Ghana: Selected Issues
Author: International Monetary Fund
Publication Date:
31 Jan 2000
eISBN:
9781451814811
Language:
English
Keywords:
ISCR; CR; export; Ghana; bank; export receipt; handicraft export; wood products; product diversification; jewelry export; Agricultural commodities; Export performance; Export competitiveness; merchandise export
Download PDF (1.5 MB)

This paper reviews trends in GDP and other macroeconomic variables since independence. It assesses the performance of the different sectors of the economy and expenditure categories. The paper identifies a number of products that could contribute to maintaining the high growth rate that nontraditional exports have experienced. The medium-term fiscal sustainability analysis provides a useful quantification of the impact of the shocks experienced on fiscal performance. Ghana's social insurance system, stock exchange, divestiture program, rural finance, and poverty are also discussed.

Abstract

This paper reviews trends in GDP and other macroeconomic variables since independence. It assesses the performance of the different sectors of the economy and expenditure categories. The paper identifies a number of products that could contribute to maintaining the high growth rate that nontraditional exports have experienced. The medium-term fiscal sustainability analysis provides a useful quantification of the impact of the shocks experienced on fiscal performance. Ghana's social insurance system, stock exchange, divestiture program, rural finance, and poverty are also discussed.

II. Ghana’s Nontraditional Exports: Performance and Prospects10

A. Introduction

33. Ghana is a small open economy that has traditionally relied on cocoa exports as the main source of foreign exchange. Until the 1970s, cocoa represented up to 70 percent of total exports of the country, with gold and timber accounting for most of the remainder. Dependence on export revenues from a limited number of commodities makes a country vulnerable to terms of trade shocks. The behavior of Ghana’s exports illustrates the risks from lack of export diversification. After an upswing in its export prices in the late 1970s, Ghana faced declining cocoa prices in the 1980s, together with fluctuating gold and timber prices (Figure 7). As a result, growth rates, tax revenue and the current account tended to fluctuate from year-to-year, increasing uncertainty and disrupting macroeconomic adjustment.

Figure 7.
Figure 7.

Ghana: Commodity Prices of Traditional Exports, 1963–98

Citation: IMF Staff Country Reports 2000, 002; 10.5089/9781451814811.002.A002

Sources: WEO; and Fund staff calculations.1/ In U.S. dollars per ounce.2/ In U.S. dollars cents per pound.3/ In U.S. dollars per cubic meters.

34. The economic reforms implemented from 1983 set in motion a steady trend toward a gradual diversification of exports, in particular toward processed and semi-processed goods. The share of nontraditional products in total exports increased from 3 percent in 1986 to 19 percent in 1998. If sustained, this trend could progressively reduce Ghana’s exposure to terms of trade shocks. In effect, prices of manufactured exports from Ghana have displayed much less volatility than those for its traditional exports, and have benefited from an upward price trend, which reflects an expanding world demand for these products (Figure 8).

Figure 8.
Figure 8.

Ghana: Export Unit Value For Manufactures, 1974–98

(Index, 1974=100)

Citation: IMF Staff Country Reports 2000, 002; 10.5089/9781451814811.002.A002

Sources: WEO; and Fund staff calculations.1/ In U.S. dollars per ounce.2/ In U.S. dollars cents per pound.3/ In U.S. dollars per cubic meters.

35. Export growth has been sluggish in Africa and researchers have pointed to the low-income elasticity of demand and market saturation as stumbling blocks to achieving high-volume growth in traditional African export crops and minerals.11 Over the period 1986–98, Ghana’s traditional exports have, on average, grown at 7 percent per year, a relatively strong growth, but hardly sufficient to generate the high, sustainable rates of growth, which were envisaged in the Ghana Vision 2020 strategy. A gradual diversification away from the traditional export crops and minerals could contribute significantly to raise the growth rate of the economy. Nontraditional exports in Ghana have been growing at an yearly average of almost 27 percent during 1986–98. Although this performance is in part explained by the smallness of nontraditional exports, its sustained growth over more than a decade highlights their potential as a source of growth for the economy.

