Gold and cocoa are central to Ghana's economy, with both
commodities driving significant export revenue and contributing substantially
to GDP.
Ghana is moving toward economic growth following the most
destructive, oppressive, lawless, and corrupt eight years of the NPP
government. However, regardless of how efficient and industrious the Mahama
administration is and how rich the country is in resources, Ghana's progress
will be incredibly slow without the government's attempts to draw in foreign
investments, which could reduce the rate of youth unemployment.
Since Ghana lost both local and foreign investors during Akufo-Addo’s
government, the new administration must explore and promote economic growth,
generate jobs, and improve managerial and technological capacities by
focusing on foreign direct investment. FDI helps create capital and investable
resources, both of which are essential for growth, especially in nations where
there is a saving-investment mismatch.
When the environment of the host nation encourages such
spillovers, it acts as a crucial channel for transferring production
technology, skills, innovative ability, and organizational practices, which can
boost productivity and competitiveness among local enterprises. One of the
biggest benefits is the creation of jobs as a result of foreign investors
starting new businesses or growing existing ones, which raises residents'
earnings and employment prospects.
This increase in income boosts demand for goods and services
and increases purchasing power, which propels economic activity even further.
Furthermore, FDI frequently results in better infrastructure and access to
vital services, such as energy, which promotes more general human development
and aids in the accomplishment of sustainable development objectives.
By boosting international trade flows and giving developing
nations access to global markets via the networks of multinational
corporations, FDI also encourages their integration into the global economy.
Local businesses can gain access to cutting-edge operational techniques,
commercial connections, and subcontracting prospects through this integration.
Depending on market conditions and host nation policies, the
presence of foreign companies may result in the consolidation or displacement
of some native businesses, but it can also encourage local entrepreneurship and
innovation. Additionally, through training and experience, FDI can enhance
labor capabilities, promoting the development of human capital that has an
impact on other industries.
Developing nations can attract foreign investment by putting
into practice a comprehensive plan aimed at enhancing the investment climate
and generating long-term economic gains. Establishing a favorable regulatory
environment by streamlining business registration, lowering administrative
obstacles, and guaranteeing clear and consistent regulations are the most
efficient measures.
To boost investor confidence and lower the risk of
expropriation, a robust legal system, consistent contract enforcement, and
property rights protection are essential. Establishing export processing zones
(EPZs) or special economic zones (SEZs) with lower taxes, expedited customs
processes, and duty-free imports of capital goods and raw materials can greatly
draw in foreign businesses looking for operational efficiency.
These zones should be created to promote connections with
the home economy, for example, by supporting local suppliers in fulfilling the
requirements of international buyers through vendor development initiatives. To
reduce operating costs and boost competitiveness, investments in infrastructure,
such as dependable transportation networks, energy supplies, and communication
systems, are crucial.
Additionally, the labor market is more appealing to foreign
investors when a skilled workforce is developed through focused vocational
training and education. Maintaining a stable currency and inflation rate,
ensuring sound debt ratios, and creating deep and diverse capital markets with
liquidity and pricing transparency are all necessary to increase investors'
potential profits.
The investment climate can also be improved by providing tax
breaks and easing labor and industry rules, but these should be counterbalanced
by measures that support long-term economic growth. To draw in and keep
long-term foreign direct investment (FDI), it is essential to provide political
stability, sound governance, and reliable institutions.
Considering the aforementioned economic and employment
advantages of foreign investment in developing countries, Mahama's
administration should concentrate on luring high-quality FDI that advances
domestic businesses, creates jobs, and transfers technology rather than only
looking for short-term financial inflows.
More importantly, the Ghanaian should give support to local
businesses to expand. This can be done through an affordable loan scheme, since
the loans given to entrepreneurs take a whole life term to pay back.
