The Ghana Union of Traders Association (GUTA) is challenging the government’s new agenda to scrap the minimum capital requirement for foreign investors, cautioning that the move alone will not guarantee increased foreign direct investment (FDI).
GUTA says history shows that investors are not lured by relaxed capital rules but by the strength of a country’s economy and the conduciveness of its business environment.
Referencing 2013 data, the year Ghana tightened its investment law and increased minimum capital, the country ironically recorded the highest inflows of foreign investment.
President of GUTA, Joseph Obeng, therefore insisted that the government does not need to scrap the minimum capital requirement since whenever the economic environment is conducive, it attracts investors irrespective of the capital requirement.
“We do not have to remove the minimum capital before investors come. Investors look at more productive areas, and then they drift towards that. You recognise that 2013 was the year that we enhanced the old investment law. We increased the capital requirements. That was the year that saw the highest number of foreign direct entries into the country,” the president of GUTA remarked.
He continued, “So what does this show? It means that if your economy is ripe enough and an industry environment is created, that alone will bring in these investors.”
The association also stressed that trading must remain a protected area for local businesses, insisting that President Mahama’s recent trade missions abroad were not intended to invite foreign traders but to court investors in more productive sectors.
With this, he noted that the trading community is not threatened by the new move by the government.
“When it comes to trading, we have made it clear, and we know that the president did not travel to Japan to solicit traders to come in and do the trading. So we know that maybe he’s thinking about the other areas of investment apart from trading. Trading is a no-go area, and we know that,” Joseph Obeng maintained.
For GUTA, the government must focus on fixing the fundamentals, such as macroeconomic stability, energy supply, and policy consistency, rather than assuming scrapping the capital requirement will make Ghana irresistible to investors.
