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Doing Business in Ghana

Doing business in Ghana is bound to be your single greatest challenge, if coming in from the West.  In all other areas, the inconveniences will seem bearable, but when they interfere with your ability to provide for your family then they become monumental migraines.  The power outages, intermittent  communications, and the casual disregard for  time can make the green pastures look very muddy, very quickly.

Anyone unfamiliar with doing business outside of America or Europe, must really take stock and do some research on the subject.  The playing field is so drastically different that it could easily be the demise of the innocent (naive, which we all are but too proud to admit it).  Most repatriates come in with less than $100,000 and are thus considered small investors, but in actual fact, not investors at all.  Most people work and save their money, never really running a company, nor gaining the experience necessary to have first hand knowledge of the intricate details associated with profitably operating a company and productively managing human resources. Those like myself, who may have owned and operated a mom-and-pop shop, may have an inkling of challenges to goes with owning your own business, but still, we are ill prepared for the vastly different playing fields.  But since this is the primary avenue to acquiring legal residency in Ghana, then we comply and become so-called investors.  And if you invest wrong, like so many   of us do, there are no safety nets, nor even recourse if you get duped (mislead:), which is often the case.  Either you get resourceful or you get packing, plenty of sob stories around here, you won't make the news.

Nevertheless, people are making a killing out of here!  There's plenty money and even more potential, no need be discouraged, just apply this method to the madness.  My advice is as follows:

  • In every way Ghana should be approached like it were China. (Assuming, of course, you are not Chinese.)  The unknown.  Stop assuming you are coming to your hometown, where you know your brothers and sisters and you know the culture, or you even overstand the language or have a clue as to how the people think.  You have no idea, so act like it.  Look through the eyes of a babe, not as you see yourself now. Ask questions like a child and don't stop asking until you are sure you have a well rounded answer.

  • Budget a reconnaissance tour and study and ask.  Make appointments with people you want to meet before you come in. For instance, if you say you are a teacher I will direct you to a couple people who have started schools, with whom you may want to solicit info. or offer services.  From those persons you may get two more contacts and so on.  Make full use of this medium.

  • Then put as little as possible up.  Invest in an area where you can use your existing equipment as the investment in kind, allowing your upfront cost to be minimal.

  • Invest in areas where you will inevitably benefit from, like a guesthouse, where you will be utilizing your own compound and possibly home for the business.

  • Invest in gold.  Turn the entire cash part of your investment into gold and let it sit, while you live off the portion which is for living off.  The safest way to stash cash, just make sure you buy from Precious Minerals Marketing Commission and don't try to get the village discount.  Not with gold, you will loose.  But try to live for a year as modest as you can, and watch. Your business choice will be much the wiser a year later.

  • Try to overstand, the wolves can be vicious and callous, so don't expose your hide.  Move wise.  It is a jungle out here.

  • Equally important, be in tune with yourself so you may distinguish the angels voice from the devil's.  Most of our time and money is wasted on account of bad counsel.  Learn to discern.

Thus being said, Ghana's Investment Promotion Centre has its procedures which it would like you to comply. After examining the process you should find it is pretty straight forward, provided you have some business acumen.  It is designed to be attractive to business professionals, allowing for fairly easy access into our economy.  If it is intimidating to you then you may be interested in our services, where we walk you through the process.  For now, study the requirements and visit their website. (Link provided at the bottom.) Just remember, this office is solely interested in generating money for the country.  It was not established to help repatriates make any sort of transition, so don't expect compassion.  Wear your tough skin and prepare for bureaucrats.

The exact procedure is as follows:

Setting Up a Business in Ghana

Business Laws
An entrepreneur, irrespective of nationality, can set up a business enterprise in Ghana in accordance with the provisions of any of the following legal instruments:

  • The Companies Code, 1963 (Act 179)
  • The Partnership Act, 1962 (Act 152)
  • The Business Name Act, 1962 (Act 151).

Minimum Foreign Capital Requirement

A foreign investor may team up with a Ghanaian entrepreneur or company for a joint venture, usually in the form of a partnership or a limited company. However, under the Ghana Investment Promotion Centre Act, 1994 (Act 478), a minimum equity capital of US$10,000 is required from any foreign investor who intends to enter into a joint venture partnership with a Ghanaian in any area of economic activity, except trading. In trading, the minimum equity capital requirement is US$300,000.

