US embassy cable - 04ACCRA1608

UNCLAS SECTION 01 OF 02 ACCRA 001608 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EFIN, ECON, ETRD, EAGR, EINV, GH, economy 
SUBJECT: GHANA ECONOMIC HIGHLIGHTS JULY 2004 
 
 
1. This report covers noteworthy economic events and 
activities in Ghana for July 2004.  The issues covered are: 
 
-- Launch of Private Sector Development Strategy 
-- Ghana Hosts Talks on ECOWAS Common External Tariff 
-- One to Watch: Economy of Ghana Network Launched 
-- New Fees on Food Imports 
 
Launch of Private Sector Development Strategy 
--------------------------------------------- 
2. On July 14, 2004, President Kufuor launched the National 
medium-term Private Sector Development Strategy (PSDS), which 
aims to fulfill the GoG vision of achieving the "Golden Age 
of Business" in Ghana.  Numerous GoG, private sector and 
donor representatives were present and stated their support 
for and commitment to the strategy.  In his speech, Kufuor 
argued that now that the GoG has achieved a level of 
macroeconomic stability, it is time to tackle the 
microeconomic environment, to enable the private sector to 
fulfill its role in powering the economy. 
 
3. The PSDS assesses Ghana's current business environment and 
outlines the strategies to achieve economic targets.  The 
strategy promotes broad-based pro-market reforms through 
consultation with the private sector and monitoring by 
development partners.  The strategy identifies four strategic 
objectives as part of the institutional framework: 1) to 
enhance Ghana's position in global and regional markets; 2) 
to improve the efficiency and accessibility of national 
markets; 3) to increase the competence and capacity at the 
firm level; and 4) to strengthen the GoG's private sector 
policy formulation, implementation, and monitoring and 
evaluation.  The GoG expects the strategy to improve Ghana's 
investment rating and to remove barriers to doing business in 
Ghana. 
 
Ghana Hosts Talks on ECOWAS Common External Tariff 
--------------------------------------------- ----- 
4. Delegations from Ghana, The Gambia, Guinea, Nigeria, and 
Sierra Leone met July 28-30 to discuss progress and negotiate 
positions on adopting the ECOWAS Common External Tariff 
(CET).  The USAID West Africa Regional Program (WARP) is 
funding this effort to complete the CET, which is based on 
the existing CET shared by the eight member states of the 
predominantly francophone West African Economic and Monetary 
Union (WAEMU).  The five countries plus Cape Verde plan for 
the ECOWAS CET to go into effect January 1, 2005, with each 
country phasing in new tariff levels over three years so that 
all ECOWAS member states have harmonized tariff structures by 
December 31, 2007. 
 
5. Although the CET treaty was originally signed by ECOWAS 
heads of state in 1975, and revised in 1993, the process was 
resuscitated by the EU's declaration that it will only 
negotiate trade agreements with or disburse European 
Development Funds to regional groups after 2007, not 
individual countries.  Under the new Cotonou Agreement, the 
negotiation of WTO-compatible new trading arrangements 
between the EU and African, Caribbean and Pacific (ACP) 
countries must be completed by 2008.  The European Commission 
proposes that regional reciprocal free trade agreements 
replace the current non-reciprocal preferences in the trade 
relations between the EU and ACP countries. 
 
6. Delegations were expected to report on their progress on 
adopting the CET, propose tariff exceptions and exemptions, 
report their findings on the economic impact of adopting the 
CET, and present specific plans to introduce the new tariff 
structure over the three-year phase-in period. 
Representatives from The Gambia, Guinea and Sierra Leone were 
well prepared for the meeting, and offered comprehensive 
reports on the above subjects.  Larger economies Ghana and 
Nigeria, however, were only prepared to brief on expected 
economic impact, though both expressed commitment to adopting 
the CET within the proposed timeline.  The next round of CET 
negotiations will take place in September 2005. 
 
One to Watch: Economy of Ghana Network Launched 
--------------------------------------------- -- 
7. More than 80 economists, policymakers and industry leaders 
have created the Economy of Ghana Network (EGN), a virtual 
community that promises to become a leading voice on economic 
development in Ghana. The intent of the EGN is to invite 
global participation to ensure that healthy criticism and 
independent external perspectives contribute to Ghana's 
economic policy. The network pledges to remain non-partisan 
while providing substantive evaluation of economic proposals 
by all political parties.  Conference papers and future EGN 
activities will be posted soon at www.isser.org. 
 
8. Organizers launched EGN on July 20 at the "Ghana at the 
Half Century" conference, an event jointly sponsored by 
Cornell University and the Institute of Statistical, Social 
and Economic Research (ISSER) at the University of Ghana. 
The conference attracted 186 participants from academia, 
government, and the private sector from Ghana, the U.S., UK, 
and Canada. 
 
9. During the three-day conference, speakers and participants 
debated the role the GoG should play in private sector 
development. Several participants spoke of the inadequacy of 
existing institutions, such as the Council of State and the 
judiciary and regulatory bodies, as well as the demoralized 
civil service.  It was also apparent that many participants 
thought that the need for politically palatable macroeconomic 
policies overshadowed the role of pure research in policy 
formulation 
 
10. A speech read on behalf of President Kufuor highlighted 
the need for institution-building and the expectation that 
deliberations would generate ideas on how to fast track 
Ghana's economy to a middle-income status by identifying 
critical pathways to poverty reduction and human capital 
development. Though never fully blessing the EGN, Kufuor 
cautiously aligned himself with the conference agenda, 
acknowledging that a large part of Ghana's strategy for 
faster growth and development will hinge on deepening Ghana's 
knowledge base and using it to strengthen interaction with 
the rest of the world. 
 
New Fees on Food Imports 
------------------------ 
11. Ghana's Food and Drug Board announced it will begin 
charging registration fees for all regulated imported goods, 
effective September 1.  The fees will be levied on imported 
food products, such as rice, sugar, poultry, fats and oils, 
tomato paste, juices and flour products. (Note: U.S. rice, 
poultry, and wheat exports to Ghana will be affected.  End 
Note).  The stated goal is to protect the health and safety 
of consumers, and the fees will ostensibly provide funding 
for laboratory analysis of products, post-market surveillance 
activities, and administrative needs. 
YATES