The government has, on balance, maintained the reform measures and budgetary stringencies of a structural adjustment program (SAP) adopted in 1983 by the previous military government. During the period between 1983-1992 impressive progress was made in reducing the fiscal deficit and bringing down inflation and interest rates. In 1992, with elections approaching, fiscal discipline was relaxed and public sector expenditures rose, resulting again in an increased fiscal deficit. A large wage increase was granted to civil servants in an effort to maintain a stable political atmosphere during the preparations for multiparty elections. In addition, performance in the fiscal sector was further undermined by a shortfall in cocoa production and a sharp decline in world cocoa prices. Since 1993, renewed efforts have been made to reduce public sector expenditures.

In general, the SAP has been characterized by an emphasis on development of Ghana's private sector, which historically has been weak and more keenly involved in trading activities rather than domestic production of goods and services. Ghana is seeking to privatize a large number of enterprises which currently operate under government control or outright ownership. During the past year the privatization effort has intensified, resulting in 15 firms being sold by the government. The prospects for 1995 are promising, with an estimated 30 additional firms likely to be privatized. Several state-owned banks, Ghana Airways, Ghana Posts and Telecommunications and the State Shipping Corporation are also being prepared for

sale.

Other reforms adopted under the SAP include the elimination of exchange rate controls on the cedi and the listing of virtually all restrictions on imports, as well as the liberalization of access to foreign exchange. The tariff structure in place is designed to discourage importation of a limited number of luxury items deemed nonessential to the growth needs of the economy. A largely dysfunctional duty drawback scheme has been totally revamped into a more "user-friendly" duty relief instrument. Whereas prior to 1994 no exports benefited from the scheme, during the first six months of 1994 the cedi equivalent of $325,000 has been paid to exporters. Further, the elimination of virtually all local direct production subsidies characterizes the overall greater reliance on market conditions to determine the value of goods and services introduced into channels of commerce.

Ghana relies heavily on donor assistance and received pledges amounting to $2.1 billion from the donor community for the two-year period beginning January 1, 1994. The World Bank is the largest donor, offering assistance at an annual level of approximately $300 million in the form of sectoral and structural adjustment credits. However, some of the assistance is currently blocked pending further progress on privatization. Ghana succeeded in eliminating its remaining debt arrears by mid-1991 and has not rescheduled official or commercial bank credits in the meantime. Ghana graduated from its IMF enhanced structural adjustment facility in December 1991; current support from the IMF takes the form of a surveillance regime monitoring developments in Ghana's macroeconomy.

2. Exchange Rate Policy

Ghana's current exchange rate policy is aimed at achieving macroeconomic stability and market-determined exchange rates. As imports have increased in recent years, the government-with the encouragement of the World Bank and the IMFhas allowed the cedi to depreciate. In March 1992, the foreign exchange auction procedure was abandoned and the exchange rate of the cedi is now determined freely in the context of an extended interbank market.

The Bank of Ghana retains all hard currency earnings on the sale of cocoa and a sliding scale percentage of earnings on gold exports. Foreign exchange is made available to importers through the commercial and merchant banks as well as independently-operated foreign exchange bureaus. A chronic shortage of forex supplied to banks by the Bank of Ghana has caused frequent delays for importers settling their overseas accounts. Foreign currency accounts may be held in local banks with interest (except on export earnings) exempt from Ghanaian tax. Transfers abroad are free from foreign exchange control restrictions. Taken in its entirety, the exchange rate regime in Ghana is seen to have no particular impact on the competitiveness of U.S. exports.

3. Structural Policies

Ghana is a member of the WTO; however its adherence to the agreement's liberal trading principles has been compromised by the need to stem the outflow of hard currency to overcome external payments difficulties. During the course of Ghana's structural adjustment program, it progressively reduced import quotas and surcharges. Tariff structures are being adjusted in harmony with the ECOWAS trade liberalization program and U.S. companies are well-advised to make inquiries on a

case-by-case basis. With the elimination of import licensing in 1989, importers now are merely required to sign a declaration that they will comply with Ghanaian tax and other laws.

The Government of Ghana is committed to principles of free trade, upon which support from the Bretton Woods institutions is predicated. However, the government is also committed to the development of competitive domestic industries with exporting capabilities. The government is expected to continue to support promising domestic private enterprise with incentives and financial support. Beyond this, Ghanaian manufacturers clamor for stronger measures and voice displeasure that Ghana's tariff structure places local producers at a competitive disadvantage vis-a-vis imports from countries enjoying greater production and marketing economies of scale. High costs of local production frequently boost the price of locally manufactured items above the landed cost of goods imported from Asia and elsewhere. Reductions in tariffs have increased competition for local producers and manufacturers while reducing the cost of imported raw materials.

