 ENHANCING TRADE AND ACCRUING INVESTMENT |
Ghana’s new government has adopted a policy designed to rapidly expand opportunities for investors and enhance the livelihood of its citizens. The Trade and Investment Program, under the auspices of the Ministry of Trade and Industry, is central to this effort and is part of the Gateway Project. While the Gateway Project will not deliver exports, the initiative was designed to effectively recreate the environment for doing business. The first phase of the project focused on enhancing the country’s trading facilities, and included renovation of Ghana’s many ports and harbors. The program also allowed for the creation of the Ghana Free Zones Board, a government department designed to aid investors who wish to relocate to Ghana and export at least 70% of their products. These initiatives, along with the Ghana Civil Aviation Authority’s development of the airport, bolstered the country’s infrastructure and laid the groundwork for successful trade in the future.
“From January to December of 1999,we recorded US$404 million from non-traditional exports.”
— Tawia Akyea,
Executive Secretary, Ghana Exports Promotion Council (GEPC) |
Phase two of the program involves promotion of Ghanaian trade to the U.S. and European countries. Crucial to this effort is the Ministry’s pursuance of enhanced trade relations with the U.S. within the context of the African Growth and Opportunity Act (AGOA) and the Trade and Investment Framework Agreement. The program also focuses on new product development in textiles and garments through the establishment of a sewing laboratory to train operators in computer-aided design and manufacturing. Under this approach — initiated by the previous government — investors are being encouraged to take advantage of the various opportunities in the country, such as the free zones created and managed by the Ghana Free Zones Board. In the nontraditional exports sector, the Ghana Exports Promotion Council (GEPC) is encouraging investors to export other materials beyond gold, timber and cocoa beans, long considered to be the country’s traditional products. However, the GEPC’s statute of incorporation mandates that it develop and promote all of Ghana’s exports, not just nontraditional ones. Under product development, materials identified as having potential for export receive technical or design assistance to either reformulate or prepare the product to meet the demands of the market.
FOCUS ON PRODUCTION
According to
the Executive Secretary of GEPC, Tawia Akyea,
any country that intends to be successful in exports
must have suitable products, and to have these products,
there must be considerable investment in production.
Since the government’s adoption of the Economic
Recovery Program in 1983, the Council has found
several new methods of encouraging these necessary
investments. To gauge the success of the Economic
Recovery Program, one must consider that, in 1984,
nontraditional exports from January to December
yielded less than US$2 million. “From January
to December of 1999, we recorded US$404 million
from nontraditional exports,” says Akyea.“For
us, that is a direct measure of the impact this
accelerated program has had over the last decade.”
The Ghana
Free Zones Board, which forms an integral part
of the Trade Investment Program and the Gateway
Project, has the objective of turning Ghana
into a middleincome- earning nation in 2020. It
plans to accomplish its goal by providing competitive
free zone incentives and operating as a "one-stop
shop" for the promotion and enhancement of
domestic and foreign investment. The free zone enclaves
have been created in the port cities of Tema and
Takoradi and the inland city of Kumasi. Any business
that wishes to operate within the country and meets
the 70% export requirement will be granted all the
privileges and opportunities provided by the free
zone program. These activities, according to Kofi
Konadu Apraku, Minister of Trade and Industry,
are aimed at increasing the country’s export
base and ultimately reducing the budget deficit.
