RESTRICTEDWORLD  TRADE
ORGANIZATIONWT/TPR/S/81
29 January 2001
(01-0251)
Trade Policy Review Body
TRADE POLICY REVIEW
GHANA
Report by the Secretariat
This report, prepared for the second Trade Policy Review of Ghana, has been
drawn up by the WTO Secretariat on its own responsibility.  The Secretariat has,
as required by the Agreement establishing the Trade Policy Review Mechanism
(Annex 3 of the Marrakesh Agreement Establishing the World Trade
Organization), sought clarification from the Government of Ghana on its trade
policies and practices.
Any technical questions arising from this report may be addressed to
Mr. W. Alfaro (tel. 739 5372) or Mr. C. Boonekamp (tel. 739 5226).
Document WT/TPR/G/81 contains the policy statement submitted by the
Government of Ghana.
Note: This report is subject to restricted circulation and press embargo until the end of the meeting 
of the Trade Policy Review Body on Ghana.Ghana WT/TPR/S/81
Page iii
CONTENTS
Page
SUMMARY OBSERVATIONS vii
(1) E CONOMIC ENVIRONMENT vii
(2) T RADE AND FOREIGN DIRECT INVESTMENT vii
(3) I NSTITUTIONAL AND LEGISLATIVE FRAMEWORK viii
(4) T RADE POLICY FEATURES AND TRENDS ix
(i) Type and incidence of instruments ix
(ii) Sectoral policies xi
(5) T RADE POLICIES AND FOREIGN TRADING PARTNERS xiii
I. ECONOMIC ENVIRONMENT 1
(1) I NTRODUCTION 1
(2) R ECENT ECONOMIC DEVELOPMENTS 3
(3) M ACROECONOMIC POLICIES 4
(i) Fiscal policies 5(ii) Monetary policies 5(iii) Exchange rate policies 6
(4) T
RADE PERFORMANCE AND FOREIGN INVESTMENT 7
(i) Commodity pattern of merchandise trade 7(ii) Regional pattern of merchandise trade 9(iii) Trade in services 9(iv) Foreign investment 12
(5) O
UTLOOK 12
II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES 15
(1) T HE INSTITUTIONAL FRAMEWORK 15
(2) S TRUCTURE OF TRADE POLICY FORMULATION AND IMPLEMENTATION 15
(i) Trade laws and regulations 16
(3) P OLICY OBJECTIVES 18
(4) T RADE AGREEMENTS AND ARRANGEMENTS 20
(i) Multilateral agreements 20(ii) Regional agreements 21(iii) Bilateral agreements 23(iv) Generalized System of Preferences (GSP) and Global System of Trade
Preferences (GSTP) 23
(v) Other agreements and arrangements 24
(5) F
OREIGN INVESTMENT POLICIES AND PROCEDURES 24
(i) Regulatory framework 24(ii) Investment incentives and promotion 25
III. TRADE POLICIES AND PRACTICES BY MEASURE 28
(1) I
NTRODUCTION 28
(2) M EASURES DIRECTLY AFFECTING IMPORTS 29
(i) Registration and documentation 29WT/TPR/S/81 Trade Policy Review
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(ii) Customs inspection and clearance 30
(iii) Tariffs and special import taxes 32
(iv) Customs valuation 41(v) Import prohibitions, quantitative restrictions, and licensing 41(vi) Anti-dumping, countervailing, and safeguard measures 42(vii) Standards and other technical requirements 42(viii) Government procurement 45
(ix) State trading 45
(x) Local-content requirements 45
(3) M
EASURES DIRECTLY AFFECTING EXPORTS 45
(i) Registration and documentation 45(ii) Export taxes 46(iii) Export prohibitions, controls, and licensing 47
(iv) State trading 47
(v) Export assistance 47(vi) Free-trade zones 48(vii) Export promotion and finance 49
(4) M
EASURES AFFECTING PRODUCTION AND TRADE 50
(i) Investment incentives 50
(ii) Credit arrangements 50(iii) State enterprises and privatization 51(iv) Competition policy 52(v) Assistance to research and development 52(vi) Protection of intellectual property rights 53
IV. TRADE POLICIES BY SECTOR 56
(1) O
VERVIEW 56
(2) A GRICULTURAL AND OTHER PRIMARY PRODUCTS 57
(i) Features 57(ii) Policy developments 59(iii) Policy by product category 60
(3) M
INING AND ENERGY 67
(i) Mining 67(ii) Energy 69
(4) M
ANUFACTURING 70