36. This chapter discusses the performance of nontraditional exports since 1986 and their potential for continued expansion. At the outset, it should be noted that a nontraditional export is a country-specific concept. In August 1995, the Ghanaian parliament adopted the Export and Import Act No. 503. That act defines nontraditional exports as all exports other than cocoa beans, lumber and logs, unprocessed gold and other minerals, and electricity.12 In practice, Ghana’s nontraditional exports basically fall into three categories: agricultural products (mainly fruits, horticultural products, and fish), processed and semi-processed products (such as wood products, aluminum products, and canned foods) and handicrafts.

37. The plan of this chapter is as follows. Section B analyzes the overall performance of nontraditional exports both in terms of growth rates and product diversification. Section C describes the performance of the largest nontraditional exports, as well as possible obstacles to their fixture growth; it also reviews a number of smaller nontraditional exports, which may hold the key for higher export-led growth during the next decade. Section D examines government institutions and initiatives set up to foster the nontraditional export sector. The last section presents the main conclusions of the paper.

B. Performance of Nontraditional Exports, 1986–98

Overview

38. Provisional data show that by the end of 1998, export receipts from nontraditional exports stood at slightly over US$400 million, or nearly 20 percent of total merchandise exports (Table 9 and Figure 9).13 Before 1990, the nascent nontraditional export sector contributed less than 5 percent of total exports and agricultural products tended to dominate the sector, representing 60-75 percent of total, while processed and semi-processed goods accounted for 25-38 percent. Exports of handicrafts were negligible, amounting to less than US$1 million. As more industries came on stream since 1992, processed and semi-processed goods started to outstrip agricultural products in total nontraditional exports. In 1998, processed and semi-processed goods represented 79 percent of nontraditional exports, with agricultural products accounting for 19 percent and handicrafts 2 percent. Therefore, the growth of nontraditional exports has reflected to a great extent the recuperation of the industrial sector in Ghana as a result of economic reforms, privatization, and a more favorable environment for the private sector.

Table 9.

Ghana; Major Nontraditional Exports, 1986–98

(In millions of U.S. dollars)

article image
Source: Ghana Export Promotion Council.
Figure 9.
Figure 9.

Ghana: Performance Indicators on Nontraditional Exports, 1986 – 98

Citation: IMF Staff Country Reports 2000, 002; 10.5089/9781451814811.002.A002

Sources: Ghanaian authorities; and Fund staff estimates.

39. The overall growth in nontraditional exports over the period 1986–98 came mainly from the processed and semi-processed sub-sectors, which grew by nearly 40 percent per annum on average. Table 10 shows that the share of the processed goods in Ghana’s total exports increased from less than 1 percent in 1986 to slightly over 15 percent in 1998—an impressive achievement by any measure. Aluminum and wood products, canned foods and other processed industries all registered significant increases in total export shares over this period. Although handicraft exports did not do as well, their share in total exports nevertheless increased.

Table 10.

Ghana: Performance Indicators on Major Nontraditional Exports, 1986–98

article image
Source: Ghana Export Promotion Council.

40. Regarding the agricultural sector, the data show that horticultural exports were among the better performers growing by more than 33 percent on average per annum while fish exports have been on a downward trend owing to a variety of reasons including the lack of refrigeration facilities and difficulties in transportation to major markets.

Trading partners

41. The data on nontraditional exports by destination presented in Table 11 show that the European Union (EU) is the most important destination for Ghana’s nontraditional exports, accounting for 68 percent of the total in 1998 followed by markets in the ECOWAS region (15 percent) (Figure 10).

Table 11.

Ghana: Destination of Nontraditional Exports, 1986–98 1/

(In millions of U.S. dollars)

article image
Source: Ghana Export Promotion Council.
Figure 10.
Figure 10.

Ghana: Destination of Nontraditional Exports

Citation: IMF Staff Country Reports 2000, 002; 10.5089/9781451814811.002.A002

Source: Ghana Export Promotion Council.

