Last week in Tokyo, during the TICAD 2025 Conference, His Excellency the President announced that Ghana is about to abolish the minimum capital requirement for foreign investors who want to enter our market. The proposed changes will be reflected in the new GIPC Act, which is expected to be passed into law before the end of the year. The announcement has already sparked debate across the policy, business, and investment community, with GUTA and AGI expressing some reservations.
Under the GIPC Act of 2013, foreign investors face a tiered structure of minimum capital: USD 200,000 for joint ventures with Ghanaians, USD 500,000 for wholly foreign-owned enterprises, and USD 1 million for trading companies. These thresholds were intended to protect certain sectors from being dominated by foreign capital and to ensure that local entrepreneurs could still compete. At the same time, these thresholds have long been criticized as disincentives to investment, especially when compared with other African countries, many of which have abolished capital requirements altogether.
CUTS-GIPC-WEF Study in 2019
At CUTS International Accra, we examined this very question in a 2019 study on Sustainable for Ghana: Policies and Measures for Consideration, supported by the World Economic Forum and in partnership with the GIPC. That study recommended that Ghana consider reducing and differentiating the minimum capital requirement for foreign-owned firms. The evidence showed that high entry barriers, particularly the USD 1 million threshold for retail trading, limited Ghana’s attractiveness compared with countries that impose no such restrictions. We also observed that technology firms, which are typically asset-light, were being discouraged from entry by requirements designed for more capital-intensive industries.
It is against this background that the President’s proposal to remove the minimum capital thresholds entirely must be examined. While the intention to attract more foreign direct investment (FDI) is laudable, a wholesale removal of these requirements risks unintended consequences. Ghana has become something of a city on a hill in West Africa, attracting the attention of global investors. Without a carefully designed framework, we risk dislodging indigenous businesses from sectors where they have traditionally been active, particularly retail trade and services.
There is a policy rationale for maintaining some form of capital requirement in selected sectors. The challenge is how to do so in a way that strikes a balance between promoting FDI, protecting domestic enterprise, and advancing the broader national interest. This is where a sector-by-sector approach becomes critical. Instead of applying a blanket rule across the economy, we should identify the sectors where domestic investors have sufficient capital and capacity, and where protection is warranted. In these areas, minimum capital requirements can continue to serve as a shield for indigenous businesses. Conversely, in sectors where Ghana lacks adequate domestic capital or technical know-how, requirements should be relaxed or abolished to encourage foreign entry.
Best Practice: Vietnam, Rwanda and South Africa
International best practices offer valuable lessons here. Vietnam, for instance, tailors its minimum investment rules to specific sectors, requiring a higher bar for hospitals but far less for lighter industries like software development. This targeted strategy has helped Hanoi attract FDI while nurturing local health and tech ecosystems. Rwanda, often hailed as Africa’s investment darling, abolished general minimum capital requirements years ago but maintains safeguards in strategic areas like mining and tourism to prevent over-dependence on outsiders. In South Africa, differentiated thresholds protect small businesses in retail while welcoming big foreign players in mining and finance. The OECD and UNCTAD investment frameworks similarly advise against arbitrary high barriers to entry, urging instead that rules be proportional, transparent, and aligned to legitimate policy objectives. Ghana retains the full policy space to decide how best to regulate foreign entry under ECOWAS and the AfCFTA rules.
Evidence and Rule-Based Approach
What we need is an evidence-based calibration of our investment regime. A landscape study should map which sectors require protection and which ones should be opened up. For example, in high-innovation, low-capital industries like fintech, IT services, and start-ups, insisting on USD 500,000 before entry makes little economic sense. On the other hand, in trading activities where local entrepreneurs are active but vulnerable, it may still be prudent to maintain a threshold to prevent displacement.
The broader issue is not only about how much foreign capital Ghana can attract but also about how well Ghanaian businesses are supported to grow, scale, and eventually invest abroad. If our local firms succeed in establishing themselves regionally or globally, they will repatriate profits home, strengthening the cedi and contributing to long-term economic resilience. This is why, alongside reforming capital thresholds, the government must put equal effort into grooming local champions who can compete effectively. Nigeria succeeded in raising Dangote. South Africa has also succeeded in creating Shoprite, GAMES, and the majority of the companies in our malls.
FDI undeniably creates jobs, transfers technology, and increases output. But Ghana should not become a market where only foreign capital drives every form of investment. A healthy economy requires balance, where both foreign and domestic enterprises contribute to growth. By adopting a surgical, sector-by-sector approach to minimum capital requirements, Ghana can achieve that balance. Such an approach ensures that foreign investors are welcomed in areas where they bring clear added value, while indigenous businesses retain space to flourish in sectors where they have comparative strength.
Conclusion
As the new draft GIPC bill makes its way to Parliament, the debate should therefore move beyond a simple binary of “abolish or retain.” Instead, we should ask which sectors need what form of protection, what evidence supports such distinctions, and how the rules can be designed to promote sustainable and inclusive development. That would reflect the best of both worlds: openness to foreign investment and commitment to nurturing domestic enterprise.
NB: The writer is a lawyer and a competition economist, and a consumer protection advocate. He is the West Africa Regional Director of CUTS International. He can be contacted via email: apa@cuts.org or www.cuts-accra.org or 0302-254-5652.