(i) Food products 71(ii) Beverages and tobacco 73
(iii) Textiles and clothing 74
(iv) Wood products 74(v) Petroleum products 74(vi) Chemicals 75(vii) Non-ferrous basic metal products 75
(5) S
ERVICES 76
(i) Tourism 76(ii) Transportation 77(iii) Telecommunications 78(iv) Financial services 79
REFERENCES 83
APPENDIX TABLES 85Ghana WT/TPR/S/81
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Page
CHARTS
I. ECONOMIC ENVIRONMENT
I.1 Merchandise trade as a share of  GDP, 1993-98 2
I.2 Commodity composition of trade, 1994 and 1999 8
I.3 Regional composition of trade, 1994 and 1999 10I.4 Composition of trade in services, 1994 and 1998 11
III. TRADE POLICIES AND PRACTICES BY MEASURE
III.1 Frequency distribution of MFN tariff rates, including special import tax, 2000 33
III.2 Share of lines subject to special import tax by HS chapter, 2000 35III.3 Tariff averages by ISIC 2-digit category, including special import tax, 2000 36III.4 Tariff disparities by ISIC sectors, 2000 37
IV. TRADE POLICIES BY SECTOR
IV.1 Sectoral composition of GDP, 1993 and 1998 57
IV.2 Composition of exports, 1993 and 1998 58IV.3 Composition of non-traditional exports, 1986 and 1998 59IV.4 Tariff averages by HS agricultural products, 2000 61
IV.5 Composition of manufacturing sector 71
IV.6 Tariff averages by HS manufactured products, 2000 72
TABLES
I. ECONOMIC ENVIRONMENT
I.1 Main economic and social indicators 1
I.2 Public debt liability, 1993-99 3I.3 Economic performance, 1995-99 4I.4 Balance of payments, 1995-99 7
I.5 Savings and investment, 1994-2000 12
I.6 Government's forecasts of selected economic indicators, 1996-2002 13
II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVESII.1 Main trade-related laws 17
II.2 Selected notifications to the WTO as at 31 October 2000 20
II.3 Investment promotion and protection agreements 26
III. TRADE POLICIES AND PRACTICES BY MEASUREIII.1 Tariff indicators, 2000 32
III.2 Privatization timetable until 2003 52
IV. TRADE POLICIES BY SECTORIV.1 Production of principal food crops, 1994-98 59
IV.2 Cocoa production and consumption, 1994-99 62
IV.3 Production and exports of logs and selected timber products, 1994-98 67IV.4 Mineral production, 1994-98 67WT/TPR/S/81 Trade Policy Review
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Page
APPENDIX TABLES
I. ECONOMIC ENVIRONMENT
AI.1 Foreign exchange controls 87
II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES
AII.1 Goods exempt from tariffs and taxes if imported from ECOWAS members 89
IV. TRADE POLICIES BY SECTOR
AIV.1 Tariffs applied in Ghana, by ISIC category, 2000 92
AIV.2 Summary of sector-specific commitments under GATS 95Ghana WT/TPR/S/81
Page vii
SUMMARY OBSERVATIONS
1. Since the early 1990's, the Republic of
Ghana has sought extensive reforms, in an
effort to reverse previous inward-looking
policies.  Trade and investment liberalization
has been integral to reform, and has continuedsince Ghana's previous review in 1992.
Government policies are now focused on
making Ghana the Gateway to West Africa.
2. Ghana achieved real annual growth
rates exceeding 4% during the 1990s.However, macroeconomic imbalances have
again precipitated an economic crisis.  This
threatens economic growth and could
endanger the continuation of trade and other
structural reforms.  Evidence of this danger isreflected in some backsliding on tariff
reductions and slowed privatization.
(1) E
CONOMIC ENVIRONMENT
3. The economy shows large budget
deficits, the core of Ghana's present economic
difficulties. Fiscal deficits re-escalated sharply
during the mid 1990s to 10% of GDP. Fundedmainly by central bank borrowings, these have
severely strained public finances and the
banking sector.