42. Over 1986–1998, nontraditional exports to the EU have increased on average by 35.5 percent per year. Lower transportation costs and ease of delivery, particularly of perishable goods, such as horticulture and seafood, have tended to favor both EU and ECOWAS markets over far away markets in North America, Asia, and Latin America. Nevertheless, a decade ago, the EU accounted for only 29 percent of Ghana’s nontraditional exports. What accounts for the change? Two aspects tend to dominate: (a) the favorable conditions for Ghanaian exports to the EU owing to the Lomé Convention;14 and (b) the expanding membership, and hence markets, of the EU itself.

43. Exports to the ECOWAS region (mainly the CFA zone) have also grown at nearly 30 percent on average during this period. However, the share of nontraditional exports going to the ECOWAS region has declined slightly from 17 percent in 1988 to 15 percent in 1998. This result is somewhat surprising, as in 1990 the ECOWAS Trade Liberalization Scheme was established to provide free movement of specified goods between member countries by phasing out existing tariffs over five years. The lack of expansion in Ghana’s nontraditional exports to other ECOWAS countries points to the fact that the implementation of the scheme has been timid. Exports to the CFA zone grew more rapidly than those to Nigeria, but may slow down in the fixture as the CFA countries become increasingly integrated through the removal of customs duties within the West African Economic and Monetary Union.

45. Exports to the United States have stagnated as Ghanaian exporters still lack the production capacity to meet the demand for large orders typically placed by U.S. importers.

Product diversification

46. The strong growth of nontraditional exports is to a considerable extent due to product diversification (Table 10). In 1986, the fledging nontraditional export sector comprised just 100 products split almost equally between agricultural and nonagricultural (mainly processed and semi-processed goods) commodities. Over 1986–98, available data show that there has been a significant diversification of nontraditional exports led by the processed and semi-processed industries. The nontraditional export sector now exports more than 250 different products mainly to the EU, ECOWAS, and North America. Product diversification in exports has mostly taken place in other processed industries (that is, processing industries other than canned foods, wood products, aluminum, or salt), in which the number of products exported increased from 22 in 1986 to 134 in 1998. There was also significant product diversification in horticultural exports during this period (from 11 products in 1986 to 32 in 1998).

47. Along with the diversification of products, there has also been an expansion in the number of exporters. In 1986, there were less than 400 nontraditional exporters, but their number grew rapidly to 3,188 in 1992. The increase in inflation and uncertainty in the wake of the 1992 elections reduced the number of exporters and slowed down considerably the growth rate of nontraditional exports in 1993, Since then, the number of nontraditional exporters has recovered led by an increase in the number of agricultural exporters. But in 1998, even as nontraditional exports have continued to grow significantly in value terms, there was a decline in the number of exporters in both agricultural and nonagricultural sectors. Data for the first quarter of 1999 show that compared to the same period last year, total exports of nontraditional products have declined by 1.7 percent, as the slight growth in export receipts from processed goods was not sufficient to offset a decline of 11.3 percent in receipts from agricultural products. The real effective exchange rate, which continues to appreciate from its low level in 1994, is likely to have contributed to this development.

C. Main Nontraditional Exports

48. Ghana’s main nontraditional exports in terms of export value have been processed and semi-processed goods, which in 1998 accounted for almost 80 percent of total nontraditional exports. In particular, four products, canned tuna, palm oil, processed cocoa products, and wood products (including furniture) accounted for 63 percent of total nontraditional exports. This section discusses the prospects of these four products and identifies a list of 10 other products that have a good potential for vigorous export growth in the near future.

Canned tuna

49. Ghana started exporting canned tuna in 1990/91. Until 1993, export receipts from canned tuna did not exceed about US$1.0 million. In 1994, the Pioneer Food Company invested heavily in its canning facilities and led the way to the expansion of exports of canned tuna. The Ghana Agro-Food Company, which was a state-owned enterprise, was sold to the Swiss company IBN in 1994 and has since doubled its production of canned tuna and increased its total work force by more than three times to 1,600 employees. As a result of these initiatives, exports of canned tuna jumped more than sevenfold in 1994 to US$7.7 million and have been growing strongly ever since. By the end of 1998, exports of canned tuna had reached US$77.3 million, or nearly 20 percent of total nontraditional exports.

