On solid footing: Strong exports and production performances support the nation’s status as a regional centre

Given the country’s growing consumer population, limited product penetration and stable business environment within ECOWAS, the manufacturing sector in Ghana has impressive potential. However, in recent years, secondary activity has experienced some issues, and industry growth has not quite matched the spectacular expansion seen in other sectors. Like many West African countries, Ghana’s dependency on commodities – such as gold, cocoa and now oil – has taken precedence over industrial output growth. Indeed, manufacturing contributed 10.2% to GDP in 2006 but just 6.9% to GDP in 2012. Compared to neighbouring countries, Ghana scores well in terms of competitiveness. “Within the sub-region, we have an advantage,” Nii Ansah-Adjaye, the chief director of the Ministry of Trade and Industry (MoTI), told OBG, echoing the analysis of government and industry leaders alike.

STATE OF MANUFACTURING: Ghana’s economy remains driven largely by the production and export of raw materials. This can be seen in recent performances; even as GDP grew at 14.4% in 2011, the manufacturing sector saw expansion of just 1.9%, according to local media. The industrial sector is well placed to benefit from commodity production, although it has not yet fully capitalised on the gains from transforming natural resource wealth into value-added finished goods. While cocoa beans and products are Ghana’s thirdmost-valuable export, earning $2.8bn in 2012, the lion’s share of this is raw cocoa. Around 95% of cocoa bean output goes abroad for processing, said the president of the Ghana National Chamber of Commerce and Industry, Seth Adjei Baah, in an interview with local media in June 2013. “We are the second-highest producer of cocoa in the world, and the best-quality cocoa in the world comes from Ghana. Why shouldn’t we add value to it here so we can export chocolate to you?” Baah said. “We need to embrace agro-processing.”

Gold, oil and cocoa comprised 84.5% of Ghana’s total exports in 2012, according to Bank of Ghana data. Dominated by aluminium, cosmetics and plastics, processed goods are categorised under “non-traditional” exports, which declined from $2.4bn in 2011 to $2.3bn in 2012. Even in the domestic market, manufactured goods must also compete with cheap imports from producers like China and Nigeria.

Imports of consumer goods increased to $902.2m in the fourth quarter of 2012, up 11.2% compared to the same period in 2011. Inflows of durable consumer goods and non-durable consumer goods grew 39.2% to $18.1m and 25.6% to $34.1m, respectively. Still, the long-term fundamentals are extremely attractive, and with the economy expanding and incomes rising, importers are eager to meet growing domestic consumer and industrial demand. The country’s population of 26m has seen per capita gross national income increase nearly five-fold in the last decade, rising from $280 in 2002 to $1550 in 2012, according to World Bank data, and in 2011, Ghana was classified for the first time as a middle-income country, although this was partly the result of a statistical rebasing.

SCOPE FOR GROWTH: While much of the increased demand is met by imports, Ghana’s growing market is supporting investment and a rise in local production, particularly in the fast-moving consumer goods (FMCG) segment. Operational costs are high in the brewing market, for example, but penetration levels are low enough and growth potential large enough that local production is worth it. “If we can raise consumption from five to seven litres per annum, it will be attractive,” said Gregory Metcalf, the managing director of UK-headquartered brewing and beverage company SABM iller’s Ghana subsidiary. Increasingly, producers of FMCGs are setting up shop locally. According to the Ghana Statistical Service, within the manufacturing sector, the food and beverage industry is the largest contributor to the economy, accounting for 30% of manufacturing value added in 2011. Production of furniture and wood products, chemicals and chemical products, and garments and textiles contributed 23%, 13% and 9.5%, respectively, to manufacturing value added in the same year.

Manufacturers of lower-value consumer goods are generally fairing better than producers serving the industrial market. Locally produced steel, for example, is sold almost exclusively for small-scale residential development. The firms constructing Accra’s rising residential and commercial towers import steel rods and girders from abroad, said Tony Sethi, the managing director of Steelco Ghana, a wire rod-processing facility producing nails, binding wire, concrete reinforcing mesh and cold-drawn reinforcing bars.

