Data from the Ghana Investments Promotion Centre (GIPC) has revealed that foreign investors in the country recorded revenue losses of around US$75,000 in the second quarter to challenges brought upon by the coronavirus pandemic.
According to the report dubbed ‘Survey on the Impact of Coronavirus (COVID-19) on Foreign Investors in Ghana’, 51.4 percent of the respondents had been severely impacted by the pandemic. In terms of revenue, 51.4 percent of the respondents sampled by the Centre had experienced losses in excess of 100,000 dollars while the rest pegged their losses between 100,000 dollars and less than 1,000 dollars. The impact of the pandemic, the survey says, came about due to the strict lockdown measures imposed worldwide which caused severe disruptions to demand and supply value chains.
As a result, most companies experienced payment and repayment delays, financial constraints and a reduction in demand for products and services which translated into revenue losses. With regards to employment, 40 percent of foreign investors foresee a permanent reduction in their workforce in the ensuing months. Meanwhile most workers have had to stay home temporarily due the pandemic.
Despite the downturn in activity experienced by various industries and businesses, sectors such as manufacturing, food processing, e-Commerce, agriculture and healthcare have remained resilient and present opportunity for growth and investments.
The report noted that the introduction of some interventions namely extension of due dates for the filing of tax, reduction in tariffs on imported inputs, low interest loans and reduction in utility bills helped in alleviating the harsh impact of the pandemic on foreign businesses.
The survey highlighted that, moving forward, more interventions such as a reduction in the cost of data, further reduction of taxes for manufacturers, tax exemptions on capital expenditure as well as the re-opening of borders will be required to cushion businesses as the detrimental effects of the pandemic unfolds.
Impact of covid-19 on FDI flows
The COVID-19 pandemic came at a time where global Foreign Direct Investment (FDI) had been experiencing a downward trend. Accordingly, the pandemic has exacerbated the decline in the flow of FDI.
The GIPC survey revealed a downward trend in FDI flow from the month of April to June 12, 2020 when the survey was completed. Within the period, the Ghana Investment Promotion Center registered 13 projects with an FDI value of 9.29 million dollars. Regardless of the initial slowdown in FDI values as indicated earlier, a total of 21 projects had been registered by the end of the quarter, i.e. June 30, 2020 which saw the value of FDI shoot up to 207.98 million dollars.
The development therefore places a positive outlook on the flow of FDI into the country and indicative of a better trend for economic recovery post COVID-19.
The United Nations Conference on Trade and Development has projected FDI to drop by 40 percent due to the disruptions to Global Value Chains (GVC) influenced by the lockdowns
Chief Executive Officer of Ghana Investment Promotion Centre, Yoofi Grant