Under the structural adjustment program, in addition to reducing tariffs, the Government of Ghana has enacted various forms of personal and corporate tax relief. In 1993 the government eliminated the experimental "super sales tax" on luxury vehicles and consumer goods and maintained lower tax rates on annual personal income below the equivalent of $17,500. The top corporate tax rate for producer industries is 35 percent. Income earned by bank and other financial institutions is taxed at the same rate. The new investment code provides that income earned from investment in export industries will be taxed at 20 percent (this rate takes effect in early 1995). This should be a significant incentive for increased investment, especially in the export sector.

4. Debt Management Policies

At year-end 1993 total outstanding public and government-guaranteed external debt totalled $4.6 billion, or approximately 116 percent of GDP at the current rate of exchange. External debt increased from 26 percent of total exports of goods and services in 1992 to 37 percent in 1993. Domestic debt rose from 7.5 percent of GDP in 1992 to 12 percent in 1993. However, nominal interest and principal payments have declined significantly since 1988 and Ghana's external debt indicators show significant improvement, reflecting a change in the composition of new borrowing in favor of financing with generous grant elements. In 1990, Ghana succeeded in clearing all external debt arrears and has maintained this position ever since. 5. Significant Barriers to U.S. Exports

Import Licenses: Ghana eliminated the last vestiges of its import licensing system in 1989. Tariffs, which in some cases are very high, have replaced the import bans which until recently were applied to certain goods.

Services: Foreign investors are permitted to participate in all economic sectors save four reserved for Ghanaians in the current investment code. These activities are petty trading, the operation of taxi services, lotteries (excluding football pools) and the operation of beauty salons and barber shops.

Standards, Testing, Labelling and Certification: Ghana has promulgated its own standards for food and drugs. The Ghana Standards Board, the testing authority, subscribes to accepted international practices for the testing of imports for purity and efficacy. Under Ghanaian law, imports must bear markings identifying in English the type of product being imported, the country of origin, the ingredients or components, and the expiration date, if any. The thrust of this law is to set reasonable standards for imported food and drugs. Locally manufactured goods are subject to comparable testing, labelling, and certification requirements.

Investment: The new investment code eliminates the need for prior project approval from the Ghana Investment Promotion Center (GIPC). Registration, which is for statistical purposes, is normally accomplished within five working days. Investment incentives are no longer subject to discretionary judgments-they have been made automatic by incorporating them into the corporate tax and customs codes. Incentives include zero-rating import tariffs for plant and generous tax incentives. Immigrant quotas for businesses, though relaxed, remain in effect. In anticipation of the new and liberalized foreign investment regime, a marked increase in registration of investments has been recorded by the GIPC, from 211 in 1991, to 250 in 1992, to 438 in 1993, and over 600 so far in 1994.

Government Procurement Practices: Government purchases of equipment and supplies are usually handled by the Ghana Supply Commission (the official purchasing agency), through international bidding, and, at times, through direct negotiations.

Former government import monopolies have been abolished. However, parastatal entities continue to import some commodities. The parastatals no longer receive gov. ernment subsidies to finance imports.

6. Export Policies

The Government of Ghana does not directly subsidize exports. Exporters are entitled to a 100 percent drawback of duty paid on imported inputs used in the processing of exported goods. As noted earlier, this system, while moribund in the past, has been restructured and exporters are now able to receive this rebate. Furthermore, over the past year four bonded warehouses have been established which allow importers to avoid duties on imported inputs used to produce merchandise for export. It is expected that investors taking advantage of this duty relief arrangement will increase inward investment flows substantially over the next 2-3 years.

7. Protection of U.S. Intellectual Property

After independence, Ghana instituted separate legislation for copyright (1961) and trademark (1965) protection based on British law. In 1985 and 1992, the government passed new copyright and patent legislation respectively. Prior to 1992, the patent laws of the United Kingdom applied in Ghana. Ghana is a member of the Universal Copyright Organization, the Intellectual Property Organization and the English-speaking African Regional Intellectual Property Organization. IPR holders have access to local courts for redress of grievances. Few infringement cases have been filed in Ghana in recent years.

Patents (product and process): Patent registration in Ghana presents no serious problems for foreign rights holders. Fees for registration by local and foreign applicants vary according to the nature of the patent. Normal minimums are $50 and $150 for local and foreign applicants respectively.

Trademarks: Ghana has not yet become a popular location for imitation designer apparel and watches. In cases where trademarks have been misappropriated, the price and quality disparity between the counterfeit and the genuine would trigger warning signals to alert a potential buyer.

Copyrights: Local enforcement of foreign copyrights has improved recently. The current copyright law provided for the establishment of a copyright office, an autonomous body. In addition, the establishment of the Copyright Society of Ghana (COSGA) to protect the interests of local and foreign copyright holders has improved copyrights administration in Ghana.

Ghana is a signatory to the Universal Copyright Convention and the Bern Convention. Moreover, COSGA has signed representation agreements with similar organizations in other countries, including the United States.

