Ghana is located in the western part of Africa between French-speaking La C¶tee divorce, Burning Fast and Togo in the west, north and east respectively and bordered in the south by the gulf of Guiana. With an estimated population of nearly 24 million of which 70 percent live in rural areas, Ghana covers an area of 238,537 square kilometers with a population density standing at 88/sq. Km. (247/sq. Mi. ) and a population growth rate of 1. 9 percent as at 2009 (ASS, 2011). Ghana in 1957 became the first sub-Sahara country in colonial Africa to gain its independence from British Leonia rule.
The country has enjoyed a stable democracy since 1992, and is considered a regional model for political and economic reform (World Bank, 2009). The National Democratic Congress (AND) led by President John That-Mills which won power at the 2008 elections is currently the ruling government. 2. 1. 2 Structure and Characteristics of Shania’s Economy The economies of most developing countries were integrated into the international trade system during European colonization, with export of primary products and import of manufactures constituting significant development activities of colonial oratories (Dado & Marshall, 2000).
The table reveals that for the period 2008 to 2010, whilst the traditional sector grew at 8. 5 percent, the .NET sector grew at a faster rate of 21. 5 percent. This confirms GAPE and It’s position that Shania’s traditional export sector has come to a standstill, whilst there exists growth opportunities within the .NET sector (GAPE, 2005; TIC, 2007). The burden of growing Shania’s overall export sector therefore lies with the .NET sector given its higher growth potential. Table 2. 4 further reaffirms Shania’s over- dependence on the traditional sector as illustrated in table 2. . It shows that whilst in 2008; 2009 and 2010 the traditional sector contributed 74. 25 percent; 70. 89 percent and 72. 2 percent respectively to total exports, for the same years, the .NET sector contributed only 25. 75 percent; 29. 11 percent and 27. 98 percent respectively to total exports. Table 2. 4 further illustrates the dominance of the .NET sector by SEEM firms (Individual exporters and small firms) who constitute some 90% of exporters, whilst large established .NET exporters constitute only 10% of the .NET sector.
MOOT is the advocate for the private sector within government. It ensures that Ghana derives maximum benefit from international trade relations and that domestic trade is conducted in a smooth and orderly manner. Furthermore, it is the responsibility of MOOT to strengthen trade relations with all friendly countries on most- favored nation basis consistent with Shania’s membership of the WTFO (MOOT, 2011). B) Ghana Export Promotion Council The Ghana Export Promotion Council (GAPE) was established by NELL 369 in 1969 as an agency of MOOT with the mandate to develop and promote Ghanaian exports.
The vision of GAPE is to become a dynamic world-class trade promotion organization playing a leading role in developing a dominant and sustained market position for Ghanaian .NET. Spec’s mission is to build internal systems and strategic external networks to develop Shania’s .NET throughout the value chain and promote made-in- Ghana goods and services in strategic markets. Its focus has primarily been to diversify Shania’s export base from the traditional export products.
To this end, GAPE has set up specific goals and objectives as follows: (I) To ensure that export trade contributes to economic growth through increased and sustainable production and competitive export market access; (it) To facilitate the development and expansion of the production base, and the promotion of .NET from Ghana; (iii) To provide relevant trade information to support competitiveness of Ghanaian exporters and other takeovers; (v) To develop programmer and activities for institutional capacity building of export community to meet the challenges of the global market; (v) To develop a coordinated national export agenda through the harmonistic of export related activities by private and public sector agencies and other development partners. GAPE has a clientele base of over 3000 registered individual and export firms organized into Export and Product Associations. Of these mass exporters, majority are individual exporters, and less than a thousand are active exporters (GAPE, 2010). Since its establishment, the GAPE has undertaken a number of restructuring programmer to motivate and mobile private sector initiative in the export sector. GAPE acts as a coordinating pivot for the various public sector and non-governmental bodies involved in trade facilitation, carrying out advocacy services for bodies involved in exports.
GAPE organizes market/trade missions, export for a, contact promotion programmer, trade fairs and exhibitions, buyer/seller meetings and conferences and group-marketing schemes with the aim of penetrating the competitive international market. GAPE works to improve supply-side constraints of SEEM exporters through the organization of contract production/supply schemes, establishment of export production village schemes, technical advisory services to Deescalate product Ana market development as well as supply canal management. GAPE is involved in trade capacity development through training of exporters and personnel of export facilitating institutions to upgrade their skill in export marketing.
