Mr. Andrew Quayson
President, Association of Ghana Industries
July 4, 2000

At Ghana's independence in 1957 there was very little industry.  One timber mill, one saw mill, Tema Harbor, Akosombo Dam, Timber Motorway, etc.  

2% (1950s-60s)-about 14% (mid-1970s) GDP was from import substitution, but Ghana was dependent on imported raw materials.  

From 1977-1983 the industries went from 70% to 20% capacity.  But industry had learned its lesson against dependency on imported inputs, as well as dependency on cocoa and began to use locally produced cotton and palm oil.  Therefore, from 1983 to 1987, the manufacturing sector grew by 8%.  Industry increased, however, in 1988, all industries collapsed due to import globalization and Forex (no controls on currency/foreign exchange) (SAP).  Anyone surviving from the 1988 on, had some special interests-economic-outside, or political-inside.  The garment industry totally collapsed, textile industry totally collapsed; the formal sector textile industry went from 25,000 to 8000 employees.  1988 liberalization opened the market to import so many products.  Now the "Club 100"-the 100 largest companies in Ghana (100-200 employee minimum)-only about 2 are not multi-nationals.  

During the recession, the skills developed were not in managing and enterprise/management skills, but just how to obtain foreign exchange (political).  But now, the industries that are doing well are those with a well-educated manager.  Our local entrepreneurs tend to be "good entrepreneurs," but they are yesterday's men and women.  What Ghana needs 1) develop managerial skills and 2) make financing available.  

Effective June 1, 2000, the government increased the VAT (value-added tax) from 10%-12.5%.  The extra 2.5% (about 250 billion cedis), he feels should go to entrepreneurial training.  He would give it to young entrepreneurs, not just college students.  The government plans to distribute it 50% to the university, 30% to secondary education, 20% to primary education.  Quayson says that he would give entrepreneurs, with a business plan, all of the 250 billion cedis.  "Half of them will waste it, or lose it, just that's the way things are; but the other half will develop good businesses.  We are too dependent on imports.  Ghana used to be self-sufficient in rice, now we import 100 million dollars of rice a year."

Trade liberalization
In the government budget of March 2000, they put a special 20% tax on 30 non-essential imports (poultry, beer, soap, second-hand clothing).  It will take a few months to see the impact, but the Ghana union of traders oppose this tax and said that they would strike in mid-June, because it was hurting their business.  We manufacturers should have gotten the traders on our side.  We will look at the list of 30 special tax imports, particularly about 10 products for reconsideration.  

US-Africa Trade Bills-Quayson said that he was okay with this.  

Types of companies who are members of AGI
Initially it was just mining, manufacturing, construction, utilities.  They now accept service companies.