This record is a partial extract of the original cable. The full text of the original cable is not available.

131127Z Jan 06

UNCLAS SECTION 01 OF 10 ACCRA 000096 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EFIN ENRG BEXP ETRD EINV PREL PGOV GH
SUBJECT: GHANA 2006 INVESTMENT CLIMATE STATEMENT 
 
REF: A. STATE 202943 
 
     ¶B. 2004 ACCRA 2536 
 
¶1. Per Ref A, Post is pleased to provide below the 2006 
Investment Climate Statement (ICS) for Ghana.  This report 
revises and updates the ICS submitted December 22, 2004 (Ref 
B). P 
 
Table of Contents 
----------------- 
 
A.1.  Openness to Foreign Investment 
  ¶2.  Conversion and Transfer Policies 
  ¶3.  Expropriation and Compensation 
  ¶4.  Dispute Settlement 
  ¶5.  Performance Requirements and Incentives 
  ¶6.  Right to Private Ownership and Establishment 
  ¶7.  Protection of Property Rights 
  ¶8.  Transparency of the Regulatory System 
  ¶9.  Efficient Capital Markets and Portfolio Investment 
  ¶10. Political Violence 
  ¶11. Corruption 
¶B.    Bilateral Investment Agreements 
¶C.    OPIC and Other Investment Insurance Programs 
¶D.    Labor 
¶E.    Foreign Trade Zones/Free Ports 
¶F.    Foreign Direct Investors in Ghana 
¶G.    Foreign Direct Investment Statistics 
 
A.1.  Openness to Foreign Investment 
------------------------------------ 
Attracting foreign direct investment remains a key objective 
of Ghana's economic recovery program, which started in 1983 
under the auspices of the World Bank and the IMF.  President 
Kufuor, re-elected in December 2004, continues to encourage 
foreign investment as an integral part of Ghana's economic 
policy. 
 
As part of his avowed commitment to attracting foreign 
investment, the President relies on advice from the Ghana 
Investment Advisory Council (GIAC), which was established 
with the help of the World Bank.  The GIAC, which consists of 
multinational and local companies and institutional observers 
(IMF, WB, UNDP), helps shape government policy to create an 
enabling investment environment. 
 
Ghana embarked on a privatization program in the early 1990s 
that has resulted in the sale of more than 300 of 
approximately 350 state-owned enterprises.  Foreign firms 
comprise most of the bidders for these businesses.  Few local 
investors have sufficient capital to participate in this 
process except as partners with foreign firms. 
 
The Divestiture Implementation Committee is the government 
institution that oversees the privatization of public 
enterprises.  Actual divestiture is usually done through a 
bidding process, and bids are evaluated on the basis of 
criteria including management skills, financial resources, 
and business plans.  New owners are expected to build the 
enterprises into profitable, productive ventures, which 
contribute to tax revenue and increase local employment. 
Although the Kufuor administration has publicly stated its 
support for continuing the privatization program, it has made 
only one new divestiture during its tenure. 
 
The Government of Ghana recognizes that attracting foreign 
direct investment requires an enabling legal environment, and 
has passed laws that encourage foreign investment and 
replaced some that previously stifled it.  The Ghana 
Investment Promotion Center (GIPC) Act, 1994 (Act 478), 
governs investment in all sectors of the economy except 
minerals and mining, oil and gas, and the free zones. 
Sector-specific laws further regulate banking, non-banking 
financial institutions, insurance, fishing, securities, 
telecommunications, energy, and real estate.  Foreign 
investors are required to satisfy the provisions of the 
investment act as well as the provisions of sector-specific 
laws.  Generally, the GIPC has streamlined procedures and 
reduced delays.  More information on investing in Ghana can 
be obtained from GIPC's website, www.gipc.org.gh. 
 
The GIPC law also applies to foreign investment in 
acquisitions, mergers, takeovers and new investments, as well 
as to portfolio investment in stocks, bonds, and other 
securities traded on the Ghana Stock Exchange. 
 
The GIPC law specifies areas of investment reserved for 
Ghanaians, such as small-scale trading, operation of taxi 
services (except when a non-Ghanaian has a minimum fleet of 
10 vehicles), pool betting businesses and lotteries (except 
soccer pools), beauty salons and barber shops.  The law 
further delineates incentives and guarantees that relate to 
taxation, transfer of capital, profits and dividends, and 
guarantees against expropriation. 
Since the enactment of the GIPC law, the Government of Ghana 
has ceased screening investments.  The GIPC registers 
investments and provides all the necessary assistance to 
enable investors to become established.  The Government of 
Ghana has no overall economic or industrial strategy that 
discriminates against foreign-owned businesses.  In some 
cases a foreign investment can enjoy additional incentives if 
the project is deemed critical to the country's development. 
U.S. and other foreign firms are able to participate in 
government-financed and/or research and development programs 
on a national treatment basis. 
 
