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Tuesday, 29 March 2011 15:03

Ghana: Trade Combats Disparity and Promotes Diversification

By Reed Kramer

WASHINGTON, DC, March 29, 2011 (AllAfrica) — Hanna Tetteh has been Ghana's minister for Trade and Industry and a senior advisor to President John Evans Atta Mills since February 2009. The country has recorded steady economic growth for the past decade. The Economist has included Ghana in its list of the top 10 fastest growing economies worldwide in 2011 - spurred by oil production which commenced in December. Interviewed by AllAfrica's Reed Kramer, Tetteh outlined the government's strategy for expanding trade and spurring growth.

HannaTettehRead the Interview Excerpts:


Q: What are the essential elements of your government's trade and economic policies?

Tetteh: Trade is key to the economic growth of Ghana. At the end of the day we are a small market with limited purchasing power. Therefore, if we are going to be able to generate the kinds of revenues that we need in order to fund our development and not to be so highly dependent on development assistance, we've got to earn those revenues by ourselves. Up until now, most of our trade has been in commodities: in cocoa, which is our major export, in minerals, with some amount of intermediate agro-processed products and a very minimal amount of trade in services. Now, we look to be expanding even faster because of the new petroleum resources.


Again, exporting is key. This is something that has been important not only for this government but also for previous administrations. As far back as 1999 to 2000 we developed what we called an Export Development and Investment Fund, supporting Ghanaian businesses that wanted to produce specifically for export. In 1996 we started our gateway project, where we wanted Ghana to be the trade gateway for West Africa. We did a lot of trade facilitation reforms to make it easier to move within our ports; we did rehabilitation within our ports so that there would be a transit route for the landlocked West African countries, and the continued focus has been on attracting foreign direct investment.


Trade is important and it's always been important, but the key is to move away from commodities and minerals to value addition. That is where we will get the maximum return. What we're focused on at the moment is how we can promote private sector growth, industrial development, more processing – especially of intermediate products such as cocoa butter rather than exporting cocoa, or cut fruits and juices instead of exporting tropical fruits, because again, there's value addition. With regard to minerals, we've got some investment to move beyond just the extraction, for instance, of bauxite, to processing into aluminum. The focus is value addition for greater value and greater returns in terms of exports revenues.


Q: What is the "vibrant technology-driven industrial sector" mentioned in the mission statement for your ministry?

Tetteh: We're not looking at high-tech, because it's not just a question of starting businesses but making sure there's supporting infrastructure. That's why we are focusing, for now, on intermediate processing. We think that's what we have the human resource skills to do, and with time we will develop into other things as well.


Q: And to get the capital required, you need to attract foreign investment?

Tetteh: Luckily, over the last couple of years we've seen growth in Ghanaian companies that can be called medium-sized enterprises. But of course FDI (foreign direct investment) comes in not only with capital, but also with skill. One of the key things is to ensure we promote the transfer of technology and skill. We have Ghanaian businesses that are now doing this, and we're getting (Ghanaian) expatriates coming back. We hope to attract more FDI, because with these industries and businesses the capital outlay is huge. Our financial services sector is not as well developed, certainly, as what you have in the West. It doesn't have the same kind of ability to do medium- to long-term lending. We don't have such a well developed capital market either. It's really FDI that can arrange the kind of resources that would make this happen.


Q: Now that Ghana has joined the ranks of the oil producers, do you plan to maintain diversification in your economy?

Tetteh: On the same day President Mills opened the first valve on the Jubilee Oil Field, the vice president was launching a private sector development strategy in Accra that focuses on the non-oil sector to clearly demonstrate that we intend to give equal attention to both. We know that if we don't make a deliberate effort, there are chances that oil will take over.


Q: Will agriculture, which has been the leading export earner, continue to have a central role?

Tetteh: Most of our exports to the EU are agricultural or horticultural products, including fresh produce and semi-processed produce. That accounts for 40-45 percent of our exports in any year. It's not something that we can decide to ignore. There are building blocks that you need to put together to make all of this happen. What my colleague, the minister of agriculture, has focused on is increased production and productivity to feed both local consumption and for export. We're looking at four main crops: rice, maize, soya and sorghum. These have multiple uses in different sectors. So, specifically with the agricultural development program of the Ministry of Agriculture, the idea is to encourage young people to engage in agriculture. We have a youth-in-agriculture program that encourages them to go back to farm to be able to cultivate these crops.


In the Ministry of Trade and Industry we've added a cotton support program because we want to encourage the re-development of the cotton sector. It's a viable cash crop which grows well in the northern parts of the country where we have issues with poverty. Not everybody is going to be able to come south and work in the oil sector. If we don't focus equally on the north and the south, and on the products that are important for local consumption, production, processing and export, then we're going to have challenges, especially where you have an increasing disparity between the south and the north. As much as possible, we want to avoid that.


Q: Disparity often arises in oil-producing countries. Are you taking other steps to avoid that trap?

Tetteh: We have different ecological zones in the north, where we have savannah, and in the south with tropical rain forests. In the north we have one rainy season. In the south we have a major and a minor rainy season. The focus in the northern region is on rice, soya, cotton and maize because those are the ones that can grow reasonably well within the constraints of the savannah region. For tree crops, we are encouraging mangoes and also shea trees that grow wildly.


The challenge is to cultivate them for cosmetics production. We want communities to participate in the development programs - to have a sense of ownership. You can't plan from the top and not have stakeholder participation and expect it to be successful. It's not just about giving them the opportunity to grow crops but putting in place the marketing mechanisms that are sure to bring revenue for what they produce. Focusing on those crops should help them to stabilize their situation and create opportunities for different kinds of processing activity to take place in our three northern regions.