This behaviour is reflected in other sectors as well, with imports often fulfilling demand for the majority of processed inputs and equipment. While the mining sector increased spending on local inputs to $1.2bn, according the Chamber of Mines, this included foreign-produced goods distributed locally, and the vast majority was produced abroad. Indeed, imports of intermediate and capital goods grew by 6.4% and 19.9%, respectively, in the fourth quarter of 2012.

The limited local production of industrial inputs offers opportunities for those who do it well. United Steel, for example, is undergoing a $100m expansion and plans to produce the nation’s first hot-pressed rebar, undercutting imported rebar by 10%, its managing director, Abdul Majeed Mikati, told OBG.

EXPORT POTENTIAL: Ghana’s currently low export and production levels belie its enormous potential. From FMGC companies to pharmaceuticals manufacturers, investors see Ghana as a potential production centre for the regional market. Perhaps its greatest comparative advantage is its relative economic and political stability in a volatile region. “It is our number one attraction,” John Defor, policy research officer at the Association of Ghana Industries (AGI), told OBG.

Nestlé moved its regional headquarters to Ghana in 2006, and Blumberg Grain announced plans in July 2013 to build a regional hub in northern Ghana. The country’s attractiveness as a base of operations should increase as connectivity improves. While transport costs are still high by global standards, new roads between ECOWAS countries, like the Abidjan-Lagos motorway, are opening new connections and lowering costs.

Beyond offering political stability, Ghana’s trade agencies have also adopted pro-business regulations and a range of investment incentives. “Ghana is one of the safest investment destinations in Africa,” the director of research and Investment at the Ghana Investment Promotion Centre (GIPC), Kofi Sakyiama Antiri, told OBG. FDI to manufacturing, 2006-12 Indeed, the World Bank ranked Ghana fifth out of 46 sub-Saharan economies on the Ease of Doing Business Index in 2012. Within the ECOWAS sub-region, the closest competitor was Nigeria, ranked the 14th most conducive to starting and operating a firm. Ghana scored particularly well on protecting investors and enforcing contracts. The current regulatory structure allows foreigners to own 100% of local firms, transfer all the profits from their investments abroad and specifically protect against expropriation.

Through the GIPC, businesses can register within three days, and can access property though the agency’s land bank. Producers that export 70% of annual production qualify for additional free zone incentives, including exemption from import duties on raw materials, from income taxes for 10 years and from payment of withholding taxes. Further, the government’s lenient free zone policy allows companies to access these benefits from almost anywhere in the country, even establishing single-factory free zones if the firm chooses to operate outside designated locations.

In July 2013 Ghana’s President John Dramani Mahama announced a stimulus package to boost agribusiness, pharmaceuticals and textiles through investment, credit and import substitution. Further, the MoTI adopted an industrial planning project running from 2011-15 that focuses on building capacity through improving technology and skills across sectors. “The project aims at making Ghanaian products both domestically and internationally more competitive,” Ansah-Adjaye told OBG.

HEADWINDS: Ghana’s comparatively strong fundamentals do not mean there are no challenges. All along the supply chain, from securing electricity to transporting goods and paying unpredictable taxes, manufacturers face constraints, although some analysts make a distinction between short-term difficulties like access to power and some broader structural challenges such as a shortage of skilled labour, relatively high wages and low productivity that must be tackled.

POWER: Ensuring electricity supply is a constant challenge in West Africa, but Ghana has long fared better than most. Nigeria, for example, has a population of 160m and a generating capacity that is equivalent to a medium-sized European town, often leaving manufacturers wholly dependent on self-generation. Electricity production in Ghana, on the other hand, has managed to generally outpace demand.

