2010 Investment Climate Statement - Ghana

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SUBJECT: 2010 Investment Climate Statement - Ghana

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Openness to Foreign Investment
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1. Attracting foreign direct investment continues to be a priority
for the government of Ghana. The Mills Government, which came to
power in January 2009, has maintained the encouragement of foreign
investment in Ghana as an integral part of Ghana's economic policy.


2. The Government of Ghana recognizes that attracting foreign
direct investment requires an enabling legal environment. The
Government passed laws to encourage foreign investment and replaced
regulations perceived as unfriendly to investors. 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.

3. The GIPC law 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.

4. The GIPC law specifies areas of investment reserved for
Ghanaians, which include 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.

5. The GIPC registers investments and provides assistance to enable
investors to become established and take advantage of relevant
incentives. GIPC registration can be filled out 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.

6. Once all necessary documents are submitted, the GIPC states that
new investments will be registered within five working days.
However, the actual time required for registration can be
significantly higher (sometimes up to one month).

7. 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 five
government agencies including the GIPC, Registrar General
Department, Internal Revenue Service (IRS),Ghana Immigration
Service, and Social Security and National Insurance Trust (SSNIT).


8. Nevertheless, the government's reforms in this area have yielded
some returns. According to The World Bank's Doing Business 2010
report issued in 2009, the average time to start a business in Ghana
is 33 days. This is a significant improvement from the 129 days it
took in 2003. Nonetheless, Ghana still ranks 135th out of 181
countries surveyed by the World Bank. In terms of overall ease of
doing business, the report ranks Ghana 92nd, down from 87th in 2009.


9. The GIPC requires foreign investors to satisfy a minimum capital
requirement. 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 does not apply to
portfolio investment, enterprises set up for export trading or
branch offices.

10. The principal law regulating investment in minerals and mining
is the Minerals and Mining Act, 2006 (Act 703). This law addresses
different types of mineral rights, issues relating to incentives and
guarantees, and land ownership. The 2006 law provides for a
stability agreement, which protects the holder of a mining lease
from future changes in law that may impose huge financial burden on
the license holder for a period of 15 years. When investment
exceeds USD500 million, a development agreement can be negotiated
which contains elements of a stability agreement and a more
favorable fiscal terms. 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.


11. 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. Following a significant oil discovery in Ghana in 2007, a
new bill, Ghana Petroleum Regulatory Authority Bill, seeks to
separate GNPC's current role as regulator and player. However, this
bill has not yet been passed, and will likely be taken up in 2010 by
Parliament. Several U.S. companies currently are involved in the
oil and gas sector in Ghana.

12. There are no 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, fishing, mining and real estate. Regarding real
estate, the 1992 Constitution recognized existing private and
traditional title to land; however, freehold acquisition of land is
no longer permitted. 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.

13. 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 which is available
on the embassy website (http://ghana.usembassy.gov) or upon
request.


14. The following table includes third-party assessments of the
Ghanaian investment climate:

MEASURE YEAR INDEX/RANKING
TI Corruption Index 2009 3.9 (67/180)
Heritage Economic Freedom 2009 58.1 (96/179)
World Bank Doing Business 2009 92/183
MCC Gov't Effectiveness 2009 0.72 (98 percent)
MCC Rule of Law 2009 0.80 (95 percent)
MCC Control of Corruption 2009 0.72 (97 percent)
MCC Fiscal Policy 2009 -9.7 (2 percent)
MCC Trade Policy 2009 65.3 (40 percent)
MCC Regulatory Quality 2009 0.71 (100 percent)
MCC Business Start Up 2009 0.95 (73 percent)
MCC Land Rights Access 2009 0.726 (81 percent)
MCC Natural Resource Mgmt 2009 64.02 (54 percent)

Percent rankings for MCC measures indicate a percentile within peer
income group.

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

16. In July 2007, the government redenominated the cedi by removing
4 zeroes. As of January 1, 2008, the new currency, the Ghana cedi
(GHC)(notes) and Ghana pesewa (coins) are the only currency in
circulation. As of January 2010, one USD was equal to about 1.424
GHC and the largest bill is 50 GHC.

