Govt urged to create economic certainty to attract investors

Business News of Tuesday, 17 February 2015

Source: Graphic Online

Lord Ian Paul Livingston

The United Kingdom (UK) Minister of Trade and Industry, Lord Ian Paul Livingston, has urged the Government of Ghana to create what he termed “the right regulatory environment and create a sense of certainty” to be able to attract investments from the UK and other parts of the world.

“Businesses cannot cope with uncertainty. If they think when they invest today things will change tomorrow, it makes things worse. This is unfortunately the situation in many countries,” he said.

The UK’s Trade and Industry Minister made the call at a breakfast meeting hosted by First Atlantic Bank Ghana in partnership with the British High Commission in Accra at the weekend on the theme: ‘Unlocking Finance for Infrastructural Development.’

The meeting attracted a large number of experts in development financing, bankers, economists and legal practitioners, among others, and was aimed at exploring avenues to attract foreign investments into the country.

According to Lord Livingston, “Uncertainty destroys confidence and increases risks.” He added: “Risk also increases the required rate of returns, which leads to a high cost of investment. That is the reason why many governments over the world are unable to attract investors consistently.”

Among Ghana’s current challenges is the lack of electrical energy to power industry and business, a situation which has forced many entrepreneurs out of business and worsened the unemployment situation.

Ghana’s interest rate regime is said to be among the highest on the continent with rates as high as 34 per cent per annum; inflation is hovering around 16 per cent while the country’s currency continues to fall uncontrollably although it stabilised in the last couple of months before the beginning of 2015.

Apart from the highly perceived corruption within the government and the public sector, the country also faces what has been described as the biggest debt stock in years said to be in the region of 65 per cent to Gross Domestic Product (GDP), an uncontrollable wage bill and an inefficient revenue collecting agency.

Infrastructure is at its worst state and it is estimated that the country requires an average of US$1.5 billion annually for the next 10 years to bridge that gap.

Lord Livingston said the UK was looking at how to invest through partnerships in Ghana.

According to him, the City of London for instance was one of the largest investment opportunities in the world and, therefore, presented private finance and expertise.

“A number of Britain-based companies are in Ghana to invest. The UK believes in partnerships that combine overseas expertise and local skills” and Ghana can gain expertise from Public Private Partnerships (PPPs) with the UK and use the expertise to market itself as the hub for infrastructural development in Africa.”

While acknowledging the opportunities in Ghana, he said “Ghana has huge potential but things have to be done well to attract and sustain investment.”

During a panel discussion, the Managing Director of First Atlantic Bank, Mr Gabriel Edgal, said the bank and others within the country had the capacity to arrange some syndicated funds from their foreign partners to support projects in the country.

Mr Edgal added, “Our bank has been doing a lot and we will continue to explore other avenues to ensure that we help raise more funds to support infrastructural development in the country.”