The only pre-condition for investment in Ghana is financial; 
the GIPC requires foreign investors to satisfy a minimum 
capital requirement.  Once this is met and all necessary 
documents submitted, investments are supposed to be 
registered within five working days.  However, according to a 
June 2003 report by the Foreign Investment Advisory Service 
(FIAS), the actual time required for registration can be 
significantly higher (sometimes three to four times) than the 
required time. 
 
Although registration is relatively easy, the entire process 
of establishing a business in Ghana is lengthy, complex, and 
requires compliance with regulations and procedures of at 
least 5 government agencies including the GIPC, Registrar 
General Department, Internal Revenue Service (IRS), Ghana 
Immigration Service, and Social Security and National 
Insurance Trust (SSNIT).  This processing period often 
extends up to 100 days.  Nevertheless, the government's 
reforms in this area have yielded some returns.  The World 
Bank announced in its "2006 Doing Business" report that 
Ghana's "Time to Start a Business" improved  from 129 days in 
2003 to 81 days in 2005.  The Doing Business report ranks 
Ghana 82 out of 155 countries in the general category of 
"Ease of Doing Business." 
 
The minimum capital required for foreign investors is USD 
10,000 for joint ventures with Ghanaians or USD 50,000 for 
enterprises wholly owned by non-Ghanaians.  Trading companies 
either wholly or partly-owned by non-Ghanaians require a 
minimum foreign equity of USD 300,000 and must employ at 
least ten Ghanaians.  This may be satisfied through remitting 
convertible foreign currency to a bank in Ghana or by 
importing goods into Ghana for the purpose of the investment. 
 The minimum capital requirement is, however, not applicable 
to portfolio investment, enterprises set up for export 
trading, or branch offices. 
 
The principal law regulating investment in minerals and 
mining is the Minerals and Mining Law, 1986 (PNDCL 153) as 
amended by the Minerals and Mining Amendment Act, 1994 (Act 
475).  This law regulates investment in mining, except for 
small-scale mining, which is reserved for Ghanaians.  It 
addresses different types of mineral rights, issues relating 
to incentives and guarantees, and land ownership.  The 
government revised the law again in December 2005.  The 
revised law contains a stability and development agreement, 
which protects the holder of a mining lease from future 
changes in law for a period of 15 years.  The Minerals 
Commission is the government agency that implements the law. 
 
The Petroleum Exploration and Production Law, 1984 (PNDCL 
84), known as the Petroleum Law, regulates oil and gas 
exploration and production in Ghana.  The law deals 
extensively with petroleum contracts, the rights, duties, 
responsibilities of contractors, and compensation payable to 
those affected by activities in the petroleum sector.  The 
Ghana National Petroleum Corporation (GNPC) is the government 
institution that administers this law.  Several U.S. 
companies are involved in oil/gas exploration in Ghana at 
present. 
 
There are no major sectors in which American investors are 
denied the same treatment as other foreign investors.  There 
are, however, some areas where foreign investors as a whole 
are denied national treatment.  Those sectors are real estate 
(non-Ghanaians may not own an interest in land for more than 
fifty years, although a lease may be renewed for consecutive 
terms), banking, securities, and fishing. 
 
The U.S. Embassy in Accra advises companies or individuals 
considering investing in Ghana or trading with Ghanaian 
counterparts to consult with a local attorney or business 
facilitation company.  The Embassy maintains a list of local 
attorneys and local business facilitators.  Both are 
available upon request. 
 
A.2.  Conversion and Transfer Policies 
-------------------------------------- 
Ghana operates a free-floating exchange rate policy regime. 
There are no restrictions on the conversion and transfer of 
funds with documented evidence to support how the funds were 
gained.  Ghana's local currency, the cedi, can be exchanged 
for dollars and major European currencies. 
 
Ghana's hard currency needs are met largely through gold and 
cocoa export revenues, official assistance, and private 
remittances.  The fall in the world prices of Ghana's export 
commodities in 1999 and increases in oil import bills led to 
a foreign currency shortage in 2000 and a subsequent, large 
depreciation of the cedi.  The cedi has been stable since 
November 2002, bolstered by sound macroeconomic policies and 
record level remittances and cocoa export proceeds. 
 
Ghana has no restrictions on the transfer of funds associated 
with investment.  Ghana's investment laws guarantee that 
investors can transfer the following in convertible currency 
out of Ghana:  dividends or net profits attributable to the 
investment; payments in respect of loan servicing where a 
foreign loan has been obtained; fees and charges in respect 
to technology transfer agreements registered under the GIPC 
law; and, the remittance of proceeds from the sale or 
liquidation of the enterprise or any interest attributable to 
the investment. 
 
