Ghana has been ranked the fourth best place to invest in Africa by RMB Global Markets Research.
Ghana beat countries such as Kenya, Nigeria, Tanzania, Cote d’ Ivoire and Algeria as it is placed among the top 10 countries on the continent. It also ranked fourth as the country to have attracted the highest amount of Foreign Direct Investment (FDI) in 2015 even when the economy was heavily saddled with major economic challenges. Ranked among the top five recipients according to the research company, Ghana only beat Morocco.
During the period under review, Africa as a whole attracted $54 billion in FDIs, representing a paltry 3.1 per cent of the world total FDIs. A researcher at RMB Global Markets Research, Ms Celeste Fouconnier, made this known at the 2nd edition of the Economic Business Breakfast meeting hosted by the First National Bank in Accra last Thursday, said much as the outcome of the research may sound unrealistic to some Ghanaians, “it must be noted that Ghana is still enjoying a lot of goodwill among investors out there”.
“This is what the country has to leverage to be able to fix the challenges to position itself to attract more FDIs to help accelerate growth of the economy”, she said. Another revelation from the research also indicated that Accra ranked number one as the African Economic Growth hotspots, beating cities such as Lagos, Abuja, Addis Ababa, Luanda, Kigali among others.
Strength of cedi
She said from all indications, there is a positive sign that the cedi will remain strong against the foreign currencies. For instance, she said the major boosts would be the “business environment which will boost sentiments and the anticipated high oil prices this year”. She said there was also the COCOBOD loan and the Eurobond issuance, the bailout from the International Monetary Fund (IMF), World Bank support and the China funding. However, she said the major risks would be the cocoa prices and fiscal slippages.
The government has been urged not to overly rely on tax cuts as a means to free up capital and whip up the private sector growth. Instead, it has been advised to work at stabilising the local currency against the major foreign trading currencies, particularly the United States dollar. Ms Fouconnier said, “the tax cuts are good in a way but the currency stabilisation is equally good”. “A table currency helps businesses to plan and therefore, no matter how taxes are reduced, if they currency keeps depreciating, they will be losing their cedi value,” she said. Ms Fouconnier said the tax cuts were positive signals but indicated that it will take time for the full realisation of its effects to be felt.
Views on budget initiatives
She referred to the tax cuts and indicated that it was beneficial in spite of the challenges that may arise from its implementation. According to her, the move will spur private growth but required more to ensure the benefits were sustained. On the ‘one district one factory’ policy, Ms Fouconnier described it as a “great initiative to improve employment and productivity” explaining that the move will enable the private sector to spread out wider to the other parts of the country to create the necessary jobs, while tapping the potential of the districts. Ms Fouconnier acknowledged the government free school high school promise but noted that there were more questions that required answers.
For instance in the 2017 budget statement, the government announced its intention to release GH¢400 million to support the initiative but Ms Fouconnier said “more clarity is needed around the funding structure”. In the area of expenditure management, she mention what the government had done which includes a Fiscal Council, Treasury Management Unit among other things but noted that these were “nothing new” adding that the implementation “success lies in enforcing existing rules”. On the whole, she described the initiatives as “Good initiatives, but timing will be tricky”. For instances, she said the “private sector will still be struggling with power outages and it takes time to derive results from formalising the economy to enable a wider tax base.
Source: Daily Graphic