How Ghana can localise investment strategies to foster economic growth

The creation of a conducive investment climate is essential for any country seeking to accelerate its economic development and attract foreign investment, and Ghana is no exception.

Despite facing inflationary pressures, high debt levels, and an unstable local currency in recent years, Ghana continues to attract significant attention as a key investment destination on the continent due to its political stability, vast natural resources, and growing infrastructure needs.

However, fostering a truly positive investment climate goes beyond laying these foundations. It requires implementing effective reforms to attract both foreign and domestic investments, enhance investor confidence, and improve local governance structures.

Is political stability enough?

In the context of Ghana, political stability is a cornerstone of the country’s investment appeal, making it one of the few countries in Africa with a consistent record of peaceful power transitions through democratic elections.

This, in turn, offers investors the much-needed assurance and confidence to make investments that will not be disrupted by political turmoil. The recent cases on the tower or the energy sector must be addressed with transparency and finding a reasonable solution that will help the country while increasing certainty about our legislative framework.

Despite this, political stability is not enough as fostering long-term investment opportunities requires the government to strengthen key institutions that promote the rule of law, anti-corruption measures, and transparent regulatory frameworks at the national and local levels.

Without infrastructure, you go nowhere

Another key component Ghana has adopted to attract foreign investment is the development of critical infrastructure, including road networks, energy supply, and digital connectivity. However, there are challenges that could deter potential investors, such as inadequate transportation infrastructure, intermittent power supply, and an underdeveloped logistics sector that increase operational costs.

To address these infrastructure gaps, it is essential for governments to implement public-private partnerships (PPPs) and other innovative funding mechanisms to create an enabling environment where businesses can thrive.

Robust, transparent and independent regulatory bodies

For any thriving economy to sustain its foreign investment, regulatory bodies such as the Bank of Ghana have taken steps to ensure a well-regulated and resilient financial system to attract foreign capital and encourage local entrepreneurs to scale up.

Access to cheap finance, economic stability

Additionally, confidence in the financial sector, coupled with a stabilized local currency and access to finance for SMEs, remains the backbone of the domestic economy, which can attract foreign investors.

It is essential for these regulatory bodies to encourage investments in microfinance and introduce innovative financing products that could further enhance the investment environment.

Improving digitalization efforts and incentivizing investors

The perception of any investment environment can also be crucial, as this shapes the ease of doing business, ensuring transparency in government and the availability of incentives for investors.

For instance, the Ghana Investment Promotion Centre (GIPC) plays a critical role in facilitating foreign direct investments (FDIs) and offering incentives to businesses. By streamlining bureaucratic processes and enhancing transparency, Ghana can further boost investor confidence.

Efforts such as digitizing government services and reducing bottlenecks in acquiring permits and licenses should also be prioritized.

Deepening local entrepreneurship

Although foreign direct investments (FDIs) are crucial, fostering a positive investment climate must also involve nurturing local entrepreneurship.

The government, through initiatives like the National Entrepreneurship and Innovation Plan (NEIP) and the Microfinance and Small Loans Centre (MASLOC), has made some strides to empower local businesses.

However, access to credit for these local businesses remains a challenge, stifling growth and innovation that is key to creating a more inclusive investment environment benefiting all segments of the population.

Conclusion

In conclusion, fostering a positive investment and regulatory environment in Ghana is a multi-faceted process that requires political stability, sound governance, infrastructure development, financial sector reforms, and investor confidence.

By embracing innovation, encouraging local entrepreneurship, and aligning with global sustainability trends, Ghana can continue to position itself as a premier investment destination in Africa.

The future of Ghana’s economic growth now strongly depends on how effectively it can localize these strategies, ensuring that investments drive private profit but also contribute to the long-term development of the country.

The writer, Mawuli Ahorlumegah, is a business journalist at GhanaWeb