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AGI provides fuel for engine of growth

Interview - June 12, 2014
Association of Ghana Industries (AGI) began as a manufacturer’s association but has grown now to represent 20 sectors of the economy and is in the process of establishing a bank for SMEs. President of AGI, James Asare-Adjei discusses the evolution of AGI, the recent national economic forum that took place this May, and talks about regional integration and the Ghanaian business climate

What are your thoughts on the outcome of last week’s 3-day National Economic Forum (NEF)?

I think that the NEF came at a very opportune time. As a country, it was very good to really meet with the various entities across all divides—economic, social, political—jointly finding ways for the nation to move forward. It is true that in the past couple of years, there have been some challenges. The managers of the economy realized that there is a need for us to build a consensus about how to move the country forward.

The Senchi Consensus resulting from the NEF is focused on the long-term national interest. What are your thoughts on the priorities of the 22-point communiqué?

I think there is a need to take on more deliberate efforts in growing specific areas of the economy. On that note, several key areas have been earmarked. For instance, if you look at manufacturing, as a country, we really need to focus on expanding the capacities of local industries.

On the side of forestry, Ghana is well-endowed. Along the agro-business value chain, we can beef up agriculture by encouraging more large-scale farming through irrigation and production, looking into agro processing facilities and ensuring that we can add value to whatever products we have—to the extent that we can create finished products out of things we can grow here. This puts us in a position to add value.

Kindly tell us about some of the challenges that you have right now.

One of the challenges that we have right now is that a lot of the products that we require in our daily existence, as a country, are imported. The things that we export are done so at a primary level. Cocoa is one such product. We only have one chocolate factory here, and it needs to be upgraded. We export almost every cocoa bean that we produce in the country. There are some factories that are set up to process cocoa in Ghana, and it would surprise you to know that despite being a leading cocoa producing country, such companies have difficulties in getting the raw cocoa beans they need to operate at full capacity. That is a big challenge. The same thing can be said about our gold.

What needs to be done for the country to move forward?

There is a need for a complete transformation of our economic structures.

Do you agree that your strategic location is a boon; particularly, when you talk about boosting your exports?

It is true that Ghana is strategically placed as a country. It has access to the West African sub-region, with a market of 350 million people. We could take advantage of that. The challenge there is the level of trading between the various countries. There are many bottlenecks in terms of the free flow of people and goods, and other forms of business activities from one country to another. It is really difficult to transport goods from one country to another. Several roadblocks cause transaction delays.

How will your affiliation with the Economic Community of West African States (ECOWAS) help ease this bottleneck?

Even though we are talking about regional integration, as a member of ECOWAS, we have yet to further develop our trade interactions to allow the free flow of persons and goods in the various markets. Nonetheless, if we can do our homework well and eliminate these roadblocks, it still holds a lot of promise. For example, Nigeria is a very big market that Ghana can tap into.

Apart from its rich resources, what makes Ghana attractive as a business destination?

Ghana is a truly democratic country, which has enjoyed over 2 decades of stability. This stability should reassure whoever decides to invest in this country. Ghana is well-positioned in terms of market access. It opens you up to the potential of the West African sub-region—a huge market. You can access a local market of 25.36 million people, and ultimately 350 million. That has been a very strong proposition that many businesses could take advantage of.

Moving on to AGI, it has been in existence for more than 50 years. What are some of the association’s milestones?

AGI has really grown over the years. We started as the Manufacturer’s Association (MA). Manufacturers came together to ensure that we could fight for some common interest. We transformed our activities to cover not only manufacturing, but also other areas of activities (e.g., financial, marketing, and other support services). As we speak, we are active in about 20 sectors across all economic areas of the country. We have a sector responsible for metal, building and construction, Agri-business, oil and gas (OG), Hospitalities, Information Communication Technology and so on. We embrace so many sectors.

Earlier this year, AGI announced its intention to establish a bank for Small and Medium-scale Enterprises (SMEs).Can you shed some light on this?

The plan for setting up the SME/Industrial bank is going well, but it is not going as fast as we want it to be. As a country, it is really necessary to have a development bank (DB) because of the huge gap in credit accessibility and affordability.

SMEs are quite vulnerable. If they are borrowing at over 25%, they are going to have a hard time being profitable and therefore cannot operate effectively. Beyond the cost of credit, we need medium to long-term funding. Most of the banks in this country operate commercial banking, even when they were set up to offer investment and development banking services. They are all now operating as universal banks with profitability as their key principle.

As an industry association, we think that there is a need to build something to address such a funding gap to grow businesses. We intend to set up a mechanism or vehicle to attract medium to long-term funding. That is how we came up with the plan for an AGI Industrial Bank (IB).

We are working on it very seriously. We have finished the pre-feasibility report. It looks very good so far. We are going to be working on our final feasibility report, which will give us the permission to have the BoG license to be able to establish such a bank. We have gone this far. We believe that we should be able to make this idea materialize.

You mentioned building the local capacity. How would you comment on Ghana’s human capital?

Ghana has a very good human resource (HR) base. When you talk about the number of graduates that come out of tertiary institutions annually, the available skilled workforce, and those coming out of other institutions of higher learning, we have them in abundance. If you look at the issue of the cost of labor, it is really affordable in this country. It makes investors want to set up operations here. Perhaps, we need to look into the possibility of technology transfer to allow us to build the capacity of our local manpower further, and keep them abreast of international best practices.

Ghanaians are very friendly people. They are highly trainable and ready to work. Many young people fresh out of school are eager to grab the opportunities given to them. That is good for us as a country. It also gives you a good idea of the demographic profile. Having more young people presupposes that we have a productive sector.

What philosophy do you adhere to as the President of AGI?

I strongly believe that the private sector is the engine of growth, and we have to establish the conditions to make that happen. Ghana has an abundance of resources that it must maximize their use.

What legacy would you like to leave behind?

I would like to be remembered for as during my presidency, the private sector has become central to all government policies, which is actively engaged in all times by the leaders of the country. I want to see a positive trajectory for businesses in this country.

As I have mentioned earlier, right now, we need to build the country’s capacities, enabling us to become tomorrow’s African giants.

The key now is to grow our SMEs so that one day, they become major global players—the Coca-Cola(s) and Unilever(s) of tomorrow. That is my vision.

I would be highly satisfied to have the private sector at the center of it all by the time I leave office, with its issues effectively addressed. Of course, we cannot do everything at the same time, but we should be seen making progressive effort in really strengthening the PS.

What values would you like to see related with Ghana?

I want Ghana to be seen as the beacon of stability that it is—a safe, democratic and peaceful environment that allows for medium to long-term planning. Our democratic credentials have endeared investments and businesses to this country. Ghana is a forward-thinking country that welcomes business from all over the world. It has resources in abundance. It has fantastic, amicable and friendly people. It has vast arable lands and rich mineral deposits. It has good oil reserves meant to be used for the benefit of its people.