Still, ensuring adequate supply remains a challenge, and in early 2013 a power crisis loomed large over domestic producers. Lack of electricity supply was the number one constraint on manufacturing growth, according to AGI’s second-quarter 2012 “Business Barometer” report, a survey sent to AGI’s 1200 members. A similar 2006-07 power crisis cost the country 1% in GDP growth, according to the World Bank. “A reliable supply of electricity is imperative. The financial costs of these power cuts severely hinder the growth of companies in Ghana,” Arthur Huberts, CEO of leading water pipe producer Interplast, told OBG.

The most recent crisis was triggered by fuel shortages when the West African Gas Pipeline was damaged by a rogue Togolese ship, as it delivered natural gas from Nigeria in August 2012. Although the government sourced heavy fuels to compensate for the loss, without the fuel to run the country’s larger gas-powered plants, generating capacity fell close to electricity demand and the Volta River Authority (VRA) began a programme of managed load shedding.

“It has serious indications in terms of costs,” said Defor. “There is not enough power, it is not the right kind [of power] and we have unannounced outages.” The generation and transmission sectors have struggled in part due to underinvestment, which has led the government to increase tariffs to cost-recovery levels. This should improve reliability, although it will affect costcompetitiveness for large consumers. The Power Utilities Regulatory Commission, which sets prices, has suggested a 166% increase in the tariff price to offset the costs of future investment. Ghana’s electricity is currently subsidised and sold at similar rates to power in Europe. However, domestic power infrastructure needs about $4bn of work in the next 10 years just to keep pace with demand, according to the World Bank.

Contribution to value addition by segment, 2011 Manufacturers who spoke to OBG are sceptical that power supply will improve with a price increase. “It’s not about the tariff, it’s about quality,” said Defor. A similar hike was sold as the price of improved service in 2011 but supply remained unreliable. “It says something that they can’t keep their word,” Defor told OBG.

Despite the shortages, the country’s power supply is, in fact, in a much better state than that of its neighbours. In the World Bank’s 2012 Ease of Doing Business Index, Ghana ranked as the third-best country for electricity access in sub-Saharan Africa, after only Mauritius and Rwanda. That ranking may very well improve in the medium term, given that power agencies have plans to address the current crisis, including constructing an additional 1000 MW in the next two years, upgrading transmission and distribution infrastructure, and tapping local gas for fuel supply. The VRA has had difficulty recruiting private sector providers until recently, though General Electric signed a memorandum of understanding (MoU) with the Ministry of Energy, committing to coordinating the financing and construction of a 1000-MW power complex. The massive investment value is a source of growing optimism about the viability of Ghana’s power grid (see Utilities chapter).

OTHER INFRASTRUCTURE NEEDS: Although the country has water in abundance, access to the resource is also a challenge. Manufacturers can count on stateprovided water supply only a few days a week and must invest in storage tanks or individual wells. A whole support segment has emerged to provide water to local industry. In 2012 and 2013 so many of its neighbouring plants drilled boreholes that SABM iller saw the water level fall in the well used for its mineral water business. Another beverage company, Guinness Ghana, moved brewery production to Nigeria for a few months due to the difficulties of getting water, Defor said.

As in the utilities sector, transport infrastructure has not kept pace with the country’s rapid growth. Congestion at Ghana’s Tema Port is increasing as well (see Transport chapter). “Vessels are just parked outside the port, wracking up high costs,” said Imad Wolley, the managing director of Koala supermarket. “There is currently a 10- to 15-day wait, but it’s getting worse. If they don’t do anything, we’re going to end up like Nigeria.”

The government has acknowledged the problem and, in the summer of 2012, Hannah Tetteh, who was at that time the minister of trade and investment and now serves as the minister of foreign affairs and regional integration, told local media that $500m would be spent on upgrades at the Tema and Takoradi harbours. Roads have also deteriorated due to overuse by heavy trucks, and congestion has increased as more cars fill the one-lane highways. Still, in the context of Africa’s emerging markets, Ghana’s transport costs do not rank as a major constraint to doing business. “The issue is common to Africa,” said SABM iller’s Gregory Metcalf. “Roads are not the biggest complaint by far.”

