EXPORTS, EMPLOYMENT AND INCOMES IN WEST AFRICA – JANUARY 2011 EXPORTS, EMPLOYMENT AND INCOMES IN WEST AFRICA WEST AFRICA TRADE HUB TECHNICAL REPORT NO. 39 January 2011 Acknowledgments The author wishes to express gratitude to the numerous individuals in the countries that participated in this study who donated hours of their time to answer questions. This report could not have been produced without the support of USAID‘s West Africa Trade Hub under the direction of Vanessa Adams. The able assistance and devotion of Kafui Djonou was instrumental in coordination of field activities; Jane Owiredu-Yeboah administered the contracts; and, Nathan Van Dusen reviewed drafts of the study. Dr. Jeffrey Cochrane of USAID‘s Economic Growth team provided clarity of purpose and ensured its fit with USAID‘s broader development agenda. The University of Ghana was a critical partner as were volunteers of the U.S. Peace Corps in Burkina Faso, Ghana and Mali. DISCLAIMER The author‘s views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government. 2 EXPORTS, EMPLOYMENT AND INCOMES IN WEST AFRICA – JANUARY 2011 Contents Acknowledgments ................................................................................................................. 2 Contents ................................................................................................................. 3 Figures ................................................................................................................. 4 Tables ................................................................................................................. 4 Foreword ................................................................................................................. 5 Executive Summary .............................................................................................................. 6 Introduction ................................................................................................................. 8 1. Value Chains and Multipliers .......................................................................................... 9 A. The Value Chain .............................................................................................................. 9 B. Employment and Income Multipliers .............................................................................. 11 2. The Multipliers .............................................................................................................. 13 A. The Basket Sector........................................................................................................... 13 B. The Wood Sector ............................................................................................................ 14 C. The Cashew Sector ......................................................................................................... 15 D. The Shea Sector.............................................................................................................. 21 E. General Summary ........................................................................................................... 24 3. Challenges and Opportunities for Increased Exports from West Africa .......................... 25 A. Handcrafts: Baskets and Wood Products ......................................................................... 25 B. Tree Crops: Cashew and Shea ......................................................................................... 26 Bibliography ............................................................................................................... 28 APPENDIX I: The Regional Income Multiplier ............................................................. 31 APPENDIX II: The Employment Multipliers .................................................................. 34 APPENDIX III: Sample of Data Collection Questionnaires used ...................................... 35 APPENDIX IV: Income Generation in Basket and Wood Product Sectors in Ghana ......... 59 APPENDIX V: Income Generation in Cashew Sector in Ghana .................................... 115 3 EXPORTS, EMPLOYMENT AND INCOMES IN WEST AFRICA – JANUARY 2011 Figures Figure 1.1: The flow of income to village women................................................................ 10 Figure 1.2: Tracing the multipliers ...................................................................................... 11 Figure 1.3: The multiplier effect .......................................................................................... 12 Figure 2.1: The flow of bolga baskets .................................................................................. 13 Figure 2.2: Cashew production zones in Côte d'Ivoire, Burkina Faso and Ghana ................. 15 Figure 2.3: Value of Ghana's processed cashew exports ...................................................... 19 Figure 2.4: Quantity of Ghana's cashew exports .................................................................. 19 Figure 2.5: How Africa loses the economic potential of cashew .......................................... 20 Figure 2.6: The African Shea Belt ....................................................................................... 21 Figure 3.1: Time trend of the handcraft sector in Ghana ...................................................... 25 Tables Table 1.1: The employment and income multipliers ............................................................ 12 Table 2.1: Multipliers for baskets in Bolgatanga .................................................................. 13 Table 2.2: Multipliers for the wood sector in Ashanti Region .............................................. 14 Table 2.3: Cashews in West Africa ...................................................................................... 16 Table 2.4: Recent trends in Ghana cashew exports .............................................................. 16 Table 2.5: Cashew multipliers ............................................................................................. 17 Table 2.6: Expenditures by commercial cashew processors, 2009 ........................................ 18 Table 2.7:Specific labor costs of cashew processing ............................................................ 19 Table 2.8: Regional income multiplier for shea in Koulikoro ............................................... 22 Table 2.9: Processor expenditures per $1,000 of shea purchases .......................................... 23 Table 2.10: Industrial shea processors' expenditures to households ...................................... 23 Table 2.11: Summary of the multiplier values ..................................................................... 24 Table 2.12: Multiplier values per MT of raw cashew nuts ................................................... 24 Table 2.13: Multiplier values per MT of raw cashew nuts ................................................... 24 Table 3.1: Shea Production, Consumption, and Exports from West Africa, 2004 (MT)........ 26 Table 3.2: Shea Production, Consumption, and Exports from West Africa, 2008 (MT)........ 27 4 EXPORTS, EMPLOYMENT AND INCOMES IN WEST AFRICA – JANUARY 2011 Foreword The Office of the United States Trade Representative (USTR) works closely with the USAID West Africa Trade Hub to facilitate trade between the United States and West Africa, and to encourage countries in the region to better utilize the trade opportunities offered by the African Growth and Opportunity Act (AGOA). AGOA was enacted in May 2000 to expand U.S.-Sub-Saharan African trade and investment, encourage regional integration, and promote economic growth by providing trade preferences to countries making progress in implementing economic, legal, and human rights reforms. Under AGOA, eligible Sub- Saharan African countries can export thousands of products to the United States duty-free. Nearly 6,500 products are covered—from apparel to automobiles and footwear to fruit. As a result, almost 95% of African exports to the United States now enter duty-free either under AGOA, the U.S. Generalized System of Preferences, or under a non-preference (normal- trade-relations) zero rate of duty. AGOA also provides a framework for technical assistance to help countries make the most of trade preferences. The West Africa Trade Hub is funded by USAID to provide AGOA-related training to individuals and to provide firm-level technical assistance to West African companies in the following sectors—shea, cashew, apparel, home décor and accessories— among others. In 2009, the USAID West Africa Trade Hub facilitated over $20 million in exports and drew investments of more than $1 million into West Africa. At a time when there are questions about export-led growth and the benefits of trade for the poorest countries in Africa, this new report by the Trade Hub illustrates the broad economic impact or ―multiplier effect‖ of export sales generated by West African producers of cashew, shea, hand-woven baskets and wood artisanal products. The report also illuminates the critical factors impeding the growth of productive capacity and export competitiveness, such as inadequate or high cost transport and other infrastructure constraints, lack of access to affordable credit and supply shortages of raw materials. So the findings in this study are important—they assist us in measuring the economic impact of export growth in the shea, cashew and home