manufacturing - natcomreport edition of the national commissions

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GHANA NATIONAL COMMISSION FOR UNESCO

IntroductionAlthough an under-devel-

oped sector in Ghana, manu-facturing is nevertheless animportant contributor to thecountry’s GDP. But the burdensit struggles under are sub-stantial. Hampered by thevariability of the agriculturalsector on which it is based,Ghana’s industries must alsocontend with high costs ofproduction, high interestrates and increased compe-tition arising out of the policyof trade liberalization.

In this context, the sectoris characterised by a narrowindustrial base dominatedby agro-industries, limiteddiversification, reliance onimported inputs of raw mate-rials and intermediates,relatively under-developedindustry linkages, prevalentuse of obsolete technologies

and production that is mainlyfocused on the domesticmarket.

Government recognisesthat significant transfor-mation of the sector is vital.In order to achieve this, it isnecessary to promote andstimulate a change processwhich will make the sectorexhibit a diversified struc-ture of production; under-take processing of more ofthe natural resources withwhich Ghana is endowed;and become export-oriented.

Taking into account theabove factors, Government’sgoals for the industrial sectorin the medium term are tooptimize the exploitation ofdomestic natural resources;to strengthen backward andforward linkages within themanufacturing sector and

between the sector and restof the economy; to ensurethat industries are compet-itive in the domestic andinternational markets; toraise levels of technologicalcapabilities; to create newemployment opportunities;to absorb the rapidly growinglabour force; to strengthenthe SME sector and putemphasis on sub-regionalcollaboration and south-south cooperation.

Importance of the sectorand performance

In terms of importance,the manufacturing sector,though not strong as it shouldbe, continues to play a res-pectable role in the economy,contributing about 9% to GDP.

Ghana’s most importantmanufacturing industriesinclude aluminium smelting,

Manufacturing:Struggling to survive

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agro-food processing, oilrefining and cement. Otherindustries include the pro-duction of beverages, textiles,apparel, glass, paints, plastics,chemicals and pharmaceu-ticals, and the processing ofmetals and wood products.

The sector provides employ-ment for an estimated work-force of over 250,000 people.

About 25,000 firms are regis-tered. More than 80% of themare small size enterpriseswith less than 50 employees,while it is estimated that 55%of all enterprises are locatedwithin the Greater Accra/Tema Region.

The Manufacturing sectorrecorded a growth of 5% in2009 compared to 4% in2008. However, the contri-bution of Ghana’s manufac-turing sector to overall growthis still marginal.

Management of thesector & policies

The Ministry of Tradeand Industry is the primaryGovernment agency with theoverall mandate of formu-

lating, developing, imple-menting, monitoring andevaluating trade and industrypolicies in Ghana. The Min-istry is also the advocates forthe private sector within gov-ernment and is the principalagency responsible for moni-toring the implementationthe Governments privatesector development programsand activities.

The Ministry aims at devel-oping a vibrant, technology-driven, liberalised and com-petitive trade and industrialsector that significantly con-tributes to economic growthand employment creationthrough:

• Policy formulation.• Facilitating enterprise devel-opment including SMEs.• Development and enforce-ment of standards in tradeand industry.• Promoting and facilitatingGhana’s internal and exporttrade with emphasis on diver-sification and value-addition.• Promoting and facilitatingGhana’s active participationin Global Trade through par-ticipation in multilateral and

Plurilateral Institutions aswell as champion Ghana’smarket expansion drive.

To meet the challengesposed by the changing domes-tic and international tradeenvironment; the Ministry ispursuing proactive policiesdesigned to create conditionsfor the renewal of Ghanaianindustry and commerce. Onemajor policy measures beingemployed for the achievementof accelerated and sustain-able growth is the GhanaTrade and Investment Gate-way Programme (GHATIG),which seeks to promote foreigndirect investment and toestablish Ghana as a majormanufacturing, value added,financial and commercialcentre in West Africa. Otherprogrammes being directlyoverseen and implementedby the Ministry include theTrade Sector Support Pro-gramme (TSSP), which wasdesigned with a view to deliverrapid and strategic expan-sion of Ghana’s productivebase, and the Private SectorDevelopment Strategy (PSDS),which focus on creating athriving private sector, cre-ating jobs and enhancedlivehoods for all.