“We have committed ourselves to systematically
bringing down the budget deficit. Currently, the
rate is about 8.5% of GDP. The target set by the
previous government was to have a balanced budget
by this year, but unfortunately, they were not able
to achieve that.” However, Minister Apraku
believes that one way to achieve this goal is to
have more commercial missions attached to the country’s
embassies. “When you talk about global trade
and competition,” states Apraku, “you
need to have your people out there, investigating
the market for you. If you want to attract investment,
you need to have your people in the field where
the investments are.” |
FACILITATING CHANGE
According to the Minister, AGOA provides a singular opportunity for nontraditional exports, specifically the textile, garment and fabric industry. “African fabrics are very unique, and Ghanaian fabrics in particular are greatly admired. The AGOA facility gives us a little bit of a competitive edge with just 20% less than the amount the Asian markets will export into America.” To take full advantage of this opportunity, the Minister says, an AGOA coordinator has been appointed to coordinate efforts for certain textile producers, helping them uncover resources, identify the market and export their products. “The Trade Investment Program that we have with the U.S. is designed to help us facilitate our understanding of WTO agreements and to offer technical assistance so that our people will understand the issues involved. I would want to introduce a link between this program and AGOA, so that our Trade Investment Program is effective in getting our products into the American market.” Says Minister Apraku, “The government’s commitment to ensuring the success of the program falls in line with its goals of improving the living conditions of our people and linking our country to the rest of the world. We do not want to be left behind by globalization or technology. We should be able to produce goods and services that are competitive in a global environment and that will generate the revenue we need for the development of our country. We want to become the real gateway to the rest of West Africa.”
“African fabrics are very unique, and Ghanaian fabrics in particular are greatly admired.”
— Kofi Konadu Apraku,
Minister of Trade and Industry
|
MOVING BEYOND TEXTILES
Ghana is determined to take advantage of AGOA and expand its export base into the U.S. by encouraging investment in cocoa processing. Outside the U.S., Minister Apraku explains, the variety of Ghanaian exports will increase. “We want to encourage the export of processed fish into the E.U. market and other countries. We want to export furniture and wood. I think we also could do well exporting salt. We want to invest less in gold mining and more in gold processing. And we want to move into agroprocessing: pineapples, tomatoes, oranges and bananas, as well as vegetables.” According to GEPC Executive Secretary Akyea, the key to stabilizing the economy and fostering the growth of nontraditional exports lies in critically examining the European markets that are considered Ghana’s traditional trading partners. But the U.S. market holds a special attraction for nontraditional product exporters. “The sheer market size, coupled with the fact that a significant proportion of the population in the U.S. trace their roots back to Africa, creates a unique and interesting opportunity for us,” explains Akyea. “Also, the U.S. has recently seen a growing influx of African immigrants — a
factor which makes for even greater market potential as well as some impressive figures. If, for example, we look at garment imports into the U.S., the yield is well over US$250 billion. If Ghana got even 2% of that market, it would make a difference.” The government also is encouraging people to invest in pineapple farming, processing and export due to its foreign exchange earning ability and the growing international demand for pineapple juice.
“What we expect from the government is a stable environment, which will demonstrate the beginning of an administration that is truly supportive of the public sector.”
—Ishmael Yamson,
Chairman and Chief Executive, Unilever, Ghana |
A DIVERSIFIED FUTURE
Ishmael Yamson, chairman and chief executive of Unilever, Ghana’s biggest business conglomerate, agrees that Ghana must move away from its commodity dependency and instead focus on value-added production and services because cocoa and its related products are luxury goods. Unilever manufactures food, home and personal care products and employs about 2,500 people. Recently, the company has seen some stability in the macroeconomic climate since the inception of the Kufuor Administration, the stability of the cedi and the significant drop in inflation. “It seems to me that the right steps are being taken, and that things are pointing in the right direction,” explains Yamson. “We expect a stable, macroeconomic environment with lower or no government deficits, which tend to crowd out the private sector from the banking sector. We’d like to see lower inflation and lower interest rates. So long as those remain high, banks will not issue long-term credit. What we expect from the government is a stable environment, which will demonstrate the beginning of an administration that is truly supportive of the public sector.” According to Akyea, Apraku and Yamson, the peaceful political change has shown that Ghana is a stable country that has been vigorous in its pursuit of the policies that will turn the economy around. That determination, combined with an excellent, disciplined workforce, gives Ghana a notable advantage over its neighbors. |
