To do business in Ghana, we must first understand the country’s unique position. As a major hub for trade and foreign investment in West Africa, Ghana offers a stable, multiparty democracy and a diverse economy. Its strategic location makes it an attractive destination for foreign investors. The country has a well-developed financial system and ICT infrastructure. Ghana also has an established legal framework that protects private property. The government cannot take your property without a good reason and proper legal steps.
This guide will provide a clear overview of the key legal and business considerations for foreign investment in Ghana. We will explore the economic drivers, legal frameworks, and practical steps for setting up a business in Ghana to help you successfully navigate the landscape.
Ghana’s Economic and Investment Climate
Ghana offers a favourable environment for foreign investment. This is due to its strong, diversified economy and commitment to creating a stable business climate. We see this in five key areas.
Diverse and Resilient Economy
Ghana’s economy is highly diversified, with key sectors including agriculture, industry, and services. Agriculture remains a core pillar, employing about 52% of the population. The industrial sector, though still developing, includes mining, manufacturing, and food processing.
The services sector is the largest contributor to GDP, and it shows robust growth. The economy is expected to grow steadily, with projections for a healthy annual growth rate in the coming years. This signals a strong rebound from the effects of the global pandemic.
Strategic Market Access
Ghana’s membership in the Economic Community of West African States (ECOWAS) gives it access to a vast regional market. The ECOWAS Trade Liberalisation Scheme (ETLS) aims to create a free trade area. This allows for the free movement of goods, services, and people within the bloc. This provides a substantial customer base. Ghana’s exports and imports benefit from this market integration.
Trade Agreements
Ghana has secured important trade agreements with major global markets. This provides foreign businesses with a significant advantage. The country has quota-free access to the United States under the African Growth and Opportunity Act (AGOA). It also has preferential access to European Union markets. These agreements lower trade barriers and boost export potential.
Government Incentives
The government offers a range of incentives to attract foreign direct investment. These include tax holidays for companies in specific priority sectors like agriculture and manufacturing. Some projects can receive exemptions from customs import duties on machinery and equipment. Companies may also benefit from reduced corporate tax rates, especially if they are located in less developed regional capitals.
Free Zones
The Ghana Free Zones Authority (GFZA) oversees the country’s Free Zones program. Businesses in these zones can enjoy significant tax incentives. These include a 10-year corporate tax holiday. After this period, the tax rate is reduced to 15% on exports. Free zone enterprises are also exempt from duties on imports for production.
The Legal and Regulatory Environment
Navigating business laws in Ghana can be complex but a clear framework exists to help foreign investors set up and operate businesses successfully. We’ll go over the basics of company registration, taxation, and operating permits.
Company Registration
When investing in Ghana, the most common business structure is a company limited by shares. To register a company in Ghana, you need to follow these five steps:
- Conduct a company name search to ensure the name is unique.
- Complete the necessary statutory forms.
- Appoint a minimum of two directors.
- Have a local registered office.
- Appoint a qualified company secretary.
For foreign-owned companies, there are additional requirements:
- A joint venture with a Ghanaian partner requires a minimum foreign capital of at least $200,000.
- A wholly foreign-owned enterprise requires a minimum foreign capital of $500,000.
Taxation
Understanding Ghana’s tax system is important for financial compliance. The first step is to obtain a Tax Identification Number (TIN) and register with the Ghana Revenue Authority (GRA). Key taxes you’ll encounter include a corporate income tax of 25% for most companies and Value Added Tax (VAT). Ghana has an electronic VAT system that simplifies tax reporting. Additionally, for multinational corporations, it’s essential to comply with transfer pricing rules to ensure that all cross-border transactions are fair and transparent.
Operating Permits and Compliance
To operate your business legally, you must acquire a Business Operating Permit (BOP) from the local assembly where your business is located. This permit is a fundamental requirement. You are also obligated to register all your employees with the Social Security and National Insurance Trust (SSNIT) to ensure they receive proper social security benefits.
Furthermore, you need to comply with annual return filings and new beneficial ownership disclosure requirements. These rules ensure transparency and prevent money laundering by identifying the true owners of a company.
Key Sectors with Growth Opportunities
Ghana’s economy presents numerous opportunities for investors across a variety of sectors. Below are six of the most promising of Ghana’s business sectors to find success.
- Energy: Ghana’s energy sector is actively seeking investment, especially in renewable energy projects. There is a demand for developing energy infrastructure and expanding power generation to meet growing needs.
- Fintech: The country’s digital economy is experiencing rapid growth, making the financial services sector a hotbed for technology innovation. There’s significant potential in developing mobile payment platforms and other fintech solutions for a tech-savvy population.
- Mining: As one of Africa’s leading gold producers, mining remains a cornerstone of the Ghanaian economy. Opportunities exist not only in the extraction of minerals like gold, manganese, and bauxite but also in downstream processing and value addition.
- Agriculture: Agriculture is a vital part of the economy. There is great potential in agribusiness, particularly in adding value through the processing and packaging of commodities such as cocoa and palm oil.
- Real Estate: A growing urban population has created sustained demand for both commercial and residential properties. There are opportunities in developing new homes, office spaces, and retail centers to cater to this expanding market.
- Manufacturing: The manufacturing sector offers potential for investors looking to set up operations in Ghana. There are specific incentives for businesses that operate within the country’s free zones, such as tax holidays and duty exemptions, to encourage foreign direct investment.
Ghana: A Gateway to Opportunity
Ghana presents a strong value proposition for investors, thanks to its stable political climate, strategic location, and diverse opportunities across key sectors like energy, fintech, and agriculture.
While navigating a new market will always come with challenges, these are manageable with the right guidance and a proactive approach. Contact LEX Africa for the professional advice and support you need to successfully navigate the investment process in Ghana.
