Life-changing News

Ghana must develop effective local supply chain policy

to entice companies to invest in production of raw materials locally


A businessman and marketing expert is urging government to fashion out a policy that entices companies that import raw materials to invest in the production of raw materials in Ghana.

According to him, successful implementation of the policy will serve as an import substitution mechanism to reduce the country’s heavy dependence on imports.

$636m worth of raw materials imported

In 2019, Ghana’s raw materials imports are worth $636 million, product share of 6.10%, while raw materials exports were worth over $8 billion ($8,075 million)

Fast-Moving Consumer Goods

The businessman, Mr Kwame Sowu Junior in a letter to Trade and Industry Minister, Alan Kyerematen recommended the development of an efficient local supply chain programme for Fast Moving Consumer Goods (FMCGs) producers operating in Ghana.

Backward integration

He explained that such a policy will have the FMCGs integrate backward with a little bit of their skin in formidable local supply chain operations.

Backward Integration is a strategy where a company gains more control over the functions in the earlier stages of the value chain.

Sugar production

To buttress his argument Mr Sowu said if Ghana had gotten FMCGs who together import millions of dollars’ worth of sugar annually to be part of the establishment of the Komenda Sugar Factory; the project would have been completed by now.

With this, he said Ghana would have been self-sufficient in sugar production and exporting surpluses by now.

Komenda Sugar Factory

On May 31, 2016, President John Dramani Mahama commissioned the revamped Komenda Sugar Factory in the Central Region.

Built at a cost of $36 million from an Indian EXIM Bank facility, the factory is yet to produce sugar due to technical issues and a lack of sugarcane to feed the factory.

A forensic audit commissioned by the Economic and Organised Crime Office (EOCO) to establish the value of the factory indicated that the current value of the company as of 2021 was $16.4 million

The plant and machinery at the factory were valued at estimated at $15.4 million ($15, 495,080) at Open Market Value and Forced Sale Value of $12.3 million ($12,396, 064).

The valuer estimates the main structure of the factory at $1 million ($1, 000, 200.70) at Open Market Value and $8 million ($800, 160, 56) at Forced Sale Value.

This brings the entire estimated value of the factory to $16.4 million ($16,495, 280. 70) for open market value and $13.1 million ($13, 196, 224. 56) for forced sale value.

Mr Sowu Junior indicated that just like sugar, the backward integration can be replicated in many formats together with an effective match-making arrangement to develop and link local capabilities, no matter how small with big corporates.

This, he said will minimise pressures on the Cedi, create lucrative local jobs, and local wealth, and improve tax revenue.

“As a matter of fact, such an arrangement as a sustainable income generation option could have minimised the phenomenon of Galamsey in parts of the country such as Obuasi which used to be well known for citrus production.

“In my humble opinion, these are things that can be projectized and realised within months. Simple things. Nothing complicated,” he stated.

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