Interview: Yofi Grant
How have government spending and investment trends changed during the Covid-19 pandemic?
YOFI GRANT: Countries around the world implemented support and recovery packages in response to the pandemic that were aimed at bolstering industry and the wider economy, while also fostering business continuity. There was a tendency for countries to look inwards to see how they could best mobilise capital during the health crisis, and Ghana acted in a similar manner. The government had to move quickly and implement a series of financial, social and health measures. These included providing food to those in need, cutting interest rates, delaying loan repayments and approving tax exemptions.
Taken together, these measures resulted in significant loss of government revenue, a trend that was seen in economies worldwide. This revenue could have been otherwise used to support foreign direct investment (FDI) inflows, as many countries saw a substantial decrease in FDI over this period. Nonetheless, Ghana was unique: the country realized a 140% increase in FDI in 2020. This is due to Ghana’s rich natural resources, strong human capital, political stability and rule of law, all of which make it an attractive place for foreign investors to deploy capital. Indeed, the government took clear and well-communicated actions to mitigate the effect of the pandemic, which boosted the confidence of local and foreign investors alike.
What has been done to maintain Ghana’s competitiveness as a destination for capital?
GRANT: Even prior to the pandemic the government prioritised economy-wide digitalisation, with initiatives like a biometric register for the national identification system, the digitalisation of land records, and a paperless port-clearing system that allows shippers to clear their goods in as little as four hours – down from around a week previously. We have embraced technology and jumped straight into the digital age. The shift towards digitalisation is being strengthened by concurrent efforts to ensure mobile data services are affordable and available in communities across the country.The policies that have been set in place will ensure that the country builds back better and stronger. After the first wave of the pandemic the government implemented several initiatives to ensure a quick return to where we were before: Ghana’s economy grew at an average annual growth rate of 6.9% between 2016 and 2019, one of the fastest in the world. It is very crucial that this growth is inclusive and felt in every corner of society, hence the importance of initiatives such as One District, One Factory.
In what ways do foreign players benefit from partnering with Ghanaian investors?
GRANT: Understanding the culture and the business norms of another country always makes conducting business easier, and can have a significant impact on how you do business. The local business community can leverage Ghanaian networks and knowledge that are not easily accessible for foreign investors, so partnering with them is key.
It is clear that Ghana must ensure that whatever is done to attract FDI should complement the local economy. Much of this is related to aligning the investment agenda with the UN Sustainable Development Goals. Partnering with domestic companies contributes to the value chain, and benefits not only the national economy but ensures the benefits are felt by local communities. These relationships between foreign and local investors can be a crucial tool in addressing issues such as poverty. Through these linkages investors can help develop the local economy, connect Ghana’s supply chains with those around the world and ensure that local communities have a stake in the success of their businesses.
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