4. Excessive money supply growth
fuelled inflation, which peaked at 60% in1995, and exacerbated rising real interest
rates.  Business investment fell, and private
sector growth, "crowded out" by the public
sector, stagnated.  Ghana's international
competitiveness declined due to realappreciation of its currency (cedi), propped up
by sizeable Central Bank intervention until
late 1999.  The cedi has since depreciated
nominally against the U.S. dollar by some
100%.
5. The economy's fragility and
vulnerability was exposed by recent external
shocks, culminating in a critical
balance-of-payments position.  Sharply
deteriorating terms of trade, reflecting falling
world prices for Ghana's main exports - cocoa
and gold - and rising oil prices, as well asCentral Bank intervention, drained foreign
reserves to tenuous levels.  Economic
difficulties seem to have been compounded by
problems of governance and weak institutions.
6. Faced with the looming economic
crisis, the Government began implementingcorrective measures in  1998.  An annual
monetary growth target of 18% was
introduced to control inflation, which fell to
12% in 1999.  Fiscal measures taken to reign
in the deficit included the re-introduction of abroad-based 10% value-added tax, increased
to 12.5% in 2000.  Tighter spending controls
were also applied.  The budget deficit fell to
6% in 1999.
7. However, measures came too late to
avert the economic crisis.  The Government's
economic outlook was revised downwards in
the 2000 Budget.  Large budget deficits are set
to continue, and the target for achieving fiscal
balance has been shifted beyond 2001.  These
deficits will strain the financial system,
generating resurgent pressures on inflation,interest rates, and the external balance.
8. Ghana remains a highly indebted
developing country (with a GDP per capita of
US$390 in 1998), heavily dependent on
external concessional financing.  Externaldebt is equivalent to over 75% of GDP, but
Ghana has serviced its debt, largely without
rescheduling.
(2) T
RADE AND FOREIGN DIRECT
INVESTMENT
9. Trade and foreign direct investment
(FDI) are essential to Ghana's economic
development.  Merchandise exports and
imports as a share of GDP have expanded
substantially, from 18% and 29% in 1993 to28% and 39%, respectively, in 1998.
10. Trade is relatively concentrated, both
in commodities and markets.  Primary
products, overwhelmingly gold and cocoa,
account for most exports.  Non-traditional
exports, including, processed food, timber, and
aluminium products, account for 20% ofWT/TPR/S/81 Trade Policy Review
Page viii
exports, up from 3% in 1986.  However, export
diversification has slowed.  Most
manufactured products, along with machinery
and other inputs, are imported.  Ghana's main
trading partner remains the European Union
(EU), accounting for almost half of totalexports – partly due to trade preferences – and
imports.  Within the EU, Italy has overtaken
the United Kingdom and Germany as the main
export market.  Italy, the United Kingdom, and
France are the main European source ofimports.
11. Ghana's regional trade with members
of the Economic Community of Western
African States (ECOWAS) accounted for 17%
of exports in 1999, up from 13% in 1994.Togo matched Italy as Ghana's main single
export destination in 1999.  The share of
African imports also rose, from 23% in 1994
to 27% in 1999.  Nigeria, the main regional
source, lost ground, its share falling over this
period from 17% to 14%.
12. Ghana is a net importer of services,
especially of "freight and merchandise
insurance". Travel exports increased
substantially during the 1990s, and is
currently by far Ghana's largest service
export, accounting for 60% of the sector'sexports in 1998.
13. Over half of Ghana's inward FDI is in
services.  Despite a more liberal investment
regime, with new legislation aimed at
extending national treatment to overseasinvestors, FDI remains erratic.  Registered
FDI from 1994-98 totalled US$1.5 billion,
mainly from the United Kingdom, China,
United States, and Germany.  Policy and
economic uncertainties in Ghana havereduced investor confidence.
14. In the Government's view meeting its
multilateral commitments is integral to
Ghana's ongoing reforms.  Its agricultural
tariffs are fully bound, and steps are being
taken to implement WTO-consistent policies
on customs valuation and intellectual propertyprotection.  Ghana looks to bilateral andmultilateral donors for technical assistance
and support in meeting these commitments.