GAPE runs an export school that organizes product, market and specialized trade development courses for export companies, trade facilitating agencies and businesses. GAPE works with the Genet and Customs, Excise & Preventive Service CUPS) to improve documentation and data collection on .NET (GAPE, 2011). C) Federation of Associations of Ghanaian Exporters The Federation of Associations of Ghanaian Exporters (PAGE) was formed in April 1992, to respond to the long-felt need for a unified, strong and credible organization to serve as an advocate of the private sector in exports. The Federation, which is registered as a company limited by guarantee under the Companies Code of Ghana, (Act 179, 1963) operates as a not-for-profit organization.
The establishment of PAGE resulted from the efforts of several export and product associations with the assistance the United States Agency for International Development (SAID), the government of Ghana, MOPE, MOOT, and GAPE. The vision of PAGE is to create partnerships for export growth in Ghana and its mission is to promote .NET through advocacy, capacity building, product and market development services, facilitation of access to finance and export development. The primary goal of PAGE is to be the premier provider of technical and information services to facilitate transactions between Ghanaian firms and their global partners. PAGE membership comprises of over 2,500 exporting firms in a range of sectors, including agriculture, seafood, crafts, timber, textiles, minerals, and industrial materials.
FAG’S mandate is to support the growth of the private sector in .NET through the provision of a portfolio of business solutions which are currently focused in four principal areas: advocacy; market and trade information, training and integrated export development programmer (PAGE, 2010). D) Ghana Export Trade Information Centre The Ghana Export Trade Information Centre (EXEGETIC) was established in November 2005 as an extension of GAPE to provide trade information and referral services to the business community, particularly, the exporter community. EXEGETIC provides tools for the business community to access and use trade information to make strategic decisions. The tools include an interactive website for business information and communication with clients and a strategically-located venue equipped with internet- connected computers for clients. It has also become an ideal location for trade conferences and workshops.
Since its establishment, EXEGETIC supports an average of four hundred and fifty three (453) clients including exporters and institutions every month with information on markets, trends, prices and other referral services to assist them in their businesses. The EXEGETIC centre houses the Ghana Export Trade Information System, which comprises an on-line export trade information network incorporated in the Export Ghana interactive website. Information available at this website includes: How to prepare for export business; Export market analysis tools; I race maps; Product Ana market access maps; International on Ana services provided to Ghanaian companies, foreign buyers, and clients; a directory of Ghanaian exporters; and general news on current export trends (GAPE, 2011). ) Export Finance Company In 1990, MOOT and the Bank of Ghana, established the Export Finance Company (AFC), o institute and streamline a comprehensive export-financing scheme for exporters in Ghana. SEC’s objectives are: (I) To grant loans and/or provide other forms of credit to exporters (it) To carry out business as a finance house and to issue and deal in commercial paper (iii) To raise loans for the purpose of financing exports. (iv) To offer and accept guarantees in respect of export finance. (v) To carry out all functions and duties incidental or ancillary to the production of export commodities and export of non-traditional commodities. The company is currently operating the following enhancing schemes: pre and post-shipment credit scheme; working capital finance; project finance; and export advisory services.
To qualify for a facility from AFC, an exporter must meet the following conditions: Should have registered company under the companies code of Ghana; registered as an exporter with the GAPE; be able to show proof of a confirmed export order from a buyer overseas; the commodity or item for export should fall under the current classification of non-traditional exports; and should demonstrate some experience in commodity areas (AFC, 2011). F) Export Development and Investment Fund The Export Development and Investment Fund (EDIFY) was established by Act 582 of 4th October 2000 to provide financial resources for the development and promotion of Shania’s export trade.
The mission of EDIFY is to finance the development and promotion of Shania’s .NET on concessionary terms, that promote the growth and prosperity of export firms, improve export competitiveness and enable the export sector to contribute towards the economic growth and development of Ghana (EDIFY, 2008). The fund has two main facilities which can be accessed by applicants for funding namely the Export Development and Promotion facility (EDP) and the Credit Facility (CB). Activities financed under the EDIFY include: product development and promotion, capacity building, market research and development of infrastructure, export trade-oriented activities of institutions.
