Ghana: Gateway to West African markets

31 Jul, 2022 - 00:07 0 Views
Ghana: Gateway to West African markets

The Sunday Mail

Trade Focus
Allan Majuru

The African Continental Free Trade Area (AfCFTA), which became operational last year, is expected to improve Zimbabwe’s access to markets on the continent.

The trade agreement undoubtedly dovetails with President Mnangagwa’s economic diplomacy agenda, which is being implemented by the Ministry of Foreign Affairs and International Trade.

The policy is premised on improving trade with fellow African countries, riding on a shared common history and decades of stellar political relations.

Landing products into the rest of the continent will, however, not be an easy due to the distance between Zimbabwe and potential markets, especially in West, North and some parts of East Africa.  There aren’t fully established logistics networks that make it easy to move products within the continent.

Thus, identifying strategic markets in tough-to-reach parts of the continent will facilitate the process of exporting diversified local products and services to the rest of Africa.  This is where Ghana comes into play.

The country presents unique export opportunities for Zimbabwean exporters and has potential to be a gateway into the rest of West Africa.

In May this year, ZimTrade conducted a market survey in Ghana to establish export opportunities for local players.

The survey focused on opportunities in fast-moving consumer goods (FMCGs), leather and leather products, building and construction, and agricultural inputs and implements.

Understanding Ghana as a market

With a population of 31 million people (2021), Ghana was one of the first countries to sign AfCFTA and first to ratify it.

It serves as the host country for the newly established AfCFTA secretariat in Accra.

Ghana has established itself as a prime destination for tourism, manufacturing and agro-processing and, together with Nigeria, constitute the engine of the Economic Community of West African States (ECOWAS).

In terms of export opportunities, Ghana is a net importer of FMCG products consisting largely of processed food items.

The country imports food items worth US$2,6 billion annually.

ZimTrade’s survey indicated that most products are imported mainly from Europe, United Kingdom and the United States of America. Some are from African countries (mainly South Africa), as well as Dubai and other Asian countries.

There are opportunities for local companies to supply products such as biscuits, sweets, cordials, cereals and dairy products through distributors or to establish warehouse facilities.

For small producers, there would be need to consolidate consignments and share freight costs. Agriculture inputs and implements sector also provides opportunities.

In 2021, Ghana imported about US$1,9 billion in agricultural and related products, including agrochemicals like fertilisers and pesticides. The discovery of oil in Ghana in commercial proportions in 2007 led to significant development in the construction sector, which presents opportunities for Zimbabwean companies, particularly in the provision of services.  Production and export of oil have driven large-scale investments in real estate, the port in Takoradi and other infrastructure projects around the country.

Building and construction in Ghana is a growing industry and contributes substantially to gross domestic product (GDP) and employment within the Ghanaian economy.

Generally, opportunities in construction are concentrated in the creation, repair, maintenance, alteration, demolition of buildings, highways, streets, bridges, roads, sewers, railways and communication systems.

Subsectors with potential also include housing and urban development (residential, municipal and commercial buildings), infrastructure (water and sanitation; energy), transport infrastructure (roads, airports, ports and harbours).

Further export opportunities for Zimbabwean companies are in leather and leather products. There are no tanneries or large industries in the leather sector in Ghana, with most of the businesses in the hands of artisanal players. Most of the industries making shoes and leather accessories are based in Kumasi.

The industry imports most of its leather mainly from Italy and to a smaller extent from neighbouring Burkina Faso.

Leather soles and other accessories are also imported from Italy as well as from China.

Logistics

The major consideration for Zimbabwean companies aspiring to do business with Ghanaian entities is the mode and cost of logistics for transporting goods.

This has a substantial bearing on the cost of the final price of the product in the market to determine its competitiveness.

The distance between the two countries provides limited options for land transportation of goods, hence sea and air freight remain as the more feasible options.

In terms of logistics, Ghana has sea ports that are critical to trade.

