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ECON 215
Introduction to Economy of
Ghana
Session 6 – Industrial Sector Part 1
Lecturer: Dr. Augustine Fritz Gockel
Contact Information: [email protected]
College of Education
School of Continuing and Distance Education
2014/2015 – 2016/2017
Session Overview
• Session Overview: The industrial sector of every economy is touted
to be the engine of growth of that economy. This session seeks to
introduce students to the concept of industrialisation and considers
the industrial sector of Ghana.
Goals/ Objectives: At the end of the session, the student will
• Understand the concept of industrialisation
• Understand the role of industrialisation in economic development
• Know the characteristics of Ghana’s industrial sector
• Know the institutions in Ghana which support industrial
development in Ghana.
Slide 2
Session Outline
The key topics to be covered in the session are as follows:
• Topic One: Industrialisation
• Topic Two: Ghana’s Industrial Sector
• Topic Three: Institutions and Industrial Development
Slide 3
Reading List
• Refer to students to relevant text/chapter or reading materials
you will make available on Sakai
Slide 4
Topic One
INDUSTRIALIZATION
Slide 5
What is Industrial Economics?
• Industrial economics deals with economic problems of
firms and industries and their relationship with society.
• It may also be defined as the application of microeconomic
theory to firms to the analysis of firms and industries.
• The distinction between microeconomics and industrial
economics is the latter’s emphasis on empirical work and
on its implications for policy.
• Industrial economists study the policies of firms towards
rivals and towards consumers (which includes prices,
advertising, and research and development)
Slide 6
What is Industrialization?
• Industrialisation is at the centre of development. Since the
industrialisation revolution in Britain, industrialisation has
been perhaps the single most profound change to the social
and economic make-up of societies.
• Industrialization is defined as the process in which there is
transformation from the dependence on agrarian and
handicraft to the dependence on an industrial sector driven
economy.
• Industrialization is normally interpreted as a process whereby
the share of industry in general and manufacturing in
particular, in total economic activity is increased.
Slide 7
What is industrialisation Cont’d
• Experience from the past 60-70 years suggests that industrialisaton has
played a crucial role in development. Countries with rapidly growing
industrial sectors have been able to handle developmental problems,
particularly those of employment much more easily and effectively than
those countries where industrialisation has lagged.
• This does not imply that other sectors – particularly agriculture – can be
neglected. On the contrary, if it is to be successful, industrialisation must
have a symbiotic or co-operative relationship with other sectors, rather
than growing at its own expense.
• A large number of studies have shown a clear tendency for
industrialisation to be associated with rising incomes, i.e., as per capita
incomes increases so does the share of manufacturing in the national
income. However, this does not prove causality. But an increase in the
share of manufacturing in national income is conventionally taken as an
important indicator of structural change at the macroeconomic level.
Slide 8
Industrialisation and Development
• There are two theoretical perspectives that have been
dominant in the studies of development in the last four
decades:
a. Structural approach to industrialisation – linked to more
protective policies to nurture growth of industry.
b. Neo-classical approach to industrialisation – linked to
more market-oriented policies.
These two macro theories of economic development can be
directly related to strategies or models of industrialisation.
Slide 9
Industrialisation and Development
•
Structuralists would argue for state intervention in industrialisation, be it
regulation of trade tariffs or direct production by the state companies. Neoclassicals however argue that the market left on its own devices is a far more
efficient arbiter of economic development.
•
Structuralists argue the importance of greater self-reliance of developing countries
whereas the Neo-classicals put emphasis on the integration with the world
economy.
•
Self-reliance led to policies of import substitution, where goods formerly imported
would be produced locally. Structuralists argued that this can only be achieved if
industries are protected from outside competition at least in its initial stage or
infant industry phase.
•
Integration into the world on the other hand implies an emphasis on exportoriented industrialisation. Neo-classicals argue that export can only compete with
world market prices if production is not hindered by price controls such as trade
tariffs
Slide 10
Topic Two
GHANA’S INDUSTRIAL SECTOR
Slide 11
Major Characteristics of the Industrial
Sector
• The most important sub-sectors within the industrial sector are
over dependent on imported raw materials. It is estimated that
about 45% of inputs used by these firms are imported. The
locally produced raw materials are also costly.
