Industrial policy grows mouldy

The five-year implementation period of Ghana’s Industrial Policy came to an end last year, but industrialists can hardly lay a hand on key achievements, especially when the Industrial Development Fund, which was supposed to fuel the policy’s roll out, was never set up.

“The policy was good; 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 would 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 a small support for the Ministry of Trade to do certain aspects. So, really, one cannot say it took off well.”

Now that a new government has taken over, the AGI wants the policy reviewed and implemented, in order to reverse the less than satisfactory fortunes of the industrial sector, which consists of mining and quarrying, manufacturing including aluminium smelting and food processing, electricity and water and construction.

“Even the previous government was trying to review it, let alone a new government that has come in. So, there is the need to review it. In the review, you also repackage it in line with your own industrial policy initiatives, and already the new government has come up with a number of policy initiatives,” Seth Twum Akwaboah said.

“This time round, we should make sure it works,” he said. “A key part of the first one was to have a monitoring mechanism, and there were clear review periods.”

The industrial sector accounted for 23 percent of GDP as at the third quarter of last year, and a year-on-year quarterly GDP growth rate of 3.9%.

The Construction sub-sector recorded the highest year-on-year quarterly GDP growth rate of 16.3% for Q3 of 2016, while the Water and Sewerage sub-sector recorded the lowest (-7.8%), according to the statistical service.

The industrial policy endorses the financing difficulties of industry, stating in part that, there is a general lack of medium and long term funds for financing manufacturing projects in the country and that the availability of medium and long term financing is essential for industrial development.

As a policy objective towards development financing, the Industrial Policy states that “Government will establish an Industrial Development Fund to provide long-term financing for industry based on clear and transparent criteria.

When she launched the Industrial Policy on June 1, 2011, then Minister of Trade and Industry, Hannah Tetteh, outlined the objectives of the policy as expanding productive development and technological capacity in the manufacturing sector, promoting agro-based industrial development and promoting spatial distribution of industries in order to achieve 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 to enable them 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," she said.

Actual implementation of the Industrial Policy was to be effected through an Industrial Sector Support Programme (ISSP) which would be implemented over a five-year period, “recognising that some interventions in the domestic economy must be time-bound to engender rapid industrialisation.”

The Government of Ghana admits that the country’s manufacturing sector has not responded well to the various economic and trade policy reforms pursued over the past decade.

“Manufacturing firms have faced considerable challenges in the form of increased competition in the domestic and export markets and high production and distribution costs arising from high interest rates, aged and obsolete equipment, inefficient infrastructural services and low productivity.”

The key development objectives of the Industrial Policy are: to expand productive employment in the manufacturing sector, to expand technological capacity in the manufacturing sector, to promote agro-based industrial development and to promote spatial distribution of industries in order to achieve reduction in poverty and income inequalities.

In a 2013 report on the “Industry Policy Process in Ghana,” for the United Nations Industrial Development Organisation, Abubakari Zakari and Amadou Boly indicate that the number of technical staff in the Ministry of Trade and Industry is “very low,” especially for the industrial policy process.

“The majority of the Ministry’s staff are found in management and administration rather than in the core technical units,” the report says.

“Thus, the supporting staff generally outnumbers the commercial and/or industrial promotion officers. The public sector only attracts individuals who seek stability, who want work flexibility so they can attend to other personal issues, or individuals who want to take advantage of official privileges to study abroad or receive training as a stepping stone for a better paying job in the future.”