Recession in the West Cuts Off An Economic Pipeline in Ghana

ADUASE, Ghana -- When the U.S. housing crash triggered economic chain reactions around the world, one ended in a lush forest near this village, where on a recent day Emmanuel Awatey was tapping his machete on a log that he very much wanted to chop up.

In previous years, Awatey would have done just that, and then carried the wood on his head to the red dirt road nearby. A truck there would have ferried it three hours to the Tekura handicrafts workshop in Accra, Ghana's capital, where it might have been carved into a stool by an artisan, then shipped duty-free to the United States, then sold at Cost Plus World Market for display in an American home.

But the U.S. housing market and the global economy collapsed. And so has work for Awatey, the carvers and others working what had been a thriving pipeline from Ghanaian rainforest to American retail.

"If work comes tomorrow, we will head to the forest," said Awatey, 44, a sinewy subsistence farmer who, like others in his village, used to make as much as $25 a week chopping and carrying cedrela wood for Tekura. "But it all depends on the ones who bring the work."

'Wiping Out' the Vulnerable

The financial crisis has checked demand for African commodities, slowing the continent's economies. Less visibly, however, it has also stunted small African exporters who had become fledgling trade success stories -- and micro-level poverty busters -- in a region often associated with gloom.

In many cases, these exporters were lifted by a decade-old U.S. program meant to promote economic development through duty-free access to American markets. Now a U.S.-triggered meltdown is erasing many of the gains.

"We had small- and medium-sized businesses that had so much hope. They invested capital, they took loans. And the rug has been pulled out from under them," said Rosa Whitaker, a former assistant U.S. trade representative for Africa and architect of the program, the African Growth and Opportunity Act, or AGOA. "It's wiping out some of the world's most vulnerable people."

In the first quarter of this year, AGOA exports from sub-Saharan Africa to the United States, including oil, plummeted 59 percent, while non-oil exports such as textiles and agricultural products dropped 22 percent.

Secretary of State Hillary Rodham Clinton is set to discuss the program, which expires in 2015, at a forum Wednesday in Kenya as part of her seven-country trip to Africa.

Ghana's overall economy has remained steady because of strong prices for its cocoa and gold. But exports under AGOA dropped by more than one-third in 2008, and fell 86 percent, to $5.2 million, in the first five months of this year. While much of the plunge came from a fall in exports of foreign oil processed in Ghana, it also reverberated through particleboard factories, mango farms and jewelry studios.

As in many sub-Saharan countries, Ghanaian textile and apparel exporters have been particularly hard-hit, including some that U.S. officials once touted as AGOA poster children. Among them is Prosper Adabla's formerly humming factory near Accra, which manufactured tube socks for export.

An end to worldwide quotas on Chinese apparel exports in 2005 brought stiff competition. Two years later, Adabla's U.S. partner went bankrupt. Adabla shut his factory last summer, leaving $1 million worth of socks unsold and 1,000 workers jobless.