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Is globalisation a curse or blessing in Africa?
Masahudu Ankiilu Kunateh, Ghanadot
Accra, February 3, Ghanadot - Globalisation has drastically
lowered barriers to trade among nations of the world in
terms of exportation and importation.
Indeed, countries are able to import goods and services
which they cannot produce themselves. Also, countries are
able to export their raw materials to other countries to
earn foreign exchange. For instance, nobody would suggest
that Iceland should grow its own oranges. It benefits by
exporting products it can produce efficiently and importing
oranges which it cannot produce at
all from orange producing nations.
Without globalisation, we in Ghana would have no access to
television sets, computers, cars and many others for which
the technological infra-structure is non-existent.
In essence, globalisation is trade liberalisation on a grand
scale. The boost in liberalisation has made it
possible for countries to import goods they would have spent
much resources in producing on their own.
Apart from lowering the barriers to trade, globalisation has
also made possible for foreign companies to do business in
our part of the world. Foreign direct investments (FDIs), as
a result of reduced trade barriers, have increased the rate
of capital injection into the economy.
A by-product of globalisation, apart
from increases in FDIs, can also be found in the
exchange of ideas and culture among nations.
However, on the other side of globalisation, is a negative
factor. Indigenous businesses are collapsing as a
result of the influx of foreign goods.
Ghanaian textiles industry,
for instance, is finding it difficult to survive.
Cheap Chinese textiles have flooded the market switching the
taste of the local consumers from the local ones to the
foreign produced. The Chinese goods are cheaper since they
have a larger market than their
Ghanaian counterparts. The Ghanaian is put at a
disadvantage because of the economies of scale that
the Chinese enjoy. For this reason, one can add that
globalisation leads to collapsing of local industries.
However, countries like Ghana are benefiting in other ways
too. For the first time in the investment
history of the country, Foreign Direct Investment (FDI)
inflows into Ghana for the third quarter of last year
recorded over GHC1.38 billion,
representing over 680% increase from the same period of
2007, which was GHC175 million.
This strong interest of foreign investors in Ghana is going
to prove helpful in the face of the current credit crunch
which is sweeping across America, Europe and the emerging
markets. Ghana still remains one of the best countries
in the world in which to invest capital
today.
It will interest you know that, the total new investments
for the same third quarter of
2008, which was GHC1.38 billion comprised
GHC407.41million worth of reinvestments (capital goods
imported) and GHC972.10million worth of equity transfers
(transfer of ownership of properties).
Some of the top investment projects attracted to Ghana
during the quarter were; Vodafone
International Holdings B.V in partnership with Ghana
Telecom-provision of telecommunication services with an
estimated project value of GHC1.29billion, Advans Ghana
Savings & Loans Ltd for provision of microfinance services
with an estimated project value of GHC8.85million and the
MDS-Lancet Laboratory (GH) Ltd to provide medical laboratory
diagnostic services with a total project value of
GHC1.43million.
For this quarter, India topped the list of countries with
the highest number of projects (13) registered, while
Netherlands led in the value of investments for the first
time, last year.
Nigeria, Ghana's ECOWAS neighbour,
became second in terms of both projects (10) and investments
(GHC257.12million) it brought to the country.
Of the 82 new projects registered during the quarter, 51,
representing 60%, were
wholly-foreign owned enterprises, while the remaining 31
projects being joint ventures between Ghanaians and their
foreign partners.
The new projects registered were expected to provide 4,631
jobs, representing about 89% for Ghanaians and 480 (10.36%)
for expatriates.
On the whole, seven out of the ten regions in the country
have benefited from the newly registered projects by way of
their location with 84.15% of all the projects located in
the Greater Accra Region.
Instructively, the service, general trading and
manufacturing sector continue to top the number of
registered projects in the country, whilst the tourism and
agriculture remained the least registered projects.
Ghana Investment Promotion Centre (GIPC) is said to be the
driving force behind these increases in FDIs. The
center is also urging and supporting more Ghanaians at home
and in the Diaspora to invest in Ghana through fully-owned
Ghana enterprises, foreign affiliates, subsidiaries,
associates, branches and joint ventures.
Furthermore, industries in such economic spheres as banking
have seen dramatic improvement in their operations in Ghana.
Banks are providing quality services compared with those of
the previous years. This is due to increased
competition because of the arrival of foreign banks such as
the Nigerians. The average Ghanaian has now the power
to choose from a number of alternatives.
In the telecom industry, Ghana has five telecom operators,
namely, MTN, Tigo, Kasapa, Ghana Telecom and Zain
Communications, which are providing quality services to
Ghanaians. Thanks to globalisation.
In Ghana, more than half the estimated 22 million
of the population subscribe to
mobile telephony services. Data obtained from the national
telecom regulator, the National Communication Authority (NCA),
shows that the number of mobile subscribers has shot up from
the 7,604,053 subscriber figure recorded at the beginning of
2008 to 11,302,647 subscribers at the end of the year. This
brings the teledensity rate of the country to 50%, fuelled
by the entry of new operators and stringent government
policy to create a conducive environment for operators.
For its part as African,
Ghana is bringing to the world
market diamond, gold, copper, bauxite, cocoa, palm oil among
others, but lacks the capacity to
render these resources as finished products to the global
market. The developed nations buy these raw materials from
us, turn them into finished products, and sell them at
exorbitant prices.
Indeed, multinational companies do little to help the
communities that they get their raw materials from. The
royalties mining companies pay is just a token of what they
get as profits. Some of these multinational companies evade
taxes because of extravagant concession they get from the
government. Typical beneficiaries are the mining
companies because of their capital injection into the mining
process.
This year we remember Dr. Kwame Nkrumah as we celebrate his
100 years anniversary. As the first President of
Ghana, Dr. Kwame Nkrumah, a true messiah of Black People,
warned about trade between Africa and the West, and proposed
the establishment of an African Common Market in order for
Africa to have the purchasing and bargaining power that
would equal those of her trading partners of the West.
Unfortunately, he did not live to see the realization of
this dream, and after his death too, there has been nobody
to carry out this vision.
What steps should Africans take to have a fairer trade deal?
I think the answer is for us to industrialize and also
foster regional integration among ourselves. The Asian
economies such as China, Taiwan, South Korea, Singapore,
Malaysia and Hong Kong, which we envy, invested heavily in
human capital, physical infrastructure and nurturing the
growth of their private enterprises, which are building
blocks for a healthy industrial sector.
Africa's poor economic performance is a result of her
inability to industrialise and to export manufactured goods,
which can compete internationally.
Africa, the richest continent in terms of mineral resources,
should have broadened its export base long ago to include
manufactured exports too. Just exporting our gold, cocoa,
diamond and others without adding value to them will not
help.
Exporting products with no added value brings less revenue.
This explains why Africans' share of global trade is fewer
than 2%.
Many poor African countries pay interests on loans far in
excess of monies they receive as foreign aid. The Breton
Wood institutions have been of little help in the face of
this problem.
Many promises have been made with regard
to helping poor nations overcome handicaps placed on them by
exorbitant loans. Many of the pledges made in
this area, in terms of aid and debt relief, never
materialized.
If the rich nations were prepared to lift Africans out of
poverty, they could have done this long ago. If we rely on
the West for a better future, then we should expect a future
bleaker than what we have now. Osagyefo Dr. Kwame Nkrumah,
foresaw this and in an effort to conscientise his people and
fellow Africans, he attracted the wrath of the West.
Globalization may help Africa, but to a point. The
whole engine of that process is controlled by the
West. The West, as has been made apparent over the
decades, will not help us free ourselves totally from their
grasp.
Ghanadot
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