub for opportunities in other West African countries and access to other ECOWAS countries
• 100% foreign ownership is permitted
• expanding stock market

Weak Points

Challenges for investors in Ghana include:

• heavy bureaucracy
• high risk of corruption (75th out of 180 on Transparency International's Corruption Perceptions Index 2020)
• inconsistent electricity supply
• underdeveloped capital market
• challenges in emerging markets weighing on the local economy (e.g. recent depreciation of cedi)
• despite improvements in per capita income, poverty persists in some rural areas
• regional instability, particularly in Burkina Faso, Nigeria and Mali.

Government Measures to Motivate or Restrict FDI

A reduced corporate tax rate of 8% is available for companies engaged in “non-traditional exports,” and a 20% rate applies to financial institutions on income from loans granted to farming enterprises and leasing companies.
Free Trade Zone (FTZ) companies have a 10-year exemption period after which they pay corporate tax at 15% on export sales.
A rebate is granted to manufacturing companies located outside Accra and Tema. In regional capitals (other than 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 granted, from the beginning of the operations, in the following cases:

• Agricultural enterprises, agro-processing and waste processing companies, rural banks and venture capital financing companies pay 1% corporate tax for periods ranging from five to 10 years.
• Real estate companies pay 1% corporate tax for five years on income from certified low-cost housing, with some limitations.
• Entrepreneurs aged 35 years and under are granted a five year corporate tax holiday if they are engaged in specific businesses. Businesses that qualify for the exemption include manufacturing, ICT, agro-processing, energy production, waste processing, tourism and creative arts, horticulture and medicinal plants. Such entrepreneurs also enjoy a rebate on corporate tax rates ranging from 5% to 15% for five years after the tax holiday.
• Privately-owned universities are exempted from corporate tax if they reinvest 100% of their profits into the operation of the university.
• Employers receive an additional tax deduction for employing new graduates as part of their workforce that ranges from 10% to 50% of the salaries or wages of such employees.