As Ghana looks to develop through industrialization by creating at least one factory in each of its 260 districts, researchers say that the Industry sector, has been struggling to meet its full potential.
The World Bank recently revealed that Ghana’s manufacturing sector declined by 14% in the second quarter of 2020 as a result of the coronavirus pandemic, contributing to the overall contraction of the industry sector by -3.1%.
Beyond COVID-19, the research firm Konfidants, noted that challenges like erratic power supply, dependence on foreign inputs and poor productive capacity, all contribute to decreasing the country’s competitiveness.
Unilever Ghana, a multinational company, that recorded a loss of almost GHS13 million in the third quarter of 2020, share their personal challenges within the sector.
“We depend on the competitiveness of cost of capital in the country, we are competing with imports. Ghana is a very liberalized country,” said the Managing Director, George Owusu.
Beyond profitability challenges, Unilever, a company that employs over 900 Ghanaians and also sources over 70% of its raw materials from Ghana, has had its share price decrease by over 50% since the beginning of this year.
But, Mr. George Owusu is hopeful that the company will survive the challenges saying, “When you look at our liability and where its liabilities sit, our liabilities are largely related parties. Our related party is a shareholder of this business and believes that its shares and investments here will become good. So, we are not under pressure at all in the area of liabilities. What we are focused on is making sure that we are improving our profitability and we are improving our management of cash.
Speaking at Ghana’s competitive potential in the AfCFTA launch and dialogue organized by Konfidants, the Managing Director of Sleek Garments, Nora Bannerman-Abbot, advocated for governmental agencies to actively assist businesses in the manufacturing sector to reach their full potential.
“The support must be direct, it must be relevant, it must be immediate and swift. There has to be private sector and public sector partnership.”
As the Ghanaian government actively encourages more businesses to participate in the African continental free Trade Agreement, some are worried that other countries with cheaper cost of credit, constant access to electricity, and superior productive capacity will outperform Ghana.
But George Owusu Ansah is hopeful that with the necessary collaborations, Ghanaian manufacturing businesses will succeed.
“Utilities, reliability, cost and capabilities of the Ghanaian become very important to enable us compete. And also, the laws around taxes and import duties. Continually, these are the areas that as industry players we have engage government to ensure we are all together in one effort (to grow the economy).”
The President of the Private Enterprises Federation, Nana Osei Bonsu, speaking at the event encouraged government to equip players in the manufacturing sector with the resources to produce the goods Ghanaians demand to grow the Industry sector.
“The government can influence what is produced here. They can order about 5 or 10 companies to make products the market directly demands,” he added.