Accra, Adeiso, Africa, Asamankese, Blue Skies, Burkina Faso, Business, Costa Rica, European Union, Export, Federal government of the United States, Fruit, Ghana, Government, Invesments, Nsawam, Real estate, Residential area, Tema, Uncategorized, United States, United States government

Ghana: Fruit processing companies look offshore for fruits

Reflex Eco Group – Africa News

Antony Sedzro (Ghanaian journalist)

sedtony@yahoo.com

This Blog is sponsored by http://www.reflexecogroup.com

Ghana’s pineapple production and exports have slumped to the lowest in nine years, throwing more than 500,000 people, mostly farmers out of job.

Not only has the situation denied the country the millions of dollars it used to receive in foreign exchange, the economy has lost some fruit processing companies, with the surviving ones struggling to get raw materials to process.

Processing companies such as Blue Skies, HPW, Peelco and Pinora have had to import more than half of their raw materials such as mangoes, pineapples and papaya (pawpaw) as they struggle to source them locally.

Other processing companies in Adeiso in the Eastern Region, Nsawam, Asamankese and Tema have all folded up for lack of raw materials that can make them competitive.

Industry value chain actors told the GRAPHIC BUSINESS newspaper that the worsening condition was due to the lack of financing for cultivation, low quality inputs, especially pineapple suckers and the age-old challenge of the country not adapting quickly to a new variety now preferred in Europe, the MD2, developed by Costa Rica.

An acre of pineapple farm requires between GH¢8,000 and GH¢9,000 to cultivate. This has put the thousands of farmers out of the farm, even though there is huge market for fresh pineapples and other horticultural produce locally and internationally.

Currently, the country only exports about 35,000 tonnes of pineapple a year, with exporters reducing from 50 in 2004 to about 15. Employment in the industry has significantly slumped from about 600,000 to about 60,000.

Chief Agronomist at Blue Skies, Mr Ernest Abloh and the Head of Administration and Control at HPW Fresh and, Mr James Obeng, told the GRAPHIC BUSINESS in separate interviews that their sources of fruits to supplement what they get locally were Cote d’Ivoire, Burkina Faso, Togo and Benin

Mr Abloh said Blue Skies had just sealed a deal to air-lift 120 tonnes of mangoes a week from Brazil for 10 weeks, mainly due to inadequate local supplies and from the sub-region, especially during the crop’s off seasons.

GRAPHIC BUSINESS newspaper investigations revealed that the lack of credit is the principal challenge facing the industry, since pineapple cultivation is capital intensive.

Blue Skies, which has the capacity to process 30 tonnes of fresh pineapple a day for export, is only doing 20 tonnes a day. Last month, the company laid of over 400 workers due to lack of raw materials for off peak production.

HPW, a Swiss company which used to export fresh fruits from Ghana, had to make a hard U-turn to dry fruits – pineapple, mango and coconut.

“Ghana’s fruit industry consists of a huge amount of small farmers often with a weak set-up and very few large and professional fruit growers/exporters. Our demand of more than 6,000 tonnes of fresh fruit is substantial for the industry,” top company officials told the GRAPHIC BUSINESS at the factory at Adeiso.

Exports of fresh pineapples reached the highest in 2004 with 71,000 tonnes a year, making Ghana the second largest exporter of the produce, after Cote d’Ivoire. These exports raked in approximately US$50 million to private sector exporters.

The Director of Export Marketing and Quality Awareness Project, (EMQAP) Ministry of Food and Agriculture (MoFA), Mr Mawuli Agboka, told the GRAPHIC BUSINESS that although finance was a challenge for the farmers, the project was making very holistic intervention in the horticultural sub-sector.

According to Mr Abloh, the company cited its operations at the current location because of proximity to raw materials, but with time, productivity had dipped, particularly after the world demand shifted to MD2 from the smooth cayenne that Ghana used to export.

He said the company got its extra fruits from other countries, but had started “a vertically integration” to produce its own raw materials.

“We didn’t want to go into production ourselves, but now we have to do it. We already cultivate all our raw material needs for passion fruit,” Mr Abloh said.

Infrastructure abandoned

Huge edifices of pack houses and cold chains constructed in some pineapple and mango growing areas with grant from the United States government are lying idle, with the low productivity.

Some farmers have also converted their farms to grow other crops or sold them for estate development.

This is prevalent in Samsam, a village near Nsawam, where the GRAPHIC BUSINESS found some farmlands turned into sand winning pits or for the construction of residential property.

Centre of excellence

The GRAPHIC BUSINESS gathered the industry has no centre of excellence to bring best practice to the industry including tissue culture, multiplication of planting materials and other specialised studies.

