Market of the Month – Sub-Saharan Africa
Ghana
Best Prospects for U.S. Exporters
Ghana, formerly called the Gold Coast, became independent from British colonial rule on March 6, 1957. Located on the west coast of Africa, it is the closest landmark to the center of the world; it is positioned about 750 kilometers north of the equator on the Gulf of Guinea, between 4–11.5 degrees north latitude, and 3.11 degrees west longitude to 1.11 degrees east longitude. Tema, the industrial city, which is adjunct to Accra, the capital city of Ghana, is on the Greenwich Meridian (zero line of longitude). Ghana is bounded on the north by Burkina Faso, on the west by La Cote D'lvoire, on the east by Togo and on the south by the Gulf of Guinea. The country has a total land area of 238,537 square kilometers (92,100 square miles) and stretches 672 kilometers north-south and 536 kilometers east-west.
Ghana's principal ethnic groups are the Akan (Twi- and Fante-speaking), the Guans, Ewes, Dagombas, Gas, Gonjas, Dagabas, Walas and Frafras. There are 56 Ghanaian dialects, of which Akwapim Twi, Asante Twi, Fante, Dangbe, Ewe, Kasem, Gonja, Dagare, Ga, Dagbani and Nzema are the major languages. The official language of the country is English. French and Hausa are two major foreign languages spoken in the country.
The economy grew 5.2% in 2003, compared to 4.5% in 2002, primarily as a result of growth in the agricultural (especially cocoa) and industrial sectors. The momentum will likely continue in the medium term, but inflationary pressures and the slow pace of government economic reforms present risks to long-term growth.
Growth in the agriculture sector was 6.1% in 2003, up from 4.4% in 2002. The cocoa sub-sector expanded by 16.4% in 2003, recovering from a contraction of 0.5% in 2002. The relatively favorable world market price of cocoa and increased production accounted for this phenomenal growth. Cocoa production in the 2003–2004 season was 660,000 tons, the highest output since 1964. In addition, forestry and logging activities increased by 6.1% in 2003, from 5.0% in 2002.
Growth in the industrial sector increased to 5.1% in 2003, up from 4.7% in 2002. The construction sub-sector outperformed the industry sector average with a growth rate of 6.1% in 2003. Growth in services, however, remained unchanged at 4.7% in 2003, although transport and government services increased.
In the past, Ghana conducted most of its external trade with Europe, but trade with the United States is becoming increasingly significant. Ghana’s trade and investment ties with South Africa have also grown rapidly in recent years. Greater transparency and accountability in government as well as strengthened local watchdog institutions fighting corruption have contributed to making Ghana a more attractive market to U.S. investors.
Ghana's largest traditional trading partner has been the United Kingdom. Nigeria and the United States are currently second and third, respectively. The last three years have seen an increase in the U.S. share of total imports, and that trend is expected to continue. U.S. exports to Ghana in 2004 were estimated at just over $308 million, making Ghana the fifth largest export market for the United States in sub-Saharan Africa.
 | Population: 22,931,299 (July 2007 estimate) |
| Government Type: constitutional democracy |
| GDP—Purchasing Power Parity: $31.23 billion (2007 estimate) |
| GDP—Official Exchange Rate: $11.06 billion (2007 estimate) |
| GDP—Real Growth Rate: 5.8% (2007 estimate) |
| GDP—Per Capita (PPP): $1,400 (2007 estimate) |
| GDP—Composition by Sector: agriculture 37.3%, industry 25.3%, services 37.5% (2006 estimate) |
| Industries: mining, lumbering, light manufacturing, aluminum smelting, food processing, cement, small commercial ship building |
| Export Commodities: gold, cocoa, timber, tuna, bauxite, aluminum, manganese ore, diamonds, horticulture |
| Import Commodities: capital equipment, petroleum, foodstuffs |
Best Prospects for U.S. Exporters
Telecommunications Equipment
As a result of the government’s liberalization of its telecommunications sector, annual growth has been significant. There are two land providers and four cellular companies. Imports are mainly for landline projects, private mobile telephone services and broadband data transfer services. Major imports include switching and transmission equipment; fax machines; telephone, radio and television equipment; and cellular radiotelephones. Landline density is very low, estimated in 2000 to be only 2.9 lines per hundred people. Cellular companies with prepaid cards have had major success. Rural areas remain largely unserved by landline and cellular companies. The national network operators have programs underway to meet the performance targets under their licenses.
Computers and Peripherals
The market for computers continues to expand as government and businesses try to facilitate work and improve productivity. The main imports are desktop personal computers, floppy disks, printers and monitors. The United States remains a major supplier in the computer equipment market in Ghana. Other suppliers are Japan, the United Kingdom, East Asian countries and, most recently, South Africa.
A growing number of firms serve the Ghanaian hardware and software markets. Local assembly is growing as a way of becoming more price-competitive. Improved local servicing capacity, coupled with the growth of offshoot activities, is spurring demand. These activities include shareware and software design, computer graphics, and systems consulting. There is also a rising demand for used Pentium computers. The government has proposed removing the Value Added Tax (VAT) on imported computers supplied to recognized educational institutions, in order to enhance Information and Communication Technology (ICT) in schools.