The current copyright statute provides for the protection of computer software, satellite programming and cable television distribution. The duration of protection is presently lifetime plus 50 years.

8. Worker Rights

a. The Right of Association.-Trade unions are governed by the Industrial Relations Act (IRA) of 1958, as amended in 1965 and 1972. Organized labor is represented by the Trades Union Congress (TUC), which was established in 1958. The IRA confers power on government to refuse to register a trade union; however this right has not been exercised by the current government or the previous military government. No union leaders have been detained in recent years nor have workers' rights to associate freely been otherwise circumscribed.

b. The Right to Organize and Bargain Collectively.-The IRA provides a framework for collective bargaining and protection against anti-union discrimination. Civil servants are prohibited by law from joining or organizing a trade union. However, in December 1992 the government passed a law which allows each branch of the civil service to establish a negotiating committee to engage in collective bargaining for wages and benefits in the same fashion that trade unions function in the private sector. While the right to strike is recognized in law and in practice, the government has on occasion taken strong action to end strikes, especially in cases involving vital government interests or public tranquility. The IRA provides a mechanism for conciliation and then arbitration before unions can resort to job actions or strikes. "Wildcat" strikes do, however, occur occasionally.

c. Prohibition of Forced or Compulsory Labor.-Ghanaian law prohibits forced labor, and it is not known to be practiced. The International Labor Organization (ILO) continues to urge the government to revise various legal provisions that permit imprisonment with an obligation to perform labor for offenses that are not countenanced under ILO Convention 105, ratified by Ghana in 1958.

d. Minimum Age of Employment of Children.-Labor legislation in Ghana sets a minimum employment age of 16 and prohibits night work and certain types of haz

ardous labor for those under 18. The violation of child labor laws is prevalent and young children of school age can often be found during the day performing menial tasks in the agricultural sector or in the markets. Observance of minimum age laws is eroded by local custom and economic circumstances that encourage people to become wage earners at an early age. Inspectors from the Ministry of Labor and Social Welfare are responsible for enforcement of child labor laws. Violators of laws prohibiting heavy labor and night work by children are occasionally punished.

e. Acceptable Conditions of Work.-A tripartite committee of representatives from government, organized labor, and employers established a minimum wage of 780 cedis (less than one dollar) per day. In real terms, the minimum wage is less than in 1980. The standard work week is 40 hours. Occupational safety and health regulations are in effect and sanctions are occasionally applied through the labor department of the Ministry of Health and Social Welfare. Safety inspectors are few in number and inadequately trained. Inspectors will take action if matters are brought to their attention but lack the resources to seek out violations.

f. Rights in Sectors with U.S. Investment.-U.S. investment in Ghana is dominated by a firm in the primary and fabricated metals sector. There is also significant U.S. investment in the petroleum, seafood, mining, telecommunications, chemicals and related products, as well as wholesale trade sectors. Labor conditions in these sectors of the economy do not differ from the norm described above. U.S. firms in Ghana are obliged to adhere to Ghanaian labor laws and no instances of noncompliance are known.

Extent of U.S. Investment in Selected Industries.-U.S. Direct Investment Position Abroad on an Historical Cost Basis-1993

The Kenyan Government does not publish unemployment figures but the 1994 is estimated at 35-40 percent.

4 Merchandise trade.

1. General Policy Framework

Kenya's economy is basically agricultural, with a small industrial base. Agriculture contributes 26 percent to GDP, provides 75 percent of total employment and 55 percent of export earnings. The main foreign exchange earners are coffee, tea, horticulture and tourism. The industrial sector, which accounts for 14 percent of GDP, is dominated by import substitution-oriented industries, many of which are agro-based and highly dependent on the domestic market and neighboring countries. The public sector is still large in Kenya, absorbing over 45 percent of all modern sector wage employees and 40 percent of total investment.

Kenya's current policy framework emphasizes the role of the free market. Features of the economy include the use of market-based pricing incentives, a liberal investment code, and a newly liberalized foreign exchange system. Non-traditional areas which have the most potential to augment incomes and employment include horticulture, non-agricultural exports and small-scale enterprises.

Under a World Bank/IMF supported structural adjustment program in 1993-94, the government made substantial progress removing impediments to the development of a free market. Price controls were abolished, import licensing requirements removed, the foreign exchange system liberalized, and markets were opened up to competition. As a result of the economic reforms undertaken in the last two years, the economy is on the road to recovery. GDP is expected to grow by over 3 percent in 1994, after two years of stagnation (0.4 percent in 1992 and 0.1 percent in 1993). The government brought down the annual inflation rate (month-to-month) from 101 percent in July 1993 to 13 percent in October 1994. The Central Bank of Kenya (CBK) acted swiftly in 1993 to mop up excess liquidity and improve management of the financial sector. Starting in March 1993, the CBK offered weekly sales of