Interview: Kadri Alfah
How can storage infrastructure be improved?
KADRI ALFAH: Ghana is currently only able to meet 20% of its warehousing needs. Recognising this challenge, the government has created the One District, One Warehouse initiative to increase capacity. However, some districts require greater capacity than a single warehouse can provide, especially in key industrial areas. There is also demand for more grain silos, as this will further reduce post-harvest losses incurred through insects and disease. In addition, improved cleaning, drying, grading and bagging equipment will help ensure that agricultural commodities are appropriately processed and stored. This will not only reduce waste but also ensure higher-quality products, better prices for farmers, lower inflation and help the country overcome issues of food insecurity.
In your view, what needs to be done to expand the commodities trade in the West African region?
ALFAH: A harmonised set of policies is essential, as we need to have common standards. At the moment, there is not enough knowledge about the regulatory environment of other countries in the region, including commodity grades and warehousing standards. Further challenges include the lack of stable exchange rates and the absence of an efficient method to change currencies. Effectively addressing these issues will require the creation of a regulator for the whole region.
Looking at the regional markets with the greatest potential for expansion in terms of the commodities trade, Côte d’Ivoire is very important. There is already significant trade between Ghana and Côte d’Ivoire – especially in staple crops – but this is largely informal. We therefore need to identify the trade routes, create institutions, build infrastructure and increase warehouse capacity to help formalise this trade. Formalisation will also help broaden the tax bracket and benefit the national governments of all the countries involved. At the GCX we expect to start looking at the issue of regional trade by 2020, with feasibility studies having commenced in 2019. Ultimately, we want merchants throughout the region to be able to use their smartphones to trade electronically and buy and sell commodities from across West Africa. Furthermore, we expect to host commodities futures markets by 2021. In Ghana – unlike in some countries that have more developed commodity markets – there are no mandated commodity classes and relatively low volumes of commodities. Some of the commodities we wish to trade on the exchange cannot be spot traded, including crops such as paddy rice, as well as minerals, gold and hydrocarbons. Therefore, we will first add more spot trading contracts for food staples, then incorporate all of the tree crops, including coffee, cocoa and palm oil. Following this we will look to integrate hard commodities such as minerals and gas by 2022. In order to ensure the success of the commodities exchange, we need a balanced and diverse portfolio of products, with commodities gradually phased in with the certainty that there will be liquidity.
What barriers are there to increasing exports?
ALFAH: Most of our farmers cannot export to the EU as they are unable to meet the necessary standards. The country’s exports are also generally constrained by low production volumes. Overcoming these hurdles, opening up new opportunities and entering new markets will require standardisation and regular training. We need to have many more processing plants and to develop a reliable method to limit post-harvest losses, which can be up to 80% in the case of vegetables. Connectivity between farms and markets is also weak due to an underdeveloped transport and logistics network. Furthermore, factories producing secondary agricultural products are facing a lack of sustainable, good-quality inputs.
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