Commodity slump cost us US$1.3bn -- Veep

Ghana lost US$1.3billion in potential export revenue last year due to price declines of gold and cocoa, the country’s biggest foreign exchange earners apart from oil, said Vice President Kwesi Amissah-Arthur on Tuesday.

 

The fall in earnings has put pressure on the country’s foreign reserves and contributed to the rapid slide of the cedi in the past year, he said, adding that cocoa and gold prices have cumulatively fallen by 20 percent and 25 percent respectively since 2011.

“Weakening commodity prices have decreased earnings from our exports, reducing our capacity to finance imports [and] thus increasing pressure on our foreign exchange reserves.”

Mr. Amissah-Arthur, who was addressing investors at the fourth annual African AmCham (American Chamber of Commerce) Summit in Accra, also worried that the rise in global interest rates, triggered by the US central bank’s slowdown in bond purchases, has fuelled currency volatility in emerging economies and threatens Ghana with higher costs of debt servicing.

His comments were made a day after Cabinet met to consider how to support fresh regulations by the Bank of Ghana (BoG) to check the depreciating cedi. The currency lost 7.8 percent in January alone against the dollar, on top of a 14.6 percent slump in 2013, according to the BoG.

Mr. Amissah-Arthur said reform of the currency market and “maintenance of an appropriate incentive structure for the country” -- which was an important element of economic reform in the 1980s – “remains a priority of government”.

“The reforms seek to restore policy credibility, stability and certainty in our economy. They also seek to enforce legal requirements for doing business and reduce the dollarisation of our economy,” he said.

“It is also to assure investors -- domestic and foreign -- we will work to create a competitive environment that assures them of adequate returns from their investment.”

The two-day AmCham conference, which has the theme “Building the American Brand in Africa”, has been described as an interactive learning and networking event for the chamber and US diplomatic representatives across the continent.

The event’s coming to Accra, according to US Ambassador Gene Cretz, is to stress the importance of Ghana for American investment and trade. “There is tremendous potential here. There should be no doubt that the Ghana and Africa brand is held in high esteem in the USA.”

He said American chambers of commerce throughout sub-Saharan Africa play a critical role in assisting and stimulating the creation of businesses and facilitating investments needed to promote the American brand.

“Chambers effectively communicate the message that American companies want to cultivate professional development and produce sustainable and equitable economic expansion across Africa.”

President of AmCham Ghana Philippe Ayivor said the local chamber is an active member of the African Business Initiative, the continent’s arm of the US Chamber of Commerce. 

“We have about 15 AmChams here [in Accra] for the next two days from various part of the continent to deliberate on investment opportunities in Africa.”

The Africa Business Initiative was set up to engage the US business community on legislative policies that foster foreign direct investment between the US and African countries, and to introduce US companies to the continent’s vast economic opportunities.

‘Gov’t must be serious about oil palm’

Government must be serious with its commitment to the oil palm sector as it holds tremendous potential to create jobs and reduce poverty, says Harrie Hendrickx, Regional Oil Palm Programme Manager of Solidaridad, a global investor in sustainable agricultural supply chains.

Oil palm is the fifth-largest crop in Ghana in terms of area planted after cocoa, maize, cassava and yam. Approximately 305,758 hectares of plantation is being cultivated nationwide, with an additional 20,000 hectares needed to meet local demand.

Ghana is a net importer of the crop, with the gap in the order of 50,000 metric tonnes per year -- a figure estimated to hit over 150,000 metric tonnes by the next 15 years.

“Ghana has a very competitive location for oil palm development compared to its immediate neighbours and top global growers,” said

Mr. Hendrickx in an interview with the B&FT. “There is a great opportunity for making a lot of money within the sector and involving more people.”

Speaking at a training programme to educate oil palm farmers on new farming techniques to increase productivity and profitability,

Mr. Hendrikx shared the concerns of farmers who complained of neglect by government despite the crop’s huge potential.

