Academic journal article Business Law International

Article 181(5) of the 1992 Constitution of Ghana and Its Implications on International Commercial Transactions

Academic journal article Business Law International

Article 181(5) of the 1992 Constitution of Ghana and Its Implications on International Commercial Transactions

Article excerpt


Ghana has been strengthened by a quarter-century of relatively sound management, a competitive business environment and sustained reductions in poverty levels. In late 2010, Ghana was categorised as a lower middleincome country and it must be noted that in relation to other African countries, Ghana's industrial sector is doing well as it accounts for about 30 per cent of the country's gross domestic product.

However, it seems that the country, which at the turn of the century held so much promise as an emerging economy in Africa, is today facing one of the most serious economic crises in its history. Economic growth has been slowing. The budget deficit has been at double digits for two years running, with a stockpile of payment arrears. In fact, the expectations of many of its hard-working citizens have not been met and the standard of living has gradually become increasingly unbearable.

The prospects look bleak, but some have suggested that the present state of depression offers a unique opportunity for investors who will have much value for what they bring in as the Ghana currency, the cedi, continues to depreciate on a daily basis following the failure of sustained efforts by the central bank to inject some stability into the economy. Another school of thought also contends that the state of the economy presents a fine opportunity for the government to implement policies that can turn things around to make businesses and other developments succeed in the country. The government has also announced that it would continue to create an enabling environment for private and foreign sector participation so as to close the country's infrastructure gap and increase the development growth rate.

Although Ghana currently has an open and entrepreneurial approach to business, English as the official language and a secure, peaceful and friendly environment to ease the comfort of international investors, there lies a deep-seated problem in the fundamental law of the country. Foreign enterprises and investors who intend to partner the country to make headway, and as a result, enter into contracts with it, often get caught up with questions concerning the validity of the agreements entered into arising out of the mandatory requirements of Article 181(5) of the 1992 Constitution of Ghana (the '1992 Constitution'), which appears in many instances not to have been complied with by government and related institutions. The courts have not been able to find a way out of the difficulty it poses for the foreign investor who rightly must have entered into such an agreement on the understanding that its Ghanaian counterparts will act within the constitutional legal framework.

In such situations, the government as a party to disputes arising out of international commercial transactions cannot refuse to abide by the decisions handed down by the courts with the result that foreign investors are left without a remedy while the people of Ghana for whose benefit such agreements were expressed to have been entered into take the benefit of the investment. This represents quite a disincentive to foreign investment in an economy that relies heavily on such inputs, as there is always a huge deficit in the import bill compared to that of exports. In the absence of such foreign investments, the government is unable to resolve most of the pressing issues that confront the economy in the fields of energy, health, education and even payment of salaries and wages to public sector workers following the implementation of a new salary regime known as the Single Spine Salary Structure (SSSS), which has made some significant improvement in the earning capacity of workers but has brought in its wake an unbearable financial burden arising out of the rash manner in which it was implemented, perhaps for political gain. From further analysis, one will notice that all the parties involved in certain cases seem to think that they have complied with the stipulated due process until the Supreme Court of Ghana in exercising its original jurisdiction per Article 130 of the 1992 Constitution holds the contract void for lack of compliance with the due process. …

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