Business News of Mon, 10 Sep 20181
One District, One Factory requires $10bn to thrive
Government must establish a US$10billion fund for a minimum of 10 years which should be dedicated to providing cheap financing to sustain companies under the One District, One Factory (1D1F) initiative, Professor Douglas Boateng, a supply chain management expert, has said.
He noted that due to the destructive impact of fake, grey, counterfeit and sub-standard products – which are cheaper than locally manufactured products– on the economy, the companies under the 1D1F need to be heavily subsidised and hand-held for sometime before they can stand on their feet and compete.
Government, he said, should bear the greater chunk of the US$10billion fund and then invite other development finance institutions to come in and support.
“Once the government commits, there are a lot of institutions that will come in as well,” he told the B&FT.
“Our economy has virtually been destroyed by counterfeit and fake products and so we need time and funding to be able to reverse it. Cheap financing is not coming from our banks and so with creativity we can sustain these enterprises that will transform the economy.”
Professor Boateng, who is also the board chairman of the Public Procurement Authority (PPA), added that to safeguard its investments, government must equip state institutions that are charged with border checks and security.
He believes that these factories, no matter how much money is given to them, cannot survive if the borders are not strengthened to curb the influx of fake, grey and sub-standard products.
“The systems and institutions in place in Ghana are struggling to contain grey, counterfeit and sub-standard products and this has led Ghana to become a dumping ground. The sad reality is that once you become a dumping ground, you kill your local industries. This is what has been happening over the last 30 to 35 years.
Meanwhile, these local businesses have overheads to cover and already you are borrowing at high interest rates. How do you compete with something coming cheap? We are all guilty as Ghanaians because we all buy these things,” he said.
Speaking ahead of the launch of the second edition of his book, ‘Executive Insight Series: Compendium of Supply Chain Management Terms’, Professor Boateng added that government can introduce a levy to fund the 1D1F fund.
“On top of that, these companies must be allowed to run as well corporatised entities with good corporate governance structures. Just leave them alone and let them be accountable for their actions. 1D1F will work if there is a collective effort to tackle fake and counterfeit products in our market,” he said.
Government has touted the 1D1F as being capable of transforming the economy by creating jobs and boosting local production. Despite strong local and international investor interest in the programme, analysts and other stakeholders, including bankers, have bemoaned a lack of cohesive strategy to drive it.
Universal Merchant Bank (UMB), a few weeks ago, announced it had signed off the first ever 1D1F project financed by a private financial institution.
Through its Public-Private Partnership (PPP) incubator centre, UMB is providing a credit facility to the tune of US$10.7million to the Central Sugar Company Limited that will be producing starch in commercial quantities from cassava from their base at Prang in the Pru District of the Brong Ahafo Region.
The starch processing factory will be constructed by the China National Building and Material Company (CNBM), which will also provide all the required machinery and tools to ensure the facility is fitted with state-of-the-art production installation.
Prof. Boateng’s book, which will be launched by President Nana Akufo-Addo on Tuesday in Accra, is the first of its kind in the world and is endorsed by global and local institutions such as the Chartered Institute of Procurement and Supply (CIPS), Chartered Institute of Logistics and Transport, Ghana Institute of Engineers and others.
The launch is a culmination of five years of work. “I have been in supply chain management for over 20 years. Doctors, accountants, engineers, lawyers, and other professionals have their own reference guides or dictionaries. When it comes to supply chain management, which include logistics, procurement and operations, there is no definitive guide for the functional practitioners around the globe. I decided to do this and it took me five years,” he said.