• Most of the firms have low capacity utilisation i.e. they are
producing below their capacity in relation to their installed
plants. This is attributed to outmoded machinery and
equipment.
• Firms are predominantly small scale or at best medium sized
industries. As a result they are not able to enjoy economies of
scale associated with large scale production
Slide 12
Major Characteristics of the Industrial
Sector Cont’d
• Low level of indigenous ownership and control because of
difficulty in financing industrial projects.
• Majority of the firms are located in the urban centers like
Accra, Tema, Kumasi and Takoradi partly because of the
under-development of infrastructure in other parts of the
country.
• Many of the firms lack well trained and qualified managerial
staff, and low level of training of enterpreneurial staff. Thus,
there is a high level of usage of causal workers and
apprentices. Also, most firms do not depend on research.
Slide 13
Composition of the Industrial Sector
• The industrial sector of the Ghanaian economy comprises
manufacturing, mining and quarrying, electricity generation
and distribution, water and sewerage, construction subsectors. Some of these categories such as the manufacturing
and the mining and quarrying have sub-sectors.
• Manufacturing Sub-Sector consists of :
i.
Manufacture of food products and beverages
ii. Manufacture of wood and articles of straw etc.
iii. Manufacture of coke, refined petroleum products etc.
iv. Manufacture of chemicals and chemical products
v. Manufacture of other non-metallic min. products
vi. Manufacture of basic metals
vii. Manufacture of rubber and plastics products
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Composition of the Industrial Sector
Cont’d
viii.
ix.
x.
xi.
xii.
xiii.
Manufacture of electrical machinery and apparatus n.e.c.
Manufacture of motor vehicles, trailers and semi-trailers
Manufacture of furniture;
Manufacture of textiles
Manufacture of paper and paper products
Publishing, printing and reproduction of rec. Media
• Mining and Quarrying subsector comprises:
i. Mining of nonferrous metal ores
ii. Quarrying of stone, sand & clay
Slide 15
Topic Three
INSTITUTIONS AND INDUSTRY
DEVELOPMENT
Slide 16
Introduction
• The major public and private institutions involved in the
industrial development in Ghana include:
i. Ministry of Trade and Industry (MOTI)
ii. National Board for Small Scale Industries (NBSSSI)(NBSSI)
iii. Ghana Regional Appropriate Technology Industries
Services (GRATIS)
iv. Council for Scientific and Industrial Research (CSIR)
v. State Enterprise Commission (SEC)
vi. Private Enterprise Foundation (PEF)
vii. Association of Ghanaian Industries (AGI)
viii. Ghana Chamber of Commerce and Industry (GCCI)
Slide 17
Ministry of Trade and Industry (MoTI)
• The Ministry of Trade & Industry is the lead policy advisor to
government on trade, industrial and private sector development
with responsibility for the formulation and implementation of
policies for the promotion, growth and development of domestic
and international trade and industry.
• The Ministry is also the advocate for the private sector within
government and is the principal agency responsible for
monitoring and implementing the Government’s private sector
development programmes and activities.
• In industry, the Ministry’s policy thrust continues primarily to be
the development of a more competitive industrial sub-sector
with potentials to make in-roads into the international market
with value added local products derived from local resources
Slide 18
National Board for Small Scale
Industries (NBSSI)
• The National Board for Small Scale Industries (NBSSI) is the apex
governmental body for the promotion and development of the Micro and
Small Enterprises (MSE) sector in Ghana . It was established by an Act of
the Parliament of the Third Republic of Ghana (Act 434 of 1981) and
operationalised in 1985 because government views the sector as having
the potential to contribute substantially to reducing the high
unemployment and to the growth of the economy of Ghana.
• MSEs account for a significant share of economic activity in Ghana and can
play an important role in achieving the development goals for production.