With regard to offshore loans, the Bank of Ghana, Ghana's 
central bank, must approve the loan agreement.  The Bank of 
Ghana inspects the terms of the loan, especially the interest 
rate, to see if it conforms to current international rates. 
There is no legal parallel remittance market for investors. 
The Bank of Ghana is drafting a new foreign exchange law, 
which will liberalize the foreign exchange market.  The 
government plans to submit it to Parliament in early 2006. 
 
A.3.  Expropriation and Compensation 
------------------------------------ 
Ghana's investment laws provide guarantees against 
expropriation and nationalization, although the 1992 
Constitution provides some exceptions to these laws.  While 
providing protection from deprivation of property, the 
Constitution sets out exceptions and a clear procedure for 
the payment of compensation. 
 
The Government of Ghana may compulsorily take possession or 
acquire property only where the acquisition is in the 
interest of national defense, public safety, public order, 
public morality, public health, town and country planning or 
the development or utilization of property in a manner to 
promote public benefit.  It must, however, make provision for 
the prompt payment of fair and adequate compensation.  The 
Government of Ghana also allows access to the high court by 
any person who has an interest or right over the property. 
 
American investors are generally not subject to differential 
or discriminatory treatment in Ghana, and there have been no 
official government expropriatory actions in recent times. 
Since President Kufuor's administration took power in 2001, 
two U.S. investors  have filed for international arbitration 
against the Ghana government, claiming expropriation.  These 
cases were each resolved when the Government of Ghana agreed 
to purchase the investments. 
 
A.4.  Dispute Settlement 
------------------------ 
Ghana's legal system is based on British common law.  The 
most important exception for the purpose of investment is the 
acquisition of interest in land, which is governed by both 
statutory and customary law. 
 
The judiciary comprises both the lower courts and the 
superior courts.  The superior courts are the Supreme Court, 
the Court of Appeal, and the High Court.  Lawsuits are 
permitted and usually begin in the High Court.  There is a 
history of government intervention in the court system, 
although somewhat less so in commercial matters.  The courts 
have, when the circumstances require, entered judgment 
against the government.  However, the courts have been slow 
in disposing of cases and at times face challenges in 
enforcing decisions, largely due to resource constraints and 
institutional inefficiencies.  There is a growing interest in 
alternative dispute resolution, especially as it applies to 
commercial cases.  The Attorney General's office has drafted 
enabling legislation, and several lawyers are providing 
arbitration and/or conciliation services. 
 
The government has established "fast-track" courts to 
expedite action on some cases.  The "fast track" courts, 
which are automated (computerized) divisions of the High 
Court of Judicature, were intended to try cases to conclusion 
within six months.  However, these courts have proven unable 
to try cases as quickly as expected.  In March 2005, the 
government established a commercial court to try commercial 
claims. The Court also handles disputes involving commercial 
arbitration and other settlement awards, intellectual 
property rights, including patents, copyrights and 
trademarks, commercial fraud, applications under the 
Companies Code, tax matters, and insurance and re-insurance 
cases.  A distinctive feature of the commercial court is the 
use of mediation or other alternative dispute resolution 
mechanisms, which are mandatory in the pre-trial settlement 
conference stage. 
 
Enforcement of foreign judgments in Ghana is based on the 
doctrine of reciprocity.  On this basis, judgments from 
Brazil, France, Israel, Italy, Japan, Lebanon, Senegal, 
Spain, the United Arab Emirates, and the United Kingdom are 
enforceable.  Judgments from the United States are not 
enforceable in Ghana at this time. 
 
Both the GIPC and Minerals and Mining Laws address dispute 
settlement procedures and provide for arbitration when 
disputes cannot be settled by other means.  They also provide 
for referral of disputes to arbitration in accordance with 
the rules of procedure of the United Nations Commission on 
International Trade Law (UNCITRAL), or within the framework 
of a bilateral agreement between Ghana and the investor's 
country. 
 
The U.S. has signed three bilateral trade and investment 
agreements with Ghana: the OPIC Investment Incentive 
Agreement, the Trade and Investment Framework Agreement 
(TIFA), and the Open Skies Agreement.  These agreements 
contain some provision for investment and trade dispute 
settlement.  When the parties do not agree on a venue for 
arbitration, the investor's choice prevails.  In this regard, 
Ghana accepts as binding the international arbitration of 
investment disputes.  Ghana does not have a bankruptcy 
statute.  The Companies Code of 1963, however, provides for 
official closure of a company when it is unable to pay its 
debts. 
 
