Successful Ghanaian SME manufacturers tell the Daily Statesman what they need from the state.
Successful Ghanaian SME manufacturers tell the Daily Statesman what they need from the state.
It’s the buzz phrase on every government official’s lips: “Made in Ghana”. Making things in this country and consuming fewer imports is what will create jobs for millions of Ghanaians and bring us broad prosperity, the thinking goes. On 28 February, the annual Made in Ghana exhibition opened at the Trade Fair Site in Accra to support the drive to expand Ghana’s export base.
The exhibition, styled Made in Ghana, Globally Accepted, showcases a huge range of some of the best Ghanaian-manufactured products and services ‒ from hand-made jewellery through mass-manufactured school desks to electrical power to fine fabrics from Bolga to footwear ‒ and features businesses of every size. There is high-end furniture (a bathroom sink of polished wood, yours for a cool GHC1,500), but also pomades and leatherwork for less than GHC40, all of it locally produced.
Trade Fair chief executive Agnes Adu says there are over 550 companies and organisations showing this year, just short of the record 600 in 2018. On the second day of the fair when I visited, a downpour had kept many visitors away. Yet even the wind and rain hadn’t dampened the spirits of business owners showing what they have to offer.
Talk to the exhibitors, though, and it swiftly becomes clear that they face steep odds. Nadia is a mother of five who started sewing on the side to make extra income. Juggling sewing with childcare, she moved seamlessly into running a small workshop in Abeka where she produces ready-mades. She is keen to expand her export business but has had a sobering experience of selling into North America.
“I was doing business through one American man. When I had clothes ready, I would send a bag to him and he would give me the money even before selling. It was good for the first bag, second, third, fourth, fifth bag. Then for the sixth one he didn’t pay me but said I should be patient.
“I sent him a seventh one. He didn’t pay. After the eighth bag, he disappeared. I have been calling and calling but nobody answers the phone.”
There are no trade guarantee or insurance schemes open to small traders like Nadia. But despite her bad experience of business witih the States, she has discovered a reliable market for her waxprint dresses, skirts and shirts in other African countries ‒ Uganda in particular. Better still, she has joined an association of garment manufacturers – also based at the Trade Fair – which helps her attend trade events abroad. The group subsidises the cost of her travel and taking an exhibition stand.
Such efforts could help achieve the 50 per cent-plus increase in trade between African countries between 2010 and 2022 that the UN Economic Commission for Africa has set as a target.
Effects of leadership
Nadia praises presidents past and present for their efforts to make Ghanaian clothes fashionable. “First President Kufuor came and started wearing shirts made from our local cloth made here in Ghana. It really helped. Then President Mahama carried on from where Kufuor stopped.
“Now President Akufo-Addo has made people really interested in our own cloth and our sewing.”
But Nadia’s optimism is a little unusual. Other Ghanaian business owners to whom the Daily Statesman spoke complain that there’s much lip-service paid to boosting Ghanaian manufacturers, but little official support for what they do.
Frank Millen is the Ghanaian chief executive of the start-up Nanini Distilleries. Previously based in Guangzhou, he has deep knowledge of the hospitality industry and was a consultant to importers of Chinese goods. His new venture takes fresh palm wine sourced in the Ashanti Region and double-distils it to produce a smooth-tasting akpeteshie. The refined liquor and sleek packaging (brand name: Apio) make it a hot tip.
Millen is still looking for ways of moving production out of Greater Accra and back into Ashanti, nearer his source of supplies, but is already selling out within days of producing each batch of his product.
“We’re in talks with potential distributors who want exclusive distribution rights for Canada and Australia,” says Millen. He is also working on import licences for the UK, Europe and the Far East.
He notes that similar kinds of liquor are popular in other parts of Africa. “Remember, Nkrumah served Queen Elizabeth akpeteshie during her visit to Ghana in 1961. Our product and its new image will ensure we break into the world liquor market and put Ghana on the map,” he says confidently.
But he dismisses the idea that state-run schemes such as One District, One Factory (1D1F) can help his business expand.
“A lot of talk, but nothing for the man with no ‘friends’ at the top,” he scoffs. “I was even told that my bottles, which unfortunately I can’t make in Ghana but will be using to bottle a premium Ghana product, attract 20 per cent duty plus VAT.
“How on earth can we even start? The government must do more to assist.”
Older hands in Ghanaian manufacturing understand the frustrations of the start-up but may advocate independence at all costs.
Kalim el-Hage is exhibiting furniture at the Trade Fair event. The Lebanese-born entrepreneur’s father and grandfather were also furniture designers and his New Form company has been operating in Ghana for nearly half a century.
