Isaac Adongo on how to make ‘One District, One Factory’ successful
The Member of Parliament (MP) for Bolga Central, Mr Isaac Adongo, says the government has failed to provide a roadmap on how the private sector can help actualise its district industrilisation programme (DIP), the ‘One District, One Factory.’
Advertisement
As an initiative that required private capital to succeed, the MP said the government needed to announce policy incentives that would help entice the private sector to invest in the DIP.
These incentives, he said, could come in the form of tax rebates or high returns for investors willing to move funds into the programme.
“We were hoping to see some incentives in that regard in the 2017 budget but that did not happen. Rather, the government signaled to us in the budget where the investments should be going, which are imports and not ‘one district one factory,” Mr Adongo told the GRAPHIC BUSINESS in the week ending.
“If I am an investor, I will move money where I will make my returns. So, if government has slashed import duties, reduced the consumption tax from 17.5 per cent to a flat rate of three per cent, and I also have a huge market access, why will I carry my money to a remote district when I can make lots of money through the importation of good,” he questioned.
“As an investor, I will be thinking about how to get reliable source of power in the remote districts, how I can attract the most technically gifted people to work for me, how I can get a reliable all-year round raw materials, how much it will cost me to transport my finished goods from the remotest village to the market centres and also how to get market access for my goods,” he stated.
He said the government should, therefore, come up with measures and policies that would minimise some of these challenges in the districts and give hope to the private sector players, who intend to take advantage of the policy.
“If it’s only about the opportunities, the private sector is already aware of the opportunities in these districts but have not moved there yet because it is not profitable,” he noted.
Access to market
Again, he said the government was also creating competition in terms of market access for the existing manufacturing companies and the factories that were yet to be established under the ‘One District, One Factory’ project by opening the country’s doors to imports by eliminating and reducing import duties.
He said this would enable people to bring in cheap imports that would create unhealthy competition for the local manufacturing companies.
Crowding out private sector
Mr Adongo also pointed out that the government’s decision to borrow GH¢17.4 billion from the domestic market in the first quarter would crowd out the private sector.
With the amount being more than half of the entire credit that banks gave out in 2016, which was GH¢36 billion, the Bolga Central MP said, “All the monies available to the banks for credit might be taken by the government.”
“It is very interesting that we are only three months into this new administration and it has already become very clear that borrowing on the domestic market is beginning to escalate,” he mentioned.
Given that the the private sector is the riskiest customer to lend, Mr Adongo said “when government is in the market to borrow, then it makes sense that this is a risk-free borrower compared to the risk-laden private sector.”
“So, when government is in competition with the private sector for funding, it means that the private sector must pay more.
“When government is borrowing, then it means it is indicating to the banking sector where they should put their monies and every bank and every investor will be interested in government bonds,” he stated.