50. The success of canned tuna exports is an example of how foreign investment can help introduce marketing skills and investment, allowing a new export to be launched. Exporters of canned tuna, particularly those involved in exports to the United States and the European Union, tend to be international firms such as StarKist. These companies have transferred the marketing know-how as well as their experience in the handling, processing, and packaging of tuna to meet the high quality standards required in their export markets. Today, Ghana has acquired the expertise to produce and market canned tuna and should be able to expand exports of this product for years to come, particularly since recent studies do not indicate that there are as yet environmental constraints on tuna fishing in Ghana.

Palm oil

51. In 1986, there were only four Ghanaian exporters of palm oil. Since then, the number of exporters of palm oil has increased steadily. In 1998, over a hundred palm oil exporters sold nearly US$20 million to foreign buyers, or about 5 percent of total nontraditional exports. While exports of palm oil have performed quite well until now, the palm oil industry was developed as a substitute for imports of edible oil.15 Turning these companies around and making them dynamic exporters in highly competitive international markets can be challenging. In Ghana, this is being achieved in part through the privatization of palm oil plantations and processing firms, which provide a new outlook to the companies. The Ghana Oil Palm Development Company was divested in 1994. Unilever has recently bought the Twifo Plantation from government. Other companies awaiting privatization are the Benso Oil Palm Plantation and the National Oil Palm Company, which has 4,500 ha. of palm plantation close to Takoradi, Ghana’s second port.

52. The major market for Ghanaian palm oil has been the countries in the CFA franc zone. However, demand from these markets could dry up if there is a loss of relative competitiveness because of regional trade developments (such as the WAEMU customs union) or because of relative exchange rate movements. Also, agroecological conditions in West Africa are not as favorable for palm oil as in southeast Asia, which remains Africa’s strongest competitor.

Processed cocoa products

53. The three most important processed cocoa products exported by Ghana are cocoa butter, cocoa liquor, and cocoa cake—in that order. The quality and flavor of Ghanaian cocoa have helped boost exports of processed cocoa, which grew nearly six times in value from US$12.5 million (8 percent of total nontraditional exports) in 1995 to US$73.0 million (18 percent of total nontraditional exports) in 1998. Exports of cocoa products benefited also from the know-how of the Walter Schroeder Company, of the German Hosta group, which bought a controlling share of two state-owned cocoa processing plants in 1992 and 1993. The government has retained a 40 percent share of this company, the West African Mills Company. Since taking over the enterprise, the new owners have invested over DM 30 million; production of cocoa butter has risen from 10,000 to 20,238 tons a year in 1998, and processing of cocoa beans from 10,000 to 53,351 tons per year. Another exporter of cocoa products is the Cocoa Processing Company, which in addition to cocoa butter, powder, and liquor, also produces confectionery. It has two plants in the port of Tema. The Cocoa Processing Company is a subsidiary of the Cocobod. Its cocoa processing operations have also expanded significantly from 18,000 tons in 1992 to 25,000 tons in 1995. The company has plans to build another 25,000 ton processing plant by 2001.

Wood products (including furniture)

54. Among the most promising nontraditional exports are three wood products: building materials, furniture and furniture parts. Although the wood processing industry has in general performed very well, accounting for 21 percent of nontraditional exports in 1998, its potential for continuous expansion needs to be examined carefully. The wood products industry has benefited from a ban on the exports of logs for environmental reasons. However, future expansion of the industry will depend on the implementation of adequate environmental policies that encourage reforestation. As a first step, user fees would need to be levied in order to recover some of the cost of reforestation. During the 1999–2001 period, the government will also periodically increase forest fees to reflect the stumpage value of the trees, with rates ranging for 5 percent to 20 percent of the f.o.b. export timber prices, depending on demand and inventory level of the species.16 Part of the problems looming over the wood processing industry in Ghana could be resolved by better technology. Owing to outdated equipment, the maximum yield of sawmills in Ghana is between 40-55 percent of unprocessed timber and the rest is wasted in sawdust. An improvement in productivity could go a long way in preventing the imposition of tighter limits on exports of wood products.

