Interview: James Asare-Adjei
What are the key competitive advantages of Ghana as a manufacturing base for West Africa?
JAMES ASARE-ADJEI: Compared to other West African nations, Ghana has a track record of peaceful transitions between governments, thus reducing the perception of political risk. Market access is another key advantage: ECOWAS is a 350m people market, and hopefully the whole continent will eventually move towards greater integration. Current reforms are also set to make the country a more business-friendly destination. In addition, Ghana has a young and educated population that is receptive to further training, although more efforts need to be made to bridge the gaps between academia and industry in order to create a stronger skills ecosystem in areas such as technical and vocational training. Such areas should be regarded as equally relevant to the economy and as tools for increasing labour productivity and mobility.
How has business confidence evolved in Ghana over the past few months?
ASARE-ADJEI: The perception of the economy has significantly improved over the past few months. The average chief executive and business owner in Ghana is optimistic overall, mostly driven by the improvement in key macroeconomic indicators. Also, the issue of power has slightly improved and blackouts are less frequent, although their cost still remains an issue.
Another area of concern, which has been around for a couple of years, is related to interest rates, and this has a bigger affect on domestic business. Currently, rates offered by financial institutions are not reacting as quickly as expected to the downward variations in the policy rate. In the coming months, all ongoing initiatives aimed at stabilising monetary variables, as well as increasing efficiency in business procedures, might continue benefitting interest rates and overall business confidence. Of course business tends to thrive when macroeconomic indicators are stable.
In which ways can consumption of locally produced goods be encouraged?
ASARE-ADJEI: Creating awareness regarding the quality of local produce is essential. Ghanaians should note that by supporting local production, they are benefitting society as a whole. Clear policy direction towards supporting local production is also required. This will also imply support to increased capacity building (human and technical) in order for local products to be able to compete on quality, price and reliability with imported alternatives. Additionally, initiatives such as One District One Factory are very promising since they are not necessarily starting from scratch, as there is already installed capacity in the regions that can be revamped. Within this context, streamlining both the petrochemical and agro-processing value chain is going to be essential to make good use of existing natural resources. Also, local entrepreneurship and ownership should be stimulated by all relevant investment and export promotion entities if Ghanaian businesses are to prosper. This will hopefully attract the right number and profile of foreign investors in a win-win value creation environment, whilst further cementing a robust supply chain.
What is the role of the private sector in managing the issues of power supply and fuel costs?
ASARE-ADJEI: Ghana’s current power generation mix, which is unable to rely solely on hydropower, is partly responsible for the high cost of power in the country. Ghana’s manufacturers are advocating reserving cheaper sources for industries, since in the end it will permeate the whole cost structure of the economy. Solar and wind sources should also be adapted here. In the case of solar, there are many companies generating solar energy that do not rely on the national grid to save costs. Future industrial zones will need to incorporate, as part of their planning, the existence of reliable and cost-effective power sources.