Interview : Seth Twum Akwaboah
How is an integrated aluminium industry contributing to the country’s industrialisation?
SETH TWUM AKWABOAH: Since 2017, there have been exciting changes in the Ghanaian economy. The continued growth of oil and gas has transformed the makeup of industry and has driven a growth in oil field services, but this is well documented. Less so are the budding bauxite, alumina and aluminium industries. This represents real industrialisation and will provide a serious boost to the economy, while at the same time bolstering Ghana’s image as an industrial nation. Ghana and Guinea together have over 70% of global bauxite ore reserves, hence there is potential for the resource to join the scale of gold, oil and cocoa, contributing to an already improving balance of payments.
To ensure wider benefits, the unprocessed export of bauxite has been banned in favour of the semi-processed compound alumina, which is significantly more valuable than the ore alone. The supply chain throughout the production process is vast. For instance, the domestic aluminium smelter at the Volta Aluminium Company is increasing its capacity, partly thanks to special energy rates that allow it to compete globally. Falling energy costs in Ghana are also worth noting; the Public Utilities Regulatory Commission decreased the prices of electricity for commercial users by up to 25%. This is a strong signal from policymakers that industry, a sector that is seeing a 10% year-on-year rise in energy demand, is a top priority. Nevertheless, energy in Ghana remains expensive when compared to our neighbours, though prices have been falling.
What role does emerging technology play in the development of Ghana’s economy?
TWUM AKWABOAH: We are in a rapidly evolving technological environment, and to succeed, one must be proactive. In Ghana we already have some firms that use cutting-edge technology. Breweries, for example, are efficient and can produce at a rate of almost 60,000 bottles an hour, as fast as anywhere globally. Pharmaceuticals and 3D printing are also areas that have shown excellent growth and initiative. Barcodes are nearly universal now, enabling a digitised and databased supply chain, which will increase efficiency and decision-making. However, Ghana’s economy mainly consists of small and medium-sized enterprises (SMEs), and it can be very challenging for these businesses to expand. Textiles is one industry where advanced mechanisation is expensive, and domestic firms are undercut by competitors from abroad. Textiles needs technology to enable mass production to make it a significant contributor to the economy. The same can be said for agriculture, which also has the potential to expand with advancements in technology.
What challenges do SMEs face with regard to funding, and how are these being combated?
TWUM AKWABOAH: There is a shortfall of medium-to long-term financing, and this affects the type of projects we see, with entrepreneurs erring towards less capital-intensive endeavours. Mobilising funds for long-term lending is a challenge for most banks, though we hope that the current tranche of recapitalisation will alleviate this. Short-term finance, although often expensive for SMEs, is much more common. Funding is a challenge, and to help solve it we must see more innovation, such as increased technical support and a decreased reliance on collateral.
However, this environment creates an opportunity for institutions that do want to provide financing products. The African Development Bank and the Commonwealth Development Fund are examples of international institutions that deploy capital in Ghana’s private sector. The Common External Tariff and the African Continental Free Trade Agreement make Ghana an increasingly safe base from which to perform business across West Africa and Africa as a whole, and long-term financing is crucial for this vision.
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