The logistical difficulties of running a business vary from country to country, but in Ghana, the judicial system has become a significant hindrance to business development. But IMANI Center for Policy and Education (IMANI), an Accra-based Atlas Network partner, has launched a successful effort to change the way the courts respond to businesses in a way that helps to secure property rights, facilitate entrepreneurship, and improve contract enforcement.
IMANI recently achieved a major policy win by successfully advocating against a government proposal to increase the country’s value-added tax (VAT) from 17.5 percent to 21 percent. They also published a three-part study that articulates how contract enforcement reform would improve the business climate for entrepreneurs.
In February, the Ghana Revenue Authority announced that the local value-added tax (VAT), a consumption tax placed on a product whenever a value is added at any stage of production or distribution, would increase. Realizing that this tax hike would complicate an already problematic business climate, IMANI successfully convinced the government to redact their proposal.
With the VAT remaining at 17.5 percent, IMANI hopes that more entrepreneurs and investors will emerge in Ghana. To build confidence among businesspeople, IMANI continues to be a vocal advocate for policies that foster economic growth and prosperity.
Enforcing Contracts: How to Attract More Entrepreneurs to Ghana, proposed significant reforms and innovation to the judiciary, including modernizing their communications platforms and promoting greater transparency.
The inability to publicly access data highlights some of the major flaws with Ghana’s court system. IMANI Founding President and CEO Franklin Cudjoe see fixing this as a priority. “The greatest challenge with regards to our enforcing contracts study was getting specific data on dates for the start and end of court processes for commercial disputes,” says Cudjoe.
Clearly defined property rights are crucial to business owners, entrepreneurs, and property owners. In Ghana, these contracts are often informal or lack legitimate legal backing to protect entrepreneurs’ interests. By reforming the judiciary to properly enforce contracts, investors and entrepreneurs will hopefully no longer shy away from conducting business in Ghana due to a lack of contractual protection and enforcement. In addition, commercial courts often fail to uphold and enforce contracts in a timely manner. Prolonged trials, compliance costs, and administrative fees often place restrictive burdens on potential entrepreneurs.
One of IMANI’s first recommendations was the establishment of small claims courts. As has been shown in other countries, small claims adjudication often shortens the amount of time necessary to resolve contractual disputes. The current case management system in Ghana has no laws in place that regulate when the court adjourns or how long the adjournment lasts.
Secondly, IMANI proposes automating courts and developing proper training for court officials. There have been attempts to introduce online court portals for court processes, but little progress has been made. Through electronic case management systems, document submission, registration, and service notification services can be provided in an efficient, user-friendly way.
This long-term proposal for an “e-justice” project promises to reform the court system in favor of efficiency and standardization. Through the e-justice system, the procedures and time required to work with the judiciary will be drastically reduced and standardized.
IMANI’s research and recommendations are designed to enable significant reductions in the time taken to enforce contracts, as well as improving the overall quality of the commercial courts in Ghana. For a country struggling to attract entrepreneurs, this is a major step towards ensuring the protection of private property and investment.