BAMBOO CULTIVATION AND PROCESSING. 1.0 EXECUTIVE SUMMARY the lack of technical know-how and machinery to maximize their efficiency. The whole process.

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The Kumasi City Investment Promotion Unit ) Kumasi Metropolitan Assembly, P.O. Box 1916, Kumasi, Ghana www INVESTMENT OPPORTUNITY IN KUMASI, GHANA BAMBOO CULTIVATION AND PROCESSING 1.0 EXECUTIVE SUMMARY Commonly referred to as the garden city, Kumasi and its environs offer numerous investment opportunities for both local and foreign investors. Over the years the city has been noted for the supply of forest timber and wood, evidenced by the numerous wood and timber processing facilities which have been operating in the city. productivity partly due to illegal logging practices, over utilization of the traditional timber species (which include Wawa, Ceiba, Asanfia, Ofram, Teak, Mahogany and Odum), unregulated farming practices and illegal mining activities. The declining rate stricter control on timber production. which stood at 8 million hectares in the early 1920s has been re duced to an estimated 1.8 million hectares as at 2010/11 (both On and Off forest reserves). The World Bank sponsored Sustainable Land and Water Management Project in 2010 indicated a deforestation rate of 22,000 ha per year whilst Ghana reported a gross an Resource Assessment for 2010. At this rate the country averagely is expected to run out of forest exp orts of plywood and wood flooring has fallen by 82.8% and 87.3% respectively between 2005 and 2010. Recognizing the potential of bamboo and the role that it can play as a suitable alternative to traditional timber, the Government of Ghana in 2002 introduc ed the Bamboo and Rattan Development Program (BARADEP) to find sustainable ways of developing the bamboo sector. The Ghanaian climate supports the cultivation of bamboo, and the Vulgaris species is most commonly found in the country. The Ashanti Region is believed to hold the third largest stock of naturally growing bamboo. The Millennium Villages Project (MVP) in Bonsaaso has been working with communities in the Amansie West region in the Ashanti to identify suitable land that could be used to cultivate b amboo for export and local use. An investment opportunity lies in the cultivation of bamboo and production of bamboo into products for the construction/real deficit.

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The Kumasi City Investment Promotion Unit ) Kumasi Metropolitan Assembly, P.O. Box 1916, Kumasi, Ghana www 2 . 0 INTRODUCTION TO KUMASI AND THE ASHANTI REGION With some 5 million inhabitants (4,780,380 according to the 2010 national census), the Ashanti Region is the most populous region in Ghana. The region occupies a total land area of 24,389km 2 (appr oximately 10 percent of total land in Ghana) and has Kumasi as its regional capital. Kumasi is located centrally in the Ashanti Region, forming an important transport and commercial hub for both domestic and international traffic. It is the key transpor tation link between the south and north of Ghana as well as the surrounding landlocked countries. It has a national airport with several flights a day to Accra, Tamale and Takoradi. se of its role as a commercial centre. Officially, Kumasi recorded 2,035,064 inhabitants in 2010. The city´s population is growing fast; it has almost doubled since 2000, from a little over 1 million people. Figure I: Population Trend: The Ashanti Region and Kumasi, 1984 to 2015 Source: KMA Statistics, 2012 open – area market, the Kumasi Central Market . Estimated market reachable within 1 day of ground travel is approximately 12 million consumers (Ashanti region and surrounding regions, approx. half of Ghana´s population). Kumasi has already proved attractive to a number of large foreign investors. Agro – processing giant Archer Daniels Midland (ADM) has been operating a cocoa processing facility in Kumasi since July 2009. Other major players with active presence include Coca Cola and Guinness which both have bo ttling plants in the City. Other international companies with offices in ASHANTI

