GHANA 2006 INVESTMENT CLIMATE STATEMENT

UNCLAS SECTION 01 OF 10 ACCRA 000096

SIPDIS

E.O. 12958: N/A
TAGS: ECON EFIN ENRG BEXP ETRD EINV PREL PGOV GH
SUBJECT: GHANA 2006 INVESTMENT CLIMATE STATEMENT

REF: A. STATE 202943


B. 2004 ACCRA 2536


1. Per Ref A, Post is pleased to provide below the 2006
Investment Climate Statement (ICS) for Ghana. This report
revises and updates the ICS submitted December 22, 2004 (Ref
B). P

Table of Contents
--------------

A.1. Openness to Foreign Investment

2. Conversion and Transfer Policies

3. Expropriation and Compensation

4. Dispute Settlement

5. Performance Requirements and Incentives

6. Right to Private Ownership and Establishment

7. Protection of Property Rights

8. Transparency of the Regulatory System

9. Efficient Capital Markets and Portfolio Investment

10. Political Violence

11. Corruption

B. Bilateral Investment Agreements

C. OPIC and Other Investment Insurance Programs

D. Labor

E. Foreign Trade Zones/Free Ports

F. Foreign Direct Investors in Ghana

G. Foreign Direct Investment Statistics

A.1. Openness to Foreign Investment
--------------
Attracting foreign direct investment remains a key objective
of Ghana's economic recovery program, which started in 1983
under the auspices of the World Bank and the IMF. President
Kufuor, re-elected in December 2004, continues to encourage
foreign investment as an integral part of Ghana's economic
policy.

As part of his avowed commitment to attracting foreign
investment, the President relies on advice from the Ghana
Investment Advisory Council (GIAC),which was established
with the help of the World Bank. The GIAC, which consists of
multinational and local companies and institutional observers
(IMF, WB, UNDP),helps shape government policy to create an
enabling investment environment.

Ghana embarked on a privatization program in the early 1990s
that has resulted in the sale of more than 300 of
approximately 350 state-owned enterprises. Foreign firms
comprise most of the bidders for these businesses. Few local
investors have sufficient capital to participate in this
process except as partners with foreign firms.

The Divestiture Implementation Committee is the government
institution that oversees the privatization of public
enterprises. Actual divestiture is usually done through a
bidding process, and bids are evaluated on the basis of
criteria including management skills, financial resources,
and business plans. New owners are expected to build the
enterprises into profitable, productive ventures, which
contribute to tax revenue and increase local employment.
Although the Kufuor administration has publicly stated its
support for continuing the privatization program, it has made
only one new divestiture during its tenure.

The Government of Ghana recognizes that attracting foreign
direct investment requires an enabling legal environment, and
has passed laws that encourage foreign investment and
replaced some that previously stifled it. The Ghana
Investment Promotion Center (GIPC) Act, 1994 (Act 478),
governs investment in all sectors of the economy except
minerals and mining, oil and gas, and the free zones.
Sector-specific laws further regulate banking, non-banking
financial institutions, insurance, fishing, securities,
telecommunications, energy, and real estate. Foreign
investors are required to satisfy the provisions of the
investment act as well as the provisions of sector-specific
laws. Generally, the GIPC has streamlined procedures and
reduced delays. More information on investing in Ghana can
be obtained from GIPC's website, www.gipc.org.gh.

The GIPC law also applies to foreign investment in
acquisitions, mergers, takeovers and new investments, as well
as to portfolio investment in stocks, bonds, and other
securities traded on the Ghana Stock Exchange.

The GIPC law specifies areas of investment reserved for
Ghanaians, such as small-scale trading, operation of taxi
services (except when a non-Ghanaian has a minimum fleet of
10 vehicles),pool betting businesses and lotteries (except
soccer pools),beauty salons and barber shops. The law
further delineates incentives and guarantees that relate to
taxation, transfer of capital, profits and dividends, and
guarantees against expropriation.
Since the enactment of the GIPC law, the Government of Ghana
has ceased screening investments. The GIPC registers
investments and provides all the necessary assistance to
enable investors to become established. The Government of
Ghana has no overall economic or industrial strategy that
discriminates against foreign-owned businesses. In some
cases a foreign investment can enjoy additional incentives if
the project is deemed critical to the country's development.
U.S. and other foreign firms are able to participate in
government-financed and/or research and development programs
on a national treatment basis.

