Let’s give equal support to local investments
The Chief Executive Officer of the UT Holdings, Mr Martyn Mensah, is advocating equal opportunities and incentives for local investments and their foreign counterparts, explaining that the country's over-zealousness for foreign direct investments (FDIs) over those from within is detrimental to the growth of the local economy.
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He said encouraging FDIs over local direct investment (LDIs) was "risky" for the country, given that foreign investors, unlike local investors, are only interested in making money off the economy, and not interested in the good of the nation.
"We must ensure that local investment is always encouraged otherwise, we stand the risk of giving out our economy to outsiders whose real allegiance is not to the economy or nation they live in; their loyalty is to the money they make from the nation and there is a big difference.
“Their loyalty is not wrong, its business, but if our agenda is business, then we must try and incentivise those who, whether they like it or not, are permanent stakeholders in this nation," Mr Mensah said in an interview shortly after addressing the Africa SME Summit in August 28 in Accra.
Indeed, we at the GRAPHIC BUSINESS share Mr Mensah’s views. We have maintained the position that our local businesses need every form of support to flourish.
There are many local companies that have grown from scratch to multinationals right in this country. Take a company like Tropical Cables and Conductors; it has grown from nothing to an international exporter of cables.
The same applies to Interplast; the company has been built from nothing over the past 50 years to become the biggest supplier of plastic pipes in West Africa.
The question, however, is what form of support has these companies received from the state over the years?
Currently, free zones enterprises under the Ghana Free Zones Board (GFZB) Act, 1995 (Act 504), which seeks to bait export-oriented companies into the country, are exempted from paying taxes on their profits for the first 10 years of operation.
Thereafter, the law allows them to pay a maximum income tax of eight per cent on their profits compared to the current rate of 25-35 per cent paid by businesses, which operate outside of the free zones, including those owned by indigenes.
These incentives add to a host of others, including guaranteed serviced lands on which to set up and duty-free imports by these businesses and their assignees as specified under the law.
Given that these incentives lower the cost of operations of the beneficiary businesses, mostly foreign, the GRAPHIC BUSINESS think that restricting these incentives to foreigners amounted to being selective.
That action contributes to the strangulation of local entrepreneurship.
The paper believes that while dangling carrots at the foreign investors to lure them to bring in their investments, similar incentives must be directed at encouraging local investments.
We need to put the issue of whether it is foreign or local aside and talk about investments. If we say FDI is good for our country, then, it can be implied that, we are also saying that local investments are also good for the country.
Therefore, the conversation on investments, we believe, must be about new businesses setting up in the country irrespective of where they are coming from.
