Ghana: Collapsed businesses, unimplemented laws lead to dwindling volume, value for exported timber this year

By: Nii Ammui Fio | 5 mins read

The collapse of local timber companies and the government's failure to implement crucial legal frameworks are reported to be contributing to a significant decline in Ghana's timber exports in 2024.

According to the Forestry Commission in a report issued in August 2024, Ghana exported €31,256,035.35 worth of timber and wood products in the second quarter of the year, from a total volume of 68,965.620 m³.

This reflects a 15.27% decrease in value and a 15.34% drop in volume compared to the same period in 2023, where earnings stood at €36,890,952.87 from 81,462.698 m³.

The value of timber exports to ECOWAS nations fell from €3,038,606.66 in Q2 2023 to €1,702,426.33 in the same period in 2024, with export volumes plummeting from 7,906.619 m³ to 4,804.743 m³. The average unit price for ECOWAS-bound timber also decreased from €384.31/m³ in 2023 to €354.31/m³ in 2024.

The decline, projected in July, has been attributed to the collapse of many local timber manufacturing companies. Dr. Kwame Asamoah Adam, CEO of the Ghana Timber Millers Organisation, reported that 75 out of 100 timber companies have shut down due to rampant deforestation and forest destruction, often caused by bushfires. The remaining 25 companies are struggling to meet production demands, with fears that even these will soon close if raw material shortages persist.

“Now, in terms of the numbers, the medium to large size companies, most of them have collapsed. So, coming from a figure of about 100 companies, now you have just about 25 that are surviving, operating, exporting, and also providing employment,” Dr. Asamoah Adam told Citi Business News.

In addition to the business collapses, Ghana’s timber industry is also facing setbacks from the government’s delay in ratifying key timber permits and leases. At a press conference on October 2, 2024, Forest Watch Ghana, a coalition of civil society organizations working in the forestry sector, raised alarms over the lack of action on implementing the Timber Resource Management and Legality Licensing Regulations, 2017 (L.I. 2254).

This regulation was introduced to strengthen timber rights and ensure legality in timber exports, in line with the Voluntary Partnership Agreement (VPA) Ghana signed with the European Union (EU) in 2009.

The agreement, aimed at promoting sustainable forest management, requires all timber exported to the EU to meet strict legality standards. However, of the 148 permits and leases identified for parliamentary ratification under the VPA, only 11 have been ratified, leaving a significant backlog that threatens Ghana’s access to the EU timber market.

Despite these challenges, the second quarter of 2024 saw the involvement of 115 timber exporters, with the top five being Samartex Timber and Plywood Company Limited, Logs and Lumber Limited, Multimodal Freight Services Limited, John Bitar and Company Limited, and 3RDI Shipping Agency Limited. These companies exported 13 wood products across 64 species to 52 countries, reaching a total of 162 buyers globally.

Ghana's timber exports were primarily directed to India, Senegal, the United States, Germany, and Togo. Among the leading buyers were Thai Phat International Company Limited, Shanghai Timber Furnishing Company Limited, Shree Sagar General Trading FZE, Miro Forestry Developments Limited, and Aron Global PTE Limited.

While the overall average unit price of timber slightly increased from €452.86/m³ in Q2 2023 to €453.21/m³ in Q2 2024, timber exports to ECOWAS countries saw a significant downturn.

The ongoing decline in timber exports, compounded by failing businesses and unratified permits, poses a serious threat to Ghana’s timber industry, which has long been a critical contributor to the country’s economy.

One major effect is the loss of revenue for the government, as the timber industry is a crucial source of income through taxes and export duties. Additionally, the reduction in timber exports can adversely affect Ghana's foreign exchange earnings.

Without urgent action to address these issues, stakeholders warn that the sector may continue to struggle, further impacting Ghana’s global market standing.

To address the issue, the government could focus on strengthening regulations by implementing and enforcing existing laws related to timber harvesting and trade.

Promoting responsible forestry practices can enhance the long-term viability of the timber sector. Certification programs ensuring that timber is sourced sustainably can attract international markets.

