Ghana Records Low Foreign Direct Investment

70% of FDI are from loans
About 70 per cent of Ghana 's Foreign Direct Investment (FDI) are in the form of loans, which experts said was not a sustainable trend to generate growth.

Investigations by the Ghana News Agency (GNA) Business Desk at the Ministries of Trade and Industry and Finance showed FDI usually should come through capital imports through the stock exchange, equity, mergers or multinational companies buying new equipment to expand their operations in the country.

The rest comes from regular individual remittances to families and friends abroad, business operators and exports.

The probing which sought views from independent think tanks also showed that Ghana's FDI accounts were less than one percent, that is 0.8 percent, of total FDI to sub-Sahara Africa.

Officials described the current situation as "unsustainable", a trend that did not augur well for the country's development.

Investigations showed that such loans were not effectively fully utilized for actual purposes they were contracted for, for maximum benefits.

Ghana is fixed at the bottom rungs of the top 20 listed countries in Africa for FDI inflows with South Africa, Angola and Nigeria, Egypt and Morocco are at the top five of FDI inflows into the continent.

The decline in FDI to Ghana is consistent with trends into sub-Saharan Africa.

Flows to the sub-region decreased from eight billion in 1999 to 6.5 billion in 2000 largely on account of a sharp drop in inflows to Angola and South Africa.

Giving the breakdown of the composition of FDI from September 1994 to the last half of last year, a source at the Ministry of Trade and Industry said Manufacturing raked in a total of 325.66 million dollars.

That represented 19.81 per cent of the total earnings with the creation of 324 projects while the Services industry topped FDI revenue by posting total investments of 906.93 million dollars, 55.16 per cent of total earnings.

The Building and Construction industry cupped in 114.99 million dollars, while investment in the Agricultural sector closed at 178.28 million dollars, chalking just 10.84 per cent of total earnings.

Tourism, which is being touted to become the leading foreign exchange earner for the country, regrettably could provide only 1.65 per cent being 27.05 million dollars.

General Trade fetched 80.08 million dollars over the same period.

The source, quoting the new Industrial Review and Trade Performance bulletin said FDI into Ghana had declined dramatically after reaching a peak of 475 million dollars in 1997.

"By 2000, FDI had declined to 114 million dollars. Preliminary figures for 2001 suggested a further decline in numbers.

"However, we are expecting that figures for this year - 2002 - will be encouraging with the renewed confidence in the Ghanaian economy."

The leading sources of FDI were Britain with 131 projects, India with 105, China 100, and the USA with 89 Projects.

Germany followed with 82 projects, Lebanon put up 71 projects, Korea 47, Italy 46, Switzerland 43, Netherlands 41, Canada and France have 24 projects each.

Nigeria, Malaysia and South Africa, all developing countries contributed 36, 12 and 22 projects respectively as investments into the Ghanaian economy.
Analysts believed that the outdooring of a new and comprehensive Investment Code to replace the first one, which was enacted in 1994, would enhance FDI inflows into the country, the kind that would trigger a massive interest into Ghana's investment portfolio.
An accelerated effective, transparent divestiture programme is also expected to put Ghana on the spotlight for huge international investment that would increase the pace of flow of FDI into the country.