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

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1. In response to reftel, this cable transmits embassy Ghana's
submission for the 2007 President's Report on AGOA.


2. Begin Text

Status
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AGOA eligible, including for textile and apparel benefits.

Market Economy/Economic Reform/Elimination of Trade Barriers
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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
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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
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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
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Ghana has ratified all of the fundamental ILO Conventions, except

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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