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Business News of Monday, 2 December 2019


Ghana’s game plan for industrial transformation

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Right since Ghana obtained political independence in 1957, Ghana has sought to transform from an agrarian economy to an industrialized one. The initial strategy was for government to finance industry itself and consequently own all sorts of factories. Since then, different approaches have been tried, including nationalization of foreign enterprises and more recently, the use of private investment, both local and foreign, with government focusing on supportive economic policies and investment codes, inclusive of mass divestiture of the industries it established just after independence; as well as economic infrastructure requisite for productive enterprise.

Each successive political administration since Ghana liberalized its economy in the 1980s, has drawn up its own game plan towards accelerated industrialization. The incumbent administration, through the Ministry of Trade and Industry has embarked on its own comprehensive and integrated programme for industrial transformation under the “Industrialization for Jobs and Growth” initiative. The programme is anchored on ten pillars as outlined below.

1. Building the Competitiveness of Existing Local Industries by Supporting Them with A Stimulus Package-: the programme involves among others, the creation of a quick disbursing Stimulus Fund to be disbursed to local companies based on a specified criterion. The Ministry has identified a number of existing companies that are currently distressed or are facing operational challenges, but are deemed to be viable, who have been screened and selected to benefit from this stimulus package.

The criteria for the selection of beneficiary companies include the following:

High potential for enhanced job creation. Competent management team (evidence of qualified personnel for key functional areas). Sound financial and accounting reporting system. Good corporate governance including effective Board structure. Good track record of operational and commercial performance. Clear evidence of existing/available market for products or services. Interest and willingness of existing shareholders and Governing Board, including but not limited to providing a board resolution to take advantage of proposed Stimulus Package. Potential to export products to other markets outside Ghana is an added advantage. Location in peri-urban and rural communities is an added advantage. To date over 300 applications have been received from business operators in sectors including Agric business, Pharmaceuticals, Garments and Textiles, Cosmetics, Building and Construction Materials, Packaging and Plastics among others. A team of experienced Consultants have conducted diagnostic studies of the companies to determine the appropriate stimulus package for the resuscitation of these distressed firms; to which 80 beneficiary companies have been qualified for the first phase of the programme. In addition to the stimulus package, the Ministry has designed mechanism to provide technical and managerial assistance to enhance the organizational capacity of these beneficiary companies.

2. One District One Factory (1DIF) Initiative: The Ministry is aggressively pursuing the One District One Factory initiative through Public-Private Partnerships under which, at least one medium to large scale industrial enterprise will be established in the 216 Districts. The Programme, also referred to as the District Industrialization Programme (DIP), will address the challenge of severe poverty and underdevelopment among peri urban and rural communities, through the establishment of an institutional framework that will attract private sector investments in rural development activities. It also seeks to promote local participation in economic development, and encourage community-based public/private

1D1F initiative seeks to achieve the following five strategic objectives namely;

a. To create massive employment particularly for the youth in rural and peri-urban communities, and thereby improve income levels and standard of living, as well as reduce ruraI-urban migration.

To add value to the natural resources of each district and exploit the economic potential of each district based on its comparative advantage. c. To ensure even and spatial spread of industries and thereby stimulate economic activity in different parts of the country.

d. To enhance the production of local substitutes for imported goods and thereby conserve scarce foreign exchange.

To promote exports and increase foreign exchange earnings. A Technical Support Group (TSG) made up of experienced Consultants has been established at the Ministry of Trade and Industry and is providing technical backstopping for the implementation of the District Enterprise Projects.

The Ministry working with its Technical Support Group has reviewed 234 Business Plans and Proposals out of a total of 350 received to date. About 59% of these District Enterprise Projects are going to be developed in the manufacturing sector while 33% are interested in the agricultural and industrial plantation to feed the manufacturing plants. It is envisaged that; more than 60 districts will start actual implementation of their enterprises during the year with a potential to generate over 40,000 direct jobs.

The DIP has the potential of transforming the industrial landscape of Ghana, and contribute significantly to the socio-economic development agenda of the country. It is estimated that over 350,000 direct and indirect jobs would be created from all parts of the country, as a result of the implementation of the programme.

3. Strategic Anchor Industrial Initiatives: The Ministry as part of its comprehensive plan to develop new growth poles for economic transformation has identified a number of Strategic Anchor Initiatives as new pillars of growth for the Ghanaian economy. These include the Petrochemical industry; Iron and Steel; Integrated Aluminum Industry; Pharmaceuticals; Vehicle Assembly and Automotive Industry; Industrial Salt; Garment and Textiles; Manufacture of Machinery, Equipment and Component Parts.

In order to promote and attract investments to support the implementation of these initiatives, the Ministry is using its foreign trade and investment offices in selected countries including the USA, UK, Belgium, Switzerland, China, Turkey, Japan, Nigeria and South Africa to attract potential investors, as well as identify export’ market opportunities in those countries. In addition to the above, the Ministry is working assiduously with other institutional partners including Ghana Investment Promotion Center and bilateral Development Institutions to attract global companies to invest in these sectors.

