Venture into export financing - Haruna urges banks

By Edmund Smith-Asante

The Minister of Trade and Industry, Mr Haruna Iddrisu, has challenged commercial banks in the country to accept the risk to do export financing.

“You are not doing enough – the Ghanaian financial institutions,” he said, adding that the banks were not bold and courageous enough to do export financing.

Mr Iddrisu threw the challenge when speaking at the second in a series of breakfast meetings organised by the Graphic Communications Group Limited (GCGL) and Fidelity Bank Limited dubbed ‘The Graphic Business–Fidelity Economic Dialogue’ on the theme: “Maximising value of exports to improve Ghana’s trade balance”.

He, however, conceded that many of the private players were too exposed and were, therefore, not friendly to attract some of the financing that was available from the government.

National Export Strategy

Mr Iddrisu said Ghana needed to improve on its macroeconomics and that between 2008 and 2013 its trade deficit increased from US$5 billion to US$20 billion, which informed the launch of a National Export Strategy to double the country’s exports from the current US$2.4 billion to about US$5 billion by the end of 2017.

According to him, the government had revised the Export Development and Agricultural Investment Fund (EDAIF) legislation to make it friendlier in terms of expanded credit to the Ghanaian private sector.

He noted that access to and the cost of credit were the bane of Ghanaian businesses, including those in the export sector.

Strengthening institutions

He said one of the strategies the government was using for expanded exports was to strengthen institutions such as the Ghana Ports and Harbours Authority (GPHA), the Ghana Standards Authority (GSA) and the Food and Drugs Authority (FDA), while all those involved in standardisation had a role to play.

Mr Iddrisu said the government had also set out to diversify the country’s export portfolio and the direction of its exports, adding that for the first time, Ghana had established trade offices in China, Turkey, and South Africa, among other countries.

He said in 2013 Ghana’s exports to the ECOWAS market were slightly higher than exports to the EU market, which meant there was some hope and confidence building in terms of expanded exports.

While noting that about 99 per cent of trade in Ghana was conducted with partners outside Ghana, the Trade Minister said the lack of regional integration, commitment to the free movement of goods and services and encouraging inter and intra trade within the sub-region were a disincentive to export trade.

Economic Partnership Agreement

Mr Iddrisu also told the meeting that the Economic Partnership Agreement (EPA), which was subject to ratification by Parliament and Cabinet offered a new and unique opportunity for Ghanaian exporters.

“We should take advantage of it in order that we can increase and expand exports,” he said.

He challenged Ghanaian businesses to venture into the farming of exportable products to take advantage of the government’s support, whose threshold had been increased from US$3 million to US$10 million.

The minister said the government had, this year alone, disbursed over US$100 million, largely to the manufacturing sector, although it expected to give more of it to export-related companies.

“Exports hold the key to the future success of our economy; they hold the key to improving the incomes of our manufacturers and farmers and improving revenue and foreign exchange,” he said.

Non-partisan export advisory council 

He hinted at the establishment of a non-partisan export advisory council that would have former ministers of Trade and Industry, former chief executives of the Ghana Investment Promotion Centre (GIPC) and the Ghana Export Promotion Authority, the Association of Ghana Industries (AGI) and other private sector players as members to advise the Trade Minister and the government on future opportunities for expanding Ghana’s exports.

Mr Iddrisu further announced that ECOWAS Heads of State had decided to have a preferential trade agreement with the EU, saying that with an open market, Ghana could do better in terms of improving its foreign exchange regime.

“It is not enough for us to keep saying that Ghana remains stable, [is] an oasis of peace, political and social stability when the fundamentals of our economy are not right,” he said.

Writer’s email: Edmund.Asante@graphic.com.gh  

This story was first published by the Daily Graphic on July 16, 2014