Blue Skies has built one ultra-modern centre of excellence for mango, but until now the Ministry of Agriculture has not posted scientists and other personnel to make the centre functional.

Currently, the fresh fruit company has its own centre of excellence with which it supports its out-growers.

But the Director of EMQAP said the project had a number of interventions to increase productivity and make best practice part of the horticultural sub-sector.

He said the seven-year EMQAP project was tackling infrastructure, technology, provision of inputs and technology to support the industry.

For example, to make pineapple planting materials available, EMQAP was helping four farmer groups in the Ga West and Akwapim South districts to multiplicate planting materials.

The project has given each group 44,000 plantlets which could be multiplied six times as well as inputs. This intervention is expected to affect over 200 farmers.

Mr Agboka said EMQAP was also supporting the Crop Research Institute in the Ashanti Region to do maintenance breeding of selected crops under the project.

The project has also spearheaded the enactment of the Plant and Fertiliser Act, Act 803, 2010, which among other things, allows for certification of nursaries and vegetative planting materials for the country.

“We certified eight planting material producers in 2011. This is to ensure that we have quality planting materials on the market,” Mr Agboka stated.

The project director, however, agrees that beyond the direct intervention by the project, there was also the need for creating a pipeline of financial support, through public-private partnerships, to enable the farmers access finance to cultivate their produce.

He believes that Ghana had much more favourable conditions to do far better in pineapple and other horticultural produce than Costa Rica which currently leads in the sector.

History and Potential of Pineapples

Horticultural produce from Ghana has shown a lot of promise over the years. The country has been involved in the export of horticultural exports since the 1980s. Exports rose quickly from US$28 million in 2000 to US$75 million by 2006, with a lot of potential at hand, with mangoes, pineapples and chilies showing firmer promise.

Statistics indicate that there are about €1 billion worth of pineapple market; €3.5 billion for bananas and US$250 million, all in the European Union alone.

Ghana’s pineapple exports blossomed in the 1990s when pineapple exports formed an association and reached an agreement with a vessel to lift fresh produce from Ghana, after visiting Cameroon and Cote d’Ivoire.

The twice a week lifting accelerated exports of fresh pineapples and other horticultural produce. Pineapple exports, thus rose from a few tonnes a week to 71,000 tonnes in 2004. The exports started slumping very fast when Costa Rica introduced the much sweeter MD2 pineapple which caught on well in the EU market.

This caused the market for Ghana’s variety, the smooth cayenne, to plummet to the current low levels of 35,000 tonnes in 2012.

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Housing Supply in Ghana

A recent study by UN-Habitat reports that Ghana’s housing need is expected to hit 5.7 million units by 2020. The analysis highlights that housing in the country has never been a significant component of the country’s national economic planning, but has been seen rather as part of its welfare sector. As much as 90 percent of Ghana’s housing stock has been produced through self-build. According to the Ghana Real Estate Developers Association, the slow pace of residential property construction is now changing. Since 2005, completions and new building plan approvals have increased. Permit approvals for registered real estate developers and parastatal real estate developers have more than doubled. In 2012, activity declined somewhat, however, with cement production increasing by only 5.82 percent, compared with an increase of 11.22 percent in 2010. This was mainly due to a temporary shutdown of the West African Cement production plant following a lightening storm. Cement prices increased by 85% from GH¢14 (US$7.38) to GH¢25. This affected the entire construction industry – although by the middle of the year, the crisis seems to have abated.

 

There is some delivery of housing by the government. Players include the Social Security and National Insurance Trust and the State Housing Company. Housing developments driven by the state, which primarily targets the public service, have, however, been unable to significantly dent the demand. Over the 10-year period 1991 – 2000, state housing institutions produced less than 40 000 mortgageable units. In 2012, a high profile development being driven by Korean construction firm STX, and which promised the delivery of 200 000 units, came to a halt due to difficulties in contracting arrangements. Concerns among the Ghanaian construction sector that local players had been sidelined in the project were also an issue. A second initiative by a local developer for the delivery of 10 000 affordable housing units has also been reported as having problems. Since the collapse of the STX programme, there have been reports of some smaller developments for public sector housing, but nothing significant. South African firm, Bigen Africa, has offered technical capacity and support in addressing Ghana’s housing backlog. Development in the upper income market remains vibrant, as developers scale-up on the need for high end expatriate accommodation. Companies such as Taysec and Clifton Homes offer housing in the US$100 000 to US$600 000 and above range – this covers two bedroom apartments to four to five bedroom homes.

