Wednesday, January 08, 2014

A Quick Overview of Ghana's Chief Foreign Exchange Earning Industries

My good friend Walt Richmond has asked me to write more on the continuing structural economic problems faced by Africa as a result of trade patterns established during the colonial era, a phenomenon Kwame Nkrumah and others have referred to as neo-colonialism. Some other readers have also expressed an interest in more Africa centered posts. The problem of course is not new. The same pattern of Africa exporting cheap raw materials to Europe in exchange for expensive manufactured goods exists today as did in colonial times. For the most part Africa has been unsuccessful in breaking this dependency and building an indigenous industrial base. Yet, there is no doubt that despite this unfavorable economic relationship that some countries in Africa such as Ghana have experienced immense economic growth in the last few decades. Although much of this can be attributed solely to the increase in prices for raw materials.

Ghana currently has four important industries for the generation of foreign revenue. These are cocoa, gold, oil, and tourism. All of these have problems. The money paid for raw cocoa to Ghana by European and American concerns is only a small portion of the costs that these companies charge for their finished products. Very little of the price of a candy bar goes to Ghanaian farmers about 6% down from 16% thirty years ago. In contrast 70% goes to the chocolate companies. A 70% - 6% split between the rich stockholders of Mars, Nestle, Cadbury etc., and poor cocoa farmers is not very equitable.

The gold and oil industries are heavily owned by foreigners and their profits likewise go mostly to foreigners. The vast majority of the gold mining industry in Ghana is owned by South African companies with much of the remainder controlled by Canadian and US companies. Although gold companies are limited to shipping no more than 45% of their profits out of the country that still equates to a very large portion of Ghana's foreign exchange earnings.

All oil ventures in Ghana are supposed to be at least 50% Ghanaian owned. But, this has not been the case. In some cases as little as 20% is owned by Ghanaian concerns. European companies like Shell and Total have routinely violated the 50% indigenous ownership clause in extracting oil from Ghana. So the new oil discoveries have not so much benefited Ghanaians, but rather rich Dutchmen and Frenchmen.

Finally, there is tourism. There is a huge mark up and collection of tourist dollars by Ghanaian businesses. So things here are far more equitable for Ghanaians than in the other industries. The Obruni surcharge levied by taxi drivers, restaurant owners, hoteliers, and other indigenous service and goods suppliers is quite substantial. But, the number of tourists coming to Ghana is limited compared to most other destinations such as Turkey, Thailand, or Mexico. The one niche market possessed by Ghana is the Black Diaspora, that is the African-Americans who come here to look at the slave castles and forts along the coast.In terms of numbers of people and disposable income, however, this demographic is limited compared to the total number of tourists in the world.

1 comment:

Kwaku A. Danso (aka Danso JFK) said...

Not everybody knows what SOAS is and it would be nice if you indicated your PhD subject matter and thesis and any publications or articles. Thanks