In his State of the Nation address last week, President John Agyekum Kufuor announced plans to establish an international financial services centre in Ghana by the middle of this year.
The 'offshore' banking centre would be set up as a joint venture between Government and Barclays, and would be the first of its kind west of the Atlantic, the President said.
This project comes off the back of enthusiasm elsewhere for the setting up of Ghana as an offshore banking centre, with one recent survey placing Ghana as the 22nd most attractive location worldwide for the outsourcing of financial services. It was one of only two countries within Africa to make the top 40 list, beating South Africa which came in at number 32.
Databank, Ghana's lead! ing financial services provider, is also strongly advocating for the development of Ghana's offshore banking potential. With the domestic banking industry itself booming – there are now 25 banks in Ghana, following rapid increase in the last few years – the potential for Ghana to offer its banking services to companies abroad is now ready to be realised, analysts say.
Offshore banking has become an increasingly attractive option for many businesses in recent years, and now Ghana is getting ready to tap into this ready market.
Both macro-economic and political stability in Ghana mark it out as an attractive location for offshore banking facilities – businesses can trust that their money and their companies will be safe in Ghana, more than would be the case with some of its less predictable neighbouring countries. Although many offshore banking locations are islands, the term is used figuratively to refer to all banks outside the country of residence of the depositor – Switzerland, Luxembourg and Andorra in Europe are all leading offshore banking providers, for example.
Other well-established locations include the British Channel islands – it was here that the term 'offshore banking' was coined – the Bahamas, the Cayman Islands, Gibraltar, Hong Kong and Singapore.
Offshore banks are typically in a low tax jurisdiction (“tax haven”) that provides financial and legal advantages.
Many companies in developed companies choose to conduct their banking overseas because of the savings that can be made in both taxation and running costs. However, the benefits are mutual and the development of offshore banking in Ghana would mean the opportunity for both job provision and valuable capital – even when attractive tax incentives are offered to overseas companies, a tax levy of just 3 percent or less could make a valuable contribution towards the annual budget.
Other advantages for Ghana could include training and education from conglomerate companies – valuable training to equip their workforces with applicable skills that are useful in the global economy.
Advantages to countries banking abroad may typically include strong privacy, less restrictive legal regulation, low or no taxation, easy access to deposits and protection against local political or financial instability