service export strategy for non-traditional exports

service export strategy (fin)

Exports of Non-traditional products have reached all-time high of over $1 billion over the past seven years. However one critical area that has not been looked at is the export of services sector especially within the sub -region.
Boahene Asamoah looks at the proposed National Strategy for the export of Non-Traditional Services.


THE country’s non-traditional exports (NTEs) for the first time cross the $1 billion mark as at the end of the 2007 export season.
Non-traditional exports are those products that does not fall within the three main traditional export of the country, namely Gold, Cocoa and Timber.
The significance of an appreciable increase in NTEs is important to the economy especially where there is a diversified foreign exchange earnings that serves as buffer for the cyclical external shocks that the economy experiences every now and then.
The service sector all over the world has been one that spearheads the economic growth of many industrialised countries.
This can be evidenced by such countries such as Taiwan, Malaysia, India and China where the boom in service sector has pushed up the economic growth in these countries.
Indeed, under a three year growth projection from 2005 to 2007, the Ghana Export Promotion Council (GEPC) stated that export strategy for NTEs envisaged the achievement of export earnings of US$ 1 billion by 2006 and US$1.2 billion by year 2007.
According to the Board chairman of GEPC, Mr Stephen Sekyere Abankwa, “strong export performance is crucial to Ghana's economic development and growth.”
Non-Traditional Exports increased from $460 million in 2001 to $1,164 million in at the end of last year depicting a growth rate of over 150 per cent.
On annual basis, this translates into a growth rate of 20.7 per cent
NTEs percentage contribution to total exports in 2004, 2005, 2006 and 2007 were about 25.74 per cent, 28.09 per cent, 26.14 per cent and 27.76 per cent respectively.
Three main sectors have contributed to the upward increase in NTEs, which are agriculture, semi-processed/processed or manufacturing and handicraft sectors have contributed.
Significantly, the service sector has not made any significant impact on the export under the non-traditional export sector.
Services in the country currently accounts for 30 per cent of the Gross Domestic Product (GDP) amount to about $3.87 billion and contributed about 31 per cent to economic growth.
Services exports account for only 8.3 per cent of GDP amounting to US$1.07 billion, however exports of goods represents over 30 per cent of GDP indicating that there is much more potential for the development of Ghana’s services exports.
According to the GEPC, the majority of revenue from services exports comes from the tourism sector, which account for US$836 million, however there seems to be lack of adequate information on the composition of the remaining $234 million services.
Research available indicate that the major component of these services were likely to be the more traditional services sectors such as transportation and financial services exports.
Estimates of selected non-million services exports based on a survey of films in selected sectors amount to US$34 million which comprise of: Business Processing Out-sourcing (BPO) exports US24 million, professional consultancy exports US$2 million; higher education exports US$8 million and medical tourism services, less than US$0.2 million.
As compared to with NTEs goods exports of about US$778 million, there is reason to believe that untapped potential for the development of the services sector strategy.
And to take advantage of these untapped opportunity a national strategy to develop and promote non-traditional services has been developed.
The thrust of the strategy is to increase exports of non-traditional exports of services to a level equivalent to 10 per cent of total non-traditional exports.
The strategy has been designed to be practical document to guide implementation of a comprehensive programme to promote, develop and support service sectors ports from the country.
The proposed strategy has three main components; awareness raising or creation, identification and removal of constraints and sector specific promotion.
According to the Executive Secretary of GEPC, Mr Edward Collins Boateng “the idea of streamlining and strategically positioning services in the nation’s exports portfolio has generated a lot of interest across the academia, policy makers, stakeholders and other interested groups”.
The Minister of Trade, Industry, President’s Special Initiative (PSI) and the Private Sector Development (PSD), Paapa Owusu-Ankomah, indicated that the country required a more purposeful national approach if it aimed at taking full advantage of and participate in the many opportunities that exists in the sub-region.
“That is why we embrace this renewed national efforts at providing a clearer strategic direction for the development of the services export sector of Ghana”, the minister stated.
“We believe that the tremendous growth recorded in the services sector in general which contributes over 40 per cent of the Gross Domestic Product (GDP) can also be replicated in the export of services within and beyond the borders”, Mr Owusu-Ankomah stated.
Many private sector operators believe that the strategy has the potential to open up the country to international best practises and building a solid human resource capital to serve the sub-region.
However, experts believe that the private sector must build capacity and also collaborate with other firms in the sector to take full advantage of strategy.