AT LAST, A SERIOUS EFFORT…
“Industrialisation equals development: that was the base of Nkrumah’s economic strategy” – Tony Killick
The idea of an industrialised Ghana is as old as the state itself. It was a vision that the country’s first President, Kwame Nkrumah embraced as a way to transform and modernize the economy, moving it away from agrarian and raw material complex to a manufacturing behemoth. It is rather sad after almost seven decades as an independent nation, this vision remains unfulfilled. What has happened to the long-term industrial strategy of Ghana?
It is only through manufacturing that we can effectively deal with the biggest obstacle facing today’s youth, which is unemployment. It is through manufacturing that we can produce the mass employment needed to absorb the thousands of youths coming out of our schools yearly.
High youth unemployment is increasingly becoming the biggest challenge facing the political leadership of Ghana. Ghana has over the decades witnessed a transitioning of its labour force from the agricultural sector to the services sector in line with the changing nature of the structure of the economy. Unfortunately, manufacturing is playing a very small role in this structural transformation taking place. While agriculture has lost more than 20 percentage points of its labour share between 1992 and 2010, manufacturing has also seen its share decreasing, with the services sector taking up the chunk of the labour force now. However, the services sector lacks the capacity to absorb the high numbers of unemployed young people roaming our streets looking for jobs.
The debate over the political direction of the country has been so intense since 2017 that we are at a risk of losing sight of what is happening on our industrialization drive. The question of industrialization policy seems like a secondary question now.
I have been following the government’s one-district, one-factory over the last five years. I must say that is the closest we have come to a well-thought-out industrialization policy since the first republic. Though I admit more needs to be done, I am concerned that we have not properly assessed what has been done so far and the opportunities being unleashed through this initiative.
Economic policies must be seen as part of a much broader set of policies geared towards achieving a specific aim of development. This brings me to the first of the factories that I want to emphasise on.
The lack of storage facilities means there is always an inevitable cyclical shortage and price hikes in the cost of tomatoes during the dry season of Ghana. This creates an enormous market for the importation of tomato paste and its related products into the country from China and neighbouring Burkina Faso. Out of over 510000 metric tonnes of fresh tomatoes produced annually in Ghana, about 153000 metric tonnes (30%) is lost through post-harvest losses.
According to the United Nation’s specialised agency, the Food and Agriculture Organisation, Ghana has the potential to process about 450000 metric tonnes of the fresh tomatoes currently being produced in the country.
From a base of 1,272 metric tonnes of tomato paste imported in 1996, this figure had shot up to 120,565 metric tonnes by 2015. (Source: FAOstat). Ghana imports an average of 78,000 metric tonnes of tomato paste currently at a cost of some $150 million. This is money and jobs being shipped out of Ghana. It is problems like this that an effective industrialisation policy must address.
Weddi Africa Ltd, a wholly Ghanaian owned company was commissioned on the 10th of August 2021 by the President at Domfete, in the Berekum West District of the Bono Region. The government working through the Ghana Exim bank and Agricultural Development Bank facilitated the acquisition of the loan facility to support the establishment and operations of the sixteen million dollars facility.
This factory has the capacity to process 40,000 metric tonnes of fresh tomatoes annually, in addition to a 500-metric tonnes facility to store fresh tomatoes. The factory is expected to serve as a source of ready market for some 2500 farmers in the Tano North and Berekum districts in addition to the 160 people directly employed by the factory now. (This number is expected to increase to 350 with the gradual scaling-up of operations within six months of operation).
This comes to augment the already established $23 million tomato processing factory, known as Leefound foodstuff Ghana, located at Doryumu in the Greater-Accra region. This facility is also operating under the one-district, one-factory initiate of the government and has the production capacity of 54,000 metric tonnes.
The African tomato paste market is estimated to be worth Eight Hundred Million dollars ($800000000) with China and Italy controlling close to 95% of this market. Out of the seven top importing countries of tomato paste on the African continent, five of them are within the West African sub-region: Nigeria (80000 MT), Ghana (75000 MT), Togo (51000 MT), Benin (44000 MT) and Cote d’Ivoire (27000 MT). The ratification of the African Continental Free Trade agreement should serve as a huge incentive for these factories to capture the tomato paste market within the sub-region.
Ghana’s food import within a space of just seven years jumped from $600 million in 2008 to $2.1 billion by 2015. The figure currently stands at $2.4 billion. Though the slowdown in the pace of growth of the food import bill is important, what exactly is the wider goal to eventually bring it down through the industrialisation policy?
In 2008, Ghana imported 395,400 metric tonnes of rice into the country. As at the end of 2019, Ghana was importing over 600000 metric tonnes of rice into the country. Ghana spends half a million dollars on just rice importation annually. With rice increasingly becoming the most common staple food in most Ghanaian homes, the need for a revamping of local production of the staple cannot be overemphasised.
The GH¢7.3 million Savelugu rice processing factory has the capacity to process some 21,500 metric tonnes of rice annually. This factory employs some 118 people including management professionals, factory floor workers and plantation workers who will work on a nucleus rice farm. Some 600 farmers from the Savelugu Municipality and neighbouring communities are also directly engaged in the supplying of paddy rice for processing.
The Savelugu facility is part of the Common User Facility, which is an agro-industrial factory established by the Rural Enterprises Programme (REP) under the Ministry of Trade and Industry with funding from the African Development Bank. Similar factories are in Nkran Nkwanta in the Dormaa West District of the Bono Region (rice processing); Akontombra in the Sefwi Akontombra District of the Western North Region (rice processing).
The GH¢6.7 million facility in Sefwi Akontombra has a similar production capacity to the factory in Savelugu. The processing plants include a modern parboiling, milling, and packaging plants. The factory has a standby generator and a mechanised borehole to supply the facility with water.
