Identifier
Created
Classification
Origin
08ACCRA89
2008-01-16 09:13:00
UNCLASSIFIED
Embassy Accra
Cable title:  

GHANA 2008 INVESTMENT CLIMATE STATEMENT

Tags:  ECON EFIN OPIC USTR 
pdf how-to read a cable
VZCZCXRO3292
RR RUEHMA RUEHPA
DE RUEHAR #0089/01 0160913
ZNR UUUUU ZZH
R 160913Z JAN 08
FM AMEMBASSY ACCRA
TO RUEHC/SECSTATE WASHDC 5976
INFO RUEHZK/ECOWAS COLLECTIVE
RUCPDOC/USDOC WASHDC 0642
RUCPCIM/CIMS NTDB WASHDC
UNCLAS SECTION 01 OF 11 ACCRA 000089

SIPDIS

Dept for EB/IFD/OIA for N HATCHER and AKAMBARA

SIPDIS

E.O.12958: N/A
TAGS: ECON EFIN OPIC USTR
SUBJECT: GHANA 2008 INVESTMENT CLIMATE STATEMENT

REF: STATE 158802

Post is pleased to provide the 2008 Investment Climate
Statement for Ghana.

Begin Text:

A.1. Openness to Foreign Investment

Attracting foreign direct investment continues to be a
priority for the government. President Kufuor, re-elected
in December 2004, encourages foreign investment as an
integral part of Ghana's economic policy. The Ghana
Investment Advisory Council (GIAC),which was established
with the help of the World Bank, helps shape government
policy aimed at creating an enabling investment
environment. The GIAC consists of multinational and local
companies and institutional observers (IMF, WB, UNDP).

Ghana embarked on a privatization program in the early
1990s. The Ghanaian government at one point controlled
more than 350 state-owned enterprises, but nearly 300 were
privatized by the end of 2000 under the privatization
program of former President Rawlings. Privatization
efforts have continued under the Kufuor Administration
under a reconstituted Divestiture Implementation Committee.
As of December 31, 2007, more than 300 firms had been
privatized, leaving only a handful of state-owned
enterprises, some of which are in very poor financial
condition. The government also pursues privatization
through selling of state-owned shares on the Ghana Stock
Exchange (GSE). For example, the government in 2007
offered its shares in Ghana Oil Company and State Insurance
Company on the GSE.

The Divestiture Implementation Committee (www.dic.com.gh)
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. Foreign investors
comprise most of the interested bidders. Few local
investors have sufficient capital to participate in this
process except as partners with foreign firms.

Although the Kufuor administration has publicly stated its

support to eliminate or reduce its holdings in state-owned
enterprises, it has made only three major new divestitures
during its 7 year tenure, the Cocoa Processing Company,
Ghana Oil Company and the State Insurance Company. The
government's partial privatizations of Ghana Telecom and
Western Wireless (Westel) are in their final stages.

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. In general, 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 fleet of at
least 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.

With the enactment of the GIPC law, the Government of Ghana
stopped screening investments. The GIPC registers
investments and provides assistance to enable investors to

ACCRA 00000089 002 OF 011


become established and take advantage of relevant
incentives. GIPC registration can be done online at
http://www.gipc.org.gh/forms_page.aspx. 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 foreign 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, 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).
Nevertheless, the government?s reforms in this area have
yielded some returns. According to The World Bank's Doing
Business 2008 report issued in 2007, the average time to
start a business in Ghana is 42 days. This is a
significant improvement from the 129 days it took in 2003
but still places Ghana 138th out of 178 countries surveyed
on this indicator. In terms of overall ease of doing
business, the report ranks Ghana 87th and, for the past two
years, one of the top ten reformers in the world.

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 (operating inside or
outside of Free Zones),or branch offices.

The principal law regulating investment in minerals and
mining is the Minerals and Mining Act, 2006 (Act 703),
which amended the 1984 and 1994 laws. It addresses
different types of mineral rights, issues relating to
incentives and guarantees, and land ownership. The 2006
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
(www.mincomgh.org) is the government agency that implements
the law. Non-Ghanaians may invest in mining, except in
small-scale (artisanal) mining, which is reserved for
Ghanaians.

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)
(www.gnpcghana.com) is the government institution that
administers this law. Several U.S. companies currently are
involved in oil/gas exploration in Ghana.

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: banking, securities,
fishing and real estate. Regarding real estate, the 1992
Constitution recognized existing private and traditional
title to land but does not now allow freehold acquisition
of land. There is an exception for transfer of freehold
title between family members for lands held under the
traditional system. Foreigners are allowed to enter into
long-term leases of up to 50 years (the lease may be bought
and sold and/or renewed for consecutive terms) while
Ghanaians are allowed to enter into 99 year leases.

The U.S. Embassy in Accra advises companies or individuals

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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 which is available on the embassy website
(www.accra.usembassy.gov) or upon request.

