Industrialisation agenda and strategic sourcing- the missing link


Ghana has been pursuing an industrialisation agenda for the past decades with the aim of promoting economic development and reducing over-dependence on imports of goods and services. Like many developing countries, Ghana’s industrialisation journey started in the 1960s and 1970s when the country pursued state-led and import-substituting industrialisation as the key to rapid economic growth.

According to Ayelazuno (2014), industries established under the industrialisation policy became frequently uncompetitive and unsustainable, and efforts to spur industrial development in Ghana largely vanished in the 1980s and 1990s. In the 2000s, the Government of Ghana set up a number of institutions and programmes to support viable and productive industries. These include the setting up of the Business Assistance Fund (BAF), the Private Enterprise and Export Development Fund (PEED), the Trade and Investment Programme (TIP), the Fund for Small and Medium Enterprises Development, the Export Processing Zone (EPZ) and the Ghana Trade and Investment Gateway project (GHATIG).

Strategic sourcing plays an important and crucial role in supporting local firms, especially small and medium enterprises (SMEs), and promoting sustainable growth and development. Strategic sourcing is a procurement process that assists in maximising the long-term value of every money spent to source a product or service. It is coined as strategic because it is a medium to long-term procurement process and a catalyst for industrialisation and economic development (Boateng. D 2021). Thus, strategic sourcing is geared toward economic development. By prioritising local suppliers and investing in their development, Ghana can support the growth of domestic industries and create jobs for its citizens. For example, Ghana has embarked on strategic sourcing programmes, such as the launch of Made in Ghana policy, which aims to promote the production and consumption of locally manufactured goods and the provision of services. This initiative encourages local firms to partner with international firms to transfer technology and expertise in areas, such as oil and gas, pharmaceuticals, and heavy mining equipment, to build stronger domestic industries.

A conscious effort has also been made to develop local supply chains for the country’s nascent oil and gas industry. By so doing, the government has invested in the development of local content policies which mandate foreign firms to invest in infrastructure and training. It is, therefore, evidenced that strategic sourcing plays a crucial role in supporting Ghana’s industrialisation agenda by promoting local industries and creating jobs for the people. However, strategic sourcing requires thoughtful planning and a mindset change in both consumer and industrial procurement. Industrialisation and strategic sourcing are inextricably linked, which should be properly aligned and integrated. The following areas are, in most cases, disjointed and missing, providing incoherent and uncoordinated results.

Policy framework: The industrialisation agenda is supported by a policy framework that outlines the government’s vision, goals and objectives for industrial development in the country. This framework guides the development of policies, programmes and initiatives aimed at promoting the growth of domestic industries and reducing the country’s dependence on imports. However, a careful review of some of the government’s priority policies, such as the 10 Points Agenda, Industrial Policy, Micro, Small and Medium Enterprise (MSME) and Entrepreneurship Policy, Auto Policy, National Export Development Strategy, National Sugar Policy, etc., indicate a total neglect of strategic sourcing policies. Since the strategic sourcing policies focus on long-term economic gains through the procurement process, sections in these policies must be dedicated to the strategic sourcing framework to provide guidelines and directives to the implementer. Therefore, the lack of effective appreciation and alignment of strategic sourcing initiatives to the national industrialisation policies is inimical to the successful implementation and resultant benefits of the industrialisation agenda.

Another critical missing link between industrialisation and strategic sourcing is stakeholder engagement. Industrialisation and strategic sourcing involve the engagement of stakeholders at various levels, including government agencies, private sector organisations, industry associations, and civil society groups. Stakeholders have varied interests and power, according to Mendelow’s stakeholder matrix. Interest indicates stakeholders’ likely concerns while influence and power indicate their ability to resist, accept or control recommendations and change. Therefore, in formulating and implementing industrialisation policies, there should be a linkage between stakeholders and industrialisation through strategic sourcing principles to cater for all stakeholders’ interests and influence. Stakeholders are consulted to ensure that policies and initiatives align with their needs and priorities, and to encourage their participation in the development of local industries.

Technical and capacity-building has become crucial for pursuing the industrialisation agenda in developing economies. Technological upgrading has become necessary for firms’ development and competitiveness. Firms that use the latest and modern technology will likely excel more than those that do not (Prasanna et al., 2019). These technological transfer initiatives, as part of the government industrialisation agenda, can be harnessed through strategic sourcing. Accessing this technology has become a challenge for firms in developing economies, especially when the project involved requires new or improved technology to execute. Local firms do not have the capabilities to undertake such projects. This implies that sophisticated jobs are always the preserve of foreign firms with the technological capabilities to undertake them. Technical support allows firms to innovate, improve efficiency, expand to a new market, create jobs, and enable firms to become competitive and undertake a significant portion of jobs requiring sophisticated technology to execute (Abubakar, 2015). Additionally, capacity-building is a key element of industrialisation and strategic sourcing, aimed at developing the skills and knowledge needed to support the growth of domestic industries. This includes investments in education and training programmes, technology transfer, and the development of local supply chains.

Every policy implementation requires a cutting-edge monitoring and evaluation framework to measure the results and outcome of such policy. The industrialisation agenda and strategic sourcing are monitored and evaluated regularly to ensure that policies and initiatives achieve their objectives. This involves the collection and analysis of data on key performance indicators, such as job creation, industrial output, and exports.

Overall, the Ghana industrialisation agenda and strategic sourcing involve a comprehensive and coordinated approach, which includes policy development, stakeholder engagement, technical and capacity-building, and monitoring and evaluation. This approach aims to support the growth of domestic industries and promote sustainable development in the country.

The writer is the President, GIPS

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