Other promising nontraditional exports

55. Table 12 provides a list of smaller nontraditional exports that nevertheless have a high potential for growth in the next decade. This list draws mostly on information provided by the Ghana Export Promotion Council and provides summary information on growth potential, export performance, comparative advantages, markets, competition, and weaknesses.

Table 12.

Selected Nontraditional Exports with High Potential for Growth

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D. Government Policies in Support of Exports

56. The Ghana Export Promotion Council (GEPC), established in 1969, is a government agency in charge of export promotion and development. Its activities are geared toward broadening Ghana’s export base and as a result it has given considerable attention to nontraditional exports. The GEPC assists exporters by identifying products and foreign markets with export potential, in part through the use of Ghana’s embassies abroad. It also provides advisory services to exporters including product development, costing and pricing. Finally, it facilitates trade by promoting participation in trade fairs, and by working with the government to streamline export procedures.

57. The Export Production Village is an example of a GEPC program to foster nontraditional exports. Under the program, small rural producers are organized in companies which interface directly with exporters. The GEPC assists with sponsorship, equity participation, sourcing of production inputs, and extension services. The coverage of the program includes agricultural products, mainly fruits, vegetables, spices, staples and tree crops; shrimp farming; handicraft goods such as batik, rattan furniture, straw baskets, jewelry, and wooden items; and manufactured items, such as salt, processed cashew nuts, and coconut fiber products. Another example of a GEPC program is the promotion of rattan furniture for export under a project funded by Norway. About two-thirds of GEPC funding comes from domestic funds and one-third from external financing provided by bilateral donors and multilateral agencies, like UNDP.

58. In July 1993, the World Bank committed SDR 29.6 million in IDA funds (equivalent to US$41 million) for the Private Enterprise and Export Development (PEED) project to promote nontraditional exports by refinancing and guaranteeing exports in that sector and assisting banks to extend credits to the nontraditional export sector. The PEED project, designed to foster the growth of nontraditional exports, had several components including (i) an export credit refinance and guarantee facility amounting to US$34 million to assist exporters in obtaining short-term pre- and post-shipment finance from participating financial institutions; and (ii) a technical assistance component amounting to US$7 million. The latter component was used to set up the Export Finance Office at the Bank of Ghana, which would implement the credit refinance and guarantee facility, train bankers and exporters in methods and practices of export finance, and develop and implement an international payments settlements system.

59. The impact of the PEED project on nontraditional exports was modest. The line of credit under the PEED project is estimated to have helped only about 11 percent of incremental exports to materialize, and the export financing scheme was plagued by high default rates and the continued erosion of their financial resources. In 1997, from US$10 million of debt service due, 40 percent was yet to be recovered from about 30 defaulters (or 65 percent of borrowers). At that time, only three banks continued to be eligible to participate under the PEED scheme. The utilization rate of the credit facility remained low despite modifications to the facility because banks were unwilling to take risks on smaller and new nontraditional exporters, market interest rates were high, and exporters required medium-term funds, which were in short supply. Finally, the objectives of some technical assistance components designed to provide business assistance to exporters and private financial institutions were only partially realized in the absence of post-shipment guarantees. Recently, however, a small bank has become active in providing export credit to handicraft producers and exporters and has done so successfully (Box 1).

60. The Export Finance Company (EFC) was established in August 1990 with the support of the Bank of Ghana in order to grant loans to exporters of nontraditional goods, to provide export finance guarantees, and to support all ancillary functions for expanding nontraditional exports. Four public sector institutions (including the GEPC and the SSNIT) and four private insurance companies each hold 12.5 percent of EFC’s shares. From the start, EFC experienced serious problems in its operations as shareholders were only able to raise 9 percent of the total proposed capital. As a result, EFC was compelled to tap the money markets and float export bills with government backing. EFC was able to obtain resources at 32 percent on average, and adding its own 2 percent margin, could only offer financing to nontraditional exporters at 34 percent. Another problem faced by EFC was that its staff at that time had no experience in running an export credit agency or in financing exports. Although EFC required high collateral such as treasury bills, bonds, and landed property, it took a long time to collect when 80-90 percent of its loans went bad in the period 1991–93 and a temporary freeze on EFC’s lending became necessary. A turnaround in EFC’s operations started in 1994 with its review of lending guidelines to improve prudential management and infusion of more skilled staff to assess risks, and the recovery of new loans increased to about 95 percent. However, the institution remains in a delicate financial situation given its narrow capital and resource base.

