Starting Cocoa Production in Ghana

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Introduction

In justification of the case for Global Ventures PLC business idea on production and processing of Cocoa, the company has focused on Ghana as the country of choice for the business idea.

Currently, Ghana is the second leading African country in the world cocoa production after Ivory Coast with an 11% market share in cocoa production (“2011 Investment Climate Statement”). Many large companies, which produce cocoa such as Nestle and Cadbury, focus on Ghana as the country of choice.

Though traditionally the country was involved in farming cocoa and then exporting it as beans. In the recent past, it has strived for increasing its earnings from the export by setting up facilities for processing the cocoa beans. While Ivory Coast is the leading world producer of cocoa, the preference for Ghana over Ivory Coast was due to the constant political instability associated with Ivory Coast.

Justification

As stated in part 2, lack of corruption was key to choosing the country of choice for setting up the new business. While no case can be made for an African cocoa producing country that is free of corruption, there is clearly a case to make on the level of corruption in Ghana being minimal as compared to other African countries involved in cocoa production and manufacture such as Ivory Coast or Nigeria.

Therefore, it is important to investigate the situation on the ground while establishing the base for conducting such a business.

One significant milestone occurred when Ghana achieved success in fighting corruption, which resulted in the establishment of the Serious Crime Office in 1999; thereafter, it has been involved in investigating corruption.

In addition, though the country has not signed a treaty for its commitment with OECD Countries for fighting bribery, the law on procurement laws of 2004 helped in conformance with the World Trade Organization principles.

Professional marketers; Marketing was clearly a key ingredient of success of any company In Ghana, The Cocoa Marketing Company is owned by the Government and responsible for marketing and selling a significant portion of cocoa in Ghana.

This was a justification for the establishment of the company in Ghana due to the availability of professional marketers. As such, this ensured marketing for the company not only at the national boundaries, but also at a global level.

In addition, the company was impressed by the efforts by the chartered institute of marketing, Ghana (CIMG) (“2011 Investment Climate Statement”). Having a strong base in the country since 1991, and having been certified by Board on National accrediting, the company has help in nurturing strong base in Ghana.

Genuine Reforms

The ability to uphold genuine reforms is one of the most outstanding characteristics of Ghana as a country, such as strong leadership, local ownership and political will within the country. Ghana upholds democracy more than any other African country, and is considered to be mother to key leaders within the African continent.

For instance, key Ghanaian personalities, such as the retired President Kuffuor and retired UN Secretary General Koffi Annan, gained credits for restoring peace in Kenya after the 2007 post election violence. Moreover, the country has been the leading one in initiating education and health reforms while, at the same time, using soccer to promote peace.

Observance of labor laws

Labor laws have been highly violated in some cocoa producing countries; in fact, many countries violate children rights by employing children in cocoa farms, as well as processing industries. In addition, many of the cocoa producing countries have highly violated human rights through noncompliance to labor laws such as minimal wages (“2011 Investment Climate Statement”).

In Ghana, there is moderate observance of labor laws with few cases of children labor being reported and being compared to Ivory Coast whose poverty level is much higher hence motivating the violation of labor laws. Many organizations and trade unions in the country are responsible for ensuring that labor laws are observed.

In fighting child labor in Ghana, organization such as ILO/IPEC, the government, the media, international organizations have helped in achieving the proposal of 2001-2002 “National Plan of Action for the elimination of Child labor in Ghana” through campaigns education programs and involvement of inspectors and the police.

Organization in Sacco Schemes

Ghanaian farmers are not left behind when it comes to forming groups that enhance their collective decision to being heard and implemented. In the pilot study to justify the establishment of the company in Ghana, the company was impressed by the presence of the international NGO Technoserve that has played a remarkable role in helping cocoa farmers obtain greater results from their crops.

Instead of selling cocoa immediately after it is harvested, the organization helps farmers to store it in a warehouses managed by the cooperation. In exchange, the farmers are able to obtain loan depending on the amount of cocoa that they have stored.

Sacco’s such as Kuapa Kokoo Limited and Farmer Organization Network have been particularly prominent in some areas of Ghana. These are prominent in mobilizing farmers and in fighting child labor among cocoa farming and production industry.

Infrastructure/Logistics

In justifying the case for the establishment of the company in Ghana, a strong analysis of the transport sector was necessary. As stated in part two, this would ensure efficiency and presence of movement and infrastructure facilities to transport beans from producers to the processing factory and from the finished goods to global consumers.

Many African countries are lagging behind in terms of the transport sector, and Ghana has never been an exception. In an effort to improve the sector, the Ministry of Transport in the country has been on the forefront in implementing projects to enhance the transport sector of the country.

In 2009, there was established a project that has been active in enhancing mobility of goods and services and in reducing the cost of production. The first role of the 2009 project was directed at the road sector and engaged in vigorous feasibility studies coming up with a geographical system.

Open market system

In the modern society, many nations that have achieved a mileage in their economic systems have embraced the private sector and have strived to eliminate government system in the financial control system. In the recent past, Ghana has drastically grown in terms of the freedom of its economic system especially in terms of labor freedom and money freedom.

This year the country has climbed to number 9 of the 46 Sub-Saharan African countries with a 60.7% score in economic freedom. With a 6% annual growing economy, the country is number 84 in the world in terms of a free market (“Global Research Report”).

