Juridique & Fiscalité Industrie

Ghana’s Appetite for Local Content

The push for local content keeps increasing by the year

Successive governments especially in the fourth republic have consistently made efforts at strengthening the participation of local talent and skills in activities across many industries. The push for local content keeps increasing by the year with successive governments adding on to the ever growing basket of services and activities which are limited to locals or require some form of local participation.

It is interesting to note that even in the 1992 Constitution of Ghana, land ownership/ leasing is limited for foreigners where they cannot lease a parcel of land for more than fifty (50) years.[1]

Also as naturally expected, a non-Ghanaian cannot hold public office and a Ghanaian with a dual citizenship cannot hold the high office of Member of Parliament[2] or any other office that requires the qualification for that.

Subsequent to the operation of the 1992 Constitution and the fourth republic for that matter, many other legislations have been passed that have introduced mechanisms that encourage local content protection in many industries and the list keeps growing longer.

 

Registration of Companies

In as much as foreigners are allowed to be shareholders and directors in companies registered in Ghana, certain positions are limited somewhat to Ghanaians or Ghanaian licensed firms or persons with Ghanaian qualifications even if they are foreigners. This can be seen from the requirements for the position of Company Secretary[3] as well as that of the Auditor of the company[4].

The Companies Act of 2019 further requires there to be at least two (2) directors, one of which must be ordinarily resident in Ghana[5]. In as much as the Act is silent on nationality for the Directors, a foreigner can only be said to be ordinarily resident officially where he/she has a resident permit and lives a minimum of 180 days in Ghana for every given year. Given that procuring a resident permit takes a while and is not the simplest thing to acquire, invariably, many foreign owned companies are left with no choice but to engage at least one local director who is ordinarily resident in Ghana to fulfil the requirement of the law.

With respect to shareholding, where foreigners opt to be shareholders in a company registered in Ghana, they are exposed to requirements of the Ghana Investment Promotion Center (GIPC), except where they are involved in manufacturing or export. In meeting with the requirements of the GIPC, if the company will be wholly foreign owned and not engaged in trading, the minimum equity requirement is $500,000 and once there is a Ghanaian shareholder with a minimum share of 10%, the minimum equity requirement drops to $200,000.

There are some specific provisions for certain industries that must be pointed out.

 

Ghana Investment Promotion Centre Act, 2013, Act 865

Under the Act, certain activities such retail of finished pharmaceutical products, the operation of a beauty or barber salon, operation of taxi or care hire service with a fleet of less than 25 vehicles and a number of other services[6] are limited to only Ghanaians

Although its implementation has seen a lot of tussle with some foreigners, that is the position of the law and local traders are resolute in fighting for its full operation.

 

Minerals and Mining (Local Content and Local Participation) Regulations, 2020 (L.I. 2431)

This regulates the local content arrangement within the Minerals and Mining sector.

The regulation has provided that catering and camp management services, haulage and transportation services, security services, contract mining services for small-scale mining and the supply of fuel shall be provided only by a citizens[7].

It further goes on to list other goods and services which only citizens can apply to be registered to provide[8]. With these particular list of goods and services, the law specifically provides that the citizen that applies to be registered shall not be financed by a non-citizen and shall not engage or employ a non-citizen or expatriate to provide the goods or services so registered for[9].

Beyond the restrictions provided for in the Regulation, there is a Local Procurement List, which is published quite frequently by the Minerals Commission in collaboration with the Chamber of Mines to ensure that goods and services that are available to be procured locally in adequate quantities and at good prices are sourced to promote the local economy, once they meet the required standards and quality.

 

Petroleum (Local Content and Local Participation) Regulations, 2013 (L.I. 2204)

This piece of regulation is concerned with the local content arrangement within the upstream petroleum sector.

The Regulations, like other such regulations, deals with the interests of citizens in petroleum operations meaning exploration, production, transportation and disposal of petroleum. A fundamental provision of the regulation is that, “An indigenous Ghanian company shall be given first preference in the grant of a petroleum agreement or a licence with respect to petroleum activities…[10].

An indigenous Ghanian company is defined as company wholly owned by Ghanian citizens and which a minimum of 80% of the executive positions and senior management positions and 100% of non-managerial positions are occupied by Ghanian citizens[11].

A non-indigenous Ghanian company can theoretically operate petroleum activities in creating a joint venture company with an indigenous Ghanian company which would hold at least 10% of the share capital.

However, in parallel, the start of a petroleum activity is subject to a prior review of the Petroleum Commission which assesses the local content plan of the operator to check whether said plan meets the minimum local content levels as defined in scheduled of the LI 2204 expressed in percentage locally produced, personnel, financing goods and services rendered in the petroleum industry value chain. Said minimum can be changed at any time by the minister of energy in consultation with the Petroleum Commission.

 

Customs Act, 2015 (Act 891)

This is the major law that regulates customs activities and its related businesses.

 The Act simply provides that only a ‘company or partnership wholly owned by an indigenous Ghanaian’[12] can engage in the business of customs house agent or clearance.

Customs house agent, also referred to as customs broker or customs clearing agent, is a person licensed to act as an agent for the transaction of any business relating to the entry or departure of imports or export of goods. These agents are persons who make declarations for customs purposes and are as such prescribed by law to be only Ghanaians or an entity that is wholly Ghanaian owned.

It is instructive to note that the provisions state ‘wholly owned’ as such, shareholding by the company must be 100% Ghanaian. The law thus does not give room for some other shareholding structure.

 

Bank of Ghana Laws, Regulations and Directives

 The Bank of Ghana  has made efforts to regulate the fintech space over the last few years and has licenced a number of companies as Payment Service Providers (PSP)s. It generally offers licences spanning six (6) different categories. Out of these, one of them, the Payment Service Provider (PSP) Standard category, is reserved for Ghanaians and wholly-owned Ghanaian entities.

Also, with respect to banking licenses, certain activities are limited to companies with only Ghanaian shareholding. These include deposit-taking microfinance institutions such as microfinance companies, Susu companies, deposit taking and profi making financial NGOs.

 

 

 

 

 

Cephas Tettey Omenyo

Law Office of C-E Omenyo

    in association with

  Alexander & Partner

https://www.alexander-partner.com

 


[1] Article 266 (4), 1992 Constitution

[2] Article 94 (2)(a), 1992 Constitution

[3] Section 211(3), Companies Act, 2019, Act 992

[4] Section 138(1), Companies Act, 2019, Act 992

[5] Section 171(1), Companies Act, 2019, Act 992

[6] Section 27(1), Ghana Investment Promotion Centre Act 2013, act 865

[7] Regulation 14(1), Minerals and Mining (Local Content and Local Participation) Regulations, 2020 (L.I. 2431)

[8] Regulation 14(2), Minerals and Mining (Local Content and Local Participation) Regulations, 2020 (L.I. 2431)

[9] Regulation 14(3), Minerals and Mining (Local Content and Local Participation) Regulations, 2020 (L.I. 2431)

[10] Regulation 4(1), Petroleum (Local Content and Local Participation) Regulations, 2013 (L.I. 2204)

[11] Petroleum (Local Content and Local Participation) (Amendment) Regulations, 2021. (L.I 2435)

[12] Section 43(1) Customs Act 2015, Act 891

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