Business News of 2014-07-15

Ghana wastes export potential — Exporters

But for the country's lack of vision and shaky commitment to ensure industrial development, the Bank of Ghana (BoG) would have been reporting trade surpluses annually and not the deficits since 1957, exporters have observed.

The exporters, made up of players in the drug manufacturing, the fruit, vegetables and beverage industries, said the country's location in the tropics and nearness to Europe gave it an upper hand in the export business over its counterparts, which are doing comparatively better in that regard.

The call comes at a time when the country is almost cash-strapped as a result of the falling prices of the major export commodities, cocoa and gold on the international market. For many decades, the two commodities have been heavily relied upon by governments for revenue to cushion the economy.

However, in spite of the major shocks the reduced prices of the commodity on the market gives the economy, not much effort has been made to ensure that the huge potential in other areas of production is heavily developed to balance off. The phenomenon raises serious questions about government’s commitment to making the exports sector more vibrant to ensure a balance in trade.

"Unfortunately, however, this advantage has not been fully exploited to our benefit," one of them, Mr George Kporye of Golden Exotics Limited (GEL), bemoaned in an interview.

"If you attend international trade fairs, you see a whole range of products coming from countries like Brazil, Costa Rica, Columbia and the rest but why we (Ghana) are not going into those kinds of businesses is strange," he told the paper on July 9, 2014.

Mr Kporye, who is the Corporate Affairs and Administration Manager of the company, and Mrs Juliana Opuni of Joekopan Enterprise, spoke to the paper ahead of today’s GRAPHIC BUSINESS—Fidelity Bank Breakfast Meeting on the export industry today.

The meeting, the first in the series for the year, is on the theme: 'Maximising Value of Exports to Improve Ghana's Trade Balance.' It will bring together key players in the sector to deliberate on pertinent issues affecting the industry and suggest solutions to them.

While urging increased investments in agriculture, Mrs Opuni, who was adjudged Woman Exporter of 2013, said the country needed to capitalise on its vantage location, conducive atmosphere and prioritise investments in agriculture or risk missing out on exports.

"Look at East Africa, they don't have the advantages we have; their weather is not as good as ours, there's not enough land and the place is farther from Europe compared to us but they produce and export a lot of vegetables and other fruits but we don't," Mrs Opuni, whose company specialises in the production and export of Asian vegetables, said.

Yawning trade imbalance

Ghana's balance of trade, which is the difference between the value of imports and exports, has been in the negative since independence. The deficit was US$3.1 billion but worsen to US$4.3 billion in 2012 before slowing to US$3.8 billion in 2013 on the back of a 2.7 per cent decline in non-oil imports that year.

Although the deficit results mostly from the country's ever-increasing appetite for foreign products, Mr Kporye said the real commitment to helping industries export more could have tamed the overall impact on the deficit while ensuring that the country gets more foreign exchange to cushion the falling cedi.

"Burkina Faso is exporting a lot of French beans; they are exporting carrots and tomatoes; all in huge volumes but we (Ghana) can even do these things better, but we are not doing that, why?" Mr Kporye, whose company pioneered banana exports in the country, asked.

Tomatoes, which Ghana has a comparative advantage over its neighbours in the sub region, is now being imported from neighbouring Burkina Faso and other European countries much to the detriment of the country's balance sheet.

The Pwalugu Tomato Factory, now Northern Star, was meant to process excess tomatoes for the export market but has been run down because of the lack of funds. Pledges on every election year by politicians are yet to be fulfilled to revive the ailing company.

Way forward

Mr Kporye and Mrs Opuni thus advised government to prioritise its spending by investing in key infrastructure that would support the growth of export-oriented companies.

Mr Kporye mentioned the need to acquire and service arable lands for onward leasing to agriculture-oriented investors, build the capacity of players in the sector and offer soft loans to exiting companies to be able to compete with their foreign counterparts.

Mrs Opuni also urged government to construct more dams nationwide to ensure all-year-round farming as against the current situation where farmers are limited to only the rainy season.