TRENDS AND IMPACTS OF FOREIGN INVESTMENT IN DEVELOPING COUNTRY AGRICULTURE

level of foreign ownership for each firm is
75 percent. Foreign insurance subsectors
were abolished with the entry into force of
a new Insurance Act in 2006.
There are other relevant areas of investment
incentives available to foreigners and
Ghanaians alike. Certain machinery
imported for investment purposes are
eligible for reduced import tariffs and
VAT rates. Tax rebates are available for
investments in specific regions. There
are also medium- and long-term credit
facilities made available to investors through
designated financial institutions under the
Ghana Investment Fund (GIF) scheme.
The GIPC Act guarantees foreign investors
“unconditional transferability” of dividends
or net profits, and remittance of proceeds
on sale or liquidation of their enterprises.
Ghana has also ratified investment
promotion and protection agreements
with a number of countries 5 . Ghana
has signed and ratified double taxation
agreements (DTAs) to rationalize tax
obligations of investors, with the view
of preventing double taxation. Double
taxation agreements have been signed
and ratified with a number of countries
actively involved, such as France and the
United Kingdom. They have been signed
also with Germany and concluded with
Belgium, Italy and countries of the Former
Yugoslavia 6 .These agreements are seen as
complementing the investment legislation
in force to help attract foreign investments.
The Ghana Arbitration Centre, a private
initiative established in 1996, provides a
forum for the resolution of disputes with a
view to bolstering investors’ confidence.
5 Agreements have been signed and ratified with : China,
Denmark, Germany, Malaysia, Netherlands, Switzerland
and United Kingdom. Agreements have been signed,
but are not yet ratified with Benin, Burkina Faso, Côte
d’Ivoire, Cuba, Egypt, France, Guinea, India, Mauritania,
South Africa, United States, the Former Yugoslavia and
Zambia.
6 See Sector Profile - Agriculture & Agroprocessing. Source:
GIPC. 2009.
Part 4: Business models for agricultural investment:
Impacts on local development
Ghana is also a signatory to the World
Bank’s Multilateral Investment Guarantee
Agency (MIGA), a convention which
provides insurance against non-commercial
risks. The country is also a member of the
International Centre for the Settlement of
investments Disputes (ICSID).
The Ghana Free Zone schemes related FDI
drive
Ghana established a free zone board (Ghana Free
Zone Board – (GFZB)) along with the country free
zone schemes in September 1995, following the
promulgation of the Ghana Free Zone Act, in order
to accelerate the exploitation of the country’s
general export potential. This Act has offered
an extensive package of incentives including the
following to companies operating in the zone:
100 percent exemption from payment of
direct and indirect duties on all import for
production and export from free zones;
Exemption of free zones developers from
income or profit tax for 10 years;
Income tax after ten-year tax holidays not
to exceed a maximum of 8 percent;
Exemption from withholding taxes on
dividends emanating from free zone
investments;
Relief from double taxation for foreign
investors and employees 7 ;
Freedom from a foreign investor to hold
a 10 percent shares in any free zone
enterprise; and
Various guarantees in respect of
repatriation of profits and against
unreasonable nationalization of assets. In
this connection, there are no conditions
or restrictions on repatriation of dividends
or net profit; payments for foreign loan
servicing; payments of fees and charges
for technology transfer agreements; and
remittance of proceeds from sale of any
interest in a free zone investment.
7 Ghana has currently ratified double taxation agreement
with France and Netherlands.
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