Ghanaian government provides incentives for building value-added processing facilities

 

One of the most ambitious elements of the government’s industrial development strategy is the One District, One Factory (1D1F) scheme that was launched in 2017. As its name suggests, the programme seeks to establish a factory in each of Ghana’s 254 districts. The initiative emphasises job creation, as well as leveraging the country’s existing natural resources and competitive advantages. The authorities are hoping to generate between 1.5m and 3.2m new jobs nationwide by the end of 2021 through the 1D1F initiative. “The government saw the need to add value to local industry and increase manufacturing to balance the agriculture and services sectors in the economy,” Kweku Baah Ofori, technical director of the 1D1F Secretariat, told OBG. “There is a need to boost revenues to reduce unemployment and fund education,” he added.

Growth Incentives

In devising the project the authorities looked to a range of successful industrial development models, including those employed in Tanzania, Malaysia and Kenya. The programme aims to use government resources and a range of initiatives to stimulate private sector-driven development.

In order to be eligible for the scheme prospective projects must have an investment value of at least $50,000 and investors must be able to ensure the commercial viability of the project. The government supports firms by matching suitable investors and offers a range of financial support, including equity investment, longand short-term trade, and asset financing. In addition, the state offers business support services, assistance with regulatory and legal compliance, and mentoring to support capacity building. “The 1D1F industrialisation policy should link almost every aspect of the economy; education, banking, marketing, among others,” Ofori told OBG. “The government brings together stakeholders and provides support for commercially viable projects to help businesses set up factories.”

These efforts are also supported by a broader driver to ensure competitive interest rates, stable financial services and improved transport and infrastructure. “It is important to get the fundamentals right,” Ofori told OBG. “But we are confident that the industrialisation policy will be well implemented and that the objective of delivering economically viable factories to enhance the Ghanaian economy will be achieved – we are hopeful about delivering a factory in every district by 2020.”

Steady Progress

As of early 2019 over 79 projects have received support under the 1D1F scheme, with a further 35 undergoing credit appraisal. Work was under way on the completion of a potato processing factory in Gomoa Bewadze in the Central Region. The company developing the plant, Casa De Ropa, is already producing bread, crisps and pastries from sweet potatoes grown in 200 acres of land, with plans to bring a further 800 acres into cultivation. Local farmers are undergoing training in growing the crop in an early example of the knowledge and technology transfer that 1D1F is intended to bring. Eventually, the company expects to employ more than 1000 people directly through project.

In Ekumfi in the Central Region, Ekumfi Fruits and Juice Limited’s processing plant is also under development. Upon completion the factory will cultivate and process pineapples, thereby increasing the value-added component of domestic manufacturing and helping Ghana shift away from the export of basic commodities and towards the export of processed goods.

A third factory, Kete Kratchi Timber Recovery, is being developed near Lake Volta. The business is set to produce a line of barge-mounted salvage units built using modified excavators to facilitate the recovery and transportation of timber; thereby supporting the further development of the country’s timber processing industry. In November 2018 President Nana Akufo-Addo inaugurated a diaper factory, being developed by the Chinese company Sunda under the 1D1F programme in Bortianor near Accra. As part of the government incentive scheme, the factory has been granted a five-year tax exemption as well as a duty free regime.

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The Report: Ghana 2019

Industry & Retail chapter from The Report: Ghana 2019

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