The only pre-condition for investment in Ghana is financial;
the GIPC requires foreign investors to satisfy a minimum
capital requirement. Once this is met and all necessary
documents submitted, investments are supposed to be
registered within five working days. However, according to a
June 2003 report by the Foreign Investment Advisory Service
(FIAS),the actual time required for registration can be
significantly higher (sometimes three to four times) than the
required time.

Although registration is relatively easy, the entire process
of establishing a business in Ghana is lengthy, complex, and
requires compliance with regulations and procedures of at
least 5 government agencies including the GIPC, Registrar
General Department, Internal Revenue Service (IRS),Ghana
Immigration Service, and Social Security and National
Insurance Trust (SSNIT). This processing period often
extends up to 100 days. Nevertheless, the government's
reforms in this area have yielded some returns. The World
Bank announced in its "2006 Doing Business" report that
Ghana's "Time to Start a Business" improved from 129 days in
2003 to 81 days in 2005. The Doing Business report ranks
Ghana 82 out of 155 countries in the general category of
"Ease of Doing Business."

The minimum capital required for foreign investors is USD
10,000 for joint ventures with Ghanaians or USD 50,000 for
enterprises wholly owned by non-Ghanaians. Trading companies
either wholly or partly-owned by non-Ghanaians require a
minimum foreign equity of USD 300,000 and must employ at
least ten Ghanaians. This may be satisfied through remitting
convertible foreign currency to a bank in Ghana or by
importing goods into Ghana for the purpose of the investment.
The minimum capital requirement is, however, not applicable
to portfolio investment, enterprises set up for export
trading, or branch offices.

The principal law regulating investment in minerals and
mining is the Minerals and Mining Law, 1986 (PNDCL 153) as
amended by the Minerals and Mining Amendment Act, 1994 (Act
475). This law regulates investment in mining, except for
small-scale mining, which is reserved for Ghanaians. It
addresses different types of mineral rights, issues relating
to incentives and guarantees, and land ownership. The
government revised the law again in December 2005. The
revised law contains a stability and development agreement,
which protects the holder of a mining lease from future
changes in law for a period of 15 years. The Minerals
Commission is the government agency that implements the law.

The Petroleum Exploration and Production Law, 1984 (PNDCL
84),known as the Petroleum Law, regulates oil and gas
exploration and production in Ghana. The law deals
extensively with petroleum contracts, the rights, duties,
responsibilities of contractors, and compensation payable to
those affected by activities in the petroleum sector. The
Ghana National Petroleum Corporation (GNPC) is the government
institution that administers this law. Several U.S.
companies are involved in oil/gas exploration in Ghana at
present.

There are no major sectors in which American investors are
denied the same treatment as other foreign investors. There
are, however, some areas where foreign investors as a whole
are denied national treatment. Those sectors are real estate
(non-Ghanaians may not own an interest in land for more than
fifty years, although a lease may be renewed for consecutive
terms),banking, securities, and fishing.

The U.S. Embassy in Accra advises companies or individuals
considering investing in Ghana or trading with Ghanaian
counterparts to consult with a local attorney or business
facilitation company. The Embassy maintains a list of local
attorneys and local business facilitators. Both are
available upon request.

A.2. Conversion and Transfer Policies
--------------
Ghana operates a free-floating exchange rate policy regime.
There are no restrictions on the conversion and transfer of
funds with documented evidence to support how the funds were
gained. Ghana's local currency, the cedi, can be exchanged
for dollars and major European currencies.

Ghana's hard currency needs are met largely through gold and
cocoa export revenues, official assistance, and private
remittances. The fall in the world prices of Ghana's export
commodities in 1999 and increases in oil import bills led to
a foreign currency shortage in 2000 and a subsequent, large
depreciation of the cedi. The cedi has been stable since
November 2002, bolstered by sound macroeconomic policies and
record level remittances and cocoa export proceeds.

Ghana has no restrictions on the transfer of funds associated
with investment. Ghana's investment laws guarantee that
investors can transfer the following in convertible currency
out of Ghana: dividends or net profits attributable to the
investment; payments in respect of loan servicing where a
foreign loan has been obtained; fees and charges in respect
to technology transfer agreements registered under the GIPC
law; and, the remittance of proceeds from the sale or
liquidation of the enterprise or any interest attributable to
the investment.

