Ghana’s exports have been given a major boost as the trade ministry finalizes the free trade agreement with the United Kingdom. The tariff-free trade agreement will also provide a platform for greater economic and cultural cooperation between the two countries.
The partnership deal worth £1.2bn will allow Ghana to export commodities such as bananas, tinned tuna, and cocoa to the United Kingdom market without tariffs. On the other hand, the UK will start its exports to Ghana under the tariff-free agreement from 2023. Based on the partnership products such as machinery, electronics, and chemical products will be brought to Ghana.
Mineral fuels and oil, fish, fruit, and cocoa are Ghana’s largest exports to the UK whilst Ghana also imports clothing/textiles, machinery and mechanical appliances, and chemical products from the UK. Available statistics show that the total UK-Ghana trade was worth £1.2 billion in 2019, of which UK exports were £652 million. The agreement, therefore, creates an opportunity for Ghana to boost its export earnings which have begun to show signs of a rebound as the economy returns to normal.
Banana exports
Banana is one of the non-traditional export commodities that holds huge prospects for the country in its quest to drive the export diversification agenda. Available statistics show that the value of exports of commodity group 0803 “Bananas, including plantains, fresh or dried” from Ghana totaled $33 million in 2019. This means that the cumulative exports of the commodity group from Ghana decreased by 28% in value terms compared to 2018 when a total amount of $46 million worth of banana was exported.
Exports of commodity group 0803 “Bananas, including plantains, fresh or dried” accounted for 0.198% of total merchandise exports of $16.7 billion in 2019. The share of commodity group 0803 in total exports from Ghana decreased by 0.075 percentage points compared to 0.273% in 2018 where cumulative exports from Ghana amounted to $17 billion.
The UK is one of the major destinations of the country’s exports of bananas. In 2019, Ghana exported US$ 8.43 million worth of banana to the UK, representing 25% of the country’s total export of the commodity. The UK remains the second-largest export destination for Ghana’s banana as of 2019, only behind Belgium with a share of 30%.
The finalization of the free trade agreement brings to an end the challenges faced by Ghanaian exporters, especially banana exporters who were slapped with higher tariffs at the later part of 2020. The current agreement also come at a time when the demand for fruits is high as most people seek to boost their immune systems against the COVID-19 pandemic. Therefore, the agreement creates an avenue for Ghana to increase the production of bananas as the country is assured of a huge market in the UK. This calls for the expansion of banana farms across the country which will result in the creation of employment for farmhands, increase income for farmers and ultimately reduce poverty and employment in the country.
Cocoa and Cocoa Preparations
Ghana can also leverage this agreement to increase its foreign exchange earnings from the exports of cocoa and cocoa products to the UK. Available statistics show that the value of exports of commodity group 1806 “Chocolate and other food preparations containing cocoa” from Ghana totaled $33 million in 2019 compared to an import value of $2.37 million. Ghana imported US$238 thousand worth of chocolate and other cocoa preparations from the United Kingdom in 2019, this accounted for 10% of the country’s import of this commodity group. However, due to constraints with value addition, Ghana has not been able to export enough of this commodity to the UK.
The agreement is therefore a wake-up call for the country to increase its value addition of cocoa products to harness the benefits that come along with it. This further lends support to the argument that Ghana stands to gain if it ensures the expansion and production of quality cocoa products to the UK market.
Whilst the trade agreement provides huge prospects for the nation’s exports with a rippling effect on other sectors of the economy, experts warn that the country must expand its production capacity especially on the products covered by the trade agreement to take full advantage of the opportunity. Other than that, only the UK will benefit more from the agreement since they have an absolute advantage in the production of most of the commodities covered by the agreement.
The value of merchandise exports from Ghana totaled $16.7 billion in 2019 with the United Kingdom receiving US$ 415 million, a share of 2.47% of total exports in 2019. Ghana’s imports from the UK amounted to US$685 million in 2019, accounting for 6.56 percent of total imports.
Given that the UK has a bigger market than that of Ghana, the country stands to gain more if due diligence is ensured to produce and export only wholesome commodities that meet international standards so as not to attract any further bans on the country’s exports due to they not meeting the standards.
