Country Profile : Ghana. Plastics Exporter Development Programme Africa Export Strategy for the South African Plastics Industry.

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Harriet Stevenson
6 years ago
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1 Plastics Exporter Development Programme Africa Export Strategy for the South African Plastics Industry. 1

Political overview Ghana is considered one of the more stable countries in West Africa since its transition to multi-party democracy in 1992.

2 Political overview Ghana is considered one of the more stable countries in West Africa since its transition to multi-party democracy in Formerly known as the Gold Coast, Ghana gained independence from Britain in 1957, becoming the first sub-saharan nation to break the chains of colonialism. Ghana will be embarking on national elections in December The country has a strong multi-party political democracy, media pluralism and a vibrant civil society. While there have been growing tensions ahead of the elections, there does not seem to be any serious cause for alarm. The New Patriotic Party, the main opposition party, and some civil society organisations raised concerns about the credibility of the 2012 voter register. 2

3 However, an independent panel set up by Ghana s Electoral Commission issued a report indicating that the commission would ensure a clean and credible voter register through an inclusive and collaborative audit. There have been a number of strikes and demonstrations, particularly by organised labour, over conditions of service for public sector workers as well as increases in utility tariffs (67% increases in electricity and 59% in water) and the imposition of the various levies. Corruption was also high on the public agenda, especially related to cases in the National Service Secretariat, National Health Insurance Scheme, Ghana Youth Employment and Entrepreneurial Agency, and the Judiciary. Ghana performed fairly well on continent-wide rankings. Transparency International s 2015 corruption perception index ranked the country 56th out of 168 countries, with a score of 47. The organisation found Ghana to be the 7th least corrupt country in Africa. On the 2015 Mo Ibrahim Index, Ghana ranked as one of the top 10 African countries in governance (67.3 out of 100). While it scored 70.6 in Safety and Rule of Law (6th in Africa), there was a deterioration in the sub-category Judicial Process (-12.5); Ghana was one of only five countries on the continent to have seen a decline. Performance improved on the Political Violence indicator (+13.4), while it has worsened for Police Services by -5.2 points since Macro-economic indicators Ghana s economic growth, which slowed from 4.0% in 2014 to 3.7% in 2015, is expected to recover to 5.8% in 2016 and 8.7% in 2017, following consolidation of macroeconomic stability and implementation of measures to resolve the crippling power crisis. Monetary and fiscal policies were tightened in 2015 and are expected to remain so in 2016 in line with the fiscal and monetary policy consolidation reforms underway as Ghana prepares for national elections in late

4 Ghana continues to experience rapid urbanisation, which has led to a number of sustainable development challenges, particularly regarding sanitation and transportation infrastructure. In 2015, the Ghanaian economy grew at an estimated 3.7%, down from 4% in The 2015 slowdown resulted from a number of economic challenges, most of which were in play in These include a 3-year power crisis, rising fiscal deficit and public debt levels, a significant external sector deficit and unpredictably low world market prices for the country s oil and gold exports. The services sector was the main driver of growth. The industrial sector also posted a positive growth rate of 9.1%. Over the medium term the country should see a recovery with a projected GDP growth of 5.8% in 2016 and 8.7% in The forecasted recovery in economic growth in 2016/17 depends on fiscal consolidation measures remaining on track, quick resolution of the power crisis, two new oil wells coming on-stream, and improved cocoa harvest and gold production. Ghana maintained a tight monetary and fiscal policy in The government s fiscal consolidation programme aimed to address demand pressures exacerbated mostly by the wage bill and by public debt services, which account for most unearmarked revenues. Monetary policy in 2015 continued to be tightened with measures to contain rising inflation and the depreciation of the domestic currency. To address these challenges, government entered into a 3-year Extended Credit Facility (ECF) agreement with the International Monetary Fund (IMF) in April 2015, successfully undertaking two reviews under the programme. The fiscal consolidation stance is expected to meet the conditions of the reviews in 2016 as well. Ghana will hold its national election in late 2016; peaceful and credible elections will be key for policy continuity and for solidifying the country s democratic dividend, especially after the closely contested 2012 elections and the judicial adjudication of the presidential elections. By 2010 over half of Ghana s population lived in urban areas (localities with a population of or more), as compared to 30% at independence in The urbanisation rate is projected to increase to 72% by While rural-urban disparities are still significant, there are signs that Ghana s cities are facing considerable challenges with land use, infrastructure and services provision (particularly with regard to housing, sanitation and transportation), and the absence 4

5 of gainful and productive employment opportunities, especially for the youth. The critical policy challenge has been to ensure orderly and sustainable spatial development, co-ordination and planning, and measures to enable metropolitan and municipal authorities to secure adequate financing for infrastructure and services. SA Trade with Ghana According to the DTI 1 South Africa only reached a positive trade balance with Ghana in 2015, R4 194 million with Machinery (HS 84) and Motor vehicles (HS 87) the top two categories. For the past 10 years, SA had a negative trade balance with Ghana. In 2012, precious metals made up 93 % of the imports, totaling R59.9 million