 

The Tema Ashaiman Municipal Slum Upgrading Fund provides useful lessons for slum upgrading, and integrated development for the poor. Funded in part by UN-Habitat, the project is driven by the Ministry of Local Government in Ghana, and two municipalities. UN-Habitat provided a grant of US$400 000 as a capital enhancement, and a further $100 000 for administration and development. A further $400 000 capital enhancement grant is expected. Working with People’s Dialogue on Human Settlements, the first project will develop houses and shops, and ultimately an entire integrated development for the slum dwellers involved. By marking land both for residential and commercial purposes, the project addresses to some extent the competing land uses that often undermine the poor’s access to well located land.

 

Homeless International has been working in Ghana since 2003. It has partnered with the Peoples’ Dialogue on Human Settlements to support Ghana’s urban poor to advocate for their rights to adequate housing, safe settlements, secure tenure and affordable infrastructure.

 

Property Market

 

Demand for housing has accompanied generally good economic performance. Incomes of middle-class Ghanaians have risen gradually together with lively property markets. A significant rise in the number of Ghanaians living abroad who want to own houses back home, foreign buyers of residential property, and foreign investment by multinational companies into the country, have all contributed to growth in the market.

 

With the growth of the oil and gas industry in Ghana, private sector development of upmarket homes is rampant and almost all selling off-plan; these prices range from upwards of US$300 000 to more than US$1 million. Property rentals in the middle to upper sector range between US$2 500 and US$8 000 a month.

 

Ghana’s construction industry continues grow steadily. In the past decade, the industry’s annual growth in 2008 and 2009 was 8.6 percent and 9.3 percent, respectively. A more recent challenge has been the apparent market saturation with cheap but low-quality imported building materials, which has had a direct, negative impact on the local manufacturing industries.

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Gold, cocoa dip in revenues calls for focus on NTEs

Reflex Eco Group – Africa News

Antony Sedzro (Ghanaian journalist)

sedtony@yahoo.com

This Blog is sponsored by http://www.reflexecogroup.com

The World Bank in its latest report is warning Ghana of huge drop in export earnings as a result of falling prices of gold and cocoa. The bank based its predictions on the huge fall in prices of the two commodities in the coming months.

The development has already affected revenue from these commodities. The Monetary Policy Committee of the Bank of Ghana, the country’s central bank, in July released figures to show that export earnings from gold for the first half of 2013 was estimated at US$2.7 billion, compared to US$3.2 billion in the same period in 2012, fall of about 16%. This fall is attributable to lower prices and volumes.

The price of gold on the international market has fallen from a high of about $1,700 in November 2012 to a low of $1,200 in the middle of this year. This is the highest fall in the value of the precious metal in thirty years.

Gold is Ghana’s main foreign exchange earner and the country is Africa’s second biggest producer behind South Africa. The fall in the world market price of the commodity has equally hit mining companies in the country.

Anglogold Ashanti, which operates one of the biggest mines in Ghana, has started the process of laying off about 430 of its mine workers. Newmont Ghana will cut at least 300 jobs in a bid to manage costs more efficiently, directors of the company said last month. Other mining firms have cut back on new mining projects in Ghana, West Africa’s second biggest economy.
During the boom in commodity prices, Ghana last year produced 4.3 million ounces of gold in 2012, a record for the country. Artisanal (small-scale) mining, which contributes about 30% to the country’s total production annually, also blossomed and saw the attraction of thousands of Chinese miners who mined illegally. A public outcry against the presence of Chinese miners led to a security crackdown on their operations. But even the artisanal miners have seen a sharp drop in their activities due to the steep fall in the precious metal’s price.

In a contribution on how this fall in revenue on the country’s economy can be remedied in the long term, respected Ghanaian economist, Dr. Joe Abbey, has revealed that concentrating on Non-traditional Exports (NTEs) could help address the expected challenge in the long term.

“So there is no choice for us but to look at the factors that determine the quality and cost of producing in this country. Oil may save something for us now, but we need to go beyond oil and get to non-commodity-based thing.”

Ghana produces and exports pineapples, oranges, bananas, cashew nuts, and others. These are normally produced by small-holder farmers with very low production capacity but with enormous potentially if supported financially.
For many years, the country has depended on hard currencies earned from exports from gold and cocoa to finance imports and shore up the local currency’s value.
The fall in price of gold and cocoa has also adversely affected Ghana’s currency, the Ghana cedi.
To stem this trend, Dr. Abbey, states that with less earnings from exports and an less controlled imports, “the Bank of Ghana would have to draw down on its holding of foreign exchange to meet the gaps”.
In spite of Ghana’s political stability, the Ghana cedi is currently the second most depreciated currency in Africa, according to the latest Ecobank report on the performance of currencies in Africa.
The report puts the cedi’s rate of depreciation at 14.5%.