(3) I
NSTITUTIONAL AND LEGISLATIVE
FRAMEWORK
15. Ghana returned to parliamentary
democracy in 1992.  The new Constitutionvests executive power with the President and
legislative authority with the unicameral
Parliament.  The President is Head of State.
As leader of the Government, he also appoints
cabinet ministers.
16. The main ministries involved in setting
and implementing trade-related policies are
Trade and Industry, Finance, and Agriculture.
Several agencies are also responsible for
certain subsectors, such as cocoa, minerals,timber, fishing, and tourism.  The Divestiture
Implementation Committee handles
privatization of state-owned enterprises.  The
Bank of Ghana, as Central Bank, manages
monetary and exchange rate policies,
determined in consultation with the
Government.
17. The Government promotes public
dialogue through periodic forums, such as the
National Economic Forum and the Policy
Forum Dialogue on Partnership for Economic
Growth, both held in 1997.  A public forum onGhana's competitiveness is planned, based on
a policy agenda set under the Trade and
Investment Reform Programme (TIRP)
overseen by the Inter-Ministerial Committee
on Competitiveness.  This will examine theadverse impact on Ghana's competitiveness of
remaining trade barriers, including tariffs.
18. The Government's long-term economic
development plan is for Ghana to become a
middle-income country by 2020 – Ghana'sVision 2020.  This is to be met via a series of
five-year rolling medium-term plans aimed at
achieving minimum real annual growth of 8%,
based largely on exports.  The current plan
terminated at end 2000.
19. The Government's industrial
development strategy is to remove bottlenecksGhana WT/TPR/S/81
Page ix
to private-sector development.  Tariffs are to
be structured to afford reasonable protection,
including reduced duties on capital goods;  the
effectiveness of the duty drawback scheme is to
be improved.  Subsidized loans are viewed as
desirable for viable industries.  The strategyalso stresses the need to establish fiscal and
monetary controls, together with central bank
independence and inflation targeting, as well
as achieving a realistic market exchange rate.
(4) T
RADE POLICY FEATURES AND
TRENDS
20. Ghana, a founding member of the
WTO, accords at least MFN treatment to all
its trading partners.  Around 15% of its tariff
lines are bound, mostly in agriculture.  ItsGATS Schedule covers commitments on
certain services, including tourism, maritime
transport, construction, and education.
Ghana also participates in the agreements on
Basic Telecommunications and Financial
Services.  It is an observer to the Plurilateral
Agreement on Trade in Civil Aircraft, and isneither a signatory, nor an observer, to the
Agreement on Government Procurement.
21. Ghana is also committed to regional
integration, and wishes to accelerate such
initiatives.  It grants tariff preferences onmany products to other members of the
Economic Community of West African States
(ECOWAS), subject to rules of origin. Ghana
eliminated tariffs on most trade with ECOWAS
members by 1996, under the Community'sTrade Liberalization Scheme.  A customs
union and common market among ECOWAS
members are also planned.  As a member of
the Organization of African Unity, Ghana
remains committed to the formation of theAfrican Economic Community, including the
creation of a pan-African economic and
monetary union.
22. As a signatory to the ACP-EC
Partnership Agreement (the successor to the
Lomé Convention), Ghana receives
non-reciprocal tariff and other preferencesfrom the EU on many goods, as well as
substantial financial assistance.23. Ghana has bilateral arrangements
with several trading partners, such as
Malaysia, the Czech Republic, and
Côte d'Ivoire, and is negotiating more,
including with Romania, Greece,
Burkina Faso, Zimbabwe, and Libya.  Oldbilateral agreements involving countertrade
with former European centrally planned
economies have been disbanded.  Ghana
receives GSP treatment from industrialized
economies, and participates in the GSTPamong developing countries.  It is also eligible
for enhanced access to the U.S. market until
September 2008, under the U.S. African
Growth and Opportunity Act of 2000, subject
to Ghana meeting specified criteria, such asprotecting workers' rights.
(i) Type and incidence of instruments
24. The tariff remains Ghana's main trade
policy instrument.  The simple average tariff
had fallen from 17% in 1992 to 13% on
January 2000, when the highest duty rate,
levied on consumer goods, was reduced from25% to 20%.  However, the average tariff rose
to its current level of 14.7% in February 2000
when a "special import tax" of 20% was
re-introduced, covering some 7% of tariff
lines.  This raised tariffs on many, mostlyconsumer goods to 40%, well above their
previous rate of 25%.  This contradicts the
Government's policy objective of lowering
average tariffs to below 10% within the next
three years.
