Ghana’s foreign minister talks partnership

One tenet of Ghana’s foreign policy is ‘good neighbourliness’. What makes Ghana a good neighbour?

We are part of the Economic Community of West African States. Under that framework, we have committed ourselves to deeper integration with the other 14 member states. Apart from that, we have traditionally seen ourselves as part of a bigger African story. Because of that, we have deliberately, in the course of implementing our foreign policy over the years, focused on: improving our bilateral and multilateral relations with countries within the continent, to improve political, social, and economic ties; to boost trade and encourage investment across the different member states; and we have also been very forward looking in terms of developing stronger economic relations with the rest of the continent. It is important for us, and fundamental to our success, to have an integrated African continent. We work towards achieving that through this policy of good neighbourliness.

We have also been involved in security cooperation. We have been an active contributor to a number of peace keeping efforts; we have contributed troops to every conflict within the region. We were in Liberia and Sierra Leone, we are in Mali, and we were in Cote d’Ivoire. We see that as an integral part of reaching out to help create stability when things unfortunately become conflict ridden.

In some areas, your ECOWAS partners haven’t always implemented protocols and treaties. In what areas would you like to see more cooperation from your ECOWAS partners?

Under the ECOWAS experiment, we committed ourselves to the free movement of people, which we have done very well with the ECOWAS passport, and also to the free movement of goods. That includes cultural, agricultural, and manufactured products. As far as the movement of products, that is where we have had the challenges. Some countries have imposed transit taxes, even though goods are not meant for that country, but are passing through. That is contrary to the spirit of the things we had agreed on. We wanted to create an economic space in the region to facilitate trade among member states. We have agreed on a common external tariff, which we are planning to implement from 2015, we also have an economic partnership agreement with the EU, which brings certainty into the trade regime between the ECOWAS and the EU, especially for businesses that had already taken the initiative to invest in Ghana and were reliant on the duty free market access for the success of their businesses. We are doing this as part of our integrated project, to the extent that we have been able to come to that consensus and we are working on strengthening other community institutions –for instance, the West African Health Organisation is at the forefront of helping deal with the challenge that has erupted in three member states with the Ebola virus – and we think there are some promising signs that gradually there is a consensus developing among member states that we should do more than pay lip service to the things that we committed to as part of our integration agenda. It’s a bit more effort to work towards implementation. Now, it is easier to communicate and travel within the region with the possibility of using air transport, so there is the pressing need to accelerate the integration agenda. I think that has been quite a positive development.

Talking about the partnership agreement with the EU, how will this help the industrialization of the West African region?

For any industrial product, global supply chains are such that the products that you manufacture are not necessarily made up of products entirely sourced from Europe. Some products may come from the Far East; others are labour intensive and more cheaply produced on a large scale, like clothing and textile. There is not much sourced from the EU, but from the Asian Pacific region. If we develop that capacity, we have to have greater integration into global supply chains. The EU is the closest market to us –in terms of size and purchasing power. With products that require EU-EPA market access, over the period when we have signed one, two, three, four, and the cotton partnership agreement, we were allowed market access into the EU for products that met the requirements. Those businesses that took advantage of the EPA had to do the backward integration into our economies, to build those local supply chains, to be able to meet the market access criteria. Industrial businesses built so far, based on intermediate production activities, have done so on the back of market access as a result of EPA. When we talk about rubber processing, the incentives to have the plantation set up by Ghana Rubber Estates and make that investment is on the back of market access that is available under the EPA duty free for processed rubber products, which they then send to Michelin in France to make tyres.

You have Cargill that is doing cocoa powder from our cocoa, adding value to cocoa, therefore helping us through that part of developing other products other than cocoa butter, cocoa liqueur, or raw beans (which are intermediate products). You have companies like Barry Callebaut or ADM that are also part of the cocoa value chain, and have been adding value to cocoa, building up industrial capacity. When you look at a company like Blue Skies, it is the same story: they are mainly based on agro industrial production; they have done the investment, backward integration to develop local supply chains, as a result of which they have created a situation where they are regular off takers for suppliers, and created opportunities for the expansion of our economy. I think there are a number of ways in which the EPA will help the industrialization process.

Could you outline UK-Ghana relations from a Ghanaian perspective?

