Ghana’s business environment is considered as less competitive compared to some economies within the sub-region.
While efforts have been made to reduce the cost and duration of registering a business in the country, it appears more needs to be done at a time that the Ghana Investment Promotion Centre is targeting 5 billion dollars in investments for 2017.
This also comes ahead of Citi FM’s investment forum on repositioning Ghana as an investment destination, slated for Tuesday, 6th June, 2017 at the Alisa Hotel.
A startup business owner who has been speaking to Citi Business News laments how frustrated he is in an attempt to register his laundry startup for the past three months.
Eddy [not real identity] explains that he has also been compelled to side-step laid down procedures to get his operations legally registered.
Currently, it costs approximately 615 cedis plus 50 percent of one’s initial capital to register a new business in Ghana.
The exercise, which is primarily undertaken by the Registrar General’s Department, also takes a period of 14 days to complete.
This compares with the 4 days duration in Burundi and Rwanda, as well as the 6 days required each in Mauritius, Senegal and Togo.
The World Bank’s latest ease of doing business report indicates that Ghana ranks 108th out of 190 countries surveyed.
Though the country improved by three points from its 2015 position, businesses are still faced with the challenge of relatively high costs and other administrative challenges.
For instance, the Private Enterprise Federation and the Association of Ghana Industries have all lamented the impact the long and costly processes have had on the operations of their members.
Ghana ranked 10th in Sub-Saharan Africa
Across Sub-Saharan Africa, Ghana ranks as the 10th economy with ease of doing business. The leading sub-Saharan economy in ease of doing business is Mauritius which ranked 49th at the global level.
Other better performing economies in Africa include Rwanda, Botswana, Kenya and Seychelles.
While it will cost a start-up almost 20 percent of its income per capita in Ghana, it will cost star-ups 0.8, 1.8 and 8.1 percent to register businesses in Botswana, Mauritius and Lesotho respectively.
Over twenty economies in sub Saharan Africa do not request for any paid in capital for starting a business.
But Ghana will requests as much as 200 percent of income per capita for paid in capital. It is immediately after Swaziland which requires 3 percent of income per capita as paid in capital.
Another area that Ghana is less competitive is on taxes, across the sub-region, Ghana placed 16th.
Companies are required to pay a total of 224 hours in taxes. This is relatively high compared to Seychelles with 85 hours and Botswana and Rwanda with 124 and 152 hours respectively.
Calculating one’s tax obligation as percentage of the profits will mean a company in Ghana will pay taxes which make up 37% of profits in Ghana.
Meanwhile taxes make up 13.6% and 20.7% of profits in Lesotho and Namibia respectively.
Exporters will spend about five days to export from Ghana to other economies at a cost of 490 dollars.
But conducting a similar exercise in Swaziland will require 3 hours at a cost of 76 dollars.
Importers to Ghana however will need about four days at a cost of 553 dollars to complete procedures while their counterparts importing into Botswana and Lesotho will require 4 hours and 98 dollars and 5 hours and 150 dollars to complete the process.
Reforms to reduce cost of doing business in Ghana
Upon assuming office, the NPP administration has been keen on attracting investments by making Ghana an attractive destination. The government however concedes that this is highly achievable only when it reduces the cost of doing business in Ghana.
The CEO of the Ghana Investment Promotion Center, Yofi Grant has also launched an ambitious 5 billion dollars target in Foreign Direct Investments to Ghana this year.
In his view, this is achievable considering the reforms that his outfit is rolling out.
Mr Grant has also indicated plans to reduce the capital limit for foreign investors if the investment will create more jobs for Ghanaians.
Trade and Industry Minister, Alan Kyerematen recently launched a rapid reform action plan to among other things, lessen the burden for businesses in registering their operations.
At the launch, ongoing as well as yet to be implemented reforms were also outlined by the respective Ministries, Departments and Agencies.
Some other reforms outlined by the Registrar General’s Department is the reduction in the number of procedures and days of registering a new business to 6 and five days respectively.
Also, the initial turnaround time in obtaining construction permits, has been slashed by more than half from 170 to 69 days while the number of procedures has been reduced by a day from 14 to 13.
This has largely been influenced by massive slashes especially by the Environmental Protection Agency and the Ghana Water Company Limited who have reduced their turnaround days from 25 to 5 and 30 to 14 working days respectively.
So what will Ghana need to assume the enviable position of being the most preferred investment destination within Africa and beyond?
To what extent could the interventions being rolled out help in attaining this objective?
At Citi FM’s investment forum in partnership with the GIPC, panelists as well as participants will look at the challenge facing Ghana and identify the legal framework needed to remove barriers and make it easy for Ghana to leap unto the topmost attractive investment destination slot.
By: Pius Amihere Eduku/Duke Mensah Opoku/citibusinessnews.com/Ghana