Would Obama’s visit to Ghana bring more American investors?
President Barack Obama left Ghana Saturday night July 11, 2009, but the ripples of his visit still reverberate throughout the country and indeed the entire world. But one question that lingers on our minds at ghanabusinessnews.com is: would the historic visit serve as an encouragement to American investors to come to Ghana?
Available data shows that US businesses are not investing as much as they should generally in Africa and in Ghana in particular. A study that was published on May 20, 2009 by the US Chamber of Commerce says American businesses are not encouraged to invest in Africa for reasons among which are corruption, lawlessness, unstable governments and inadequate infrastructure.
Indeed, in President Obama’s speech to Ghana’s Parliament Saturday July 11, 2009, he specifically touched on the issues of corruption as a bane to development not only in Ghana, but the entire continent. He said: “Repression takes many forms, and too many nations are plagued by problems that condemn their people to poverty. No country is going to create wealth if its leaders exploit the economy to enrich themselves, or police can be bought off by drug traffickers.”
Adding, “no business wants to invest in a place where the government skims 20 percent off the top, or the head of the port authority is corrupt. No person wants to live in a society where the rule of law gives way to the rule of brutality and bribery. That is not democracy, that is tyranny, and now is the time for it to end.”
As a matter of fact, several studies conducted in Ghana by anti-corruption institutions over the years show the police as corrupt. The political institution has also been cited in surveys as being corrupt. Political corruption in Ghana has even been nicknamed “kickbacks”.
Another study published by the Bank of Ghana on foreign direct equity investments in Ghana also shows that Europe and not America is the leading investor in the country.
The highlights of the survey, shows Europe as making the highest foreign direct equity investments (FDEI) to Ghana representing 60.7%., while investments from the African continent consist of 38.0%.
America places fifth among the top ten investor nations in Ghana. According to the reporty, the top ten sources of FDEI inflows in 2007 were Mauritius, 27.9%; France 19.4%; British Virgin Islands 18.4%); United Kingdom 16.9%; United States 5.9%; Togo 3.4%; Norway 3.3%; Israel 3.2%; Nigeria 2.1%, and Switzerland 1.9%.
The US Chamber of Commerce study is titled ‘The conversation behind closed doors: Inside the Boardroom: How Coporate America Really views Africa’.
The Chamber is also the world’s largest business federation with a membership of more than three million businesses and organizations of every size, sector and region as well as 112 affiliates in 99 countries around the world, making the Chamber a crucial source of investment in any country.
Despite the enthusiasm and hope that heralded the institution of the African Growth and Opportunities Act (AGOA) on May 18, 2000 to offer “tangible incentives” for African countries to open their economies and build free markets, not many American businesses as expected are doing business in Ghana.
To the exten that reports indicate that Ghana’s exports to the US under the AGOA fell in 2008 and continued to fall into the first quarter of 2009.
Ghana’s total exports under AGOA to the US market stood at US$42.2 million in 2008, a 38.4 percent decline from the US$68.6 million recorded in 2007.
From January to March this year, the country’s total value exported under the scheme was US$2.5 million, representing a momentous 86 percent decline over the US$18.1 million recorded in the first quarter of 2008.
The US Chamber of Commerce cited some of the following reasons for not investing in Africa; the image of lawlessness, corruption, unstable governments, an inadequate infrastructure, uneducated or untrained people, and an unwelcoming government attitude toward business.
Hopefully, President Obama’s visit to Ghana, which he clearly said was his endorsement of the country’s democratic culture and stability, would change the perception and spur some more US businesses to enter Ghana and invest.
These businesses would be joining other major US investors like Coca-Cola, Newmont Mining, Lehman Brothers, CMS Energy and Cargill.
American investors can look at the following areas; aerospace/defense, agribusiness, consumer goods, health care and information and communications technology.
The others could be infrastructure, media, petrochemical/extractive, pharmaceutical and transportation.
By Emmanuel K. Dogbevi