We have the pre-independence and the post-independence relationship. As far as the pre-independence relationship is concerned, the colonial experience is what it was. But we also had during that period, the beginning of investment by some major British businesses that have helped to build our sectors as well. For instance, a key investor in the Ghanaian cocoa sector was Cadbury, which is now part of the Kraft Foods conglomerate. We also had Unilever, which, at that time, under a different company name, had also invested in Ghana and helped to create a marketing and distribution base. You had banks like Standard Chartered, and Barclays that came into Ghana pre-independence and continue to operate post-independence, and have helped to give depth to the banking sector.

You have a number of investments that have taken place since then, which have contributed to the deepening of our economy. I am confident that, for a number of reasons, it is going to grow. We are looking forward to parliament approving the concession agreement between Lonhro and Atuabo ports to develop the first oil services terminal in Ghana. We also have Tullow that was one of the first movers in the oil and gas sector, and since then has developed other fields as well.

Practically in every sector, there is investment from the UK, either FDI or joint ventures. Because of similarities in our legal and administrative systems, we understand each other’s systems, and that is a very important point for doing business. Because of that history and similarities, it allows ease of understanding of the operating framework in Ghana. That has been key to the strengthening of relations between Ghana and the UK. Also, because of the large diaspora, which is visible, even in politics, and through that process there has been a great understanding of Ghana. That created even more opportunities for us to work together and see how we can grow together.

The new British High Commissioner, Jon Benjamin, spoke about shared experiences with Ghana in terms of how to deal with the current financial slowdown. What do you think Ghana could learn from the way the UK responded to its own financial problems in recent years?

They went through a period of austerity. They cut costs as much as possible in order to reduce their deficits and they are beginning to see the outcome. We have to do the same, and have begun to take those measures. We hope to be able to see the tangible outcomes of those measures by the end of the year. It is always useful to learn from the experience of people who have been down that road in the recent past, to see how they were able to execute policies to change the situation.

Ghana has been a very active contributor to the Commonwealth. How does Ghana benefit from being a member of the Commonwealth and what are the shared values you have with other members?

The greatest asset is the English language, because it gives us means of communicating with other members. Having been former colonies of the UK, and having developed legal and administrative systems with significant inputs from the UK, it allows us to understand each other, to do business with one another, and have some sense of familiarity with the ways in which other governments work. It is not an accident that we had investment from other Commonwealth countries, because of the similarities in our systems.

One of the key things is a commitment to human rights, rule of law, and good governance. Those are some of the key shared values that we have with other members of the Commonwealth, and we continue to build on as we strengthen our relationships with each other. The Commonwealth could do more to promote more economic activity within the ambit of the Commonwealth. Maybe we should focus on doing that, and not only look at it from the social and political angle.

Last year, Ghana signed a High Level Prosperity Partnership with the UK. What are the potential impacts of this agreement and the concrete results it has produced so far?

We agreed to work together in three things. First, deepening the financial services sector; second, the development of SMEs; and third, to work together in the minerals and mining sector. The different ministries identified to be the key drivers of this partnership are working on the details of the arrangement, especially regarding the SME program. It was to be implemented in such a way that as the Lonhro port project was being implemented and executed, there was a deliberate effort to support the development of SMEs providing support services for the oil and gas industry. Specific facilities were to be developed within that project for SME businesses, to help create opportunities for them in this new sector of our economy.

In the financial sector, it was to look at the development of financial instruments to support SME financing, and also to have a look at improving the productivity of the cocoa sector. Cocoa is under the Ministry of Finance because of its significance for our economy.

We started this discussion last year in November, now the initiatives are being finalized. When these projects start to be implemented and executed, we will be able to see the concrete outcomes of the partnership.

Regarding the global African Investment Summit in London in October, why do you think Ghana stands out as the destination for FDI in the key areas to be discussed: power, natural resources, agribusiness and critical infrastructure?

When you look at African countries, you look at different strengths. Ghana and Togo have closely linked economies. We are a bigger country, the second largest economy in West Africa, and have greater economic diversity. We have a record of peace and stability in a competitive democracy, respect for rule of law, respect for property rights, and the commitment to build strong institutions that are independent of political entities.

We have reasonable assurance of the security of investments. The governments respect agreements of previous administrations. We also, as a result of our growing economy, are better connected to the rest of West Africa. We have continued to invest in our infrastructure to expand it even further; you need logistics to be able to connect to compete. With those elements, together with the promise that we have shown with our economic growth and potential of new industrial sectors – and not only oil and gas, but also services which has grown in the last years, contributing almost 50% of our GDP – we have more opportunities for a variety of businesses. That is why we think we are the most attractive investment destination in West Africa.