6 July 2012

Ghana: Worrying Developments in Ghana's Oil Sector

analysis

Accra — Last month, the Government of Ghana was expected to begin a rigorous enforcement of the Ghana Investment Promotion Centre Act of 1994 through an "inter-Agency Taskforce".

What this really meant was that members of the taskforce, backed by security officers, will move through various markets to ensure that foreigners (who are the main subjects of that law) not meeting the statutory requirements are prevented from continued trading. We come to this conclusion because all comments by Ministers and taskforce spokespersons to date have focussed on the trading provisions in that Act and little else besides.

Why as a country we have waited for more than 15 years to "enforce" our laws on "trading" is a question for another day.

In the circumstances, the enforcement exercise was postponed from last month to the current month, but the concerns remain.

Concerns have been rightly raised about the consequences of this new focus on enforcement for our obligations to ECOWAS treaties and covenants. Some observers worry that ECOWAS nationals are not provided with special safeguards in the GIPC Act, and that to advance the objectives of the custom union and to promote the ideals of the common market, not even to talk of pan-Africanist solidarity, such safeguards ought now to be provided. This matter deserves additional attention, and in due course the debate will be joined.

IMANI's immediate concerns about the impending exercise are however focused on the quality of the GIPC Act itself, whether it advances our nation's economic interests, whether it contributes to sound policymaking, and whether in fact it makes coherent sense.

We note that it has been 5 years since the Ghanaian cabinet was advised by the GIPC of the need to update the Act. We have not seen any policy paper from the government in connection with the need to upgrade the investment laws of this country to align with the country's current and evolving needs.

The proposed enforcement exercise is therefore based on a superficial appraisal of the current challenges within our investment climate. We will explain.

Except for the special regimes in the Act for sectors such as fishing, forestry, mining and banking, and the wholly separate sector of petroleum, where foreign participation is governed by its own exclusive set of laws, the Act is fairly consistent in what it requires of non-Ghanaians seeking to do business in Ghana.

Indeed the overall state of affairs is summed up in this popular, rather liberal, provision:

"An entrepreneur, irrespective of nationality, can set up a business enterprise in Ghana in accordance with the provisions of the Companies Code, 1963 (Act 179), the Partnership Act, 1962 (Act 152), or the Business Name Act, 1962 (Act 151)."

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