Chief Executive Officer of Dalex Finance, Joe Jackson, has cautioned that government’s plan to remove the capital threshold for foreign investors could have negative consequences for Ghanaian businesses.
Speaking in an interview with 3Business, Mr. Jackson reacted to President John Dramani Mahama’s recent announcement in Tokyo that Ghana will remove the minimum capital requirement for foreign investors as part of reforms to the Ghana Investment Promotion Centre (GIPC) Act.
The announcement was made at the Presidential Investment Forum on the sidelines of the 9th Tokyo International Conference on African Development (TICAD 9).
According to the President, the reform is designed to lower entry barriers for global businesses, encourage private sector growth, and accelerate job creation.
The GIPC Act, 2013 (Act 865) currently requires foreign investors to meet minimum capital requirements such as $200,000 for joint ventures, $500,000 for wholly foreign, and $1 million minimum for trading enterprises.
But Joe Jackson warns that scrapping these thresholds could disadvantage local entrepreneurs who already face challenges accessing affordable capital. He fears the move could open the floodgates for foreign companies to dominate the market.
“We could have done a sector-by-sector approach. We could look at whether we want to do this for traders, or maybe limit it to investments in factories, plastics, and agro investments. But are we not making it even more difficult for Ghanaian businesses? These are real questions.”
He stressed that having a parliamentary debate on the amendment will be critical, noting that “obviously, some of us are worried and maybe a sector-by-sector approach will help.”
Mr. Jackson further raised concerns about profit repatriation, cautioning that the amendment could worsen capital flight.
“We should also look at repatriation. If I bring in just $5000, how much am I going to be able to repatriate my earnings that go outside? If I bring in $5000 and earn $10,000, can I take all the $10,000 out? Those are questions we have to ask.”
While acknowledging that the policy has good intentions and the benefits can clearly be seen, he insisted that “sometimes, we have to look at the policy very carefully.”
Mahama plans to abolish minimum capital for foreign investors, revise GIPC Act
By Esinu Adza|3Business
