In recent times, the departure of some foreign businesses from Ghana has raised significant concerns among the general public and stakeholders alike.
The most recent one is Glovo, a prominent food delivery platform, which announced its decision to end operations in Ghana on May 10, 2024, despite significant investment in the last two years to expand its services.
The company conveyed this development to its network of restaurant partners via email, attributing its decision to profitability issues encountered within the Ghanaian market.
This trend has sparked discussions on the underlying factors contributing to this exodus and the necessary measures to mitigate further departures.
Franklin Cudjoe, the Founding President of IMANI Centre for Policy and Education, has shed light on the pressing issues contributing to this trend, urging the government to take immediate action to prevent further departures.
Mr Cudjoe began by pointing out that while Ghana has seen an influx of Foreign Direct Investments (FDI), surpassing other African countries like Kenya and South Africa, the departure of foreign businesses remains a pressing issue.
He noted that according to research conducted by the IMANI Centre for Policy and Education, Ghana has become the highest recipient of Foreign Direct Investments, with a substantial number of investors originating from the Netherlands.
“Bawumia, what are you doing to prevent more departures?. IMANI research shows that ‘Ghana has become the highest recipient of Foreign Direct Investments compared with countries like Kenya and South Africa’. According to the Ghana Investments Promotion Centre (GIPC), there are more investors coming from Netherlands than from other countries. It is therefore important to pay attention to the challenges of such businesses”.
Franklin Cudjoe, Founding President IMANI Africa
One of the primary concerns highlighted by Mr Cudjoe is the burdensome regulatory and compliance processes faced by foreign firms operating in Ghana.
He emphasized that the high regulatory and compliance costs, coupled with inefficient permit processes, often force businesses to resort to unofficial channels, increasing their operational expenses.
The founding President of the policy think-tank, IMANI Africa further stated that the above observations had been earlier echoed by members of the Ghana Netherlands Business Culture Council (GNBCC).
Mr Cudjoe recounted that the group in a recent policy meeting urged the government to streamline regulatory compliance processes to enhance efficiency and additionally emphasized the need for “deepened digitalization” in public services by the government to address corruption, which further exacerbates the challenges faced by businesses.
The Incidence of ‘Duplicating Taxes’
Furthermore, Mr Cudjoe emphasized the need for the government to review and align tax frameworks to minimize the incidence of “duplicating taxes,” which he noted significantly inflate the cost of doing business in the country.
He posited that reducing the tax burden on businesses is crucial for enhancing their competitiveness and attracting more foreign direct investment.
Mr Cudjoe also noted that aligning tax policies with strategic measures will not only alleviate the financial strain on businesses but also foster an environment conducive to investment and economic growth.
As Ghana confronts with an alarming unemployment rate, the departure of foreign businesses poses a significant threat to job opportunities in the country.
Mr Cudjoe’s call for the government to prioritize reducing the cost of doing business through tax reduction and strategic policy adjustments is therefore imperative.
Ensuring a favourable business environment is not only vital for retaining existing businesses but also for attracting new investments, ultimately contributing to job creation and economic development.
By addressing regulatory inefficiencies, reducing the tax burden on businesses, and implementing strategic policies, the government can foster an environment that promotes business growth and job creation.
Failure to take decisive action risks further exacerbating Ghana’s unemployment crisis and hindering its economic potential.
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