This article is written by David Parkes (partner) and Ofei Kwafo-Akoto (associate).
Ghana has faced a series of macroeconomic challenges over the past year, with sustained depreciation of the cedi against major foreign currencies, high fiscal and current account deficits and a slowdown in real GDP growth. Despite this, the country remains one of the bright spots for investment in the West African sub-region. Attracting foreign investment continues to be a key priority for the Government and certain recent legislative developments reveal strong efforts to create an enabling regulatory environment for investors.
Energy and Infrastructure
In July 2015 the Petroleum Revenue Management (Amendment) Bill was passed into law in an effort to address irregularities and operational challenges in the management of Ghana’s revenue from the oil and gas sector. The primary objective of the bill was to amend the Petroleum Revenue Management Act 2011 to provide for the re-allocation of funds to the Ghana Infrastructure Investment Fund for the purposes of infrastructure development, signalling great opportunities for investors in this sector.
In August 2015 the Ghana Nuclear Regulatory Bill was passed with the objective of establishing the Ghana Nuclear Regulatory Authority to oversee all activities in the nuclear energy sector. According to Lom Ahlijah, Legal Counsel at the state-owned electricity transmission company Ghana Grid Company (GRIDCo), “the enactment of the Nuclear Regulatory Act 2015 is a game changer in the power sector, especially as it opens up a new frontier in the Ghana power sector. This will pave the way for the use of nuclear power in Ghana’s energy mix to secure the long-term needs of the country”. The Government has already signed agreements with international partners such as the State Atomic Energy Corporation of Russia (ROSATOM) for the construction of a 1000-1200MW nuclear power plant.
Nonetheless, there remains much legislative reform to be effected in the energy and infrastructure sector. Of the laws currently in place, Ahlijah observes that, “legislative intervention is needed to streamline entry requirements for investors in the sector by ensuring that the ease of doing business is greatly expedited”.
There has been a boom in the Ghanaian real estate market in recent years due to the increasing presence of multinational companies and foreign investors in the country’s oil industry, with major projects including Actis' investment in the One Airport Square development.
Despite this, the Ghana Investment Promotion Centre (GIPC) has acknowledged the significant challenges faced by investors in the sector with respect to land tenure. According to Mawuena Trebarh, Chief Executive Officer of the GIPC, “a unique combination of cultural nuances and clan ownership makes land tenure in Ghana a highly complex issue and as a result investors are often unable to carry out adequate due diligence on real estate assets”. Although the existing legal framework provides a means for enforcing property rights, the process for obtaining clear title over land can be complex and electronic conveyancing is yet to be implemented in Ghana. Elikem Nutifafa Kuenyehia, Managing Partner at Oxford & Beaumont Solicitors, comments on the need to improve the efficiency of the current systems and regulations which “make business practice cumbersome and convoluted”.
Legislation is to be introduced which will seek to address these problems and the GIPC is working with the Lands Commission and the Ministry of Chieftaincy to introduce a new automated system of records and filings at the Lands Commission, which aims to improve the security of documentation and quicken the conveyancing process.
In July 2015, the Bank of Ghana (BoG) issued new e-money regulations that establish a best practice framework for digital financial services. The regulations permit non-banks to operate e-money businesses, a significant change that secures the previously tenuous position of mobile network operators that already provide such services and aims to bolster investment in the sector from other providers. The regulations focus on minimising barriers to access for end customers whilst strengthening supervision and consumer protection. The measures include the introduction of a risk-based approach to ‘know your customer’ processes (as is the international norm) with clear rules on identification requirements and transaction limits that encourage the market for 'over-the-counter' services. Industry experts have called this one of the most significant interventions by the BoG to promote financial inclusion for unbanked Ghanaians.
Recent developments indicate that the Government is aware of the need to create a competitive investment environment in Ghana and much work is being done in this respect. A key theme amongst industry experts is the need to generally improve the opportunity and administrative ease of doing business through legislative measures and we continue to see positive signs that this is indeed being addressed.