2007 NATIONAL TRADE ESTIMATE REPORT: GHANA

UNCLAS SECTION 01 OF 05 ACCRA 002693

SIPDIS

SIPDIS

PLEASE PASS TO USTR/GBLUE AND STATE EB/TPP/BTA

E.O. 12958: N/A
TAGS: ETRD ECON EFIN
SUBJECT: 2007 NATIONAL TRADE ESTIMATE REPORT: GHANA

REF: 136302

TRADE SUMMARY
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1. Ghana is a market-based economy with relatively few
barriers to trade and investment. The U.S. goods trade
surplus with Ghana was $179 million in 2005, an increase of
$15 million from $164 million in 2004. U.S. goods exports in
2005 were $338 million, up 9.0 percent from the previous
year. Corresponding U.S. imports from Ghana were $158
million, up 8.9 percent. Ghana is currently the 89th largest
export market for U.S. goods. End Summary.


IMPORT POLICIES
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Tariffs


2. Ghana is a member of the WTO and the Economic Community
of West African States (ECOWAS). Along with other ECOWAS
countries, Ghana adopted a common external tariff (CET) in

2005. The ECOWAS CET requires that members simplify and
harmonize ad valorem tariff rates into four bands: 0 percent
(social goods),5 percent (raw materials and equipment and
specific inputs),10 percent (intermediate goods),and 20
percent finished products. Currently, Ghana maintains 190
exceptions to the CET. Tariff rates for the items covered
under exceptions are within the 0-20 percent range, but will
require some increase or decrease to align with the CET.
Ghana, along with six other Anglophone countries, is
currently in a transition period and is negotiating the
exceptions with ECOWAS. The transition period ends December

2007. Consensus on a comprehensive ECOWAS CET must be
reached by January 2008.


3. The Ghanaian government continues to support domestic
private enterprise with financial incentives and tax holidays
in order to develop competitive domestic industries with
export capabilities. Nevertheless, Ghanaian manufacturers
and producers contend that the country's relatively low
tariff structure puts them at a competitive disadvantage
vis-a-vis imports from countries that enjoy greater
production and marketing economies of scale. Conversely, the
relatively low tariff structure reduces producer costs for
imported raw materials and inputs, so there is also some
local demand for further tariff reductions, especially on
inputs used by local businesses. Since 2004, the Ghanaian
government has responded by reducing the import duty on
livestock ingredients, pharmaceutical raw materials, and
inputs for textiles production. In addition, there is a zero
tariff on some imported manufacturing raw materials. Further
adjustments both upward and downward may occur as the CET
process moves ahead. Tariff information is available on the
Customs Excise and Preventive Service (CEPS) website
(www.cepsghana.org).

Non-Tariff Measures


4. Importers are confronted by a variety of fees and charges
in addition to tariffs. Ghana levies a 12.5 percent
value-added tax (VAT) plus 2.5 percent National Health
Insurance Levy on the duty-inclusive value of all imports and
locally produced goods, with a few selected exemptions. In
addition, Ghana imposes a 0.5 percent ECOWAS surcharge on all
goods originating from non-ECOWAS countries and charges 0.4
percent of the sum of the free on board (FOB) value of goods
and the value-added tax (VAT) for the use of the automated
clearing system, the Ghana Community Network (GCNet).
Further, under the Export Development and Investment Fund Act
Act 582),Ghana imposes a 0.5 percent duty on all
non-petroleum products imported in commercial quantities.
Ghana also applies a 1 percent processing fee to all
duty-free imports.


5. All imports are subject to destination inspection and an
inspection fee of 1 percent C.I.F. (cost, insurance,
freight). Importers have indicated that they would prefer a
flat fee on each transaction. The destination inspection
services are currently provided by four private companies
licensed by the GoG. Importers are lobbying the government
of Ghana to shift the provision of destination services from
the four licensed companies to Ghana Customs because of the
cost and delays incurred as a result of having an outside
provider.


6. Imports of malt drinks, water, beer, and tobacco products
are subject to excise taxes ranging between 5 percent and 140
percent.


