US embassy cable - 05ACCRA404

UNCLAS SECTION 01 OF 02 ACCRA 000404 
 
SIPDIS 
 
PASS TO AF/EPS MARY FLEMING AND CYNTHIA AKUETTEH 
 
E.O. 12958: N/A 
TAGS: ETRD, GH, economy 
SUBJECT: GHANA: INPUT FOR 2005 PRESIDENT'S REPORT ON AGOA 
 
REF: STATE 24616 
 
 1. Economic Situation: Ghana has a market-based economy with 
few barriers to trade and investment.  In February 2005, the 
GoG ceded control of petroleum prices to the National 
Petroleum Tender Board, made up of GOG representatives and 
oil retailers, and gasoline prices immediately jumped 50 
percent. Ghana has divested all or part of its holdings in 
318 of 350 state-owned enterprises, and it has announced 
interest in privatizing most of the remaining ones, including 
the oil refinery, power and water utilities, ports and 
railways, and civil aviation establishments.  The 
government's monopoly on the export of cocoa was removed in 
1999 to allow the private sector to participate partially in 
cocoa exports, though few companies have taken advantage of 
this opportunity, and the GoG still controls the price paid 
to cocoa farmers. The IMF and World Bank gave final approval 
to HIPC Completion Point in July 2004, paving the way for 
Ghana to receive approximately USD 3.5 billion in debt 
forgiveness from official creditors. 
 
2. Trade Liberalization: Ghana requires foreign investors to 
satisfy a minimum capital requirement and prohibits them from 
investing in several traditional sectors. Starting a business 
in Ghana can take about 85 days.  In December 2003, 
Parliament passed five of the six bills designed to bring 
Ghana into compliance with TRIPS requirements; the remaining 
copyright bill is expected to pass in 2005. Ghanaian law 
protects private property rights, although disputes over land 
ownership are common. The government has made some progress 
in resolving ongoing investment disputes involving U.S. 
companies, but there are currently several commercial 
disputes involving cotton production, rice production, and 
telecommunications. 
 
3. Political Pluralism: President John Kufuor of the NPP 
party was re-elected on December 7, 2004, in a national 
election that was generally considered free and fair by 
international observers, despite a few incidents of 
intimidation and minor irregularities. Eight political 
parties contested parliamentary elections and four parties 
contested presidential elections. 
 
4. Rule of Law: Corruption in the judicial system and lengthy 
pre-trial detentions remain serious problems. &Fast Track8 
High Courts are dealing with routine commercial disputes and 
high profile corruption cases. The integrity of the legal 
system is limited by a lack of financial, human, and material 
resources. The judiciary is occasionally subject to executive 
influence and corruption. 
 
5. Anti-Corruption: The government pursues a &Zero 
Tolerance8 policy on corruption. The government is 
negotiating a contract with a U.S. company to put in place a 
double-blind bidding system for government procurement 
contracts. The National Reconciliation Commission completed 
an inquiry in 2004 for victims of past government human 
rights abuses.  Police corruption and impunity remains a 
problem. 
 
6. Poverty Reduction: The IMF approved a new Poverty 
Reduction and Growth Facility for Ghana in April 2003 and 
completed the second review in July 2004; to date, the GoG 
has adhered to the majority of its targets. The current 
budget includes a number of initiatives to alleviate poverty. 
The National Health Insurance Scheme increased the VAT tax by 
2.5 percent in August 2004 to fund expanded health coverage 
in Ghana. 
 
7. Human Rights: The GOG generally respects human rights. 
However, there have been some credible reports that police 
have beaten suspects in custody and have arbitrarily arrested 
and detained people. In 2004, an opposition member in the 
north died in military custody. Prison conditions remain 
harsh and life threatening and prolonged pre-trial detention 
remains a serious problem.  There are occasional reports that 
government officials pressure government media outlets to 
minimize coverage of opposition politicians. 
 
8. Labor: The new Labor Act of 2003 amends and consolidates 
previous labor laws, conforms to ILO conventions, enhances 
the right of every worker to form or join a trade union, and 
creates a National Labor Commission to help resolve labor 
disputes. The Constitution prohibits forced or compulsory 
labor, however there were reports that such practices 
occurred. Ghana has ratified both ILO Convention 29 and 
Convention 105 on forced labor. 
 
9. Child Labor: GOG law sets a minimum employment age of 15 
years and prohibits night work and certain types of hazardous 
labor for those less than 18 years of age. However, child 
labor is a serious problem in the informal sector.  In 
September 2003, Ghana signed the Optional Protocol to the 
Convention on the Rights of the Child on the sale of 
children, child prostitution, and child pornography. The 
government has ratified ILO Convention 182 on the worst forms 
of child labor. 
 
10. AGOA-related outreach: The West Africa Trade Hub is a 
important USAID-funded program whose goal is to build the 
export capacity of Ghanaian firms through training, technical 
assistance, and information.   The Trade Hub supports an AGOA 
Resource Center in Accra, offering public Internet access for 
research and communication with potential suppliers and 
buyers, and provides information on customs, transport, and 
sanitary/phytosanitary standards. 
 
11. Challenges: Two main challenges prevent expanded exports 
under AGOA. First, the production supply base is too small to 
meet demands from the large commercial entities in the U.S., 
and the benefits from AGOA do not make up for the resources 
required to increase supply. Secondly, producers have 
difficulty meeting the stringent delivery requirements of big 
commercial U.S. importers. Since most of the products are 
created by local, unorganized labor and are dependent on a 
variety of uncontrollable logistical elements, producers 
generally cannot guarantee a time or quantity for delivery. 
YATES