Enterprise reporter, PRESSHARK Information
Getty PicturesThe Accra road vendor appears at me, bemused.
I am attempting to ascertain how the fairly flimsy 30g bag of roasted cashew nuts she’s promoting, beside a sweltering freeway in Ghana’s capital, prices me the equal of about 75 cents (60p).
That is clearly not some huge cash for me, a customer from the UK, however I am amazed on the mark up.
The worth is a minimum of 4,000% greater than the price of shopping for the identical weight of uncooked, unshelled cashews from a Ghanian farmer.
“It is unimaginable,” I protest. But she would not perceive my English, or my reasoning.
The worth of the nuts was, in spite of everything, printed on the packet. And explaining why I believed it was past the pale was by no means going to be simple.
Ghana is the world’s third-biggest exporter of unprocessed cashew nuts, behind Ivory Coast in first place, and Cambodia in second.
To provide the crop, round 300,000 Ghanaians make a minimum of a part of their dwelling rising cashews.
Nashiru Seydou, whose household have a farm within the nation’s north-east, some 500 miles (800km) from Accra, is one among them.
He says the work is tough, and unreliable provide chains and risky wholesale costs make survival tough.
“We’re struggling. We will use the daylight, the fertile land, to create extra jobs,” he says. “I would be glad if the federal government involves our assist and helps assist our business.”
He tells me that he at present will get round $50 for a big 100kg sack of unshelled cashews.
“It is wonderful,” says Brilliant Simons, an entrepreneur and financial commentator in Accra, who has studied the numbers. “Roasters and retailers purchase the nuts from farmers for $500 a tonne, and promote to clients [both at home and abroad] for quantities between $20,000 and $40,000 a tonne.”
As a complete, Ghana grows about 180,000 tonnes of cashews yearly. Greater than 80% is exported, and in uncooked, unshelled type. This generates some $300m in export revenues, however implies that Ghana misses out on the considerably greater returns you get from roasted, ready-to-eat cashews.
Mildred Akotia is one particular person attempting to extend the quantity of cashews which are shelled and roasted in Ghana. She is the founder and CEO of Akwaaba High-quality Meals, which at present processes simply 25 tonnes a yr.
Ms Akotia denies any suggestion that she and others like her are price-gouging. The packaging and roasting equipment a western enterprise would mechanically use on this business, she says, is out of attain for her due to the excessive price of credit score in Ghana.
“Should you go to a neighborhood financial institution, it can price you 30% curiosity to get a mortgage,” she complains. “As a producer you inform me how giant your margins are that you would be able to afford that type of curiosity? We have needed to depend on what we will get: mushy loans from family members and grants from donor companies.”
She says that this example is why lower than 20% of Ghana’s cashews are processed domestically. The majority are scooped up and exported to massive factories in nations like India, Thailand and Vietnam.
Remarkably, a few of these packaged nuts are then exported again to Ghana, the place they’re offered for a similar value as domestically roasted cashews. That is regardless of the 20,000-mile sea freight spherical journey, and import prices.
It’s a comparable image for rice, which is exported to Ghana from Asia and offered at low costs, regardless of Ghana additionally rising the crop itself.
Again in 2016 the Ghanaian authorities experimented with an export ban on uncooked cashews as a way to encourage homegrown processing. Nevertheless the coverage needed to be deserted inside a few weeks after uproar from farmers and merchants.
With out obtainable low-cost loans, it wasn’t doable for enough new Ghanaian roasters to enter the market. So the value of uncooked nuts crashed, and lots of began rotting for need of a purchaser.
Extra not too long ago there was speak of elevated tariffs on uncooked cashew exports and bans on exporters buying cashews straight from farms.
However all these coverage interventions miss a key level, in response to Mr Simons. An enormous problem for native producers, he says, is to work tougher on the fundamentals of doing enterprise, and rising their firms.
“As a way to be environment friendly at this, you want scale,” he says, including that companies want to advertise consuming cashews to make it extra widespread within the nation. “You want a variety of a Ghanaians consuming the nuts, not only a small center class”.
Prof Daron Acemoglu, a Turkish-American economist, agrees that constructing a robust native market is necessary for Ghana’s cashew business. He was one among final yr’s winners of the Nobel Memorial Prize in Financial Sciences, for his work on the struggles going through low-income economies, and specifically their home-grown companies.
But he says that the primary precedence must be bettering entry to worldwide markets for processed Ghanaian cashews.
“These companies are coping with workforces that are not correctly expert, they’ve infrastructures that are not working, they’re consistently in worry of corrupt officers, or rule modifications, and likewise it’s extremely tough to achieve overseas markets, he says. “They want the overseas market as a result of the home market is small, and their very own authorities has little or no capability [to boost it].”
He additionally desires to see the Ghanaian authorities enhance the community of roads and railways to ease the price of transportation.
However Mr Simons reckons the onus ought to now be on Ghanaian companies themselves, to do the fundamentals to reinforce the branding and advertising and marketing of cashews. As it’s, he says, most of the nation’s most enterprising enterprise individuals are simply leaving Ghana for higher paid alternatives overseas due to the pink tape and cronyism in Ghana are so prohibitive.
“There is a huge mind drain,” he says. “My concept of why Africa’s financial growth has been gradual is as a result of we focus an excessive amount of on the provision facet, however the true magnificence is in demand, making a consuming class of cashew-eating lovers, and you do not have an entrepreneurial class that may create demand transformation.”
He says the identical argument applies to Ghana’s different greater exports, like gold and chocolate, neither of which will get a lot value-addition inside Ghana earlier than getting exported to the West.
Mildred Akotia hopes she may be a kind of entrepreneurs to buck the pattern. She now desires to construct her personal logistics arm, to have the ability to course of the cashews direct from the farm gate.
“I’ve a variety of calls from the UAE, from Canada and America. At the moment we won’t meet demand. We won’t get sufficient kernels to roast.
“There is a prepared market each domestically and internationally. My branding is nice, my advertising and marketing is nice. My dream is to offer a facelift to Ghanaian processed meals.”