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The Kumasi City Investment Promotion Unit ) Kumasi Metropolitan Assembly, P.O. Box 1916, Kumasi, Ghana www Kumasi include Maersk, Barclays Bank, Standard Chartered Bank and Unilever, which has been operating in Ghana for over 70 years. Ghana is divided into ten administrative regions. Ea ch region is headed by a Regional Minister appointed by the President. The principal units of local government are the district assemblies. There are three kinds of districts in Ghana districts, municipalities and metropolis. Between the district assembl ies and the central government are the regional coordinating councils. The role of these bodies is to administer and coordinate policy implementation at the local level. Kumasi is administered by the Kumasi Metropolitan Assembly, with the Mayor serving as executive officer. The Ashanti region as a whole is under the purview of the regional minister. The institution of chieftaincy is very pronounced in the Ashanti region and plays a significant role in its management, especially in the are a of land administration. Most land in the Ashanti is administered by the Asantehene (Ashanti King) and relatively small portions belong to the state under the administration of the Lands Commission. The Asantehene is assisted by a variety of chiefs rangin g from paramount, divisional and sub chiefs, stool and clan elders who all play roles in land acquisition with the Asantehene playing the ultimate role. Kumasi is home to numerous educational institutions, including the largest science and technology univ ersity in Ghana and in West Africa, the Kwame Nkrumah University of Science and Technology (KNUST), which has a student population of over 31,000 students comprising both undergraduate and postgraduate students. anti Region and of Ghana, coupled with its good road network and airport, makes it the preferred trading centre for most of the surrounding regions and is an important commercial centre for West Africa. Kumasi serves as the commercial hub for the neighbour ing Brong – Ahafo region, the three northernmost regions of Ghana, and parts of the Western and Eastern regions, creating a potential market of about 12 million people. An investor can access landlocked Burkina Faso, Mali and Niger with a total potential mar ket of over 48 million people. Merchants from these landlocked countries trade at the Kumasi Central Market, to the extent that a section of the market has come to be hip in the Economic Community of West African Countries (ECOWAS), Kumasi potentially serves an even larger market of over 250 million people. 3 . 0 MARKET OPPORTUNITY 3 . 1 Overview of

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The Kumasi City Investment Promotion Unit ) Kumasi Metropolitan Assembly, P.O. Box 1916, Kumasi, Ghana www early 1920s have been reduced to an a little over 1 million as at 2010/11(both On and Off forest reserves). The World Bank sponsored Sustainable Land and Water Management Project in 2010 indicated a deforestation rate of 22,000 ha per year whilst Ghana reported a gross annual deforestation rate of 135,000 ha according t this rate the country is expected to run out of forest cover in about 20 years. This rate of wood flooring has fal len by 82.8% and 87.3% respectively between 2005 and 2010. F i g u r e I I : – 2005) Source: Forestry Commission The value of exports of plywood and flooring has fallen by 82.8% and 87.3% respectively from 2 005 to 2010. This significant drop is as a result of the depletion of the general stock of forest wood resulting in the strict management of the reaming forest reserves. T a b l e I : Timber Exports, 2000 to 2010 (m 3 ) Timber Product 2000 2005 2010 Plywood 46,791 57,704 6,234 Flooring 2,218 6,444 817 Rotary Veneer 75,059 59,186 8904 Source: Forestry Commission, Ghana Ghana imported US$148 million and 70 million worth of wooden products (including paper products) in 2010 and 2006 respectively. 0 20000 40000 60000 80000 100000 120000 140000 2000 2001 2002 2003 2004 2005 Off Reserve Forest Reserve