Apart from international trade, these ports also deal with the transhipment of cargo to and from nations in the north such as Burkina Faso.

The Golden Jubilee terminal is a newly opened facility at the port of Tema, which is the largest port in Ghana, receiving an average of over 1 511 vessel calls per year.

Over 85 percent of Ghana’s trade is done through the ports (Tema and Takoradi), with shipping routes and vessel calls to and from all continents through both direct and transhipment services. Given the distance between the two countries, it is critical that Zimbabwean exporters explore the most effective route to reach the Ghanaian market.

Being a land-linked country, goods from Zimbabwe to Ghana would still need to travel by road to the available seaports in neighbouring countries, either the port of Beira in Mozambique or Durban in South Africa.

On average, the cost of shipping dry goods from Zimbabwe to Tema through Beira port is US$5 000 for a 40-foot container – though this figure had previously increased to US$7 500 due to Covid-19.There is also the option of goods going via the port of Walvis Bay in Namibia, where there is a dry port facility that Zimbabwe established. It provides a safe, faster and cheaper route for Zimbabwean exporters of finished products to Ghana.

Through this facility, Zimbabwean companies are also able to easily access markets in Central, West and North Africa.

Access to market

For companies to break through and reap meaningful benefits, they must have a presence in the market in the form of partnerships and subsidiary operations.

Given the complexities of penetrating the West African market, it is critical for exporters to consider distributorship agreements as they can ride on existing market knowledge.

Identification of a distributor will assist with areas such as the geographic spread of the Ghanaian market, complexities of the informal and often corrupt market dynamics and language barrier. Another effective option is registering a subsidiary company in Ghana, which will allow a Zimbabwean company to have full control of marketing and distribution of its products.

Already, there are companies with Zimbabwean parentage that have been able to break into the market through opening subsidiaries in Ghana. Optionally, companies can consider partnership with a Ghanaian local company to penetrate the market.

One of the successful examples is Seedco-Lima partnership, which has been operating for five years.

Allan Majuru is ZimTrade’s chief executive officer

The African Continental Free Trade Area (AfCFTA), which became operational last year, is expected to improve Zimbabwe’s access to markets on the continent.

T

he trade agreement undoubtedly dovetails with President Mnangagwa’s economic diplomacy agenda, which is being implemented by the Ministry of Foreign Affairs and International Trade.

The policy is premised on improving trade with fellow African countries, riding on a shared common history and decades of stellar political relations.

Landing products into the rest of the continent will, however, not be an easy due to the distance between Zimbabwe and potential markets, especially in West, North and some parts of East Africa.  There aren’t fully established logistics networks that make it easy to move products within the continent.

Thus, identifying strategic markets in tough-to-reach parts of the continent will facilitate the process of exporting diversified local products and services to the rest of Africa.  This is where Ghana comes into play.

The country presents unique export opportunities for Zimbabwean exporters and has potential to be a gateway into the rest of West Africa.

In May this year, ZimTrade conducted a market survey in Ghana to establish export opportunities for local players.

The survey focused on opportunities in fast-moving consumer goods (FMCGs), leather and leather products, building and construction, and agricultural inputs and implements.

Understanding Ghana as a market

With a population of 31 million people (2021), Ghana was one of the first countries to sign AfCFTA and first to ratify it.

It serves as the host country for the newly established AfCFTA secretariat in Accra.

Ghana has established itself as a prime destination for tourism, manufacturing and agro-processing and, together with Nigeria, constitute the engine of the Economic Community of West African States (ECOWAS).

In terms of export opportunities, Ghana is a net importer of FMCG products consisting largely of processed food items.

The country imports food items worth US$2,6 billion annually.

ZimTrade’s survey indicated that most products are imported mainly from Europe, United Kingdom and the United States of America. Some are from African countries (mainly South Africa), as well as Dubai and other Asian countries.