The foreign shareholder is required to satisfy this minimum equity capital either in cash transferred through Ghana's banking system or its equivalent in the form of goods, plant and machinery, vehicles or other tangible assets imported specially and exclusively to establish the enterprise. The imported items must be covered by a Destination Inspection Report issued by an accredited inspection company, stating the value and condition of the goods. Consideration for goodwill of a business or services rendered by partners cannot be used to satisfy the minimum foreign equity capital.

Foreigners are permitted 100-per-cent ownership of an enterprise provided the investor satisfies section 19 (2b) of the GIPC Act, 1994 (Act 478). Wholly foreign-owned enterprises must have a minimum paid up capital, the equivalent of US$50,000 in all areas of economic activity except import trading, where the minimum equity capital requirement is US$300,000. In the cases of export trading and liaison (external) offices, there is no minimum foreign equity requirement.

Establishment of Enterprises

Application for registration of a company is made directly, or through agents or solicitors, to the Registrar-General. A company is duly registered after the company's regulations have been submitted to the registrar of companies and a certificate of incorporation issued. A specified fee is paid on presentation of the regulations. The information required includes:

  • the name of the company with the word "Limited" as the last word in the name
  • the nature of the company's business
  • the names of the first directors of the company
  • a statement that the liability of the company is limited
  • the share capital and its division into shares of no par value
  • a statement that the company possesses all the powers of a natural person of full capacity
  • limitation on the powers of the Board of Directors in accordance with section 202 of the Companies Code
  • any other lawful provisions relating to the constitution and administration of the company

The requirements for a public company limited by shares are similar to those stated above, except that the public can buy shares.

Commencement of Business
Before commencing business, further information on the company must be provided. This includes the particulars of the company and a declaration of compliance.
The particulars of the company are given on Form No. 3 and signed by the directors and the company secretary. The information provided must include:

  • name of company
  • authorized business
  • particulars of directors (at least two) and a secretary
  • name and address of auditors
  • addresses of the company's registered office and principal place of business
  • address at which register of members is maintained
  • amount of stated capital; number of authorized and issued shares, amount paid (other than cash), and amount due for each class.

The declaration of compliance is made on Form No. 4. This states that the conditions of section 28 of the Companies Code pertaining to a minimum capital issue of 25,000 cedis (C) has been paid and signed by all directors and the secretary of the company. There is a stamp duty of 0.5 per cent of capital issue payable. Upon due completion and presentation of the forms, the registrar issues the company with a certificate of commencement of business.

Annual Returns
Limited Liability Companies must file annual returns with the Registrar of Companies showing its audited balance sheet and profit-and-loss statement after 18 months of incorporation.

External Company
An external company is a body corporate formed outside Ghana but which has an established place of business in Ghana. This can take the form of a branch, management, share, transfer, registration office, factory, mine or other fixed place of business, but does not include an agency unless the agent is authorized to negotiate and conclude contracts on behalf of the outside company.

Within one month of the establishment of the place of business, the external company should deliver to the registrar of companies the following:

  • an English language translation of a certified copy of the charter, statutes, regulations, memorandum and articles or other instrument constituting or defining the constitution of the company,

statement of the following in duplicate:

  • name
  • nature of business or main objects
  • name, address and business occupation of the local
    manager authorized to manage the business in Ghana
  • number of authorized shares, amount paid and what
    is remaining payable in cash or otherwise
  • address of its registered or principal office in the country of its incorporation.
  • address including post office box number of its principal place of business in Ghana
  • name and address in Ghana of a person authorized by the company to accept service of process and other documents on its behalf
  • particulars and copies of any charges on the property of the company or if no such charges, then statement to that effect.

On receipt of the documents, they are registered in the Registrar of External Companies and the particulars gazetted.

An external company may invite the Ghanaian public to subscribe to its shares, subject to its complying with requirements of the Companies Code concerning invitations and the prospectus as if it were a Ghanaian company. The registrar, however, has the discretion to waive or modify parts of these requirements.

Annually, or at intervals not exceeding 15 months, the external company must submit for registration, a profit-and-loss account and balance sheet (as in the limited liability return of accounts).

Alterations made in the charter, statutes, regulations, articles or other instruments used in registration should be delivered to the registrar within two months of the effective date of the alteration.

The various forms required for registration of companies are obtainable from the Registrar-General. Prospective investors should obtain competent professional advice on the type of company which may best meet their needs. Such advice is obtainable from:

The Registrar-General
Registrar-General's Department
P.O. Box 118
Accra, Ghana
Tel: (233-21) 662043/664691