On creating an enabling environment for factories
How has the One District, One Factory initiative impacted investment commitments?
GIFTY OHENE-KONADU: The National Secretariat has received several business plans that have been cleared by participating financial institutions and partners. Besides the already launched Ekumfi pineapple factory, it is anticipated that by the end of September 2018 no less than 30 new projects will become operational, after taking into account the construction times and gestation periods for the agricultural produce related to those projects.
There is investment interest from different regions, including the EU, China and Turkey. Our target investors include existing businesses willing to move to the districts and expand, and new businesses seeking to operate within districts where they can source raw materials and employ locals. The secretariat is also targeting businesses in which operations would involve distribution and generating market access for goods produced in the districts, as well as businesses already located in the districts that have the potential to grow, but need some degree of support.
What supporting infrastructure is needed to ensure the sustainability of the programme’s sites?
OHENE-KONADU: Road accessibility is critical for facilitating the transportation of raw materials and goods to and from the factories. Also, infrastructure related to irrigation and the construction of dams close to the producing areas is also important. Mutual coordination with the Ministry of Agriculture and programmes such as One Village, One Dam will be critical for ensuring sustained supply. Additionally, warehouse facilities for storing finished products and raw materials are needed. Because of the specialisation required, this will be handled by the private sector to ensure long-term sustainability, given the wider spectrum of industries that One District, One Factory aims to support, which include agro-processing, textiles and clothing, ICT and pharmaceuticals.
What do you see as the biggest implementation challenges ahead?
OHENE-KONADU: A typical concern investors have is the lending rates of local financial institutions. The possibility of accessing financing at competitive rates is critical, and alternatives are currently being explored. These include financing schemes in collaboration with financial institutions and schemes that take into account the cash flow estimations of individual projects.
On the human capital side, we are anticipating issues concerning its availability and are contemplating a comprehensive effort that includes collaboration with NGOs, as well as setting up incubators in some areas to develop an adequate business ecosystem surrounding key sites. Participation of external markets is also an important factor for certain products in order to sustain larger-scale production. For this, the adoption of international best practices and certification will be a crucial area to track.
How can the long-term commercial viability and profitability of these factories be ensured?
OHENE-KONADU: The secretariat is committed to creating an enabling environment for commercially viable factories. As part of its mandate it is working towards the provision of business support services, business assessment, assistance with developing growth strategies, capacity building (mentoring and coaching), the creation of networking opportunities, assistance with financial planning, regulatory and legal compliance, as well as sector-specific support, including technical support in project management and engineering services. All of this is expected to have an impact on the success rates of the new factories. Coordination with other government and private agencies and institutions is integral to the secretariat’s practices because of the number of critical factors and resources that are required.