Investing In Agribusiness In Ghana.

Legal News & Analysis - Asia Pacific - Ghana - FDI

15 April 2021
 

Introduction
 

Ghana is keen on promoting investor confidence when it comes to agribusiness. With a stable political environment, functional legal framework and sound economic policies, Ghana has become one of the attractive locations for doing agribusiness in Africa.
 

Agriculture is key to Ghana’s economy employing about 45% of the population. The sector also offers a unique set of advantages to interested investors, including large plots of arable land, ecological zones that make the country suitable for the production of a diverse range of commodities, a strong enabling environment for investment, and established export channels to Europe and the United States.

 

A case study: Cashew
 

Cashew is one of Ghana’s important tropical tree crops. Ghana is seen as a leading producer of raw cashew nuts in Africa. Records show that about 57% of the world’s cashew come from sub-Saharan Africa. Thus, the production of raw cashew nuts has become a promising business in Africa.
 

Ghana’s success as one of the leading producers of cashew in Africa is largely due to strong government support, with the introduction of the 10-year Cashew Development Plan” in 2018 by the President of Ghanawhich seeks to improve research methods, introduce appropriate production and processing technologies, as well as develop marketing strategies along the value chain.
 

Furthermore, the Tree Crops Development Authority Act, 2019 (Act 1010) was passed by Parliament of Ghana in December 2019 to establish the Tree Crop Development Authority to develop and regulate the tree crops sub-sector and to provide for related matters.
 

Cashew nuts production in Ghana is strongly supported by international donors such as USAID through the African Cashew Alliance and the Gates Foundation through the African Cashew Initiative. GIZ Competitive Cashew Initiative (GIZ/ComCashew) also supports some cashew processing companies in Ghana by assisting processors with capacity building in the areas of access to finance, market entry training, quality management with regards to sourcing and warehousing of raw cashew nuts as well as good manufacturing practices.

 

Legal framework
 

In September 2020, the President of Ghana officially inaugurated the Tree Crop Development Authority in Ghana pursuant to the Tree Crops Development Authority Act, 2019 (Act 1010). According to Act 1010, the objective of the Tree Crops Development Authority is to regulate and develop a sustainable environment in the production, processing and trading of tree crops in Ghana.
 

Cashew is part of the selected tree crops together with oil palm, shea, coconut, mango and rubber. The Tree Crops Development Authority is responsible for coordinating the activities of all the major stakeholders involved in the production, marketing and export of these six major crops.

 

Cashew Business in Ghana
 

Considering an increase in production and availability of raw cashew nuts in Ghana, an investor may choose to invest in production of raw cashew nuts or endeavour to export them.
 

Alternatively, an investor may venture into processing of the raw cashew nuts to produce goods such as cashew butter, cashew flour, cashew soap, cashew juice, cashew cheese and cashew oil.
 

There is also the avenue for an investor to invest in transportation of raw cashew nuts or processed cashew within or outside Ghana.
 

Another reason for choosing Ghana is that investors can benefit from Free Zones. Ghana has Free Zones which are overseen by the Ghana Free Zones Board (GFZB), providing tax and duty reductions and exemptions for businesses that invest in Ghana. Imports of a free zone developer, subcontractor or enterprise into a Free Zone are exempt from direct and indirect taxes and duties.
 

Conclusion
 

With investor confidence growing and a conducive environment for business in Ghana, it is the right decision to invest in agribusiness in Ghana. The cashew sector has gained momentum as recognition from the government and international donors have increased, coupled with the stable investment environment provided by the government.
 

Demand for cashew has rapidly increased over recent years as knowledge about the associated health and nutritional benefits has become more widespread. In addition, there is the rising purchasing power of emerging economies which traditionally use cashew as an ingredient in many foods.
 

Also, navigating the business environment in Ghana is easy for investors, with English as its official language.
 


 

For further information, please contact:

 

Kwabena Oppong-Kyekyeku, Associate, CQ Legal

[email protected]