A.2. Conversion and Transfer Policies

Ghana operates a free-floating exchange rate policy regime.
Investors may convert and transfer funds associated with
the investment provided there is documentation proving how
the funds were acquired. For details, consult the GIPC Act
and the Foreign Exchange Act. Ghana's local currency, the
Ghana cedi, can be exchanged for dollars and major European
currencies.

In July 2007, the government redenominated the cedi by
removing 4 zeroes. As of January 1, 2008, the new
currency, the Ghana cedi (notes) and Ghana pesewa (coins)
is the only currency in circulation. As of January 2008,
one USD was equal to about .96 Ghana cedi and the largest
bill is 50 Ghana cedis, worth a little more than USD 50.

Ghana's hard currency needs are met largely through cocoa
and gold 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 quite stable since November 2002, bolstered by sound
macroeconomic policies, record levels of remittances and
favorable cocoa and gold prices but depreciated about 4%
against the dollar over the last two months of 2007.
However, the Bank of Ghana has noted the very low
repatriation rate of gold proceeds.

Ghana has no restrictions on the transfer of funds
associated with investment, provided documentation about
how the funds were acquired is available. 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.

There is no legal parallel remittance system for investors.
The Parliament passed a new Foreign Exchange Act in
November 2006. The Act provides a new legal framework for
the management of foreign exchange transactions in Ghana.
It is expected to efficiently integrate the country?s forex
market into the global financial system, give legal backing
to policies of the 1980s that liberalized the foreign
exchange regime. It fully liberalized capital account
transactions, including allowing foreigners to buy
securities in Ghana. It also removed the requirement for
the central bank to approve offshore loans. Payments or
transfer of foreign currency can only be made through
institutions such as banks or persons licensed to do money
transfer. The new law also gives the Central Bank power to
allow foreigners to buy securities in Ghana.

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. The
Constitution sets out both exceptions and a clear procedure
for the payment of compensation in allowable cases of
expropriation or nationalization. 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. While these cases were

ACCRA 00000089 004 OF 011


resolved when the Government of Ghana agreed to purchase
the investments, in both cases, the U.S. investors agreed
to the terms of the government purchase as an exit strategy
and considered the terms inequitable.

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. Several
lawyers are providing arbitration and/or conciliation
services. Arbitration decisions are enforceable provided
they are registered in the courts.

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, they have not been
able to handle cases that quickly. 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
currently enforceable in Ghana.

The GIPC, Free Zones, Labor, and Minerals and Mining Laws
outline 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 United States 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

ACCRA 00000089 005 OF 011


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, as a condition of privatization of some state-
owned enterprises, notably the telecommunications sector,
acquiring 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.
The new 2006 Minerals and Mining law, however, allows the
government of Ghana to negotiate any other form of
participation.

There are no requirements on physical location of
investments. However, there are tax incentives to
encourage investment in specific geographic locations,
primarily in areas outside the main urban centers. There
are also no import substitution restrictions. While the
only requirement for compulsory employment of Ghanaians is
that any investment in a trading enterprise must employ a
minimum of ten Ghanaians, the issuance of visa/work permits
for expatriate staff is tied to the size of the investment.

There are regulations relating to the transfer of
technology when it is not freely available in Ghana. For
example, according to the Technology Transfer Regulations,
1992, total management and technical fee levels should not
exceed 8 percent of net sales. Higher fees have to be
approved by GIPC. Among others, the regulation does not
allow agreements that impose obligation to procure
personnel, inputs, and equipment from the transferor or
specific source. The duration should not exceed 10 years
and cannot be renewed for more than 5 years. 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, in
conformity with the ECOWAS common external tariff.

The Ghanaian tax system is replete with tax concessions
that make the effective tax rate generally low. The
minimum incentives are specified in the GIPC law and are
not applied in an ad hoc or arbitrary manner. Once the
investor has been registered under the GIPC law, the

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investor is entitled to the incentives provided by law.
The government, however, has discretion to grant an
investor additional customs duty exemptions and tax
incentives beyond the minimum stated in the law.

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) in 2006.
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. A foreign 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

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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, although there are only a few thousand in
existence due to a variety of factors including land
ownership issues and scarcity of long-term finance.
Mortgages are regulated by the Mortgages Decree. In the
case of default, the property is sold after obtaining court
approval. 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). Ghana?s Parliament in 2004, ratified
the WIPO internet treaties, namely the WIPO Copyright
Treaty and the WIPO Performance and Phonograms Treaty.
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.
Implementing legislation necessary for fully effective
implementation has not been passed.

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 really a "one-stop shop." It serves more as
a facilitating mechanism. A new Charter was launched in
November 2007 under the public sector reform Program, under
which time frames within which government officials must
perform specific duties have been set and are monitored.