Harmonisation andrationalisation of policies

Recognising that the revi-val of the industrial sectoris key to Ghana’s ability todevelop a competitive manu-facturing base, the Ministryis currently developing aNational Industrial Policy tocomplement the existing one.The new industrial policy willprovide clear and transparentguidelines for the implemen-tation of Ghana’s Industri-alization agenda, particu-larly with respect to themanufacturing sector. It isalso intended to create a

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consistent and stable policyenvironment in which theprivate sector can competi-tively promote industrialactivities effectively and withcertainty.

The following issues arebeing developed to suit theindustrial policy needs of thecountry:

• Labour and industrialrelation.• Incentive framework forindustrial development.• Privatization and public-private partnership for devel-opment.• Technology and industry.• Intellectual property rightsin industrial development.• Financing for industrialdevelopment.• Gender mainstreaming inindustrial.• Quality health in indus-trial development.• Micro, small and mediumenterprises development.

The following programmesand projects will be perusedto complement the industrialpolicy in the following pipeline:• Strengthening the linkagesbetween industry, researchand development institutions.• Establishment of an IndustrySupport Centre to assist firmsto become internationallycompetitive.• Strengthening of the ExportDevelopment and Invest-ment Fund (EDIF).• Decentralization of indus-trial development to explorethe resource endowment ofdistricts.• Enhancing Ghana’s inter-national competitiveness ingoods and services throughstandardisation.• Establishment of petro-chemicals, fertilizer and LPGCylinder industries takingadvantage of the oil industry.

• Establishment of manufac-turing enterprises to processagricultural products (valueaddition).• Rejuvenation of textile indus-try in an integrated mannerintegrated manner.• Establishment of integratedShea butters Processing fac-tories in the three northernregion targeting productionof 50,000 tons of shea butterper annum.• Processing of salt leadingto the petrochemical industry.• Establishment of an inte-grated iron and steel projectin Ghana and the rehabilita-tion of abandoned but viablemanufacturing enterprises.

Implementing AgenciesThe Ministry implements

its policies, programs andspecial projects through itsimplementing agencies.

Export Development andInvestment Fund (EDIF)

The Export Developmentand Investment Fund (EDIF)was established by law in theyear 2000 and since 2002 upto date has provided loansand grants in the total amountof about GH¢126 million inaccordance with its mandate.The EDIF provides fundingas loans through 20 desig-nated financial institutions

(DFIs) to producers and mar-keters of export goods andservices. The fund also pro-vides grants to associations,institutions and groups toboost the production andmanagement capacity ofsuch groups operating in thenon-traditional export sector.

Ghana Export PromotionCouncil (GEPC)

The Ghana Export Pro-motion Council was estab-lished in 1969. It has as itsmandate the developmentof Ghana’s export trade andthe promotion of Ghana’sexports abroad. It acts as acoordinating institution forthe various public sector andother organizations involvedin trade facilitation, it carriesout advocacy services fororganizations and individualsinvolved in the export tradeand organizes workshops,forums, conferences and sem-inars for such organizationsand individuals.

The GEPC also organizesmarket and trade missions,trade fairs and exhibitions,buyer-seller meetings with aview to helping Ghanaianenterprises to do business inthe competitive internationalexport market. GEPC alsohas the trade information


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centre, which offers infor-mation and referral servicesto the business community.

GEPC has some 3,000 pri-vate sector exporting compa-nies organised into 15 productassociations.

The general performanceof the non-traditional exportsector shows that Ghanaearned US$729.14 million overthe first eight months of 2009,compared with US$613.64million in the same periodin 2008, representing 18.8%growth. Given the magnitudeof the global financial crises,it is a welcome development.

Ghana Free Zones Board(GFZB)

The Ghana Free ZonesBoard was established by lawin the year 1995, and has asat today 205 approved FreeZone Companies and fivedesignated export processingzone areas. These are: theTema Export Processing Zonewith a total of 1,234.11 acreswhich has been developedto some extent under theGateway project. There are

also the Sekondi Export Pro-cessing Zone with a total of2,512.82 acres; the AshantiTechnology Park with a totalof 1,090 acres; the ShamaExport Processing Zone witha total of 3,238 acres; andthe Community 21 residen-tial area with a total of 152acres all of which are yet tobe developed.

