[Final Thoughts] A Few Recommendations on how the Ghana Freezones Act can be adapted to achieve its purpose in the Cocoa Chocolate sector.

Continued from Previous article

Ghana’s Free Zones program was envisioned as a strategic initiative to attract foreign investment, boost exports, create jobs, and drive economic growth. However, our in-depth analysis of Barry Callebaut’s operations within these zones reveals a complex web of benefits and drawbacks. While the program has succeeded in bringing in foreign companies and creating employment, it has also led to significant challenges that undermine its intended goals.

Key Takeaways

1. Limited Tax Revenue: The substantial tax incentives provided to attract foreign investment result in limited tax revenue for the Ghanaian government. This revenue shortfall hampers the ability to fund essential public services and infrastructure, affecting local communities, particularly smallholder cocoa farmers. The burden of funding public services falls on the local population, further entrenching poverty that we initial sort to reduce by introducing the Freezones Act.

2. Labour Concerns: While jobs are created, they are predominantly low numbers as the cocoa factory can be 100% automated. With the advancement of technology and every business persons interest to make profits, the humans are more likely to be reduced. High-level roles are often filled by expatriates, perpetuating economic inequality and failing to foster significant skill development among the local workforce.

3. Local Value Addition: Barry Callebaut for example focuses on processing raw cocoa beans into intermediate products, but high-value activities such as research and development and product innovation are conducted abroad. This limits the economic benefits and opportunities for technological and skill transfer in Ghana, perpetuating the country’s role as a supplier of raw materials and intermediate products. Research & Development is where the actual value happens, the skills of value addition happens, hence knowledge transfer required for local to gain and make an impact. Example, if the factory in Ghana would have employed an electrician but the research and development that leads to the development of the eletricial role and the tasks they are to complete to help acheive a bigger goal is outside of Ghana. So working in the factory in Ghana is not intself knowledge or skills transfer. Ghana needs to ensure that we have metrics that allows us to measure how we are realising the the benefits we were promised by the freezones act.

4. Contradiction in Encouraging Local Consumption: The policy that restricts local sales of processed cocoa and subjects them to import duties contradicts the goal of promoting local consumption. Unlike othe other sectors, the incetives that exist for those producing in the freezones enclave disincentives any one to process Cocoa for local consumption by chocolatiers.

This makes locally produced cocoa products expensive for Ghanaians, discourages local entrepreneurship in the cocoa processing industry, and undermines efforts to build a resilient domestic market. So if we want to encourage local consumption, there Chocolatiers locally needs access to semi processed products (which they can only be accessed from Freezones company, but as an imported product and are limited to a maximum of 30% of what the processing company produces). Everything in here is contradictory.

Path Forward

To ensure that the Free Zones program delivers on its promises of economic growth and equitable development in the Ghanaian Cocoa Chocolate sector, several key changes are needed:

1. Balancing Tax Incentives and Revenue: