The Chamber of Agribusiness Ghana (CAG) has called for urgent establishment of a National Industries Development and Regulatory Authority to prevent the recurrence of failed industrial policies and position Ghana for genuine industrial transformation.
This call was made through a press release issued by the CEO of the Chamber, Mr. Anthony Morrision after the Chamber conducted a comprehensive review of Ghana’s One District One Factory (1D1F) program.
According to CAG, the comprehensive review on 1D1F has revealed that the policy not merely a policy failure, but an economic gaffe that weakened Ghana’s industrial sector rather than strengthening it. A policy that entrenched high-cost production, debt distress, and widespread factory under-utilization instead of promising job creation, enhanced competitiveness, import substitution, and export growth.
KEY FINDINGS AFTER THE REVIEW
Prohibitive Capital Costs Undermined Industrial Viability
The most damaging flaw of the 1D1F program was the cost of capital. Industrial firms accessed financing at rates ranging from 22% to 47%, including fees, foreign exchange exposure, rollovers, and compounding. These rates are fundamentally incompatible with industrial development, particularly in agro-processing sectors that require five to seven years to stabilize and operate with assets having 15-to-25-year lifespans. At such rates, debt service overwhelms cash flow before economies of scale can be achieved.
By comparison, successful industrializing nations provide manufacturing finance at 3% to 8%. China’s policy banks offer 3% to 5% for strategic industries. Vietnam provides 5% to 7% for export-oriented manufacturing. India’s MUDRA scheme finances MSMEs at 7% to 8%. Rwanda’s development finance operates at 5% to 10% with extended grace periods. Ghana’s 22% to 47% rates make industrial competitiveness mathematically impossible.
Development Finance Institutions Failed Their Mandate
Even institutions established to correct market failures priced loans as speculative capital rather than developmental finance. Short moratoriums misaligned with the realities of biological assets, foreign exchange risk was shifted entirely to firms, and no first-loss or risk-sharing mechanisms were implemented. At rates between 22% and 30%, development finance ceased to be developmental. At rates above 40%, it became extractive.
Weakened Fiscal Incentives and Absence of Local Content Policy
Rather than offsetting extreme capital costs, government reduced critical fiscal incentives. Rural tax holidays were cut from 10 years to 5 years. Comprehensive exemptions for plant and machinery were not provided. No relief was offered on utilities, spare parts, or industrial inputs. Firms consequently faced a triple burden: high debt service, early tax exposure, and elevated operating costs. This combination locked factories into permanent fragility.
Ghana lacks a robust local content policy framework comparable to successful models elsewhere. Nigeria’s Oil and Gas Industry Content Development Act reserves specific value chain segments for local firms and mandates progressive local participation.
Malaysia’s Bumiputera policy provided preferential financing, procurement access, and equity requirements that built indigenous industrial capacity. South Korea’s industrial policy in the 1970s through 1990s combined infant industry protection with export discipline, creating globally competitive chaebols. Thailand’s Board of Investment offers three-to-eight-year corporate tax exemptions, machinery duty exemptions, and land ownership rights for strategic industries.
Ghana’s failure to implement competitive incentive packages for indigenous industrial start-ups places local entrepreneurs at a severe disadvantage against imported goods and foreign-owned operations, undermining the very industrialization objectives the nation seeks.
Inadequate Raw Material Systems
Factories were commissioned without guaranteed feedstock systems. The absence of compulsory contract farming, production zoning, irrigation planning, and farmer financing frameworks resulted in seasonal and erratic production, low capacity utilization, increased unit costs, and continued dependence on imports.
Employment Outcomes Failed to Materialize
Employment under 1D1F was treated as a political outcome rather than an economic function. Under-utilized factories cannot sustain
employment. Debt-stressed firms reduce shifts. High interest costs crowd out wages and training investments. The promised jobs remained unstable, temporary, and overstated, while youth
Absence of Skills Development for Sustainable Productivity
The 1D1F program failed to integrate skills development and technology transfer frameworks essential for sustainable industrial growth. Germany’s dual vocational training system and Singapore’s SkillsFuture initiative embed workforce development, continuous upskilling, and productivity enhancement as core components of industrial strategy.
Ghana’s approach overlooked technical and vocational training aligned with factory requirements, management capacity building, technology adoption frameworks, quality assurance training, and maintenance skills development. Without these foundational capabilities, factories cannot achieve the productivity levels necessary for competitiveness, regardless of physical infrastructure investments.