 

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Africa Focused News

REPORT OF TUESDAY 22/10/13

by Dario Galluccio

This Blog is sponsored by http://www.reflexecogroup.com

Ghana: Renewable energy sector gets €1.8m from Germany

Ghana’s energy sector has received a boost of 1.8 million Euros from the government of the Federal Republic of Germany through the Deutsche Gesellschaft fur Internationale Zusammenarbeit (GIZ) to be disbursed in two years. This is in pursuance of a successful implementation of the Renewable Energy Act 832 enacted in 2011.

Speaking at the launch of the joint programme for a successful implementation of the renewable energy Act in Accra, Deputy Minister for Energy and Petroleum John Jinapor commended the German government for its efforts over the years to build capacities in Ghana’s energy sector. He added: “Most high ranking officials in the energy sector today are beneficiaries of GIZ programmes.

Mr. Jinapor, giving the background of Ghana’s energy history, said the country relied solely on hydroelectricity until 1997 and 2007 when the water level in the Akosombo Dam fell drastically, forcing governments at the time to shift their attention to thermoelectricity by constructing thermal plants to support the energy sector.

Nigeria: U.S. invests U.S.$50 Mln in economy in 2013

United States of America Consul General, Jeffrey Hawkins said that the US has invested $50 million in Nigeria’s economy in 2013 alone. He said this during a courtesy visit to the Nigerian Stock Exchange (NSE). He said that Nigeria was a growing economy and assured that the United States government would help in growing the economy.

He pointed out that no country can progress without capital market investment, saying that the US was building a solid trade framework with the Nigerian government. He urged the NSE to create a transparent environment that will attract investors to the Nigerian capital market.

The CEO of NSE, Oscar Onyema, while welcoming the US Consul General, said Nigeria has a strong relationship with the US government, saying that the Stock Exchange would support the relationship and economic activities between the two countries. He added that the Exchange would also drive friendly portfolio investments from the deepest market(New York Stock exchange) in the world to emerging market which has the highest return on investment in the world.

Ghana: President Mahama to address economist Ghana Summit

President John Dramani Mahama is expected to address the Ghana Economist Summit on Tuesday, October 29th 2013 at the Movenpick Ambassador Hotel in Accra as part of a two-day international business leaders’ event. The Ghana Summit would openly explore the risks and opportunities that are facing the thriving African economy.

It would bring together over 150 leaders from government, business and finance that have either invested in the country or expressed interest in its future.

In a special opening keynote address by the President, he would discuss how Ghana would take advantage of positive conditions and overcome further challenges to its continued emergence as a growing economy. Ghana’s economy has witnessed major changes in the last couple of years. GDP has more than doubled in four years from GH¢23billion in 2007 to GH¢59 billion in 2011. This has been aided by the oil production, which took off in December 2010. Last year, oil contributed GH¢3.7 billion to the country’s GDP.

Despite the positive outlook for the Ghanaian economy, there are a number of critical challenges that could restrict growth and slow down the progress of poverty alleviation and development. While the economy has seen low and stable inflation, the cost of credit for small and medium size enterprises is still high.

South Africa: Commuter rail investment gains pace

South Africa will invest over R50-billion in passenger rail infrastructure and services over the next few years, President Jacob Zuma said at the launch of the Bridge City Rail Link project in KwaMashu outside Durban. This follows the government’s investment of over R40-billion in the sector over the past four years, Zuma said.

The R1.3-billion Bridge City station, which includes a bus and taxi interchange, is the largest rail infrastructure development project in the Durban area. Situated 17 kilometres from the Durban city centre, the Bridge City station links the communities of Phoenix, Inanda, Ntuzuma and KwaMashu directly to the urban transport system. The development is expected to boost economic growth in these communities as it improves their opportunities to work, travel, shop and do business. It will also serve as a social and commercial centre for an area housing a population of over 800 000 people, who at present have generally poor access to facilities and social services.

Ghana: Dangote withdrawing sugar

Dangote sugar refinery, Nigeria’s biggest producer of the sweetener, has told the current requirements in Ghana regarding the production of sugar are hindering them from entering the market.

Dangote Sugar plans to increase its capacity to enter more African countries beginning with Mali, Gambia, Burkina Faso and Togo this year and Liberia, Senegal and Mauritania next year.

