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Ghanaian Investors Are 52% Disadvantaged; PEF Wants Equal Benefits
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The Private Enterprises Federation (PEF) has revealed that local investors are highly disadvantaged when it comes to doing business in the country.

The Federation is unhappy about what it explains as unfair treatment meted out to local investors who lack the funds and resources to compete with their well-resourced foreign counterparts.

The minim amount a foreign company is required to pay to the Ghana Investment Promotion Centre (GIPC) when it applies to do business in the country is US$50 million, which amount automatically gives them 25 percent tax exemption.

This means that the local companies who cannot afford the US$50 million do not enjoy the 25 percent tax holiday and the 27 percent on construction, foreign investors enjoy.

Speaking at the Citifm’s Investment Forum, PEF’s Nana Osei Bonsu said that government policies that drive the business environment may be the biggest enemy of the private sector.

He said there is an unfair competition from foreign businesses who have 52 percent competitive advantage, from the 25 percent tax exemptions, cheap financing of 3 percent for FDI as against locals 25 percent tax obligation and 30 percent cost of credit.

He stated that “Government must allow us to be competitive by creating favorable policies that will benefit us as well. We don’t have private equity; venture capital, so everybody is competing for the limited credit including government. When a foreign company is coming to do business it will borrow at 3 percent in his home country but his counterpart here in Ghana, who wants to do the same business, borrows at 30 percent. When they apply to the GIPC because they are a strategic investor, the minimum requirement is US$50 million; how many Ghanaians have US$50 million? Automatically we have sidelined our own people.”

He outlined corruption that is eroding the private sector, private sector facing extortion to do business, the inefficient public sector services, delays in getting licenses, unreliable infrastructural service delivery and high cost of capital as some of the challenges facing the private sector.

The Federation also wants government to insist that 25 percent of foreign investors’ profits stay in the country to be invested in other sectors of the economy.

Nana explained that “because, even though, it’s their own money it came on the back of tax exemptions, revenue that could have gone to government that was forgiven and that investment will still be theirs and it won’t be taxed to help develop other sectors of the economy.”

Meanwhile the members of the federation have been meeting with management of the GIPC to have their grievances addressed.

Source: Godstreet Business

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