Another rice processing factory which has benefitted from the one-district, one-factory initiative is the Tamanaa company Ltd., a rice farming and processing company located at Nasia, near Walewale. The facility which hitherto had a production capacity of milling 40 metric tonnes of rice per day has seen its production capacity increased to 290 metric tonnes by day. So far, some 148 workers have been employed. The company markets 60 per cent of its parboiled rice under the brand name: Nasia Star Rice.
Though this is relatively small compared to the volumes that the country imports annually, this should be a good start in bridging that gap.
Quite lamentable is the amount the nation spends in importing processed fruit juice every year. Ghana spends some $150 million annually in importing various types of fruit juice into the country.
According to a report by an international advisory firm, Konfidants, conducted in May 2021, only 26% of consumable goods sold in Ghana’s leading supermarkets are produced in the country. This is a slight improvement on the 18% recorded in 2019. In order to have any effective industrial development, any policy effort should start from what we consume as food.
The Ekumfi Juice factory, the first factory to be commissioned under the one-district, one-factory initiative is currently in its third year of production. A wholly Ghanaian company installed with modern production facilities, the factory has the capacity of processing 10000 fruits every hour which means the factory will require four acres of pineapple fruits to be harvested every hour.
The Ekumfi Juice is currently the biggest pineapple processing factory in West Africa. The company has so far increased its pineapple farmlands from 1,200 acres to 6,000 acres. The factory is providing direct jobs to some 520 people and indirect jobs to about 1000, mainly farmers in its catchment area.
Though the factory expressed production challenges earlier this year due to pineapple production challenges, it is gratifying to note that the Agricultural Development Bank is investing in the construction of an irrigation dam to facilitate the cultivation of pineapple at the factory’s 21 sites throughout the year. The company has already staggered the production of the pineapple at its various sites to ensure the continuous availability of the products throughout the year. After the success of its maiden product, the factory hopes to diversify into the production of other products such as multi-fruit juices and pineapple beer.
Nano Foods Limited, a pineapple juice processing factory at Nsawam has also been revived under the one-district, one-factory initiative. This company has the capacity to process and package 6,000 metric tonnes of pineapple fruits into pineapple juice annually. The Nano Foods Limited, formerly known as ASTEK Refresh Pineapple Juice Factory, was revived with $1.6 million capital support, through the Ghana Export-Import Bank (EXIM Bank) in 2018. The factory hopes to increase its staff strength from the current 100 to 300 in the next two years. The company currently deals with 13 Pineapple Associations and Co-operatives in the Nsawam-Adoagyiri Municipalities and Akuapem South District. These farmers now supply pineapple fruits to the factory, thereby increasing their income.
The last of the fruit processing factory I would tell you about is the GHc36-million water-melon processing factory in Walewale in the North-East region. This factory is also wholly Ghanaian owned and is a subsidiary of Champion Foods and Beverages Limited, a beverage manufacturing, distribution, and marketing company. This factory is expected to create direct employment for 300 people, while about 2,000 people, including farmers and aggregators will also be engaged in an out-grower scheme. The facility when fully operational in March 2022, will be expected to process 80,000 metric tonnes of watermelon annually.
According to the national poultry association, over 90 percent of Ghana’s annual demand of about 250,000 metric tonnes of poultry meat is supplied by foreign producers. In 2003, 13,000 metric tonnes of poultry were imported to Ghana from the European Union market. By 2019, this figure had increased to 175,000 metric tonnes.
The revamping of Darko Farms, the oldest private and largest poultry farm in Ghana as part of the 1-District-1-Factory initiative is therefore most welcoming. The Ghana EXIM Bank has granted a concessionary loan of GH¢22.1 million to revamp the company’s operations, by upgrading the plant and equipment, retooling the hatchery, feed mill and processing facility and as working capital. Darko Farms, currently has a processing plant operating at 10,000 birds per day with one shift, and 20,000 birds per day with two shifts. It has a hatchery with capacity to produce 6-million-day-old chicks a year, breeder farms with a bird population of about 30,000 per batch, a layer farm with capacity of 100,000 per batch, and commercial broiler farms with capacity of 350,000 birds per cycle of 8 weeks.
Thus far, the company has created direct employment opportunities for some 250 workers, and indirectly for over 500 people, including out-growers, distributors, and transporters. At full operational capacity, the company will directly employ more than 400 workers, with 700 being indirect employment.
The company is engaged in negotiations with the Mohinani Group to become the major local supplier of processed chicken for Kentucky Fried Chicken (KFC) restaurant chain. KFC, through its local supplier has indicated its preparedness to off-take 100,000 birds monthly from Darko Farms under YUM certified conditions.
The subsidies provided by the European common agricultural policy has meant that poultry products from Europe have become very cheap compared to locally produced birds. To curb this trade imbalance, the government should be looking at increasing the import tariff on poultry products from the current 20% to about 35/40%. This may encounter technical and legal challenges since Ghana has already rectified the interim economic partnership agreement with the European Union, which effectively grants tariff-free access to the Ghanaian market for European producers.
Industrialisation development must be geared towards import substitution goals for products that can easily be produced here at competitive prices to protect jobs and enhance capabilities. We should not be repeating the mistakes of past attempts at industrial development which was simply focused on maximising political goals rather than situating them within a wide policy goal of establishing a modern manufacturing base.
If we are to make economic progress that can deliver high paying mass jobs for our youths, then we must endeavour not to fail at yet another attempt to structurally transform our economy. There are no simplistic rules of thumb when it comes to picking factories to underpin the industrial agenda of a nation but we must be deliberate in our effort to stand any chance of success