25. Although "temporary", no time limits
were specified for the removal of the import
tax.  Doing so would improve Ghana's tariff
structure by reducing average duty levels and
narrowing relatively wide disparities acrossrates;  the standard deviation of tariffs is
currently 12%.
26. Special import taxes have been a
common feature of Ghana's tariff.  The
previous such duty of 17.5% had only been
abolished in March 1999.  The authorities are
of the view that such taxes protect domesticindustries from what they consider "unfair
trading practices" by foreign traders.WT/TPR/S/81 Trade Policy Review
Page x
27. Ghana's tariff structure, with rates of
free, 5%, 10%, 20% and now 40% (with the
special import tax), has "built-in" tariff
escalation within certain manufacturing
groups, especially textiles, leather, chemicals,
basic metals, food, beverages, and tobacco.Lower, more uniform duties could improve the
tariff structure.
28. All tariff duties are ad valorem, thus
aiding transparency.  But the widespread use
of discretionary exemptions, oftenadministered under poorly specified authority,
is non-transparent and risks providing "tailor
made" protection to some industries.  Tariff
concessions also apply to specific importers,
such as the Volta Aluminium Company, and oninputs into nominated end-uses imported by
approved manufacturers. These include the
making of agricultural implements and
machinery, fishing nets, pharmaceuticals,
plastic pipes and bicycles.  Their rationale and
administration appear unclear.  A duty
drawback system operates inefficiently;refunds are slow.  The Government is
rationalizing such exemptions, including the
common use of bonded warehouses, which
may be contributing to duty evasion.
29. From April 2000, Ghana replaced
mandatory preshipment inspection with
destination inspection, performed by two
private contractors.  Documentation
requirements were also simplified and more
targeted inspections introduced to facilitateimports.  The use of transaction value for
customs valuation purposes was implemented
from February 2000, except for second-hand
motor vehicles, and minimum import prices
were terminated, according to authorities.Price verification and risk-assessment
procedures are aimed at preventing duty
evasion from under-invoicing.  Import
clearance delays of up to seven days appear to
occur.  A 1% inspection fee on imports, and an
ECOWAS customs levy of 0.5% apply.
30. Ghana applies few formal non-tariff
trade barriers.  Imported motor vehicles older
than ten years – previously subject to penalty
tariffs – were banned in 2000.  Certain importprohibitions and controls apply for
environmental, health, public safety, and
security reasons, and under international
conventions.
31. Ghana applies no trade embargoes,
nor any local-content requirements fordomestic production.  Mandatory standards,
set by the Ghana Standards Board, mainly in
line with international norms, do not
discriminate against imports.  The
Government intends to move to voluntarystandards.  Test results from foreign countries
are usually accepted. Quarantine
requirements apply, but do not generally
appear to be a major constraint on imports.
32. Ghana has no legislation on
contingency protection measures, such as
anti-dumping, countervailing, and safeguards.
However, the special import tax appears to be
used for these purposes.  The Ministry of
Trade and Industry monitors world markets
and the impact of imports on domestic firms so
that compensatory measures can be taken.
33. Government procurement is
increasingly being decentralized away from
the Ghana Supply Commission.  Ministries
and state-owned entities procure many goods
directly, largely using non-transparentprocedures.  Government directives favour
public procurement of "made in Ghana"
goods.  Domestic suppliers also receive a
formal 12.5% price preference (since
August 1999).
34. Export taxes are levied on cocoa and
certain air-dried sawn timber.  Gold and
diamonds from small-scale mining are
exported mainly by the Precious Minerals
Marketing Corporation.  Exports of logs weresuspended in 1995, aimed mainly at promoting
timber processing.  Raw rattan and bamboo
exports are also prohibited.