4. Development of Industrial Parks: The ministry is currently facilitating the establishment of Multipurpose Industrial Parks in each of the ten regions. This component of the industrial development agenda is to improve access to land and utility services whiles spreading economic activities across the country.

It is the vision of the ministry that, this initiative will significantly improve Ghana’s ranking in the World Bank’s Ease of Doing Business Index since it targets one of the major constraints investors and entrepreneurs face when starting a business.

As at now, the Ministry has identified interested parties including foreign investors who have initiated the construction of these industrial parks in Ashanti, Greater Accra and Western regions.

5. Small and Medium Scale Development: -As the anchor ministry for business support and development, another important component of the ministry’s roadmap for industrial transformation is the implementation of a Comprehensive Programme of Action for Small and Medium scale business development. In order to execute this programme effectively, the Ministry is currently restructuring the operations of the National Board for Small Scale Industries, Rural Enterprises Programme (REP) and GRATIS Foundation to enhance their capacities to provide quality support services to the SMEs in Ghana.

These institutions will provide enhanced managerial and technical business support services to Small and Medium scale entrepreneurs and business owners to facilitate access to credit, technology, quality labour and markets for their outputs.

6. Industrial Sub-Contracting Exchange: The Ministry has established a mechanism called Industrial Sub-Contracting Exchange to link large scale companies with SMEs. This aspect of the industrialization programme is critical to ensuring that SMEs develop productive capacity to feed the industrial requirements of large multinational enterprises.

In order to efficiently achieve this objective, the ministry has completed work on the development of a draft National Local Content and Participation Policy and Bill for the country. The policy is aimed at building the capacities of local businesses and facilitating sub-contracting arrangements with the larger companies.

7. Export Diversification And Development: The ministry Is Implementing an Aggressive Programme for Export Development, targeting primarily the sub regional and Continental markets. This Export Diversification Programme Is anchored on the National Export Strategy. m Ministry through Ghana Export Promotion Authority has rolled out the district Ievel component of the Strategy which Involves the development of one export commodity in every district of Ghana under its One District One Factory Initiative. The initiative is underpinned by the Ministry’s decision to develop potentially viable export commodity in every district to create decent livelihood within the rural economy.

It is Imperative to note that following the extension of The African Growth Opportunities Act (AGOA) Initiative by the US Government, a Strategy is being rolled out to enable the country derive the full benefits under the initiative. In addition to the above, the Ministry has put in place systems to take advantage of intra-African trade particularly the Continental Free Trade Area (CFTA) and ECOWAS Trade Liberalization (ETL) scheme.

8. Enhancing Domestic Retail Trade Infrastructure: The Ministry has developed a plan to enhance Domestic Retail Market infrastructure and to actively promote Made in Ghana goods. The Ministry in collaboration with other MDAs. especially the Local Government Ministry and District Assemblies, has initiated plans to facilitate the construction of modem retail market infrastructure in me 216 districts.

9. Business Regulatory Reforms: ~ In order to Improve the Business Environment to make Ghana an attractive destination for Investments, the ministry has set up a target of making Ghana the most business-friendly economy in Africa. In pursuit of this, the Ministry is aggressively pushing through some major reforms of the business environment of the country through its Business Environment and Regulatory Reforms initiatives.

The business environment reform agenda is focused on the following strategic components:

Improve ranking of Ghana on the World Bank Ease of Doing Business which targets ten indicators including starting a business, getting electricity, trading across borders, getting credit and registering a business; Establish electronic register for business regulations, legislations and processes which should lead to providing a complete repository of business laws and transparency for investments; Conduct rolling review of business regulations using the Guillotine approach which will ensure significant reduction in cost and volume of regulatory compliance; Centralized consultations web portal for business regulations to act as One Stop portal two-way public consultations; Design targeted regulatory reliefs for SMEs in order to reduce entry barriers for young entrepreneurs and startups; Establish regulatory reforms units within MDAs and conduct Regulatory Impact Assessments (RIA) across government. This should lead to the creation of a permanent system of quality controls that include Regulatory Impact Assessment (RIA) for quality control of new rules; and Develop Communication, Advocacy and Public-Private Dialogue with Stakeholders to enhance the inclusive and open process of stakeholder engagement. These measures are envisaged to ensure a significant improvement in Ghana’s ranking in the Ease of Doing Business and the Global Competitiveness Index. To this end, the ministry is collaborating with Development Partners and other MDAs to ensure removal of bottlenecks and impediments that are adversely affecting businesses operating in Ghana.

10. Public Private Sector Dialogue: Plans are far advanced to institutionalize and formalize the engagements between the government representing policy makers and the private sector which ordinarily must leverage the policies developed by government. The ministry in consultations with the Office of the President is developing a framework to foster this high-level engagement which should lead to the organization of a periodic dialogue session. This dialogue platform will bring together government agencies and the business community to engage at the highest level of policy formulation to promote inclusiveness.

The Implementation of these programmes aims to greatly enable the business sector to make significant contribution towards inclusive and sustainable economic growth with improved employment creation opportunities for the good people of Ghana. This ambitious programme is well integrated to offer a holistic approach in dealing with structural deficiency of Ghana’s industrial structure and build the productive capacities of businesses operating from Ghana to be able to compete at the global market place.