Why Ghana is attracting investments in biofuels

13 05 2009

By Emmanuel K. Dogbevi

Ghana has become a major centre of attraction for the cultivation of biofuels in Africa for a number of reasons, even though some of these reasons are hard to tell.

Currently, the country features prominently on the radar of alternative energy interests, especially in the cultivation of the non-food plant jatropha for the production of biofuels.

Ghana, Thailand and Uruguay have been identified by a study conducted by the University of  Wisconsin-Madison Nelson Institute for Environmental Studies in 2007, as becoming the leading producer countries of the emerging renewable fuel known as biodiesel.

One of the factors that put Ghana among the leading league of nations with a high potential for biodiesel production is the fact that large volumes of the product can be produced at low cost.

Overall, the study ranked Malaysia, Thailand, Colombia, Uruguay and Ghana as the developing nations most likely to attract biodiesel investment, not only because of their strong agricultural industries, but also due to their relative safety and stability, lack of debt, among other economic factors.

Ghana is ranked high in Africa as a politically stable country, with a growing culture of democracy. Labour is also believed to be cheaper in Ghana than in most African countries, even though some investors disagree on that score.

One investor in the biofuels sector in Ghana argues that the cost of labour in Ghana is not cheap after all, because in his view, “the Ghanaian worker is not efficient as compared to the Chinese worker.”

While an employer might be paying a Ghanaian worker what is estimated to be low wages, the Ghanaian worker is proverbially known “to pretend to be working, while the employer pretends to be paying him.”

Indeed, this is not only a notion but a fact, because most employers in Ghana pay very low wages, irrespective of qualifications, experience or job description. Most Ghanaian workers are therefore, not motivated to give off their best. Substandard work performance has become a norm in Ghana.

Ironically, however, this belief that wages are low in Ghana also makes the country a choice destination for industries, especially the biofuels businesses.

There are companies from Brazil, Italy, Norway, Israel, China, Germany, The Netherlands, Belgium and India investing in the area in Ghana.

They are cultivating fields in the Volta, Brong Ahafo, Ashanti, Eastern and the Northern regions of Ghana. The main non-food crop that these companies are planting is jatropha.

Jatropha has oil-rich seeds that can be used to produce biodiesel.

While its supporters argue that it can be grown on semi-arid land and so poses less of a threat to food output than other biofuel feedstocks such as grains and vegetable oils, its opponents argue that investors are taking away productive agriculture land from poor local farmers for the purpose.

Currently, there is an ongoing debate, accusations and counter-accusations of land grabbing between NGOs, Action Aid and FoodSPAN on one hand and Rural Consult, a consultancy firm on biofuels on the other.

One of the companies, Agroils of Italy is currently cultivating jatropha on 10,000 hectares of land in Yeji in the Brong Ahafo region of Ghana for biofuels.

Israeli company, Galten has acquired 100,000 hectares of land and an Indian company is requesting for 50,000 hectares of land from the Ghana Investment Promotion Council (GIPC), to cultivate jatropha.

A company from the Netherlands has started a pilot project on 10 acres in the northern region and the Chinese are also doing a pilot project.
Gold Star Farms Ltd., is cultivating five million acres of land to plant jatropha for the production of biofuels for export.

A Norwegian company ScanFuel Ltd., has started operations outside Kumasi in the Ashanti region to produce biofuel. The company aims to start initial cultivation of jatropha seeds on 10,000 hectares of land.

The company which has a Ghanaian subsidiary, ScanFuel Ghana Ltd., says its Ghanaian unit has contracted about 400,000 hectares of land, with up to 60 percent reserved for biofuel production, “not less” than 30 percent for food production and the remainder for biodiversity buffer zones.

Another Norwegian company, Biofuels Africa Ltd., the only one among the about 20 biofuels companies cultivating jatropha to receive an Environmental Impact Assessment (EIA) permit from Ghana’s Environmental Protection Agency (EPA) which covers 23,762.45 hectares of its project area is operating in two locations.

Steinar Kolnes, CEO, Co-founder and director of BioFuel Africa Limited has told ghanabusinessnews.com by email that the company is currently operating in two locations in Ghana. The company has a 300 hectare test farm in Sogakope in the Volta region and a 10,696.32 hectares in Yendi in the Northern region.

According to him, the company has planted a total of 660 hectares of jatropha on its projects.

One of the complexities that might confront the growing biofuels industry in Ghana is the challenge of land acquisitions. There is a plurality of land tenure and management prevailing in Ghana.

There is the state/public system and the customary system. These systems have been poorly articulated over the years leading to increasing conflicts associated with land.

Public lands in Ghana fall into two main categories: land which has been compulsorily for a public purpose or in the public interest under the state lands Act 1962 (Act 125) or other relevant statute; and land which has been vested in the President, in trust for a landholding community under the Administration of Stool Lands Act, 1962 (Act 123.)

While government is working to streamline the land tenure system in the country, there are some advocating for a land bank system to make land acquisition smoother and beneficial to all.

Ghana is certainly attractive for investments, especially in the biofuels sector.

But the question some observers of the biofuel sector are asking is why is the country so enthusiastic about biofuels when it has found oil in commercial quantities?

Others are also asking why an agriculture country where only 16 per cent of arable land is used for food production would not rather concentrate on developing the food crop sector, but is diverting resources and labour in agric for the cultivation of non-food crops for biofuels.

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2 responses

21 05 2009
violet

I wonder how far Ghana has invested in prodcuction of Jatropha. How old are the oldest jatropha plantations?This seems interesting because my recent study on the sam in Kenya is also interesting. The results are not as positive as i expectd as i was starting. Jatropha does not seem promisng as most people have put it. A t least not in the short run.

17 07 2009
Divya

Hi,

This is a good report on Jatropha cultivation in Ghana, and thanks for sharing these facts.

Violet, Jatropha is still ‘undomesticated’, and a lot of research and development is going into domesticating the crop for farming purposes.

Commercial investment only ‘took off’ around five-seven years ago, wheras established biofuel crops like Palm have over 40 years of research behind them.

Give Jatropha some time.

~Divya

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