By Isaac AIDOO, in Accra, Ghana
In spite of its economic challenges, Ghana’s foremost investment promotion agency, the Ghana Investment Promotion Centre (GIPC), is upbeat about what it describes as limitless trade and investment opportunities in the West African country.
GIPC maintains that “Ghana continues to remain one of the most attractive destinations for investments in Africa. The 2021 edition of the ‘Where to Invest in Africa’ Report by the Rand Merchant Bank (RMB) ranks Ghana as the best place to invest in West Africa and the 6th best investment destination in Africa.”
Indeed, the Centre has found it expedient to explore the synergies and linkages between its functions and the role being played by the African Continental Free Trade Area (AfCFTA) whose secretariat is headquartered in Accra.
The GIPC has been a force to reckon with in the country’s efforts to attract foreign direct investments (FDIs) into Ghana.
FDI into Ghana has been particularly impressive since the pandemic, albeit lower than recorded values in 2020 but higher compared to 2019. At the end of 2021, Ghana recorded 271 projects with a total FDI value of $1.3 billion: a decrease of 51 percent over 2020 FDI results but an increase of 17 percent over 2019 FDI results of $2.65 million and $1.11 billion, respectively.
At the maiden annual meeting of African Investment Promotion Agencies (IPAs) held recently in Ghana’s capital, Yofi Grant, chief executive officer, GIPC, said, “FDIs may not be the panacea for all of our economic problems in Africa, but it is important because it brings the fresh capital, technology, and skills so badly needed to raise living standards and reduce Africa’s dependence on volatile commodity exports and as we look externally, it is time to look inward for the much-needed investment.”
He noted that Africa could see FDI increase by between 111 percent and 159 percent under the AfCFTA, while wages would rise by 11.2 percent for women and 9.8 percent for men by 2035, albeit with regional variations, depending on the industries that expanded the most in specific countries.
The event, themed: ‘The Role of IPAs in Facilitating Intra-African Trade,’ pooled the heads and representatives of the invited African IPAs and their colleagues from the World Association of Investment Promotion Agencies (WAIPA), economic and political leaders.
It discussed the critical role IPAs play in boosting intra-African trade and deliberated on the emerging opportunities AfCFTA continues to present and how various development actors can leverage them to facilitate trade and boost continental socio-economic development.
Grant said, with deep integration, Africa’s exports to the rest of the world would go up by 32 percent by 2035, and intra-African exports would grow by 109 percent, led by manufactured goods.
Foreign direct investment (FDI) flows to Africa reached $83 billion in 2021 – a record – from $39 billion in 2020, accounting for 5.2 percent of global FDI. Southern Africa, East Africa and West Africa saw their flows rise; flows in Central Africa remained flat and in North Africa declined.
Intra-Africa FDI — direct investment by firms in Africa into other countries in the region — has also increased steadily, rising 12 percent annually from 2002 to 2008 (excluding FDI to and from Mauritius).
In 2017, the stock of intra-Africa FDI hit a high of $52 billion, or 11 percent of Africa’s total FDI stock. Southern Africa, specifically South Africa, is the main source of intra-Africa FDI, making up 60 to 70 percent of intra-Africa FDI stock in most years, and West Africa has recently emerged as another important source of intra-Africa FDI.
These statistics, Grant pointed out, “make the case for a deepening of intra-regional connections and networks to foster intra-African investment.”
The AfCFTA with its protocols on trade, intellectual property, investment, among others, would provide much needed stimulus and drive Africa’s long-term recovery and growth.
Liberalising tariffs in Africa was set to unleash billions of dollars in untapped export potential and with plans under way to remove market frictions that hindered intra-Africa trade. AfCFTA is on course to increase intra-African trade by 81 percent by 2035, according to Grant.
“What would it take for Africa to trade more and invest more with itself?” he asked
Responding to the question, Grant said “I believe it will take the cooperation and collaboration of us, herein gathered to propel intra-Africa trade, and investment.”
Africa open for business
The GIPC CEO said the international investor community could be assured that Africa was ready and open for business with the AfCFTA providing a level playfield of rules and incentives.
“The time is ripe for us to chart a new path in the African FDI story, we must embrace this opportunity with open arms and work tirelessly to realise the goal of an economically emancipated Africa,” he added.
Investment Promotion Agencies, key to success
Ismail Ersahin, the executive secretary, WAIPA, said to attract and facilitate direct FDI investments, IPAs were critical partners to governments and investors around the world.
Invest in critical infrastructure, services to reap AfCFTA benefits
Three years after the launch of the AfCFTA, African countries are yet to take full advantage of the agreement due to the inability of some countries to submit their tariff schedules to the AfCFTA Secretariat for technical validation.
Herbert Krapa, Ghana’s deputy minister for trade and industry, cautions “Africa will not reap the dividend of AfCFTA, if we are not investing in critical infrastructure and services.”
He said the role of Investment Promotion Agencies (IPAs) is critical in ensuring that the continent brings the dividends and the benefits of intra-Africa trade to the fore.
Forecasts from the United Nations Conference on Trade and Development (UNCTAD) show that the AfCFTA could boost intra Africa trade by about 33 percent and cut the continent’s trade deficit by 51 percent.
If the IPAs would work together and channel their energies and resources together, they would be able to make more gains for the continent and for member states.
“Because once we are working together, and we are speaking to each other and aligning resources, it will be possible to implement an agenda that fits directly into African Agenda 2062,” he added.
Support to private sector
The deputy minister noted that the ministry is collecting data that would enable it to develop a special package for companies which sought to take advantage of AfCFTA.
He said the package, when ready, would be submitted to Cabinet for approval, then later to Parliament for approval.
Among other things, he said the package would consider areas such as the cost of power, cost of credit and cost of infrastructure.
He said the move was aimed at making Ghanaian companies more competitive on the continent.
“We are paying attention to some of these things so that we will be able to take full advantage of the AfCFTA agreement,” he stated.
Stakeholders and investors in the trade and investment space are indeed in high expectations as AfCFTA makes a turning point three years on.
It is hoped that agencies at the helm will not relent in their efforts to make Africa the pride of the world.
