Why the Government of Ghana should reconsider the GNTC model to boost local manufacturing

Kingsway Accra.jfif Kingsway Accra. Post Independence, Unilever Ghana

Fri, 26 Jul 2019 Source: Myles Nti

Through many years of socialization and formal education, many of us have settled on the notion that the role of government is to provide the right policies and infrastructure for private enterprise to thrive but the more I look at this topic now, the more I ask myself whether government still has a role to play in helping African industry flourish by being a stakeholder in certain sectors including Tele-communications and e-commerce.

Let me float a suggestion-public-private run/backed supermarkets that stock ‘made in Ghana’ products like the once thriving Ghana National Trading Corporation (GNTC) of old.

What led to the collapse of these supermarket chains including Kingsway, Union Trade Company (UTC), Glamour? Was it poor management, corruption, inefficiency and most of all political instability? Almost certainly so and the result is Ghanaians who can afford to invest in industries are hesitant due to our history of past political interference, instability and victimization of successful businesses. We are left with foreign firms to come build but how long will it take and how many will eventually come?

According to Zakariah Ali, in the book ‘Walk with the Devil’- “within a short period of time, GNTC become the dominant distributor of every conceivable commodity in Ghana. Endemic corruption soon permeated and took over legitimate operations of the corporation. The culture of bribery and corruption that was sown shortly after independence also doomed Ghana’s attempt at capturing commanding heights of the economy.”

My question then is this, was the proximate cause of the collapse of state -owned corporations the economic model itself or was it the lack of an enabling environment i.e. corrupt political leadership and the associated instability?

If The government of Ghana is in the process of reviving Ghana Airways because of its importance to the economy, can the success of Rwanda Airways, Ethiopian Airlines and Emirates offer a strong argument for reviving the ‘GNTC model’ as part of our economic revitalization program in Ghana? Under Ghana National Petroleum Corporation, Ghana owns a minority stake in all oil blocks in the country and then we have The Ghana Cocoa Board.

This shows that with the right structures and policies, the GOG is capable of competent partnerships in private enterprise. Would it be a bad idea if government creates the platform for the consumption of locally produced goods or must we depend only on private enterprise such as Shoprite, Melcom and Citydia to do the heavy lifting for us? Are we hoping and praying that they will showcase our local products? Even if they want to stock Ghana made products, these supermarkets do not have the capacity and the reach to make a difference in the Ghanaian value chain for manufacturing.

Let’s look at Kenya for instance, Uchumi Supermarkets Ltd. (which is our version of GNTC) was a government run supermarket chain from the time of independence until recently when it folded. Ironically, its primary competitor-a fully privately-owned corporation, Nakumatt Holdings also met the same fate. Both felled by gross mismanagement.

Private enterprise fails just as public enterprise in Africa. Is it fair then to say that African government always run everything aground? Through pressure from the ‘Bretton Woods consensus’, Ghana was forced to offload all its government owned enterprises. Are we better off today? I think both experiments have failed and need a re-evaluation.

Have we been too quick to copy models from other places forgetting that those are well matured markets with purchasing power that can withstand shocks? Does it make sense for the GOG to look into the GNTC etc. model as a stepping-stone for their industrialization policy? The model has worked in other places such as China where Huawei, ZTE and the likes have had strong government backing pushing them to the top. China is also involved in the construction industry and making news on the world stage. Do you think these are all mere coincidences?

In conclusion, Ghana can manufacture all we want but if there is no platform for local consumption, then we will continue to import everything. Can we therefore complement our exports with local consumption? This experiment worked for a very long time until wrong polices and political instability stifled and killed it.

The government must reconsider this model but avoid the trap of a ‘cash cow milked to death.’ Meaning bring in competent management teams from the private sector, execute public private partnerships models and hand majority stake over to private enterprise after several years to make sure that operations are sustainable for generations to come.

Columnist: Myles Nti