The long-term goal is for MSEs to maximize their contribution to the
country’s economic and social development with respect to production,
income distribution and employment and the closer integration of women
and people in rural areas with the national economy.
Slide 19
National Board for Small Scale
Industries (NBSSI) Cont’d
•
In order to create a single dynamic integrated organization adequately capitalized
and capable of responding to the needs of the small-scale enterprises sector, the
Government merged the Ghanaian Enterprises Development Commission (GEDC)
in 1991 and the Cottage Industries Division of the Department of Rural Housing
and Cottage Industries in 1994 with the Board.
•
Based on Parliamentary Act 434 establishing NBSSI and NRCD 330 (the GEDC
promulgation Instrument) the following objectives guide the operations of NBSSI:
To contribute to the creation of an enabling environment for the small-scale
enterprises development.
To contribute to the development of an enterprise culture in Ghana.
Facilitate MSEs access to substantial and high quality Business Development
Services for their development.
To Promote MSE sector Associations.
To facilitate access to credit for small enterprises
i.
ii.
iii.
iv.
v.
Slide 20
Ghana Regional Appropriate
Technology Industry Services (GRATIS)
• GRATIS Foundation evolved out of the Ghana Regional Appropriate
Technology Industrial Service (GRATIS) Project, was established by the
Government of Ghana in 1987 and mandated to promote small-scale
industrialisation in Ghana.
• To accomplish this mandate, GRATIS established Intermediate Technology
Transfer Units (ITTUs) now designated Regional Technology Transfer
Centres (RTTCs) in nine regions of Ghana to transfer appropriate
technologies to small-scale industrialists through training, manufacturing
and the supply of machine tools, plants and equipment.
• Instead of phasing out GRATIS after the establishment of the RTTC
network, the Government and other stakeholders agreed that it should be
incorporated as a company limited by guarantee called GRATIS
Foundation.
Slide 21
Ghana Investment Promotion Centre
(GIPC)
•
•
The Ghana Investment Promotion Centre (GIPC) is a Government agency,
responsible under the GIPC Act, 2013 (Act 865): to encourage and promote
investments in Ghana, to provide for the creation of an attractive incentive
framework and a transparent, predictable and facilitating environment for
investments in Ghana.
Object
The object of the Centre is to ;
(a) Create an enhanced, transparent and responsive environment for investment
and the development of the Ghanaian economy through investment; and
(b) Encourage, promote and facilitate investment in the country.
Functions
For the purposes of attaining its objects, the Centre shall, actively encourage,
promote and facilitate investments into and within Ghana and shall:
Slide 22
Ghana Investment Promotion Centre
(GIPC) Cont’d
(a)
formulate investment promotion policies and plans, promotional
incentives and marketing strategies to attract foreign and local
investments in advanced technology industries and skill-intensive
services which enjoy good export market prospects;
(b) initiate and support measures that will enhance the investment
climate in Ghana for both Ghanaian and non-Ghanaian enterprises;
(c) initiate, organise and participate in promotional activities such as
exhibitions, conferences and seminars for the stimulation of
investments, to present Ghana as an ideal investment destination;
(d) collect, collate, analyse and disseminate information about
investment opportunities and sources of investment capital,
incentives available to investors, the investment climate and advise
upon request on the availability, choice or suitability of partners in
joint venture projects;
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Ghana Investment Promotion Centre
(GIPC) Cont’d
(e)
register, monitor and keep records of all enterprises in
Ghana;
(f) register and keep records of all technology transfer
agreements;
(g) identify specific projects and prepare project profiles on
investments and joint venture opportunities in Ghana and
attract interested investors for participation in those projects;
(h) bring about harmonisation in investment policy formulation
through coordination of the activities of all other institutions
and agencies; and
(i) perform any other functions that are necessary for the
attainment of the object of Act 865
Slide 24
Council for Scientific and Industrial
Research (CSIR)
• The Council for Scientific and Industrial Research (CSIR) is the
foremost national science and technology institution in Ghana. It is
mandated to carry out scientific and technological research for
national development. The Council was established in its present
form by NLC Decree 293 of 10th October, 1968 and re-established
by CSIR Act 521 of 26th November, 1996.
