TradeInvest Africa (Cape Town)
17 November 2008
Investment opportunity: Forestry and paper
Ghana's timber is highly valued for its durability and aesthetic appearance. The government is inviting investors to convert the available vast land to commercial forest plantations, and also partner with local wood processors to expand the industry.
The wood sector contributes 6-8% of the country's GDP and directly employs over 80,000 workers. Roughly 34% of Ghana's total land area (23.85 million hectares) is forest covered. About 24 of the 420 timber species are traded, including mahogany, sapele and African walnut. The industry has progressively moved towards value-added production with many companies investing in new technologies to diversify product range.
Establishment of commercial forest plantations: An estimated 400,000 hectares of land are available within the country's degraded forest reserves that can be converted to plantations. There is also a large number of exhausted cocoa farms and degraded areas outside reserves areas that are suitable for plantation development.
Ghana has supplied Europe with timber in log form (mostly mahogany) as far back as 1833. Timber is the country's fourth export earner, raking in around 400 million dollars per year. Exports of sawn lumber have grown significantly to include veneer sheets and plywood. The forestry sector has seen major policy reviews, improvements in management practices, and institutional restructuring. These have been largely supported by international donors and are aimed at eliminating the rate of forest decline while supporting economic growth. Incentives have continued to attract investors to large scale plantation development.
Exports:60% of wood exports are shipped to European Union markets including Italy, France, Germany, Belgium and the United Kingdom. Other new markets include the US, South Africa, Saudi Arabia, Australia, Hong Kong, Singapore and China.
Advantages for investors in the processed wood sector
Raw materials:Ghana has excellent climatic conditions for natural forest regeneration as well as abundant land outside official reserves for establishing large-scale plantations. Species for lumber (teak and cedrela) and pulp (gmelina) have been successfully established. However, other species with commercial potential have yet to be harvested on a commercial basis.
Human resources: There is abundant workforce in the sector. Institutions from vocational to university level train specialists in wood science and technology, forest management, carpentry, furniture design and construction.
Other advantages:Excellent water, electricity, communications and transport systems; and low labour rates.
Specific incentives
Custom duty exemptions on the importation of special equipment and rebates for companies based in capitals other than Accra and Tema.
Additional incentives for operating under the Export Processing Zones (EPZs) are provided by the Free Zone Act of 1995
General incentives
Corporate tax rebates of 40% - 75%
Investment allowance of 7.5% per annum
Full repatriation of earnings in the currency of investment
Depreciation or capital allowance of 50% in the year of investment and 25% in subsequent years for plant and machinery respectively.
For more information: http://www.tradeinvestafrica.com/investment_opportunities/894903.htm
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