GHANA: INPUT FOR ANNUAL AGOA REPORT TO CONGRESS

UNCLAS SECTION 01 OF 02 ACCRA 000499 SIPDIS SIPDIS STATE PLEASE PASS TO USTR; AF/EPS FOR J.POTASH E.O. 12958: N/A TAGS: ETRD ECON GH SUBJECT: GHANA: INPUT FOR ANNUAL AGOA REPORT TO CONGRESS Ref: State 22438 ACCRA 00000499 001.3 OF 002 ¶1. In response to reftel, this cable transmits embassy Ghana's submission for the 2007 President's Report on AGOA. ¶2. Begin Text Status -------------- AGOA eligible, including for textile and apparel benefits. Market Economy/Economic Reform/Elimination of Trade Barriers -------------- -------------- Ghana has a market-based economy with few barriers to trade and investment. Sound macroeconomic policies and generous debt relief have resulted in declining inflation and interest rates, a stable currency, and real economic growth averaging 5-6 percent per year. In October, 2006, Ghana successfully completed a USD 274.2 million IMF Poverty Reduction and Growth Facility that supported the government's poverty reduction and reform efforts. The business climate remains somewhat challenging. For example, according to the World Bank, starting a business in Ghana takes an average of 81 days, well above the median for low income countries globally. Ghana requires foreign investors to satisfy a minimum capital requirement and a few areas of investment are reserved for Ghanaians including small-scale trading, operation of taxi services (except when a non-Ghanaian has a fleet of at least 10 vehicles), pool betting businesses and lotteries (except soccer pools),beauty salons and barber shops. There are no major investment disputes with the government but fraud and business scams in the private sector are a common and growing problem. Ghanaian law protects private property rights, although disputes over land tenure are common. Ghana has divested all or part of its holdings in all but a handful of the more than 350 enterprises it once controlled. Few divestitures have been made since 2001 and a number of the remaining SOEs are in poor financial condition. Ghana has passed the six bills designed to bring it into compliance with TRIPS requirements but implementing legislation necessary for fully effective implementation has not yet been passed. Political Pluralism/Rule of Law/Anti-Corruption -------------- -- President John Kufuor was reelected in December 2004 in an election that was generally considered free and fair by international observers, despite a few incidents of intimidation and minor irregularities. Presidential elections are scheduled for 2008. Ghana has eleven political parties, three of them newly created in the past year, although two parties are dominant. Corruption in the judicial system and lengthy pre-trial detentions remain serious problems. "Fast Track" High Courts are dealing with routine commercial disputes and high profile corruption cases. The integrity of the legal system is limited by a lack of financial, human, and material resources. The judiciary is occasionally subject to executive influence and corruption, and long delays. The government's Zero Tolerance policy on corruption yielded a few prosecutions. Government anti-corruption institutions continue to be weak and under-funded. The government passed a law governing transparency in government procurement. However, there are loopholes in the law and in some cases winning bidders have seen contracts awarded to competitors with little or no explanation. The government passed a Whistleblower law in 2006 but has not yet implemented it. Police corruption remains a problem. Poverty Reduction -------------- In partnership with donors, including the United States, Ghana is implementing its second (2006-2009) poverty reduction strategy (GPRS II). GPRS II focuses on enhancing private sector competitiveness, investing in human resource development, and improving governance. There is strong donor coordination and on March 1, donors signed a Joint Assistance Strategy that outlines how each will contribute to Ghana's efforts to achieve the GPRS II goals. The government's anti-poverty efforts are bolstered by significant debt relief Ghana is receiving under the HIPC Initiative and the Multilateral Debt Relief Initiative. During the GPRS period, Ghana is expected to benefit from about USD 1.3 billion in debt relief. Progress on quality and access to health services has been stagnant. Access to primary education is over 90% but there are significant challenges related to quality. Labor/Child Labor -------------- Ghana has ratified all of the fundamental ILO Conventions, except ACCRA 00000499 002 OF 002 ILO Convention 138 on minimum age. The Labor Act of 2003 amends and consolidates previous labor laws, conforms to ILO conventions, enhances the right of every worker to form or join a trade union, and creates a National Labor Commission to help resolve labor disputes. The Constitution prohibits forced or compulsory labor; however there were reports that such practices occurred. The government has set a minimum employment age of 15 years and prohibits night work and certain types of hazardous labor for those younger than 18 years of age. However, child labor remains a serious problem in the informal sector. Children are trafficked both within and outside Ghana for forced labor in a variety of sectors. The government supports an ILO-IPEC Timebound Program that aims to eliminate child labor in targeted sectors, and a regional ILO-IPEC project, along with international chocolate manufacturers, that aims to eliminate the worst forms of child labor in the cocoa sector. End Text. BRIDGEWATER