VZCZCXRO2962
RR RUEHMA RUEHPA
DE RUEHAR #2693/01 3121006
ZNR UUUUU ZZH
R 081006Z NOV 06
FM AMEMBASSY ACCRA
TO RUEHC/SECSTATE WASHDC 2933
INFO RUEHZK/ECOWAS COLLECTIVE

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 
 ------------- 
 
¶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 
--------------- 
 
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. 
 
 
ACCRA 00002693  002 OF 005 
 
 
¶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 
--------------------------------------------- - 
 
¶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 
 
ACCRA 00002693  003 OF 005 
 
 
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, 
 
ACCRA 00002693  004 OF 005 
 
 
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 
-------------- 
 
¶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 
 
ACCRA 00002693  005 OF 005 
 
 
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. 
 
 
 
BRIDGEWATER 
BRIDGEWATER