The main Free Zones Enter-prises are into: Shea butterprocessing, development ofcomputer soft ware, woodprocessing, cocoa processing,ICT, consumer goods and flightcatering. The total number ofemployees directly employedin the Free Zones is 27,971. Thetotal capital invested in FreeZones Enterprises over theperiod since its establish-ment is approximately US$3billion while the total valueexported is US$ 5.8 billion.

Ghana Standards Board (GSB)The Ghana Standards

Board is responsible for thenation’s quality infrastructureand conducts its activities onthe four pillars of metrology,standards, testing and quality

assurance. The national stan-dards infrastructure is criticalto the growth of industry andpromotes standards in publicand industrial goods, welfare,health and safety.

Currently three of GhanaStandards Boards Labora-tories have received and main-tained international accred-itation in the areas of mass,temperature and pressure. Anational enquiry point hasbeen strengthened to serveas the National StandardsInformation Centre relatingto Standards, Technical Regu-lations, Conformity Assess-ment Procedures, Import-Export procedures and isserving as a reliable infor-mation source for both localand foreign import/exportdemands.

The testing laboratories arecurrently preparing towardsinternational accreditationon the requirements of ISO/IEC17025. This will ensure thatthe GSB labs will be in a posi-tion to certify that exportersmeet specific export stan-dards and requirements.

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National Board for SmallScale Industries (NBSSI)

The National Board forSmall Scale Industries is theGovernment organizationresponsible for the promotionand development of micro andsmall enterprises in Ghana.It was established in 1981and it is the view of the gov-ernment that it is a key insti-tution that has the potentialto assist in the reduction ofunemployment and facil-itate the growth and devel-opment of the MSME sector.NBSSI has its head office inAccra, Ten Regional Officesand 110 District Offices knownas Business Advisory Centres.2,750 entrepreneurs havebenefited from counsellingand advisory services offeredby the Business AdvisoryCentres in 2009. Extensionservices have been providedto 1,559 entrepreneurs while40 associations have receivedtraining in leadership andgroup dynamics.

GratisThe GRATIS Foundation

was incorporated in December,1999. It evolved from theGhana Regional AppropriateTechnology Industrial Services(GRATIS) Project which wasestablished in 1987 by theGovernment of Ghana withsupport from the European

Union and the CanadianInternational DevelopmentAgency to promote small-scale industrialization inGhana. It seeks to develop,promote and disseminatemarketable technologies andskills for the growth of indus-try, particularly, micro, smalland medium scale enter-prises in Ghana and the WestAfrican sub-region. GRATISoperates through a networkof 9 regional centres and 3District Rural TechnologyService Centres.

Others facilitatorsThere are several other

institutions rendering supportservices to the manufacturingsector. These, among others,include: The Association ofGhana Industries (AGI), TheGhana National Chamberof Commerce and Industry(GNCCI), the Private Enter-prise Foundation (PEF) and theFederation of Association ofGhanaian Exporters (FAGE).

Latest Development

In November 2009, localmedia reported government’sintention to reopen the state-run Volta Aluminium Com-pany Limited (VALCO) fol-lowing its closure in January2009. Not only have pricesfor aluminium rebounded

in recent months, but waterlevels in the Volta Lake haverisen back above 270 feet,which will enable the com-pany to make use of hydro-electric power. When fullyoperational, VALCO couldinject some US$300mn intothe Ghanaian economy.

InvestmentOpportunities

Opportunities for invest-ment exist in the followingareas:

• Garments and Textiles forExport – AGOA and EU;• Agro-food processing andseafood processing;• Electrical and electroniccomponents assembly;• Aluminum based products;• PVC and other plastic pro-ducts;• Jewellery (Gold processing,Refinery);• Pharmaceuticals;• Vehicle assembly and partsmanufacturing;• Capital goods manufactur-ing (Agro-processing equip-ment, packaging equipment,machine tools, componentsand spare parts);• Processed wood products forexports;• Ceramic tiles manufacturing.

ConclusionThe manufacturing sector

holds the key to Ghana’s eco-nomic growth given the desireto diversify from agricultureto other sectors. Althoughthe sector’s contribution tothe national economy hasnot significantly improvedlately, there is every reasonto believe that with properpolicies and investment incen-tives in place, manufacturingsector is a growth area.

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