Automobiles, Light Trucks and Vans
Ghana has no significant domestic assembly of motor vehicles and thus relies exclusively on imports of these products. Used vehicles (5–10 years old) constitute about 70% of the vehicles imported into Ghana. Low income levels make these older cars more attractive. The general trend is toward vehicles
with smaller engine capacity (1200–1800 cc). Imported vehicles require an import duty of 5% plus a 15% VAT. In the new vehicles market, U.S. salon cars and sport utility vehicles are becoming very popular, as it is increasingly easier to obtain replacement parts. Right-hand steering motor vehicles are forbidden in Ghana.
Electrical Power Systems
Ghana suffers from an estimated demand deficit of about 600 megawatts. The government plans to increase generating capacity to 2600 megawatts, primarily through gas-fired plants financed by independent power producers. Capital investment by the utilities is expected to help stimulate the market for generation, transmission and distribution equipment. There are official plans to restructure the electricity sector. This includes the eventual privatization of the Electric Company of Ghana (ECG), which operates the Tema plant, and permission for more private sector thermal generation.
Construction and Earthmoving Equipment
Earthmoving equipment is in demand for use in road construction, mining operations, and commercial and residential property development. Price and financing terms are key considerations for buyers whose purchases are not linked to external assistance programs. Reconditioned equipment has very good prospects, especially that which has easily obtainable replacement parts. Non-U.S. producers of construction and earthmoving equipment have been somewhat slow to enter the Ghanaian market, but there are indications that they are becoming more aggressive.
Mining Industry Equipment
Gold extraction is the focus of most mining activity, but bauxite, manganese, salt and diamonds are also being mined in Ghana. The country now produces over one million ounces of gold annually and is the second-largest producer in Africa. The industry leader, Ashanti Goldfields Corporation, was partially privatized in 1994, and in 2004 merged with South Africa’s AngloGold. U.S., Australian and South African firms are also active in the Ghanaian gold mining industry. The salt industry offers particular opportunity for equipment, as it is the focus of the president’s Special Initiative.
U.S. suppliers do face strong competition from Japanese, European, Australian and South African manufacturers. However, U.S. products have earned a reputation for high quality, reliability and good value.
Food Processing and Packaging Equipment
Ghana is an agriculture-based economy. The government has determined that processing is required to add value to its agricultural products. For cocoa, they plan to process 40% of production through the private sector. As exports are the focus, high-quality food processing equipment and packaging offers excellent opportunities. With packaging, the local demand is unmet, as there are large imports of packaging materials on an annual basis. The local companies that manufacture packaging products use outdated equipment and cannot satisfy the need for upscale packaging and point of sale materials.
Equipment suppliers will find opportunities with the following: canners and bottlers of beer, soft drinks and fruit juices; and those who work with locally produced fresh produce, particularly tomatoes and pineapples. Major imports include fruit, cocoa, vegetable and beverage processing equipment. Due to the relatively small market, lower output capacity equipment is preferable. Local engineering firms can be good outlets for the sale of assembly components.
Travel and Tourism Services
International travel and tourism is gradually emerging as a key services sector in the Ghanaian economy. Foreign exchange earnings from tourism increased from US$81 million in 1990 to over US$386 million in 2000. The number of tourists arriving in 2000 was about 400,000, and this is projected to rise.
Wheat
There is no cultivation of wheat in Ghana. All the wheat consumed in Ghana is imported, with about 40% of the imports coming from the United States and the rest from Canada and the European Union. Bread has become one of Ghana’s staple foods, with most Ghanaians having some form of wheat in their diet daily. There is an increasing demand for wheat bran for livestock and poultry, and it is expected that the demand for the importation of wheat will be sustained.
Rice
Rice is cultivated in all the agricultural regions of Ghana. It is grown mainly in the valley bottoms, employing traditional farming practices. Modern scientific methods of rice cultivation through mechanization and irrigation are gradually increasing, particularly in the northern savannah zone and the Accra Plains of the Greater Accra region. Nevertheless, local rice cultivation does not meet local demand. To augment local production of milled rice, it is imported from Pakistan, Korea, India, Thailand, Japan, China, Vietnam and the United States. Imports from the United States represent about 35% of total imports.
Ghanaian banks are usually reluctant to issue letters of credit to importers. This makes it difficult for the U.S. Department of Agriculture to operate the USDA/CCC GSM-102 program for the importation of rice and other U.S. agricultural products.
Frozen Beef, Chicken and Turkey
The cattle industry in Ghana is based mainly on extensive pastoral or free-range systems among subsistence farmers. The northern savannah zone accounts for the bulk of cattle production. Ineffective control of cattle diseases and the lack of veterinary drugs are the two major problems facing the cattle industry. Poultry production in about 65% of the market is mainly "backyard/free range,” with a high chick mortality rate. Large quantities of meat, meat products and poultry parts are imported into Ghana to satisfy local consumption. The government of Ghana has expressed its intentions to support the poultry industry with the goal of enhancing the country’s nutritional intake.
For more information, visit the U.S. Commercial Service Site for Ghana.
http://www.buyusa.gov/ghana/en/