Government must use its purchasing power to help strengthen local banks and position them to support the ‘One District, One Factory’ (1D1F) project, according to Frank Adu, Managing Director of CalBank.
“With the One District, One Factory, we still do not see a clear path to financing it though we have all been asked to support it. It is very simple: the ministries of Trade and Finance should take a look at the balance sheets of banks and look at the banks which do medium- to long-term loans.
“You need more patient capital than working capital when it comes to 1D1F. Just look at the banks which have a propensity for making medium- to long-term loans and go to them and say: ‘we will support you so that you can use your skill set to support 1D1F’,” he said.
Even though the project team has some banks on board, the CalBank boss believes that local banks must be deliberately supported to sustain development and the project implementers must see 1D1F as a platform that can develop the local banks.
“I don’t think that any of them has sat down to look at the balance sheet of banks to say: ‘look, these banks are naturally predisposed to gain medium- to long-term loans, so let’s support them so they support our One District, One Factory project’.
“There are banks in the country which do only three-month cycle loans, so you do not go and give government resources to those banks; because in any case their DNA will not allow them to do these loans,” he said.
Development, Mr. Adu argued, “is not by happenstance” – and governments, when they come to power, should understand this and use their enormous resources to support and grow local industries, including banks.
The Ministry of Trade and Industry this week signed contracts with the China National Building Materials Corporation in Accra for the construction of 22 factories under the ‘One District, One Factory’ (1D1F) initiative.
The 22 Engineering Procurement and Construction contracts were signed between some Ghanaian business executives, selected district assemblies represented by the ministry, and the Chinese contractors. The projects, valued at US$400million, are to be sited in 22 districts across the 10 regions.
The 1D1F initiative is designed as a comprehensive programme for rural industrialisation, involving the setting-up of at least one medium- to a large-scale factory or industrial enterprise in each of the administrative districts of Ghana, based on the natural resource endowment or comparative advantage of each district.
The trade ministry says a total of 707 business plans have been received from business promoters – out of which 602 have been reviewed by the Technical Support Group (TSG) of the ministry, with 313 of the plans considered to be feasible for implementation.
The MMDCEs are expected to provide infrastructural support in the form of land, water, electricity to attract potential investors into the various districts.
The programme is expected to facilitate the creation of between 7,000 to 15,000 jobs per district, and between 1.5 million and 3.2 million nationwide by end of 2020.