Foreign Investment flows to Ghana decline

Foreign Direct Investment (FDI) flow into Ghana fell sharply from 233.84 million dollars in 1999 to 132.1 million dollars last year, representing about 52 per cent decrease over the 1999 levels.

Speaking at the launch of the World Investment Report 2001 in Accra on Tuesday, Emmanuel Gyasi, Director of the Research and Development Division of Ghana Investment Promotion Centre, said although it was difficult to determine the exact amount of investment flows because of lack of co-ordination among the various investment attracting agencies, FDI flow into the country last year was not the best.

He attributed the fall to the difficult macro-economic environment evidenced in high inflation and the rapid depreciation of the cedi against major foreign currencies.

Inflation last year averaged 40 per cent and the cedi depreciated more than 80 per cent from 4,200 cedis to 7,200 cedis to the dollar at the close of the year.

There was also the unpredictable outcome of the 2000 elections that made potential investors to adopt a wait-and-see attitude.

Mr Gyasi said other bottlenecks, besides the macro-economic environment, that impede the ability of the country should be looked at and removed for potential investors to have confidence in the economy.

He mentioned acquisition and registration of land as one such negative factor that discouraged foreign investors.

"The longer period investors spend to acquire land adds to the cost of doing business and makes the country unattractive to them."

The GIPC, he said, has identified some of these shortcomings and is working to review the Investment Act to bring it in line with current investment practices in the world.

Although the Act had been praised as the best in Africa, Mr Gyasi said, the country had not been able to achieve its target of investment flows.

He admitted that legal environment, though necessary, was not enough to speed the rate of investment flows.

Other factors such as attitude of workers, perception of work cultures from other countries and the skills of labour might be more critical in influencing investment flows.

Mr Gyasi suggested the promotion of regional links and breaking down trade barriers among the countries in the sub-region as a first step to improving investment flows onthe continent and also in taking advantage of globalisation.

Dr Kofi Konadu Apraku, Minister of Trade and Industry, said although the government enjoy a lot of goodwill from the international community, this was not enough to attract investment. ''There is the need for other actions''.

He said the government was doing everything possible to make GIPC a one-stop investment centre by ensuring that all bureaucratic rules and procedures are removed to facilitate easy processing of documents. The legal system is also being looked at to review the benefits available to investors.