61. As quality takes the center stage in international trade, advanced concepts such as ecolabeling, organic products, and environment-friendly production processes increasingly influence the marketability of nontraditional exports. The Ghana Standards Board (GSB) has taken the lead in providing technical assistance in such areas as quality management and export packaging to assist Ghanaian enterprises and exporters to improve their ability to compete in international markets. GSB has also been developing a database and a library containing information to respond to exporters’ enquiries on the technical and legal specifications required to market specific nontraditonal exports.

Financing Nontraditional Exports—A Success Story

uA02bx01fig01

Flow of Transactions in the Financing of Handicraft Exports

Citation: IMF Staff Country Reports 2000, 002; 10.5089/9781451814811.002.A002

Prudential Bank (PB), which started operations in August 1996, has extended credit to Ghana’s handicraft sector to expand production and exports. PB has also extended loans to the agricultural and garment sectors. The bank typically provides short-term loans (maturity of 6 months to a year) to handicraft exporters as soon as they obtain an export order (see flowchart). Financing is limited to 60 percent of the export order and the interest rate depends upon the source of funding—12.5 percent on U.S. dollar loans from PEED money, 30 percent on cedi loans using DANIDA funds, or 32 percent using PB’s cedi deposit liabilities. PB has used a concept of group lending in lieu of collateral requirements. It channels the loans and repayments through an agent, who is a businessman engaged in handicraft exports. While the agent does not guarantee the loan, PB is able to reduce risks because the agent has an interest in timely production and closely monitors the handicraft production process. Most loans are paid back in time and overall PB’s export financing has been very profitable. The bank is gradually venturing into providing longer-term loans to finance investments in equipment.

62. The Ghana Trade and Investment Gateway Project, a US$50.5 million World Bank-financed initiative, aims at attracting a critical mass of export-oriented investors to Ghana to accelerate export-led growth, while making Ghana a gateway to the West African market of 250 million people. A crucial element of the project is the creation of a privately-developed and managed Export Processing Zone (EPZ). An enabling legal and regulatory environment has been put in place through the adoption of the Investment Promotion Center Act of 1994 and the Free Zone Acct of 1995.17 Industrial sites in three favorable locations close to ports and/or transportation facilities have been secured.18

63. To assess the viability of the project the government commissioned a survey of foreign investors to compare Ghana’s investment climate to those in Dubai and Mauritius (considered best practices) and Togo and Kenya (potential competitors). The main finding of the survey is that Ghana has favorable investment and export incentives. Its labor regime is satisfactory and there is an adequately skilled or trainable labor force. The transportation system is at par with comparators and costs of sea and air freight are competitive. However, Ghana’s basic infrastructure is slightly below that of comparators.

64. A number of trade facilitation activities have been identified and are being gradually put into place under the World Bank project. Key elements include: design and development of the Tema EPZ; implementation of a work program to achieve ISO 9000 certification of Ghana’s customs and port clearance processes; private management of ports and terminals under the Ghana Ports and Harbor Authority; reform of the Ghana Civil Aviation Authority and implementation of a “liberalized skies policy”; support to the Ghana Investment Promotion Center and the Ghana Free Zones Board; and steps to promote trade facilitation by the Ghana Immigration Services.

65. In 1993, the Government of Ghana launched the Ghana Trade and Investment Program (TIP) with a US$80 million grant from the USAID in order to expand exports of nontraditional products and diversify the country’s export base. In 1996, the USAID funded a study to assess the income and employment impact of the TIP. The study, carried out by the Sigma One Corporation, was based on a survey of nontraditional exporters with an overall firm response rate of 75 percent. The main conclusion of the study was that the TIP had resulted in a sizeable increase in direct employment and annual wages for workers in the nontraditional export sector that was substantially higher than the daily minimum wage. Direct full-time equivalent employment in nontraditional export firms increased from 12,000 jobs in 1993 to almost 27,000 jobs in 1995. Finally, the provision of technical assistance to the nontraditional export sector with simultaneous reform of the regulatory environment encouraged exporters to diversify their product line and increase their export capacity.

