Finance and Economics Professor, Godfred Bokpin, has cautioned government to tread carefully with its plan to abolish the minimum capital requirement for foreign investors, warning that the move, while potentially attractive to global capital, could disadvantage local enterprises.
Speaking on the sidelines of Prudential Bank’s special customer seminar on the appreciation of the cedi, Prof. Bokpin noted that although the proposal could boost foreign direct investment, it risks weakening the competitiveness of small and medium-scale (SMEs) Ghanaian businesses.
“The minimum capital requirement under the GIPC Act acts as a safeguard for indigenous businesses, particularly in sensitive sectors such as retail. Removing this threshold without adequate protective measures could allow foreign players to dominate areas reserved for local entrepreneurs. This would weaken the capacity of Ghanaian businesses to grow and create sustainable jobs.” he explained.
The professor underscored the importance of a balanced approach that both encourages foreign participation and shields domestic industries from undue pressure. He stressed that small and medium enterprises (SMEs) the backbone of Ghana’s economy could be the hardest hit if the reform is not carefully managed.
“It has a potential to affect our small businesses, so we need to find ways to manage it well,” he cautioned, adding that poorly designed liberalisation could undermine industrialisation efforts.
The government recently announced at the Presidential Investment Forum in Japan that it intends to remove the minimum capital threshold under a review of the Ghana Investment Promotion Centre (GIPC) Act. The reform is framed as part of efforts to make Ghana a more attractive investment destination and to accelerate job creation.
But industry watchers like Prof. Bokpin insist that protective frameworks must be embedded in the policy to prevent local enterprises from being crowded out. “We must ensure foreign inflows complement, rather than replace, domestic businesses,” he argued.
The Prudential Bank seminar, which convened policymakers, industry leaders, and financial sector players, also examined strategies for sustaining the cedi’s recent appreciation and ensuring long-term macroeconomic stability.
Prof. Bokpin’s intervention adds to a growing debate on how Ghana can strike the right balance between opening up to foreign capital and safeguarding the survival and growth of its indigenous businesses.
