Ghana, with a population of about 33 million located in West Africa provides an opportunity to investors with a wealth of natural resources such as cocoa, gold, oil, timber, and gas. Ghana is known for its political stability, providing a secure environment for business operations.
The government of Ghana is committed to creating a conducive business environment with transparent regulations and strong private sector participation. This includes various incentives for foreign investors and support for start-ups and SMEs such as tax incentives, free trade zones, a robust legal framework which protects investors, and investment guarantees to foster foreign direct investment.
The country offers a dynamic and well-educated workforce with a large consumer market. The country’s ports, especially the Tema Port, are well-developed, enhancing its status as a regional trade hub. Ghana represents a unique opportunity for investors seeking to tap into Africa’s growth potential in energy, agriculture, mining, manufacturing, and industrialisation.
1. Legal framework
1.1. What laws and regulations govern exchange control regime in your jurisdiction?
The Foreign Exchange Act 2006 and various directives from the Bank of Ghana outline the legal framework that oversees exchange control in Ghana. These BOG directives are:
Foreign Exchange Market Reference Rate, Notice No: BOG/FMD/2024/65
Prohibition Of Pricing, Advertising and Receipt Or Payment For Goods and Services In Foreign Currency In Ghana, Notice No: BG/GOV/SEC/2022/04
Amendments To The Rules On Advance Payments For Imports Of Goods And Services, Notice No: BG/GOV/FMD/2024/42
Bank of Ghana Guidelines for Allocation of Foreign Exchange Through Forward Auctions
Notice to the General Public Importation and Exportation of Foreign Currency (Cash Couriers), Notice No: BG/GOV/SEC/2019/05
Notice to Licensed Forex Bureaux and The General Public, Notice No. BG/GOV/SEC/2018/16
1.2. Which bilateral and multilateral exchange control instruments have an effect in your jurisdiction? How is regulatory cooperation and consolidated supervision ensured?
There are currently no bilateral and multilateral instruments affecting exchange control in exchange control in Ghana.
1.3. What are the current priorities of regulators and how do they work with the banking industry?
Current priorities of regulators
The mandate of the Bank of Ghana as the regulator is to license and supervise authorized dealers such as banks and other financial institutions involved in foreign exchange transactions
The Bank of Ghana is introducing a new methodology for computing its Foreign Exchange Market Reference Rate (MRR) in line with international best practices. This is to guarantee that the rate reflects market developments more accurately. The new methodology is the priority of the Bank of Ghana as it seeks to broaden the data coverage and reflect daily transactions executed between commercial banks and their clients.
For this to be achieved, all banks will submit data on all spot US$/GH¢ transactions concluded on the reporting day before 3.30 pm for each working day. The data will cover all spot transactions on the interbank markets as well as transactions with their clients that have nominal values of US$10,000 or more, mutually reflective of prevailing market conditions.
2. Exchange control regime
2.1. Can a subsidiary or affiliate repatriate money to a non-resident parent company?
A subsidiary or an affiliate can repatriate capital cash to a non-resident parent company, however, this must be done through a person licensed to carry out the business of money transfers or any other authorized dealer.
2.2. Is there limitation of transfer of foreign currency to procure goods or payment for services to non-resident person?
Yes, making payments for goods and services in foreign currency in Ghana is prohibited unless the person has received authorisation from the Bank of Ghana to carry out such transactions.
2.3. Can a subsidiary easily make payments for intra-group transactions?
Yes, a subsidiary can easily make payments for intercompany transactions in cedis, but in the case of foreign currency, the payment must be made through an authorised bank.
2.4. Are there rules against intercompany netting off?
There are no rules against intercompany netting off.
2.5. Are permits required to transfer money to a third party or non-resident entity for procurement of goods or services?
A permit might be required if the money is in foreign currency.
2.6. What requirements or documentation must be in place before banks authorize requests for international transfers?
The Bank of Ghana (BOG) has issued a notice that provides guidance and clarification on the procedures that govern Advance Payments for imports. In this notice, the Bank of Ghana (BOG) stated clearly the documentation required to effect Advance Payments. These documents are listed below.
- A Customer instruction or request
- A valid Import Declaration Form (IDF)
- A Pro forma or Commercial Invoice outlining the details of the transaction.
- An Undertaking by the importer to submit clearing documents within a period
- not exceeding:
- 90 days from payment of invoice for general merchandise or finished goods.
- For capital goods such as plant, machinery and equipment with long manufacture periods, the period shall be 180 days which can be extended with prior approval from the Head, of the Financial Markets Department, Bank of Ghana.
- A Sales Contract or Supplier Agreement detailing payment terms and schedules. (Optional)
2.7. Have there been recent directives issued by your Central Bank on Exchange Control?
Yes, the recent directive was on rules for advance payments for imports of goods and services which was issued on 25th June 2024. The purpose of this directive is to substantiate the requirements and bring precision to the procedures that govern Advance Payments for imports.
3. Exchange control contraventions
Enforcement
3.1. Which entities are responsible for enforcing the relevant laws and regulations? What powers do they have?
The Bank of Ghana (BOG) is responsible for the enforcement of these applicable laws and regulations. They have the power to license, regulate and supervise the exchange control environment.
6.2 What sanctions are applicable in the event of a violation of the exchange control regime?
4. Trends and forecasts
4.1. How would you describe the current exchange control regime and trends in your jurisdiction? Are there any plans for further developments in the next 12 months, including proposals for legislative reforms?
The current exchange control regime in Ghana can be described as restrictive. This can be attributed to the intricate licensing requirements needed to engage in forex transactions, which creates a regulatory environment that ensures transactions are conducted through approved channels.
For the next 12 months it can be anticipated that due to the high rate of depreciation of the Cedi over the years, there could be legislative reforms aimed at introducing measures for currency stabilization. This could include mechanisms for managing speculative trading in the forex market or introducing stronger controls on foreign exchange rates.
6.3 Does your jurisdiction regulate cryptocurrencies? Are there any legislative developments with regard to cryptocurrencies or financial technologies in general?
Ghana is yet to establish a clear regulatory framework for cryptocurrencies. Cryptocurrencies are not recognized as legal tender in Ghana according to the Bank of Ghana. However, legislation such as the Payment Systems and Services Act 2019 (Act 987) has been passed to provide a legal framework for regulating electronic payment systems and fintech operations in Ghana.
The Bank of Ghana has further launched a Regulatory Sandbox framework to promote innovative financial technology. This initiative allows fintech innovators to test their products and services under a controlled regulatory environment.
