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Are there laws protecting local businesses from foreign investors?
How do we ensure such protection and are there any laws that protect Ghanaian businesses from such threats?
OTK, Lapaz,
Accra.
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Dear OTK, There is no unified definition of Local Content and Participation in Ghana.
In general, Local Content refers to the procurement of locally made goods and services while local participation relates to equity ownership of Ghanaians in all businesses irrespective of the dominant owners and their orientation.
Local content and participation is not codified in one statute, however, some key legislations like the Ghana Investment Promotion Centre(GIPC) Act 2013 (ACT 865), the Public Procurement Authority Act 2003 (ACT 663), the Energy Commission (Local Content and Local Participation) (Electricity Supply Industry) Regulations, 2017 (L.I. 2354) the Petroleum (Local Content and Local Participation) Regulations 2013 LI2204 and the Minerals and Mining (General Regulations) 2012 LI2173 stipulate the minimum requirement for local content and participation in the respective sectors.
The government agency responsible for facilitating local and foreign investment in Ghana is the Ghana Investment Promotion Centre (GIPC).
The agency is regulated by the provisions of the Ghana Investment Promotion Center Act 2013 (Act 865) which stipulates the incentives for foreign and local participation.
The GIPC stipulates that the capital requirement for a wholly foreign-owned company is the sum of $500,000.
A foreign company can partner with a local Ghanaian company for a lower minimum capital requirement of $200,000 with at least 10 per cent equity participation from the local partner.
A foreign company that intends to engage in a trading enterprise is required to invest a minimum capital of not less than $1,000,000.
In addition, such a trading company must employ at least 20 skilled Ghanaians.
The foreign capital requirement under the Act can be contributed in cash or goods worth or a combination of both.
Under the Act, there is an automatic expatriate quota for foreign companies depending on the amount of paid-up capital.
For a company with not less than $50,000 and not more than $250,000 paid-up capital, such a company is entitled to an automatic expatriate quota of one person.
For a company with not less than $250,000 and not more than $500,000 paid-up capital, such a company is entitled to an automatic expatriate quota of two persons.
For a company with not less than $500,000 and not more than $700,000 paid-up capital, such a company is entitled to an automatic expatriate quota of three persons.
For a company with more than $700,000 paid-up capital, such a company is entitled to an automatic expatriate quota of four persons.
These laws are to ensure real protection and capital injections into the Ghanaian economy ensuring real protection from foreigners that may have so much capital to take over Ghanaian businesses and trading.
The more foreigners you see engaging in businesses in Ghana should inform and strengthen your belief of the insistence of these rules by the needed authority and the positive influence on our Ghanaian economy to have access to goods and capital.
