Government must review the existing Industrial Policy and the strategy for its implementation if the sector’s contribution to Gross Domestic Product (GDP) is to be enhanced, the latest Ghana Business Development Review Report prepared by the University of Ghana Business School (UGBS) has said.
“The manufacturing sector continues to be highly challenged, with its associated firms continuing to encounter numerous constraints which affect their productivity.
“In this regard, there is an urgent need for government to heed the call that AGI has been making since 2015 for a review of the Ghana Industrial Policy and its implementation programme, known as the Industrial Sector Support Programme; as well as put in place the necessary measures and resources for its full and effective implementation,” the report states.
The Industrial Policy, which was launched on June 1, 2011, was designed to help expand productive development and technological capacity in the manufacturing sector, promote agro-based industrial development and 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 that enable them to 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,” Ms. Hanna Tetteh, the then-Trade and Industry Minister, said during the policy’s launch.
Actual implementation of the Industrial Policy was to be effected through an Industrial Sector Support Programme (ISSP), which was to be implemented over a five-year period.
However, seven years down the line the policy is still on the shelf gathering dust. The Association of Ghana Industries (AGI) has constantly reminded successive governments to fully implement the policy that, it argues, can turn the fortunes of the economy around.
“The policy is good, but unfortunately when it comes to implementation there are problems. Aspects of it were done, in a way; but comprehensively not much was done,” Seth Twum Akwaboah, CEO of the Association of Ghana Industries (AGI) told the B&FT.
“There were key parts that will give you an indication of whether it was done or not. There was supposed to be a Secretariat to implement the policy – that was never established. The Industrial Development Fund was never established, and the government of Ghana needed to make some contribution as seed capital for the donors to contribute – that was never made. Indeed, eventually what they did was provide small support for the Ministry of Trade to do certain aspects. So, really, one cannot say it took-off well,” he added.
Industrial sector performance
In 2016 the GDP contribution of the manufacturing sector was 4.6 percent, signifying a decline of 0.2 from the previous year. Meanwhile, the corresponding overall industry contribution for 2016 was 24.2 percent, representing a 0.9 percent drop.
Again, despite the country’s economy growing by 8.5 percent in 2017 – largely boosted by oil and gas – one of the critical sectors, manufacturing, sadly continues its poor showing.
The provisional 2017 GDP figures released by the Ghana Statistical Service (GSS) show that the manufacturing subsector grew by 3.7 percent in the year under review, whereas mining and quarrying, oil and gas – which all fall under the industrial sub-sector – grew by 46.7 and 80.4 percent respectively.
The UGBS report cited high cost of utilities, volatility of the exchange rate, multiplicity of taxes, high cost of materials, high cost of credit and poor power supply, and unfair competition on local markets as the main challenges which have thwarted growth of the manufacturing sector in recent years.
To address these challenges, the report noted, government must heed the call from players in the industry to review and implement the Industrial Policy.