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The Kumasi City Investment Promotion Unit ) Kumasi Metropolitan Assembly, P.O. Box 1916, Kumasi, Ghana www 3 . 2 Global Production Of Bamboo UN Comtrade statistics, in 2009 estimated the global export value of bamboo and rattan commodities at US$1.82 billion. The total import value of bamboo and rattan commodities in 2009 was about US$1.6 billion. Traditional bambo o and rattan products, specifically plaited products, including mats and screens, baskets and wicker work products, and semi – finished plaiting articles, constituted (40%) to the global export market in 2009. The further – processed bamboo products, such as f looring, panels, charcoal, pulp and paper, constituted 23% and bamboo and rattan furniture accounted for 21% of the total global export. Most of bamboo and rattan commodity trade occurs within Asia, in Europe, and between Asia and Europe and North America . Consumer countries in Europe and North America form the major import markets with their imports accounting for 71% of the global import value in 2009.China made up 57.3% of the global bamboo and rattan exports worth US$1.0 billion in 2009. T a b l e I I : Top 10 Exporters of Bamboo Globally, 2009 Country Volume of Global Exports (%) China 57.3 Indonesia 14.8 Vietnam 4.6 EU – 27 3.0 USA 1.7 Philippines 1.6 Thailand 1.0 Singapore 1.0 Myanmar 0.8 Malaysia 0.8 Source: International Network For Bamboo And Rattan (INBAR) In 2009, the total global export value of bamboo and rattan baskets and wickerwork products was US$435 million. Of this, bamboo articles accounted for just over half (US$227 million) the amount. More than 60% of imports are to m arkets in EU and USA, while Japan, Canada, the Republic of Korea, Australia and Russia also have significant import markets In 2009, the international export market for bamboo flooring was worth approximately US$252 million, with China accounting for US$ 224 million, or 89% of this total value. In 2009, EU and Canada were the two largest international importers of bamboo flooring, accounting for US$26

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The Kumasi City Investment Promotion Unit ) Kumasi Metropolitan Assembly, P.O. Box 1916, Kumasi, Ghana www million and US$18 million, respectively, of the total global import market. USA, Mexico, New Zealand, Japa n and Singapore are the other key international importers of bamboo flooring. 3 . 3 Bamboo Cultivation and Harvesting i n Ghana Most bamboo in Ghana grows naturally in the wild. The most prevalent is the Vulgaris species. The Forestry Commission of Ghana is responsible for the regulation of utilization of forest and wildlife resources and the conservation and management of those resources and the coordination of policies related to them. The Western region of Gha na holds the highest stock of natural bamboo reserves estimated at over 60%, but most of the harvesting takes place in the Eastern Region due to its proximity to the Capital Accra where demand for the bamboo is higher. The Ashanti region however is the mos t populous region in Ghana with a population with a 2013 estimated of over 5 million people. commercial hub, daytime population is estimated at over 2.5million. Kumas i as a result of the large population can provide an even larger market for bamboo products. Bamboo merchants are traditionally responsible for harvesting bamboo from the wild and supplying to processors who on average pay US$20.00 per hundred culms of ba mboo harvested from traditional land owners or custodians. For forest reserve areas, a permit is issued for about GHC10.00 (US$5.00) per month which will cover about 100 to 150 head loads of bamboo culms. In Northern Ghana an average of US$0.38 may be paid for each culm harvested. which includes the Ashanti, Eastern and Western Regions where bamboo is widely found, harvesting is carried out all year round. 3 . 4 Bamboo for Real Estate Development (Plywood, Fooring And Furniture) The Real Estate Market and commercial development. The residential market is the most active, registering an estimated 85,000 transactions per annum over the past decade, with an estimated value of about US$1.7 bn per year. Ghana’s current residential property demand is 150,000 units per annum, with a shortfall of over 100,000 housing units. Current production of residential properties average only 35,000 units per annum, implying a significant annual supply gap.

