After 15 years of export promotion, Ghanaians can rest assured that the free zones initiative is bearing fruit.

When Ghana established the Free Zones Board (FZB) in 1996, one could not have predicted the extent to which it has contributed to private sector development in the country. Although geared to the export industry, the FZB and the government have embarked on a marketing campaign to convince the local community of its benefits.

The FZB recently organised a three-day interactive event, dubbed “15 Years of Pioneering Ghana’s Export Industry” to showcase its functions and contributions to the economy and the operations of the free zone firms as well as launch their new website,

It was hoped that the event would debunk many of the misconceptions about the board, particularly suggestions that it is a major drain on government resources. However, conference participants especially those in the public sector were quick to counteract such claims during the FZB event.

Ghana’s FZB was created under Parliamentary Act (504) to serve as a one-stop service centre for investors looking to export their products. The board also facilitates, regulates and monitors activities in the free zones through the issuance of licenses. In line with improvements in Ghana’s Doing Business rankings, the FZB issues a license in only 28 days.

Since its establishment over a decade ago, the board has registered 208 companies, assisting applicants in acquiring other permits such as for the acquisition of land and in identifying opportunities for linkages in the a firm’s value chain with other companies within the free zones.

The Minister of Trade and Industry, Honourable Hannah Tetteh, reported at the FZB promotion event that the initiative has helped employ up to 29,0000 Ghanaians and that all employees of firms engaged in the free zones, including expatriates, contributed US$11.38 million in fiscal revenue through social security contributions in 2010, from salaries totalling US$67.5 million.

In the same year employees of free zone entities contributed US$6.4 million in income tax whiles expatriates contributed another US$4.5 million. Indirect benefits include promotion of Ghanaian products abroad and increased international competitiveness.

However, this must be seen in the context of the upfront incentives offered to companies registering with the FZB. Some of the monetary perks that have been cited include 100% exemption from direct and indirect duties, 100% 10-year income tax exemption and exemptions from withholding taxes. It does not stop there.

The non-monetary incentives consist of no import licensing requirements, minimal customs formalities, 100% ownership of shares by the investor, no restrictions on profit repatriation, permit to operate a foreign currency account and guarantee against nationalisation and expropriation for all the free zone investors.

Nonetheless, free zones seem to be the way of the future. The Tema Export Processing enclave, for instance, houses American firm Cargill, Ltd. The company began operations in Ghana in 2005, and with an investment capital of US$168 million, it now exports 65,000 tonnes of processed cocoa beans every year. As of the first quarter of 2011, its export value is already US$312 million, thanks in part to the contributions of its 166 local staff. Indeed, the agroprocessing sector has benefitted significantly from the free zones.

The Acting Executive Secretary of the FZB, Kwadwo Twum Boafo, said the board strategically invites investors into the sectors which Ghana does best, namely the cocoa and agro-processing sectors. “The board was set up to facilitate export development...and we place a premium on adding value to our exports.” Similarly, Myroc Foods, a processing company for canned tuna, employs up to 1,200 local staff although the General Manager Emmanuel Asante, conveys that recruitment is seasonal. Most of the firms of the free zones are happy business men and women. The General Manager of Cargill, Kojo Amoo-Gottfried, described the FZB as “an enabler toprogress”.

However, the FZB is expanding its sectoral portfolio and encouraging investment opportunities in the burgeoning oil and gas sector as well as in ICT, textile and apparel manufacturing, jewellery production, floriculture, metal fabrication, ethnic beauty products, and light industry assembling plants.

Red Sea Housing Services Ghana Ltd, another FZB licensee, manufactures pre-fabricated buildings for export, valuing a total of US$118 million based on an investment capital of US$52 million, employing around 300 Ghanaians, some of which are stationed abroad, according to Managing Director Mark Summer.

Dorilyn Esi Agamah, the Head of Human Resources at Lucky 1888 Mills, says her workforce consists mainly of women. They help the apparel company to produce 2,000 garments a day and export 90,000 pieces of clothing to the US and Europe every year.

Despite these success stories, some have said that the free zones are crowding out local entrepreneurs and not sufficiently accommodating local purchasing power. Indeed, to become a free zone member, investors must demonstrate an ability to export 70% of their produce although they may sell 30% on the local market.

Another major critique is that the process is only possible for the formal industry which only makes up a very small percentage of the private sector in Ghana. To obtain a license, a company must present certificates of incorporation and declare the business with the Registrar General’s Department, provide an appropriate business plan package, companies code, evidence of real property, Memoranda of Understanding with prospective clients, Environmental Protection Agency (EPA) permit, where applicable and evidence of funding.

All of these are viewed as prohibitive to many local small and medium-size business owners who are looking to expand. The FZB’s activities do not end with the licensing and monitoring of companies. The board is also becoming an astute property manager.

Apart from the Tema Export Processing Zone, an enclave that covers a total land area of 1,200 acres (480 hectares), with a multitude of public support services including the Ghana Customs, Excise and Preventive Service (CEPS), Police, Immigration, EPA and the Internal Revenue Service (IRS), the board is now seeking to develop other properties.

Shama Land Bank, with 3,200 acres of seafront land, located in the Western region has been designated as a potential petrochemical hub for a refinery, distribution, transit and petrochemical product manufacturing companies. Sekondi Export Processing Zone, also in the Western region, has 2,200 acres which has been carved out by the FZB to be developed by Hasan International.

But the Western part of the country is not the only one to benefit. The Ashanti Technology Park located in the Ashanti region is earmarked for an ICT village, cocoa processing, light and heavy industrial manufacturing, warehousing, social services and bio-technology development centres.

The FZB sensitisation event gave credit to Honourable Dan Abodakpi, Ghana’s current High Commissioner to Malaysia, for the critical role he played in establishing the free zones initiative in 1995-96 during his tenure as the Minister of Trade.

Honourable Abodakpi indicated the event that the explosion of globalisation in the 1990s made it important to position the country to tap into the free flow of capital moving around the world and the growing need by trading partners for scarce resources.

Despite the financial and bureaucratic challenges that joining a free zone may present local companies, they must look to be part of the initiative. The revenues and company profiles of those operating within these enclaves are convincing and companies looking to grow beyond the Ghanaian market must take advantage of this initiative to contribute to the strengthening of Ghana’s trade balance.