17. Ghana's hard currency needs are met largelyBQQYhQfMQ%gQQE`Q}Q1Ql*[O\F access to the high court by any
person who has an interest or right over the property.

21. American investors are generally not subject to differential or
discriminatory treatment in Ghana, and there have been no official
government expropriations in recent times. Since 2001, two U.S.
investors have filed for international arbitration against the Ghana
government, claiming expropriation. These cases were resolved when
the Government of Ghana agreed to purchase the investments.
Nonetheless, in both cases the U.S. investors agreed to the terms of
the government purchase as an exit strategy, notwithstanding
perceived inequitable terms.
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Dispute Settlement
--------------


22. Ghana's legal system is based on British common law. Investors
should note that the acquisition of real property (land) is governed
by both statutory and customary law.

23. 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 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.

24. 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 succeeded in consistently disposing of cases within
six months. 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.

25. 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 American courts are not currently enforceable in Ghana.

26. 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.

27. The United States has signed three bilateral agreements on
trade and investment with Ghana: the OPIC Investment Incentive
Agreement, the Trade and Investment Framework Agreement (TIFA),and
the Open Skies Agreement. These agreements contain some provisions
for investment and trade dispute settlement. When the parties do
not agree on a venue for arbitration, the investor's choice
exchange transactions in Ghana. 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.
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Expropriation and Compensation
--------------


20. Ghana's investment laws provide guarantees against
expropriation and nationalization (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.

21. American investors are generally not subject to differential or
discriminatory treatment in Ghana, and there have been no official
government expropriations in recent times. Since 2001, two U.S.
investors have filed for international arbitration against the Ghana
government, claiming expropriation. These cases were resolved when
the Government of Ghana agreed to purchase the investments.
Nonetheless, in both cases the U.S. investors agreed to the terms of
the government purchase as an exit strategy, notwithstanding
perceived inequitable terms.
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Dispute Settlement
--------------


22. Ghana's legal system is based on British common law. Investors
should note that the acquisition of real property (land) is governed
by both statutory and customary law.

23. 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 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.

24. 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 succeeded in consistently disposing of cases within
six months. 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.

25. 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 American courts are not currently enforceable in Ghana.

26. 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.

27. The United States has signed three bilateral agreements on
trade and investment with Ghana: the OPIC Investment Incentive
Agreement, the Trade and Investment Framework Agreement (TIFA),and
the Open Skies Agreement. These agreements contain some provisions
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.

28. 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 Commercial Conciliation Center of the
American Chamber of Commerce (Ghana) provides arbitration services
on trade and investment issues.

29. 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, for disputes within the energy sector, the
government has expressed a 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").
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Performance Requirements and Incentives
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30. 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. In the case of banks, the opening of branches
requires approval from the central bank. Investors are not required
to purchase from local sources. Investors are not required to
export a specified percentage of their output, except for free zone
enterprises operating under the Free Zone Act, which must export 70
percent of their products.

31. Foreign investors are not required by law to have local
partners except in the fishing, insurance, and mining industries.
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. There is compulsory local
participation in the extractive sector: by law, the Government of
Ghana acquires an automatic ten percent of all interests in mining
and oil and gas ventures (a carried interest, at no cost to the
government). The 2006 Minerals and Mining law, however, allows the
government of Ghana to negotiate any other form of participation.

32. 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 local employment requirement 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.

33. Ghana regulates the transfer of technologies 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 obligations to procure personnel, inputs, and
equipment from the transferor or specific source. The duration of
related contracts cannot 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.

34. 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. Tax incentives vary
depending upon the sector in which the investor is operating.

35. All investment-specific laws contain some 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 on) these production items. The Government of
Ghan recently imposed a five percent import duty on some items that
were previously zero-rated, to conform with the ECOWAS common
external tariff.

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

37. The GIPC website (www.gipc.org.gh) provides a thorough
description of available incentive programs. The law also
guarantees an investor all the tax incentives provided for under
Ghanaian law. For example, rental income from commercial and
residential property is exempt from tax for the first five years
after construction. Similarly, income from a company selling or
leasing 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.

38. 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) and oil and gas exploration companies (35
percent). For some sectors there are tax holidays for a period 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 zero 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.

39. The government charges a 12.5 percent VAT plus a 2.5 percent
Health Insurance Levy 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.