“In the oil palm sector, farmers experience very little help from government. There are no extension officers to provide training to any farmer. Nobody tells us what to grow, how to farm, how to get higher productivity or learn new farming and agronomic techniques. We are left alone in the business, unlike farmers of cash crops such as cocoa and rubber,” said Kwame Adentwi, a farmer in Abekwasi in the Western Region.

He said the lack of financial support from government and banks, lack of appropriate pricing for their commodity, and no input subsidies all combine to deprive them of a decent livelihood from the crop.

Mr. Hendrikx added that land ownership is a challenge that must be fixed if farmers are to expand their production beyond the subsistence level.

Three years ago, government published an oil palm master-plan that set out a strategy to boost production and farmers’ competitiveness, but growers say the words have not been followed by actions.

Ghana’s first international commercial trade in oil palm took place in 1820. Starting from wild harvesting, oil palm evolved into an agricultural crop and plantations were established by 1850.

In the 1880s, the crop accounted for 75 percent of export revenue until it was overtaken by cocoa in 1911. Global production of oil palm is estimated by the United States Department of Agriculture at 50.28 million metric tonnes in the crop-year ending September 2011. Africa’s share dropped from about 27 percent in 1980 to 3 percent in 2011.

Indonesia and Malaysia are the top-two growers, accounting for 85 percent of world production.

2015 cocoa certification on-course

…Cargill trains more farmers
 
Ghana is on course to achieve the 2015 cocoa production certification standards stipulated by the World Cocoa Foundation, Philippe Huet, Managing Director of Cargill Cocoa and Chocolatetold B&FT.

Cocoa buyers and consumers of chocolate around the world are increasingly demanding traceable cocoa that is certified as grown in a sustainable manner. As a result, a lot of cocoa- producing countries are grabbing the opportunities therein.

Cocoa certification demands that a farmer’s social, environmental and economic activities fall in line with best labour practices, in exchange for receiving a premium price on the produce.

The standards will also push farmers to develop better drying and fermentation practices.

“We are working hard with our partners toward achieving the 2015 deadline. In November, I was in the country to check on exactly what we are doing on it.Our focus is to invest in education of our farmers and making sure that the deadline is met.

“The training is in good agricultural practices targetted at the farmers, the farm and bringing good farm techniques,” said Huet at a ceremony in Tema to present certificates of graduation and a cheuque for GH¢604,288 to some trained cocoa farmers.

About 3,900 farmers were honoured for their dedication to helping to grow sustainable certified cocoa in the country.

He said: “We are pleased to welcome so many people to our plant, especially the farmers when this may be their first time they have seen what happens to their cocoa beans, how companies such as Cargill process cocoa, and even what chocolate tastes like.

We hope that today is an informative and educational experience.


“This premium recognises the hard work undertaken by these farmers and is a clear indication that farmers are adopting more sustainable practice. Cargill will continue to work with our partners to make sure that cocoa farmers have the right support, education and tools in order to continue building and actively supporting the development of sustainable cocoa production in the country.”


The training, spearheaded by Cargill Cocoa and Chocolate, is being delivered in partnership with Ghana Cocoa Board; licenced cocoa-buying company Akuafo Adamfo, a subsidiary of the Finatrade Group of Companies; and Solidaridad West Africa, a not-for-profit organisation that supports sustainable development of farmers through the enhancement of value chains for fresh and processed agricultural commodities and non-agricultural commodities.

The Cargill sustainable cocoa programme ensures a better life for cocoa farmers and their families, and strengthens the cocoa supply-chain for the future, exercising responsible environmental stewardship.

The programme increases farmer incomes through efficient cocoa production. It offers tangible customer solutions which enable them to join Cargill in the journey toward a sustainable future for cocoa.

Kojo Amoo-Gottfried, Managing Director of Cargill Ghana, said: “Helping farmers adopt better farming practices so they can improve the quality and size of their yields is a central part of the Cargill sustainable cocoa programme.

