CUTS Int’l Welcomes Govt’s Investment Reforms But Prefers Reduction Over Total Scrap of Capital Requirements

Civil Society Organization, CUTS International, Accra, is welcoming the government’s decision to scrap minimum capital requirements for foreign investors but argues that a measured reduction, rather than outright abolition, would better balance investor attraction with local economic interests.

President John Dramani Mahama, in a recent announcement, revealed that the revised Ghana Investment Promotion Centre (GIPC) Act will eliminate entry thresholds for foreign-owned firms.

The reform, unveiled at the Presidential Investment Forum during TICAD-9 in Japan, is part of the government’s broader bid to position Ghana as one of Africa’s most attractive investment destinations.

In a policy paper titled “Sustainable Investment in Ghana: Policies and Measures for Consideration,” copied to The High Street Journal, CUTS applauds the intent to remove barriers and encourage more diverse investment, but notes that completely scrapping minimum requirements may create new challenges.

Instead, the organisation advocates for reduced and differentiated thresholds that reflect the needs of different sectors.

Under the existing GIPC Act (2013), foreign investors in retail trade must invest at least $1 million, joint ventures require $200,000, and wholly foreign-owned firms must bring in $500,000.

CUTS, in the document, observes that these figures are comparatively high, especially when benchmarked against other African countries, of which some have even abolished such requirements entirely.

However, instead of outright elimination, CUTS recommended that Ghana adopts a tiered approach. For example, capital-light industries such as technology should face lower requirements than capital-intensive sectors.

In the policy brief, CUTS told the government to “consider reducing and/or differentiating the minimum capital requirement for foreign-owned firms to invest in Ghana.”

The current situation, the CSO says, “is seen as a disincentive to invest since these levels are quite high when compared with other African countries, some of which have even abolished minimum capital requirements.”

“In addition to reducing the minimum capital requirement for foreign investors, Ghana could consider differentiating between minimum capital requirements for different types of firms. For instance, technology firms are relatively asset-light and therefore do not require large capital expenditures to start operations; having high capital requirements may therefore be a disincentive to the entry of technology firms in the Ghanaian market.”

By reducing rather than scrapping the minimum requirements, it is believed that Ghana can strike a middle path, keeping the country competitive while ensuring safeguards for local businesses, particularly in sensitive areas like retail.

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