NewsWest AfricaGhana needs local content and local participation - James Asare-Agyei

Thu,23Nov2017

Posted on Tuesday, 29 April 2014 15:16

Ghana needs local content and local participation - James Asare-Agyei

By Interview by Billie Adwoa McTernan in Accra

James Asare-Agyei President, Association of Ghana Industries (AGI). Photo©Chris Stein for TARThe AGI (Association of Ghana Industries) is lobbying for Ghanaian companies to play a larger role in the economy through the creation of new financial institutions and legislative measures.

 

The Africa Report: To what extent do the recent Bank of Ghana foreign exchange (forex) reforms affect businesses?

James Asare-Agyei: With the new measures, it makes it quite difficult for businesses. We are asked that all foreign exchange proceeds are repatriated within 60 days of export. [But] what if the trade agreement goes beyond 60 days? Are there going to be any sort of sanctions for the exporter? Once these export proceeds come in, within five days of their recourse to the account holder you have the foreign currency or the proceeds converted to the Ghanaian cedi. Once it is converted and you also need to import your materials, what do you do? Do you go back and then buy at a higher rate?

We are encouraged by some of the initiatives, but we want to see it become a reality

What are the other challenges facing local manufacturers and producers?

There [are] challenges like the cost and availability of credit. At the moment, commercial banks are giving credit facilities [at] between 27% and 30% [interest], which is high compared to some economies where you can get 2%. So how are you going to be competitive? How do you get credit at more than 30%, be able to pay all the overheads and make a profit? The second thing has to do with the availability of power. The cost of utilities keeps rising, and there are companies that rely heavily on power, like the steel companies. The increases definitely affect them and mean they are not competitive.

In his February state of the nation address President John Dramani mahama announced plans to boost locally made goods. Have you seen a concerted effort towards this?

We at AGI are encouraged by some of the initiatives that were mentioned, however we want to see it become a reality. We want to see imports of raw materials and finished products reduced and make the economy an export-driven economy. The issue has to do with making efforts to [encourage] people to accept products made here. There are a lot of high-quality products [but] sometimes their prices are quite deterring. You have to be able to build the capacity to take advantage of the economies of scale. Building capacity involves building financial capacity, human resource capacity and other forms. We need to grow our businesses so that we [can] build the quality products and also bring down prices. These things are medium-to long-term measures so we need to make the effort and take deliberate steps. We have launched the Made in Ghana products process. We need to eat what we produce, and we should produce what we eat.

Do you think a local content bill could be extended to other sectors?

We need to go beyond the oil industry and ensure that other sectors are also covered. We're looking at the mining sector, energy sector and other areas to be brought on board. We're not only looking at local content but also local participation. Local participation goes beyond local content in the sense that it brings about ownership of some multinational companies.

When you were elected you announced plans to set up a bank for small and medium-sized enterprises. is this still on your agenda?

We are working seriously on that. There is a huge gap in the medium-to long-term financing. Almost all the banks operate on a commercial basis in that they give short-term loans that cannot be used for capital expenditure. We at AGI feel there is a need for us to get an industrial bank that will serve the needs in terms of medium-to long-term financing. ●

 



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