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General News of Wednesday, 24 October 2012

Source: NPP Communications Directorate

Speech: Nana Addo Speaks on Industrialization

SPEECH ON INDUSTRIALIZATION DELIVERED BY NANA ADDO DANKWA AKUFO-ADDO, NPP 2012 PRESIDENTIAL CANDIDATE, AT THE ST HILDA HOTEL, TARKWA, ON OCTOBER 23, 2012

Good evening, Ladies and Gentlemen, I am very happy for this opportunity to speak on INDUSTRIALIZATION, a subject that is fundamental to the NPP plans to transform the economy of Ghana, and to do so most appropriately in Tarkwa, one of the first mining/ industrial towns of our country.

At this time of the election campaign, those of us seeking the mandate of the people to manage the affairs of our nation have a responsibility to spell out our plans to help the people make informed decisions on December 7. The NPP has been consistent in its message about the need to transform the economy and to do so through industrialization.

Luckily for me, I feel this message, like the free SHS message, has found resonance with the people and so there would not be the need to explain why we need to industrialize. This evening I intend to talk about how we aim to achieve the goal of industrialization.

Yesterday, I went to the offices of the AGI in Accra to have a conversation with members about what they want and expect of government and the role they could play in helping Ghana become a truly industrialized nation.

As we sat in their council room, I looked around at the list of the former presidents of the AGI and my eyes rested on the very first president of this august grouping, the late Mrs. Esther Ocloo. Her story, which she herself used to tell with such good humour is certainly worth recalling and I believe that story still has lessons for us today.

It was back in 1942 that Dr Esther Ocloo, at the time Esther Nkulenu, made her first few jars of marmalade. She had completed Achimota College and had been unable to find a job. Having picked up marmalade-making skills at Achimota, she used her pocket money to buy oranges, sugar and firewood and immediately made a 100% mark-up on her marmalade. The rest, as the saying goes, is history and Esther Ocloo's twelve jam jars turned into the internationally acclaimed Nkulenu Industries, constant companion of boarding school students as producer of marmalade, orange squash, palm concentrate, aubergines and even palm wine.

I like the Nkulenu story, because she exemplifies the entrepreneurial spirit in the Ghanaian, and is a classic case of how other nations started on the road to industrialization: food processing and adding value to raw materials that are easily found around them. It is probably worth pointing out another poignant part of the story as well. She had left Achimota College, at the time it was the highest level of education you could get in Ghana, and she could not find a job! A young girl finishes school and can't find a job has a familiar ring to it in our present day Ghana. Seventy years after that leap of faith however, it is sad that there aren't many more Esther Ocloos and Nkulenu Industries.

Some would say her business should be a large scale enterprise by now, but nothing can take her pioneering status from her and I would like to say that even if Nkulenu Industries has remained a cottage industry throughout the years, there is still a lot to learn from that. The leather industry in Italy, a multi-billion dollar industry that makes world famous shoes, bags, belts and other leather products, is run very much along the lines of a cottage industry by many families. There are still vast opportunities for the emergence of many more Nkulenus and the processing of our foods so that cooking does not remain such a time-consuming drudgery in Ghana.

But whether it is on a small scale or a large scale, industrialization can only be successful when the necessary infrastructure is available to make our production processes and the products competitive. Industrialization can only be successful if we have a workforce that is educated and skilled and can compete on the global market.

I look at your University here, the University of Mines and Technology, Tarkwa, sited in the heart of the mining industry, and it is just the type of institution we need to train the manpower to transform our economy. This is an institution established back in 1952 as the Tarkwa Technical Institute. In 1961, it became the Tarkwa School of Mines with the mandate to train the required manpower for the mining and allied industries in Ghana. Later, in 1976, the Tarkwa School of Mines was affiliated to the Kwame Nkrumah University of Science and Technology (KNUST) as a faculty of the university. In 2001, it became the Western University College of KNUST Finally, in November 2004 in the Kufuor/ NPP era, the University of Mines and Technology (UMaT) was established to provide higher education in mining, technology and related sciences, and to act as a catalyst for the development of mining and technology.

Despite the change in names and centres of authority over the years, the core mandate has not changed. There are very few countries in the world with universities dedicated to mining and allied industries.

UMaT puts Ghana, a country rich in minerals, in a strategic position to be a world leader in mining and its allied industries.