35. Ghana has no export quotas or
voluntary export restraints, and no export
subsidies per se.  However, income tax
concessions assist exporters of non-traditional
products, who pay a company tax rate of 8%Ghana WT/TPR/S/81
Page xi
instead of 35%.  Exporters of traditional
products are also eligible for company income
tax rebates tied to their export share:  the
maximum rebate of 75% – for companies
exporting at least 25% of their production –
also lowers their income tax rate to 8%.  Moregenerous income tax incentives, including an
additional ten-year tax holiday, now apply to
designated free-zone enterprises, which must
export at least 70% of production.  Benefiting
firms can be located outside the free zones.Substantial leakage of domestic sales above
the 30% permitted share appear to be
arbitrarily undermining tariff protection to
domestic industries, and facilitating tax
evasion.
36. Ghana has no production subsidies.
Certain, mainly agricultural, activities are
assisted by tax concessions, including on
investment.  Cocoa income is exempt from tax,
and tax holidays of five years apply to most
farm and fishing income, and of ten years for
tree crops.  Hotel income is taxed at aconcessionary rate of 25%, and hotels receive
duty concessions on certain imported inputs.
37. FDI, outside mining, fishing and
forestry, is no longer screened, but monitored
by the Ghana Investment Promotion Centre,formed in 1994.  Only a few activities,
including petty trading and taxi services, are
reserved for Ghanaians.  Joint ventures are
optional.  Foreign investors must have
minimum capital levels of US$10,000 for jointventures and US$50,000 for wholly
foreign-owned enterprises, unless engaged
solely in exporting Ghanaian goods.  Foreign
trading companies must have capital of
US$300,000, and employ at least tenGhanaians.  No performance requirements per
se exist.
(ii) Sectoral policies
38. Ghana is heavily dependent on
agriculture, especially cocoa, and on natural
resources, notably minerals. Primary
production accounts for almost half of GDP;agriculture, at 40%, is the most importantsector.  Manufacturing contributes some 10%
of GDP.
39. Cocoa production, a mainstay of the
economy, is marketed by the statutory board,
COCOBOD.  Cocoa marketing is being
further liberalized under the Government'sefforts to revitalize the industry.  The
Government's cocoa strategy, adopted in April
1999, is to progressively increase the growers'
price to at least 70% of the world price by
2004-05, by reducing taxation and furtherimproving COCOBOD's effi ciency.  Its "single
desk" export monopoly is to be partially
relaxed, with quotas introduced for private
sellers, and domestic sales further
deregulated.
40. Exports of logs are suspended and
exports of certain sawn timber are taxed to
promote value-added activities and conserve
forests.  Logging rates exceed sustainable
levels, accentuated by substantial illegal
felling.  Forest policies are being strengthened
to promote sustainable management, includinghigher stumpage fees and enhanced
monitoring of logging operators.
41. Offshore fishing licences are granted
only to fully domestic-owned boats using
mainly Ghanaian crew, except for tuna vesselswhere minimum domestic ownership of 25% is
required.  Licensed foreign vessels must also
sell at least 10% of their catch to domestic
processors, and transship all fish through
Ghanaian ports.  The fish import ban wasterminated in 1997.
42. Large-scale mining is open to foreign
participation.  Joint ventures are not required,
but the Government receives a 10% equity and
can buy another 20% equity at "fair marketprices".  Royalty rates and foreign currency
retention allowances are negotiated on a
mine-by-mine basis.  Mining companies
receive generous capital and other tax
allowances, but pay an "additional profits tax"
of 25% for earnings above a negotiated
threshold rate of return, currently set at17.5%.  Small-scale gold and diamond mining
is reserved for Ghanaians.WT/TPR/S/81 Trade Policy Review
Page xii
43. Deregulation of the petroleum
subsector has included the termination, in
1996, of the oil import monopoly and the
exclusive supply of locally refined products to
oil marketing companies by the state-owned
Ghana National Petroleum Corporation(GNPC).  In 1998, prices were changed from
"cost plus" to "import parity".  The sector
remains dominated by state-owned
enterprises.  Privatization of Ghana Oil
Company, the largest oil marketer, and of theTema Oil Refinery have been delayed, and the
GNPC is no longer a priority for privatization.
44. Past policies promoted import
substitution through widespread direct
government participation, including Stateownership.  The Government has divested
some of these interests, and intends to sell off
more as part of its re-invigorated privatization
programme.  Outstanding divestments are,
however, increasingly involving sensitive
activities, and several proposals, such as on
petroleum, have stalled since 1997. TheGovernment's revised accelerated timetable
covers mainly divestiture in the transport,
energy, and banking sectors, including the
State Insurance Company and the Ghana
Electricity Company, by end-2003.