40. Ghana has no discriminatory or excessively burdensome 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. Several U.S. firms have recently
reported extensive delays in receiving the work permits to which
they are entitled by their investment levels.

41. Ghana has no import price controls. It is pursuing a
liberalized import regime policy within the framework 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.

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Right to Private Ownership and Establishment
--------------


42. 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 4).

43. 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.

44. Private and public enterprises compete on an equal basis with
respect to access to credit, markets, licenses, and supplies.
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Protection of Property Rights
--------------


45. The legal system recognizes and enforces secured interest in
property, both chattel and real property. 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.

46. 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.

47. 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 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. Except for the Copyright law, implementing legislation
necessary for fully effective promulgation has not been passed.

48. Piracy of intellectual property is known to take place.
Although precise statistics are not available for many sectors,
there is evidence that the proportion of counterfeits is high for
products such as software and (to a lesser extent) pharmaceuticals.
Counterfeit products have also been discovered from such disparate
sectors as industrial epoxy, cosmetics and household cleaning
products. Based on cases where it has been possible to trace the
origin of counterfeit goods, most (although not all) have been found
to have been produced outside the region (usually in Asia). Holders
of intellectual property rights have access to local courts for
redress of grievances, although the few trademark, patent, and
copyright infringement cases that have been filed in Ghana by U.S.
companies are reported to move through the legal system slowly.
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Transparency of the Regulatory System
--------------


49. 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" for investment registration. In
practice, it does not really operate as a "one-stop shop;" it serves
more as a facilitating mechanism.

50. 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, downstream petroleum, 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.
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Efficient Capital Markets and Portfolio Investment
-------------- --------------


51. 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 within the
country. While credit to the private sector has increased, the high
interest rates on bank loans (in the 30 percent range) continue to
be an impediment to raising capital on the local market.

52. Banks in Ghana are relatively small. The largest in the
country, Ghana Commercial Bank (GCB),has a net worth of
approximately USD 150 million. Out of the 26 banks in Ghana, the
government has a majority ownership position in GCB and fully owns
two other banks. Under the central bank's new minimum capital
requirement for banks, existing banks with majority foreign
ownership had to increase their capital base to GHC 60 million
(approximately USD 42 million) from GHC 7 million (approximately USD
5.0 million) by December 31, 2009, while banks with Ghanaian
majority share ownership (local banks) will first have to increase
their capital base to GHC 25 million by December 31, 2009, and have
until 2012 to fully increase it to GHC 60 million. This new level
applies to new banks entering the market. The Bank of Ghana
abolished official secondary reserve requirements for financial
institutions in 2006. The banking reserve requirement is now 9
percent.

53. Recent developments in the non-banking financial sector
indicate increased diversification. 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 (GSE)(which as of December 2009 had 36
listed companies, 3 government bonds and 1 corporate bond and
oversees portfolio investment) has had varied performance. The
Ghana Stock Exchange (GSE) was one of the best performers among
emerging markets in 2007, but in 2008 it was one of the worst
performers, recording a decline of 47.9 percent. It is open to all
foreign buyers. Both foreign and local companies are allowed to
list on the GSE. The Securities Regulatory Commission regulates the
activities on the Exchange.

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Competition from State-Owned Enterprises
--------------


54. 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. Given privatization efforts over the past decade, only a
handful of state-owned enterprises remain, some of which are in poor
financial condition. The government also pursues partial
privatization through selling equity stakes in state-owned
enterprises on the GSE.

55. The Divestiture Implementation Committee (www.dic.com.gh)
oversees most privatization efforts. Actual divestiture is usually
done through a bidding process; bidders 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, tax paying, productive ventures employing
Ghanaians. Generally, foreign investors constitute the interested
bidders. Few local investors have sufficient capital to participate
in divestitures, but local firms may partner with foreign firms.
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Corporate Social Responsibility
--------------


56. Corporate social responsibility (CSR) is of growing concern
among Ghanaian companies. The Ghana 100 is a ranking of the top
performing companies. It is based on several criteria, including a
10 percent weight assigned to corporate social responsibility,
including philanthropy. Consumers do not generally demand CSR
activities from all companies, but they expect them from companies
engaged in the extractive industries. Local communities where
foreign firms reap a profit from natural resources expect those
firms to give back to the communities in which they are active.