With regard to offshore loans, the Bank of Ghana, Ghana's
central bank, must approve the loan agreement. The Bank of
Ghana inspects the terms of the loan, especially the interest
rate, to see if it conforms to current international rates.
There is no legal parallel remittance market for investors.
The Bank of Ghana is drafting a new foreign exchange law,
which will liberalize the foreign exchange market. The
government plans to submit it to Parliament in early 2006.

A.3. Expropriation and Compensation
--------------
Ghana's investment laws provide guarantees against
expropriation and nationalization, although the 1992
Constitution provides some exceptions to these laws. While
providing protection from deprivation of property, the
Constitution sets out exceptions and a clear procedure for
the payment of compensation.

The Government of Ghana may compulsorily take possession or
acquire property only where the acquisition is in the
interest of national defense, public safety, public order,
public morality, public health, town and country planning or
the development or utilization of property in a manner to
promote public benefit. It must, however, make provision for
the prompt payment of fair and adequate compensation. The
Government of Ghana also allows access to the high court by
any person who has an interest or right over the property.

American investors are generally not subject to differential
or discriminatory treatment in Ghana, and there have been no
official government expropriatory actions in recent times.
Since President Kufuor's administration took power in 2001,
two U.S. investors have filed for international arbitration
against the Ghana government, claiming expropriation. These
cases were each resolved when the Government of Ghana agreed
to purchase the investments.

A.4. Dispute Settlement
--------------
Ghana's legal system is based on British common law. The
most important exception for the purpose of investment is the
acquisition of interest in land, which is governed by both
statutory and customary law.

The judiciary comprises both the lower courts and the
superior courts. The superior courts are the Supreme Court,
the Court of Appeal, and the High Court. Lawsuits are
permitted and usually begin in the High Court. There is a
history of government intervention in the court system,
although somewhat less so in commercial matters. The courts
have, when the circumstances require, entered judgment
against the government. However, the courts have been slow
in disposing of cases and at times face challenges in
enforcing decisions, largely due to resource constraints and
institutional inefficiencies. There is a growing interest in
alternative dispute resolution, especially as it applies to
commercial cases. The Attorney General's office has drafted
enabling legislation, and several lawyers are providing
arbitration and/or conciliation services.

The government has established "fast-track" courts to
expedite action on some cases. The "fast track" courts,
which are automated (computerized) divisions of the High
Court of Judicature, were intended to try cases to conclusion
within six months. However, these courts have proven unable
to try cases as quickly as expected. In March 2005, the
government established a commercial court to try commercial
claims. The Court also handles disputes involving commercial
arbitration and other settlement awards, intellectual
property rights, including patents, copyrights and
trademarks, commercial fraud, applications under the
Companies Code, tax matters, and insurance and re-insurance
cases. A distinctive feature of the commercial court is the
use of mediation or other alternative dispute resolution
mechanisms, which are mandatory in the pre-trial settlement
conference stage.

Enforcement of foreign judgments in Ghana is based on the
doctrine of reciprocity. On this basis, judgments from
Brazil, France, Israel, Italy, Japan, Lebanon, Senegal,
Spain, the United Arab Emirates, and the United Kingdom are
enforceable. Judgments from the United States are not
enforceable in Ghana at this time.

Both the GIPC and Minerals and Mining Laws address dispute
settlement procedures and provide for arbitration when
disputes cannot be settled by other means. They also provide
for referral of disputes to arbitration in accordance with
the rules of procedure of the United Nations Commission on
International Trade Law (UNCITRAL),or within the framework
of a bilateral agreement between Ghana and the investor's
country.

The U.S. has signed three bilateral trade and investment
agreements with Ghana: the OPIC Investment Incentive
Agreement, the Trade and Investment Framework Agreement
(TIFA),and the Open Skies Agreement. These agreements
contain some provision for investment and trade dispute
settlement. When the parties do not agree on a venue for
arbitration, the investor's choice prevails. In this regard,
Ghana accepts as binding the international arbitration of
investment disputes. Ghana does not have a bankruptcy
statute. The Companies Code of 1963, however, provides for
official closure of a company when it is unable to pay its
debts.

In 1996, the privately managed Ghana Arbitration Center was
established to strengthen the legal framework for protecting
commercial and economic interests, and to bolster investors'
confidence in Ghana. The American Chamber of Commerce's
(Ghana) Commercial Conciliation Center provides arbitration
services on trade and investment issues.