A major attraction of the EDIFY facility is the low interest rate on its loans. Eligible applicants include institutions, organizations, product and trade associations in both the private and public sectors providing services to the export sector. The Die’s main source of funding is a statutory 0. 5 per cent fee on all non-petroleum imports. The EDIFY Credit Facility operates with 18 designated financial institutions (Dips). The Dips receive loan applications from prospective borrowers and submit them, together with their appraisal and recommendation, to the EDIFY Board. The main products financed under Die’s credit facility are she butter, cocoa powder, canned tuna, vegetable oil, and handicrafts (EDIFY, 2008). ) Export Associations Export Associations were set up in the early sass by the Government of Ghana tongue c to promote ten Interests AT s exporters Ana to conclave ten Toweling objectives: (I) Play an advocacy role for small exporters (it) Consolidate/aggregate products for export (iii) Attend to the needs of small exporters (iv) Create a platform or small exporters to meet to discuss issues of interest (v) Increase exporters contribution to discussion on export trade and (v’) Work together with GAPE to find markets for their members (GAPE, 2001). PAGE was later set up with the assistance of GAPE, as the umbrella body to superintend the activities of Ease.
Examples of EASE in the agricultural sector are: Vegetable Producers & Exporters Association of Ghana (PAGE); Sea-Freight Pineapple Exporters of Ghana (ESP.); Horticulturist’s Association of Ghana (HAG). Within the handicraft sector, some of the EASE are: National Association of Handicraft Exporters (NAME); Ghana Association of Fashion Designers and Exporters (GAFFED); TAG Craft Network Association of Ghana (ACING). Examples of EASE within the processing sector are: Furniture & Wood Products Association of Ghana (FAGAN); Botanical Product Association of Ghana (BOTTOM) and Continental Association of Salt Exporters (CASE). Export Associations have their own individual goals and objectives relevant to their specific industry or markets.
Within the agricultural sector for example, the Vegetable Exporters and Producers Association of Ghana (VEGA) has the following objectives: (I) to promote getable production for the local and international markets (it) to mobiles resources for the production and export of vegetables (iii) to ensure product quality to meet international standards (v) to encourage processing as a meaner of adding value to products (v) to identify markets for members and provide them with up-to-date market information (vi) to serve as a linkage between policy makers and the vegetable industry (VEGA, 2004). The average EAI membership size is 30. However, membership could range between 20 to 150 depending on how well-organized the EAI is and the extent of members’ interest and confidence in Association leaders. EASE are supposed to meet monthly or bi-monthly to plan, coordinate and execute their objectives. Each EAI is represented on the Executive Council of PAGE and therefore has a say in what PAGE does for the Associations (GAPE, 2010). However, as PAGE is a voluntary umbrella association for exporters, it does not have operational control over Ease. EASE in Ghana are generally weak and poorly organized (GAPE, 2009).
Shipman (2006) states that regarding EASE and export units in Ghana, one problem that has emerged is the lack of cooperation and communication, citing the case of the ‘Ghanaian Association of Vegetable Exporters’ (GAVE) established in 2004. The establishment of GAVE was the result of a situation in which an exporter sold his products at lesser prices to win new customers. This brought other exporters together to form GAVE to forestall such occurrences and to deal with such problems in the export business. Unfortunately, after this particular problem was solved, the association became very weak and ineffective (Shipman, 2006). PAGE suggests that a sizeable portion of EASE have management problems which are rendering the EASE ineffective (PAGE 2010). A few EASE are progressive and well-organized.
For example Sea-Freight Pineapple Exporters AT Ana (SPECS) Is Dragging all tenet monomers exports Day using ten same packaging materials and labeling for their export items (GAPE, 2010). GAPE is a necessary bridge between EASE and the government, and provide trade information and capacity building. GAPE currently does not have any major control or leverage on EASE except in an advisory capacity, working closely with their leadership and generally assisting them to find markets and leading them to access funding for their operations. GAPE is also represented in the meetings of a few EASE as observers from time to time when invited. There is anecdotal evidence suggesting that relationship between GAPE and some of the EASE is unhealthy owing to how EAI leaders are ‘MIS- managing the Ease.
There is an ongoing debate within the .NET sector as to whether or not legislation should be put in place to compel SEEM exporters to Join Ease. One school of thought believes that legislation may not be the effective way of strengthening Ease. Instead, EAI leaders should be provided technical and managerial assistance to work for exporters, who would be attracted to Join EASE when they see the benefits of belonging to Ease. On the other hand, there is the view that it is imperative to institute mandatory membership for EASE as SEEM exporters would not Join EASE if left alone. H) SEEM Exporters (Non-Traditional Exporters) About 90% of .NET exporters in Ghana are Seems (GAPE, 2006).
