Ghana and the United States Relationship Essay

Capitalism is an economic and political system where a country’s commerce and industry is dictated and controlled by private owners. In many developing countries, capitalism can lead to foreign corporations penetrating and taking over different markets and squeezing out the local entrepreneurs. Ghana which is official known as the Republic of Ghana is a west African country with abundant natural resources. These natural resources are a target of international commerce, corporate investments, and exploitation by the developed nations.

In this essay, I will examine the relationship between the Unites States of America and the Republic of Ghana focusing on investments and trade. The land, labor, capital, space, and abundant resources in Ghana plays a key role when focusing on the international relationship with the United States. Approximately 56 percent of the workforce consist of farming, and the agricultural sector makes up 37 percent of the nation’s gross domestic product (GDP). In addition, 70 percent of the land is arable, fertile, and forested.

The natural resources consist of gold, oil, timber, diamonds, bauxite, manganese, rubber, cocoa, wood manufactures, pineapples, cashews, spices, fish, and other food crops. The USA is one of the primary trading allies with Ghana, mainly, through gold mining, wood products, and petroleum; however, they trade other items such as yams, cassava, and cocoa paste. In 2007, there was a discovery of oil in the Jubilee Field of the coast of Ghana by the Ghana National Petroleum Corporation (GNPC) and productions began in December 2010, and it is projected that Ghana would be one of the largest producers of oil.

Currently, Ghana is producing approximately 85,000 barrels of oil a day and holds an estimated 1. 5 billion barrels of oil. The current exchange rate is 1 USD = 1. 7588 GHS (Ghanaian Cedi) their exchange rate is a reflection of there economic sustainability. The 2011 GDP is 38. 6 billion in US dollars. Ghana is a favorable destination for different companies and nations since the country has a stable environment as well as a democratic government.

In 1999, the United States and Ghana developed a Trade and Investment Framework Agreement (TIFA) that improves cooperation and enhances opportunities for trade and investment such as “market access issues, labor, the environment, protection and enforcement of intellectual property rights, and, in appropriate cases, capacity building. ” (ustr. gov) In Accra (the capital of Ghana), there is a United States Chamber of Commerce which is an advocate group for small businesses and corporations to get there voices heard to the U. S. government. Through the U. S.

Chamber of Commerce, there is an African Business Initiative (ABI) their mission is to engage the U. S. Businesses on the legislative policies that involve direct investment in Africa, to facilitate trade between the United States and African countries, as well as introduce U. S. companies the economic opportunities in the continent. The main reason the Chamber of Commerce is located in Ghana is because there are an array of U. S companies operating in the country, such as Newmont, Cargill, ADM, Kosmos Energy, Anadarko, DHL, FedEx, UPS, KPMG, ACS, Coca Cola, S. C. Johnson, Ralston Purina, Star-Kist, A. H. Robins, Sterling, Pfizer, IBM, 3M, Motorola, Stewart & Stevenson, Price Waterhouse Coopers, United Airlines, Delta Air Lines, General Electric, and National Cash Register (NCR).

These companies are operating in Ghana as a means to expand the revenues of the corporations and the employment for the citizens, as well as for the different governments to establish a better economic relationship. However, it can lead to the local entrepreneurs having a hard time competing with these corporations due to their increase capacity to ass produce goods causing a cheaper product (economy of scale). In addition, these companies lobby to the Chamber of Commerce for favorable measures in their respected fields, and are some of the top US companies that lands on the Fortune 500 list. Many U. S. firms have made investments in Ghana, primarily in gold mining, wood products, and petroleum. One of the top U. S. Gold mining companies known as Newmont has entered Ghana’s mining markets in 2004 and has invested approximately $1 billion to search for resources.

According to Newmont’s projections, there would be a 100% growth in production throughout the many different plants that are sitting on major metal reserves. Currently, Newmont generates $9. 5 billion dollars in revenues, and it is 260 on the fortune 500 list. However, unlike Newmont the Nuevo Petroleum and other U. S oil based companies had little success with their mining endeavors. As a result of the increased economic relationship, the U. S has been providing socioeconomic assistance to Ghana.

In 2007, the United States Agency for International Development (USAID) implemented the Millennium Challenge Corporation, the African Development Foundation, and other programs which stimulates the economy for the Republic of Ghana. The U. S. assistance in 2007 was approximately $55. 1 million, and the programs were designed to alleviate health issues (HIV/AIDS and child health), education, promote efficient democratic governance, and increase competitiveness with small farmers.

