Revised GIPC Act to clamp on ‘fronting’
The Ghana Investment Promotion Center (GIPC) is currently working on a law to effectively punish the activities of persons who front for entities in business ventures that may hitherto not have the legal requirements to engage in.
There are a number of provisions within the GIPC Act 2013, Act 865, that for instance restrict business entry or participation in some selected sectors to Ghanaians, but some foreigners with the assistance of Ghanaians have ventured into such spaces.
The Head of Legal at GIPC, Mrs. Naa Lamle Orleans-Lindsay speaking at a meeting with foreign missions and foreign business associations, said one of the highlights of the amended GIPC Act would see to it that persons found to be fronting would be fined.
Mrs. Orleans-Lindsay said much as the prevalence of fronting does not inure to the advantage of the country, it is careful about its approach to dealing with it effectively. According to her, the new measures being put in place would ensure punitive fines rather than term imprisonment for the perpetrators – be it the individuals, foreign and local.
The GIPC Act, Act 865, is currently undergoing review and the Chief Executive Officer (CEO), Yofi Grant told the media at the meeting with the diplomatic community and foreign business mission that: “The review of the GIPC [law] is a very interesting.”
According to him, “there are many parts of the law which we think we could look at again to attract investors into the market. One that is a bit controversial is the capital limit, that says that if you are in joint venture with a foreigner the foreigner needs to demonstrate a minimum inflow of US$200,000 and if it is a foreign company that wants to be 100 percent owned, we should bring a minimum capital inflow of US$500, 000 and for trade US$1,000,000. It has a reason for being there, but is that reason still valid? Has it been helpful in getting our companies to grow up and become as big?”
So we need to take a relook at that law and open up and say that, no we will still say that if you can invest here, bring in the minimum in whatever figure it is. Let the companies come and invest in the country. There are companies that may come with the minimum investment of say US$100,000 for example in the IT business but they come and employ 200 people, but because they will not meet the minimum capital, they will not come,” he observed.
Mr. Grant explained there is the need for issues surrounding the review to be thoroughly discussed and addressed to provide a win-win situation for both foreign investors and Ghanaian business owners.
He said GIPC in reviewing its laws would have to take cognizance of the fact that the country’s neighbours are also seeking same foreign direct investment.
“So those are the kind of things we need to talk about. Bear in mind we are also comparing ourselves to our neighbors, Cote d’ivoire, Nigeria, how can Ghana best position itself to be the main attraction center for West Africa,” he said.