Ghana

How Ghana’s economy will top Africa in 2018

Ghana is tipped to lead Africa as the fastest growing economy in 2018 with a growth rate of eight per cent as a result of increased oil and gas production, which boosts exports and domestic electricity production.

In its latest report dubbed: “Global Economic Prospects: Sub-Saharan Africa,” the World Bank has forecasted that growth in Sub-Saharan Africa will pick up at 3.2 percent in 2018, and Ghana will lead the economies in Africa with eight per cent followed by Ethiopia and Tanzania, which is expected to grow at 7.2%

Ghana’s economic growth, which had slowed from 4.0% in 2014 to 3.7% in 2015,  recover to 5.8% in 2016 and 8.7% in 2017, following consolidation of macroeconomic stability and implementation of measures to resolve the crippling power crisis.

 

However the forecasted recovery in economic growth in 2018 will depends on fiscal consolidation measures remaining on track, quick resolution of the power crisis, two new oil wells coming on-stream, and improved cocoa harvest and gold production.

“Growth in non-resource intensive countries is anticipated to remain solid, supported by infrastructure investment, resilient services sectors, and the recovery of agricultural production,” the report stated.

On the Sub-Sahara outlook, the bank said growth in the area was forecast to pick up to 3.2 per cent in 2018.  It also predicated a moderate rise in commodity prices.

Per capita output, which was projected to shrink by 0.1 per cent in 2017, is also expected to increase to a modest 0.7 per cent growth pace over 2018-19.

“At those rates,” World Bank said “growth will be insufficient to achieve poverty reduction goals in the region, particularly if constraints to more vigorous growth persist”.

Growth in South Africa, the second biggest economy in Africa, which is projected to rise to 0.6 per cent in 2017, is expected to accelerate to 1.1 per cent in 2018. Africa’s biggest economy, Nigeria, which is forecasted to go from recession to a 1.2 per cent growth rate in 2017, will gain speed to 2.4 per cent in 2018, helped by a rebound in oil production.

Growth is forecast to jump to 6.1 per cent in Ghana in 2017 and 7.8 per cent in 2018 as increased oil and gas production boosts exports and domestic electricity production. However the bank noted that militants’ attacks on oil pipelines could hold the key.

“If militants’ attacks on oil pipelines in the country decreases further the Nigeria economic will grow further”

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IMANI: Update on Efficiency in Ghanaian Ports – A Discussion with Stakeholders & Vice President Bawumia’s Commendable Efforts

IMANI Centre for Policy and Education has been studying the challenges – both current and potential – that negatively impact trade in Ghana. These challenges have been analysed under two major areas: 1) trade competitiveness and diversification, and, 2) trade facilitation and port efficiency.


IMANI published its first major report in June 2017. The paper, titled ‘’IMANI’s ‘Efficiency’ Report on Operations at Ghana’s Tema Sea Port; More Needs Doing’’ can be assessed @ http://www.imaniafrica.org/2017/06/27/imanis-efficiency-report-operations-ghanas-tema-sea-port-needs/

This article provides a summary of the research that has been undertaken into port efficiency and performance in Ghana, which includes discussions with and the perspectives of various stakeholders such as the Ghana Ports and Harbours Authority (GPHA), Meridian Port Services (MPS) Ltd., the Ghana Institute of Freight Forwarders (GIFF), and a and a shipping line executive.

The importance of an efficient port for trade, development and economic growth cannot be understated. Efficient ports facilitate trade competitiveness and greatly increase revenue mobilisation. The appropriate question to pose now is what makes Ghanaian ports inefficient, and what are the salient challenges they face? One pertinent issue that was mentioned by nearly all stakeholders involved the inefficiencies within the cargo clearing process. These include 1) long cargo clearing and processing times, 2) the multiplicity of agents in the inspection and customs processes, 3) the absence of paperless processes throughout.