The funding has been increasing since then through the Millennium Challenge Corporation which is a five year program that set up to raise $547 million to reduce poverty by raising farmer incomes through “private sector-led agribusiness development” and modernization. There are three main focuses to support economic growth which are “the Agriculture Project to strengthen production; the Transportation Project to move goods to market, and the Rural Development Project to improve farm communities and farmers’ livelihoods and living conditions. The agriculture program seeks to increase profits from staple food and horticulture crops that are produced by poor small farmers and to improve business and technical services to develop the agriculture markets. The transportation program intends to develop poor quality roads and transportation linkages that restricts sustainable economic growth by restricting access to foreign and domestic agricultural markets. The program strives to promote growth, access to social services, and support expansion of Ghana’s export directed horticulture base.

The rural development program will provide community services, including water and sanitation, education, and rural electrification. It is enhancing the capacity of the local governments and communities to deliver the services, maintenance and sustainability. In the later, FY 2010 President Obama and his Administration Developed an Assistance planned to continue supporting the different programs with a focus on on trade, the financial sector, and the food and agricultural sectors. In addition, Ghana was the first country in the world to accept Peace Corps volunteers, and the program is one of the largest in the world.

Currently, there are more than 150 volunteers in Ghana where they assist mainly in education, and the others focus on agro-forestry, small business development, health education, water sanitation, and youth development. Through the establishment of a constitution with different government branches Ghana aims for efficient government regulation and expansion through the establishment of different protective and development agencies. The government has different agencies that oversee all exports.

One of the agencies is the Ghana Trade fair Company (GTFC) which was formerly known as the Ghana Trade Fair Authority (FTFA). It is an autonomous self-financing state-owned enterprise that is responsible for overseeing the Ministry of Trade and Industry. The Ghana Export Promotion Council (GEPC) is responsible for the development and promotion of nontraditional exports. The GEPC provides technical assistance in production, marketing, training, general advisory services, as well as participation in export finance committees to expand the nontraditional export market.

The Ghana National Procurement Agency (GNPA) handles the purchasing of bulk products, for example rice, sugar, coking oil and many more. The Federation of Association of Ghanaian Exporters (FAGE) is a private, non-governmental organization comprised of Ghanian exporters and importers associations. The primary goal is to be the leading provider of technical and information services national and international. The Ghana National Chamber of Commerce and Industry (GNCCI) was established to promote commercial and industrial interests.

The Timber Export Development Division (TEDD) handles export promotion and development and publication of journals and periodicals for the timber industry. The Precious Minerals Marketing Company Limited (PMMC) buys and sells precious minerals such as diamonds and gold. Their main goal is to develop and add value to the jewelry industry in ghana, and the PMMC manufactures jewelry, but mainly traditional African designs. Finally, the Ghana Cocoa Board (Cocobod) is a public board that handles various operating and servicing components of the cocoa industry.

These agencies handle all of the regulatory aspects of the Ghanian trade. In addition, the government wants a more transparent system as a means to combat corruption. On the other hand, there are private organizations that lobby the government, and the many regulator agencies in Ghana is set up to favor corporate business. One is the Private Enterprise Foundation (PEF) which promotes the development of the Ghana private sector through advocacy. The PEF is involved in governmental policy to ensure growth in the private sector.

However, the agencies impose regulation that include licensing, registration and reporting, labour laws, standards and support services that hampers small and mediums sized businesses from growth. According to the Centre on Regulation and Competition Institute for Development Policy and Management, at the University of Manchester, UK, small businesses employ only 15. 5 percent of the workforce, however many individuals depend on these businesses for survival. The centre analyzed businesses operates in wood processing, food processing, garments and textiles, services and manufacturing.

The institution found out the reason for limited ambition and growth among entrepreneurs to pursue improving business strategies is because of the limited access to funds and markets, “the lack of access to outside sources of finance was one of the main problems, delays in setting up businesses were also identified as an obstacle to growth, foreign-owned businesses performed better than firms owned and operated by Ghanaians, most small businesses failed to comply with labour regulations, such as minimum wage rules, and small businesses lacked awareness of regulations (for example, property rights) and business support services. Although there are many initiatives, programs, and agencies designed to promote business development in Ghana, the regulatory structure is not enhancing the growth and development of Small and medium sized businesses. The American Chamber of Commerce in Ghana is a lobbying organization and voluntary association with supporting business people and professionals that is working to develop an environment where business can flourish in Ghana and America.

The American Chamber promotes commercial, economic, educational and cultural relationships between the United States and Ghana, and their goal is to advance the general welfare of the Ghanian citizens. Some of the members of this organization is Coke-a-Cola, General Electric, KPMG, and many more. Ghana with their vast land and abundant natural resources has had an even economical relationship with the United States.

These two nations trade goods and services, Ghana supports US corporate development for employment in their nation, and the United States in turn supports economical and social development with the implementation of various developmental programs to enhance the markets, the knowhow and capacity of the citizens. In this essay, I examined the relationship between the Unites States of America and the Republic of Ghana focusing on investments and trade relations.

Work Cited

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