The company’s Vice President, Sani Dangote stated that it will not be making a stop in Ghana saying, “we have two major problems in Nigeria you cannot produce without fortifying with vitamin A in Ghana you do not need to fortify that’s number one and that’s very expensive. You fortify sugar with vitamin A for the eye and in Ghana this is not compulsory.” He continued saying, “we have 45 units as the highest in Nigeria and in Ghana you have 150 units’ what’s known as brown sugar so to come to Ghana is very difficult because you can’t produce sugar in Nigeria without fortifying it but we have some Ghanaian businesses importing from us in Nigeria.”

Ghana over the last few years has spent over GHC 500 million on sugar imports with demand rising by over 5 percent yearly.

Rwanda: Free internet project to boost economic growth

Thanks to the launch of the government-backed “Smart Kigali” project, people in Rwanda now have access to free internet via Wi-Fi enabled devices. The project, which is line with Rwanda’s Vision 2020, symbolises another step towards achieving the East African nation’s prospects of becoming a regional IT hub, as it steadily moves past the tragic events of the 1994 genocide into a future built on a Knowledge-based economy in order to attract more foreign investment.

Five years ago, Rwanda launched the “One Laptop Per Child” initiative in schools across the country. So far, the project has seen about 200,000 laptops distributed to more than 400 schools. Going further, Rwandan government signed a $140 million deal with South Korea’s largest Telecom – Korea Telecom (KT) Corp in June, 2013 to provide 4G Long Term Evolution (LTE) Broadband networks across the country especially in areas where internet connectivity is low. The deal is considered to be one of the biggest FDI deal ever embarked on by the East African nation.

Ghana: SEC to establish fund to promote investment education

The Security and Exchange Commission, (SEC) is to set up an advocacy fund to help it step up an investment education in the country, the Director General of SEC, Mr Adu Anane Antwi has disclosed. The move according to him forms part of measures to expand the investment base of the capital market.

He explained that although, the capital market has recorded growth in 2013, its investment education has had to face the challenge of getting sustainable finance hence, the fund would help address this challenge and would be funded by friends of the industry.

Mr Anane Antwi made these known at the launch of the EM Balanced Unit Trust (EMTRUST), a collective investment scheme set up by EM Capital Partners Limited, an investment banking institution.

The education he said was aimed at bringing Ghanaians closer to the capital market, something which had yielded positive results thereby, registering 35 schemes generating about GH¢301.47 million for the SEC to manage.

The EMTRUST according to the Chairman and Chief Executive Officer of the EM Capital, Mr Mike Ashong, has an objective of enhancing and preserving the wealth of its unit holders through investments in a diversified portfolio.

Rwanda: Among social entrepreneur fund beneficiaries

Rwanda is among the six African countries that have been lined up as beneficiaries for a new fellowship fund programme aimed at supporting social entrepreneurs in addressing food security issues. The new fund was announced last week by the Tony Blair Africa Governance Initiative, in collaboration with the Howard G. Buffett Foundation and World Food Prize Foundation.

The country has embarked on modern farming methods. The fellowship fund, dubbed ’40 Chances Fellows’, seeks to encourage innovation in developing market-based approaches that address food security in Rwanda, Liberia, Sierra Leone, Malawi, Guinea and South Sudan.

Launched at the World Food Prize in Iowa (October, 16-19), the programme will select four individuals with the most innovative social enterprise business plans and provide living expenses as well as start-up funds for one year to execute the ideas. “We are thrilled that this partnership will help to empower social entrepreneurs to test new ideas that can have a positive impact in Africa,” Tony Blair, a former British prime minister said.

Ghana: Now fastest growing economy in sub-Saharan Africa

Mr Seth Adjei Baah, President of Ghana Chamber of Commerce and Industry, noted that Ghana is currently one of the fastest growing economies in sub-Saharan Africa. He said the country’s business environment is also conducive and supportive of foreign investments.

Mr Adjei Baah, who was speaking at a day’s business forum of Ghana Chamber of Commerce and Industry and Turkey IZMIR Chamber of Commerce (ICC) in Accra, said Ghana is loaded with many trade and investment opportunities.

The forum served as a platform for Turkish businessmen to meet with their Ghanaian counterparts to discuss trade and investment opportunities. It is also facilitated the establishment of an honorary consulate in Izmir to advance trade and development between the two countries.

The visiting Turkish entrepreneurs would hold business meetings with their Ghanaian counterparts in areas such as agriculture and agro-processing, banking and finance, construction and real estate development, tourism, telecommunications, information and communication technology, oil and gas extraction, mining and quarrying.