6 R millions Country Profile : Ghana 20,000 10, ,000-20,000-30,000-40,000-50,000-60,000-70,000 Total SA Trade with Ghana (R' ) ,000-10,000-30,000-50,000-70,000 SA Exports SA Imports Trade balance Figure 1: Total trade balance between South Africa and Ghana If only Plastics products are considered - HS 39, South Africa has had a positive trade balance with Ghana for the last 10 years. Polypropylene formed the bulk of the HS 39 exports to Ghana in %. Acrylics (HS 3906), Pipes (HS 3917) and other products (HS 3926) formed 26 % of the total plastics exports from South Africa to Ghana in (Rubber was included in the graph as Ghana has natural rubber and it was mentioned in one of the discussions.) 6

Figure 2: Plastics (HS39) and Rubber (HS40) trade balance between South Africa and Ghana China is a large source of plastics products and plastics packaging but it is perceived as a threat to the

7 Figure 2: Plastics (HS39) and Rubber (HS40) trade balance between South Africa and Ghana China is a large source of plastics products and plastics packaging but it is perceived as a threat to the local economy. Investment opportunities exist for any plastics products linked to agriculture as agro-processing growth is a high priority to the Ghana government. Products include cocoa, bananas, mangos, pineapples and root products like yam and cassava. Very little commercialization is in place for these products. Partnerships with improved crop yields and reduced food wastage would be advantageous to both the Ghana producer and the plastics investor. Products like banana blue films, shade netting, irrigation tubing, fresh produce packaging would all assist in developing the agriculture industry. Investors are welcomed to Ghana to grow the local economy. Foreign ownership is restricted to 40 %. New companies can reduce the company tax levels pro rata to their distance from Accra. 7

8 Energy supply is insufficient and erratic and independent power supply is essential to any business operating in Ghana. The registrations of new companies are relatively simple and foreigners will be easily understood as English is spoken by all Ghanaians. The Tema and Takoradi ports are well developed and offer a gateway to West Africa. Neighboring countries, Ivory Coast, Togo and Burkina Faso can be accessed via Ghana. As part of the ECOWAS countries, no trade barriers exist between the West African countries. Plastics Industry in Ghana 1. What is the current size of the plastics packaging market in Ghana? The Ghana Plastic Manufacturers Association, referring to the 2014 statistics, asserts that the plastic packaging market size grew from a paltry 28% in 2010 to a whopping 72%. The Association is currently collating the figure for 2015 which will be published within the 1st quarter of The Ghana Plastic Manufacturers Association represents 95% of the plastics industry, (which is Indian dominated). This comprises of 110 plastics manufacturers. The association is funded through membership fees. According to 2015 statistics the national consumption was approximately tons. The challenge that Ghana faces is the influx of finished goods that are "competing with" the local production. The imported finished plastic products from China and elsewhere have taken over 42% of the local manufacturers market share. Generally, the local Ghanaian sees convenience in using plastic for packaging as compared to other products such as paper. 8

9 2. How is the plastics packaging product market divided into different types? The plastic packaging market is divided into four (4) sectors, namely: High Density Polyethylene (HDPE) sector that produces Bleach and Shampoo bottles which takes about 2% of the market share. Most often imported from China. Polystyrene (PP) sector which also produces egg cartons, protective packaging for electronic goods as well as electrical insulation materials. Ghana does not have the requisite manufacturers in spite of the growing construction industry. It has 10% of the market share. Polyethylene Terephthalate (PET) sector is currently controlling over 35% of the plastic market. This is due to the large number of water processing companies in existence. Additionally, herbal medical practitioners have also accepted the use of this type of plastic for the packaging of the finished herbal products. Low Density Polyethylene (LDPE) sector controls over 50% of the plastic production in Ghana. Almost everything in Ghana is packaged with flexible lighter plastics, hence the largest portion of the plastics packaging market. Manufactured products range from carrier bag, cling wrappers, bin liners etc. 3. How is the market expected to develop in the future? The plastics packaging industry is predicted to be moving into its Golden Age especially when Ghana develops its petro-chemical industry. Currently, plastics do not have a substitute in terms of the uses. However Ghana s economic prospects are looking up. 9

10 4. What is the market potential compared to other countries (ECOWAS countries)? Since 2000, Ghana has been a hub for the export of plastic products to neighbouring countries such as Niger, Mali, Burkina, Togo and Ivory Coast. Although Ghana has great potential for plastics recycling, foreign investment is critical to develop this sector. 5. What are the potential opportunities for South African plastics/packaging companies? Commercializing banana farms banana blue sheeting, IP to local flexible film producers Greenhouse films, Shade cloths, Shade netting to be introduced for increased crop yield Packaging primary and secondary for fresh produce Packaging for shea butter Agricultural opportunities for agro-processing Plastics pipes 10

Policy Brief. 1. The problem and the interest of the study

Policy Brief. 1. The problem and the interest of the study Policy Brief ES_No. 03/ July 2013 Reduction of Constraints to Export Production Capacity in Africa: The Case of Côte d Ivoire By Pierre Roche Seka, K. Clement Kouakou, B. Benoit Malan and Patricia Drogon