Ghana is rosy for investors but wages low - UNIDO Survey

Accra, Feb. 13, GNA - Ghana is the most investor-friendly nation in Africa but with the lowest wage levels that do not reflect labour productivity, the 2005 Africa Foreign Investor Survey report has indicated.

The survey, which is the third in a series by the United Nations Industrial Development Organisation (UNIDO) in 15 countries of sub-Saharan Africa, said the wage level in Ghana was 47 per cent below average.

Foreign firms from the South were found to pay higher wages than those from North whilst newly established companies pay higher wages than more established ones.

The survey, which has the objective of optimizing resource allocation for investment promotion in Africa, collated the data based on investor motivation, performance, perception and impact on domestic economy.

The aim was to enable policy makers in Africa to better target investors, tailor policies and services as well as leverage FDIs growth. The report said though Ghana scored the highest in most of the indicators by way of doing more to attract investors, it also had the lowest in terms of local content percentage of all countries surveyed. It said on average, each investor firm spent 2.6 million dollars for local material.

Presenting the report at a day's forum in Accra on Tuesday under the auspices of the Ghana Investment Promotion Council (GIPC), Mr Mithat Kulur of UNIDO said investors were satisfied with location factors in Ghana and saw all of them improved over the past three years. Mr Kulur said the report showed that Ghana was mainly an investment destination for small multinationals or stand-alone foreign entrepreneurs (FEs) adding that FEs exhibited highest employment and investment growth although from a relatively low base.

He said there was different pattern of investment for Ghana than in the whole sample, which showed that investors from the North were more forgiving than South investors with regard to location factors, except resource-related factors.

In addition, he said, investors were generally satisfied with their own performance as well as the performance of the GIPC.

Mr Kwadwo Affram-Asiedu, Deputy Minister of Trade, Industry, Private Sector Development and President's Special Initiatives, said it was important that it was now a common knowledge that growth did not occur by chance but through a well crafted investment or growth agenda based on resource availability.

He said available statistics indicated that FDI worldwide surged to an estimated 897 billion dollars in 2005 but Africa's share was less than two per cent.

This, he said, was a challenge since Africa was not only competing with advanced nations like Germany, France, UK, Japan and US for worldwide investment, but also with other newly industrialized economies particularly those in Eastern Europe and Asia.

Mr. Affram-Asiedu said a look at the report indicated that African countries ought to study the economic impact of the distinct groups of foreign investors in a host of beneficiary countries, the different perceptions about the location factors in host countries an develop customized strategies for the different investor groups.

He said a major finding was the apparent dichotomy between investor groups that exhibited "jobless growth" and those that exhibited high employment growth without much value creation or spill over benefits. "The former group is represented mostly by the traditional, established, resource oriented, capital-intensive Trans-national Corporations (TNCs)," he said.

The other group, Mr Affram-Asiedu pointed out, was the recently arrived investors from developing economies especially Asia which have considerable employment and sales growth but few spillover effects in terms of local content, technology and knowledge transfer or human capital development.

He observed that major investments these days moved from North to North in the form of mergers, acquisitions and franchising and that those in developing countries were still not paying much attention to South-South cooperation.

Mr Robert Ahomka-Lindsey, Chief Executive of the GIPC, said the launch was also to afford stakeholders the opportunity to brainstorm on how to re-strategize to inform policy decision-making in attracting investors into the country.

The forum was under the theme "Ghana-Your Profit Centre in West Africa: Developing Synergies between FDI and Local Private Sector Resources."