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FALL OUT FROM THE SHOT DOWN: The rise in China’s influence in Africa and the decline of the West

Reflex Eco Group – Africa news

by Paul Frimpong (Ghanaian Economist)

This Blog is sponsored by http://www.reflexecogroup.com

The African continent is increasingly becoming the global common hub for doing business. A continent which not long ago was described as a ‘hopeless continent’ have risen above all odds to actually show the potential that it posses. Not only is Africa attracting the world and depicting that it is capable to contain them, but increasingly from operators in Africa itself. Africa’s economic structural reforms have shown a strong resilient following the global economic crisis in 2008 by rebounding back very quickly since the last decade and going forward, looking more boisterous.

The economic fundamentals are clearly in favour of Africa and just what exactly do I mean by that?__I am talking about the potential, the capacity; the zeal and the robust economic posture of continental Africa. The numbers are clearly in favour of Africa with steadier exchange rates, robust commodity prices, increased private capital flows and modest inflation. Africa has got a very good fiscal story with debt to GDP ratios at the sovereign level which are no where near the burden of what is seen in Europe, United States and other parts of the world.

Exports are booming and export markets have become more diversified. Foreign direct investment has increased by a factor of six over the past decade. Private entrepreneurs have emerged as a dynamic force for change, driving innovation and transforming outdated business models. There is an emergent middle class, although its size is often exaggerated. For the first time in over a generation, the number of people living in poverty has fallen. Fewer children are dying before their fifth birthday and more are getting into school.

However, there is a growing schism globally about the relationship of Africa with the West (US) and China. I watch this debate with much enthusiasm and moreover, I expect this to be the case especially looking at the increasing awareness in and on Africa in the past decade.

Africa has had 50 years of development partnership with the West and even though still continues to, but really, there is not much change experienced on the continent. This has sent a lot of frustration shared by people not only on the African continent but by people in the West as well. Questions are been thrown at the West as to why after several years and several billions poured into Africa, there has not been a significant change on the continent. This and other questions are very legitimate to be tabled before both the donor west and recipient Africa.

The most intriguing aspect is that, Africans themselves are up on their toes and asking questions as to whether they are better off without the West/traditional donors or are there alternatives to this model. Can we as Africans form a different development partnership which can bring us the change that we so seek?

These questions have led Africa to sit at the same table with China, the new development partner. The China-Africa relation started dating back in the 1960s and 1970s. But really, the relation came to the fore in 2006 when 48 African leaders attended a joint forum in Beijing. The Forum on China – Africa Cooperation is the name of the meeting between the People’s Republic of China and the states of Africa. There have been five summits held to date, with the most recent meeting having occurred from July 19 – 20, 2012 in Beijing, China.

In 1980, the total Sino-African trade volume was US$1 billion. In 1999, it was US$6.5 billion and in 2000, US$10 billion. By 2005, the total Sino-Africa trade had reached US$39.7 billion before it jumped to US$55 billion in 2006, making China the second largest trading partner of Africa after the United States which had trade worth US$91 billion with African nations. In 2010, trade between Africa and China was worth 114 billion and in 2011, US$166.3 billion. In the first 10 months of 2012 it was US$163.9 billion. Currently, there are an estimated 800 Chinese corporations doing business in Africa, most of which are private companies investing in the infrastructure, energy and banking sectors.

At the level of attitude, China sees its interest in development as directly linked with Africa. Of course, that is what has necessitated for the constant engagement between African countries and China in the last decade. China has a huge population to feed; talk of potable water, arable land, oils, minerals etc. China therefore sees Africa as the best destination to meet the increasing demand domestically.

Nonetheless, since China began seriously investing in Africa, it has been routinely cast as a stealthy imperialist with a voracious appetite for commodities and no qualms about exploiting Africans to get them. It is no wonder that China has received criticism from all over, especially from the US and UK.

Despite all the euphoria, China’s motives for investing in Africa are actually quite pure and very visible. The increasing infrastructure development is quite visible, and their quest to offer support to spur economic growth on the continent is a course worthy of mentioning.

However, let not miss the point that, the West in their 50 years development partnership have their own approach. In a June 2012 White House paper on ‘U.S Strategy towards Sub-Saharan Africa’, the United States will partner with sub-Saharan African countries to pursue the following interdepen­dent and mutually reinforcing objectives: strengthen democratic institutions; spur economic growth, trade, and investment; advance peace and security; and promote opportunity and development.

Africa needs China’s investment; we need jobs, trade, we seek something new to happen. But the point really is that, we need development and that is why the case about which quarters development emanates from is not really something we have to worry about. It can come from China and or the West.