“In farmer field-schools, farmers will receive extensive training to help them rejuvenate cocoa farms and apply best agricultural practices related to pest-control, harvest and post-harvest practices.


“The premium payments are a result of the Cargill cocoa promise and a commitment to building a sustainable cocoa supply chain by focusing on three key areas: farmer training; supporting cocoa farming communities; and investing in the future for sustainable cocoa production,” he said.

Economy attracts Turkish investors

Turkish Ambassador to Ghana, Dr. Senturk Uzan, has said that there is enormous investor interest in the country’s economy to bolster trade and sustain bilateral relations among the two countries.


“Turkey has huge success from businesses and want to replicate that in Ghana’s business environment to help boost trade and investment, and promote development,” he said.

The value of trade between Ghana and Turkey is expected to increase to about US$1billion by 2015 from the current trade portfolio of US$500million.

Turkey imports from Ghana, mainly gold and cocoa, are valued at US$115million annually, according to 2011 trade figures.

Turkish exports to Ghana last year recorded US$223.5million while it imported US$303.5million worth of goods from Ghana.

For the first six months of 2013, Turkey exported US$103.6million worth of goods to Ghana while it imported US$128.9million worth of goods from Ghana.


Dr. Uzanwho was speaking in Accra during a courtesy call on the Ghana Chamber of Commerce & Industry, and expressed the Turkish government’s commitment to encouraging businesses to invest in Ghana’s economy.


This is because Turkish investors see Ghana as a country with a lot of potential in the sub-region, and are ready to form joint ventures with other counterparts to promote businesses among the two countries.


“The entrepreneurs are ready to invest 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.”


He revealed that the Turkish government has made available a scholarship scheme for African students to attend and study various disciplines in Turkish universities to help to promote trade and boost investment among the two countries.

“The universities offer scholarships for African students, especially Ghanaian youth. This is to help deepen bilateral relations,” he said.


Seth Adjei Baah, President, Ghana Chamber of Commerce and Industry, pledged Ghana’s readiness to improve its exports to Turkey to boost trade.


He called for the implementation of practical measures that would stop the importation of items that can be produced in Ghana.


“It is sad to note that we import fruit juices when we have a lot of fruit in the country,” he stated. A country like Ghana, with over 50 percent of the population involved in farming, cannot produce enough to feed its citizens and has to import to supplement its food needs.


“In some countries, only about 5 percent of the population is involved in agriculture and yet they can produce for the population and even export,” he remarked. 

Two fertilisers launched to boost soil fertility

Deputy Minister of Food & Agriculture, Hannah Louisa Bissiw, has officially launched two new fertiliser products into the Ghanaian agricultural sector aimed at increasing soil fertility to boost farm produce.

The fertilisers; Magic Leon and Black Diamond, manufactured by Organiksa -- a giant fertiliser manufacturer in Turkey -- will be distributed in the country and other West African markets by the Shaaba Group Ltd, a Ghanaian construction and processing company.

The two products have been manufactured with high capacity to improve the structure of soil, and prevent high water and nutrient losses in light and sandy soil.

The products also help increase the water-holding capacity of soil and helps resist drought, while darkening the color of the soil to help absorption of the sun energy.It also helps reduce the presence of toxic substances in soil.

Launching the fertilisers in Accra, Dr. Bissiw urged farmers in the country to patronise the new fertilisers to boost their yield. She pledged government’s support for the new products and urged farmers to patronise them.

Chairman of the Shaaba Group Dr. Seth Adjei Baah explained that research-testing and efficacy of trails have proven the Magic Leon and the Black Diamond contributes greatly to plant growth, root development, soil remediation, higher yields and results in overall healthy agriculture production.

“The products’ distinction is in the fact that they contain higher percentages of the beneficial humic acid components, with below detectable levels of the undesirable trace elements. This is an uncommon feat, especially because the products are the most competitively priced on the market.”

