The Ghana Investment Promotion Centre (GIPC) is optimistic that 2021 will see increased foreign direct investment inflows into the country even though the ongoing second wave of COVID-19 infections across many countries in the western hemisphere has interrupted the rebound in FDI commitments which began in June this year.

New investments in upstream petroleum and gas field development are expected to generate major inflows as Aker Energy commences its phased development of its Pelican oilfield.

When all phases are completed it will be Ghana’s biggest producing oilfield to date.

A plan of development has finally been approved by government but the slump in global oil prices persuaded Aker to postpone commencement of field development.

However a partial recovery of global crude prices has made field development economically feasible again.

Another major channel for FDI inflows will be the commencement of two large scale mines in the northern part of the country. One is the Wa Gold Project being executed by Azumah Resources across the Wa East and Nadowli districts of the Upper West Region which envisages capital expenditure of some US$117 million.

The other is the Namdini Project being executed by Cardinal Resources near Bolgatanga in the Upper East Region. Capital expenditure is projected at over US$350 million for this project whose economics are so attractive that Cardinal Resources has been the target of a ferocious bidding war since June this year which has now been won by China’s Shandong Gold.

The United Nations Conference on Trade and Development (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.

In this regard, the GIPC remains cautiously optimistic about the flow of FDI to Ghana, going forward but is banking on opportunities to be created by government initiatives such as the COVID-19 Alleviation and Revitalization of Enterprises Support (CARES) Programme which aim to bolster the Ghanaian economy towards a recovery and remain resilient post pandemic. Furthermore, with the impending general elections behind the country, Ghana’s perceived political risk will reduce considerably.

Ghana has recorded total investments of US$869.47 million, with total FDI value amounting to US$785.62 million between January to June 2020 as FDI inflow showed rare strength in the final moments of the second quarter of the year, undeterred by the COVID-19 pandemic.

The total FDI of US$785.62 million represents investment recorded by the Ghana Investment Promotion Center (GIPC) and the Petroleum Commission.

While this is low compared with previous recent years – in 2017 and 2018, investment from these two sources bordered on US$ 5 billion per annum, it reflects global trends in FDI brought about by COVID-19 and the resultant worldwide economic slump.

Worldwide, the United Nations Conference on Trade and Development (UNCTAD) has estimated that the COVID-19 pandemic will 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 severe lockdown measures to contain the spread of the corona virus, FDI commitments 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 were 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 (Jan-Jun 2019), depicting a strong performance irrespective of the global pandemic.

The causes of the slump in FDI in 2019, which occurred prior to the advent of the coronavirus epidemic have still not been explained.

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

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 GH¢1,365.26 million was recorded as investments from 28 wholly owned Ghanaian businesses.