The last NPP government started on a vigorous upgrading and expansion of facilities in this University and I believe that, if this is continued, equipment for all aspects of mining from prospecting to refining of minerals can be designed and prototypes produced here. Students, with the necessary motivation and entrepreneurial skills, will also be assisted to form incubator companies during their training so they can be self-employed when they leave the walls of the University.

Mining has been an integral part of our economy for hundreds of years, but Ghanaians have never really controlled the business. When voted into power, I will see to it that the University fulfills its mandate so that, as soon as possible, Ghana will be self-sufficient as far as mining technology is concerned, and that Ghana will get, at long last, full value from its mineral wealth.
This, of course, will be of interest to the growing army of young people that are involved in small scale mining around the country. I cannot and should not avoid the subject of Galamsey at this stage. My government will find a way to regularize small scale mining, including Galamsey to make it safer and better for the environment. But to do that this university has to assist in designing the machinery that will make this type of mining safe for both miners and the environment.

I have spoken about the exploits of one woman in establishing a food processing industry, and I have spoken about an institution that can and is producing the workforce that can transform one particularly important industry, mining.
And it leads me to the critical role of government in creating the enabling atmosphere and providing the infrastructure to make industrialization possible. The availability of reasonably priced and reliable power ranks very high on the MUST HAVE list. The energy deficit is a great drawback to our development and it has to be resolved. The last NPP government made great strides in increasing the energy capacity of the nation. We added a total of 560 megawatts to the National grid. These include: 

  1. VRA Plant, Tema, funded by government: 110 Megawatts                
  2. Mines Reserve Plant, Tema, funded by mine companies with government support: 80 Megawatts
  3. VRA Athol Plant, Tema, government support: 50 Megawatts
  4. Emergency Plant, Tema, funded by government: 120 Megawatts
  5. Asogli Power Plant, Tema, funded by a private investor with government support: 200 Megawatts, making a TOTAL of 560 Megawatts

It is probably worth mentioning here the energy projects started by the NPP and not completed before we left office:

  1. BUI Hydroelectric Dam, Bui: 400 Megawatts
  2. ABOADZE Thermal Plant (T3), Takoradi: 136 Megawatts
  3. OSORNOR Thermal Plant, Tema 120 Megawatts
  4. KPONG Thermal Plant: 220 Megawatts

TOTAL: 876 Megawatts

An Akufo-Addo government, God willing, will tackle the power problem to save industry from the insecurity and extra costs that come from frequent power outages. We are determined to increase generation from the current 2,400MW to 5,000MW within the four year term of office. We will ensure a strategic generation reserve requirement of a minimum of 18% to ensure stable power supply to our industries. We will review and consolidate the governance and power regulatory regime to ensure consistency and fairness in pricing.

We cannot hope to industrialize with the current state of water supplies in the country. We will implement a strengthened National Water Policy, which will greatly improve supply, hygiene and sanitation. Our goal is to ensure that every Ghanaian has access to potable water and industry get the water needed to function. We will continue the programme of the Kufuor government, which undertook major water systems improvements nationwide, including Cape Coast, Mankessim, Koforidua, Ku- masi, Kwanyarku, Ada, Sogakope, the Accra East – West inter-connection and Tamale.    
We will additionally construct more dams along our major waterways and build a third water treatment plant in the lower Basin.We will ensure the water sector gets the investment it needs, by dramatically cutting down on non-revenue water losses, and empowering the PURC and the CWSA to oversee effectively the water delivery system in the country to ensure Ghanaians get value for money.

We have made great strides in telecommunications in the past decade and this has transformed communications in the country, but we still have a long way to go with the state of our roads, railways, ports, harbours and airports. We must open up our country and make movement around the country less stressful and cumbersome if our industries are to prosper.

Ever since Governor Guggisberg left our shores in 1928, Ghana's economy has remained structurally rigid, depending largely on exports of primary commodities such as gold, cocoa, bauxite and timber. In 1928, seventy percent (70%) of our foreign exchange earnings were from gold, cocoa and timber.

In 2007, about 65% of our earnings were from these same three products.
In 2009, cocoa and gold exports accounted for $4.5 billion or 78% of total exports.
Provisional data for the past year indicate that cocoa and gold exports alone accounted for $6 billion or 76% of Ghana's total exports.

