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Country Commercial Guides for FY 2000: Ghana Report prepared by U.S. Embassy Accra, released July 1999

CHAPTER I:   Executive Summary

This Country Commercial Guide (CCG) presents a comprehensive look at Ghana's commercial environment using economic, political and market analysis. The CCGs were established by recommendation of the Trade Promotion Coordinating Committee (TPCC), a multi-agency task force, to consolidate various reporting documents prepared for the U.S. business community. Country Commercial Guides are prepared annually at U.S. Embassies through the combined efforts of several U.S. Government agencies.

Ghana is a small West African country about the size of Oregon with an economy traditionally oriented toward agriculture and small scale domestic trading. A former British colony, Ghana uses English as the language of commerce and government, although some 75 other languages and dialects are spoken. In the past, Ghana conducted most of its external trade with Europe and North America and only a relatively small amount with other African countries. Ghana's re-establishment of diplomatic and trade ties with South Africa has contributed to a new trade and investment flow with that country. However, trade with the United States is also becoming more and more significant. Greater transparency and accountability in government as well as strengthened local watchdog institutions fighting corruption have contributed towards making this a more attractive market to the U.S. investor.

Leading U.S. Export Markets in Africa:

	
				1998 Export Value (USD millions)
	South Africa			3,626.1
	Nigeria			 	  819.6
	Angola				  354.3
	Ghana				  223.4
	Kenya				  199.0
	Côte d'Ivoire			  151.6
	Zimbabwe			   93.1

Traditional Ghanaian exports include cocoa, timber, and gold. While cocoa production is highly dependent on weather conditions, the mining sector has experienced vigorous growth in recent years as new mining technology has permitted the profitable exploitation of lower grade ores. The recent decline in gold prices has had a negative impact on Ghana's foreign exchange earnings, although it should be noted that Ghana's gold production costs are still lower than South Africa's.

Agriculture dominates the economy (about 37 percent of GDP); sustained growth in the manufacturing sector has been elusive. Until reform measures were adopted in the mid-1980s the economy was dominated by public sector enterprises -- more than 300 in number. The Government of Ghana (GOG) has now divested itself of well over 200 of these firms and the divestiture program continues, albeit at a slower rate.

The GOG re-instituted a system of Value-Added Tax (VAT) in the last quarter of 1998 to bolster revenue collections and rationalize the tax system. The VAT is currently fixed at 10%.

Various events have meant renewed interest in the continent, and in particular Ghana.

The historic visit to Africa by President Bill Clinton in March of 1998 reinvigorated the Ghanaian business community's seriousness about becoming the Gateway to West Africa. President Jerry John Rawlings' state visit to the United States in February of 1999 (at which time Ghana and the United States signed a Trade and Investment Framework Agreement as well as an Investment Incentive Agreement), and the 5th African-African American Summit which took place in Accra this year (bringing approximately 2,000 U.S. delegates, many of them investors), have also instilled high expectations of business ties with the U.S. As more and more people are visiting Ghana, including over 50,000 Americans in 1998, tourism has become the country's third largest foreign currency earner.

Until recently Ghana was a net exporter of surplus electricity. However, a long standing tariff policy, below average rainfall over the past three years, and a growing demand combined to create an historic power shortage for the country throughout most of 1998. The GOG, external donors and local and foreign private sector companies worked together to put the country back on course. The energy crisis is largely over and the capital Accra is back on full city power for the most part. Consumer electricity prices were increased by 300% in early 1999. The GOG plans to double its generating capacity to 2600 megawatts by 2001, primarily through gas-fired plants, and it has set up the regulatory framework and price reforms to attract independent power producers, as well as encouraging alternate renewable sources of energy. This situation has afforded many opportunities for foreign vendors and investors in that sector.

The telecommunications sector has been reinvigorated by deregulation, providing many new opportunities for investment. Wireless services and the replacement of antiquated switching facilities have improved the telephone system, but there is still room for expansion, especially in the area of data transmission and international networks. In 1998 a U.S. company became the second provider of wired telecommunications service.

The generally poor quality of the Ghanaian road networks continues to have an adverse effect on economic development, but offers opportunities for U.S. investment.

Electrical power systems, telecommunications equipment, construction and earth moving equipment, motor and heavy-duty vehicles and replacement parts, mining industry equipment, computers and peripherals, travel and tourism services, food processing and packaging equipment, secondhand clothing, medical equipment as well as hotel and restaurant equipment also offer opportunities for U.S. exports. In FY 1999 Ghana became the second largest importer of U.S. rice (after South Africa) in sub-Saharan Africa. Sales of defense articles to Ghana topped $900,000 in FY 1999.

All the programs of the Export-Import Bank of the United States (Eximbank) for both public and private sector transactions are available in Ghana. Exim's most active portfolio in Africa is currently in Ghana, with total loan guarantee facilities of $117 million in FY98 and FY99, and pending letters of interest for $400 million in proposed U.S. sales.

One of the major disincentives to investment in Ghana remains the land acquisition problem. Land reforms are urgently needed to ensure that investors can lay claim to their property within a legal framework.

General elections are scheduled to take place in December, 2000, with President Rawlings no longer eligible for candidacy according to the 1992 Constitution. The expectation is that elections will be free and fair, much as they were in 1996.

Ghana's largest traditional trading partner has been the United Kingdom, Nigeria is second, and the U.S is third. The last three years have seen an increase in the U.S. share of Ghana's total imports, and that trend is expected to continue. Ghana is now America's third-largest export market in sub-Saharan Africa. It has become a site for conferences and gatherings of potential business links with Africa.

The Commercial Service is represented in Accra, and it, the Foreign Agricultural Service and other U.S. Embassy elements stand ready and eager to assist U.S. businesses in their efforts to penetrate this attractive West African market. The Commercial Service can provide the U.S. company representative with a personalized program of local appointments and insights into the Ghanaian marketplace known as the "Gold Key Service." For more details see Chapter IV, 2.

Country Commercial Guides are available for U.S. exporters from the National Trade Data Bank's CD-ROM or via the Internet. Please contact Stat-USA at 1-800-Stat-USA for more information. Country Commercial Guides can be accessed via the World Wide Web at http://www.stat-usa.gov; http://1997-2001.state.gov; and http://www.mac.doc.gov. They can also be ordered in hard copy or on diskette from the National Technical Information Service (NTIS) at 1-800-553-NTIS. U.S. exporters seeking general export information or assistance and country-specific commercial information should contact the U.S. Department of Commerce Trade Information Center by phone at 1-800-USA-TRADE or by fax at (202) 482-4473.