Ghana: Trade Combats Disparity and Promotes Diversification – Minister

28 March 2011

interview

Washington, DC — Hanna Tetteh has been Ghana’s minister for Trade and Industry and a senior advisor to President John Evans Atta Mills since February 2009. The country has recorded steady economic growth for the past decade. The Economist has included Ghana in its list of the top 10 fastest growing economies worldwide in 2011 – spurred by oil production which commenced in December. Interviewed by AllAfrica’s Reed Kramer, Tetteh outlined the government’s strategy for expanding trade and spurring growth. Excerpts:

What are the essential elements of your government’s trade and economic policies?

Trade is key to the economic growth of Ghana. At the end of the day we are a small market with limited purchasing power. Therefore, if we are going to be able to generate the kinds of revenues that we need in order to fund our development and not to be so highly dependent on development assistance, we’ve got to earn those revenues by ourselves.

Up until now, most of our trade has been in commodities: in cocoa, which is our major export, in minerals, with some amount of intermediate agro-processed products and a very minimal amount of trade in services. Now, we look to be expanding even faster because of the new petroleum resources. Again, exporting is key. This is something that has been important not only for this government but also for previous administrations. As far back as 1999 to 2000 we developed what we called an Export Development and Investment Fund, supporting Ghanaian businesses that wanted to produce specifically for export. In 1996 we started our gateway project, where we wanted Ghana to be the trade gateway for West Africa. We did a lot of trade facilitation reforms to make it easier to move within our ports; we did rehabilitation within our ports so that there would be a transit route for the landlocked West African countries, and the continued focus has been on attracting foreign direct investment.

Fredrick Onyango

A textile exhibitor at an African Growth and Opportunity Act (Agoa) conference in Nairobi.

Trade is important and it’s always been important, but the key is to move away from commodities and minerals to value addition. That is where we will get the maximum return. What we’re focused on at the moment is how we can promote private sector growth, industrial development, more processing – especially of intermediate products such as cocoa butter rather than exporting cocoa, or cut fruits and juices instead of exporting tropical fruits, because again, there’s value addition. With regard to minerals, we’ve got some investment to move beyond just the extraction, for instance, of bauxite, to processing into aluminum. The focus is value addition for greater value and greater returns in terms of exports revenues.

What is the “vibrant technology-driven industrial sector” mentioned in the mission statement for your ministry?

We’re not looking at high-tech, because it’s not just a question of starting businesses but making sure there’s supporting infrastructure. That’s why we are focusing, for now, on intermediate processing. We think that’s what we have the human resource skills to do, and with time we will develop into other things as well.

And to get the capital required, you need to attract foreign investment?

Luckily, over the last couple of years we’ve seen growth in Ghanaian companies that can be called medium-sized enterprises. But of course FDI (foreign direct investment) comes in not only with capital, but also with skill. One of the key things is to ensure we promote the transfer of technology and skill. We have Ghanaian businesses that are now doing this, and we’re getting (Ghanaian) expatriates coming back. We hope to attract more FDI, because with these industries and businesses the capital outlay is huge. Our financial services sector is not as well developed, certainly, as what you have in the West. It doesn’t have the same kind of ability to do medium- to long-term lending. We don’t have such a well developed capital market either. It’s really FDI that can arrange the kind of resources that would make this happen.

Now that Ghana has joined the ranks of the oil producers, do you plan to maintain diversification in your economy?

On the same day President Mills opened the first valve on the Jubilee Oil Field, the vice president was launching a private sector development strategy in Accra that focuses on the non-oil sector to clearly demonstrate that we intend to give equal attention to both. We know that if we don’t make a deliberate effort, there are chances that oil will take over.

Will agriculture, which has been the leading export earner, continue to have a central role?

Most of our exports to the EU are agricultural or horticultural products, including fresh produce and semi-processed produce. That accounts for 40-45 percent of our exports in any year. It’s not something that we can decide to ignore.

There are building blocks that you need to put together to make all of this happen. What my colleague, the minister of agriculture, has focused on is increased production and productivity to feed both local consumption and for export.

We’re looking at four main crops: rice, maize, soya and sorghum. These have multiple uses in different sectors. So, specifically with the agricultural development program of the Ministry of Agriculture, the idea is to encourage young people to engage in agriculture. We have a youth-in-agriculture program that encourages them to go back to farm to be able to cultivate these crops.

In the Ministry of Trade and Industry we’ve added a cotton support program because we want to encourage the re-development of the cotton sector. It’s a viable cash crop which grows well in the northern parts of the country where we have issues with poverty. Not everybody is going to be able to come south and work in the oil sector. If we don’t focus equally on the north and the south, and on the products that are important for local consumption, production, processing and export, then we’re going to have challenges, especially where you have an increasing disparity between the south and the north. As much as possible, we want to avoid that.

Disparity often arises in oil-producing countries. Are you taking other steps to avoid that trap?

We have different ecological zones in the north, where we have savannah, and in the south with tropical rain forests.
In the north we have one rainy season. In the south we have a major and a minor rainy season.

The focus in the northern region is on rice, soya, cotton and maize because those are the ones that can grow reasonably well within the constraints of the savannah region. For tree crops, we are encouraging mangoes and also shea trees that grow wildly. The challenge is to cultivate them for cosmetics production. We want communities to participate in the development programs – to have a sense of ownership. You can’t plan from the top and not have stakeholder participation and expect it to be successful. It’s not just about giving them the opportunity to grow crops but putting in place the marketing mechanisms that are sure to bring revenue for what they produce. Focusing on those crops should help them to stabilize their situation and create opportunities for different kinds of processing activity to take place in our three northern regions.

What is your government doing to tackle corruption?

Corruption is a problem everywhere in the world, to a greater or lesser extent. We have institutions that deal with it, but more importantly, we have a very free and vibrant media that draws attention to these problems when they occur.

A multiplicity of instruments is needed to deal with the challenge. You need institutions that are able to take decisive action against individuals when these sorts of things occur. You also have to have the mechanisms that bring it out into the open. As far as the mining and petroleum sectors are concerned, we’ve signed onto the Extractive Industries Transparency Initiative. We are currently developing the regulatory framework for the petroleum sector, and the emphasis is on making sure the processes are clear, transparent, and people understand what they need to do in order to get a license or set up an industry.

We have a petroleum revenue management bill that is coming to the tail end of debate in Parliament. Of course we believe that it is important to strengthen our judiciary, the security agencies – especially investigative ones – so that they feel they are free to undertake those kinds of investigations.

Recently we transformed what we call the Serious Fraud Office into the Economic and Organized Crime Commission because we wanted to give them an independent institutional status and to give the chief executive the staff and support he needed. We want to investigate crimes that go beyond the police: organized crime, white-collar crime – things that come along with more development and more economic activity.

AllAfrica – All the Time