The case for licensing export management companies to boost exports

Some few years ago, I was consulted by a client to help him export a consignment of charcoal to Belgium. 

Though not familiar with the export procedures myself at the time, my knowledge on export requirements caused me to caution him to exercise patience while I made a full enquiry on the whole spectrum of the requirements for exporting charcoal to Europe. 

He was incessant that he only had a 2 or 3 weeks time frame to fulfil the export order. 

Not ready to abide by my admonition of him exercising patience while I sought to find out the full requirements to successfully fulfil the export order, I left him to his fate. 

Some few months later, he came back to me in a sullen mood to inform me that he indeed made the export of charcoal to Belgium but the whole consignment was rejected and so lost money.

In Ghana, the Ghana Export Promotion Authourity (GEPA) has contributed significantly in scaling up the export of non-traditional products comprising mainly handicrafts, art and leather works, agricultural and horticultural produce, flavours and fragrances, garments, apparel among other products. 

The export of commodities like gold, cocoa, coffee, timber products, cashew etc does not pose a problem as the regime for exporting such commodities has long been established with agencies like PMMC, Ghana Cocoa Board, Tree Crop Development Authourity playing a facilitating role.

Other organisations like the Federation of Association of Ghanaian Exporters, FAGE, Vegetable Producers and Exporters Association of Ghana, VEPEAG are also major players in facilitating exports of their members abroad. 

In scaling up the export of locally produced goods by entrepreneurs who may not have a clue as to maximizing their potential in exporting their goods, there is the need to consider also making GEPA a regulatory agency in licencing export marketing companies to offer technical support to potential exporters. 

 
Scaling export potential 

Most importantly, with the expression of the government’s intention to offer incentives to local businesses for production to be carried out round the clock in fulfilment of its manifesto promise of Ghana operating a 24-hour economy, there is bound to be the saturation of the domestic market with increased production of goods. 

As the increased production cannot all be absorbed by the domestic market, there would necessarily be the imperative to find export markets for the goods which will be produced beyond the consumption limit offered by the domestic market. 

Also, the anticipated surge in the production of goods which would be generated by the 24-hour economy would also require that firms must be more proactive in marketing their products aggressively in order not to have stocks stuck in their warehouses. 

Obviously, in undertaking aggressive marketing of their products, reasonably resourced firms like pharmaceutical, beverage manufacturing, cosmetic and other companies which have already been exporting could easily scale up through their already established export departments. 

Those companies which may not have been previously engaged in exporting but are reasonably resourced and which may want to export their products due to expanded production imposing upon them the imperative of exporting would not have a problem establishing export departments, resourcing them and employing the right calibre of personnel to man them to achieve their goal of exporting.

Difficulties

Enormous difficulties could be encountered by small manufacturers without adequate knowledge and resources in their attempts to explore the export market. 

The potential exporter would have to overcome some difficulties associated with exporting like language barrier, lack of familiarity with the business and regulatory environment of the importing country, compliance with legal requirements and packaging standards, exchange rate convertibility among others.  

Thankfully, with the introduction of the Pan African Payment Systems (PAAPS) which was launched recently by the African Continental Free Trade Area (AfCFTA) to facilitate intra-African trade and which has caught on quite well with its facilitation by a number of commercial banks, payment bottlenecks due to non-convertibility of almost all African currencies is no longer a problem inhibiting intra-African trade.

For any potential exporter to successfully access the export market, it needs to be able to conduct appropriate market research, tailor its products to suit consumption tastes and adhere to regulatory standards in the importing country, plan an effective distribution network either by itself or working through partners, conduct an effective advertising campaign, pass sanitary and phyto-sanitary requirements of the importing country and also packaging and labelling its products properly to attract attention and to satisfy the requirements of local and international trade protocols and legislation among other requirements.

The role of GEPA in promoting local exports

It is remarkable that GEPA has over the years exhibited fidelity to its core mandate in facilitating the export of Ghanaian products into the international market. 

In carrying out its mandate, GEPA has organised workshops on export procedures for exporters, port and customs documentation, packaging, fulfilling sanitary and phyto-sanitary requirements etc. 

It has also organised road shows and exhibitions, particularly in West African countries in conjunction with trade and business associations like Association of Ghana Industries (AGI), Federation of Association of Ghanaian Exporters and Ghana’s diplomatic missions in those countries. 

However, it is fair to say that it has been a while since these exhibitions were organised in any African country or in any other continent.

It is also noteworthy to mention that the Economic Trade and Investment Bureau of the Ministry of Foreign Affairs has also been organising regularly exhibitions in conjunction with foreign embassies to showcase local Ghanaian products in support of GEPA to boost exports. 

The last of these exhibitions was held last year at the forecourt of the Accra Metropolitan Assembly.

In the past year also, the Ghana Exim Bank in collaboration with the Ministry of Foreign Affairs held an exhibition of local products after which it presented a quantity of such products to the Ministry of Foreign Affairs to be marketed outside Ghana through Ghana’s mission abroad.

The fact is that, as a normal state entity, GEPA may be bogged down by administrative bottlenecks and inertia with the actual business of facilitating the promotion of exports in keeping to its core mandate.

It is proposed that the time has come for policy makers to consider making GEPA also a regulatory body by empowering it to licence export marketing companies with the core mandate in providing technical advisory services to exporters to access foreign markets in scaling up the export of local products. 

With the licencing of export marketing companies, the services offered to exporters in enhancing their capacities to export would be greatly enhanced. 

Also, the EMCs would be in close proximity to many potential exporters who are located throughout the country, unearth them and facilitate their potential.

Export Marketing 

In licencing export marketing companies, it is proposed that even though the business of exporting covers several areas like freight forwarding, customs brokerage, export trading, packaging etc, it would be appropriate to facilitate the business of exporting to licence export marketing companies as one-stop businesses encompassing the whole export chain. 

However, the business of providing export credit insurance and export finance could be segmented and be handled by banks and insurance companies as is presently the case. 

Conclusion

It is my hope and belief that in incorporating the licencing by GEPA of EMCs as a regulatory function, situations like what I encountered with my client who wanted to export charcoal will be greatly minimised. 

It will also generally scale up the export potential of the country as GEPA is deemed to be centralised and may be seen to be remote from a good number of potential exporters.

The writer is a lawyer with specialisation in international business law. Email: joseph.a@akyeampongandco.com