Meanwhile, the Ministry of Lands and Natural Resources, on behalf of the Forestry Commission, has signed a Letter of Intent with the Government of the United Arab Emirates (UAE) for the grant of USD $30,000,000 to provide additional/alternative livelihood support to forest fringe communities as an incentive for them to engage in enhanced forest protection, forest restoration, and reforestation.

This forms part of efforts by the Government of Ghana to achieve the biodiversity and climate objectives under the Resilient Ghana Package launched at COP28 in Dubai, last year.

Here’s a breakdown of the export figures across the various regions.

Asia/Far East: Leading Destination

The Asia/Far East region remained the largest market for Ghana’s timber exports in June 2024, bringing in €33,126,566.11, accounting for 54.68% of total export revenue. A total of 85,070.301 cubic meters of timber (63.90% of the volume) was shipped to this region.

Despite its lead position, the market experienced a 12.28% drop in value and a 12.79% decline in volume compared to June 2023, when the region contributed €37,766,006.11 from 97,543.488 cubic meters. The products exported included Lumber (Air Dried), Billet, Teak Logs, Lumber (Kiln Dried), Sliced Veneer, and Processed L/Mouldings, with key species like Teak, Papao, Denya, Wawa, and Cedrela.

Europe: Second-Largest Market

Exports to Europe generated €13,084,226.34 (21.60%) from 20,961.021 cubic meters (15.75%) of timber, making it the second-largest destination for Ghana's wood products in June 2024. However, compared to June 2023, the European market witnessed a significant decline, with a 20.71% decrease in value and a 17.56% drop in volume.

In June 2023, exports to Europe stood at €16,500,761.05 from 25,425.897 cubic meters. The European market primarily imported Boules (Air and Kiln Dried), Briquettes, Lumber (Air and Kiln Dried), Plywood, Veneers, and Processed L/Mouldings, with species like Wawa, Niangon, Ceiba, Odum, and Sapele.

Africa: ECOWAS Sub-Region Leading

The African market brought in €5,415,246.66 (8.94%) from 13,175.392 cubic meters (9.90%) of timber exports in June 2024. This represented a sharp decrease of 25.76% in value and 26.75% in volume compared to June 2023, when €7,294,120.74 was earned from 17,986.965 cubic meters.

The ECOWAS sub-region dominated the African market, accounting for €3,849,751.90 (71.09%) of the total, from 10,277.141 cubic meters (78.00%). Key destinations within Africa included Egypt, Morocco, Benin, South Africa, and Mozambique. Popular products included Lumber (Air and Kiln Dried), Plywood (Overland), Rotary Veneer, and Sliced Veneer.

America: Growth in Value and Volume

The American market showed positive growth in June 2024, generating €5,589,609.13 (9.23%) from 7,168.660 cubic meters (5.38%) of wood exports. This marked a 9.72% increase in value and a 10.19% rise in volume compared to June 2023, when the market recorded €5,094,409.11 from 6,505.824 cubic meters.

The U.S. and other American destinations primarily imported Lumber (Kiln Dried), Plywood, Processed L/Mouldings, Rotary Veneer, and Sliced Veneer, with species like Mahogany, Cedrela, Sapele, Eucalyptus, and Black Ofram being the most sought after.

Middle East: Fifth-Largest Market

Timber exports to the Middle East amounted to €3,342,407.14 (5.52%) from 6,712.262 cubic meters (5.04%) in June 2024. This marked a 12.79% decrease in value and a 15.22% decline in volume compared to June 2023, when €3,832,786.92 was earned from 7,917.551 cubic meters.

The Middle East imported Lumber (Air and Kiln Dried), Plywood, Rotary Veneer, and Sliced Veneer, with key species including Denya, Eucalyptus, Wawa, Teak, and Odum.

Timber Resource Management and Legality Licensing Regulations, 2017 (LI 2254).

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REPORT ON EXPORT OF GHANA’S TIMBER AND WOOD PRODUCTS, SECOND QUARTER, 2024

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