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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.







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