Research on Strategies to Attract and Retain Foreign Direct Investment (FDI) in Oil and Gas Industry in Ghana

Abstract

Foreign Direct Investment (FDI) occurs when a firm invests directly in facilities to produce or market a product in a foreign country which is not its country of origin. This study was limited to Strategies to Attract and Retain Foreign Direct Investment (FDI) in Oil and Gas Industry in Ghana. To achieve the objectives of the study, investigations were conducted regarding the following factors as important measures of motivation for foreign investors to invest in Ghana, the factors that will ensure their continue stay and operations as well as factors that can attract more investors to the oil and gas industry. Data was also collected from local firms operating in the industry in order to have their opinion on the subject matter since they also have a role to play in attracting and retaining foreign investors. This was done through primary data collection by way of questionnaires. The result of the data analysis indicated that, the main motivating factor for the foreign investors to invest in Ghana is the raw material which in this case is the oil and gas. The local firms also rated this factor as the main reason in addition to political stability. For continued operational factors, the foreign investors rated political stability as what will determine their decision in that direction. In the case of attractive factors, majority of the foreign investors rated Flexibility of Investment Policies index or factor as very important to attract more investors. However, in the case of local firms’ respondents, they strongly agree that, Taxes holiday is the main attracting factor for the foreign investors but company’s documentation processes been so burdensome can hinder foreign firms from investing in the oil and gas industry in Ghana.

Key Words: Foreign Direct Investment, Strategies, Attraction, Firms and Institution