Oil is Ghana’s best investment driver

Ghana has been ranked as the third-best country in Africa that received Foreign Direct Investments (FDI) on the continent last year.

The latest United Nations World Investment report 2012 released last week said the country’s performance in attracting FDIs was largely based on the developments in the upstream petroleum sector, which is now being developed following the discovery of oil in commercial quantities half a decade ago.

According to the report authored by the United Nations Conference on Trade and Development (UNCTAD), Ghana -- which trails Nigeria and South-Africa in attracting Foreign Direct Investments (FDI) -- received approximately US$3.2billion FDI inflows at the end of 2011 compared to US$2.5billion two years ago and US$2billion in 2009.

UNCTAD through its research has found that new oil- and gas-producing countries are emerging as major recipients of FDI as foreign investors look farther afield in search of oil and gas reserves.

“Ghana in particular benefitted from FDI in the newly-developed Jubilee oil field, where commercial production started in December 2010,” the report said.

The report said inflows to West Africa are destined primarily for Ghana and Nigeria, which together account for some three-quarters of the sub-region’s inflows.

UNCTAD, however, has warned that FDI inflows to the continent will slow this year in the face of the global economic slowdown.

However, the UN Trade facilitation arm believes improvements in the way the country attracts FDI signals longer-term changes in the investment climate.

Meanwhile, data from the Ghana Investment Promotion Centre (GIPC) indicate that in recent years the structure of ownership of FDIs is skewing increasingly toward wholly-owned foreign enterprises and fewer of joint-ventures.

The trend has been typical of FDI flows into the country in recent years. Analysts are beginning to question the GIPC’s commitment to ensuring quality and balanced investment flows -- whether FDIs or domestic investments -- as it is high time the Centre took a second look at the way it woos investors, as well as how it manages their activities so as not to jeopardise local enterprise.

“Presentation of reports on investments should be transparent, detailed and comprehensive enough for other stakeholders to be able to use it to meet their special needs, while the current practice of placing emphasis mainly on financial receipts should be minimised.”

Analysts have also called on the GIPC to be proactive in enforcing its own regulations to prevent the current practice of unscrupulous foreign investors moving into business activities reserved solely for Ghanaians.