The European Union Cooperation with Ghana

Ghana’s is an important regional player and its political role has gained importance in assuming the chairmanship of the Economic Community of West African States (ECOWAS). In this role, President Kufuor has provided considerable impetus to mediation efforts for the resolution of the Ivory Coast and the Liberian crises, including the hosting of peace talks on Liberia, under the auspices of ECOWAS, from June to August 2003. Within the UN circles, Ghana has been nominated to serve on the Security Council for the next two years with effect from October 2005.

Political situation

Ghana is a unitary republic with a constitution based on the US model. The National Democratic Congress (NDC), in power since 1993, lost the elections held on 7 December 2000 and its leader, President Rawlings, stood down after two four-year terms. Having won a presidential run-off vote against then Vice-President John Evans-Atta Mills, President John A. Kufuor, leader of the New Patriotic Party (NPP), was elected for a four-year term in January 2001. President John Agyekum Kufuor and his NPP party were again returned to power in the December 7, 2004, presidential and Parliamentary elections.

A National Reconciliation Commission (NRC) started to work in September 2002 and submitted its work in April 2005. The commission was set up to investigate human rights abuses in Ghana during past periods of military rule. Many of the cases brought forward dealt with human rights abuses during the period between 1982 and 1992 when it is alleged that some 300 people disappeared. The Commission presented its final report to the Government in April 2005.

Economical and social situation

Ghana is a low-income country with a per capita income of US$434 in 2005 (Growth and Poverty Reduction Strategy (GPRS) final draft report 2006-2009). Agriculture, services and industry provided 35%, 40% and 25% of GDP respectively. The annual economic growth rate stood at 5.8 % in 2005, after 4.0% in 2001 (World Bank data). Population growth is estimated at a comparatively low 1.6 % per annum in 2002. About 40% of the population have been estimated to be below the poverty line of 1 US$/day over the 1983-2000 period (UNDP data).

Ghana has published its first Ghana Poverty Reduction Strategy (GPRS) in February 2003, setting the overall framework for medium-term poverty reduction and growth in the country (2003-2005). This document is one of the main references for the 9th EDF Country Strategy Paper of the European Commission and provides a comprehensive set of development indicators and specific targets for the coming years. In 2005 a GPRSII (Growth and Poverty Reduction Strategy) is being developed highlighting the policy objectives and the detailed activities for the period 2006-2009.

Ghana opted for debt relief under the Heavily Indebted Poor Country (HIPC) programme in 2002 (to reduce the large fiscal burden of its external debt). In mid 2004, the country reached HIPC completion point. The debt relief provided under the HIPC initiative has been estimated to amount to US$ 215 million per year over the 2002-2011 period. In addition, Ghana is one of the 14 poor countries that should be benefiting from the debts cancellation agreed by the G-8 Group in July 2005 in Gleneagles (Scotland), amounting to a nominal debt relief of around $4.3bn for Ghana (i.e. the total value of debt relief that will be realised over the next 20+ years).

Regional framework

Ghana appears as a strong advocate of regional integration in the framework of ECOWAS and is part of the ECOWAS grouping for the negotiations of an Economic Partnership Agreement (EPA) with the EU. In October 2003 the negotiations between West Africa and the EU for the EPA have been officially launched in Cotonou. Few months after a road map was approved by the two parties, indicating the priority areas, the institutional set up and the calendar for the negotiations. The next stage, which should start in early 2006, will focus on defining the content of the Agreement and the modality for the trade liberalisation of goods and services between the two regions. This negotiation phase is expected continue until the end of 2007 for the EPA to commence on 1 January 2008.

On the 1st February 2003, President Kufuor was elected as the chairman of ECOWAS, following Senegal’s President Wade in this function. During his chairmanship, President Kufuor was actively involved in the resolution of Ivory Coast and Liberia crises. The country hosted, in mid-2003, the peace talks on Liberia, held under the auspices of ECOWAS and resulting in the signature of a peace agreement on 18 August 2003. During the summit held on 19 December 2003 in Accra, President Kufuor was re-elected ECOWAS President for second term (2004). President John Agyekum Kufuor is a leading proponent of NEPAD and of adherence to its underlying principles, including good governance and peer review. Ghana was the first country to undergo peer review examination in April 2005.

Trade Relations with the EU

The EU is the world’s largest and most open trading partner. It is also the world’s biggest single market. Following the enlargement of the EU in May 2004, the EU is now composed of 25 Member States and is home to 450 million consumers. Ghana and other third countries benefit from an enlarged Union. A single set of trade rules, tariffs, and administrative procedures apply across the continent. This simplifies dealings for Ghana exporters to the EU and improves conditions for trade and investment.

The EU remains Ghana’s major trading partner (53% for exports and 33% for imports), with the United Kingdom, Netherlands, Germany, France, Italy and Belgium being the main bilateral European partners. Outside Europe, USA and Japan represent important export destination, whilst Nigeria, China and US are relevant importing countries. Exports to the European Union are predominantly based on a few (primary) products, with almost 60% of exports consisting of cocoa (mainly beans, but also some butter and paste), followed at a distance by wood (including sheets and plywood), gold (and other precious stones), prepared fish, fruits and nuts. Ghanaian main imports from the European Union consist of a range of products, such as machinery, vehicles, chemicals oil clothing, medicines, electrical equipment and spare parts. Outside, the European Union, oil imports accounts for a significant share of the value of imported goods, whilst cocoa (40% in value terms), gold (30%) and timber (7%) are the lead the export products.

Ghana’s trade is largely dependent on a few primary products (gold, cocoa and timber) making its economy vulnerable to international price fluctuation. However, thank to the strong growth in international prices of cocoa and gold and higher domestic production (particularly in the former), between 2002 and 2004 export growth averaged nearly 20% and 17% respectively for those two crucial items. The total value of EU exports to Ghana in 2004 was €1,186 million, while imports from Ghana valued €1,032 million. The trade balance therefore showed a deficit for Ghana (€154 million).