57. Foreign and local enterprises do not tend to follow CSR
guidelines such as the OECD Guidelines for Multinational
Enterprises.

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Political Violence
--------------


58. Ghana offers a relatively stable and predictable political
environment for American investors. Ghana has a solid democratic
tradition, completing its fifth consecutive democratic election in
December 2008. There is no indication at present that the level of
political risk in Ghana will change markedly over the near term.
Ex-president John Agyekum Kufuor of the New Patriotic Party
completed his second, and final, four-year term in 2008 and
peacefully handed over power to the National Democratic Congress's
John Atta-Mills, who began a four-year term in January 2009. The
2008 election was keenly contested but generally peaceful and
conducted transparently in a free and fair manner.
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Corruption
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59. Corruption in Ghana is comparatively less prevalent than in
other countries in the region, although it remains a problem.
However, a few U.S. firms have identified corruption as the main
obstacle to foreign direct investment. Since 2006, Ghana's score
and ranking on the Transparency International Global Corruption
Perceptions Index has improved slightly.

60. 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 the law as inadequate. The government, in
conjunction with civil society representatives, drafted and
presented to Parliament in November 2009, the 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.

61. American businesses report 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. 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.

62. Commercial fraud in the form of scams, especially in gold or
currency deals, is frequent in Ghana. These are commonly termed
"419" scams. 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.

63. The 1992 Constitution established the 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 investigate 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.

64. 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. A law to revise the SFO law is being drafted and it
is expected to define more clearly treatment of the proceeds from
criminal activities. The government passed a "Whistle Blower" law
in July 2006, intended to encourage Ghanaian citizens to volunteer
information on corrupt practices to appropriate government agencies.
In December 2006, CHRAJ issued guidelines on conflict of interest
to public sector workers. In December 2009 CHRAJ and the government
issued a new Code of Conduct for Public Officers in Ghana with
guidelines on conflicts of interest. A Freedom of Information bill
is still pending in Parliament.
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Bilateral Investment Agreements
--------------


65. Ghana has bilateral investment agreements with the following
countries: 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.

66. 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.
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OPIC and Other Investment Insurance Programs
--------------


67. 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).
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Labor
--------------


68. Ghana has a large pool of unskilled labor. English is widely
spoken, especially in urban areas. Labor regulations and policies
are generally favorable to business. Although labor relations are
in general positive, there are occasional labor disagreements
stemming from wage policies in Ghana's inflationary environment.
Many employers find it advantageous to maintain open lines of
communication on wage calculations and incentive packages. A
revised Labor Law of 2003 (Act 651) 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.

69. Under the Labor Law, the Chief Labor Officer issues collective
bargaining agreements (CBA) in lieu of the Trade Union Congress
(TUC). This change limited the TUC's influence, since the prior CBA
provisions implicitly compelled all unions to be part of TUC. Also,
instead of the labor court, a National Labor Commission was
established to resolve labor and industrial disputes. Finally, the
Tripartite Committee that determines the minimum daily wage was
given legal authority.

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

71. 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.

72. Post recommends consulting a local attorney for detailed advice
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
http://ghana.usembassy.gov or upon request.
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Foreign Trade Zones/Free Ports
--------------


73. 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.

74. 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.
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Major Foreign Investors in Ghana
--------------


75. 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); Kosmos Energy, Anadarko, Hess, and
Vanco (oil and gas exploration); Newmont Mining (gold mining);
Archer Daniels Midland, Cargill (cocoa processing); and Affiliated
Computer Services (data processing).
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Foreign Direct Investment (FDI) Statistics
--------------


76. The following table shows recent dramatic growth in FDI in
Ghana.

FDI (USD million) FDI as share of GDP (percent)
2000 165.9 3.3
2001 89.3 1.7
2002 58.9 0.9
2003 136.6 1.8
2004 139.7 1.6
2005 145.0 1.4
2006 434.5 3.5
2007 970.4 6.4
2008 2,111.6 13.2
2009* 660.3 4.3
* Provisional figure for - Jan. to Sep. 2009
Source: Bank of Ghana, International Monetary Fund (IMF)

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