Ghana is still losing significant profits from foreign investments amid recent economic gains and projected growth by the government and international agencies.
According to Bank of Ghana data, Ghana’s net Foreign Direct Investment (FDI) continued its negative trend since the first quarter of 2021. This means that more money left Ghana for foreign investment than came in from foreign investors within the period.
The government’s efforts to reverse this disinvestment cycle have yielded no result yet, as the data show that in the first half of 2025, investment losses exceeded those in the preceding quarters. The effect of macroeconomic instability witnessed in the past three years still lingers. Unlike major economic shifts and impacts, like disinflation and reduced cost of living, after six months of economic restoration and stability, other aspects of the economy perhaps require more time.
Ghana’s Investment Shortfalls
The first half of the last decade (2016 – 2020) recorded significant investment inflows that exceeded the outflows, ranging from US$226.05 million to US$1063.79 million, and averaging US$712.17 million of net FDI for the five years.
The second half, aside from the first quarter of 2024, witnessed intense disinvestment, implying that Ghana’s investment outflows exceeded its inflows. From 2021 to the first half of this year, the net FDI ranged between -US$943 million to -US$286 million, averaging -US$440.53 million for the period (excluding 2024Q1).
Specifically, -US$491 million, -US$386 million, and -US$535 million represent the net FDI for the fourth quarter of 2024, first quarter of 2025, and second quarter of 2025, respectively. This means that in these periods, more money left Ghana for foreign investments than came in from foreign investors. That is, the value of the outward FDI exceeds the value of the inward FDI.
The net outflow of capital represents Ghanaian companies investing abroad or foreign companies that reside in Ghana repatriating profits. The second instance relates more to Ghana’s situation. On the other hand, the inflows are the new foreign investments foreigners make in Ghana.
Possible Reason for Negative Net FDI
The imbalance in net FDI does not necessarily undermine the economic growth and resilience Ghana has achieved. For the greater part of this year, the Ghanaian economy is restored, is growing, the Cedi has appreciated against the U.S. dollar, and the macroeconomic figures are stable.
According to the Ghana Investment Promotion Center (GIPC) Act, 2013 (Act 865) and the Foreign Exchange Act, 2006 (Act 723), foreign investors and companies are legally allowed to repatriate their profits, dividends, and capital unrestricted, provided the transfers are made through an authorized bank in Ghana and all relevant taxes are deducted. The GIPC therefore rejected calls from Ghanaians to restrict foreign companies from repatriating all their funds in foreign currencies.
Ghana’s legal framework is a barrier against the expropriation of foreign investments. Also, foreign companies operating in Ghana within the Ghana Free Zones Authority are entitled to income tax exemption on profits.
The Bank of Ghana alluded to having met with companies and tried to use moral suasion to get them to repatriate as much foreign exchange as possible to the country and give the Bank of Ghana the first right of refusal to buy the foreign exchange, but it has been challenging.
The Bank of Ghana now mandates all exporters to repatriate their export proceeds through local banks within 120 days of shipment, accompanied by strict non-compliance penalties. This, according to the Bank, will ensure foreign currencies flow through the official banking system.
Most of the mining companies, shipping lines, and other large companies in Ghana are owned by foreigners who repatriate their profits and dividends after tax. Ghana gets the tax revenue, but everything else is sent away. Ghana’s fight against foreigners repatriating their profit began way back in 2022, and it appears no headway has been made yet.
Ghana is Open for Business Campaign
At the back of this, the government has visited possible investor countries and companies to increase investment in Ghana. The various ambassadors have been charged with a quota of investment inflows from their respective country stations. The government’s initiative is to improve the investment climate and support foreign and local businesses in Ghana.
The government is encouraging the diaspora to also repatriate their profits back to Ghana through initiatives like the Decade of Our Repatriation (DOOR) program to boost local life, investment, and integration in Ghana.
The government aims to improve the way of doing business in Ghana and to provide support and a business-friendly environment to thrive. A legal investment framework is in place to regulate the inflow and outflow. This campaign has also provided a special lens for the government to protect specific Ghanaian companies in specific sectors, like oil exploration.
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