Business News of 2014-06-10

GEPA takes steps to improve earnings from non-traditional products

The Ghana Export Promotion Authority (GEPA) is taking various steps to increase earnings from the country’s non-traditional exports.

The move is intended to help the country close its gaping current account deficit.

The deficit, which stands at 12.8 per cent, has been predominantly responsible for the depreciation of the local currency. It took a sharp nose dive from the beginning of the year and has to date, shed 21.29 per cent of its value to the United States dollar as of April 30.

Although non-traditional exports (NTEs) recorded almost the same numbers in 2013 as the previous year, it is on course to reaching a national average target of US$5 billion by 2017.

Earnings from NTEs for last year amounted to US$2.44 billion, an increase of 3.05 per cent over the previous year’s earnings of US$2.36 billion.

These have incentivised the GEPA to institute measures, including the training of experts managers and working with exporters, such as smallholder farmer groups, to improve farm practices and obtain international licences to enable them to export to bigger markets outside West Africa.

Training beneficiaries

The acting Chief Executive Officer of the Ghana Export Promotion Authority (GEPA), Mr Gideon Quarcoo, announced at the 75th National Exporters Forum in Accra on May 28 that a total of 230 exporters of non-traditional products participated in eight international fairs last year, under the auspices of the GEPA with funding from the Export Trade, Agricultural and Industrial Development Fund (EDAIF).

In addition, 22 exporters of fruits, vegetables and natural ingredients took part in a Contact Promotion Programme in The Hague, The Netherlands. The programme is a collaboration between GEPA and the Dutch Centre for the Promotion of Imports from Developing Countries (CBI).

GEPA also worked with CBI and other local certification bodies to assist farmers to improve on good agricultural practices to enable them to comply with the global certification, GLOBALGAP.

He said an additional 334 export managers were trained in export marketing fundamentals; 13 GEPA staff trained in market intelligence with the same number from the foreign service trained on how efficiently to engage in commercial representation in Ghana’s missions abroad.

According to Mr Quarcoo, 54 woodcraft exporters were also trained in contemporary product development and adaptation.

Current account

Last year, the country’s overall balance of payments deficit remained largely unchanged at US$1.2 billion. This was mainly due to deterioration in the current account, according to the April release from Monetary Policy Committee (MPC) of the Bank of Ghana.

The current account deficit widened to US$5.7 billion from US$4.9 billion recorded in the corresponding period of 2012.

While the country exported merchandise amounting to US$13.8 billion in 2013, compared to US$13.5 billion a year earlier, its imports rose from US$17.8 billion in 2012 to US$17.6 billion.

Worse of all, its earnings from traditional exports such as gold fell from US$5.6 billion in 2012 to US$5 billion, while export of cocoa beans also declined from US$2.2 billion in 2012 to US$1.6 billion, due to lower export volumes.

Oil exports, however, improved from US$3 billion to US$3.9 billion, as a result of increased production.

Performance of NTEs

According to the export promotion authority, after a steady annual growth in NTE earnings from 2001 to 2008 - at rate of about 16.4 percent with the highest rate of about 30.4 percent occurring in 2007 – the sector was hit by the global economic meltdown in 2009, which made earnings fall by 9.38 percent from US$1.34 billion in 2008 to US$1.22 billion in 2009.

In 2010,earnings from the sector went up by 34.1 per cent to US$1.63 billion and by 48.74 per cent in 2011 to US$2.42 billion.

The contribution of non-traditional exports to total exports has been chequered, one of the reasons that informed the National Export Strategy that aims at raking in US$5 billion from NTEs by 2017.

Last year, the US$2.44 billion inflow from NTEs amounted to 17.2 percent of Ghana’s total exports. The percentage contributions in 2008, 2009, 2010, 2011 and 2012 were 25.75 per cent, 29.11 per cent, 27.98 per cent, 18.95 per cent, 17.46 per cent and 17.20 per cent respectively.

Outlook

GEPA acknowledged the effects the current economic imbalances in Ghana’s economy could have on the export sector, but expressed optimism that measures instituted by the government to mitigate them would yield the desired results.

The acting CEO of GEPA also called on the President, Mr John Dramani Mahama, and other ECOWAS heads of state to sign the Economic Partnership Agreements (EPAs) with the European Union (EU) to ensure sustained exports to the EU market.

More than 40 per cent of Ghana’s exports, NTEs especially, go to the EU market for which the EPAs would help to sustain.