Ghana signed and ratified the Convention on the Settlement of
Investment Disputes in 1966, which allows for arbitration
under ICSID ) the International Center for the Settlement of
Investment Disputes. However, at least with disputes related
in the energy sector, the government has expressed a strong
preference for handling disputes under UNCITRAL rules Ghana
is also a signatory and contracting state of the UN
Convention on the Recognition and Enforcement of Foreign
Arbitral Awards (the "New York Convention").

A.5. Performance Requirements and Incentives
--------------
Ghana is in compliance with WTO Trade-Related Investment
Measures (TRIMS) notification.

Generally, Ghana does not have performance requirements for
establishing, maintaining, and expanding a business.
However, in its privatization of state-owned enterprises,
notably the telecommunications sector, companies have to meet
performance targets or they may have their licenses revoked.
In the case of banks, the opening of branches requires
approval from the central bank. Investors are not required
to purchase from local sources. Except for free zone
enterprises operating under the Free Zone Act, which are
required to export 70 percent of their products, investors
are not required to export a specified percentage of their
output.

Foreign investors are not required by law to have local
partners except in the fishing, insurance, and mining
industries, as well as in the securities market. In the
tuna-fishing industry, non-Ghanaians may own a maximum of
seventy-five percent of the interest in a tuna-fishing
vessel. In the insurance sector, a non-Ghanaian cannot own
more than sixty percent of an insurance company. In the case
of the Ghana Stock Exchange, a single foreign investor cannot
own more than ten percent of any security listed. This
applies to individuals as well as institutional investors.
The total holding of all foreigners in a listed security
cannot exceed seventy-four percent. There is compulsory
local participation in the minerals and mining sector. By
law, the Government of Ghana acquires ten percent of all
interests in mining ventures at no cost.

There are no requirements on physical location of
investments. However, there are tax incentives to encourage
investment in specific locations. There are also no import
substitution restrictions. The only requirement for
compulsory employment of Ghanaians is that any investment in
a trading enterprise must employ a minimum of ten Ghanaians.

There are regulations relating to the transfer of technology
when it is not freely available in Ghana. The transfer of
technology is governed by an agreement under the Technology
Transfer Regulations of Ghana. Any provisions in the
agreement inconsistent with Ghanaian regulations are
unenforceable in Ghana.

Investment incentives differ slightly depending upon the law
under which an investor operates. For example, while all
investors operating under the Free Zone Act are entitled to a
ten-year corporate tax holiday, investors operating under the
GIPC law are not automatically entitled to a tax holiday,
depending upon the sector in which they are operating.

All investment-specific laws contain some investment
incentives. The GIPC law allows for import and tax exemptions
for plant inputs and machinery (and parts thereof) imported
for the purpose of the investment. Specifically, chapters
82, 84, 85, and 89 of the Customs Harmonized Commodity and
Tariff Code zero-rates (i.e. does not levy import duty) these
production items. The Government of Ghana recently imposed a
five percent import duty on some items that were previously
zero-rated.

The Ghanaian tax system is replete with tax concessions that
make the effective tax rate generally low. The incentives
are specified in the GIPC law and are not applied in an ad
hoc or arbitrary manner. The GIPC has no discretion and once
the investor has been registered under the GIPC law, the
investor is entitled to the incentives provided by law. The
GIPC, however, has discretion if an investor is seeking
additional customs duty exemptions and tax incentives.

The GIPC website (www.gipc.org.gh) provides a more thorough
description of incentive programs. The law also guarantees
the investor all the tax incentives provided for under
Ghanaian law. For example, rental income from commercial and
residential property for the first five years after
construction is exempt from tax. Similarly, income from a
company selling or letting out premises is income tax exempt
for the first five years of operation. Rural banks and
cattle ranching are exempt from income tax for 10 years.

The government lowered the corporate tax rate to 25 percent
(from 32.5 percent in 2004 and 28 percent in 2005) when it
published the 2006 budget. The new rate applies to all
sectors except income from non-traditional exports (eight
percent). For some sectors there are tax holidays for a
number of years. These sectors include, free zone
enterprises and developers (zero percent for the first 10
years and eight percent thereafter),real estate development
and rental (zero percent for the first five years and 25
percent thereafter),agro-processing companies (zero percent
for the first five years after which the tax rate ranges from
0 to 25 percent depending on the location of the company in
Ghana),and waste processing companies (zero percent for
seven years and 25 percent thereafter). Tax rebates are also
offered in the form of incentives based on location. A
capital allowance in the form of accelerated depreciation is
also applicable in all sectors except banking, finance,
commerce, insurance, mining, and petroleum.