Q: What is your government doing to tackle corruption?

Tetteh: Corruption is a problem everywhere in the world, to a greater or lesser extent. We have institutions that deal with it, but more importantly, we have a very free and vibrant media that draws attention to these problems when they occur.


A multiplicity of instruments is needed to deal with the challenge. You need institutions that are able to take decisive action against individuals when these sorts of things occur. You also have to have the mechanisms that bring it out into the open. As far as the mining and petroleum sectors are concerned, we've signed onto the Extractive Industries Transparency Initiative.


We are currently developing the regulatory framework for the petroleum sector, and the emphasis is on making sure the processes are clear, transparent, and people understand what they need to do in order to get a license or set up an industry. We have a petroleum revenue management bill that is coming to the tail end of debate in Parliament. Of course we believe that it is important to strengthen our judiciary, the security agencies – especially investigative ones – so that they feel they are free to undertake those kinds of investigations.


Recently we transformed what we call the Serious Fraud Office into the Economic and Organized Crime Commission because we wanted to give them an independent institutional status and to give the chief executive the staff and support he needed. We want to investigate crimes that go beyond the police: organized crime, white-collar crime – things that come along with more development and more economic activity.


What we have going for us more than anything else is a president who wants to make sure that we deal with the issues of corruption. Leadership is from the top: it's not about paying lip service by creating more offices, but we have someone who wants to walk the talk. Once you set the example, it's impossible for other government officials to duck away from the responsibility. If the president is transparent and ready to hold himself up to that scrutiny, who are you to say you don't want to be part of that?


Q: There have been problems reported between your government and certain investors, including Kosmos Energy, one of the partners in the Jubilee Oilfield. What steps are you taking to reassure investors that their assets will be safeguarded in Ghana?

Tetteh: We have a regulatory framework where investors coming into Ghana have an institution they can deal with - a one-stop centre called the Ghana Investment Promotion Centre. We have the Ghana Investment Promotion Act, which details very clearly what investors are expected to comply with in terms of registration of their businesses, what comes along with that registration, the kind of minimal capital investments we require for the wholly foreign-owned businesses - the fact that we expect them to incorporate limited liability companies or partnerships in order to do business in Ghana - and the agencies they need to deal with in order to get various permissions and permits.


The Kosmos issue has been resolved. What I said to Kosmos when I had the opportunity to meet their management is if you have a problem with the government, I would rather think you would be having a conversation with the government, as opposed to putting pressure through the media for a certain solution. At the end of the day, a country has its rules and regulations. We have a framework that is consistent and that applies equally to everybody. Once you are able to engage, we can find a resolution that is mutually acceptable. That is what has happened now and Kosmos is still in Ghana.


Q: With China an increasing important trading partner, how does Ghana balance its economic relations with various major powers?

Tetteh: Our largest trading partners are the U.S., China, the European Union and India, and, within Africa, Nigeria and South Africa. Trade with the EU comes under our Interim Economic Partnership Agreement (with regulates trade between EU members and the African, Caribbean and Pacific countries). As a result of that we have duty-free, quota-free access to the EU market. We have quite a number of European companies that have invested in Ghana that have taken advantage of those preferences and are doing quite well.


We have a deficit as far as China is concerned. They export to us much more than we export to them, and it is a cause for concern because once that deficit becomes too huge, it tells you that you're really not benefiting much from this relationship. We recognize that in order to be more competitive and to have greater value for our products, we need to do value addition. We need to have finished products as opposed to just exporting commodities.


With the U.S., again you have an unbalanced situation where there are more exports coming in from them. Most of our exports have been cocoa, minerals, and we have a small garment sector that is able to manufacture garments for export to the U.S. under Agoa (the African Growth and Opportunity Act). It's a relationship that could do more with more focus, and I think there's a lot of opportunity for growth.


The European Union has been quite strategic in promoting business with Ghana, because in addition to the framework agreements, they have financing available for European companies to invest in Ghana. Even though the U.S. has OPIC (the Overseas Private Investment Corporation), the funding availabilities are on the same scale.


To take advantage of Agoa, it would be interesting to have U.S. companies supported with funding facilities to come to Ghana to produce the kind of intermediate products which, when exported to the U.S., would undergo further processing to meet consumers' diverse tastes and needs. There hasn't been too much of a focus on that. If we were able to do that, I'm sure there would be a significant increase in trade. Both sides would benefit.


One problem is that you only hear bad news about Africa. It is only when you have problems that you see news about Africa. You don't hear about the countries that are working quite well. The tendency is to think of Africa as a country as opposed to a continent. People don't see that there is a huge variety of places that you could invest in, and some of them deserve more attention.


Q:What do you want people to know about Ghana?

Tetteh: Ghana is stable. Ghana has been growing continuously for over 20 years now. Ghana is going to grow even more. We have invested our time and energy as a people in building the institutions and structures that allow people to do business within a regulatory framework. We have a democracy - civil society organizations, a vibrant press, all of those ingredients that go together to make a stable society. Come to Ghana because Ghana works!


(***Biography: Ms Hanna Tetteh, Minister for Trade and Industry. Honorable Hanna Tetteh is Ghana’s Minister for Trade & Industry. The Ministry is responsible for matters relating to Trade, Industry and the promotion of the Private Sector. She is a member of Cabinet, the Chairperson of the Ghana Free Zones Board, a Member of the Economic Management Team, and serves on the National Development Planning Commission, and is on the board of the Millennium Development Authority, and the Divestiture Implementation Committee among others.) (END/2011)




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