In 1996, the privately managed Ghana Arbitration Center was 
established to strengthen the legal framework for protecting 
commercial and economic interests, and to bolster investors' 
confidence in Ghana.  The American Chamber of Commerce's 
(Ghana) Commercial Conciliation Center provides arbitration 
services on trade and investment issues. 
 
Ghana signed and ratified the Convention on the Settlement of 
Investment Disputes in 1966, which allows for arbitration 
under ICSID ) the International Center for the Settlement of 
Investment Disputes.  However, at least with disputes related 
in the energy sector, the government has expressed a strong 
preference for handling disputes under UNCITRAL rules  Ghana 
is also a signatory and contracting state of the UN 
Convention on the Recognition and Enforcement of Foreign 
Arbitral Awards (the "New York Convention"). 
 
A.5.  Performance Requirements and Incentives 
--------------------------------------------- 
Ghana is in compliance with WTO Trade-Related Investment 
Measures (TRIMS) notification. 
 
Generally, Ghana does not have performance requirements for 
establishing, maintaining, and expanding a business. 
However, in its privatization of state-owned enterprises, 
notably the telecommunications sector, companies have to meet 
performance targets or they may have their licenses revoked. 
In the case of banks, the opening of branches requires 
approval from the central bank.  Investors are not required 
to purchase from local sources.  Except for free zone 
enterprises operating under the Free Zone Act, which are 
required to export 70 percent of their products, investors 
are not required to export a specified percentage of their 
output. 
 
Foreign investors are not required by law to have local 
partners except in the fishing, insurance, and mining 
industries, as well as in the securities market.  In the 
tuna-fishing industry, non-Ghanaians may own a maximum of 
seventy-five percent of the interest in a tuna-fishing 
vessel.  In the insurance sector, a non-Ghanaian cannot own 
more than sixty percent of an insurance company.  In the case 
of the Ghana Stock Exchange, a single foreign investor cannot 
own more than ten percent of any security listed.  This 
applies to individuals as well as institutional investors. 
The total holding of all foreigners in a listed security 
cannot exceed seventy-four percent.  There is compulsory 
local participation in the minerals and mining sector.  By 
law, the Government of Ghana acquires ten percent of all 
interests in mining ventures at no cost. 
 
There are no requirements on physical location of 
investments.  However, there are tax incentives to encourage 
investment in specific locations.  There are also no import 
substitution restrictions.  The only requirement for 
compulsory employment of Ghanaians is that any investment in 
a trading enterprise must employ a minimum of ten Ghanaians. 
 
There are regulations relating to the transfer of technology 
when it is not freely available in Ghana.  The transfer of 
technology is governed by an agreement under the Technology 
Transfer Regulations of Ghana.  Any provisions in the 
agreement inconsistent with Ghanaian regulations are 
unenforceable in Ghana. 
 
Investment incentives differ slightly depending upon the law 
under which an investor operates.  For example, while all 
investors operating under the Free Zone Act are entitled to a 
ten-year corporate tax holiday, investors operating under the 
GIPC law are not automatically entitled to a tax holiday, 
depending upon the sector in which they are operating. 
 
All investment-specific laws contain some investment 
incentives. The GIPC law allows for import and tax exemptions 
for plant inputs and machinery (and parts thereof) imported 
for the purpose of the investment.  Specifically, chapters 
82, 84, 85, and 89 of the Customs Harmonized Commodity and 
Tariff Code zero-rates (i.e. does not levy import duty) these 
production items.  The Government of Ghana recently imposed a 
five percent import duty on some items that were previously 
zero-rated. 
 
The Ghanaian tax system is replete with tax concessions that 
make the effective tax rate generally low.  The incentives 
are specified in the GIPC law and are not applied in an ad 
hoc or arbitrary manner.  The GIPC has no discretion and once 
the investor has been registered under the GIPC law, the 
investor is entitled to the incentives provided by law.  The 
GIPC, however, has discretion if an investor is seeking 
additional customs duty exemptions and tax incentives. 
 
The GIPC website (www.gipc.org.gh) provides a more thorough 
description of incentive programs.  The law also guarantees 
the investor all the tax incentives provided for under 
Ghanaian law.  For example, rental income from commercial and 
residential property for the first five years after 
construction is exempt from tax.  Similarly, income from a 
company selling or letting out premises is income tax exempt 
for the first five years of operation.  Rural banks and 
cattle ranching are exempt from income tax for 10 years. 
 
The government lowered the corporate tax rate to 25 percent 
(from 32.5 percent in 2004 and 28 percent in 2005) when it 
published the 2006 budget. The new rate applies to all 
sectors except income from non-traditional exports (eight 
percent).  For some sectors there are tax holidays for a 
number of years.  These sectors include, free zone 
enterprises and developers (zero percent for the first 10 
years and eight percent thereafter), real estate development 
and rental (zero percent for the first five years and 25 
percent thereafter), agro-processing companies (zero percent 
for the first five years after which the tax rate ranges from 
0 to 25 percent depending on the location of the company in 
Ghana), and waste processing companies (zero percent for 
seven years and 25 percent thereafter).  Tax rebates are also 
offered in the form of incentives based on location.  A 
capital allowance in the form of accelerated depreciation is 
also applicable in all sectors except banking, finance, 
commerce, insurance, mining, and petroleum. 
 