The government charges a 12.5 percent VAT plus a 2.5 percent
Health Insurance Levy, instituted in August 2004, on most
imports, all consumer purchases, services, accommodation in
hotels and guest houses, food in restaurants, hotels and
snack bars, as well as advertising, betting and
entertainment.

Ghana has no discriminatory or excessively onerous visa
requirements. An investor who invests under the GIPC law is
automatically entitled to a specific number of visas/work
permits based on the size of the investment. When an
investment of USD 10,000 or its equivalent is made in
convertible currency or machinery and equipment, the
enterprise can obtain a visa/work permit for one expatriate
employee. An investment of USD 10,000 to USD 100,000
entitles the enterprise to two automatic visas/work permits.
An investment of USD 500,000 and above allows an enterprise
to bring in four expatriate employees. An enterprise may
apply for extra visas/work permits, but the investor must
justify why a foreigner must be employed rather than a
Ghanaian. There are no restrictions on the issuance of work
and residence permits to Free Zone investors and employees.

Ghana has no import price controls. It is pursuing a
liberalized import regime policy within the framework and the
spirit of the World Trade Organization to accelerate
industrial growth. The Government of Ghana joined other
ECOWAS countries on the phased implementation of the ECOWAS
Common External Tariff on January 1, 2005.

A.6. Right to Private Ownership and Establishment
-------------- --------------
Ghana's laws recognize the right of foreign and domestic
private entities to own and operate business enterprises.
Foreign entities are, however, prohibited by law from
engaging in certain business activities in Ghana (see section
1, paragraph 6).

Private entities may freely acquire and dispose of their
interests in Ghana. When a foreign investor disposes of an
interest in a business enterprise, the investor is entitled
to repatriate his or her earnings in a freely convertible
currency.

Private and public enterprises compete on equal basis with
respect to access to credit, markets, licenses, and supplies.

A.7. Protection of Property Rights
--------------
The legal system recognizes and enforces secured interest in
property, both chattel and real, but the process to get clear
title over land is often difficult, complicated, and lengthy.
It is important to conduct a thorough search at the Lands
Commission to ascertain the identity of the true owner of any
land being offered for sale. Investors should be aware that
land records can be incomplete or non-existent and,
therefore, clear title may be impossible to establish.

Mortgages exist in Ghana and are regulated by the Mortgages
Decree. They are enforced by judicial sale upon application
to the court. A mortgage must be registered under the Land
Title Registration Law, a requirement that is mandatory for
it to take effect. Registration with the Land Title Registry
is a reliable system of recording the transaction.

The protection of intellectual property is an evolving area
of law in Ghana. Progress has been made in recent years to
afford protection under both local and international law.
Ghana is a party to the Universal Copyright Convention and a
member of the World Intellectual Property Organization
(WIPO),the English-speaking African Regional Industrial
Property Organization (ESARIPO),and the World Trade
Organization (WTO). Since December 2003, Ghana's Parliament
has passed all six bills designed to bring Ghana into
compliance with WTO TRIPS (Trade-Related Aspects of
Intellectual Property Rights) requirements. The new laws
are: Copyright, Trade Marks, Patents, Layout-Designs
(Topographies) of Integrated Circuits, Geographical
Indications, and Industrial Designs. Piracy of protected
goods is known to take place, though there is no reliable
information on the scale of this activity. In cases where
trademarks have been misappropriated, the price and quality
disparity is usually readily apparent. Holders of
intellectual property rights have access to local courts for
redress of grievances, although few trademark, patent, and
copyright infringement cases have been filed in Ghana.

A.8. Transparency of the Regulatory System
--------------
The Government of Ghana's policies of trade liberalization
and investment promotion are guiding its effort to create a
clear and transparent regulatory system. The GIPC law
codified the government's desire to present foreign investors
with a liberal and transparent foreign investment regulatory
regime. The GIPC has established a "one stop shop" to
facilitate business registration for investors, but it is not
effective. Under the Ghana Trade and Investment Gateway
(GHATIG) Program, time frames within which government
officials must perform specific duties have been set and are
monitored. Implementation, however, has not measured up to
desired standards.