The result: factories operating below global productivity benchmarks, inability to meet international quality standards, high waste rates, dependence on expatriate technical staff, and limited process improvement. Industrial transformation requires not just factories, but the human capital and institutional capabilities to operate them efficiently.
Operational Complexity and Bureaucratic Barriers
The current operational environment poses severe challenges to ease of doing business. Fragmented oversight across multiple agencies, institutions, and ministries creates overlapping and often conflicting mandates. Government’s overbearing ombudsman role and extended bureaucratic processes create significant transaction costs and delays.
Industrial operators face multiple licensing and permit processes across agencies, inconsistent interpretation of regulations, lengthy approval timelines for critical inputs and expansions, duplicative inspections, unclear dispute resolution mechanisms, and ad-hoc policy changes without adequate consultation.
This contrasts with competitive jurisdictions. Rwanda’s single-window business registration completes incorporation in 6 hours. Mauritius offers integrated regulatory clearance through its Economic Development Board. Singapore’s pro-enterprise panel systematically reviews and reduces regulatory burden. Estonia’s e-governance platform enables 99% of public services online with minimal physical interaction.
The World Bank’s Doing Business indicators rank Ghana below regional competitors on starting a business (rank 120), getting electricity (rank 122), and enforcing contracts (rank 116). These structural impediments increase the cost of doing business by an estimated 15% to 30%, eroding any competitive advantage firms might otherwise achieve.
Case Study: Ekumfi Juice Factory
The Ekumfi Juice Factory exemplifies the systemic failures of 1D1F. Despite requiring approximately 7,000 acres of cropping support, the facility received only 400 acres. It operated with effectively zero incentives and was financed under short-moratorium, high-cost loan structures. Conservative estimates indicate over $160 million per year in lost production potential and 3,000 to 5,000 foregone jobs due to policy-induced constraints. The factory’s survival came only through absorbing losses, pre-financing farmers, and operating below optimal margins.
Political Expediency Over Economic Sequencing
Factories were launched before raw materials were secured, before financing was viable, before infrastructure was ready, and before markets were contracted. Ribbon- cutting ceremonies replaced proper sequencing. Political optics replaced sound balance sheet management.
Contextual Factors
Several factors beyond policy design contributed to outcomes and warrant acknowledgment.
What the Program Did Achieve
The 1D1F program established physical industrial infrastructure in districts that previously had none. It elevated industrialization as a national priority and generated public discourse about manufacturing’s role in economic development. Some factories have achieved operational stability and contribute to local economies. The program demonstrated political will to pursue industrial policy, a necessary precondition for any transformation agenda.
Macroeconomic Constraints on Interest Rates
Ghana’s high interest rate environment reflects structural macroeconomic factors that extend beyond industrial policy choices. Persistent inflation, currency volatility, sovereign risk premiums following debt restructuring, and Bank of Ghana monetary policy all contribute to elevated borrowing costs. Financial institutions face genuine risks in lending to nascent industrial ventures, and their pricing reflects real default probabilities, foreign exchange exposure, and liquidity constraints.
This analysis correctly identifies high capital costs as incompatible with industrial development. Addressing this requires broader macroeconomic stabilization, not merely directives to lend at lower rates, which could undermine financial sector stability.
Fiscal Space Limitations
The reduction in tax holidays and limited incentive packages occurred within severe fiscal constraints. Ghana’s debt-to-GDP ratio, IMF program conditionalities, and revenue mobilization pressures limited government’s capacity to offer the generous incentive packages available in comparator countries with stronger fiscal positions. The choice was not simply between generous and limited incentives, but between limited incentives and no program at all.
Implementation Failures Distinct from Policy Design
Not all 1D1F shortcomings stem from policy architecture. Implementation challenges included capacity constraints at district and regional levels, coordination failures across government agencies with limited institutional experience in industrial development, private sector partners who underperformed on commitments, and external shocks including COVID-19 disruptions and global supply chain volatility. Firm-level factors such as management quality, market assessment accuracy, and operational discipline also influenced outcomes independent of the policy environment.
Demand-Side Constraints
Some factory underperformance reflects market realities beyond policy control. Consumer preferences for imported goods, established distribution networks favoring incumbents, and limited domestic purchasing power constrain demand for locally manufactured products regardless of production costs. Export competitiveness faces challenges from regional competitors with established market positions and preferential trade arrangements.