PRICING INPUTS: The depreciation of the cedi, Ghana’s currency, regularly features as one of the topmost concerns on AGI’s quarterly “Business Barometer” survey. The cedi declined 14% in 2012 and is forecast to drop 5% in 2013, according to the Ghana Commercial Bank. The falling cedi increases a number of costs for manufacturers, including the price of raw materials, the tax burden and the cost of credit. As the bulk of industrial inputs are secured abroad, manufacturers are hit particularly hard by fluctuating exchange rates. Government duties on imported raw materials are calculated as a percentage of the foreign currency price, thus increasing the tax burden when the cedi falls.

ACCESS TO FINANCE: Ghana’s manufacturers frequently cite limited access to finance and the high price of credit as barriers to expansion, which is perhaps unsurprising given the fact that thanks to Treasury bills, interest rates generally exceed 22% for all but the largest blue-chip firms. Only 22% of Ghanaian firms have access to loans, and among smaller companies, only 13% have a line of credit, according to International Finance Corporation data. Firms that can access finance face interest rates of up to 32%.

“The number one issue is finance,” said Luiz Carlos da Silva, the project manager for Coral Paints Ghana. “It is almost impossible to achieve growth with banks, so you have to grow organically.”

LABOUR: There has been a push in recent years to improve the country’s human resources. The level of productivity is competitive by regional standards, but is considered low globally, while the price of wages is relatively high. Ghana was ranked 97th out 144 countries in terms of the connection between pay and productivity, scoring 3.1 out of 7 on the 2012-13 World Economic Forum’s “Global Competitiveness Report”.

“The human element is the biggest problem”, said Yasser Aschkar, the managing director of Wire Weaving Industries (Ghana), told OBG. “You pay middleincome country wages, but productivity is very low.”

Most domestic firms must invest extensively in training initiatives. To train their Ghanaian staff, Coral Paints sends its manufacturing technicians to Brazil and South Africa, and both the marketing and decorating teams to England. On larger infrastructure projects like the construction of gas pipelines, foreign technicians may work alongside Ghanaians and train locals on the operation of the equipment for several years into the project. Manufacturing contribution to GDP, 2009-12 Meanwhile, manufacturing employers are often required to offer generous benefits, including health care, housing and funeral costs, for the employee’s entire family. The highly unionised labour force allows for limited flexibility in labour relations. Laying off an employee costs 50 weeks of salary in Ghana, making redundancy costs among the highest in the world according the Global Competitiveness Index.

TARGETING SUCCESS: While the government offers numerous incentives for manufacturers setting up shop in Ghana, over the long term, fiscal pressure is regularly cited as a constraint on manufacturing growth. One industry executive that OBG spoke with said that although the government gives a lot of incentives to attract retailers, it still needs work to retain them.

The corporate tax rate is 25%, but in June 2013 the government announced plans to introduce a 5% stabilisation levy on specific sectors, including mining, brewing and telecommunications. Manufacturers who spoke to OBG felt as though their track record of reliability as taxpayers has led to increased scrutiny from the government. Most firms have been audited every year. “We do sometimes feel that we’re an easy target for revenue collection,” SABM iller’s Metcalf told OBG.

On average, 65% of the selling price for SABM iller’s Ghana products is tax, he said. Still, the government is hoping to reduce the overall fiscal burden and improve collection efficiency to enhance the country’s investment attractiveness. “There are so many scattered costs in terms of licensing,” said the MoTI’s Ansah-Adjaye. “We are looking at how to improve trade facilitation factors.”

MARKET ACCESS: The current transaction costs tied to trading within the ECOWAS countries prevent Ghana from harnessing its full potential as a regional manufacturing centre. The ongoing efforts to reduce trade barriers have produced some positive results, and as implementation continues, Ghana will be a top choice for production and distribution to West African markets. Founded in the 1970s to promote economic integration, ECOWAS has made strides in terms of visa-free movements of people and reducing some trade tariffs. However, informal transaction costs, including language barriers, Customs delays and bribes, remain high.