The government charges a 12.5 percent VAT plus a 2.5 percent 
Health Insurance Levy, instituted in August 2004, on most 
imports, all consumer purchases, services, accommodation in 
hotels and guest houses, food in restaurants, hotels and 
snack bars, as well as advertising, betting and 
entertainment. 
 
Ghana has no discriminatory or excessively onerous visa 
requirements.  An investor who invests under the GIPC law is 
automatically entitled to a specific number of visas/work 
permits based on the size of the investment.  When an 
investment of USD 10,000 or its equivalent is made in 
convertible currency or machinery and equipment, the 
enterprise can obtain a visa/work permit for one expatriate 
employee.  An investment of USD 10,000 to USD 100,000 
entitles the enterprise to two automatic visas/work permits. 
An investment of USD 500,000 and above allows an enterprise 
to bring in four expatriate employees.  An enterprise may 
apply for extra visas/work permits, but the investor must 
justify why a foreigner must be employed rather than a 
Ghanaian.  There are no restrictions on the issuance of work 
and residence permits to Free Zone investors and employees. 
 
Ghana has no import price controls.  It is pursuing a 
liberalized import regime policy within the framework and the 
spirit of the World Trade Organization to accelerate 
industrial growth.  The Government of Ghana joined other 
ECOWAS countries on the phased implementation of the ECOWAS 
Common External Tariff on January 1, 2005. 
 
A.6.  Right to Private Ownership and Establishment 
--------------------------------------------- ----- 
Ghana's laws recognize the right of foreign and domestic 
private entities to own and operate business enterprises. 
Foreign entities are, however, prohibited by law from 
engaging in certain business activities in Ghana (see section 
1, paragraph 6). 
 
Private entities may freely acquire and dispose of their 
interests in Ghana.  When a foreign investor disposes of an 
interest in a business enterprise, the investor is entitled 
to repatriate his or her earnings in a freely convertible 
currency. 
 
Private and public enterprises compete on equal basis with 
respect to access to credit, markets, licenses, and supplies. 
 
A.7.  Protection of Property Rights 
----------------------------------- 
The legal system recognizes and enforces secured interest in 
property, both chattel and real, but the process to get clear 
title over land is often difficult, complicated, and lengthy. 
 It is important to conduct a thorough search at the Lands 
Commission to ascertain the identity of the true owner of any 
land being offered for sale.  Investors should be aware that 
land records can be incomplete or non-existent and, 
therefore, clear title may be impossible to establish. 
 
Mortgages exist in Ghana and are regulated by the Mortgages 
Decree.  They are enforced by judicial sale upon application 
to the court.  A mortgage must be registered under the Land 
Title Registration Law, a requirement that is mandatory for 
it to take effect.  Registration with the Land Title Registry 
is a reliable system of recording the transaction. 
 
The protection of intellectual property is an evolving area 
of law in Ghana.  Progress has been made in recent years to 
afford protection under both local and international law. 
Ghana is a party to the Universal Copyright Convention and a 
member of the World Intellectual Property Organization 
(WIPO), the English-speaking African Regional Industrial 
Property Organization (ESARIPO), and the World Trade 
Organization (WTO).  Since December 2003, Ghana's Parliament 
has passed all six bills designed to bring Ghana into 
compliance with WTO TRIPS (Trade-Related Aspects of 
Intellectual Property Rights) requirements.  The new laws 
are:  Copyright, Trade Marks, Patents, Layout-Designs 
(Topographies) of Integrated Circuits, Geographical 
Indications, and Industrial Designs.  Piracy of protected 
goods is known to take place, though there is no reliable 
information on the scale of this activity.  In cases where 
trademarks have been misappropriated, the price and quality 
disparity is usually readily apparent.  Holders of 
intellectual property rights have access to local courts for 
redress of grievances, although few trademark, patent, and 
copyright infringement cases have been filed in Ghana. 
 
A.8.  Transparency of the Regulatory System 
------------------------------------------- 
The Government of Ghana's policies of trade liberalization 
and investment promotion are guiding its effort to create a 
clear and transparent regulatory system.  The GIPC law 
codified the government's desire to present foreign investors 
with a liberal and transparent foreign investment regulatory 
regime.  The GIPC has established a "one stop shop" to 
facilitate business registration for investors, but it is not 
effective.  Under the Ghana Trade and Investment Gateway 
(GHATIG) Program, time frames within which government 
officials must perform specific duties have been set and are 
monitored.  Implementation, however, has not measured up to 
desired standards. 
 
