The ties that bind: An important player on both the regional and world stage

 

Ever since gaining its independence from the UK in 1957, sub-Saharan Africa’s first self-governing nation has strived to follow a path of cooperation and active participation in the international community. As one of Africa’s most stable and progressive democracies, Ghana’s influence in regional affairs and international diplomacy has been solidified over the years, aided by repeated efforts to strengthen the functioning of multilateral institutions.

MAKING A MARK: Historic involvement has given Ghana an array of well-known diplomats and a strong voice in the UN. Its active foreign policy has also seen it participate in peacekeeping operations across troubled areas of the globe. More recently, strong economic growth has renewed the focus on Ghana as an example of African development, and transformed it into the third-largest recipient of foreign direct investment on the continent.

Ghana’s first president, Kwame Nkrumah, a national hero and respected African figure, was one of the founders of Pan-Africanism. The movement influenced much of Ghana’s foreign policy over the following decades, cementing the country’s image as a solid member of the Non-Aligned Movement during the Cold War. Nkrumah’s efforts to unify newly independent African nations made him a founding figure of the Organisation of African Unity in 1963, which became the African Union in 2002.

In 1975 Ghana was one of the keenest adherents of the Economic Community of West African States (ECOWAS), to which it still belongs, allowing it a pivotal role in the development of intra-regional trade and the continuous lowering of trade barriers across West Africa. Politically and economically, Ghana has become a key player in African affairs. Besides the strong weight of bilateral relations with its neighbours, the country is a strategic ally for the US and European partners wanting to have a positive influence not only in Africa and expand North-to-South cooperation. In recent years, however, Ghana has also managed to balance the importance of traditional partnerships with burgeoning relations with emerging global powers. Political dialogue has led to stronger economic ties, as the country strives to promote investment opportunities with heavyweight economies such as China, India and Brazil.

UK PARTNERSHIP: Based on historic ties, Ghana has always had a very close relationship with the UK. The former colonial power became a strong partner after independence, promoting development programmes and helping to improve living conditions in the former Gold Coast and Togoland territories. Current plans to spend an average of $150m per year in Ghana until 2015 attest to the close relationship the two countries still share today.

Most assistance transfers are done through the UK’s aid agency, the Department for International Development, which has had a strong presence around the country through the financing of several health and education programmes. This proximity has been reflected over the years through the numerous reciprocal visits of high-ranking delegates from both countries. It also opened the door to an increasing number of British firms wanting to expand operations into Ghana, not only to the benefit from the country’s fast-growing economy, but also as a solid base to tap into markets in West Africa. The UK traditionally ranks as one of the country’s most important investors, in terms of value of projects. Since 1994 British investment in Ghana has amounted to $4.9bn. Today, business ties are expressed throughout most sectors of the economy, with British companies having an important stake in Ghana’s nascent oil industry, its telecoms sector, and in the burgeoning financial services industry. Cultural interactions are also important, as the UK hosts one of the biggest Ghanaian communities living abroad.

THE US & EUROPE: Despite not having an equally strong historical relationship, the US has quickly become one of Ghana’s most important Western allies. This has translated into regular high-ranking official visits across the Atlantic. Riding on the back of visits by former American President George Bush as well as President Barack Obama in 2010, the late Ghanaian President John Atta-Mills had become a regular visitor to the US over the years.

A big part of American policy in Ghana has focused on the enlargement of its development programmes through the US Agency for International Development (USAID). But the two countries have recently increased cooperation on other fields, such as joint military training exercises and cooperation, as well as shared efforts to combat drug trafficking.

Although several European countries have had individual historical ties with Ghana, it is the strength of the whole union that has made it such an important source of trade for the African country. Today, the EU is Ghana’s most important trade partner, with European exports to Ghana rising 35% in 2011 to a total of €2.91bn. In the opposite direction, Ghanaian exports into the EU have doubled over the same period, reaching €3.4bn in 2011.

