Business News of 2014-03-18

Protectionism hurting Kasapreko’s expansion drive

High import duties and strict market regulations in some African countries are inhibiting plans by Kasapreko Company Limited (KCL), an indigenous alcoholic beverage producer, to expand into other markets across the continent apart from the sub-region.
That is in spite of the rising demand for the company's products by people of all walks of life across the globe, including Europe, America and Africa in particular.
The Deputy Managing Director (DMD) of the Kasapreko, Mr Kojo Nunoo, who disclosed this in an interview, added that his outfit was planning to petition the Ministries of Trade and Industry (MoTI) and Foreign Affairs to look into the matter.
Speaking to the GRAPHIC BUSINESS on the challenges facing the company's expansion drive, which is hinged on exporting to other markets, Kasapreko's DMD said some neighboring countries had created artificial barriers that sometimes made Kasapreko's products uncompetitive in their respective markets.
The practice adopted by these African countries, chief of which is Nigeria and South Africa, is among measures taken to ensure that their local manufacturing companies thrived to creat the necessary employment avenues for their citizens.
It is also intended to limit the volumes of imports to protect their local currency against the major foreign currencies, including the United States dollar.
Although this is against the World Trade Organisation (WTO)?rules, these have been violated for long and instead of Ghana doing same to protect its industries, governments sit aloof on the fringes while industry is faced with major challenges and unfair trade treatment.
Today, many of such companies are on their knees and the impact is also being felt on the entire economy; the free fall of the cedi in recent times being a typical example.
"Most of these countries have very strict regulations that we need to comply with. South Africa, for instance, is no joke. There, you need to go through the Department of Agriculture, Customs, VAT and a host of other institutions for them to certify you before you can be allowed to import the product into that country," he explained on March 11.
Kasapreko's DMD, together with colleague management staff, undertook a market survey in South Africa about two weeks ago and he told the paper that their findings showed that the South African government was overzealous about its alcohol market, much to the detriment of imports, including those from their company.
Comparatively, Mr Nunoo said, while Ghana had a liberal market, South Africa, which has dozens of its wines and champagnes imported into the country, was overly protective of its market.
This can be expected because of the intention and it is amazing that the WTO which Ghana is scared of is not cracking the whip if there is any at all under the rules.
On the shelves of many shops in the country, South African drinks, key amongst them being Amarula—a major competitor to the famous Irish Cream, are litered all over and the demand is very high. There are also wines of different brands names among many others.
It is clear that the more Ghanaians consume the drinks, the more the industries that produce those drinks expand to employ more people while our local industries collapse for lack of patronage.
"When South Africa is charging 165 per cent of import duties, VAT and customs for a product, over here, we are charging a maximum of 50 per cent and that is the inconvenience. When it happens that way and you have to compete with the Johnny Walkers, then you are immediately priced out," Mr Nunno said.
The company is planning on adding some two production lines, each with a production capacity of 26,000 packs, to enable it to satisfy the growing demand in the country while expanding to outside markets.
Mr Nunoo was, however, worried the unfair trade practices and protectionism, which he says are also rife in Liberia and Nigeria, among other West African countries, could hurt that expansion drive should the government continue to make pledges to intervene without action.
"I think these are some of the things that our government and the trade agencies will have to look at to ensure that there is fair trade between us and our partners," he said, explaining that the company was looking at urging government to review its trade relations with countries closing their markets to Ghanaian exports.
Export earnings
Kasapreko, which is a closely held family business, currently exports large quantities of its products, including the flagship Alomo Bitters, to neighbouring countries such as Nigeria, Togo, Liberia, Côte d'Ivoire and a couple of European and American countries.
It got some US$19.46 million in export receipts in 2012 and that earned it the enviable the Exporter of the Year Award at the 23rd national export awards held late last year.
Although Mr Nunoo did not disclose the exact amount the company earned in 2013, he said indications were that last year's earnings could be twice as much as the previous year's receipts.