An export-focused growth strategy has long informed Ghana’s industrialisation agenda. The country’s economic infrastructure is key to this growth strategy, which comprises special economic zones (SEZs), export processing zones (EPZs) and industrial parks. This landscape facilitates the maximisation of limited capital outlay, the provision of a dedicated institutional framework, lower production costs and an enabling business ecosystem due to shared services and infrastructure within a designated environment. According to an October 2021 UN Conference on Trade and Development report, West Africa hosts 24% of Africa’s 237 SEZs, exemplifying the growing prominence of such enclaves as a means of promoting industrialisation, economic diversification and foreign investment inflows.
Transformation
Facilitating the emergence and diffusion of economic infrastructure has been central to Ghana’s industrial strategy. Free zones are key to the government’s 10 point-Industrial Transformation Agenda, buttressing the flagship One District, One Factory programme and its goal to enhance manufacturing capacity. The third point of the agenda underscores promoting industrial parks and SEZs to bolster strategic sectors. To achieve this, the Ministry of Trade and Industry aims to ease the procurement of land, enabling the proliferation of parks and SEZs.
To accelerate the shift into higher-value manufacturing, companies operating in free zones are offered numerous incentives. These include tax and Customs exemptions, competitive water and electricity tariffs, reliable power supply, an export mandate of at least 70% of production, and no controls on foreign ownership and repatriation of profits. Another advantage of free zones is their integration with and proximity to key infrastructure, such as the Port of Tema.
Ghana’s free zone facilities include four EPZs: Ashanti Technology Park, the Tema EPZ, the Sekondi EPZ and the Shama EPZ. As of 2022 the Tema EPZ was fully operational, hosting 90 companies, including global chocolate manufacturers such as Barry Callebaut, Cargill and Touton. Additionally, the Tema EPZ hosts the Dawa Industrial Zone, one of the country’s two active and privately owned industrial parks.
According to Michael Oquaye Jr, CEO of the Ghana Free Zones Authority (GFZA), a total of 39 new companies were licensed between 2021 and 2023, deepening a pool of at least 217 companies active in free zones and strengthening supply chain linkages with local stakeholders. The new companies are expected to inject an estimated $230m into the economy in the coming years, in addition to estimated export earnings of $529m from a production value of $436m.
As the emphasis on sustainability grows, the sector could also see an increased focus on recycling. “Enforcing regulations more rigorously across the value chain is crucial to fostering environmental sustainability,” Adrien Cerino, Ghana managing director of environmental services company Veolia, told OBG. “Promoting the integration of recycled materials, like plastic waste, into the raw materials used by manufacturing companies has the potential to drive the adoption of eco-friendly practices in other industrial segments.”
Growth Potential
While as of 2020 companies had generated a cumulative $27bn in exports under the GFZA, a 2022 report by the African Centre for Economic Transformation illustrates the significant scope for growth. The report found that Ghana’s free zone programme offers growth opportunities by establishing effective links to other industrial policies and the government’s overarching development agenda. Ghana’s model stands to benefit from environmental sustainability measures, as well as improved technology access and greater workforce proficiency. The report also stressed the importance of good corporate social responsibility activities. While single-factory zones have had a positive social and economic impact, Ghana’s enclave-based zones could benefit from organising programmes that contribute to local communities.
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