USTR - 1996 National Trade Esimate-Ghana
Office of the United States Trade Representative

 

1996 National Trade Esimate-Ghana

In 1995, the United States trade deficit with Ghana was $29 million, a decrease of $45 million from that in 1994. U.S. merchandise exports to Ghana were $167 million in 1994, $42 million more than those in 1994. Ghana was the United States' ninety-sixth largest trading partner in 1995. U.S. imports from Ghana totaled $196 million in 1995, a one percent decrease from those in 1994.

IMPORT POLICIES

Tariffs and Structural Policies

Ghana is a member of the WTO. During the course of the structural adjustment program, begun in the early 1980's, Ghana progressively wound down import quotas and surcharges. Tariff structures are being adjusted in harmony with the Economic Community of West African States (ECOWAS) trade liberalization program. With the elimination of import licensing in 1989, importers now are simply required to sign a declaration that they will comply with Ghanaian tax code and other laws. However, special permits are still required for some imports. Ghana's tariff structure addresses capital goods, intermediate goods and consumer goods. There are now three ad valorem import duties: 0 percent, 10 percent and 25 percent. In addition, a specific duty of 10 percent to 40 percent is imposed on 16 types of merchandise including textiles, alcoholic and non- alcoholic beverages and tobacco. These are aimed at putting local manufacturers on an equal competitive basis with imported goods.

The Ghanaian Government is committed to the development of competitive domestic industries with exporting capabilities. The Government is expected to continue to support domestic private enterprise with financial incentives, tax holidays and other similar programs. Nevertheless, Ghanaian manufacturers argue that Ghana's tariff structure places local producers at a competitive disadvantage vis–a–vis imports from countries enjoying greater production and marketing economies of scale. Reductions in tariffs have increased competition for local producers while reducing the cost of imported raw materials. However, the steady depreciation of the CEDI during the past year has had the effect of partially offsetting this effect for importers of these materials.

Under its current economic reform program, in addition to reducing tariffs, the Government has enacted various forms of personal and corporate tax relief. In 1993, the Government eliminated the experimental "super sales tax" on luxury vehicles and consumer goods and maintained lower tax rates on annual personal income below the equivalent of $17,500. While the top corporate tax rate is 35 percent, the new investment code now provides that income earned from investment in export industries will be taxed at a 20 percent rate.

Import Licenses

Ghana completed the elimination of its import licensing system in 1989.

SERVICES BARRIERS

The investment code allows foreign investors to participate in all economic sectors except for four that are reserved for Ghanaians. These activities are petty trading, the operation of taxi services, lotteries (excluding football pools) and the operation of beauty salons and barber shops.

STANDARDS, TESTING, LABELING, AND CERTIFICATION

Ghana has issued its own standards for food and drugs. The Ghana Standards Board, the testing authority, subscribes to accepted international practices for the testing of imports for purity and efficiency. Under Ghanaian law, imports must bear markings identifying in English the type of product being imported, the country of origin, the ingredients or components, and the expiration date, if any. The thrust of this law is to set reasonable standards for imported food and drugs. Locally manufactured goods are subject to comparable testing, labeling, and certification requirements.

INVESTMENT BARRIERS

The new investment code eliminates the need for prior project approval from the Ghana Investment Promotion Center (GIPC). Registration, essentially for statistical purposes, is normally accomplished within five working days. Investment incentives are no longer subject to discretionary judgements––they have been made automatic by incorporating them into the corporate tax and customs codes. Incentives include zero–rating import tariffs for plants and generous tax incentives. Immigrant quotas for businesses, though relaxed, remain in effect. In anticipation of the new and liberalized foreign investment regime, the GIPC recorded a marked increase in investment registration of over 600 in 1994.

U.S. investment in Ghana is predominantly in the mining and fabricated metals sector. There is also significant U.S. investment in the petroleum, seafood, telecommunications, chemicals and related products, as well as, wholesale trade sectors. Labor conditions in these sectors of the economy do not differ from the norm in Ghana. U.S. and other foreign firms in Ghana are required to adhere to Ghanaian labor laws, including restrictions on the number of expatriates employed.

Lack of local financing and traditional hard currency shortages, which are attributable to constant trade deficits, constrain local traders, as well as, investors seeking foreign joint venture partners. High interest rates, lack of liquidity in the financial system and frequent Ghanian inability to access offshore financing constrains industrial growth and helps preserve the micro–scale of most Ghanaian businesses. The legalization of foreign exchange bureaus has made foreign currency readily available in Ghana, but strong demand for imported goods has led to a decline in the foreign exchange value of the CEDI during 1995. Domestic inflation is currently running at about 60 percent and the Bank of Ghana has been pursuing a tight money policy to contain inflationary pressures in the economy.

Bureaucratic inertia is a problem in Government ministries and administrative approvals often take longer than they should. Entrenched local interest sometimes have the ability to derail or delay new entrants, and securing Government approvals too often is dependent upon an applicant's contacts.

GOVERNMENT PROCUREMENT

Government purchases of equipment and supplies are usually handled by the Ghana Supply Commission (theofficial purchasing agency), through international bidding, and, at times, through direct negotiations.

Former government import monopolies have been abolished, but parastatal entities continue to import some commodities although they no longer receive government subsidies to finance imports.

At its peak, the Government of Ghana controlled more than 300 parastatals, but is now in the process of divesting most of these. Progress, however, has been slow. The political leanings of the Ghanaian partners of foreign investors are often subject to close government scrutiny. The privatization of a Government–controlled enterprise may be stalled if an interested party is known to be sympathetic to the political opposition.

 
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