The Government of Ghana has established regulatory bodies 
such as the National Communications Authority, the National 
Petroleum Authority, and the Public Utilities Regulatory 
Commission to oversee activities in the telecommunications, 
power, and water sectors.  These bodies are relatively new 
and under-resourced, which limits their ability to deliver 
the intended level of oversight. 
 
A.9. Efficient Capital Markets and Portfolio Investment 
--------------------------------------------- ---------- 
Private sector growth in Ghana has been constrained by 
limited financing opportunities for private investment. 
Seventeen years after the beginning of financial sector 
reforms in 1988, much remains to be done.  Confidence in the 
financial sector has suffered because of policy interventions 
by the government, many of which have not facilitated the 
free flow of financial resources in the product and input 
markets.  Current high interest rates on bank loans (over 25 
percent) have been a serious impediment to raising capital on 
the local market. 
 
Banks in Ghana are relatively small.  The largest in the 
country, Ghana Commercial Bank (GCB), has a net worth of 
approximately USD 50 million.  Out of the 18 banks in Ghana, 
the government has a majority ownership position in GCB and 
fully owns two other banks.  The government is still 
reviewing options regarding divestiture of its remaining 
interest in GCB.  The Bank of Ghana, under its 2004 universal 
banking policy, increased capital requirements for 
establishing a bank to 70 billion cedis (USD 7.7 million). 
This new level applies to both foreign and Ghanaian-owned 
banks.  In the past, foreign-owned banking businesses faced 
higher capital requirements than Ghanaian-owned banks: 50 
billion cedis (USD 5.6 million) versus 25 billion cedis (USD 
2.8 million).  In mid-2005, the Bank of Ghana lowered the 
official secondary reserve requirements for financial 
institutions from 35 to 15 percent, so total bank reserve 
requirements are now 24 percent. 
 
Some recent developments in the non-banking financial sector 
have been encouraging.  Among the non-banking financial 
institutions, leasing companies, building societies and 
savings and loan associations have been innovative in serving 
savers and borrowers.  In addition, the formulation of new 
regulatory policies for the Ghana Stock Exchange (which has 
29 listed companies and 2 corporate bonds at the present time 
and oversees portfolio investment) has been promising.  The 
Ghana Stock Exchange (GSE) was one of the best performing 
bourses in emerging markets in 2003 and 2004, although it 
fell substantially in 2005.  It is open to all foreign buyers 
and subject to the restrictions described in section 7.5, 
paragraph 3.  Both foreign and local companies are allowed to 
list on the GSE.  The Securities Regulatory Commission 
regulates the activities on the Exchange. 
 
Although Ghana's informal financial sector is large, with an 
estimated 45 percent of all private sector financial savings 
mobilized initially through informal channels, its capacity 
to serve as an intermediary between savers and investors has 
been limited.  This is due in part to Ghanaians' savings 
behavior (customarily avoiding the formal banking system), 
and in part to the absence of strong links with the formal 
sector. 
 
A.10.  Political Violence 
------------------------- 
Ghana offers a relatively stable and predictable political 
environment for American investors.  There is no indication 
at present that the level of political risk in Ghana will 
change markedly over the near term.  Peaceful and fair 
presidential and parliamentary elections were held on 
December 7, 2004.  Incumbent President, John Agyekum Kufuor 
of the New Patriotic Party, was reelected for a second 
four-year term, completing a fourth consecutive democratic 
election. 
 
A.11.  Corruption 
----------------- 
Corruption in Ghana is somewhat less prevalent than in other 
countries in the region, and no U.S. firms have identified 
corruption as the main obstacle to foreign direct investment. 
 However, several local opinion polls recently concluded that 
there is a growing perception in Ghana that 
government-related corruption is on the rise.  Transparency 
International ranked Ghana 65 out of 159 countries in its 
2005 Global Corruption Perceptions Index, dropping slightly 
from 3.7 to 3.5 on a scale of 0 to 10 (10 least corrupt). 
 
Ghana is not a signatory to the OECD Convention on Combating 
Bribery.  It has, however, taken steps to amend laws on 
public financial administration and public procurement.  The 
public procurement law, passed in January 2004, seeks to 
harmonize the many public procurement guidelines used in the 
country and also to bring public procurement into conformity 
with WTO standards.  The new law aims to improve 
accountability, value for money, transparency and efficiency 
in the use of public resources.  The government, in 
conjunction with civil society representatives, is drafting a 
Freedom of Information bill, which will allow greater access 
to public information.  Notwithstanding the new procurement 
law, companies cannot expect complete transparency in locally 
funded contracts.  There have been recent allegations of 
corruption in the tender process and the government has in 
the past set aside international tender awards in the name of 
national interest. 
 