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The Kumasi City Investment Promotion Unit ) Kumasi Metropolitan Assembly, P.O. Box 1916, Kumasi, Ghana www Bamboo is used in addition to cane, rattan and wood to make furniture. Most of the bamboo furniture makers exist in clusters spread all over the country. In addition to furniture they make baskets, floor mats shoe racks, and other artifacts. The raw material, i.e. the bamboo, is supplied by merchants, who supply the bamboo a regul ar basis mostly as per the demand of the furniture makers. Each furniture maker buys an average of three (3) bamboo culms per week. The average price a bamboo Culm is US$0.70. Each furniture maker makes an average of one (1) set of furniture a month in add ition to other bamboo products. A set of bamboo furniture which is made up of one (1) three seater sofa, one (1) 2 seater sofa, two (2) single seaters and a centre table will sell for an average of US$250.00 The low level of production is not as a result of low demand but rather the inability of the bamboo furniture makers to supply. Most producers produce at a subsistence level, because of the lack of technical know – how and machinery to maximize their efficiency. The whole process of making the furniture is manual which tends to be time consuming. Even though they operate in a cluster, each individual is responsible for his own production from start to finish and marketing. Most of the furniture makers and bamboo suppliers are illiterate and semi literate therefore are unable to do proper costing and accounting. These factors together contribute to the low production levels. Due of the high demand for furniture in general, most consumers use the bamboo furniture to compliment furniture made from wood. This demand has also led to an increase in imported metal and wood furniture (as indicated earlier), because furniture made from traditional wood has become more expensive. 3 . 6 Bamboo Charcoal Bamboo can be used to produce charcoal. Bamboo charcoal can replace the traditional charcoal made from trees, thus decreasing deforestation. Nigeria was the top exporter of bamboo charcoal globally in 2009, with an export value of about US$7 million Estimates from the Food and Agriculture Organization (FAO) suggests that 14 million m 3 of wood is used for energy production in Ghana. 69% of all urban households in Ghana use charcoal for cooking and the annual per capita consumption is around 180 kg. The total annual consumption is about 700,000 tons. The International Network for Bamboo and Rattan (INBAR), the Forestry Research Institute of Ghana (FORIG) and Bamboo and Rattan Development Programme (BARADEP) have piloted a programme in Tandan in Ellembelle District and Daboase in the Western region to produce bamboo charcoal. Th e programme works with the Micro Small Enterprise Association at Daboase. In October and November 2011, 505 tons of bamboo charcoal was produced from the programme.

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The Kumasi City Investment Promotion Unit ) Kumasi Metropolitan Assembly, P.O. Box 1916, Kumasi, Ghana www 3 . 7 Bamboo Bicycles and Other Products Bamboo can be also used for the production of other pro ducts, such as bicycles and toothpicks, . Ghana has seen an average increase in the value of bicycles imported from 2000 to 2010. In 2010 Ghana imported over US$15 million worth of bicycles. Bicycles are an important means transport in the country espec ially in the Northern regions of Ghana. F i g u r e I V : Ghana Bicycle Imports (2000 To 2010) Source: Ministry of Trade and Industry o f G h a n a S t a t i s t i c s The Ashanti region as a whole plays host 3 organizations which use bamboo for the production of bicycles. Two of these organizations are active in the production while the third is on a pilot basis with its emphasis the training of bamboo bicycle artisans. The major player amongst the 3 companies is the Bamboo Bikes Limited (BBL). BBL was identified for implementation when an investor , a Kumasi indigene, participated in an in September 2008. This was after MCI and KPMG had profiled this investment opportunity. The company was incorporated in 200 9, however actual production begun in January 2011 T a b l e I I I : Bamboo Bikes Limited Units of bicycles sold January 2011 to June 2012 MARKET NUMBER OF BICYCLES Domestic 994 International 80 Total 1074 – 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 14,000,000 16,000,000 18,000,000 2000 2001 2002 2003 2004 2005 2006 2007 2009 2010

