It’ll be an Economic Travesty to Completely Scrap Minimum Capital Rule – Prof. Asuming Warns

As the government of President Mahama considers amending the GIPC Act, an economist at the University of Ghana Business School, Prof. Patrick Asuming, says it will be an economic travesty for the state to scrap the minimum capital requirement for foreign investors under the GIPC Act.

Prof. Asuming says the regulation exists for a reason, which is to protect the country’s economic interests and guide the kind of foreign direct investment (FDI) Ghana attracts.

He argued that nations that reap the most from FDI are those that make strategic choices, not those that throw their doors wide open without direction.

Prof. Asuming explained that foreign participation in certain sectors should be tied to a long-term national strategy, where the government deliberately decides which areas require outside expertise or capital. Even then, he stressed, such participation is often temporary and carefully managed.

“It would really be a travesty if we went ahead to completely scrap the minimum capital requirements that are contained in our investment laws. They were there for a reason,” the economist indicated.

For him, just opening the floodgates will put Ghana at risk of exposing its fragile economy to foreign dominance, deepening the woes of local businesses already struggling to compete.

“The countries that benefit the most from FDI are the countries that make strategic choices. So you look at your economy and you have a long-term strategic plan and vision. Then you figure out areas where you feel foreign participation would be helpful. And even that is generally temporary because you have a strategy. And you say, maybe this area I don’t have enough expertise, I don’t have enough capital. So, in that area or maybe the next 10 years, I want to encourage foreign participation in that space,” he noted.

He added, “Then you do that so that you ensure that they are there to fix or to fit into a particular long-term strategy that you have. So if that’s your approach, you will never go and say, I’m going to open the way for anyone to come in.”

Other critics of the move, such as CUTS International, GUTA, and AGI, fear that completely scrapping the minimum capital rule could weaken domestic industries, kill jobs, and make Ghana’s economic sovereignty even more vulnerable.

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