Exporting Goods to Ghana

There are three main ways a foreign company can export goods to Ghana;

1. Distribute the goods in Ghana directly
2. Form a joint venture with a Ghanaian company and have them do the distribution in Ghana
3. Locate a qualified Ghanaian distributor/agent to undertake distribution in Ghana

Assuming you have your correct market data showing the need for your goods in Ghana, you must undertake two important steps before your first consignment of goods hit the shores of Ghana. First you must conduct due diligence to find out the broad outlines of the legal regime pertaining to export of goods into Ghana. Second, you must conduct due diligence to help select a vendor that will assist with turning your goods into cash.

If the company decides to distribute the goods directly within the Ghanaian market then the due diligence on legal regime affecting exports must be very thorough. The company must know government regulations pertaining to the goods, intellectual property rights and other licensing processes within Ghana.

Direct distribution can be very cumbersome and time consuming, especially for small and medium size companies. To be effective at direct distribution you will have to spend lots of resources learning the ropes of the local business practices. For the small or medium size company this can be a bottomless pit with the potential to cut very deep into your profit margin. A better option will be to locate a peer rated local distributor/agent with a wide distribution network throughout the country. Distributors are already well versed in the local business practices and they can assist with adopting a winnable distribution strategy to introduce the goods into the Ghanaian market.

A joint venture (JV) can also be very effective in getting your goods into the Ghanaian market. Like distributors, a JV partner is more knowledgeable about the ropes of doing business in Ghana –licensing issues, export restrictions, intellectual property rights regimes, government regulations, etc. Depending on the type of JV, the local partner may share some of the risks of distributing the goods in the Ghanaian market. One main difference between the JV and distributors is that unlike distributors who are normally paid a set fee for their services, JV partners share in the overall profits of the venture, so JV partners are more incentivize to work for the success of the venture. It should be noted however that JV’s might not be ideal for some small companies because of the relatively large capital requirement the Ghana government stipulates to register a JV. There are also requirements and restrictions about transferring profits outside the country.
In spite of whatever option you choose to distribute your goods, you must first take all necessary steps to know the market you will be operating in. Are the business and political climate conducive for your type of business? Then a sound marketing strategy that among other things accesses the strength and weaknesses of your product will be good to ensure deep penetration of the Ghanaian market.

Dangerous Bedfellows - Politics and Doing Business in Africa

When doing business in African, one is always tempted to use friendly politicians to advance processes. Sometimes friendly politicians and people in ‘high’ places will help expedite the granting of a mining license, a timber concession, an oil block allocation or a telecom license. This type of help can be very profitable as it will help bypass the red-tape laden bureaucratic systems of African countries. Thus there are many professionals who sell their services by claiming that they know the 'right' people to fast track business processes in African countries. Many business folks find these services appealing because as the popular adage goes “in business time is money”. One must note however that there are many pitfalls in mixing business with politics in Africa. You must tread carefully so that your business is not labeled a benefactor of a particular political party or faction. Four years or eight years is always around the corner and the reins of power change very quickly. Once your business is labeled, the business may become the target of political wrath once there is a power change.

Here is what you have to do to avoid being weather the storm. Always insist that due process is followed in all business processes. The politician might help expedite your concession or license, but make sure that you comply with all stipulations of the law and any administrative procedures. The next political party will have very little ammunition (evidence) to use to withdraw your license or concession. They certainly will have noting on you to impute killer fines on your business. As much as possible, never attend a political rally or make political pronouncements in public. Although many African countries have turned the corner, there are still a few relics of the past that exist.

Employment Law – Social Networking and Blogs

The internet has provided a relatively cheap and efficient way to disseminate information throughout the world. Today, medium size companies and your smallest mom and pop company can boast of a website. Thanks to free sites like Worldpress, Google blogger, Facebook etc, ‘star’ employees are creating Facebook pages, blogs and twitter accounts to promote themselves and their companies. Anchors at Radio and Television stations all have blogs and Facebook pages. Some government officials have Facebook and other social network accounts with 1000s of ‘friends’ through which they send government information and raise funds.

