Strengthening the 1D1F: Lessons from manufacturing history
The One-District, One-Factory(1D1F) programme was launched in 2017 and though I am not aware of a policy paper that launched it, a PowerPoint presentation on the secretariat’s website states its objectives.
They include job creation, rural income generation, import substitution for currency stability, increasing export revenue, attracting profitable investors and increasing the yield of domestic output.
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While its objectives are well-intentioned, they can be strengthened when related to the manufacturing history of the country.
History
British colonialists stifled the growth of our manufacturing industry so as to use Ghana as a market for their manufactured goods.
Nkrumah was apprehensive of the emergence of a competitive capitalist class, so his policy limited Ghanaian-owned businesses to a maximum capitalisation of ¢500,000.
In the 1960s, we embarked on modernisation’s Import Substitution Industrialisation (ISI) policy, designed to break our dependence on foreign imports, generate jobs, lower prices and transfer technology to Ghana.
GIHOC’s 17 establishments failed partly because they depended on imported raw materials and machinery, assembled consumer (not capital) goods for local consumption and depended on both semi-peripheral and state capital.
Protectionism (tariffs and quotas) associated with ISI also violated basic economic concepts of comparative advantage and protected unviable establishments. State farms were designed to feed manufacturing with raw materials but in most cases, key inputs had to be imported.
In the 1970s, based on self-reliance, we turned to the informal sector as an engine of manufacturing growth.
This was a return to our traditional ways of adding value to raw materials.
It was supported by the Operation Feed Yourself/Operation Feed Your Industries policies (OFY/OFI).
Yet, the lack of adequate institutional, financial, technical, managerial and marketing enabling circumstances contributed to the failure of the programme.
Under dire economic circumstances, we were compelled to adopt ERP/SAP starting in the 1980s.
The neoliberal ideology of this programme dictated we privatise production and minimise the role of the state in the economy by deregulating production. GHIOC’s establishments and the State Farms were, therefore, disposed of, mostly to FDI.
Foreign companies (e.g., Trusty Foods) bought GIHOC plants (Pwalugu Tomato Factory) not to resuscitate them, but to keep them ideal so they could dump their manufactured goods on us.
By the 2000s, we were back to where we started at independence: a peripheral producer of raw materials for export that depended on external sources for manufactured good.
1D1F
1D1F seems to have lumped all our three manufacturing policies into one.
The implication is that all strengths and weaknesses of each are inherent in the programme.
The first strength of 1D1F is that it emphasises the private sector (both local and foreign) in manufacturing since the state only provides a 10 per cent loan guarantees to creditors.
On hindsight, it was suicidal to kill International Tobacco, Boakye Mattress, Apino Soap, and Tata Brewery.
Second, it is also great that the programme is concerned with all scales of manufacturing (from micro- to macro-scales).
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That way, the informal sector will also be strengthened.
A third strength that is not talked about is stemming rural-urban migration since jobs in locales will limit the youth flooding the major cities, just as China’s Town and Village Enterprises did.
A fourth strength is that the state only provides institutional, financial, technical, managerial and marketing enabling circumstances to make manufacturing viable and globally competitive.
Strengthening 1D1F
Yet, there are aspects of the programme that can be strengthened to make it more effective.
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First, why import substitution? The focus should be on producing for the global market, including the local market.
You will be surprised at the demand for pounded yam in the Nigeria Diaspora, as well as for unadulterated palm oil, black soap and African fabrics and clothes globally. Thus we should focus on producing for a broad or export-led market.
Second, why are we focusing on distribution and trade?
We already have a vibrant commercial sector that should be left to handle distribution and trade. Third, we need to link 1D1F with PFJ in an effort to make our manufacturing ago-based. PFJ makes an effort to do this through its second module: Planting for Export and Rural Development (PERD).
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I suggest the PERD module of PFJ be expanded to focus on agro-based (and geologic-based) raw materials.
Fourth and most importantly, manufacturing policy should go beyond the production of consumer or assembly goods to include capital goods.
This means the development of primary manufacturing in paper, plastic, metals (aluminium, iron and steel) and glass.
The development of these primary industries will mushroom into a capital sector that produces machines for additional production.
Considering the size of our market (about 30 million people), this may be done at a regional scale where ECOWAS and AU countries cooperate to develop primary industries for its over billion-strong market.
Technicians at Kumasi Magazine and engineering graduates can produce the majority of machines we need to manufacture goods. ‘Smart manufacturing’ requires that educational systems be designed to meet the specific needs of manufacturers.
Fifth, the role of infrastructure (power, water, transportation and warehouses) in manufacturing should not be overstated. Dumsor stifled cold stores, seamstresses, tailors, hairdressers and barbers’ businesses in this country. Last but not least, manufacturing under 1D1F should be done in an environmentally sustainable manner.
The writer is a Professor of Geography, Miami University
Writer’s E-mail: [email protected]