“It is more cost-effective to ship paint from Brazil to Burkina Faso than from Ghana to Burkina Faso,” Da Silva said. Nevertheless, the paint distributor does export some products to the inland neighbour when the supplies are needed quickly. Poor road infrastructure is partly to blame for the high cost of trade in ECOWAS, and the mix of English- and French-speaking countries can also present challenges, according to Defor. But the greatest costs arise from delays and corruption at border crossings within the bloc. An average trip from Ghana’s Tema Port to Ouagadougou in Burkina Faso resulted in 165 minutes of delays at 20 roadside controls and four border check points, and required $26 in bribes, according to a 2012 road governance report commissioned by the US Agency for International Development’s West Africa Trade Hub.

However, Ghana performs quite well in terms of road controls and bribes in comparison to other ECOWAS countries. The trend in road governance is also improving across the 15 nations. On a region-wide basis, the average number of checkpoints fell from 2.4 per 100 km in the first quarter of 2010, to 1.4-1.6 per 100 km in the fourth quarter of 2012. The cost of bribes dropped from $9.7 per 100 km to $4.5, and delays reduced from 16 minutes per 100 km to 14 minutes during the same period. Reducing barriers to trade within ECOWAS is an ongoing regional project. “They have been reduced drastically,” Defor told OBG. “There will be more progress.”

KEY TO SURVIVAL: Considering the high costs of operating in Ghana, the manufacturers that thrive usually benefit from a supportive tax regime and/or high import costs for competitors’ products. Local firm Melcom Groups, for example, assembled consumer electronics and appliances in its Accra factory until the import tariff was reduced from 50-60% to 10-20%. The retailer then began importing fully assembled products. These ended up being cheaper, and the freight and assembly costs of importing semi-knocked-down parts were higher than transporting finished products.

Describing the high assembly costs in Ghana, Melcom’s managing director, Ramesh Sadhwani, told OBG, “There were no economies of scale and no skills set.” Melcom initially continued to assemble the exterior of television sets locally, but the frame was subject to a 10% excise tax on raw materials, rendering local production uncompetitive. Meanwhile, Melcom began successful local production of consumer plastic goods in 2000. The freight cost differential between importing raw materials and finished plastics is significant, offering a profit margin to the firm. Similarly, local breweries began purchasing locally produced cassava when the government raised tariffs on imported hops.

AGRO-PROCESSING: Thanks to both a range of locally available inputs and growing demand, “agro-processing offers the best opportunities right now in terms of incentives and opportunities,” Ansah-Adjaye told OBG.

Foreign investment in the food and beverage industry was higher than other manufacturing segments in 2011, attracting 45% of foreign manufacturing funds, according to the GIPC. Food and beverage exports more than tripled during 2010-11, while imports increased slightly more than 50% during that period. Agro-processing is growing from a small base, however. Only 10% of Ghana’s maize was processed on an industrial level in 2009 and 2010, according to World Bank data.

The MoTI has launched multiple efforts to promote development of the value chain from farming to transport, processing and packaging. The GIPC offers a fiveyear tax holiday to industries using agricultural produce, and Ghana’s Export Development and Agricultural Investment Fund announced in July 2013 that it would guarantee loans to companies in the nation’s agricultural and agro-processing sectors.

As the world’s second-largest producer of cocoa, Ghana is hoping to boost the local processing industry. While state-owned Cocoa Processing Company reported losses of $10.2m in 2012 due to water and power shortages along with financing constraints, according to local media reports, there has been successful expansion of cocoa processing on the part of the private sector. Cocoa processor Cargill Ghana said that with the right combination of government incentives the company would expand its local processing capacity; at present the firm has two operational plants.