Cocoa supply in Ghana

As it has been stated earlier, Ghana is the second supplier of cocoa in the world. With over 90 years in cocoa production, the supply of cocoa by the six areas of Ashanti, Brong Ahafo, Eastern, Volta, Central and western region the supply of cocoa are highly guaranteed. Though many of the farmers of cocoa are small holders with 4-5 acres, there is a guarantee of production of cocoa since it is a main source of livelihood in the country.

Regulatory framework

The regulatory framework in Ghana is effective in promoting new investment and competitiveness of a new company. The Global forum on transparency and exchange of information is the guiding tool for Ghana’s legal framework, it has been effective in promoting new investment companies.

Industry policy

Industry policies include the principles, policies, rules, regulations and procedures that regulate industrial enterprises within the nation; hence, determine the direction of key development. In June 2011, Ghana trade and industry Minister, Ms Hanna Tetteh launched the industrial policy for the country to be implemented within the period of the subsequent five years.

Key issued the policy that justified the establishment of Global Ventures PLC in Ghana included the increase of industrious employment in the production sector and marketing of Agriculture based industries (“Ghana launches Industrial Policy” 3).

Export policy

According to the ministry of Trade and Industry which is in charge of all the export policies in Ghana, the sector is geared to ensure the implementation of a self-fulfilling export sector.

The country is improving its international presence so as to improve the export value of its goods, which are mainly the Agriculture processed or partially processed export goods. The country is likely to gain stable and fair prices for its exports by increasing its multilateral presence with other countries.

In addition, Ghana has a positive image when it comes to the quality of its cocoa. Since 1947, Ghana has been the sole nation with the government established institution (Ghana Cocoa Board) among all cocoa producing countries in West Africa (“Ghana launches Industrial Policy” 2).

Alliance, trade, navigation, and taxation agreements are mainly concerned with offering security for trading rights, as well as eliminate situations of double taxation.

In Ghana, there is a fair business environment where all competing companies are treated equally without discrimination in the enforcement of laws and regulations. This was a key justification for the establishment of the country in Ghana as it was not exposed to unnecessary discrimination because it was a foreign company (“Global Research Report” 7).

We identified the country because the pricing of cocoa beans was left to the market determinants of supply and demand, but not controlled by the government. Though several economies are not isolated from the world market fluctuations, in economically powerful countries such as the US as well, the floating exchange system in Ghana was a justification for the establishment of the company in Ghana.

Monetary Policy

This refers to all those activities and interventions that aim at establishing an even supply of credit for business and advancement of trade, as well as industry. The effectiveness of a monetary system is based on a thorough investigation on how the policy will affect and diffuse into other factors of the economy of the country (“Heritage Research Institute: Global Research Report” 5).

In Ghana, the monetary system has been remarkably effective with the Bank of Ghana keeping a thorough check to ensure intervention in the monetary system is on time.

Social or cultural factors

Culture is a combination of the tangible and intangible factors which influence how a certain group makes its decision (“2011 Investment Climate Statement”). In justification of the company establishment within the country, it was adequately necessary to investigate the social norms that influenced consumer behavior.

Since Ghana is an African country, the consumer behavior was highly influenced by what family and friends thought about the product; hence, it was necessary to use this as a key strategy for marketing the company. Individual purchasing decision was influenced by what their friends and relatives thought about the product.

An Integrated supply chain was necessary so that the product could be produced and sold to the relevant markets; in choosing Ghana, the presence of ports, malls and mass retail outlets were a key justification in the choice for the establishment of the company.

Unlike a country which is landlocked, the presence of ports exporting the goods to the outside and enabled a fast reach of the global market (“Heritage Research Institute: Global Research Report” 7). The mass retail outlets established over the years were also a key justification for the choice.

Government contracts and large corporate orders

Since 1947, the government of Ghana has been in the forefront in promoting cocoa farming in the country. The country has a Board dealing with cocoa that is responsible for making purchases and then selling it internationally. With the government involvement in Ghana, the company will be assured of the government assistance in the sale of its products.

Niche market

This refers to a selected group or class that the company wants to concentrate on selling its products. Cocoa farming and production will not be something new in Ghana and subset group will be easy to form.

Forming a niche market will be remarkably easy since the company is dealing with a product that the local people already know (“Heritage Research Institute: Global Research Report” 7). At a global level, forming a niche market will be quite easy since Ghana cocoa products are distinct, as well as famous for their outstanding quality.

Potential global market size

It is no doubt that Ghana is well known all around the world for cocoa production. Establishing a global market will become easy. While the quantifiable characteristics such as the population size and GDP per head might have been hard to estimate, other characteristics such as, cheap labor and semi-skilled labor for farming and skilled labor for processing justify the case for Ghana as the country of choice.

In conclusion, when it comes to the country of choice in Cocoa farming, Ghana outdoes all other countries. The respect for democracy, peace and its record in stability, favorable legal framework, as well as outstanding economic growth and production of cocoa makes it the best country for making key investments.

Works Cited

2011 Investment Climate Statement – South Africa. Bureau of economics energy and business affairs. 2011, Web.

Ghana launches Industrial Policy, 2011. Government of Ghana, Web.

Global Research Report 2012. Heritage Research Institute. Web.

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