Poverty reduction efforts and development goals have allowed EU assistance to Ghana to reach €367m for the 2008-13 period, through the European External Action Service. Current EU assistance focuses on transport connectivity and regional integration, governance and budgetary support.

EMERGED GIANTS: Bridging Africa and the East, China is fast becoming an active participant in Ghana’s economic development, through increased cooperation agreements and the further development of common business interests.

Trade with China currently accounts for 13% of Ghana’s total international trade. However, the relationship dates back to country’s independence. Ghana has a long history of supporting China in the international political arena. One sign of Ghanaian-Chinese relations can be seen in central Accra – the National Theatre building, which was partly financed with Chinese capital. China is already Ghana’s second-most-important trade partner, after the EU.

The acceleration of economic involvement took a new step when President Atta-Mills signed a deal that will allow $13bn worth of loan facilities from the Chinese government to be channelled to Ghana. Included in that package is a $3bn loan for the purpose of accelerating several infrastructure projects.

Priority will be given to energy sector, including the $850m dedicated to build the Western Gas Corridor Infrastructure project, which will establish the necessary structure to develop Ghana’s promising gas reserves from the Jubilee Field.

Chinese companies are also involved in other energy projects, such as the Sunon Asogli Power Plant and the ongoing building of the Bui Dam, which will add 400 MW of hydroelectric energy to Ghana’s national electricity production.

The China-Africa Development Fund, established in 2007 to coordinate Chinese investments and cooperation projects on the continent, recently announced it will be opening its West African regional office in the Ghanaian capital.

EASTERN PROMISE: India is another Asian giant with increasing interests. The countries share a strong link, as the first leaders of both liberated nations, President Nkrumah and Indian Prime Minister Jawaharlal Nehru, shared a close personal bond.

India is heavily invested in capacity-building efforts in Ghana, training professionals in areas such as agriculture, management, information technology and small business creation. This assistance has been complemented by a series of scholarships that have allowed Ghanaian students to take part in higher education studies in Indian universities.

Business is growing. India’s exports into Ghana reached $658m in 2011. Repeated visits by Indian business delegations have led to an increase in investment by Indian firms wanting to capitalise on the opportunities of the Ghanaian economy.

Indian businesses have been focusing their attention in sectors like construction, manufacturing, pharmaceuticals and agro-processing. Information and communication technology (ICT) is also an area of cooperation, as exemplified by the establishment of the India-Ghana Kofi Annan Centre of Excellence for ICT. Also in the works is a $1.2bn fertiliser plant that would allow production for Ghana and the whole region, impacting the continent’s agriculture sector.

BRAZIL NUTS: Another country that is increasingly using its close proximity with Ghana as a gateway to the continent is Brazil. Brazilian companies are heavily involved in infrastructural development projects across the country, such as the Eastern Logistics Corridor project and the revamping of Tamale Airport into an international capacity facility. This increased cooperation has also expanded into the field of agricultural development. Politically, meanwhile, the countries are increasing their bilateral ties and intensifying South-to-South cooperation, indicating that Ghana’s role in the international community will only get stronger over the years to come.

Share

You have reached the limit of premium articles you can view for free. 

Choose from the options below to purchase print or digital editions of our Reports. You can also purchase a website subscription giving you unlimited access to all of our Reports online for 12 months.

If you have already purchased this Report or have a website subscription, please login to continue.

Cover of The Report Ghana 2012

The Report

This article is from the Country Profile chapter of The Report: Ghana 2012. Explore other chapters from this report.

Covid-19 Economic Impact Assessments

Stay updated on how some of the world’s most promising markets are being affected by the Covid-19 pandemic, and what actions governments and private businesses are taking to mitigate challenges and ensure their long-term growth story continues.

Register now and also receive a complimentary 2-month licence to the OBG Research Terminal.

Register Here×

Product successfully added to shopping cart