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Business News of Tuesday, 12 February 2013

Source: B&FT

AGI demands action on Industrial Policy

The Association of Ghana Industries (AGI) has expressed worry over slow implementation of the Industrial Policy, saying close to two years after the policy was launched not much has happened beyond the development of modalities.

In an interview with the B&FT, a Senior Policy Officer of the Association, Samuel Anokye, attributed the delay to the fact that the Industrial Development Fund proposed under the policy has not been set up.

“Most of the challenges we face in industry are because we do not have medium- to long- term funding. So we thought at least after one year this fund would have been set up so that we could speed up the implementation -- because most of the other aspects of the policy are dependent on the fund,” he said.

Actual implementation of the Industrial Policy will be effected through an Industrial Sector Support Programme (ISSP) that will be implemented over a five-year period, “recognising that some interventions in the domestic economy must be time-bound to engender rapid industrialisation”.

This is where the AGI’s concern lies -- the fact that the programme is to be undertaken within a five-year period; meanwhile the fund to support it is yet to be set up one and a half years later.

“We are industry, we want to stick to time...You know we are all thinking of the country moving from lower middle-income to upper middle-income. So we feel the government should be serious with this Industrial Policy,” Mr. Anokye said.

Among the targets set by government is that by the end of 2015 GH¢297million in medium- to long-term loans and matching grants will have been disbursed to the manufacturing sector from the fund.

“Once the government gives the seed-money, then we can ask other donor partners to also contribute into the fund. We are pretty confident that if we start, even this year, a lot could be achieved...The programme is fantastic, the modalities are good, so it’s just the delay in implementation that we are not happy with,” he said.

In its latest Business Barometer Report covering the fourth quarter of 2012, the AGI described as “worrying” the re-emergence of difficulty in accessing credit as the number-one challenge for businesses.

The prevailing rigid requirements demanded by commercial banks in the country, the report said, have resulted in low access to credit by the private sector; as a result most SMEs have resorted to non-bank financial institutions whose interest rates are very prohibitive.

The Industrial Policy recognises the financing difficulties of industry, stating in part that there is a general lack of medium- and long-term funds for financing manufacturing projects in the country, and that the availability of such financing is essential for industrial development.

As a policy objective toward development financing, the Industrial Policy states that “Government will establish an Industrial Development Fund to provide long-term financing for industry, based on clear and transparent criteria”.

The AGI official admitted that the criteria have been set with their active participation as representatives of industry and the private sector, but said government needs to act with dispatch on the fund.

When she launched the Industrial Policy on June 1, 2011, then-Minister of Trade and Industry Hannah Tetteh outlined the objectives of the Policy as expanding productive development and technological capacity in the manufacturing sector, promoting agro-based industrial development, and promoting spatial distribution of industries in order to achieve a reduction in poverty and income inequalities.

"Generally, the policy is aimed at ensuring that our industrialists are able to offer high- quality and competitive products to enable them gain access to the global market. It represents a critical component of Ghana's strategic effort to alter the industrial structure by developing a competitive manufacturing sector," she said.

The Government of Ghana admits that the country’s manufacturing sector has not responded well to the various economic and trade policy reforms pursued over the past decade.

“Manufacturing firms have faced considerable challenges in the form of increased competition in the domestic and export markets, and high production and distribution costs arising from high interest rates, aged and obsolete equipment, inefficient infrastructural services and low productivity,” the Industrial Sector Support Programme document states.