Manufacturing sector to draw attention at Graphic Business/Stanbic Breakfast
The manufacturing sector holds the key to Ghana’s economic growth given its potential to create jobs and provide additional tax revenue for the state.
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The manufacturing sub-sector’s contribution to GDP has, however, been on a consistent decline for some time, from 10.2 per cent in 2006 to 4.5 per cent in 2017.
Although the sector’s contribution to the national economy has been declining, there is every reason to believe that with proper policies and investment incentives in place, the manufacturing sector can potentially become a major driver of economic growth.
The sector has not realised its enormous opportunities due to a myriad of challenges such as high costs of production, high-interest rates and increased competition arising out of trade liberalisation agreements.
With unemployment reaching alarming rates in the country, the manufacturing sector has been identified as the government’s sure bet to curb the menace.
The Ghana Labour Force Survey Report by the Ghana Statistical Service (GSS) projected the country’s unemployment rate at 11.9 per cent.
Although the country’s economy grew by 8.5 per cent last year, this growth was largely driven by the oil and gas sector and this growth has so far not been able to translate into the creation of jobs in the country.
Despite growth being a necessary condition for development, it can only pass the sufficient condition test if it translates into the generation of productive and high-earning jobs.
For this to be possible, it requires a redirection of a growth strategy that is based on the promotion of manufacturing activities that are strongly linked with agriculture.
The new direction should be focused on fixing the problems of the declining manufacturing sub-sector and raising productivity in agriculture. This should be the policy direction towards a more inclusive growth.
This calls for investment in areas that would promote manufacturing and agricultural activities where the potential for job creation is high.
A key indicator of the health of an economy is the availability of jobs and the quality of those jobs. This is measured by rates of unemployment and joblessness, as well as poverty incidence and income inequality.
It is for this reason that the GRAPHIC BUSINESS, in partnership with Stanbic Bank, is bringing together experts from the private sector and the government to discuss how these two stakeholders could partner to unlock economic growth through manufacturing-cost, quality and competitiveness.
The breakfast meeting, which has been scheduled for July 31, will have speakers such as the Senior Minister, Mr Yaw Osafo-Maafo and the Managing Director of Tropical Cables, Dr Tony Oteng-Gyasi.
Ghana’s manufacturing industry
In 1957, after Ghana gained independence, the Nkrumah government launched an industrialisation drive that increased manufacturing's share of GDP from 10 per cent in 1960 to 14 per cent in 1970.
This expansion resulted in the creation of a relatively wide range of industrial enterprises, the largest including the Volta Aluminium Company (VALCO), smelter, sawmills and timber processing plants, cocoa processing plants, breweries, cement manufacturing, oil refining, textile manufacturing operations and vehicle assembly plants.
Many of these enterprises, however, survived only through protection. The overvalued cedi, shortages of hard-currency for raw materials and spare parts, as well as poor management in the state sector, led to stagnation from 1970 to 1977 and then to a decline from 1977 to 1982.
Thereafter, the manufacturing sector never fully recovered and performance has remained weak.