Foreign Direct Investment: An alternative for Aid in Ghana
A review of Dr. Dambisa Moyo book “Dead Aid” convinced me that Foreign Direct Investment (FDI) is best investment plan that Developed world can give to Africa rather than concentrating on Foreign Aid only. Ghanaian government needs to focus on Policy reforms by taking serious steps for the growth of Foreign Direct Investment in the country, together with giving proper incentives and protection to investors. They are considered back bone of growing economy of the country.
The liberalization, privatization and deregulation of the telecom sector by Former President Kufuor's government, which seemed to be continued by the current government were specially appreciated by Foreign investors and considered as rational thinking of the current government. The liberal FDI policy by the Government of Ghana and deregulation and privatization of the sector has triggered a wave of international acquisitions in the sector. During the last year about US $ 2 billion worth of acquisitions were made in the telecom sector. After liberation of the sector a large number of firms are found working in Ghana's telecom sector.
The government should concentrate seeking more FDI into the country. It seems the government is doing satisfactory job in strengthening the regulatory bodies that are in charge of the various sectors. It worth mentioning some of the bodies such as the National Communication Authority (NCA), Ghana National Petroleum Authority (GNPA) and many more who are doing well in attracting FDI into the country. Solid steps of NCA as regulatory body of telecom sector and support from the government enhanced the level of confidence of foreign investors and stimulate the investment environment of the country.
Due to satisfaction of the various investors in Ghana, it has enabled Ghana to be the Gateway to Africa. NCA has proved a conducive and investor friendly environment in the telecom sector by awarding licenses in a fair and transparent manner. All operators mostly foreign are rolling out their networks rapidly all over the country, which requires huge investments. The Foreign investors has created an environment of competition in the mobile sector and the tariffs have reduced substantially with improved telecom services.
Ghana therefore has really benefited from the FDI policies in the country. There has been job creation, improvement in infrastructure and many more other benefits. That is the reason why we advocating the World Financial Bodies to concentrate more on the FDI rather than given aid to African governments, which many of them misuse those funds which in the short run has affected the African Ordinary man on the street to grow poorer.
In conclusion I have eight recommendations for the government, in other to attract and strengthen FDI into the country:
• Revolutionary reforms and even new tax structure should be introduced in order to save investors from the complexity of tax structure as well as to save time. Tax reforms are very important for attraction and retention of potential investors.
• All measures should also be taken by keeping in view the sovereignty of the country. Encouragement of FDI shouldn't be practiced at the cost of supremacy of the home country.
• Absence of long-term government policies prevents the implementation of long-term plans. Gaining the confidence of foreign investors asks for consistent and coherent policies. The situation over the last five years has certainly improved but a lot more needs to be done.
• The laws and regulations should be simplified, updated, modernized, made more transparent, and their discretionary application must be discouraged.
• The availability of better quality and more reliable services in all areas of infrastructure are key ingredients of a business environment conducive to foreign investment. In most infrastructure services, Ghana is highly deficient as compared with many developing countries that have attracted higher levels of foreign investment. Ghana will have to invest more in the areas of education and physical infrastructure.
• Government should focus on its positive image display all over the world.
• Government should make such a statistical data of its citizen which are abroad and provide them incentives plus security and encourage them to invest in their homeland.
• Government should make policies regarding sending its delegation to potential investor nations and make them aware of opportunities available in Ghana but before this government should ensure faire grounds and security measures.
God Bless my motherland Ghana!!!!
Author: Paul Rex Danquah
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