The Government of Ghana has established regulatory bodies
such as the National Communications Authority, the National
Petroleum Authority, and the Public Utilities Regulatory
Commission to oversee activities in the telecommunications,
power, and water sectors. These bodies are relatively new
and under-resourced, which limits their ability to deliver
the intended level of oversight.

A.9. Efficient Capital Markets and Portfolio Investment
-------------- --------------
Private sector growth in Ghana has been constrained by
limited financing opportunities for private investment.
Seventeen years after the beginning of financial sector
reforms in 1988, much remains to be done. Confidence in the
financial sector has suffered because of policy interventions
by the government, many of which have not facilitated the
free flow of financial resources in the product and input
markets. Current high interest rates on bank loans (over 25
percent) have been a serious impediment to raising capital on
the local market.

Banks in Ghana are relatively small. The largest in the
country, Ghana Commercial Bank (GCB),has a net worth of
approximately USD 50 million. Out of the 18 banks in Ghana,
the government has a majority ownership position in GCB and
fully owns two other banks. The government is still
reviewing options regarding divestiture of its remaining
interest in GCB. The Bank of Ghana, under its 2004 universal
banking policy, increased capital requirements for
establishing a bank to 70 billion cedis (USD 7.7 million).
This new level applies to both foreign and Ghanaian-owned
banks. In the past, foreign-owned banking businesses faced
higher capital requirements than Ghanaian-owned banks: 50
billion cedis (USD 5.6 million) versus 25 billion cedis (USD
2.8 million). In mid-2005, the Bank of Ghana lowered the
official secondary reserve requirements for financial
institutions from 35 to 15 percent, so total bank reserve
requirements are now 24 percent.

Some recent developments in the non-banking financial sector
have been encouraging. Among the non-banking financial
institutions, leasing companies, building societies and
savings and loan associations have been innovative in serving
savers and borrowers. In addition, the formulation of new
regulatory policies for the Ghana Stock Exchange (which has
29 listed companies and 2 corporate bonds at the present time
and oversees portfolio investment) has been promising. The
Ghana Stock Exchange (GSE) was one of the best performing
bourses in emerging markets in 2003 and 2004, although it
fell substantially in 2005. It is open to all foreign buyers
and subject to the restrictions described in section 7.5,
paragraph 3. Both foreign and local companies are allowed to
list on the GSE. The Securities Regulatory Commission
regulates the activities on the Exchange.

Although Ghana's informal financial sector is large, with an
estimated 45 percent of all private sector financial savings
mobilized initially through informal channels, its capacity
to serve as an intermediary between savers and investors has
been limited. This is due in part to Ghanaians' savings
behavior (customarily avoiding the formal banking system),
and in part to the absence of strong links with the formal
sector.

A.10. Political Violence
--------------
Ghana offers a relatively stable and predictable political
environment for American investors. There is no indication
at present that the level of political risk in Ghana will
change markedly over the near term. Peaceful and fair
presidential and parliamentary elections were held on
December 7, 2004. Incumbent President, John Agyekum Kufuor
of the New Patriotic Party, was reelected for a second
four-year term, completing a fourth consecutive democratic
election.

A.11. Corruption
--------------
Corruption in Ghana is somewhat less prevalent than in other
countries in the region, and no U.S. firms have identified
corruption as the main obstacle to foreign direct investment.
However, several local opinion polls recently concluded that
there is a growing perception in Ghana that
government-related corruption is on the rise. Transparency
International ranked Ghana 65 out of 159 countries in its
2005 Global Corruption Perceptions Index, dropping slightly
from 3.7 to 3.5 on a scale of 0 to 10 (10 least corrupt).

Ghana is not a signatory to the OECD Convention on Combating
Bribery. It has, however, taken steps to amend laws on
public financial administration and public procurement. The
public procurement law, passed in January 2004, seeks to
harmonize the many public procurement guidelines used in the
country and also to bring public procurement into conformity
with WTO standards. The new law aims to improve
accountability, value for money, transparency and efficiency
in the use of public resources. The government, in
conjunction with civil society representatives, is drafting a
Freedom of Information bill, which will allow greater access
to public information. Notwithstanding the new procurement
law, companies cannot expect complete transparency in locally
funded contracts. There have been recent allegations of
corruption in the tender process and the government has in
the past set aside international tender awards in the name of
national interest.