In a coup for the agro-processing sector, the government and Blumberg Grain signed an MoU in July 2013 to build a multimillion-dollar manufacturing and storage hub for West Africa in the northern region. The plant will be constructed at Blumberg Grain’s expense and the Ministry of Food and Agriculture (MFA), in conjunction with universities and non-governmental organisations, will develop an educational institution to build capacity among farmers. While many West African countries were considered for the site, and Ghana’s selection is not final, Philip Blumberg, the CEO of the food processor, said Ghana’s MoTI and MFA had been “proactive and displayed strong leadership during the selection process”, according to the firm’s press release.

Nestlé moved its West and Central Africa regional office to Ghana in 2006 and built its first shared services hub on the continent in the country in 2011. The world’s two biggest beverage companies, SABM iller and the UK’s Diageo, are also processing cassava for the local beer market in Ghana (see analysis).

PALM OIL: The government is promoting the palm oil industry by expanding production and developing a strategy with funds from the French Development Agency. Palm oil has been a key part of the nation’s exports since the 1880s, when it comprised 75% of goods sold abroad, but today the country’s palm oil production is insufficient for local needs, and the MFA estimates unmet demand at 35,000 tonnes annually. Currently, 305,758 ha are devoted to cultivating oil palm, 80% of which belongs to small-scale private holders that have a production level of about 3 tonnes per ha, compared to large estates with 10-15 tonnes per ha and outgrowers with 7-10 tonnes per ha.

International players are increasing their investment in the local industry, as seen when Singapore’s Wilmar International, the world’s largest processor of palm oil, opened a $16m refinery in Ghana in early 2013. Wilmar International’s local subsidiary, Benso Oil Palm Plantations, cultivates more than 6000 ha in the country. Sifca Group, Africa’s largest rubber producer, is in talks with Wilmar for a stake in the new plant and announced plans in June 2013 to spend $417m over the next five years on plantations in Ghana, Nigeria and Liberia. The country’s largest producer, Ghana Oil Palm Development Company, is a wholly owned subsidiary of Belgium’s Société d’Investissement pour l’Agriculture Tropicale and cultivates 21,000 ha, producing 35,000 tonnes of palm oil and palm kernel oil per year.

CPP: The chemicals, paint and pharmaceuticals (CPP) sectors contributed 15.85% to manufacturing GDP in 2011, according to AGI, with top sub-groups categorised as chlorides and chloride oxides; glaziers putty, gratifying putting and painter fillings; laminaria absorbable haemostatics; materials for surgical sutures; and medicaments of alkaloids or derivatives.

Relatively robust in comparison to other manufacturing sub-groups, Ghana’s chemical sector contributed 12.89% to manufacturing GDP in 2011. The chemical and chemical products sector includes commodity chemicals, specialty chemicals like fertiliser and pesticides, and consumer chemical products like soap and cosmetics. Growth in consumer care products is driven by the same consumer trends fuelling expansion in the food and beverage industry, and raw materials are mostly imported for local processing. While Ghana certainly has great demand for industrial chemicals related to agriculture, the country’s much-touted potential to harness new natural gas finds to power a large increase in petrochemicals production is a long way from realisation. Several petrochemicals firms have conducted feasibility studies to build plants that tap local gas but have not committed to investment, the GIPC said.

Fuel demand from the power grid is unlikely to leave much gas left over for industrial production.

PHARMA: The government is hoping to grow the domestic pharmaceuticals industry, a sector in which the country’s reputation within the sub-region is an advantage, said Ansah-Adjaye. The potential is significant as domestic demand for medicines is relatively strong in Ghana, thanks to a 2005 health insurance reform measure that improved drug access. There are only a handful of sizeable local firms, and domestic producers had a 37% market share by value and a 20% market share by volume in 2005, according to World Health Organisation (WHO) data. In a 2012 report the WHO said that all 34 local manufacturers were in compliance with its Good Manufacturing Practices.