Long cargo clearing and processing times

During IMANI’s interview with a shipping line executive, the lengthy cargo clearing processes at the ports was highlighted as a serious issue. Most importers are unable to clear their containers within the 7-day demurrage-free time. This observation was also noted by GIFF. In addition, GIFF stated that in an ideal and efficient situation, it should take approximately 5 days for goods to be cleared at customs. However, this is not the case in reality. It can even take more than a fortnight for goods to clear. The unnecessary delays affect both the ability of importers to quickly distribute their goods, and tend to lock up much needed capital for other business operations. Importers are required to pay container detention fees and demurrage deposits to shipping lines prior to a container being cleared from the port. Container deposit fees serve as a guarantee that importers will return containers back to the shipping line in time, once their contents have been emptied. GPHA estimate that shippers pay over $100 million in container demurrage annually to the government, in ports throughout the country. The longer the cargo clearing and processing time, the longer the funds sit with the shipping lines, and the fewer funds are made available for the importer’s business. This challenge is compounded as the repayment of container detention fees often takes a while to come into effect.

Multiplicity of regulatory agents in the inspection and customs process

Multiplicity of regulatory agents and the duplication of roles during the physical examination is also a serious inhibitor of efficiency at the Port of Tema. Custom Examination Officers physically examine container, alongside about 18 agents from different Ministries, Departments and Agencies (MDAs) – sometimes more – which is highly unnecessary, allows room for corrupt activities, and lengthens the whole inspection and customs process. As GIFF so adequately described, ‘the more layers you have, the more corrupt the port is’. This issue was also brought up by MPS, who mentioned that the inspection and customs processes were duplicated. Other stakeholders including the Ghana National Chamber of Commerce and the GPHA have also decried the challenge of multiple regulatory agencies and their impact on efficiency at the port.

mandatory joint inspection has been announced by Vice President Dr Bawumia to address this challenge. This policy is expected to take effect from 1 September, 2017. Under this policy, not all containers will be inspected, only those with a certain risk level. A risk engine will be introduced, which will assign risk levels to importers depending on the level of their compliance. Further, if an inspection is necessary, only the agencies required for the inspection will be informed, and they will have to sign in electronically to confirm their participation.

The absence of paperless processes

The lack of paperless processes at the Ports is another significant inhibitor of efficiency. However, MPS Terminal is the only terminal operator at the ports that has implemented a paperless system, which has allowed it to become a leader in port efficiency.

As of Monday 7 August 2017, Ghana Community Network (GCNet) began to pilot paperless processes at the Tema Port. This is one part of the three highly commendable policy ideas put forward by the Vice President. The policy ensures that by 1 September 2017, all transactions at Ghanaian ports will be 100 per cent paperless, enabled by an electronic system, which will be powered by GCNet. It will also ensure that the processes and players along the value chain from exporters, cargo tracking, warehousing, freight forwarding, payment systems, free zones, regulatory bodies and shippers all operate on an electronic basis.[1] These will greatly improve trade facilitation, revenue mobilisation and port efficiency and has significant impacts for economic development across the nation. Moreover, the introduction of paperless systems will also make multiple inspections and the role of superfluous agents and MDAs redundant.

Additional measures to improve port efficiency

Additional measures taken by Vice President Bawumia, to be put into effect by 1 September, 2017, also include the removal of internal customs barriers. This means that duties will be paid on goods that are destined for re-export, and no vehicles will be able to leave the ports without paying their duties, as a new automated gate opening system will be linked to the risk engine for inspections. Consequently, these new measures will expedite the inspection process and ensure that duties are paid where they are due. Moreover, the resultant decline in the complexity of inspection and control procedures will lead to a decline in costs, delays and minimise corrupt and informal payments which would have been used to speed up processes, and even make government agents and importers compliant to such unlawful situations.

Commendable efforts

Vice President Dr Bawumia and the NPP Government must be commended on the practical measures that are currently being put into place to improve port efficiency in Ghana, and ensure that the nation becomes one of the most competitive ports within the sub-region, and in the long-term, even globally. These measures are necessary to stimulate national economic development, increase tax revenues and minimise the corrupt practices among importers, customs officers and clearing agents. With these measures in place, and the active participation of key stakeholders, the nation will see positive and sustainable improvements in the realm of trade and economic development.

 

Republished from IMANI Ghana

This update was compiled by Ms. Anita Nkrumah and  Ms. Nana Dei-Anang with IMANI’s Centre for Economic Governance and Political Affairs. For interviews please call 0554309966 or 0302972939.

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