“I have done well for 48 years here because I don’t let politics get involved in this business,” he declares.
El-Hage insists that state support would merely interfere with trade out of his workshop in Abelenkpe, Accra. He says his recipe for success and longevity depends on doing business strictly with neutral institutions, and he is highly suspicious of state subsidies and business advice.
The Ghana Investment Promotion Centre reports that income from manufacturing reached an all-time high of GHC2.54 billion 2017 and sees huge scope for expansion through 1D1F. And the government’s Co-ordinated Programme envisages a whole new industry for Ghana based on expanded production of chemicals and fertilisers, powered by gas by-products from the resurgent petroleum sector.
The Daily Statesman put some of the manufacturers’ concerns to the One District, One Factory secretariat. A spokesman said: “The thing about 1D1F is very simple: tendering a business plan or proposal unlocks every other opportunity the scheme has to offer. No business can get past that. And there is no pot of cash sitting somewhere under the programme, into which we can dip to support start-up businesses.
“We are driven by the private sector. So, for any person or business that can source for funds, we play an intermediary, facilitating role: we channel the proposal and information about the business to existing financial institutions which then assess whether they want to back that project or not. It is the private business that takes the risk of sourcing the loan, contracting it and meeting payment terms.”
The spokesman says that in the initial stages 1D1F considered other models which involved managing a fund through the secretariat, but it became clear that this model was unsustainable. He points to the projects under 1D1F which are either up and running or nearing completion as evidence of the scheme’s success (there are 79 of them) and says there are proposals to offer incentives in five key areas to businesses whose projects have been approved by 1D1F, primarily by offering start-up businesses duty-free imports of equipment and tax holidays of up to five years.
The spokesman notes that other government institutions such as the National Entrepreneurship and Innovation Plan offer direct funding through small-scale loans. Most of this support is directed at business owners under the age of 40.
Nana Aduna II would welcome duty waivers on equipment. His Eastern Region-based business, Ohene Cocoa, is giving meaning to much-vaunted theories of adding value to cocoa, still Ghana’s third biggest source of foreign exchange, earning the country $2.5 billion each year. His inventory of attractively packaged cacao-based products includes soaps, salves, healthy breakfast supplements and a particularly delicious crunch bar.
The business has done well over the past couple of years by using savvy direct marketing techniques and by tapping in to a market hungry for healthy eating options and well-presented, locally manufactured goods.
He is aware of the export potential of his goods – expats figure prominently among his Ghana-based clientele ‒ but is approaching the idea of selling abroad with caution. His successes have come entirely through his own efforts and clever partnerships with other small-scale operators who make their goods in Ghana.
“I think there’s a potential market within West Africa and my future export earnings could be as high as 40 per cent but I’m in no rush. The transition from production to value addition is fraught with so many barriers to entry – from knowledge of how to convert the cocoa into products, to the COCOBOD monopoly on buying cocoa, to the quality and availability of beans.”
He values information-sharing and opportunities for partnerships at this stage of development for his business above direct state help, yet still sees himself as an ideal project for collaboration with 1D1F.
“I could easily be a project where I’m based in Asamankese, with a bigger-scale operation and additional machinery. We could have cocoa butter as an additional line and with support I could easily employ another ten people.”
He points to the information gap between state agencies and Ghanaian manufacturers: “At this point in time I’m getting nil support from the state. Once these government agencies identify that someone is doing something, there should be a reaching out to inform people of the services available.”
He also says: “The regulatory processes for what I do are more of a hindrance than an enabling thing. The attitude is: ‘these are the rules, now come and meet them’. But there should be a more proactive unit in an organisation such as the Food and Drugs Authority, identifying businesses and encouraging them.
“The FDA and the ministries could have a dedicated unit or desk whose sole job is to go out and find the manufacturers with viable projects and offer them advice on tax breaks, for example, and other types of support.”
Although a start-up, Ohene Cocoa is not taking advantage of any tax breaks.
There’s much work for technocrats and public information experts to do to bridge the gap between the state and manufacturers of locally made goods. But determined efforts promise, in Millen’s words, to put Ghana back on the map.
* A shorter version of this article appeared in the Daily Statesman's print edition of 8 March 2019.
Ghana Trade Fair Company Ltd: www.tradefairgh.com. “Made in Ghana, Globally Accepted” ends today, 11 March.
One District, One Factory: http://1d1f.gov.gh
National Entrepreneurship and Innovation Plan (NEIP): http://neip.gov.gh