American businesses have reported being asked for "favors" 
from contacts in Ghana, in return for facilitating business 
transactions.  These favors could potentially conflict with 
U.S. business ethics or laws, and U.S. business visitors 
should make clear that U.S. companies operating abroad are 
subject to the Foreign Corrupt Practices Act of 1977. 
 
Commercial fraud in the form of scams, especially in gold or 
currency deals, is on the rise in Ghana.  These are commonly 
termed "419" scams.  While these cases are exceptions and not 
the rule to doing business in Ghana, U.S. potential gold and 
diamond buyers are strongly advised to deal directly with the 
Precious Minerals Marketing Company (PMMC) in Ghana.  Gold 
and diamonds can be exported legally from Ghana only through 
the PMMC, and prices are based solely on the London Exchange 
price on the day of export.  No discounting or negotiation of 
prices prior to export by the PMMC is valid.  U.S. firms can 
request a background check on companies and individuals with 
whom they wish to do business by using the U.S. Commercial 
Service's International Company Profile (ICP).  Requests for 
ICPs should be made through the nearest U.S. Export 
Assistance Center.  For more information about the U.S. 
Commercial Service, visit www.buyusa.gov/ghana. 
 
The Government of Ghana has publicly committed to ensuring 
that government officials do not use their positions to 
enrich themselves.  Official salaries, however, are modest, 
especially for low-level government employees, and such 
employees have been known to ask for a "dash" (tip) in return 
for assisting with license and permits applications 
 
The 1992 Constitution provided for the establishment of a 
Commission On Human Rights and Administrative Justice 
(CHRAJ).  Among other things, the Commission is charged with 
investigating all instances of alleged and suspected 
corruption and the misappropriation of public funds by 
officials.  The Commission is also authorized to take 
appropriate steps, including providing reports to the 
Attorney General and the Auditor-General, in response to such 
investigations.  The Commission has a mandate to prosecute 
alleged offenders when there is sufficient evidence to 
initiate legal actions.  The Commission, however, is 
under-resourced and few prosecutions have been made since its 
inception. 
 
In 1998, the Government of Ghana also established an 
anti-corruption institution, called the Serious Fraud Office 
(SFO), to investigate corrupt practices involving both 
private and public institutions.  SFO's 1999 report to the 
President and Parliament reported cases of economic fraud 
that resulted in more than USD 2 million in losses to the 
country.  The SFO has called for a national debate on how to 
deal with largesse acquired through economic crimes since the 
present punishment of dismissal and imprisonment is an 
inadequate deterrent.  The government has announced plans to 
streamline the roles of the CHRAJ and SFO, in order to remove 
their duplication of efforts.  Government has also submitted 
"Whistle Blower" legislation to Parliament.  This bill will 
encourage Ghanaian citizens to volunteer information on 
corrupt practices to appropriate government agencies. 
 
¶B.  Bilateral Investment Agreements 
----------------------------------- 
Ghana has concluded investment protection and promotion 
agreements with 21 countries.  Parliament has ratified eight 
of these agreements, including with the U.S., the United 
Kingdom, Republic of China, Denmark, Germany, Malaysia, The 
Netherlands and Switzerland.  The remainder are signed but 
not yet ratified.  Nineteen other countries are negotiating 
similar arrangements.  The U.S. signed three agreements 
between 1998 and 2000: the OPIC Investment Incentive 
Agreement (ratified in 2004), the Trade and Investment 
Framework Agreement (TIFA), and the Open Skies Agreement. 
 
Ghana has met eligibility requirements to participate in the 
benefits afforded by the African Growth and Opportunity Act 
(AGOA) and also qualified for the apparel benefits under AGOA. 
 
Ghana has double taxation agreements (DTA) in force with only 
France and the U.K.   The Ghana government has signed a DTA 
with Germany, but Ghana's Parliament has not yet ratified it. 
 
¶C.  OPIC and Other Investment Insurance Programs 
--------------------------------------------- --- 
OPIC is active in Ghana, and OPIC officers visit Ghana 
periodically to meet with representatives of prominent 
American and Ghanaian firms.  OPIC launched the Modern Africa 
Growth Fund and the Africa Infrastructure Investment Fund, 
which are sources of information and financing for investment 
in Ghana.  The African Project Development Facility (APDF) 
and the African investment program of the International 
Finance Corporation are other sources of information.  Ghana 
is a member of the World Bank Group's Multilateral Investment 
Guarantee Agency (MIGA). 
 
