FDI stock was GH¢20.4bn in 2011

The stock of foreign direct investment (FDI) in Ghana rose from GH¢16.9 billion in 2010 to GH¢20.4 billion in 2011, representing an increase of 20.7 percent, a 2012 Bank of Ghana (BOG) Foreign Private Capital Flows survey has shown.

The change in the FDI stock value, according to the survey, was on account of new resources amounting to GH¢2.9 billion and valuation gains of GH¢571.9 million.

The survey covered a total of 178 Ghanaian enterprises in the country. The major owners of FDI capital were the United Kingdom, France, South Africa and Canada. Most of the investments were in mining but also included oil, information and communications, and the finance and insurance sectors.

Speaking at the launch of the survey findings in Accra, the Deputy Governor of the Bank of Ghana, Mr. Millison Narh, said: “Investors worldwide have woken up to the exciting growth opportunities in emerging market countries and in Africa in particular. And despite fluctuations from time to time, robust capital flows to emerging economies and Africa are likely to be a structural characteristic of global financial markets for years to come.

“It is time we also positioned ourselves to attract the huge investment funds looking for safe havens to migrate to. Our traditional dependence on commodity exports for foreign exchange continues to face challenges, the commencement of crude oil production notwithstanding.

“We will strive to maintain macroeconomic stability in the country to improve our competiveness on the international market.”

With the drying up of external capital due to economic challenges in most donor countries, FDI represents an important source of private equity and loans for Ghana.

The Finance Minister, Mr. Seth Terkper, said the government is yet to realise most of its official inflows for the 2013 fiscal budget.

“[There is a] falling trend in official inflows, to the extent that government has hardly realised 40 percent of its programmed inflows for the 2013 fiscal budget. This has brought home the reality that we take the idea of looking elsewhere for foreign exchange inflows very seriously.”

He said his ministry is working at addressing the structural issues that are constraining the fiscal budget to ensure medium- to long-term sustainability of its finances.

The budget deficit in the first seven months of the year was 6.3 percent of Gross Domestic Product (GDP), against a target of 5.6 percent. Fiscal revenue and grants was GH¢10.4 billion, below the target of GH¢12.5 billion -- mainly due to shortfalls in revenue collections and poor disbursement of external grants.

Government responded to the revenue gap by keeping total expenditure below target. However, spending on wages and interest payments exceeded their targets. The wage bill, which was the main cause of fiscal dislocation in 2012, amounted to GH¢5.5billion between January-July against a projection of GH¢5.1billion.

The President of the Association of Ghana Industries (AGI), Nana Owusu-Afari, said: “Foreign private capital inflows have become an increasingly significant source of investment in most developing economies, and these have a bearing on our GDP. With the low levels of domestic savings and revenues, the government can only supplement domestic financial capital with foreign savings by attracting private capital flows into the country.”