Vice President of IMANI Africa, Bright Simons, has expressed concern about the Ghana Investment Promotion Center’s (GIPC) recent pivot towards taxpayer funding due to a significant drop in its traditional revenue sources.
In a tweet, Simons brought attention to GIPC’s unexpected financial strain, revealing that the agency is now actively seeking public funds to continue its operations.
Previously, GIPC enjoyed a stable income by providing essential services to investors. These services included issuing registration certificates, validating technology transfers, processing work permits, and supplying investment data.
Mr Simons noted that the fees for these services were substantial—for instance, a “strategic investment” classification could cost up to $10,000, and a technology transfer approval for a $5 million project could be priced at $55,000 annually.
He added that, GIPC operated independently, generating nearly 11 million GHS from service fees and an additional 1 million GHS from development partners in the second quarter of 2022.
By contrast, the second quarter of 2024 saw GIPC report zero income from these revenue sources. Consequently, the agency has had to rely on approximately $35,000 in central government funding to cover its salaries and operations.
Mr Simons pointed out that this abrupt revenue decline has led GIPC to reconsider its self-financing strategy, now pushing for a shift to a predominantly tax-funded model.
The agency argues that its role provides significant national benefits, justifying the need for taxpayer support to sustain its activities.
“The question is: what happened?” Simons asked, reflecting the confusion surrounding GIPC’s current financial situation. He implied that while Ghana’s fiscal challenges might have deterred some investors, this alone does not fully explain the drastic drop in GIPC’s revenue. Despite a reported 50% drop in investments between 2022 and 2023, the agency also noted a 16% increase in inbound investment in the first quarter of 2024 compared to the same period in 2023.
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There is something very strange happening to the Ghana Investment Promotion Center (GIPC), the body set up to drive foreign investment into Ghana.
For many years, it derived most of its money from providing services to investors. Businesses hoping to set up in Ghana would pay for registration certificates, technology transfer validation, work permit processing, and data services, etc.
For example, if as an investor you wanted your project classified as a “strategic investment”, GIPC would take a cool $10,000. If you want them to give you some stats on investment trends, it would cost you ~$250. If you have a foreign partner that wants to transfer their technology to you for use in Ghana and GIPC estimates that the technology would be worth $5m, they will charge you $55,000 year. All these fees have allowed the agency a pretty nice existence for a while. But now something strange is happening.
In the second quarter of 2022, GIPC generated nearly 11 million GHS from these service fees and an additional ~1 million GHS from Ghana’s “development partners”. This year, care to know how much they generated from services or from donors in the second quarter?
ZERO. ZILCH. 0. NOTHING.
The agency relied entirely on about $35,000 provided by the central government to pay salaries and run programs. GIPC is now trying to convince the government to forget about the whole concept of a self-financing investment promotion agency. It wants to be predominantly tax-funded. It says that citizens get a lot of value from its existence and should pay for the full privilege.
The question is: what happened? The reader’s first suspicion might be that Ghana’s fiscal crisis has scared away investors who are thus no longer paying GIPC because, well, they are not coming in the first place. But that is true only up to a point. GIPC says there was a drop by 50% in investments coming into Ghana between 2022 and 2023. That is a big drop but it is, obviously, not a drop to zero.
In fact, GIPC says that the first quarter of 2024 saw a 16% increase in inbound investment inflow compared to the same period in 2023. The tone of the agency aligns with the Finance Ministry: the economic recovery is strong and steady. So, where is the service fee income, then?
We could all hazard a guess. Investors may still be trickling in, but they are wising up. GIPC has been collecting fees and doing precious little to enhance the business environment. So, if you can avoid paying somehow, why bother?
Or, perhaps, they – the investors, I mean – make pledges, GIPC captures those as inbound investment, but they actually don’t step up? That could also account for the yawning gap between the record of hundreds of millions of dollars of inbound foreign investment and the searing fact of zero fee income at the country’s main investment agency.
One cue is to be found in a flurry of agreements GIPC signed with UAE/Dubai entities to boost investment into Ghana in 2021/22. The UAE is now Africa’s largest source of investment. Yet, in spite of GIPC’s wooing and frantic agreement signing, including full blown courtship with an obscure entity called X-Fusion, UAE investors have snubbed Ghana for virtually the whole of 2023 and 2024.
Instead of pushing to become a fully tax-funded agency, GIPC needs to review its bouquet of services carefully and ask itself: if we were savvy investors, would we pay for any of this?