In 2011, we hit the magic number of 1 million metric tonnes of cocoa production, which was the target set by the Kufuor government. This was also the year that the target for having 50% of our cocoa processed locally was set. Sadly, my information is that this target for added-value has been missed.

Being touted as a leading producer of cocoa, raw gold, raw manganese and timber has done nothing to address the concerns of the hundreds of thousands of young men and women who do not have jobs. Even though the significant expansion of the economy over the last decade has brought about a higher average per capita income, it is still limited in its capacity to generate decent jobs with decent pay for our youth.

An expanded economy should not mean having a wider variety of cheap imported goods to sell on our streets. An expanded economy should mean an industrializing economy that is adding value to its raw materials.

During the 8 years of the NPP being in government, thanks to the focused leadership of J. A. Kufuor, Ghana eventually discovered oil in commercial quantities in 2007. The discovery is offshore here in the Western Region and your towns and cities are beginning to feel the impact in terms of an influx of people and higher rents. There is an Immigration Desk at the small aerodrome in Takoradi and you only need to see the numbers of foreign arrivals to accept that we have become an oil economy.

We have two options about what to do with the oil: one, to treat the oil like we have done to gold and allow it to be exported in its raw material form as crude; or, two, use this as a perfect opportunity to transform the structure of our economy through industrialization and value-added commercial activities. I believe we should use our oil revenues to create assets, not waste it on consumption and accumulate debt simply because people will lend us money now that we have oil.

Our oilfields provide us with the perfect opportunity to create a petrochemical industry in Ghana. We will facilitate the setting up of a multi-billion dollar gas feedstock industrial estate in the Nzema area producing methanol, ammonia, urea and natural gas liquids, which hopefully will feed from the oil and gas industry in both Ghana and Cote d'Ivoire.

We also intend to convert our petrochemicals into hundreds of industrial and consumer products produced right here in Ghana, including plastics, paints, rubber, fertilizers, detergents, dyes, textiles, solvents and, hopefully, bitumen for road construction. From the petroleum, we can get the preservatives to can food produced in Ghana and we can get plastics in which to preserve the processed food. The synthetic by-product from petroleum can serve as raw material for the manufacturing of different types of garments and footwear.

Ladies and Gentlemen, unless we add significant value to our primary products, be they heavy or otherwise, we cannot create the necessary numbers of high-paying jobs that will enhance the living standards of the mass of our people. Raw-material producing economies do not create prosperity for the masses. The way to that goal, the goal of ensuring access to prosperity, is value addition activities in a transformed and a diversified modern economy, in other words, the industrial development of our economy.

An Akufo-Addo Presidency will focus on leveraging our basic sources of comparative advantage; namely, relatively inexpensive labour and natural resources from agriculture and mining, especially the emerging oil/gas sector, to develop a value-added industrial sector that is globally competitive.

We also have the opportunity to make Ghana a regional centre for light manufacturing industry for a market of some 350 million people, projected to reach 500 million by 2030, by weaving together our numerous natural resources, like food produce, bauxite, iron ore, oil and gas, with our talents and energy to turn our nation into an economic powerhouse in Africa, generating full employment for our teeming youth.

Mr. Chairman, I believe Ghana should be at the forefront of the industrialization of West Africa. Ghana's bauxite deposits carry a potential value of $350 billion, far in excess of what we expect to reap from crude oil. An Akufo-Addo government will seek private investment to add value to our bauxite by building an integrated aluminium industry and export manufactured aluminum products, as was envisaged by the Kufuor government.

We will add value to our iron ore and build a new Iron and Steel Industry. Our salt will be part of this new vision. I want to see a West Africa that is working together to create jobs for its people; and providing decent lives for its population and I want to see Ghana being in the driving seat of that regional project.

Ladies and Gentlemen, unfortunately, the contribution of Ghana's manufacturing industry is small and getting even smaller under this NDC government. In 2008 it was a meagre 7.9% and last year it had gone down to 6.7%. A bad situation is being aggravated by bad policies.

Let us take the Pharmaceutical industry for example. Up until recently we were doing quite well in the sector. Now our pharmaceutical companies are struggling with the introduction of measures that are counterproductive to the growth of the local industry, with Facility Audit Fees, for example, going up from $7,000 in 2008 to $15,000 today. At the same time, the Food & Drugs Board, the regulatory body, has seen its share of the national budget decreasing in real terms. Is it any wonder, therefore, that our pharmaceutical companies are under pressure from cheap foreign imports?