ABOUT THE AUTHOR

Paul Frimpong CEPA

Chartered Economist (ACCE-Global) who writes on the macroeconomy and global affairs. He is also an African Affairs Analyst

Tel: +233 -241 229 548

Email: py.frimpong@yahoo.com

py.frimpong90@gmail.com

Please kindly send all feedback, queries and comments to py.frimpong@yahoo.com

 

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Ghana: Non-traditional Exports hits $3.3bn

Reflex Eco Group – Africa News

Antony Sedzro (Ghanaian journalist)

sedtony@yahoo.com

This Blog is sponsored by http://www.reflexecogroup.com

Ghana expects to make more than $3.3 billion as earnings from non-traditional exports for this year.

The projected income is an improvement on last year’s earnings of $2.3 billion.

The Ghana Export Promotion Authority (GEPA) which supervises non-traditional exports says it has so far earned 12% more than what it had during the same period last year.

Chief Executive, Gideon Boye Quarcoo, told local media that the projected improvements from non-traditional export has also been influenced by progress made in the global economic recovery.

He said a dip in Tuna exports last year resulted in last year’s figures, noting that “when you have less coming from tuna which is a big winner your numbers go down”.

He indicated also that the availability of funds from banks and other funding institutions has brought about added value from local products enabling it to earn more in exports.

 

Mr. Quarcoo also adds that they are on track to hit their 5 billion dollar target in the next four years because the service sector has been booming.

In June this year, Mr. Haruna Iddrisu, Ghana’s Minister of Trade and Industry announced that the total value of non-traditional exports was expected to increase to $5 billion between mid-year 2015 to end of 2016. Mr. Iddrisu was speaking at the inauguration of a nine-member Board for the re-launched Ayensu Starch Company Limited in Kasoa, in the country’s Central Region. The Starch Factory produces cassava on a large scale for domestic and export markets.

Consequently, Government would aggressively support agricultural production, growth of horticultural and other vegetable crops as well as shore up small out-grower farming schemes countrywide to meet the target, he added.

The Minister expressed optimism that the target would be achieved, adding that, stronger collaboration between the Ministry of Trade and the Ministry of Food and Agriculture is expected to guarantee the desired goal of increasing export to improve the country’s terms and balance of trade.

He said Ghana was under obligation to improve her export standards to meet the European Union requirements, particularly in the area of cocoa. Cocoa is the main ingredient for making chocolate.

Meanwhile, statistics for the first eight months of 2013 have shown major shifts in the structure of Ghana’s export revenue base.

Whereas gold still remains Ghana’s highest export earner despite this year’s price slump – from a high, early this year, of US$1,600 to US$1,300 currently – on the global market, cocoa has slid from being Ghana’s traditional second, or sometimes even highest export earner to the fourth position due to production problems and a fall in price.

Crude oil, which the country started producing less than three years ago, has become Ghana’s second highest export earner – a spot it has occupied since 2012. Non-traditional exports (NTEs), however has this year overtaken cocoa as Ghana’s third highest export earner.

In 2012, gold was Ghana’s highest export earner netting US$5,643 billion. Crude oil was next in line with export earnings of US$2,976 billion. Cocoa followed closely at US$2,828 while NTEs earned Ghana US$2,362.

Earnings from gold declined by 12.6% to US$3.4 billion in the first eight months of this year as compared to the same period last year while cocoa exports also fell by 21.4% to US$1.4.

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Accra, Africa, Bretton Woods, Bretton Woods system, Business, Economic, Financial Services, Ghana, Government, Invesments, Smithsonian Agreement, Uncategorized, United States

UNDERSTANDING THE ROLE OF THE FINANCIAL SECTOR

Reflex Eco Group – Africa news

by Paul Frimpong (Ghanaian Economist)

This Blog is sponsored by http://www.reflexecogroup.com

The financial sector refers to the market for the creation and exchange of financial asset such as money, stocks and bond.

It is very interesting to note that, it is the financial sector which stimulate and facilitate transactions in the real world. The real sector is referred to as the creation and exchange of goods and services. The financial sector plays a central role in almost all aspect of macroeconomic activities. It is so important in our everyday economic transaction such that it cannot be ignored.

As properly framed by economists; that “for every real transaction, there is a financial transaction that mirrors it” Most often, when people think of the economy, they tend to focus on the real sector not appreciating the role and the influence of the financial sector. That is an incomplete view of the economy. The financial sector plays a central role in organizing and coordinating our economy; it makes economic transactions possible. A human cannot live without life; an economy cannot operate without a financial sector. It is practically impossible unless may be we want to go back to the era of barter trading system. This shows how important the financial sector is to the operation of the economy.

The financial sector serves as the lubricant that facilitates the operation of trade that exists in our markets. Let’s consider an example of how the financial sector facilitates trade. Say you walk to a shop and buy a television. You shell out GH¢100.00 and the salesperson hands you the TV. Easy right? Right- but why did the salesperson give you the TV for the little piece of papers?