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. The creation of these bodies was
a positive step but they remain relatively under-resourced
and subject to political influence, 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.
Almost two decades after the beginning of financial sector
reforms in 1988, much remains to be done. Confidence in
the financial sector has suffered because of a legacy of
government interventions, many of which did not facilitate
the free flow of financial resources in the product and
input markets. While credit to the private sector has
increased, the high interest rates on bank loans (in the 20
percent range) continue to be an 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 92 million. Out of the 23 banks in
Ghana, the government has a majority ownership position in
GCB and fully owns two other banks. The GCB in May 2007
issued new shares for sale on the Ghana Stock Exchange,

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which resulted in a further reduction of the government
ownership. The Bank of Ghana, under its 2004 universal
banking policy, increased capital requirements for
establishing a bank to 70 billion (old)cedis (USD 7.2
million). This level applies to both foreign and Ghanaian-
owned banks. The Bank of Ghana in October 2007 proposed a
further increase in the minimum capital base for banks in
Ghana to 50 to 60 million Ghana cedis (about $52m-$63m).
The banks are expected to present their capitalization plan
to the central bank by December 31, 2008 and meet the
requirement by January 2009, but there is discussion of
offering an additional six months grace period. This new
level applies to new banks entering the market. In mid-
2005, the Bank of Ghana lowered the official secondary
reserve requirements for financial institutions from 35 to
15 percent and finally abolished it in August 2006, so the
total bank reserve requirement is now 9 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 as of January 2008 had 35 listed
companies, 2 government bonds and 4 corporate bonds 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, it fell
substantially in 2005 and then improved marginally in 2006
and 2007. It is open to all foreign buyers, 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.

A.10. Political Violence

Ghana offers a relatively stable and predictable political
environment for American investors. Ghana has a solid
democratic tradition, completing its fourth consecutive
democratic election in 2004. There is no indication at
present that the level of political risk in Ghana will
change markedly over the near term. Incumbent President
John Agyekum Kufuor of the New Patriotic Party will
complete his second, and final, four-year term in 2008.
The 2008 election will be keenly contested and there is the
possibility of some election-related violence.

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, there is a growing perception
in Ghana that government-related corruption is on the rise.
In 2007, Ghana's score and ranking, however, showed a
slight improvement over the 2006 Transparency International
Global Corruption Perceptions Index.

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.
However, some in civil society have criticized it as
inadequate. 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 continue to be 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

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commonly termed "419" scams. While these cases are
exceptions and not the rule to doing business in Ghana,
potential buyers of gold and diamond 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 permit applications

The 1992 Constitution provided for the establishment of a
Commission for 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 that cause a loss to the
state. 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. A
law to revise the SFO law is being drafted and it is
expected to deal with proceeds of crime. The government
has announced plans to streamline the roles of the CHRAJ
and SFO, in order to remove their duplication of efforts.
Government passed the ?Whistle Blower? law in July 2006.
This law is expected to encourage Ghanaian citizens to
volunteer information on corrupt practices to appropriate
government agencies. The Freedom of Information bill,is
yet to be passed. In December 2006, CHRAJ issued guidelines
on conflict of interest to public sector workers.


B. Bilateral Investment Agreements

Ghana has bilateral investment agreements with: the United
Kingdom; People's Republic of China; Romania; Denmark; and
Switzerland. These agreements were signed and ratified
between 1989 and 1992. Italy and France are negotiating
similar arrangements. Agreements with Germany, India,
Pakistan, South Korea, North Korea, and Belgium are being
considered. The United States signed three agreements
between 1998 and 2000: the OPIC Investment Incentive
Agreement, 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.


C. OPIC and Other Investment Insurance Programs

OPIC is active in Ghana, and OPIC officers visit Ghana
periodically to meet with representatives of American and
Ghanaian firms. OPIC has launched several investment
funds, 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

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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. A revised Labor law (Act 651) passed in 2003
became effective in March 2004. The new law unified and
modified 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 2003 Labor Law, the Chief Labor Officer issues
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.

Post recommends consulting a local attorney regarding labor
issues. The U.S. Embassy in Accra maintains a list of
local attorneys, which is available on the US Embassy?s web
site www.accra.usembassy.gov or 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 (www.gfzb.com) 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.

F. Major Foreign Investors in Ghana

Major foreign investments in Ghana are mainly in mining,
off-shore oil exploration and manufacturing. Great Britain
is Ghana's leading foreign investor with direct investment
exceeding USD 750 million. Major U.S. investors are
Chevron West Africa Gas Ltd. (West Africa Gas Pipeline
construction),Regimanuel Gray Limited (housing and
construction),Affiliated Computer Services (data
processing),and Newmont Mining (gold mining).


G. Foreign Direct Investment (FDI) Statistics

FDI (USD million)QFDI as share of GDP (%)

2000 165.9QQQ3.3
2001 89.3QQQ1.7
2002 58.9QQQ0.9
2003 136.6QQQ1.8
2004 QQQ 139.7QQQ1.6
2005 QQQ 145.0QQQ1.4
2006QQQQ 434.5QQQ1.4
2007* QQ 303.6QQQ3.5


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Source: Bank of Ghana, International Monetary Fund (IMF)
* ? provisional

End Text.

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