There are opportunities for local companies to supply products such as biscuits, sweets, cordials, cereals and dairy products through distributors or to establish warehouse facilities.

For small producers, there would be need to consolidate consignments and share freight costs. Agriculture inputs and implements sector also provides opportunities.

In 2021, Ghana imported about US$1,9 billion in agricultural and related products, including agrochemicals like fertilisers and pesticides. The discovery of oil in Ghana in commercial proportions in 2007 led to significant development in the construction sector, which presents opportunities for Zimbabwean companies, particularly in the provision of services.  Production and export of oil have driven large-scale investments in real estate, the port in Takoradi and other infrastructure projects around the country.

Building and construction in Ghana is a growing industry and contributes substantially to gross domestic product (GDP) and employment within the Ghanaian economy.

Generally, opportunities in construction are concentrated in the creation, repair, maintenance, alteration, demolition of buildings, highways, streets, bridges, roads, sewers, railways and communication systems.

Subsectors with potential also include housing and urban development (residential, municipal and commercial buildings), infrastructure (water and sanitation; energy), transport infrastructure (roads, airports, ports and harbours).

Further export opportunities for Zimbabwean companies are in leather and leather products. There are no tanneries or large industries in the leather sector in Ghana, with most of the businesses in the hands of artisanal players. Most of the industries making shoes and leather accessories are based in Kumasi.

The industry imports most of its leather mainly from Italy and to a smaller extent from neighbouring Burkina Faso.

Leather soles and other accessories are also imported from Italy as well as from China.

Logistics

The major consideration for Zimbabwean companies aspiring to do business with Ghanaian entities is the mode and cost of logistics for transporting goods.

This has a substantial bearing on the cost of the final price of the product in the market to determine its competitiveness.

The distance between the two countries provides limited options for land transportation of goods, hence sea and air freight remain as the more feasible options.

In terms of logistics, Ghana has sea ports that are critical to trade.

Apart from international trade, these ports also deal with the transhipment of cargo to and from nations in the north such as Burkina Faso.

The Golden Jubilee terminal is a newly opened facility at the port of Tema, which is the largest port in Ghana, receiving an average of over 1 511 vessel calls per year.

Over 85 percent of Ghana’s trade is done through the ports (Tema and Takoradi), with shipping routes and vessel calls to and from all continents through both direct and transhipment services. Given the distance between the two countries, it is critical that Zimbabwean exporters explore the most effective route to reach the Ghanaian market.

Being a land-linked country, goods from Zimbabwe to Ghana would still need to travel by road to the available seaports in neighbouring countries, either the port of Beira in Mozambique or Durban in South Africa.

On average, the cost of shipping dry goods from Zimbabwe to Tema through Beira port is US$5 000 for a 40-foot container – though this figure had previously increased to US$7 500 due to Covid-19.There is also the option of goods going via the port of Walvis Bay in Namibia, where there is a dry port facility that Zimbabwe established. It provides a safe, faster and cheaper route for Zimbabwean exporters of finished products to Ghana.

Through this facility, Zimbabwean companies are also able to easily access markets in Central, West and North Africa.

Access to market

For companies to break through and reap meaningful benefits, they must have a presence in the market in the form of partnerships and subsidiary operations.

Given the complexities of penetrating the West African market, it is critical for exporters to consider distributorship agreements as they can ride on existing market knowledge.

Identification of a distributor will assist with areas such as the geographic spread of the Ghanaian market, complexities of the informal and often corrupt market dynamics and language barrier. Another effective option is registering a subsidiary company in Ghana, which will allow a Zimbabwean company to have full control of marketing and distribution of its products.

Already, there are companies with Zimbabwean parentage that have been able to break into the market through opening subsidiaries in Ghana. Optionally, companies can consider partnership with a Ghanaian local company to penetrate the market.

One of the successful examples is Seedco-Lima partnership, which has been operating for five years.

Allan Majuru is ZimTrade’s chief executive officer

 

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