The answer to that question is; because the economy has a financial sector that has convinced him / her that, that piece of papers has value. To convince him (and you) of that requires an enormous structural system, called financial sector, underlying the TV transaction and all other such transactions. That financial system makes the transaction possible; without it the economy as we know it, would not exist.

The intriguing aspect is that; because the financial sector is running smoothly, you hardly know it’s there, but should the financial system break down, the entire economy would be disrupted; and would either stagnate or go into a recession. This is the more reason why it is very important to underline the impact of the financial sector in our modern day economic transactions.

For every real transaction, there is a financial transaction that mirrors it. For example, when you buy a CD, the sales person is buying GH¢1.00 from you by spending his CD. The financial transaction is the transfer of GH¢1.00 and the real transaction is the transfer of the CD. Because there is a financial transaction that mirrors every real transaction; the financial sector is then considered very important for the proper functioning of the real sector.

Every time there is a flow of both goods and services or factors of production from one sector to another, there is financial flow in the opposite direction. If the financial sector doesn’t work, the real sector doesn’t work. All market transaction requires both the real and the financial sector to be able to function effectively.

The financial sector is again important because of it role in channeling flows of the circular flow chart-such as saving back into the circular flow in the form of loans. The financial sector which comprises of financial markets and institutions channels savings back into spending. This is extraordinary complicated and requires years of study to understand fully. However it can be understood in the simplest form. If the financial sector expands the flow too much, you get inflationary pressures; if it contracts the flow too much, you get a recession; and if it transfers just the right amount, you get a smoothly running economy.

Whiles understanding the underpinnings of the financial sector, the role of interest rate cannot be ignored. Interest rate is the mechanism that equilibrates supply and demand in the financial sector just as price is the mechanism that equilibrates supply and demand in the real sector.

The willingness of individuals and firms to incur financial liabilities is greatly influenced by the interest rate on those financial assets and liabilities.

Interest rate in simple terms is the price paid for the use of a financial asset. For instance, when you deposit cash into an account, the bank pays you interest for the use of your financial asset. In the same vein, when you borrow cash from the bank, you pay interest plus the amount borrowed. When the rate of interest rises, people are less likely to borrow (sell a financial asset) and more likely to save (buy a financial asset). Thus when interest rates falls, there is more borrowing and the opposite is the case.

In order to appreciate the financial sector and the recent trends in global financial flows, perhaps it would be appropriate to have a look at some of the major incidence in history __ the Bretton Woods system.

In July 1994, the procedure for fixing exchange rate and managing international financial system was worked out at a conference held in Bretton Woods, a town in New Hampshire in the US. The Bretton Woods system was designed to ensure that domestic economic objectives were not subordinated to global financial pressures. Under the Bretton Woods system, all countries were required to fix exchange rate to the US dollar, and the dollar was fixed in terms of gold at $35 an ounce.

Since the US emerged as the leading power after World War II, the dollar replaced the sterling as the dominant currency for exchange. Under this system, private financial flows were regulated by capital controls and an international institution, IMF, was set up to monitor the international financial system that was largely dominated by official capital flows. The Bretton Woods system was not universal in its outreach as the communist bloc was not part of it.

However, the rise of Eurocurrency market in the 1960s put strains on the Bretton Woods system. The system suffered a major breakdown on August 15, 1971 when the US; which was unable to deal with a massive speculative attack on the dollar in the wake of growing balance of payments deficit largely caused by the protracted Vietnam War—unilaterally declared that it would no longer honor its commitment to exchange dollars for gold. For some time, a few countries attempted to create alternatives (e.g. the Smithsonian Agreement) to the defunct Bretton Woods system. But on February 12, 1973, Japan decided to float yen against the dollar, and on March 16, 1973, the European Community followed suit. Thereafter, the remaining countries took recourse to either floating or flexible exchange rate system.

Undoubtedly, this system was based on the hegemony of the US as it served the country’s foreign policy and economic interests. Surely, the motive was not altruism on the part of the US but was based on expectation that the country had much more to gain from managing international financial system. Despite its several shortcomings, this system provided adequate financial stability and economic growth for a considerable period (Taming Global Financial Flows by Kavaljit Singh)

ABOUT THE AUTHOR

Paul Frimpong CEPA

Chartered Economist (ACCE-Global) who writes on the macroeconomy and global affairs. He is also an African Affairs Analyst

Tel: +233 -241 229 548

Email: py.frimpong@yahoo.com

py.frimpong90@gmail.com

Please kindly send all feedback, queries and comments to py.frimpong@yahoo.com

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