He indicated that over the years Ghana’s development strategies have highlighted modernisation.

“Until recently, the agriculture sector has been the bedrock of the Ghanaian economy, dominating in terms of its contribution to Gross Domestic Product (GDP) and employment. Unfortunately, fortunes of the agriculture sector have dwindled in recent years.

“The agriculture sector, which used to contribute about 40 percent to Ghana’s GDP and employ about 60 percent of the total labour force in the country, currently accounts for a little over 22 percent of the country’s gross domestic product and 50 percent of national employment.

“There is therefore an urgent need to reverse these worrying trends if the country is to meet the Millennium Development Goals of halving poverty and eradicating hunger by 2015,” he said.

US to help solve Ghana's energy problems

…MCA II deal expected mid-year

The Millennium Challenge Corporation (MCC) says the second compact, which will focus on solving the country’s energy and power challenges, is due to take off by the middle of this year.

Mr. Jonathan Bloom, Deputy Vice-President, Africa Department of Compact Operations of the MCC, disclosed this in an interview in Accra. 

“Ghanaians should be excited after the signing ceremony.We are hoping to get through our board and have the signing ceremony certainly toward the middle of this year.

“The processes will be approved by the board, which will be followed by the signing ceremony -- and it’s only at the end of this that the big money starts to flow, paving the way for work to start on the second compact which is estimated to be worth hundreds of millions of dollars.”

Ghana is one of two countries that have been eligible for the grant since 2004 on a continuous basis, and the country’s performance and indicators continue to be strong.

The second phase of the compact will finance the country’s irregular and insufficient power supply. It will be targetted at enhancing the distribution system, effecting institutional changes and creating a Power Park to boost energy consumption.

Ghana’s demand for power is growing at around 10 percent per annum, spurred by robust economic growth and rising consumption.  

B&FT has gathered that the funds expected from the second compact will enable the country to construct a 400-megawatt thermal plant in the next three years to reduce over-reliance on hydropower generation.

In November last year, government submitted a concept-paper proposal to the board of directors of the MCC to support power generation and distribution in the country.

Currently, a team of US technical experts are engaging with government and finalising plans for the second phase.

Mr. Bloom said: “There has been a team that has come several times, because the critical process for the MCC is preparing in great detail to know what is going to be done by who, when, what result to expect, through what mechanisms, for what amounts of money -- and so we design all that with a team from the Millennium Development Authority (MiDA).

“We’ve been going on for three years now, which is an unusually long time; but because we are tackling one of the biggest problems in the country -- we are seeking access to reliable power -- it is a difficult problem to solve.”

Mr. Bloom commended government through the Electricity Company of Ghana and the Ministries of Finance and Energy for having very solid plans for the compact.

“I think the compact should result in the right kind of structures to provide a sound foundation for building power in the future.The decision that the Public Utilities Regulatory Commission (PURC) made in October 2013 to raise tariffs substantially was a politically courageous decision. 

“It was necessary, but it requires courage. In many countries they cannot advance because their leadership doesn’t make those hard decisions. So I congratulate the government on making those hard decisions, but it takes time,” he stated. 

Commenting on the benefits to be derived from the signing of the compact, Mr. Broom explained that the initial US$8million grant agreement signed between the government and the MCC in July 2013 was to facilitate feasibility studies in engineering and consultancies, and had greatly contributed to the progress made so far toward the compact’s take-off.

“That US$8million has substantially been spent, and it is essentially what has enabled us to make a lot of progress,” he said.

In August 2006, Ghana signed the first compact for an amount of US$547million, making it the third-biggest beneficiary of this initiative by the United States government after Tanzania (US$698million) and Morocco (US$69million).

The five-year compact came into force on February 16, 2007. The agricultural sector was the main focus, but transportation and rural development were also covered. In January 2011, Ghana was reselected with two other countries for the second compact.