• The Council, however, traces its ancestry to the erstwhile National
Research Council (NRC), which was established by the Research Act
21 of August, 1958, a little over a year after independence, to
organize and co-ordinate scientific research in Ghana and provide
the necessary platform for Ghana’s accelerated development.
Slide 25
Council for Scientific and Industrial
Research (CSIR)
MANDATE:
• The CSIR is mandated to pursue, among others, the
implementation of government policies on scientific research
and development, coordinate R&D activities in the CSIR and
other S&T institutions nationwide and assist the government
in the formulation of S&T policies for national development.
• The CSIR is further required to commercialize appropriate
technologies, in partnership with the private sector and other
stakeholders, and encourage in the national interest, scientific
and industrial research of importance for the development of
agriculture, health, medicine, environment, technology and
other service sectors of the economy
Slide 26
State Enterprise Commission (SEC)
• The beginning of what is now the State Enterprises
Commission is traceable to the State Enterprises
Secretariat, which was incorporated in 1965 under
Legislative Instrument (L.I. 47).
• The Secretariat was tasked to promote within the
framework of Government policy, the efficient and
profitable operation of Statutory Corporations
engaged in trade and industry.
Slide 27
Association of Ghana Industries (AGI)
•
The Association of Ghana Industries (AGI) is a voluntary business association of
over 1200 members, made up of small, medium and large scale manufacturing and
services industries in agro-processing (food and beverages), agri-business,
pharmaceuticals, electronics and electrical, telecommunications, information
technology, utilities, service industries, transport, construction, textiles, garments
and leather, banking and advertising.
•
As the leading voice of manufacturing industries in the country, AGI is dedicated
to:
Advocating policies that advance the growth and development of industries;
Facilitating international trade through exhibition of member products in
countries across the sub-region;
Strengthening national industry associations through the sharing of knowledge,
experience and critical information;
Providing members with a vast network of contacts, especially in the West
African sub-region;
Hosting the industry and technology exhibition to promote members’ goods.
i.
ii.
iii.
iv.
v.
Slide 28
Private Enterprise Foundation (PEF)
• The Private Enterprise Foundation (now Federation) was
established in 1994 as the apex institution to forge consensus and
provide the leadership voice for advocacy, on the initiative of the
Association of Ghana Industries, Ghana National Chamber of
Commerce and Industry, Ghana Employers’ Association, and the
Federation of Associations of Ghanaian Exporters; with the support
of the United States Agency for International Development (USAID).
• The Ghana Association of Bankers (GAB) was later admitted as the
fifth founding member and the Ghana Chamber of Mines (GCM)
was also added as a member later on. Four (4) new members
namely, Ghana Chamber of Telecommunications (GCT), the Ghana
Insurers’ Association (GIA), the Association of Oil Marketing
Companies (AOMC’s) and the Liquefied Petroleum Gas Operators
Association (GLiPGOA) have joined the Federation as full-fledged
members since October 2012.
Slide 29
Private Enterprise Foundation (PEF)
Cont’d
• MISSION:
The mission of PEF is to service the development needs of the private
sector through advocacy for efficient allocation of the country’s
resources, provision of requisite business development support
services and capacity building for a sustainable private sector led
national economic development.
• VISION:
Influence Government Policy direction prioritizing private sector driven
economic and social development for an improved and consistent
investment climate and enabling environment, for globally
competitive and thriving private sector operations.
Slide 30
Ghana Chamber of Commerce and
Industry (GCCI)
• The Ghana Chamber of Commerce and Industry is an
association of business operators, firms and industries with
interests spanning every sector of private enterprise in Ghana.
As an advocacy organization, the GCCI was established with
the prime objective of promoting industrial and commercial
interest in the country.
• The Chamber represents the voice of the business community
with total commitment to playing a leadership role towards
propelling Ghana’s economy to higher heights. To this end,
the Chamber has and will continue to influence government
policies which will be to the benefit of the private sector
whiles promoting the overall development of the Ghanaian
economy.
Slide 31
References
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