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The Kumasi City Investment Promotion Unit ) Kumasi Metropolitan Assembly, P.O. Box 1916, Kumasi, Ghana www The company has also started producing of toothpicks using bamboo for local consumption with the aim to utilize bamboo unsuitable to the production of bicycle parts and to diversify its product range. The demand for bamboo bikes is growing and that there s eems to be good potential in production of bamboo bikes. 8 . 0 WHY PRODUCE THE ASHANTI REGION 8 . 1 Support Institutions Kumasi plays host to numerous research institutions that provide technical support for the cultivation and processing of bamboo. These institutions include International Network for Bamboo and Rattan (INBAR): INBAR is an independent intergovernmental organization established in 1997 to develop and promote innovative solutions for poverty reduction and environmental sustainability using bamboo and rattan. Its West Africa Centre is located in Kumasi. Forest Rese arch Institute of Ghana (FORIG): Forestry Research Institute of Ghana is one of the 13 institutes of the Council for Scientific and Industrial Research (CSIR). Its purpose is to conduct forest and forest products research for social, economic and environme ntal benefits of society. It is located in Fumesua near Kumasi. Kwame Nkrumah University of Science and Technology (KNUST): The University which was founded in 1961 has a number of faculties, notably the Faculty of Natural Renewable Natural Resources which provides technical support for the forestry sector. 8 . 2 Availability of Skilled/Semi Skilled Labour Kumasi can boast of a specialized part of the labor force in the region with advanced education. Examples of skilled labor in the region are plumbers, engine ers, builders, architects, etc. According to the 2010 Population and Housing Census, out of the 1,894,958 population of 15 years and older by level of education, 61,272 had attended Senior High School; 55,010 vocational/technical school; 71,222 Diploma/HND ; 41,493 Bachelor Degree and 10,208 had postgraduate certificate. Out of the total of 2,976,462 population of 15 years and older by activity in the Ashanti region, 2,073,016 are economically active and out of this figure 1,929,018 are employed. Out of the total of 1,963,012 population of 15years and older by occupation in the region, 586,436 are into agriculture forestry and fishery. 8 . 3 Land And Climate The Ashanti region covers a total area of 24,389 Sq Km most of which has the ideal soil structure to suppor t the cultivation of bamboo.

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The Kumasi City Investment Promotion Unit ) Kumasi Metropolitan Assembly, P.O. Box 1916, Kumasi, Ghana www Table I V : Ashanti regional rainfall data in mm (2001 – 2010) AS H ANTI REGIONAL RAINFALL DATA in mm (2001 – 2010) % Chan ge 2010/ 30 – Year Aver age % Cha nge 2010 / 2009 REGI ON 200 1 200 2 200 3 200 4 200 5 200 6 200 7 200 8 200 9 201 0 10 – YE AR AV. 30 – YE AR AV. ASHA NTI 1,1 36 1,6 37 1,3 26 1,0 98 1,1 18 1,3 84 1,5 42 1,4 12 1,3 80 1,3 80 1,34 3 1,34 5 3.9 1.2 Source: Ghana Meteorological Service 8 . 4 Location Advantage good road network and airport facilities makes it the preferred trading centre for most of the surrounding regions. Kumasi is not only an economic hub for wider Ashanti/Northern Ghana but also an important trading hub for landlocked Burkina Faso, Mali and Niger, with an estimated market of over 48 million peo ple. Clearly Defined Traditional Authority the city and region has clearly defined traditional authorities which foster peace, unity and stability. The traditional authorities are the custodians of most land, thus making the process of land acquisition r elatively simple. 9 . 0 POTENTIAL LOCATIONS IN ASHANTI REGION Areas suitable for bamboo cultivation include: Amansie West District, Amansie East District, Nkwawie District, Ejisu District. The Ghana Investment Promotion Centre (GIPC), Lands Commission and the Association Of Ghana industries (AGI) are institutions which can assist investors in the identification of lands and support services. The Millennium Villages Project in Bo nsaaso is working with communities to identify and restore lands that have been degraded through illegal mining using bamboo. The MVP can provide an investor with details of such land for bamboo cultivation. 1 0 . 0 SUPPORT PROVIDED BY KUMASI MUNICIPALITY AND KUMA SI REGIONAL ADMINISTRATION

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