Despite the negative impact of the COVID-19 pandemic on Foreign Direct Investment (FDI), the American Chamber of Commerce-Ghana (AmCham) is hopeful its virtual engagements with American investors will start yielding positive results as US businesses revamp interest in the Ghanaian economy.
Even though the government is yet to publish its data on inflow of investment between the two nations during the outbreak of COVID-19 in 2020, AmCham says it has received favourable responses from American investors through its virtual interactions.
According to the United Nations Conference on Trade and Development (UNCTAD), the impact of the COVID-19 pandemic could send global FDI plunging by about 40 percent – driving the total value of FDI below US$1trillion for the first time since 2005.
Already, the Ghana Investment Promotion Centre (GIPC) in its 2020 half-year report said investment in Ghana saw a rebound by June 2020 – with total investments reaching US$869.47million and total FDI value amounting to US$785.62 million between January to June 2020.
The Executive Secretary of AmCham, Simon Madjie, told the B&FT that despite expectations of a drop in FDIs, there are positive signals from US businesses and investors who have shown renewed interest to invest in areas such as agribusiness, manufacturing, the extractive and services sectors in Ghana.
“We could not go on investment promotions, let alone speak about investment potentials of Ghana and encourage US FDIs in Ghana in 2020; but now we have moved into virtual trade missions to encourage U.S investors to look at Ghana, and I can say that US investors are still keen on doing business in Ghana,” he said.
Mr. Madjie pointed out that the situation has not been all gloomy, since there were some Ghanaian businesses which took advantage of the pandemic to supply the US economy with essential goods such as food. “There are still Ghanaian businesses that are doing well and have taken advantage of the situation. Lately, there is a Ghanaian company that is doing business in the US selling Ghanaian bread in New York.”
He maintained that Ghana is still a favourable market for US investors due to the stable political environment and economic prospects that lie ahead for the country.
With the opening of Ghana’s air borders, Mr. Madjie disclosed that potential investors are planning to visit the country to move the discussion beyond virtual engagements. “We have to live with the virus and life must continue. The main issue now is resources. Businesses are just being cautious in moving, but I can tell you the conversation is just the first step and then the engagements will go on as the restrictions are lifted,” he added.
Debunking the notion that some major American companies have stalled their operations in the oil and gas industry due to COVID-19, Mr. Madjie explained that all American companies in the extractive sector are busily working to consolidate their operations.
“Commodity prices may fluctuate due to COVID-19 but it doesn’t mean that businesses will shut down. Don’t forget these multinational giants in Ghana have made huge investments and are committed for the long run,” he said.
2020 Doing Business Report
In the World Bank’s 2020 Doing Business Report, Ghana ranked 118th worldwide for ‘ease of doing business’ – losing four positions comparing to the previous year.
In 2019, government announced it would implement 10 major reforms to secure more foreign investments. The measures include dematerialising tax, legal and business registration processes. It also said construction permits, operating permits and identification numbers will be automated and digitalised. In addition to these reforms, a scheme to boost performance of the power sector was initiated.
Challenges to investors
Over the years, some challenges that have militated against investing in Ghana include cumbersome administrative processes, corruption, weak productivity and unskilled labour.
According to the 2020 Doing Business Report, Ghana is still faced with challenges such as insufficient water and power supply. Access to electricity, the resolution of insolvency problems and protection of investors are points on which Ghana has a large margin of progress.