The Dawn of a New Era: A warm welcome to the Ghana Investment Promotion Authority Act, 2025 (Act 1173)
The Dawn of a New Era: A warm welcome to the Ghana Investment Promotion Authority Act, 2025 (Act 1173)
1. Overview of the Legislative Framework
The Ghana Investment Promotion Authority Act, 2025 (Act 1173) has recently been assented into law and it replaces the Ghana Investment Promotion Centre Act, 2013 (Act 865). It upgrades the Centre into a full Authority, extends its mandate to outward investment and Ghana's role as an AfCFTA focal point, and spans 61 sections; introducing obligations, mechanisms and incentives with no equivalent in the old Act. Act 1173 aims to strengthen the nation's appeal to investors by fostering growth, innovation and confidence in the economy.
2. The Overarching Philosophy Shift
The old Act 865 was purely promotional: it attracted capital through guarantees and a permissive regime. Act 1173 keeps those guarantees but adds a reciprocal obligations framework; mandatory investor standards on human rights, environmental stewardship, gender equality, corporate social responsibility and local talent development. This aligns Ghana's investment law with international ESG norms, driven partly by AfCFTA commitments and engagement with multilateral development frameworks.
3. Key Changes and Introductions of Commercial Significance
Minimum equity: halved from USD 1,000,000 to USD 500,000 for a wholly foreign-owned trading enterprise; no other general minimum capital requirement exists for all other businesses. Sector/industry regulators may set their own thresholds where applicable. For example where the Bank of Ghana has a capital requirement for businesses that want to obtain a banking license.
Local employment condition: replaces the old fixed 20 employee rule; now at least 75% of the skilled workforce must be Ghanaian nationals, regardless of headcount.
Reserved activities: reserved categories cut from eight to six; lotteries and recharge scratch-card printing removed, but penalties for “fronting” (using a Ghanaian nominee to bypass restrictions) are now explicit.
Tax incentives: Sections 35 and 36 create dedicated, sector-specific and strategic-investment tax incentives in a single instrument, replacing the old need to cross-reference multiple revenue statutes.
4. Provisions Requiring Careful Legal Attention
Technology transfer agreements: unregistered agreements lose tax-deductibility of fees; software is now covered; validity fixed at 5 years; minimum duration cut from 18 to 12 months.
Expatriate quotas: ceiling raised from 4 to up to 12 persons for investments of above $10 million, but conditional on 90% of the direct skilled workforce being Ghanaian (previously automatic based on capital size).
Penalties & enforcement: penalty units increased to 2,000 - 10,000 units from the previous 500 – 1000 units; a new administrative penalty regime runs independently of and alongside any criminal prosecution for the same breach.
5. Enhanced Investor Protections
Grievance mechanism: Section 43 creates a dedicated grievance office where complaints are acknowledged within 5 days, resolution targeted within 3 months, quarterly reports are made to the President. This replaces the slower route of going through the GIPC Board and then to the High Court.
Expropriation protection: nationalization without compensation ban and court access are retained; the Attorney-General is now mandated to defend expropriation claims on the state's behalf.
6. Novel Provisions
Citizenship by investment: Section 37 directs the Ministry of the Interior to legislate eligibility categories for citizenship tied to qualifying investment; detailed criteria are still pending.
ESG/CSR obligations: first ever mandatory, enforceable obligations on ESG, CSR, human rights and local content. These are not aspirational; they are backed by the penalty regime.
Board composition: the Authority's Board is broader than the old GIPC Board, explicitly adding the Ghana Revenue Authority and the Ministry of Foreign Affairs alongside the Bank of Ghana and National Development Planning Commission.
Board duties & liabilities: Section 7 imposes fiduciary duties on Board members (good faith, loyalty, care, avoidance of conflicts, no misuse of confidential information), with financial penalties and court-ordered compensation for breaches causing loss.
7. Legal Continuity
Sections 60 and 61 preserve all existing registrations, technology transfer agreements and expatriate quotas granted under Act 865. No re-registration or re-application is required, easing the transition for current investors.
8. Old Act versus New Act at a Glance
Taken together, the changes above show a consistent pattern of liberalised entry thresholds paired with tighter compliance and enforcement. On minimum equity, the requirement for a wholly foreign-owned trading enterprise has fallen from USD 1,000,000 under Act 865 to USD 500,000 under Act 1173. The skilled Ghanaian workforce condition has moved from a fixed minimum of 20 employees to a minimum of 75% of the skilled workforce. Reserved for Ghanaians activities have been reduced from eight categories to six, with lotteries and recharge scratch card printing removed from the list.
On tax incentives, Act 865 contained none, requiring cross-reference to other statutes, whereas the new Act 1173 provides dedicated clauses (35 and 36). The minimum duration for technology transfer agreements has been cut from 18 months to 12 months, alongside a new 5-year validity period and the loss of tax-deductibility for fees under unregistered agreements. The expatriate quota ceiling has risen from 1 to 4 persons (automatic, tied to capital) to up to 12 persons for investments of USD 10 million and above, though this now requires 90% of the direct skilled workforce to be Ghanaian. Penalty units have increased from a range of 500 - 1,000 units to a range of 2,000 - 10,000 units and now sit alongside a separate administrative penalty regime.
The investor grievance route has moved to a dedicated grievance office under Clause 43, which must acknowledge complaints within 5 days, resolve them within roughly 3 months, and report quarterly to the President.
Citizenship by investment did not exist under the old Act 865; it is introduced as a wholly new feature under Clause 37. Board composition has broadened from a leaner body centred on the Bank of Ghana and the National Development Planning Commission to one that also includes the Ghana Revenue Authority and the Ministry of Foreign Affairs.
Finally, existing registrations and quotas, which had no equivalent transitional protection under Act 865, are now preserved automatically under Sections 60 and 61, with no re-registration required.
9. Conclusion and Recommended Next Steps
Act 1173 is a regulatory maturation of Ghana's investment framework: more structured, more enforceable and more demanding of investors, but also more protective and better institutionally resourced. The net effect for foreign investors is broadly positive, provided compliance is addressed proactively. The following steps are recommended:
Review current workforce composition against the 90% skilled Ghanaian employee condition to assess whether existing or planned expatriate quota reliance can be sustained under the new application-based regime.
Map existing operational practices against Act 1173 ESG, CSR and human rights obligations and identify areas requiring policy or structural adjustment.
Monitor the development of implementing regulations under Clause 37 (citizenship by investment) if long-term or permanent establishment in Ghana is contemplated.
Engage Ghanaian legal counsel with investment law expertise to advise on sector-specific capital thresholds applicable to any joint venture structures under consideration.
AUTHORS:
AUTHORS:
CEPHAS TETTEY OMENYO
KAATHY OPOKUAA KYEREMEH
Alexander & Partner Ghana PRUC co(@)alexander-partner.com
The Octagon Building 2nd Floor, Unit B207 Barnes Road - Accra
Mobile: 020 823 1346 / 059 605 7422
Office:055 257 2156