45. Services are the second largest
component of GDP.  Many basic
infrastructure services, such as electricity,
ports, and water, are provided by state-owned
statutory monopolies.  Basic telecomm-unication services are supplied by a statutory
duopoly following licensing of a second
national carrier in 1997.  These arrangements
have had only limited success in promoting
telecommunication services: neither carrierhas met its network expansion or service
quality target.  The Government will consider
allowing additional carriers from March
2002.  The market for value-added telecom
services is open.  The National
Communications Authority was formed in
1997 as the independent legislative regulatorto promote fair competition and enhanced
efficiency.46. Electricity, a "traditional" export,
suffered major hydro-generation problems
between 1996 and 1998, due to low water
levels in the Volta Lake.  The electricity crisis
severely curtailed production, including of
aluminium, which consumes over one third ofGhana's total power supply.  To improve
efficiency, the Government is taking steps to
restructure the industry and increase
private-sector participation.  State-owned
entities, including the Volta River Authority,are being separated into companies for the
generation, transmission, and distribution of
electricity, and a National Company Grid is to
be established.
47. More efficient infrastructure services
should improve the competitiveness of
downstream industries, such as tourism, and
encourage FDI.  Private tourism development
is a government priority.  Air transport is
being deregulated under the Government's
"liberalized skies" regime.  Ghana has no
cabotage requirements protecting coastalshipping, but new legislation provides for their
introduction.
48. The Bank of Ghana grants banking
licences.  The freeze on issuing new bank
licences was removed in 1999.  Banks mustmeet certain prudential requirements in
accordance with the core principles of the
Bank for International Settlements.  Foreign
banks may operate locally incorporated
subsidiaries.  Higher minimum capital levelsare prescribed for foreign banks – defined as
having below 60% Ghanaian equity.
49. The Government's Financial Sector
Adjustment Programme has begun privatizing
several large state-owned banks.  In 1996,42% of the Ghana Commercial Bank was sold,
and another 40% is slated for sale, along with
30% of the National Investment Bank.
Legislation to enhance the Central Bank's
supervision and enforcement of prudential
regulations is under way.  Three licences were
withdrawn in 2000 from banks repeatedlyunable to meet the Bank's minimum capital
adequacy ratio.  Bank rationalization andGhana WT/TPR/S/81
Page xiii
restructuring have occurred through mergers
and the closure of non-viable banks.
50. Foreign insurance companies may
enter Ghana as subsidiaries, subject to a
maximum foreign-equity limit of 40%.
Government equity of 20% is required, andGhanaians must own another 40%.  The
National Insurance Commission regulates the
industry.  It sets certain prudential and
reporting requirements, and must approve all
premium increases; currently it onlyintervenes in setting motor insurance
premiums.  The Government intends to
privatize the Ghana Reinsurance Company by
2003.
(5) T
RADE POLICIES AND FOREIGN
TRADING PARTNERS
51. Ghana generally applies its trade
policies and measures on a non-discriminatory
basis, granting at least MFN treatment to all
its trading partners.  Pursuing MFN
liberalization while expanding its bilateral
arrangements and deepening regionalintegration, would maximize benefits, and help
guard against any possible trade diversion.52. Reliance on ad valorem tariffs, which
are being rationalized, as the main trade
instrument contributes to a more transparent
trading regime.  Extending the coverage of
tariff bindings beyond agriculture would
benefit Ghana and its trading partners byincreasing the predictability of the tariff.
Continued structural reforms, including
further trade and investment liberalization,
can improve the economy's flexibility and
growth prospects.
53. However, the economy remains
relatively weak and vulnerable to external
commodity price movements and other shocks,
such as weather conditions.  Current economic
difficulties, both internal – including the largebudget deficit – and from abroad, are placing
extra pressures on the economy which may
weaken the Government's resolve for trade
liberalization. Ghana' s enhanced commitments
to the WTO and compliance with its
obligations can help sustain such unilateral
reforms.  However, Ghana's trading partnerscan greatly assist its reform efforts by
ensuring stable, increased access to their
markets, especially in agricultural products
where Ghana's comparative advantage
appears strongest.