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7. An examination fee of 1 percent is applied to imported
vehicles. Imported used vehicles that are more than 10 years
old attract an additional tax (penalty) ranging from 5
percent to 50 percent of the C.I.F. value of the used
vehicles. Ghana Customs maintains a price list of vehicles
that it uses to determine the value of used vehicles for tax
purposes. There are complaints that this system is
non-transparent. The price list is not publicly available.


8. All communications equipment requires a clearance letter
from the National Communications Authority.


9. Each year, between May and October, there is a temporary
ban on the importation of fish, except canned fish, to
protect local fishermen during their peak season. Ghana
continues to ban imports of U.S. bone-in beef due to Bovine
Spongiform Encephalopathy (BSE). Certificates are required
for agricultural, food, cosmetics and pharmaceutical imports.
The procedures are cumbersome. Permits are required for
poultry and poultry product imports. The permit process is
time-consuming, and, at the time the permit is issued, a
non-standardized quantity limit is imposed.


10. Ghana prohibits the importation of meat with a fat
content by weight greater than 25 percent for beef, 42
percent for pork, 15 percent for poultry, and 35 percent for
mutton. It also restricts the importation of condensed or
evaporated milk with less than 8 percent milk fat by weight,
with the exception of imported skim milk in containers.
Imported turkeys must have their oil glands removed.


STANDARDS, TESTING, LABELING AND CERTIFICATION
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11. Ghana has issued its own standards for most products
under the auspices of its testing authority, the Ghana
Standards Board (GSB). The GSB has promulgated more than 250
Ghanaian standards and adopted more than 3,057 international
standards for certification purposes. The GSB determines
standards for all products. Authority for enforcing
standards for food, drugs, cosmetics, and health items lies
with the Food and Drugs Board. Ghana intends to adopt more
internationally-recognized standards and move away from its
mandatory domestic standards, except for products that raise
environmental or human health or safety concerns.


12. Ghana instituted a "Standards Board Conformity
Assessment Program," which requires that food products
imports meet Ghana's standards, or CODEX standards. For raw
materials, a certificate of analysis is required, while a
certificate of conformity is required for electrical and
electronic equipment from accredited international
laboratories.


GOVERNMENT PROCUREMENT
--------------


13. Ghana is not a signatory to the WTO Agreement on
Government Procurement. In December 2003, however,
Parliament passed a public procurement law that codified
guidelines to enhance transparency and efficiency and assign
administration of procurement to a central body.


14. In August 2004, the government inaugurated the Public
Procurement Board. Individual government entities have
formed tender committees and tender review boards to conduct
their own procurement. Large public procurements are made by
open tender and non-domestic firms are allowed to
participate. A draft guideline has been prepared, giving a
margin of preference of 7.5 percent to 20 percent to domestic
suppliers of goods and services for international competitive
bidding. Notwithstanding the new procurement law, companies
cannot expect complete transparency in locally funded
contracts. There have been recent allegations of corruption
in the tender process, and the government has in the past set
aside international tender awards in the name of national
interest.


EXPORT PROMOTION
--------------


15. The government uses preferential credits and tax
incentives to promote exports. The Export Development
Investment Fund administers financing on preferential terms
using a 12 percent interest rate, which is below market
rates. Agricultural export subsidies were eliminated in the
mid-1980s. The Export Processing Zone (EPZ) Law, enacted in
1995, leaves corporate profits untaxed for the first ten

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years of business operation in an EPZ, after which the tax
rate climbs to 8 percent (the same as for non-EPZ companies).
However, businesses producing traditional exports, e.g.
cocoa beans, logs and lumber, remain untaxed. Under the 2006
budget, submitted to Parliament in November 2005, the
government reduced the corporate tax rate for non-exporting
companies from 28 percent to 25 percent, effective January 1,

2006. Seventy percent of production must be exported from
within the EPZ.


INTELLECTUAL PROPERTY RIGHTS (IPR) PROTECTION
--------------


16. Ghana is a party to the Universal Copyright Convention
and a Member of the World Intellectual Property Organization
(WIPO) and the African Regional Industrial Property
Organization. Since December 2003, Parliament has passed six
bills designed to bring Ghana into compliance with TRIPS
requirements. The new laws address copyright, trademarks,
patents, layout-designs (topographies) of integrated
circuits, geographical indications, and industrial designs.
New legislative instruments (akin to USG implementing
regulations) necessary for fully effective implementation
have not been passed.


