IICD supported project: E-Commerce for Non-Traditional Exports

Countries: Ghana [GH]
Sectors: agriculture livelihood ebusiness

Summary

Through the MOFA, the Ghanaian Government has made concerted efforts to promote the production of non-traditional export product. In support of this effort, the MOFA has been very active in wooing foreign investors to invest in the production of non-traditional export products. Consequently, Ghana has recently experienced a tremendous growth in the production of non-traditional export products, particularly those agriculture-related. Nevertheless, the impact of increased production has not achieved the greatest possible impact on the Ghanaian economy. Ghanaian producers and exporters of non-traditional goods depend heavily on the promotion of their products in international markets, and therefore, on accurate information about product prices and demand levels. The lack of efficient and effective channels to transfer such information between the Ghanaian non-traditional exporter/producer and the foreign importer in the global market has dampened the potential economic impact of the MOFA initiative. Thus, accurate price and demand information is currently inaccessible. Additionally, the opportunities to promote Ghanaian trade are limited and the process is slow and costly given the reliance on telephone and fax lines. The E-Commerce Project aims to overcome these barriers by enabling Ghanaian non-traditional producers and exporters to effectively promote their products in the global market. Specifically, the Project expects to: Increase the competitiveness and market position of Ghanaian farmers and exporters by enabling them to approach and to respond more effectively to the demands of the market via faster and cheaper contacts.

Update

Updated: 2005-03-09

The website on this project (Electronic Commerce for Non-Traditional Exports Products) has been launched. It provides, amongst others, an overview of the project and informs on issues such as market prices, production and international trade, NTE producers/traders and agricultural information centres.

(June 2001)
The pilot project is ongoing. It focuses on the development of a basic information system for and with producer groups of major non-traditional export products in 2 leading agriculture districts of Ghana. The project has installed equipment providing Internet access at 2 district levels and has identified interested producers and traders in the districts. ICT training of project staff, producers and traders has been done and a website for the Ministry of Food and Agriculture and publication of market information on this website is being done. The pilot project will now focus on the distribution of the information to the districts via Internet and the development of web pages by and for producers and traders showing their products and market offerings.

Objectives

The Project will achieve this objective by providing simple to use, faster and less expensive contacts to external markets using ICTs. ICT services will include: 1) a website service for non-traditional farmers, exporters and their customers; 2) on-line services on market and crop information, such as products, prices, new technological developments; 3) a database on
production, export organisations and their products; and 4) the introduction of an e-commerce application supported by training. Eventually an easy, fast and secure on-line ordering and payment system will be added to the services furnished by the Project. Technical equipment required to support these services include: Windows NT server, MS Office 97, Oracle 8.0 work group, customised e-commerce software, and a file server, six PCs and two printers.

The E-Commerce for Non-Traditional Exports Project was identified at an IICD ICT Roundtable supported by the Ghanaian Ministry of Communications in May 1998.

Development Impacts

The Project seeks to increase the livelihood opportunities of local Ghanaian farmers by improving their opportunities to compete effectively in the non-traditional products export market. The targeted beneficiaries of the Project are 1) small and medium-sized non-traditional producers, and 2) small and medium-sized non-traditional exporters. By introducing more efficient and cost effective communication between Ghanaian producers/exporters and foreign importers, the Project will improve their business position by increasing efficiency and eliminating waste associated with fraud and superfluous travel. The Project contributes to the economic well-being of the targeted beneficiaries. It is projected that approximately 1400 participants (400 exporters and 1000 producers) will benefit from E-Commerce for Non-Traditional Exports by the Project's 5th year of operations. A minimum increase in participant sales volume of 15% is the Project target.

A primary component that will contribute to the Project's success is the building of ICT capacity through training of not only Project staff, but moreover, of the users of Project services. The Project personnel will be responsible for identifying and collecting data as well as designing, building and maintaining the tools required to analyse and to share data. To support these responsibilities the staff will undergo training in project management, system management, data collection and entry. In addition, these trainees will in turn recruit and inform Project beneficiaries about electronic commerce as a means toward supporting Project objectives. Therefore, knowledge and skills transfer will not only affect the seven persons staffing the information centre, but more broadly, at least 80% of the 1400 participants via awareness-raising workshops in e-commerce. Toward this end, the trained Ghanaian staff will conduct four electronic trade information and awareness-raising workshops annually.

The Project's value-added is strengthened by the fact that it is a first of its kind effort in Ghana and has the potential to be expanded to meet the needs of many more beneficiaries located in other geographical zones. The Project could also be replicated to match the demands of traditional producers/exporters.

Market and finance

The Project's target market is as yet, not fully aware of potential benefits to be realised through e-commerce and web information services. A primary focus of the sales plan is the awareness-raising workshops. The initial pricing policy seeks to maximise usage and is thus based on the concept of affordability. As demand for the Project's services increases, prices will be allowed to adjust to market conditions. The "affordable" price is deemed to be a flat fee of USD15/month, with an option for very low-income producers to subscribe in small producer groups.

The Project will be fully operational after a start-up period of 6 months. The 200 subscriber-rate of Year 1 will more than double in Year 2 reflecting the first full year of service offering. This cautious estimate of Year 1 demand reflects a realistic need to first generate the necessary market awareness. Heightened market awareness and therefore demand, accounts for the stronger revenues of Years 3 to 5. Based on the projected number of subscribers, the Project will become self-sustaining by Year 2, and will achieve profitability by Year 5.

Budget

Financial Rate of Return: n.a.			Project Life: Sept 2001 - 2006			Break-Even: 4th year
Net Profit (Loss):
	Year 1	Year 2	Year 3	Year 4	Year 5	Capital Cost		Financing Plan:
Revenues	36.0	81.0	90.0	99.0	108.0			AgSSIP own contribution (1st year) 36.0
Operating Costs	78.7	77.4	87.0	88.8	89.7			External Funds:
Depreciation	14.0	14.0	14.0	14.0	14.0	70.0		Required Funds 150
Profit (Loss)	(56.7)	(10.4)	(10.9)	(3.8)	4.3
								Total: 151.0
Working Capital Requirements 2.3								Investment Opportunity: Grant

Project Owner : Agricultural Service Sector
Investment Programme (AgSSIP)

Project Partners : IICD
Ghana Export Promotion Council
Federation of Ghanaian Enterprises
Association of Ghanaian Industries

Contact Organisation : IICD