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01.04.2008 Business & Finance

Non-Traditional Exports Post Strong Growth

Non-Traditional Exports (NTEs) have shown strong performance over recent years, reaching $1.164 billion, above the $1 billion target for 2006.

The exports increased from $460 million in 2001 to $1,164 million in 2007, showing a growth rate of over 150 per cent. On annual basis, the growth translates into a 20.7 per cent increase yearly.

According to a report from the Ghana Exports Promotion Council (GEPC), made available to the Daily Graphic, total national merchandise exports of Ghana had shown positive growth over the past three years.

They have grown from $2.74 billion in 2004 to $4.19 billion in 2007, representing a 53.08 per cent growth in 2007 over the 2004 figures.

Within the same period from 2004 to 2007, NTEs grew from $705 million to $1,164 million, showing a growth rate of 65.08 per cent.

However, the percentage contribution of NTEs to total exports rose from 26.14 per cent in 2006 to 27.76 per cent in 2007.

Although the current year under review, 2007 follows the general trend of increase in NTEs achieved over the last five to six years, the export earnings achieved in 2007 exceeded the $1 billion earmarked for 2006 but fall below the expected amount of $1.2 billion forecast for the year 2007.

NTEs percentage contributions to total exports in 2004, 2005, 2006 and 2007 were about 25.74 per cent, 28.09 per cent, 26.14 per cent and 27.76 per cent respectively.

Review of NTEs Sector in 2007

Total value of NTEs in 2007 was approximately $1,164 million. This depicts a growth of 30.42 per cent over the 2006 figures ($892 million).
 
Previous year's performance showed an increase from $778 million in 2005 to $892 million in 2006, representing 14.8 per cent growth.
 

The performance of the sector over the period 2004-07 is shown graphically below:

The total earnings of the non-traditional export sector in 2007 were made up of earnings from three main sub-sectors as follows:

The agricultural sector contributed by $197.24 million, representing 16.9 per cent of the total exports. The manufacturing sector contributed $963.5 million, representing 82.7 per cent while the handicraft sector contributed $3.79 million representing 0.32 per cent.

The GEPC report said the performance of semi-processed/processed and the agricultural sub-sectors grew positively by 35.53 per cent and 11.14 per cent over the 2006 earnings.
 
 However, the handicrafts sub-sector recorded a negative growth of 15.59 per cent over 2006 earnings.

This was because major buyers of Ghanaian crafts in the United States of America (USA) turned to the Far-East, especially Indonesia, India and China for handicraft supplies with relatively good finishing and functionality.

Performance of NTEs by leading products

The 10 top performing products included cocoa paste which contributed 12 per cent worth $139.75 million, followed by canned tuna with 8.51 per cent of total exports amounting to $99.15 million.

Veneers accounted for 7.50 per cent with $87.8 million worth of veneers exported, $86.6 million worth of cocoa butter was exported, representing 7.45 per cent of total exports.

Other products including plastic wares, plywood, fresh or chilled tunas, nutural rubber sheets, shea nuts and cut pineapples, all made impressive gains during the 2007 export year.
 
The total value of the top 10 earning products amounted to US$ 671,112,968 representing 57.63 per cent of the total NTEs for 2007.

According to reports, the increase in cocoa paste and butter earnings was due to increases in the futures prices for the product during the period on the London futures market.

Moreover, the increase in earnings was partly due to capacity expansion of a major exporter of cocoa paste, Barry Callebaut Ghana Limited and a major exporter of Cocoa butter, Cocoa Processing Company Limited.

The report said veneer sheets and plywood earnings increased significantly. This is mainly because a major exporter, John Bitar Company Limited, expanded its plant capacity and also acquired a defunct wood export company, Metro Star Limited together with its buyers.

Canned tuna also increased significantly because of the increase in the average world market price of the product and partly to the contribution of Myroc Food Processing Company Limited which did not feature in 2006.

In the agricultural sub-sector, the top export earner was frozen tuna which saw a 33.78 per cent increase from $39.4 million in 2006 to $52.8 million

Shea nuts, pineapple, cashew nuts and banana recorded negative growths of -0.88%, -29.40%, -9.99% and -3.54% respectively, compared with the 2006 performance.

Earnings from frozen tuna and other frozen fish grew significantly over the period, due to a huge investment and the utilisation of modern fishing implements by Panofi Company Limited.

Export of pineapples experienced a negative growth because of the fall in pineapple production due to many of the outgrowers leaving the industry.

Cashewnuts earnings decreased over the period due to the inability of one of the exporters, Rals Commodities Company Limited to export in the year under review. The company made US$3.2 million in the year 2006.

In the handicraft sub-sector, hides and skins were the top earners in that sector with 274 per cent increase in exports in that sector from $378,873 to $1,416,980.

The ten leading general product categories each contributed over US$30 million to NTEs earnings.
 
The lead earning category, cocoa products, contributed 21.11 per cent to total NTE earnings in 2007, while rubber and rubber products, the tenth earning category, contributed 2.63 per cent to total NTE earnings in 2007.

The 10 leading general product categories were made up of seven processed or semi processed and three agricultural products. One out of the ten product categories, namely; horticultural products recorded a negative growth of -6.37 per cent in 2007 compared with 2006.

The performance of the NTE sector by markets indicates that the markets of the European Union and ECOWAS absorbed 46.55 per cent and 31.36 per cent respectively of NTE exports from Ghana.
 
Other African countries and other developed countries as well as other countries including emerging or transitional economies/markets absorbed 2.36 per cent, 9.25 per cent , 10.48 per cent respectively of NTE exports from Ghana.
 
This is shown in the chart above. According to the GEPC report, a comparison of the performance of the various markets in 2007 to 2006 reveals that all the markets recorded positive growth.
 
The EU market performance grew by 29.10 per cent whereas the markets of the other African countries, other developed countries and other countries including emerging markets grew by 8.97 per cent, 8.93 per cent and 14.89 per cent respectively.

In 2007, Ghana's single largest market for the NTEs was the United Kingdom, absorbing 11.42 per cent of total NTEs during the period.

Nigeria which was overtaken by Burkina Faso in 2005 and 2006 has resurfaced as Ghana's leading market in the ECOWAS sub region.

Significantly, there was a positive growth in Nigeria's market share of total NTEs of 67.93 per cent in 2007 relative to 2006. Burkina Faso, the second most important market in the sub region registered a negative growth of 8.13 per cent in 2007 market share over 2006.

— Story by Boahene Asamoah

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