Enterprise reporter, BBC Information
Getty PicturesThe Accra avenue vendor seems to be at me, bemused.
I am making an attempt to determine how the moderately 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 value is at the very least 4,000% increased than the price of shopping for the identical weight of uncooked, unshelled cashews from a Ghanian farmer.
“It is unbelievable,” I protest. But she does not perceive my English, or my reasoning.
The value of the nuts was, in any case, printed on the packet. And explaining why I assumed it was past the pale was by no means going to be straightforward.
Ghana is the world’s third-biggest exporter of unprocessed cashew nuts, behind Ivory Coast in first place, and Cambodia in second.
To supply the crop, round 300,000 Ghanaians make at the very least a part of their residing rising cashews.
Nashiru Seydou, whose household have a farm within the nation’s north-east, some 500 miles (800km) from Accra, is certainly one of them.
He says the work is difficult, and unreliable provide chains and unstable wholesale costs make survival tough.
“We’re struggling. We are able to use the daylight, the fertile land, to create extra jobs,” he says. “I would be completely happy if the federal government involves our support 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 superb,” says Vivid 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 prospects [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 kind. This generates some $300m in export revenues, however signifies that Ghana misses out on the considerably increased returns you get from roasted, ready-to-eat cashews.
Mildred Akotia is one particular person making an attempt to extend the quantity of cashews which can be shelled and roasted in Ghana. She is the founder and CEO of Akwaaba Tremendous Meals, which at present processes simply 25 tonnes a 12 months.
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 value of credit score in Ghana.
“For those who go to a neighborhood financial institution, it should value you 30% curiosity to get a mortgage,” she complains. “As a producer you inform me how massive your margins are which you can afford that type of curiosity? We have needed to depend on what we will get: comfortable loans from family members and grants from donor companies.”
She says that this case is why lower than 20% of Ghana’s cashews are processed domestically. The majority are scooped up and exported to massive factories in international locations 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 with a purpose to encourage homegrown processing. Nevertheless the coverage needed to be deserted inside a few weeks after uproar from farmers and merchants.
With out out there low-cost loans, it wasn’t potential 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 lately there was discuss of elevated tariffs on uncooked cashew exports and bans on exporters buying cashews immediately 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 more durable on the fundamentals of doing enterprise, and rising their firms.
“With a purpose to be environment friendly at this, you want scale,” he says, including that corporations 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 powerful native market is vital for Ghana’s cashew business. He was certainly one of final 12 months’s winners of the Nobel Memorial Prize in Financial Sciences, for his work on the struggles dealing with 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 corporations are coping with workforces that are not correctly expert, they’ve infrastructures that are not working, they’re always in concern of corrupt officers, or rule adjustments, and likewise it is very 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 boost the branding and advertising of cashews. As it’s, he says, lots 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 principle of why Africa’s financial improvement has been sluggish is as a result of we focus an excessive amount of on the provision aspect, however the actual magnificence is in demand, making a consuming class of cashew-eating fans, 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 is likely to be a kind of entrepreneurs to buck the development. 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 is nice. My dream is to offer a facelift to Ghanaian processed meals.”