Tag Archives: economics

“Dumping” in Ghana

Kumasi Central Market

The structure of Ghana’s economy has made minimal changes since the nation’s independence in 1957. It is still heavily reliant on traditional agricultural and mineral goods, mainly gold, cocoa and timber, in a highly competitive and aggressive international market. According to Ghana’s Private Sector Development Strategy, some of the country’s economic challenges include: “limited diversification into manufactured goods and traded services, or movement to adding value to primary products,” as well as limited productivity, investment, innovation and use of technology. The strategy was designed in accordance with the Government of Ghana’s vision of attaining “The Golden Age of Business”: to create and maintain an appealing business climate directed at both local and foreign investment. The  concept is a Presidential Special Priority; however, as it stands Ghana’s market is in a slump. There are many systematic issues to which one could point the blame–corruption, undeveloped infrastructure and weak taxation practices, for example.

According to Professor Appiah-Nkrumah, head of the economics department at Kumasi’s Kwame Nkrumah University of Science and Technology (KNUST), one of Ghana’s biggest economic challenges is unfair subsidized competition from other countries. During our discussion last week, he asked me if I had been to the central market (the biggest in West Africa). When I revealed that yes, I had been just the day before, he asked me point blank: “What did you observe?” This was a loaded question. I had spent hours exploring the endless stalls, overflowing with merchandise such as cooking utensils, electronics, clothing, car tires, colourful kente cloth, pig hooves and entire goat carcasses. Put simply, it was a sensory overload and I couldn’t narrow it down to only a few observations.  I muttered something about the vendors all selling the same merchandise and his face lit up. “And they’re selling a lot of imported products?” I asked. “Yes!” he exclaimed, as he opened up a local newspaper and read me a headline. Ghanaian manufacturing company Aluworks had recently closed down citing unfair subsidized competition from Chinese aluminum imports and unfair international trade practices as the main reasons. (Ironically, Ghana is the second highest exporter of aluminum in Africa.) Professor Appiah-Nkrumah elaborated: “Look at the textile industry. They take designs from here, then take it to China. That is a major issue. How do we compete?” He explained what economists call “dumping”- the process of selling goods in a second country at a cheaper price than they are sold in the primary country.

I think about some of the things I’ve purchased since arriving in Ghana a few weeks back: a plastic coffee mug made in China, a box of tea imported from Sri Lanka, chocolate treats from Turkey (although Ghana is the highest cocoa producer in Africa) and toasted rice cereal from Egypt. All items that Ghana has the capacity to manufacture. Ghana has the ability to be a big player in the international agricultural market, but its reliance on imports is still overwhelmingly dominant. The root of the problem stems back to the 1990s when Ghana was forced to agree to the demanding terms of International Monetary Fund and World Bank structural adjustment programs in order to save their economy and in spite of a gold and cocoa market crash. This involved eliminating tariff and exchange controls, cutting civil service, education and health expenditures and emphasizing free market policies. Ghana’s most recent Growth and Poverty Reduction Strategy states accelerating the growth of the economy in order to achieve middle-income status (an average income of $1750 per capita) as its central goal, in accordance with the Millennium Development Goal of halving the population living in poverty by 2015. Ghanaians believe the path to financial prosperity lies in adding industrialization, high productivity and modern technologies to their economy, but their national development continues to be blocked by unfair international trading systems. Until the structure of Ghana’s internal trade and internal production regulations are radically altered, its economy cannot be self-reliant and will remain, as professor Appiah-Nkrumah puts it, “at the mercy of the buyers.”