66. The TIP has now been replaced by the Trade and Investment Reform Program (TRIP), which aims at expanding the production base of the economy and to build up on competitive strengths to place the country in a position to benefit from opportunities for export in a global environment of increasingly free trade. One study being undertaken under the TRIP is a comprehensive analysis of the tariff structure with a view to enhancing the competitiveness of local industry, and removing distortions that impede exports of goods in which Ghana has a comparative advantage.

67. USAID has also financed the Federation of Associations of Ghanaian Exporters (FAGE), which is an umbrella organization set up in 1992 to represent the various export organizations in the country. FAGE provides support to nontraditional exporters through technical assistance. For example, it recently provided, in collaboration with the Ghana Standards Board, technical assistance in packaging and handling to ensure that Ghana’s nontraditional exporters are able to meet the standards of the EU.

68. A new law establishing the Export Development and Investment Fund is expected to be presented to parliament in 1999.19 The Fund will operate as a guarantee scheme to provide long-term investment finance for exporters who may need to retool in order to increase their production and exports.

E. Conclusion

69. Ghana’s nontraditional exports have grown rapidly albeit from a small base. They are becoming increasingly diversified, covering over 250 different products and amounting to more than US$400 million. Moreover, today most nontraditional exports are processed and semi-processed goods, which benefit from a growing world demand and more stable international prices. This chapter has identified a number of products that could contribute to maintaining the high growth rate that nontraditional exports have experienced since 1986. However, it has also noted a number of areas in which the government will need to cooperate with the private sector to maintain this momentum. These areas include:

  • Maintaining a stable macroeconomic environment and adequate exchange rate policies.

  • Encouraging foreign investment in the economy.

  • Accelerating the divestiture program.

  • Ensuring a competitive environment for exporters located in Ghana.

  • Improving basic infrastructure connected to exports.

  • Implementing trade facilitation activities, particularly those identified within the World Bank Gateway project.

  • Providing opportunities for capacity building in international marketing, packaging, and handling to ensure that Ghanaian products meet international standards.

  • Encouraging banks to develop creative financing facilities that cater to the needs of nontraditional exporters.

References

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  • ISSER, The State of the Ghanaian Economy in 1998, University of Ghana, Legon, June 1999.

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10

Prepared by Dev Kar.

11

See, for example, Baban and Greene (1992).

12

Therefore, exports of aluminum, bauxite, manganese and diamonds are considered traditional exports.

13

The data on nontraditional exports used in this chapter are compiled by the Ghana Export Promotion Council (GEPC). The data cover most, but not all, nontraditional exports from Ghana.

14

Under the Lomé Convention, Ghana receives duty-free access to the EU market for industrial and agricultural exports not subject to the arrangements under the EU’s Common Agricultural Policy. Several important or potentially significant processed and unprocessed food items such as cocoa products, fruits, and vegetables are eligible under this convention.

16

Other environmental efforts being carried out by the government with a bearing on the production and exports of wood products are the Timber Resource Management Act of 1998 and its regulations, as well as a pilot scheme on community collaboration in resources management.

17

A number of enterprises have already received authorization to operate in export zones, and applications for several others are being processed.

18

The sites are in Tema, Takoradi, and Kumasi.

Same Series

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Cover IMF Staff Country Reports
Ghana: Selected Issues
Author: International Monetary Fund
Volume/Issue:
Volume 2000: Issue 002
Publisher:
International Monetary Fund
ISBN:
9781451814811
ISSN:
1934-7685
Pages:
140
DOI:
https://doi.org/10.5089/9781451814811.002

Ghana: Commodity Prices of Traditional Exports, 1963–98

Ghana: Export Unit Value For Manufactures, 1974–98

(Index, 1974=100)

Ghana: Performance Indicators on Nontraditional Exports, 1986 – 98

Ghana: Destination of Nontraditional Exports

Flow of Transactions in the Financing of Handicraft Exports