Business News of 2014-03-18

New GIPC Act under fire

The new Ghana Investment Promotion Centre Act 2013 (Act 865) has come under thorough scrutiny from stakeholders with the former board Chairman of the GIPC, Dr Ishmael Yamson, stating that the Act has rather worsened the bureaucracy it sought to eliminate.

According to him, being part of the process that brought in the new Act, Act 865, “We were conscious that there was so much bureaucracy in our system and the law should therefore reduce the level of bureaucratic interventions in the investment processes.”

At a stakeholder’s dialogue to discuss the new Act, six months after its inception, Dr Yamson said per the criteria of eliminating bureaucracy from investment processes, the law had failed to achieve that.

He said, “I will judge this law as to whether it has achieved that and my view is that it has made it worse,” adding, “that there are more processes to go through, there are more approvals, there are more institutions involved, even in spite of the fact that there is a technical committee that has brought almost every institution that has something with investment together.”

A former Chief Executive Officer of the GIPC, Robert Ahomka-Lindsay, who was also a panel member, shared in the sentiments of Dr Yamson on the issue of bureaucracy.

His comments raised questions about whether the GIPC?was proactive enough to consult such personalities with indebt knowledge of the centre before presenting the GIPC?Bill to Parliament.

It is clear (from the experts and the opinions shared) that there is the need for the new Act, which is barely a year, to be reviewed, taking into consideration the various suggestions made to ensure that the country gets value from such laws.

One major reason Ghana is taken aback in many areas is because of the unnecessary bureaucracy which breeds bribery and corruption and, therefore, it is baffling to know that in reviewing an Act, the bureaucracy has intensified instead of simplying it.

“Unfortunately I must say we have increased the bureaucracy. There is a situation where you have the certificate to commence business from the Registrar General and then you tell the person you are not allowed to commence business. It does not help,” he lamented.

He said there was the need to reduce the steps involved in going about businesses in the country, adding: “so that we do not have investors having to register at several places before they make one decision as to whether they would want to invest in Ghana or not.”

“In my opinion and based on what I have seen so far, it is now worse and I think that will not help us as a country because we live in a competitive world,” he reiterated.

Revised capital requirement

Aside the issue of bureaucracy, Dr Yamson also put the spotlight on the revised capital requirement for foreign companies wanting to invest in the country.

Per the new capital requirement, investment in joint ventures require a minimum capital requirement of US$200,000, for wholly owned foreign investments, the new capital is US$500,000, while companies interested in trading must have US$1 million minimum capital and employ a minimum of 20 skilled Ghanaians.

According to him, there are big businesses that did not start US$1 million threshold or even US$500,000 capital, but are able to create huge businesses starting with just 1 laptop.

“Are we saying that every business that comes here must have that chunk of money to be able to invest in this country? We are not saying that, and we should not say that. If that is the import of this bill, it will not attract investors,” he said.

Using himself as an example, Dr Yamson told the gathering, “Let us be real, if I am coming to invest in Ghana, which does not have a track record of 10 years of stable macro environment, and you tell me to come and put US$1million in this country, I will tell you, unless I can see real benefit in the very short term, I will think twice. That is the reality.”

He was however quick to add that he was not advocating that the law should be ‘fidgeted’ with, “but if our view is to attract investment then we must not do those things that will not attract investments.”

Brief about the act

Dr Yamson said the law started when the country was not benefitting from foreign investors and therefore sought to change the investment climate to bring in the desired level of investments.

“We felt Ghana was not attracting its fair share of international private capital and it shouldn’t be difficult for this country to attract up to US$10bn a year when we have countries like Vietnam and Peru which are newcomers attracting close to US$15bn a year,” he said.