American businesses have reported being asked for "favors"
from contacts in Ghana, in return for facilitating business
transactions. These favors could potentially conflict with
U.S. business ethics or laws, and U.S. business visitors
should make clear that U.S. companies operating abroad are
subject to the Foreign Corrupt Practices Act of 1977.

Commercial fraud in the form of scams, especially in gold or
currency deals, is on the rise in Ghana. These are commonly
termed "419" scams. While these cases are exceptions and not
the rule to doing business in Ghana, U.S. potential gold and
diamond buyers are strongly advised to deal directly with the
Precious Minerals Marketing Company (PMMC) in Ghana. Gold
and diamonds can be exported legally from Ghana only through
the PMMC, and prices are based solely on the London Exchange
price on the day of export. No discounting or negotiation of
prices prior to export by the PMMC is valid. U.S. firms can
request a background check on companies and individuals with
whom they wish to do business by using the U.S. Commercial
Service's International Company Profile (ICP). Requests for
ICPs should be made through the nearest U.S. Export
Assistance Center. For more information about the U.S.
Commercial Service, visit www.buyusa.gov/ghana.

The Government of Ghana has publicly committed to ensuring
that government officials do not use their positions to
enrich themselves. Official salaries, however, are modest,
especially for low-level government employees, and such
employees have been known to ask for a "dash" (tip) in return
for assisting with license and permits applications

The 1992 Constitution provided for the establishment of a
Commission On Human Rights and Administrative Justice
(CHRAJ). Among other things, the Commission is charged with
investigating all instances of alleged and suspected
corruption and the misappropriation of public funds by
officials. The Commission is also authorized to take
appropriate steps, including providing reports to the
Attorney General and the Auditor-General, in response to such
investigations. The Commission has a mandate to prosecute
alleged offenders when there is sufficient evidence to
initiate legal actions. The Commission, however, is
under-resourced and few prosecutions have been made since its
inception.

In 1998, the Government of Ghana also established an
anti-corruption institution, called the Serious Fraud Office
(SFO),to investigate corrupt practices involving both
private and public institutions. SFO's 1999 report to the
President and Parliament reported cases of economic fraud
that resulted in more than USD 2 million in losses to the
country. The SFO has called for a national debate on how to
deal with largesse acquired through economic crimes since the
present punishment of dismissal and imprisonment is an
inadequate deterrent. The government has announced plans to
streamline the roles of the CHRAJ and SFO, in order to remove
their duplication of efforts. Government has also submitted
"Whistle Blower" legislation to Parliament. This bill will
encourage Ghanaian citizens to volunteer information on
corrupt practices to appropriate government agencies.


B. Bilateral Investment Agreements
--------------
Ghana has concluded investment protection and promotion
agreements with 21 countries. Parliament has ratified eight
of these agreements, including with the U.S., the United
Kingdom, Republic of China, Denmark, Germany, Malaysia, The
Netherlands and Switzerland. The remainder are signed but
not yet ratified. Nineteen other countries are negotiating
similar arrangements. The U.S. signed three agreements
between 1998 and 2000: the OPIC Investment Incentive
Agreement (ratified in 2004),the Trade and Investment
Framework Agreement (TIFA),and the Open Skies Agreement.

Ghana has met eligibility requirements to participate in the
benefits afforded by the African Growth and Opportunity Act
(AGOA) and also qualified for the apparel benefits under AGOA.

Ghana has double taxation agreements (DTA) in force with only
France and the U.K. The Ghana government has signed a DTA
with Germany, but Ghana's Parliament has not yet ratified it.


C. OPIC and Other Investment Insurance Programs
-------------- ---
OPIC is active in Ghana, and OPIC officers visit Ghana
periodically to meet with representatives of prominent
American and Ghanaian firms. OPIC launched the Modern Africa
Growth Fund and the Africa Infrastructure Investment Fund,
which are sources of information and financing for investment
in Ghana. The African Project Development Facility (APDF)
and the African investment program of the International
Finance Corporation are other sources of information. Ghana
is a member of the World Bank Group's Multilateral Investment
Guarantee Agency (MIGA).