The purchasing power of government, the purchasing power of the National Health Insurance Authority must be used to support our pharmaceutical companies, and an Akufo-Addo government will certainly make this happen. We can position our pharmaceutical industry to be a major player in the sector not only in West Africa, but also on the entire African continent. It could be a very lucrative industry generating lots of revenues and jobs for our people.

After 20 years of a stable and free, democratic society, with a market economy, resources-rich Ghana, today, has the best opportunity since Independence, to undertake a deliberate and meaningful transformation of the economic structure.

As the experiences of the successful countries in Asia and elsewhere have shown, Government has a very important and positive role to play in spurring industrialization and economic transformation.

An NPP government will establish industrial parks in every Region and we shall focus on building an integrated industrialization programme, with a clear bias towards supporting small and medium scale enterprises with access to science and technology, incentives and markets to make them more productive and competitive. We will introduce programmes that will boost the agricultural sector and introduce incentives that will encourage our banks to provide affordable credit and other financial services to SMEs and launch a new wave of small and viable industries across the length and breadth of Ghana.

Government's business is to ensure that businesses are up and running and have access to the capital that will keep the wheels of industry moving. These are simple beliefs with profound implications.

A first class public sector will provide the backbone for Ghana's economic transformation. Mr. Chairman, the NPP will focus on pursuing a public sector model that responds to the needs of its citizens. We need a public service that frowns upon the culture of corruption and provides the people with a quality environment of law and order, physical infrastructure, social services, sensitivity and quick responsiveness to needs, and a regulatory environment that allows free and fair competition.
We have the human capital right here to make it happen. Those young people I met today here in Tarkwa, their colleagues at Suame in Kumasi and similar sites around the country demonstrate the vast intellectual property that is at our disposal.

We will invest heavily in building up the most important ingredient for development: the intellectual property of the people – the mind – education, and skills training are the key to success.

The challenge for Ghana is that we have not attracted as much foreign investment as we could have. Our dealings with foreign investors have not been as sure-footed as it could have been and this has led to the many foreign-led highly publicised projects that have not seen the light of day. There is a large proliferation of agencies and departments that local industries and would-be foreign investors have to deal with; maybe it is time we consolidated some of them.

When Japan needed to, back in 1949, when it was reeling from the effects of the war, it created MITI, (Ministry of International Trade and Industry) which became one of the most powerful agencies in their country. At the height of its influence, it effectively ran much of Japanese industrial policy, funding research and directing investment. MITI was responsible not only in the areas of exports and imports, but also for all domestic industries and businesses not specifically covered by other ministries in the areas of investment in plant and equipment, pollution control, energy, and power, some aspects of foreign economic assistance, and consumer complaints. This span allowed MITI to integrate conflicting policies, such as those on pollution control and export competitiveness, to minimize damage to export industries.

MITI served as an architect of industrial policy, an arbiter on industrial problems and disputes, and a regulator. A major objective of MITI was to strengthen the country's industrial base. It did not manage Japanese trade and industry along the lines of a centrally planned economy, but it provided industries with administrative guidance and other direction, both formal and informal, on modernization, technology, investments in new plants and equipment, and domestic and foreign competition.

There was very close relationship between MITI and Japanese industry and MITI facilitated the early development of nearly all major industries by providing protection from import competition, technological intelligence, help in licensing foreign technology, access to foreign exchange, and assistance in mergers. In its early years it was very much a protective agent against foreign competition until Japanese goods were strong enough to compete on the world markets.

Admittedly times have changed and such pure protectionism would not be feasible today, but MITI still exists in various forms in other emerging markets like Turkey, Brazil, South Africa and Malaysia and even neighbouring Nigeria and we can certainly learn a few lessons from them. Even if our own government were to stick to the provisions of the Procurement law, our local companies would get some protection, instead of which we get the current situation of sole-sourcing in favour of foreign companies. An Akufo-Addo government will not shy from favouring local businesses. Our local companies need assured markets at home and it is from such a base that they will develop and grow into regional and international giants. I, Nana Addo Dankwa Akufo-Addo, believe that the surest way to build a strong industrial base is to develop our own indigeneous businesses; and with your votes and God's help I shall do just that.

Thank you, God bless you, God bless Ghana.




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