A key project in the MoTI’s industrialisation plan aims enhance the training of local drug makers to ensure Ghanaian-produced drugs meet international standards and can be exported regionally. Designed to serve the entire region and promote quality standards, the Centre for Pharmaceutical Advancement and Training was launched by the US Pharmacopeial Convention in May 2013 in Accra. The new centre is aimed at equipping national and local regulatory authorities and quality assurance professionals with the knowledge and skills to promote access to high-quality medicines. However, Ghana still has a ways to go before becoming a pharmaceuticals exporter of note. While the segment’s exports grew from GHS2.98m ($1.53m) in 2010 to GHS4.65m ($2.39m) in 2011, imports increased from GHS152.24m ($78.29m) to GHS227.17m ($116.79m) over the same period, according to an AGI report.

In the region, only Nigeria has greater drug manufacturing capacity, according to the Human Development Department at the African Development Bank.

The West African Pharmaceutical Manufacturing Association, launched in 2007 by Ghanaian vice-president, Aliu Mahama, has 30 Ghanaian member firms, 100 Nigerian member firms and one Ivoirian member.

CONSTRUCTION MATERIALS: A construction boom is supporting production of building materials, cement, and related goods, including paint, nails and wiring. New steel companies are springing up to manufacture the steel rods and corrugated roofing used in Ghanaian buildings (see analysis). Locally produced steel has been confined to use in small-scale residential development thus far, while industrial firms and commercial builders import higher-quality rebar for their purposes. However, Lebanese-owned local firm United Steel announced a $100m plan to produce higher-quality iron rods at its new Tema factory by 2014. If the firm successfully competes with imports, it will send a strong message about Ghana’s competitive potential.

The local cement industry is growing as well, and the current capacity stands at around 5.2m tonnes a year, according to local media, of which 3.4m tonnes is produced by Ghacem, a subsidiary of German-based HeidelbergCement. Ghacem announced plans in May 2013 for a $30m investment at its Takoradi mill. The investment follows the opening of the firm’s 1m-tonne Tema plant in 2012 and will bring Ghacem’s total domestic capacity to 4.4m tonnes annually in 2014. Western Diamond Cement, one of two local subsidiaries of the West African Cement Group, stated its plans in May 2013 to build a new 1m-tonne-per-annum-capacity plant to start production in 2014. Meanwhile, Nigerian cement giant, Dangote, began exporting 5000 tonnes per week to Ghana in March 2013, and plans to export up to 1.8m tonnes per year to its neighbour.

TEXTILES: As is the case in many markets across Africa, including South Africa and Nigeria, Ghana’s once vibrant textiles industry has declined with an influx of cheaper imports. The small manufacturers that comprise the Spinnet Textile and Garment Cluster have seen production capacity drop by about 60% due to competition with Asian imports, the cluster’s president, Edwina Assan, told local media in March 2013. The industry employed close to 3000 Ghanaians as of 2012, down from a high of 25,000, according to statistics from the Textile, Garment and Leather Employees Union, and further staff reductions are likely.

Trade liberalisation and the expiration of the MultiFibre Accords led to the influx of cheap Asian textiles into major export markets, although much of the fabric enters the country illegally, according to local industry leaders. “Corruption at the borders must be checked to ensure a high sense of integrity and patriotism to help reduce the influx of cheap textile products on the market,” Assan told reporters. The MoTI announced plans to tackle illegal textile imports in June 2013 and organised the Task Force on the Seizure and Disposal of Pirated Ghanaian Textile Prints.

OUTLOOK: While Ghana’s industrial sector faces its share of battles, the government is investing in a variety of projects that are geared towards tapping the country’s potential. The small coastal country is selling itself as the gateway to West African markets, and a number of multinationals are taking advantage of Ghana’s stable and conducive business environment to serve the region. A few key improvements could turn the tide.

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The Report: Ghana 2013

Industry & Retail chapter from The Report: Ghana 2013

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