¶D.  Labor 
--------- 
Ghana has a large pool of relatively inexpensive and 
unskilled labor.  English is widely spoken, especially in 
urban areas.  Labor regulations and policies are generally 
favorable to business.  Labor-management relations are fairly 
good. 
 
The new Labor law (Act 651) passed in 2003 became effective 
in March 2004.  The new law unifies and modifies the old 
labor laws to bring them into conformity with the core 
principles of the International Labor Convention, to which 
Ghana is a signatory.  All the old labor related laws, except 
the Children's Law (Act 560), have been repealed. 
 
Under the new Labor Law, the Chief Labor Officer will now 
issue collective bargaining agreements (CBA) in lieu of the 
Trade Union Congress (TUC).  This effectively limits the 
TUC's monopoly, since the old CBA provisions implicitly 
compelled all unions to be part of TUC.  Also, instead of the 
labor court, a National Labor Commission has been established 
to resolve labor and industrial disputes.  Finally, the 
Tripartite Committee that determines the minimum daily wage 
now has legal backing, and public and private employment 
centers can be created to help job seekers find work. 
 
There is no legal requirement for labor participation in 
management.  However, joint consultative committees in which 
management and employees meet to discuss issues affecting 
business productivity are common. 
 
There are no statutory requirements for profit sharing, but 
fringe benefits in the form of year-end bonuses and 
retirement benefits are generally included in collective 
bargaining agreements. 
 
Consulting a local attorney with regard to labor issues is 
recommended.  The U.S. Embassy in Accra maintains a list of 
local attorneys, which is available upon request. 
 
¶E.  Foreign Trade Zones/Free Ports 
---------------------------------- 
Free Trade Zones were established in May 1996, one near Tema 
Steelworks, Ltd., in the Greater Accra Region, and two other 
sites located at Mpintsin and Ashiem near Takoradi.  The 
seaports of Tema and Takoradi, as well as the Kotoka 
International Airport and all the lands related to these 
areas, are part of the free zone.  The law also permits the 
establishment of single factory zones outside or within the 
areas mentioned above.  Under the law, a company qualifies to 
be a free zone company if it exports more than 70 percent of 
its products.  Among the incentives for free zone companies 
are a ten-year corporate tax holiday and zero duty on imports. 
To make it easier for free zone developers to acquire the 
various licenses and permits to operate, the Ghana Free Zones 
Board provides a "one-stop approval service" to assist in the 
completion of all formalities.  A lack of resources has 
limited the effectiveness of the Board, however.  To further 
facilitate operations in the zones, nationals of OECD 
countries, East Asian countries, and the Republic of South 
Africa may with advance notice obtain entry visas at the 
international airport in Accra.  However, all foreign 
employees of businesses established under the program will 
require work and residence permits. 
 
The contact address for the secretariat is as follows: 
 
The Director 
Ghana Free Zones Board 
Ministry of Trade & Industry Annex 
P.O. Box M.47 
Accra - Ghana 
Tel: 233-21-780532/3/4/5/7 
Fax: 233-21-780536 
E-mail: freezone@africaonline.com.gh 
 
¶F.  Major Foreign Investors in Ghana 
------------------------------------ 
Major foreign investments in Ghana are mainly in mining and 
manufacturing.  Great Britain is Ghana's leading foreign 
investor with direct investment exceeding USD 750 million. 
Major U.S. investors are, CMS Energy (independent power 
producer), Regimanuel Gray Limited (housing and 
construction), Coca-Cola Company, Affiliated Computer 
Services (data processing), Pioneer Foods (Star-Kist tuna), 
Phyto-Riker (pharmaceuticals), Millicom (telecommunications), 
 and Newmont Mining. 
 
¶G.  Foreign Direct Investment (FDI) Statistics 
--------------------------------------------- - 
FDI statistics in Ghana tend to be unreliable since the 
promotion and monitoring of FDI in Ghana are carried out by 
several agencies without coordination in arriving at a total 
figure. 
 
Since 1994, however, the Ghana Investment Promotion Center 
(GIPC) has registered over 1281 projects.  GIPC provided the 
following statistics on registered private investments. 
(Note:  These figures do not include investments in the 
mining and petroleum industries and free zones, which are all 
major recipients of FDI.  End Note) 
 
Foreign direct investment (FDI) (USD million) 
 
1994 Sep ) 1999 Dec   1,205.46 
2000                    114.91 
2001                     89.32 
2002                     58.93 
2003                     88.06 
2004                   143.73 
2005 (Jan ) Sep)         98.08 
 
Note: Between September 1994 and September 2005, the U.S. 
ranked fifth in terms of number of investment projects (131) 
after India (201), China (189), Great Britain (187), and 
Lebanon (154).  The services and manufacturing sectors 
recorded the highest number of investment projects during 
this period. 
BRIDGEWATER