The manufacturing
sector has witnessed a massive decline over the years. But alas, there is hope.
Charles Benoni Okine reports
The government has outlined a number of direct interventions
meant to transform the ailing manufacturing sector to do import substitution by
replacing foreign imports with domestic production.
Consequently, the Export Development and Agricultural
Investment Fund (EDAIF) is to be used as the main conduit to achieve that
transformation by allowing it to directly disburse for instance, funds to players
in the manufacturing sectors of the country instead of using the banks as is
presently the case.
The Minister of Trade and Industry, Mr Haruna Iddrisu, who
dropped the hint during a visit to the offices of EADIF in Accra said, “The law
mandates EDAIF to spend only on export and disburse only through the banks”.
“So that EDAIF loans
to the banks at 12.5 per cent and the banks give to industry at 23 per cent but
a revised EADIF legislation will cure this mischief,” he said.
The change has come about as a direct response to concerns of
industry players regarding the stress they encounter in accessing funds from
the banks under the EDAIF facility to be able to do their business.
The move is also expected to ensure that massive imports
which puts excessive pressure on the country’s currency is substantially
reduced while providing many employment avenues for the people.
“I wish to state that,
this intervention among many others is a deliberate government attempt to
ensure that the manufacturing sector which has witnessed a decline over the
years is reversed for the better”, he said.
He said to give meaning to the task and quest of the President,
EDAIF will have to play a lead role in some of the major policy reforms that
will underpin the President’s Private Public Partnership (PPP) initiative.
“The country needs to move into the upper middle income status
from the lower middle income bracket and we need a strong and viable manufacturing
sector to be able to achieve this”, he said.
The contribution of the manufacturing sector to Gross Domestic
Product (GDP) is not the best and, therefore, a viable and sustainable
manufacturing sector has a role to play to ameliorate unemployment and to
provide sustainable jobs for the young men and women in the country.
Mr Iddrisu explained that the essence of the review of the
EDAIF legislation is to make the Fund more private sector-friendly and to
provide a resource envelop to provide an opportunity to nurture and grow
Ghanaian industry.
In time past the primary focus of EDAIF was export related
and therefore export development fund.
But with the new export strategy approved by cabinet, we need
to develop import substitution industry in the country which will do more agro
processing in the country.
The review exercise is to build a strong nexus of a
relationship between the export sector and the manufacturing sector because one
feeds the other.
Mr Idrisu said the government is of the strongest conviction
that some of the players in the manufacturing sector, if well capacitated, may
be able to do exports.
“The focus of EDAIF looking into the future must shift away
from just export related industry or export narrow support into providing a
comprehensive envelop which will develop the private sector in its entirety”,
he said.
So a future revised EDAIF will provide a stimulus package
that encourages and facilitates agriculture production, enhances exports and
builds a viable manufacturing sector with a capacity to export.
“We expect a future revised EDAIF to provide the opportunity
to help the startups and that should be done through the NBSSI’s vehicle”, he
said.
The trade and Industry Minister also hinted that EDAIF will
become the source of the President’s stimulus intervention to industry.
“So tomorrow, pharmaceutical companies, garments, cashew
exports and production, banana/citrus exports, should be able to have the
President’s stimulus package as was done in the United States of America (USA).
Caution to applicants
It is has been the tendency of many businesses that borrow
money from state institutions to refuse to pay back, leading to the collapse of
many of such institutions.
Those that do not collapse are put in serious financial
distress because of the huge impairments, a situation the banks and other
financial institutions that provide loans to people also severely suffer.
Against this background, Mr Iddrisu asked beneficiaries and
potential ones to ensure that they paid back on time to enable others to
benefit and also more importantly prevent the collapse of the fund.
EDAIF expansion
He said the nature of the revised fund would require a
nationwide spread to ensure that people in the other parts of the country are
able to access the fund without having to travel to Accra.
With the banks doing the disbursement on behalf of EDAIF
presently, the nationwide spread is possible but with the Fund taking up that mandate,
it will require that EDAIF is present in the regional capital for a start and
later to the district capitals.
He said the decision of the government is well intended and
must be taken in good faith.
“EDAIF will set the tone for the country’s industrialization
as it has failed in the past and it will require the contribution of all to
make it happen”, he said.
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