D. Labor
--------------
Ghana has a large pool of relatively inexpensive and
unskilled labor. English is widely spoken, especially in
urban areas. Labor regulations and policies are generally
favorable to business. Labor-management relations are fairly
good.

The new Labor law (Act 651) passed in 2003 became effective
in March 2004. The new law unifies and modifies the old
labor laws to bring them into conformity with the core
principles of the International Labor Convention, to which
Ghana is a signatory. All the old labor related laws, except
the Children's Law (Act 560),have been repealed.

Under the new Labor Law, the Chief Labor Officer will now
issue collective bargaining agreements (CBA) in lieu of the
Trade Union Congress (TUC). This effectively limits the
TUC's monopoly, since the old CBA provisions implicitly
compelled all unions to be part of TUC. Also, instead of the
labor court, a National Labor Commission has been established
to resolve labor and industrial disputes. Finally, the
Tripartite Committee that determines the minimum daily wage
now has legal backing, and public and private employment
centers can be created to help job seekers find work.

There is no legal requirement for labor participation in
management. However, joint consultative committees in which
management and employees meet to discuss issues affecting
business productivity are common.

There are no statutory requirements for profit sharing, but
fringe benefits in the form of year-end bonuses and
retirement benefits are generally included in collective
bargaining agreements.

Consulting a local attorney with regard to labor issues is
recommended. The U.S. Embassy in Accra maintains a list of
local attorneys, which is available upon request.


E. Foreign Trade Zones/Free Ports
--------------
Free Trade Zones were established in May 1996, one near Tema
Steelworks, Ltd., in the Greater Accra Region, and two other
sites located at Mpintsin and Ashiem near Takoradi. The
seaports of Tema and Takoradi, as well as the Kotoka
International Airport and all the lands related to these
areas, are part of the free zone. The law also permits the
establishment of single factory zones outside or within the
areas mentioned above. Under the law, a company qualifies to
be a free zone company if it exports more than 70 percent of
its products. Among the incentives for free zone companies
are a ten-year corporate tax holiday and zero duty on imports.
To make it easier for free zone developers to acquire the
various licenses and permits to operate, the Ghana Free Zones
Board provides a "one-stop approval service" to assist in the
completion of all formalities. A lack of resources has
limited the effectiveness of the Board, however. To further
facilitate operations in the zones, nationals of OECD
countries, East Asian countries, and the Republic of South
Africa may with advance notice obtain entry visas at the
international airport in Accra. However, all foreign
employees of businesses established under the program will
require work and residence permits.

The contact address for the secretariat is as follows:

The Director
Ghana Free Zones Board
Ministry of Trade & Industry Annex
P.O. Box M.47
Accra - Ghana
Tel: 233-21-780532/3/4/5/7
Fax: 233-21-780536
E-mail: freezone@africaonline.com.gh


F. Major Foreign Investors in Ghana
--------------
Major foreign investments in Ghana are mainly in mining and
manufacturing. Great Britain is Ghana's leading foreign
investor with direct investment exceeding USD 750 million.
Major U.S. investors are, CMS Energy (independent power
producer),Regimanuel Gray Limited (housing and
construction),Coca-Cola Company, Affiliated Computer
Services (data processing),Pioneer Foods (Star-Kist tuna),
Phyto-Riker (pharmaceuticals),Millicom (telecommunications),
and Newmont Mining.


G. Foreign Direct Investment (FDI) Statistics
-------------- -
FDI statistics in Ghana tend to be unreliable since the
promotion and monitoring of FDI in Ghana are carried out by
several agencies without coordination in arriving at a total
figure.

Since 1994, however, the Ghana Investment Promotion Center
(GIPC) has registered over 1281 projects. GIPC provided the
following statistics on registered private investments.
(Note: These figures do not include investments in the
mining and petroleum industries and free zones, which are all
major recipients of FDI. End Note)

Foreign direct investment (FDI) (USD million)

1994 Sep ) 1999 Dec 1,205.46
2000 114.91
2001 89.32
2002 58.93
2003 88.06
2004 143.73
2005 (Jan ) Sep) 98.08

Note: Between September 1994 and September 2005, the U.S.
ranked fifth in terms of number of investment projects (131)
after India (201),China (189),Great Britain (187),and
Lebanon (154). The services and manufacturing sectors
recorded the highest number of investment projects during
this period.
BRIDGEWATER