Interview: Yaw Adu Gyamfi
To what extent will the African Continental Free Trade Agreement (AfCFTA) impact the industry?
YAW ADU GYAMFI: The AfCFTA presents both potential advantages and challenges, but on balance it will have a positive impact on Ghanaian industry. The larger market will bring investment to the continent and facilitate trade. While Ghana is one of the stronger economies in West Africa, other countries beyond the region are much more competitive, such as Morocco, Kenya, South Africa and Ethiopia. It is therefore important to ensure that our business environment and productivity levels support competitive prices. We are confident that this can be achieved, but it will take some further investment. Ghana’s advantage lies in its access to affordable electricity and raw materials. However, challenges remain, with room for improvement in the financial sector – particularly in terms of ensuring that the cost of credit remains competitive.
The investment that will come as a result of the AfCFTA will benefit the middle class and create more job opportunities. When countries in Africa are competing on the basis of fairness and equity, prices should come down and the market should become more efficient, which will lift up the whole population. In terms of specific industries that stand to gain in Ghana, the oil value chain is showing potential and – with bauxite production ramping up – the aluminium industry will receive a significant boost. Furthermore, the agro-industrial sector, with limited commercial farming experience compared to neighbouring countries, could also benefit if industrialisation is promoted.
How is regional trade in manufactured goods expected to develop over the medium term?
GYAMFI: In West Africa the countries with an important manufacturing sector are Ghana, Nigeria and Senegal, where there has been a lot of industrial development. The remaining countries are very import-dependent, and this is unlikely to change in the medium term, as their manufacturing capacity has yet to be developed. If AfCFTA works well, Western Africa will trade more with us than with other countries.
ECOWAS trade is currently just 12% of Ghana’s total international trade. Furthermore, while the regional francophone markets trade in large volumes with France, the likelihood is that trade between them will increase with the AfCFTA in place. There are also opportunities for Ghanaian firms to open up manufacturing plants in countries such as Burkina Faso and Mali.
In what ways can the One District, One Factory (1D1F) policy boost industrialisation?
GYAMFI: The Association of Ghana Industries has embraced the 1D1F programme, as the concept and intentions are very good. With more industries at the district level and within various regions, local raw materials could be used more efficiently to promote development and leverage industrial output for export purposes. Alongside other stakeholders, we are also working with the government on a stimulus package for distressed factories. However, the challenge lies in the implementation and management of expectations, as a lot of work needs to be done to attain this objective. To ensure the success of the policy rollout, there needs to be enough high-quality raw materials available. This is one of the main bottlenecks at the moment.
Is the energy mix expected to change, and, if so, how will this affect the industrial sector?
GYAMFI: On the supply side there is sufficient output, but demand is always growing, and the cost of electricity is relatively high. We foresee that the hydroelectric component will continue to grow, and we expect other energy sources to further augment the mix.
Renewables are also developing very strongly, in particular solar, where the government has set a target of 10% of total output. However, for now, the initial cost of investment for solar energy remains prohibitive.
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