Foreign Direct Investment inflows to Ghana grow by 409% despite of COVID-19

GHANAGhana’s economy has portrayed a unique resilience during the COVID-19 pandemic, managing to record a total foreign direct investment (FDI) of US$785.62 million during the first half of 2020.

According to a report by the Ghana Investment Promotion Center (GIPC) and the Petroleum Commission, FDI inflow showed rare strength in the final moments of the second quarter of the year, undeterred by the Covid-19 pandemic.

In total, the West African nation recorded a total investment of US$869.47 million, a stark contrast to worldwide performance when it comes to investment.

According to estimates from the United Nations Conference on Trade and Development (UNCTAD), the Covid-19 pandemic send global FDI plunging by about 40 percent – driving the total value of FDI below US$1 trillion for the first time since 2005.

However, in spite of a sluggish start in the first quarter of 2020 and a worrying slump in the beginning of the second quarter due to corona virus, FDI to Ghana have begun to rebound resulting in a notable increase in FDI inflow for the first half of the year.

At the GIPC, a total of 69 projects with a total estimated value of US$688.74 million was recorded by the end of June 2020.

Of this, the total FDI component amounted to US$627.52 million while local component accounted for an estimated US$61.22 million.

 The FDI value of US$627.52 million was a considerable increase of about 409.10 percent from last year’s FDI value of US$123.26 million recorded within the same period, depicting a strong performance irrespective of the global pandemic.

Out of the 69 projects recorded, the services sector registered a majority of 25 projects followed by the manufacturing and export trade sector with 21 and 11 projects respectively.

With regards to value, general trading recorded the highest amount of US$246.05 million.

This was tailed closely by the mining exploration sector with US$231.02 million having sealed some major investments such as the Chirano Gold mine project for the exploration of minerals.

 The manufacturing sector also saw significant investments valued at US$170.67 million on the back of some notable ventures such as a deal by Matrix industries for the manufacture of paper and aluminium products as well as the Rainbow Paints Limited project.

Together, the 69 projects are expected create a total of 14,614 jobs when the projects are fully operational. Out of this, 14,052 of the jobs representing 96.15 % will be for Ghanaians.

Meanwhile, additional equity totaling US$11.56 million was re-invested by existing companies within the first half of the year, while a total of US$234 million was recorded as investments from 28 wholly owned Ghanaian businesses.

The seemingly positive performance of FDI inflows to the country has been to an extent attributed to the gradual easing of the Covid-19 restrictions as well as government initiatives and incentives rolled out to buffer businesses and the economy at the height of the pandemic.

Regardless of the upbeat performance, the UNCTAD predicts that FDI will continue to see a decline of 5-10 percent in 2021 with a slow recovery to be initiated in 2022 driven by restructuring of global Value Chains and a general rebound of the global economy.

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