Ghana’s manufacturing industry got a boost in 1957 when the government launched an industrialization drive. The drive resulted in the creation of a range of industrial enterprises including aluminum processing, oil refining, timber processing, cocoa processing, breweries, cement manufacturing and textile manufacturing. As a result of this industrialization, the manufacturing industry’s share of GDP grew from 10% in 1960 to 14% in 1970.

After 1970, harsh economic conditions, poor management, and shortage of resources made it difficult for businesses to stay afloat in the industry, ultimately leading to a decline through the 70’s and 80’s. Liberalization of trade further added to the difficulties by flooding markets with cheap imports (mostly from China) with which local companies could not compete. As many as 120 manufacturing facilities have closed their doors since liberalization of trade, eliminating many jobs.

In 1986, the government stepped in again and established the Ghana Investment Center which supported the creation of new enterprises in the manufacturing and other industries. In 1989, the government allocated over $100 million in investment capital to approved projects, two thirds of which were joint ventures in the manufacturing sector. By 1999 manufacturing was contributing about 30% of GDP and 15% of employment in the country.

Major Sectors

Ghana’s major manufacturing sectors include:

Pharmaceuticals

Ghana serves as the regional hub for pharmaceutical manufacturing and distribution to the 250 million people who live within the Economic Community of West African States (ECOWAS). Compared to the other countries, Ghana has a relatively strong pharmaceutical industry with stringent guidelines, producing quality products and high production capacity. Ghana has over 30 registered pharmaceutical manufacturing companies.

Throughout the 1990’s, Ghana was producing mainly over-the-counter medications. High local production rates coupled with importation of over-the-counter medications from India resulted in over saturation of the market and production slowed. Around 2002, the industry’s focus shifted to essential drugs that targeted high-priority endemic diseases such as malaria, tuberculosis and HIV/AIDS. The public health crisis created by these diseases encouraged international donors and aid organizations to push millions of dollars toward the manufacturing of essential drugs. Many pharmaceutical manufacturing companies in Ghana have benefited from this trend in recent years.

There is still room for lots of growth in Ghana’s pharmaceutical manufacturing. Even with production rates as they are, factories in Ghana are not operating at full capacity. Because of their high quality, Ghana’s pharmaceutical exports to other countries in the region are valued.

Locally produced products are often more expensive than imports from India and China. Taxes on imported materials are high and banks do not provide reasonable borrowing rates for companies. Manufacturers need to find ways to reduce their costs to make their products competitive with foreign manufacturers. They also need continued access to foreign investment and partnership to keep the industry growing. Ghana has many advantages for investors, such as a sound structure in place and access to a large and in-need market.

Timber

Ghana has been providing timber to the international market as far back as 1833. Over a third of Ghana’s total land area is covered by forest. With over 1.8 million hectares of forest having been certified as forest reserves, harvesting is currently taking place on only 47% of the available area, leaving a large, untapped potential for investment and growth. Around 24 of Ghana’s 420 timber species are commercially traded including African Walnut, Mahogany and Sapele. About 60% of timber products manufactured in Ghana are exported to the European Union.

Ghana possesses excellent climatic conditions for natural forest regeneration as well as abundant land outside official reserves for establishing large scale plantations. In addition, there are a large number of exhausted cocoa farms and degraded areas outside reserves that are suitable for plantation development.

Since 1995, Ghana has experienced exciting growth in total exports of processed wood products. Leading importers of Ghana’s wood products include Germany, France, Italy, USA, England, South Africa, and recently from Hong Kong, Singapore, China, Australia and Saudi Arabia.

The forestry sector has seen major policy reviews in recent years including institutional restructuring and improvements in management practices. In an effort to promote trade in value-added wood exports, the government banned all exports of unprocessed timber in 1995 and established a forest management certification and log tracking system. This system was not only created to safeguard the community, but also to preserve the country’s natural heritage.

One challenge facing the industry is the high rate of deforestation.  The government, in conjunction with the private sector, made efforts to re-establish 50,000 hectares of trees in the late 1970’s, but only 15,000 hectares survived. This effort is presently yielding around 50,000 cubic meters per year.

With well over 80,000 workers in the wood sector, skilled work is relatively easy to find. With low labour rates (currently at a minimum of $1.50 per day) and relatively stable water, electricity, communication and transport systems, Ghana is an attractive option for investors. Investors continue to enjoy Ghana’s positive attitude toward foreign investment, including foreign participation in joint ventures and ownership of local enterprises.

Textiles

Once a booming industry employing over 25,000 workers, textile manufacturing suffered throughout the 1970’s and 1980s resulting in the shutdown of most production lines in the country.  This was mostly a result of foreign competition, infrastructure issues, and harsh economic conditions. Industry stakeholders appealed to the government to save the industry from total collapse. The government responded by instituting a bail out plan under which they backed the building of a $10 million production facility operated by ABC Textiles (UK based textile company that partnered with Akosombo Textiles Limited) and GHC, and a $3 million bailout to Volta Star Textiles Limited. The government also gave $26 million to the cotton industry.

The textile industry is challenged by capital shortages and high production costs. Many companies are trying to operate with out-of-date machines. They often suffer production line halts due to machine breakdowns. Importing up-to-date machines and equipment is expensive. Also, in times of power shortages and load shedding, manufacturing facilities sometimes have to shut down.

In order to find continued success in the industry, textile manufacturers will have to apply strict and effective costing schemes to reduce the cost of production and seek funding for expenses they cannot cover independently. Investors are needed to close this funding gap which will allow manufacturing companies to increase production and operate at full capacity. Funding is also needed to invest in facilities and transportation to get finished products to market. There is a large market, both locally and internationally, for Ghanaian textiles, such as wax print, kente, and other woven cloths. Ghana has a rich and well-respected tradition in manufacturing these products.