Over the years, the non-traditional export sector has been identified as an area that could supplement Ghana's foreign exchange earnings. Apart form seeing the sector as a potential exchange earner, very little has gone into propping it up. The woes of Volta River Estates Limited (VREL), the only commercial producer of banana for export has been well documented. The company earns between US$1.5million to US$1.8 million per year. But over the years it has not received the needed support to increase its presence on the international scene.
Last Thursday, the management of VREL made yet another appeal to the government to provide financial and logistical support to entice more investors into the production of banana.
The large-scale production of banana would open up the industry, create employment and enable Ghana to take advantage of positive changes that are likely to emerge out of the ongoing negotiations between the European Union and World Trade Organisation on behalf of the African Caribbean and Pacific countries.
The management also appealed to the Ministries of Trade and Finance to maintain Ghana's current status and support the draft proposal by the EU for a waiver for its preferential market access arrangement with ACP countries. The draft, it was learnt is in Ghana's interest and a reversion to the old agreement could spell doom for the industry.
These issues came to light when a select group of members of the Institute of Financial and Economic Journalists (IFEJ) paid a facility visit to plantations of the company to acquaint themselves with problems of the company and bring them to the notice of the government.
The Export Manager of VREL, Kwame Yeboah Afari said the negotiations between the European Union and the World Trade Organisation which borders on increasing quota to ACP members could open the way for Ghana to increase banana exports.
The World Bank has estimated that Ghana needs to produce close 60,000 tonnes a year to make her banana industry sustainable. Afari said Ghana is currently doing just 5,000 tonnes a year, while Cameroun and Cote d'Ivoire are producing the same figure every fortnight. These figures show Ghana has a lot of catching up to do. To make an impact on the international market Ghana needs to make up for the shortfall of 55,000 tones. By its projections, the company plans to reach 7,000 metric tonnes by 2002.
"There's very little VREL can do to improve the situation unless the financial institutions show interest in funding banana production. That is the more reason why the government needs to encourage more investors into the industry by providing the needed support," he advised.
The export manager said the multiplier effect of increased production could benefit other sectors of the economy. At the moment the company imports curtains, twine and other packaging materials, but if production goes up some firms could start producing packing materials for VREL.
Asked why the company was not taking advantage of the Libyan market, Mr. Afari said at the moment the European market is the most lucrative. He explained that delivery time to Libya is very long and makes the banana go bad on arrival.
VREL has a long term plan to go into organic production of banana and is currently carrying out some experiments to start full time organic production by November this year. The General Manager, in charge of Agriculture, Anthony Kofi Blay said because of the high demand for organically produced banana in Europe, the company has obtained a loan of 1.5 million Dutch Guilders from the Netherlands to establish an organic plantation at Akuse, one of its sites.
Blay said at the moment the company has carved a niche by doing fair trade, using less artificial fertilizers and promoting socially and environmentally acceptable methods of production.
VREL is one of the pioneers of private sector initiative to diversify the country's exports. But since it started operation, the going has not been easy. First, was the limited quota that restricted its banana to the European market.
Its most daunting challenge perhaps, is its inability to raise loans locally for expansion. Management is not happy that over the years, the Agricultural Development Bank, which has the mandate to promote agriculture, has shied away from granting it loans. As a result the company has had to rely on foreign loans with the accompanying high interest rates to finance its projects.
Paying back such loans, and interests accruing thereon have combined to erode the company's profit margins. With more than 700 employees at its four sites, the company is going through trying times to maintain them.
The plight of VREL once more demonstrates how the country has paid lip service to private sector development and export diversification. This is now the era of the "Golden Age of Business" and it remains to be seen whether the sector ministries would wake up to the call to launch Ghana into the non-traditional export drive.
