Enrichment

Ghana's ambitions to move its chocolate industry up the global value chain

Geoff Riley

3rd June 2021

This piece from David Pilling, FT Africa Correspondent and author of 'The Growth Delusion' is a brilliant read for anyone wanting a deeper understanding of competitive advantage.

The Ghanian government is looking to achieve a structural shift away from dependence on growing and then exporting raw cocoa beans. Farmers routine get less than 5-7 per cent of the global value chain and small growers - even if they form cooperatives - are little bargaining power set against the monopsony power of the giant transnational chocolate manufacturers.

Can Ghana achieve this transformation into economies of scale in cocoa processing and chocolate manufacturing to take a larger slice of a US$130 bn annual global market? The barriers are high. The government does not possess a dairy industry (milk powder must be imported) and inadequate and antiquated infrastructure increases the cost and reduces the reliability of energy supplies.

Some smaller scale manufacturers are making headway and inward FDI is growing. And there is plenty of political momentum to restrict exports of raw cocoa.

As Pilling argues, "In Asia, almost no economy of any size clambered out of poverty without manufacturing.". Can Ghana do the same?

Please do have a read of the article - it will really help to put into context much of the development and growth economics you will cover as part of your A Level and IB Economics courses.

And please do follow David Pilling on social media.

Ghana's export patterns can be found here from the Observatory of Economic Complexity

"What would happen if Ghana, the world’s second-biggest cocoa producer, refused to ship the raw material to Switzerland, one of the biggest manufacturers of chocolate? We may be about to find out."

Geoff Riley

Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.

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