Despite efforts to increase private capital participation in the Ghanaian economy, in the early 1990s foreign investments continued to be sparse, and the economy relied heavily on aid and loans. By 1991 the external debt exceeded US$4 billion, and it was nearly US$4.3 billion in 1992, an amount equal to the level of assistance provided by donors over the previous decade. The country continued to experience trade and service deficits despite increased exports.
Despite efforts to induce foreign investment in the economy, interest has been restricted primarily to the mining sector. Although at least eleven mining companies enjoyed some foreign participation by 1990, the government had succeeded in creating only two joint ventures in former state enterprises outside the mining industry.
In 1985 the government adopted an investment code to encourage foreign investment. It excluded the petroleum and mining sectors for which the government introduced a separate code in 1986, it offered special conditions for agriculture, manufacturing (for export, using local raw materials, and for the production of agricultural equipment, spare parts, and machine tools), construction, and tourism. Agricultural projects were given a 45 percent corporate income tax allowance, a 100 percent allowance on plant and equipment, and a 10 percent investment allowance. In manufacturing and construction, the investment allowance was 7.5 percent, with depreciation and capital allowances of 40 percent and 50 percent, respectively, the latter two halved in subsequent years. Finally, in tourism, the investment allowance was 7.5 percent, and the depreciation allowances were 50 percent for plant and 20 percent for buildings, which also were halved in subsequent years. In all cases, imports required for the projects were exempted from duties. Additional tax reductions were granted to projects located in Kumasi and Sekondi-Takoradi, while other areas (excluding Accra-Tema) were given even larger reductions.
Some activities (retail and wholesale trade, except where employed capital was over US$500,000; land transport; travel; advertising; estate agencies) were reserved for Ghanaian-owned firms. Foreign investors were required to supply a minimum of US$60,000 in the case of partnerships with Ghanaians, or US$100,000 in the case of fully owned enterprises. Only net foreign exchange earning ventures were allowed to be fully owned by foreigners. The code guaranteed investments against nationalization, and where disputes needed arbitration, they were to be settled through existing international forums. Transfers abroad were allowed for dividend payments, debt servicing, charges for technology transfers, or liquidation of enterprises. Implementation of the code and processing of applications by potential investors were made the responsibilities of the Ghana Investment Center.
In mid-1993 Minister of Finance Kwesi Botchwey announced that a new investment code had been presented to Ghana's parliament. Under the new code, minimum foreign capital requirements for joint ventures will be dropped from US$60,000 to US$10,000, and the minimum for fully owned foreign enterprises will be reduced to US$50,000. Companies established solely for export will be exempt from the minimum capital requirement. The new code outlaws government expropriations and provides a five-year tax holiday for the agricultural and real estate sectors.
Data as of November 1994