Ghana’s dying businesses: Why inheritance tax overhaul can no longer wait

Introduction

Ghana’s private sector is sitting on a quiet crisis, one that rarely makes headlines but silently erodes national wealth. Indigenous businesses, many of them decades old, routinely collapse the moment their founders die.

The collapse of formerly prominent indigenous firms reflects a broader national pattern and represents the predictable consequence of an environment that celebrates entrepreneurial achievement but provides limited institutional support to ensure continuity across generations.

In view of this, it becomes evident that Ghana cannot cultivate a resilient economic base when firms cease to exist upon the death of their founders. This development is not solely a managerial issue; it constitutes a broader threat to national economic stability.

The country is effectively resetting its private sector every 20 to 30 years. No nation can build long term prosperity on such a fragile foundation.

In remarks delivered in March 2026, President Mahama expressed concern about the high rate at which Ghanaian businesses collapse after the death of their founders, urging business owners to prioritise succession planning to safeguard long-term sustainability.

In a recent address, the then Business Development Minister, Dr Ibrahim Mohammed Awal, also cautioned that only about 15 percent of businesses survive into the second generation after the founder’s death. Although political interference is frequently cited as an explanation for this situation, such accounts often overlook the institutional and structural conditions that shape firm survival in the Ghanaian context.

Consequently, if the country is committed to industrialisation, job creation, and the Accelerated Export Development Programme, it must acknowledge an uncomfortable reality: Ghana’s current inheritance and succession framework is structurally hostile to business continuity.

A comprehensive inheritance tax reform that encourages continuity rather than liquidation is no longer optional but an economic necessity.

The Current State of Inheritance Tax in Ghana

Ghana’s inheritance tax framework is fragmented, outdated, and not deliberately structured to promote business continuity. Although the country applies an estate‑related levy called Estate Duty, the system operates mainly as a financial burden on inheritance rather than a policy instrument for enabling smooth intergenerational transfer of businesses to heirs or families.

This Estate Duty is often described as a “hidden inheritance tax,” applied broadly to the total value of a deceased person’s estate, including land, real estate, business assets, shares, and personal property.

Ghana provides no tax reliefs, exemptions, or incentives aimed at protecting family businesses during succession. Unlike countries such as Italy, Germany, or the UK, where inheritance tax systems include targeted measures to prevent forced sales of family firms or shares in businesses, Ghana treats business assets like any other property. Estate Duty must be paid before heirs gain ownership, creating liquidity pressures that can weaken firms and disrupt continuity during generational transitions.

The broader legal framework governing inheritance also does little to support business succession. Ghana’s primary statutory instrument, the Intestate Succession Law (PNDC Law 111), focuses on distribution rules, not tax incentives or continuity mechanisms.

It ensures fairness among spouses, children, and parents but provides no guidance on preserving business operations or ownership structures during generational transfer.

Similarly, the Wills Act (Act 360) provides procedural clarity for estate planning but does not incorporate tax based tools to ease business succession.

In practice, smooth business transfer in Ghana relies almost entirely on proactive estate planning, including wills, trusts, and clear succession arrangements. Without these measures, slow, costly, and complex probate processes can delay or disrupt the transfer of business assets, often creating disputes or fragmenting ownership during succession.

Why Ghana Needs an Inheritance Tax Reform

Instead of taxing heirs simply for inheriting, Ghana should reward heirs for sustaining the business. A continuity oriented inheritance tax could:

• Defer or reduce taxes for heirs who keep the business running

• Offer tax credits tied to job retention

• Provide valuation discounts to ease succession

• Encourage formalisation and governance reforms

• Reduce the temptation to liquidate assets

• Protect indigenous capital from political capture

This should not be seen as giving wealthy families a tax break. It is about protecting the productive base of the Ghanaian economy.

Lessons from Countries That Refuse to Let Their Businesses Die

Many countries understand something Ghana has yet to fully accept, business continuity is a national economic strategy, not a private family matter. Presented below are a few best practices.

Spain: The country provides one of Europe’s most extensive continuity incentives, granting 95–99 percent inheritance tax relief on family business transfers, conditional on heirs maintaining ownership and ensuring continued operational activity for a designated period.

These provisions are frequently strengthened by regional authorities, thereby reducing the attractiveness of liquidation and reinforcing incentives for preserving the business across generations.

Italy: Authorities provide up to 100 percent exemption from inheritance and gift taxes on family business transfers when heirs commit to maintaining ownership and operations for at least five years. This policy has been central to sustaining Italy’s dense network of multigenerational industrial districts and family owned manufacturing firms.

Germany: The law provides up to 100 percent inheritance tax relief for heirs who commit to sustaining the business for seven to ten years. This framework aims to safeguard jobs and uphold the Mittelstand, the backbone of German industry.

Japan: The country’s Business Succession Taxation System defers 100 percent of inheritance tax for heirs who continue operating the firm. This reform markedly reduced SME closures and reinforced Japan’s broader domestic industrial base.

United Kingdom: The UK supports family enterprises through Business Property Relief, which provides up to 100 percent inheritance tax exemption on qualifying business assets when heirs commit to continued operation of the firm for a stipulated minimum period. This framework significantly reduces liquidity pressure during succession and helps preserve multi generational family companies across manufacturing, agriculture, and services.

China: The government imposes no inheritance tax, eliminating liquidity shocks that often trigger business sales during succession. Continuity is further reinforced through governance reforms, SME support mechanisms, and structured succession training that enable family owned firms to transition leadership without financial disruption.

Urgent Regulatory Imperatives

An opportunity exists to reshape Ghana’s economic trajectory by adopting legal frameworks that promote continuity, multigenerational wealth, and sustainable industrial capacity. This can be done by:

1. Incorporating business continuity principles in tax policy: Reviewing legislations to mandate that inheritance tax laws include incentives for sustaining family businesses.

2. Protecting indigenous capital: Regulatory reforms should explicitly encourage the preservation of Ghanaian owned enterprises across generations.

3. Mandating governance and succession structures: Businesses should adopt formal governance and succession plans to qualify for tax incentives or any state support.

4. Setting up a National Business Continuity Fund: This fund would support heirs during transition periods, preventing forced liquidation.

5. Mandating periodic review of inheritance tax policy: This ensures alignment with global best practices and Ghana’s evolving economic structure.

The Association of Ghana Industries (AGI) Must Step Up and Drive National Reform
AGI has the credibility, influence, and responsibility to push this agenda by:

• Mobilizing industry voices

• Engaging Parliament, the 24 Hour Economy Authority and policymakers

• Providing technical input on incentive design

• Educating members on succession planning

• Positioning continuity as a pillar of industrialization.

Conclusion
A continuity oriented inheritance tax reform is an urgent economic necessity, enabling job security, preserving indigenous capital, and supporting Ghana’s 24 Hour Economy aspirations.

Explore the world of impactful news with CitiNewsroom on WhatsApp!

Click on the link to join the Citi Newsroom channel for curated, meaningful stories tailored just for YOU:
https://whatsapp.com/channel/0029VaCYzPRAYlUPudDDe53x

No spam, just the stories that truly matter! #StayInformed #CitiNewsroom #CNRDigital