17. In cases where trademarks have been misappropriated, the
price and quality disparity is usually readily apparent.
Piracy of copyrighted works is known to take place, although
there is no reliable information on the scale of this
activity. Holders of intellectual property rights have
access to local courts for redress of grievances, although
few trademark, patent, and copyright infringement cases have
been filed in Ghana in recent years. Government-initiated
enforcement is virtually non-existent.


SERVICES BARRIERS
--------------


18. The investment code excludes foreign investors from
participating in four economic sectors: petty trading, the
operation of taxi and car rental services with fleets of
fewer than ten vehicles, lotteries (excluding soccer pools),
and the operation of beauty salons and barber shops.
Provision of services by professionals such as lawyers,
accountants, and doctors requires membership in a
professional body. Requirements for membership are identical
for both Ghanaians and non-Ghanaians.


19. Ghana has committed to offering access to foreign
telecommunications providers for most basic services, but has
required that these services be provided through joint
ventures with Ghanaian nationals. In 2004, the National
Communications Authority (NCA) opened up the market by
allowing additional carriers beyond the previous duopoly.
The NCA has yet to become an effective mechanism to resolve
complaints of anti-competitive practices by Ghana Telecom,
the state-owned national telecommunications operator.


20. Ghana allows up to 60 percent foreign ownership in the
insurance sector. This cap does not apply to auxiliary
insurance services. Ghana allows them to provide a full
range of services, as long as they are a registered company
in Ghana.


21. There are no limits on foreign participation in banking
and other financial services. However, shares held by a
single non-resident foreigner and the total number of shares
held by all non-resident foreigners in one security listed on
the Ghana Stock Exchange may not exceed 10 percent and 74
percent, respectively. The Central Bank must issue licenses
for banking and leasing. For securities trading, a license
is required from the Securities Regulatory Commission.
Capital requirements for establishing a bank have been
increased to 70 billion cedis (approximately $7.7 million),
and it is now the same for both foreign-owned banking
businesses and Ghanaian-owned banks. Prior to implementing
the Bank of Ghana's universal banking policy in 2004,
foreign-owned banking businesses faced higher capital
requirements than Ghanaian-owned banks (50 billion cedis
versus 25 billion cedis, approximately $5.4 million and $2.7
million, respectively).


INVESTMENT BARRIERS
--------------


22. The 1994 Investment Code (Act 478) eliminated the need
for prior approval of foreign investment projects by the
Ghana Investment Promotion Center. Investment registration,

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which the government undertakes essentially for statistical
purposes, is supposed to be accomplished within five working
days. However, according to the "Administrative and
Regulatory Cost Survey," conducted by the World Bank and
IFC-funded Foreign Investment Advisory Service in 2003, the
actual time reported by respondents averaged two weeks. The
World Bank reported in its "Doing Business 2007" report
that the total time to start a business in Ghana was 81 days,
an improvement from 129 days prior to 2003, but still
significantly longer than in many other countries at a
similar level of development.


23. Investment incentives have been written into the
corporate tax and customs codes. Incentives include
exemption from import tariffs for manufacturing inputs and
equipment and generous tax breaks. Work visa quotas for
businesses are in effect. The following minimum equity
requirements apply, in the form of either cash or its
equivalent in capital goods, for non-Ghanaians who want to
invest in Ghana: $10,000 for joint ventures with a Ghanaian;
$50,000 for enterprises wholly-owned by a non-Ghanaian; and
$300,000 for trading companies (firms that buy/sell finished
goods) either wholly or partly-owned by non-Ghanaians.
Trading companies must also employ at least ten Ghanaians.


