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German companies urged to invest in regional trade hub

Article - March 28, 2012
Industry and trade are getting a boost from record rises in foreign direct investment and the state's multimillion-dollar SME schemes
HANNAH TETTEH, MINISTER OF TRADE AND INDUSTRY

Ghana has often taken the lead in Africa. From gaining independence and establishing democracy to its now potentially transformational economic growth, it is becoming one of the top African choices for foreign investment and trade, with major enterprises such as BASF, Bayer, VW, Mercedes, Nestle, Samsung and Unilever setting up regional bases in the country.

Record GDP expansion of 13.6 per cent last year places it as the world’s second fastest-growing economy last year, after Qatar. Abundant natural resources, a low crime rate, competitive wages, a labour pool of around 10.7m people and a solid macroeconomic environment also characterise Ghana’s investment profile. Such advantages helped attract almost $7bn in foreign direct investment in 2011.

However, challenges ahead for Ghana include stemming the migration of people from rural to urban areas, and generating jobs for Ghana’s youth, particularly through the launch of small and medium-sized enterprises (SMEs) and creating more agricultural projects.

 

“The private sector initiative is not only about attracting large enterprises; it is about having different levels of business, all providing different goods and services.”

Hannah Tetteh, Minister of Trade and Industry
In anticipation of a busy year, the 2012 Budget allocated about GH¢157.4m ($91.2m) to the Ministry of Trade and Industry, which has announced plans to train more than 150,000 people in artisanal vocations. Starting in 2012, its Rural Enterprise Programme is expected to create more than 66,000 SMEs in 160 districts across the country. The programme is part of the government’s second Private Sector Development Project and will see the launch of such micro-business activities as hairdressing, dressmaking, tie dyeing, welding, painting, fish farming, animal husbandry and agro-processing. The International Fund for Agricultural Development (IFAD) has earmarked $39m to kick-start the $170m, eight-year initiative.

“This is a very important part of our private sector development initiative because we are looking at the development of micro, small enterprises,” says Minister of Trade and Industry Hannah Tetteh. “The private sector initiative is not only about attracting large enterprises; it is about having different levels of business, all providing different goods and services,”
 
In addition to championing SMEs and encouraging entrepreneurship in the nation’s youth, the Minister has also been pushing for closer relations with Ghana’s West African neighbours through its membership of Economic Community of West African States (ECOWAS) to increase inter-regional trade. At the launch of the new Border Information Centres at Aflao and Kojoviakorfe in Ghana and Togo respectively last August, which provide information on trade and border procedures and were created by the USAID West Africa Trade Hub, Ms Tetteh said: “While total ECOWAS exports by 2009 estimates amounted to a whopping $70bn, intra-ECOWAS trade was only at a regrettable $6bn.” She commended the new centres for seeking to support the private sector, reduce supply chain costs for exporters, and complement the efforts being made by both national governments towards job creation and poverty reduction.

National agencies offering both local and international investors advice on the opportunities available in Ghana include the Ghana Export Promotion Council (GEPC), Ghana Free Zones Board (GFZB), Ghana National Petroleum Corporation (GNPC) and Ghana National Gas Company (GNGC). Opportunities for private sector initiatives and public-private partnerships with international companies exist across the board, for example in the areas of agriculture, banking, tourism, mining and power distribution.

Today, Germany is an important trade and investment partner and is one of Ghana’s most important sources of imported passenger vehicles, machinery and chemical products. However, most of Ghana’s imports – mainly capital equipment, petroleum and foodstuffs – come from China (16.6 per cent), followed by Nigeria (12.7 per cent) and the US (8.4 per cent). The total value of imports rose around 28 per cent in 2011 to $14.03bn, up from $10.95 in 2010.

Ghana’s main exported commodities include gold, cocoa, timber, tuna, bauxite, aluminium, manganese ore, diamonds and horticulture. In all, 11.7 per cent of Ghana’s exports headed for the Netherlands in 2010 and it is Ghana’s top export partner, followed by the UK (7 per cent), France (5.7 per cent) and the US (5.6 per cent). Total exports reached an estimated $13.13bn in 2011, marking a substantial increase of more than 66 per cent on the $7.89bn-worth of exported goods in 2010.

On top of a record cocoa harvest of more than 1m tonnes last year, and soaring gold exports of $2.8bn, Ghana began pumping oil from its newly tapped offshore Jubilee field for the first time in 2010. The additional petroleum earnings will enable Ghana’s government to leverage loans towards building infrastructure to process gas, increase electricity output and reduce costs.

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