The Ghana Investment Promotion Centre (GIPC) is collaborating with the Ghana National Chamber of Commerce and Industry – representing government and the private sector respectively, to persuade Chinese companies to set up production and manufacturing plants in Ghana rather than importing finished goods from China to Ghana.
The move is to reduce the large trade deficit that Ghana is incurring in its merchandise trade relationship with China, create direly needed new local jobs in the manufacturing sector, benefit from technology transfer and benefit from the capital inflows in foreign exchange that are inevitable in establishing foreign owned enterprises in Ghana.
While this is line with established objectives of the state with regards to all countries that Ghana has economic relationships with, GIPC and government itself sees extraordinary opportunities in its investment drive if it successfully targets China in particular.
Not only is China now the world’s second largest economy and still one of the fastest growing, its ongoing trade war with the United States – which has the European Union as a close ally – is encouraging it to look elsewhere for trade and investment counterparties and Ghana believes it can fit the bill within the African region.
According to the International Trade Commission (ITC), Ghana’s exports to China in 2018 were worth US$2.4 billion while imports of Chinese goods into Ghana that same year amounted to US$4.82 billion. This translates into a trade deficit of US$2.42 billion for the year, in continuation of what has become a regular annual deficit. Positively, however Ghana’s exports to the Chinese market increased by 32 percent in value in 2018.
According to the Chief Executive Officer of GIPC, Mr. Yofi Grant, the Centre is targeting about 1,000 Chinese companies over the next two years as candidates to establish production plants in Ghana to cut down the import bill through import substitution and also shore up Ghana’s exports.
A number of Chinese companies have expressed interest to begin investing in Ghana. Their main areas of interest are agriculture, manufacturing, renewable energy, construction, tourism among other sectors.
Already as at the end of 2018, Chinese investors were participating in 37 projects registered with the GIPC, which cut across agriculture, building and construction, commerce, manufacturing and services. Actually, there are perhaps hundreds of business ventures involving Chinese, but most of them are not formally registered. Indeed, it is believed that more Chinese investors have Ghanaians fronting for them than any other nationality represented in Ghana.
Crucially, the Centre is working with private sector associations and business groups in Ghana to identify and secure the interest of potential local investors who can serve as local equity partners to any potential incoming Chinese investors
Speaking exclusively with the Goldstreet Business at the ongoing China Trade Week in Accra, the CEO of Ghana National Chamber of Commerce and Industry, Mr. Mark Badu-Aboagye said one key area which enterprises in Ghana are seeking to leverage on at the moment in their efforts to attract capital-laden foreign partners is the imminent commencement of the Africa Continental Free Trade Area agreement and this offers huge market opportunities to Chinese companies accepting to set up their hub in Ghana.
“Our collaboration with China is to set up investments here. Instead of importing from them, we will rather produce them here and export. We export all the raw materials that we produce and we cannot continue like that.
“There is no way we can balance the trade deficit with the export of raw materials. We are positioning ourselves in this direction by adding value to our exports in order to enter their markets”, Mr. Badu-Aboagye reiterated.
By Dundas Whigham