24. The Ghanaian government at one point controlled more
than 350 state-owned enterprises, but nearly 300 were
privatized by the end of 2000 under the privatization program
of former President Rawlings. Privatization efforts have
continued under the Kufuor Administration under a
reconstituted Divestiture Implementation Committee. As of
December 31, 2005, a total of 351 firms had been privatized,
leaving only a handful of state-owned enterprises. By the
end of 2006, both the Ghana Oil Company, Ltd. and the State
Insurance Company will be floated on the Ghana Stock
Exchange. Furthermore, the dilution of government ownership
in Ghana Commercial Bank, which is Ghana's largest bank and
represents a contingent liability for the government, is
ongoing, with the government selling shares on the Ghana
Stock Exchange. In October 2006, the government solicited
letters of interest for a transactions advisor for the
privatization of Ghana Telecom.


25. U.S. direct investment in Ghana is predominantly in the
mining and energy sectors, but there is also significant U.S.
investment in the seafood, chemical, and wholesale trade
sectors. Wage rates in the mining sector are substantially
higher than in other industries. U.S. and other foreign
firms in Ghana are required to adhere to Ghanaian labor laws,
including restrictions on the number of expatriates employed.



ELECTRONIC COMMERCE
--------------


26. Barriers to electronic commerce are mainly due to
inadequate telecommunications and financial infrastructure.
The payment system in Ghana is largely cash-based. The
legalization of foreign exchange bureaus has made foreign
currency readily available for small transactions. Local
banks can facilitate the transfer of foreign payments abroad.
Transfers of large quantities of foreign currency, however,
can run into significant delays. The Parliament is now
considering a new Foreign Exchange Act, with the goal of
liberalizing the foreign exchange market.



OTHER BARRIERS
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27. U.S. businesses interested in Ghana should be aware of
other barriers, such as limited and costly credit facilities
for local importers and freight rates that are higher than
those for potential European competitors. There are frequent
problems related to the complex land tenure system, and
establishing clear title can be difficult. Non-Ghanaians can
have access to land on a leasehold basis. Frequent backlogs
of cargo at the port hurt the business climate. The Customs
Service phased in an automated customs declaration system
that was established in the last quarter of 2002 to
facilitate customs clearance. Although the new system has
cut down the number of days for clearing goods from the
ports, the desired impact has yet to be realized because
complementary services from government agencies, banks,
destination inspection companies, and security services have
not been established.


28. The high cost of local financing (with short-term
interest rates currently above 20 percent) is a significant

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disincentive for local traders, inhibiting the expansion of
most Ghanaian businesses from their current micro-scale
operations and constraining industrial growth. The high cost
of credit in Ghana is a function of the high risks of doing
business in Ghana. They also reflect high labor costs as
well as the oligopolistic structure of the banking sector and
directed lending to state-owned enterprises. Ghanaian banks
are among Africa's most profitable due to wide
interest/deposit rate spreads. The residual effects of a
highly regulated economy and lack of transparency in
government operations create an element of risk for potential
investors. Bureaucratic inertia is frequently a problem in
government ministries, and administrative approvals take
longer than they should. Entrenched local interests
sometimes have the ability to derail or delay new entrants,
and securing government approvals may depend upon an
applicant's local contacts. The political leanings of the
Ghanaian partners of foreign investors are often subject to
government scrutiny. Corruption historically has been an
issue with which foreign firms have had to contend. The
government has indicated its intent to address this issue,
particularly through the passage of Public Procurement,
Financial Administration, and Internal Audit Acts. However,
these Acts have not been fully implemented and are therefore
not effective i reducing or eliminating government
corruption.


RANKING OF BARRIERS
--------------

29 The investment and business climate has improvedin
recent years and will continue to do o if the government
follows through on its commitments to structural reforms.
Ghana!,s barriers to the growth of trade are relatively few
and are, on paper, even fewer than in practice. Post
believes that the greatest barriers to growth of trade with
the United States flow from administrative barriers to
investment arising from unclear processes and procedures, the
need to deal with multiple agencies to obtain approvals, and
the issues noted in the "other barriers" section. Ghana is
a small market with a relatively poor population. It already
has a substantial trade deficit. The capacity of the market
to absorb further imports is limited. U.S. imports are equal
to about $14 per capita, which is equivalent to about 3.5
percent of GDP per capita. The current size of the market,
although growing, makes it difficult to place dollar-figure
estimates on any potential growth that could be associated
with the elimination of individual barriers. Our best
estimate is that removal of any of Ghana's barriers would
lead to an increase of U.S. exports of less than $10 million.



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