The important question is who owns these sites. What happens when the employee/employer relationship ends? The employee will definitely agree to remove any reference to his former employer from the site. But the question still remains, who keeps these sites with all the 1000s of followers. The law is currently silent on this issue. However, in the event of a litigation to determine ownership, these are some of the questions that may arise; was there any prior written agreement? When was the page created? What is the nature of the content? Is the page updated substantially during work time? etc. These issues can be very contentious because the large list of contacts/followers may be crucial for an employee to launch a new career. The employer who loses these 1000s of contacts/followers may lose a substantial audience or clientele. The company may have to spend valuable resources and time to build another network of audience/clientele/followers.

To avoid a potential costly law suit, the parties may take a proactive step by establishing a written agreement at the front end to determine the ownership of social networking sites when the employer-employee relationship ends.

Gift Tax and the Holiday Season

Christmas as they say is a time of giving. Many people exchange gifts with friends, loved ones and businesses partners and associates. As we celebrate, we have to remember that under Ghanaian Tax Law, any gifts exceeding GHc 50 is taxable at the rate of 5%. The Gift tax is not limited to cash gifts, it applies also when the value of a gift you have received exceed the taxable amount of GHc 50. Note that failure to pay any taxes including Gift tax may subject you to both criminal prosecution and civil liabilities.

Due Diligence and Real Estate Property in Ghana – Part 2

Extra care is needed when you are buying or leasing a property owned by more than one person (jointly owned property). You need the consent of all the property owners in any transaction involving the property if you want to avoid any future litigation. Under no circumstance should you deal with only one or some of the owners of the property in any transaction involving the property. Whatever assurances you get from one or some of the owners should not suffice. To avoid any problems, you have to make sure you have obtained the consent of all the parties who are listed as joint owners of the property.
For practical purposes, one or two of the joint owners may lead the negotiations for any transaction involving the property. If this is the case, then make sure that before you sign unto any transaction, you obtained a properly executed letter of consent from the ‘absentee’ owners saying that they have consented to the transaction. The letter of consent from the absentee owners must not be just a general letter of consent. It must specifically speak to the transaction under consideration. The letter must also state clearly that payment can be made to those persons leading the negotiations for disbursement to all the owners.
For total peace of mind, engage the services of a qualified lawyer to lead you in any transaction especially when it involves landed property.

Due Diligence and Real Estate Property in Ghana

There seem to be a mad rush for commercial real estate property in Ghana. However, leasing a landed property in Ghana has a lot of hidden traps. The key to a hassle free commercial property lease is to conduct a thorough due diligence. The seasoned lawyer would know that in a country like Ghana, a thorough due diligence goes beyond the usual title search at the land title registry, zoning law verifications and building code requirements. First, it is important to go beyond the side plan and then visit the site to physically see that the property is in existence. When you find occupants on the property, seek directly from them the basis of their occupation. Also, you need to talk to the neighboring property owners to confirm ownership of the property. Then before you seal the deal, get the seller to sign an undertaking that he has the lawful right to alienate the property in question. The undertaking should also state that the seller will indemnify the buyer and agree to a full refund of the lease price in the event that there is an adverse claim to the property. For a total piece of mind, the buyer must purchase title insurance on his own or arrange with the seller to jointly purchase title insurance.

Construction Contracts – The STX Deal

The STX deal has now been approved by parliament and a local STX affiliate has been registered in Ghana. The next stage of course is the construction phase. There are many important legal considerations that must be borne in mind in awarding contracts for the STX construction. The awarding company must consider whether to award a package deal contract or individual components contract. Different liability regimes come into play depending on the type of contract that is awarded. In a package deal contract, a main contractor is hired and the main contractor then hires sub contractors to perform various components of the construction. In the absence of specific contractual terms, the main contractor will be liable for all and any negligence of the subcontractors. In fact under common law, the main contractor will be liable for any defect in the project even if sub contractors exercised all professional care.
In an individual component contract, various contractors are hired by the awarding company to execute various components of the contract. In this type of contract, individual contractors will be held liable for any defect in their specific work. It is important to know that the construction business is so complex that it is impossible sometimes to determine who bears responsibility for a defect. For instance there are builders, designers, regulators and purchasers who are often involved in a construction deal. Each of these actors plays an important part to ensure the success of the construction deal. Their roles are also so intertwined that it becomes very difficult to untangle and apportion blame when there is a defect.
The international practice is that in most big contract such as the magnitude of the STX deal, a package deal contract is chosen. In an individual component contract, the awarding company or the owner of a facility may face the problem of suing multiple contractors/professional when there is a defect.