Although SEEM exporters receive support from the government and trade support agencies, they are not immune to the same international trade challenges (such as declining prices, worsening terms of trade, manufacturing of synthetic substitutes and dumping of cheap exports on the markets of developing countries) that traditional exports have been subjected (Dado & Marshall, 2000). SEEM exporters in Ghana are beset with overall problems including: poor marketing practices; high banking charges; problems in communicating with foreign clients; poor institutional assistance; management problems; poor access to credit; high interest rates; and low exporter- friendliness by banks (Baits, 2002; Jeroboam-Coleman and Bike, 2006; Shows- Primping and Mine, 2007).
Analysis of corporate size of enterprises reveals that about 70 percent of the annual .NET earnings for Ghana is contributed by less than 20 percent of the nearly 3000 registered exporters. Only a few firms have turnover of over $ 1 million. Majority of exporters have annual turnovers of less than $50,000 GAPE, 2005). Shows-Primping and Mine (2007) discovered that only 31 percent of SEEM exporters had a turnover of above $1 million, with over percent of them operating without formal planning procedures or set of objectives, generally lacking the marketing resources and expertise available to larger organizations. Although there are about 3,000 SEEM exporters registered with the GAPE, only nearly a thousand to a thousand- three hundred are active year-in-year-out (GAPE, 2010).
Not all SEEM exporters are registered with GAPE, and there is suspicion that unregistered exporters may even outnumber the registered. There has been an administrative directive from MOOT since 1990 requiring all exporters to register with the GAPE. However, enforcement poses a challenge as this directive is not backed by legislation. Consequently, It Is Doolittle to capture data on all exporters Including many AT ten itinerant and cross-border exporters between Ghana and the neighboring countries, and equally difficult to enforce traceability protocols. Through the Genet system of CUPS, it is known that a lot more exporters are carrying out exports independently of the GAPE.
Most of the complaints of poor quality goods emanating from importers elate to products of exporters not registered with GAPE (GAPE, 2009). 2. 3. 2 The Non-Traditional Export Sector’s Contribution to Total Exports Table 2. 5 shows the total national export earnings and contribution of .NET exports to the overall total exports from 2005 to 2010. Total national merchandise exports of Ghana grew from US$2. 76 billion in 2005 to US$5,822. 23 billion in 2010. This depicts an annual average growth rate of percent. Within the same period (2005 to 2010) Ante’s grew from about IIS$777. 59 million to IIS$I ,million, showing an annual growth of about percent. The percentage contribution of .NET to total exports has been quite stable. Table 2. : Percentage of .NET to Total Exports – 2005 to 2010 I year / Export proceeds (US$’OHO) 12005 12009 12010 14,194. 72 15,206. 55 Contribution of .NET 14,174. 16 | 5,822. 2 | 2007 12,768. 40 13,415. 70 I I Non Traditional Exports 11,164. 51 1 1340. 94 11,215. 04 11,629. 20 128. 09 126. 14 I I Exports to Total Exports 127. 76 29. 11 Source: Ghana Export Promotion Council (2011) Table 2. 5 suggests that between 2005 and 2010, the .NET sector contributed averagely 27. 5% to total exports, whilst the traditional sector contributed the rest (72. %). This scenario illustrates Shania’s over- reliance on the traditional export sector which is subject to price fluctuations and other adverse terms, exposing the vulnerability of Shania’s export earnings.
The author argues that this vulnerability could be mitigated by a more diversified export base and a quantum leap in export performance by the .NET sector. 2. 3. 3 General Performance of the Non-Traditional Export Sector Non- traditional exports grew significantly from 2000 to 2010 as a result of government support and activities of Peas in the sector. Figure 2. 2 shows the general trend of .NET performance in US dollars from 2000 to 2010. Hogue 2. 2: General I Rena AT N I E Performance 2 [pica] With respect to figure 2. 2, the sector grew steadily at an average annual rate of about 16. Percent from 2001 to 2008 with the highest growth rate of about 30. Percent occurring in 2007.
The year 2009 saw a decline in total earnings of .NET in US dollars as compared to the general trend of increases in .NET achieved over the previous years due to the global financial crises and poor geographical conditions in Europe. The sector performed better in 2010 than in previous years, yielding export proceeds f IIS$I . 629 billion.