Impact Assessment
These contextual factors notwithstanding, the preponderance of evidence indicates that the 1D1F program made Ghanaian industry less competitive. It raised unit production costs, increased debt burdens, reduced operating capacity, made imports cheaper than locally produced goods, and locked firms into survival mode. This explains why many factories never scaled, never exported, and never created sustainable employment.
Global Evidence: What Works in Industrial Policy
Successful industrial transformation follows proven principles that Ghana has consistently ignored.
Taiwan’s Industrial Technology Research Institute (ITRI) bridges the gap between research and commercialization, providing technical support, prototype development, and technology transfer to SMEs. This produced companies like TSMC. Ireland’s Industrial Development Authority (IDA) provides coordinated investment promotion, skills matching, and regulatory facilitation, attracting over 300 billion euros in FDI while developing indigenous supply chains. Ethiopia’s Industrial Parks Development Corporation offers plug-and-play facilities with pre-cleared utilities, streamlined customs, and coordinated services, achieving 60% to 80% capacity utilization within two to three years of operation.
These models demonstrate that industrial success requires dedicated institutional architecture with technical competence, regulatory authority, and coordinated implementation capacity. Ghana currently lacks this.
The Economic and Strategic Imperative
Ghana faces mounting economic pressures: a manufacturing sector contributing only 12% to GDP, youth unemployment exceeding 25%, import dependency draining foreign reserves, and debt distress limiting fiscal space for industrial support. Without urgent industrial transformation, Ghana risks permanent deindustrialization as regional competitors advance.
The African Continental Free Trade Area (AfCFTA) presents both opportunity and threat. Countries with competitive manufacturing will capture regional markets. Those without will become permanent importers. Ghana’s current policy trajectory positions the nation as a consumer market rather than a production hub.
Conclusion and Recommendation
Industrialization cannot succeed when financed at rates between 22% and 47%, burdened by bureaucratic complexity, and unsupported by skills development and local content frameworks. The 1D1F program failed because capital was priced like speculation, incentives were diluted, value chains were ignored, productivity capabilities were overlooked, and political considerations overrode economic logic.
Factories alone do not create competitiveness. Affordable capital, secure inputs, streamlined regulations, skilled workforces, and patient, evidence-based policy do.
The Chamber of Agribusiness calls for the immediate establishment of a National Industries Development and Regulatory Authority with the mandate to:
Ensure industrial financing aligns with international development finance standards (3% to 10% for strategic sectors with appropriate grace periods).
Coordinate raw material value chains before factory commissioning, including contract farming, production zoning, and input supply systems.
Implement comprehensive local content policies and competitive incentive frameworks that prioritize indigenous industrial start-ups
Develop skills programs aligned with industry needs for sustainable productivity.
Streamline regulatory processes across agencies through single-window clearance systems.
Enforce proper sequencing and feasibility assessment based on economic viability rather than political timelines.
Provide independent regulatory oversight with technical competence and autonomy from political interference.
Establish productivity and quality standards benchmarked against international best practices.
Create technology transfer and innovation support mechanisms Monitor and report publicly on industrial performance indicators
On the Risk of Adding Another Agency
There is an obvious tension between criticizing fragmented oversight and proposing a new authority. We address this directly.
The proposed Authority is not an additional layer. It is a consolidating body that absorbs, coordinates, or supersedes overlapping mandates currently scattered across ministries and agencies. The Authority should inherit industrial policy functions now fragmented across the Ministry of Trade and Industry, Ghana Investment Promotion Centre, Ghana Free Zones Authority, and relevant divisions of the Ministry of Finance.
The enabling legislation must include sunset provisions for redundant functions in existing agencies, clear jurisdictional boundaries to prevent mandate creep, inter- agency protocols that subordinate other bodies to Authority decisions on industrial matters, and performance metrics tied to reduced compliance burden rather than expanded oversight.
The Authority’s success should be measured by the reduction in total regulatory touchpoints firms must navigate. If implemented correctly, it should result in fewer agencies with industrial mandates, not more. The Chamber commits to opposing any implementation that merely adds bureaucratic layers without rationalization.
This Authority must operate with statutory independence, technical expertise, and coordinated mandates across the industrial value chain, from finance and inputs through production, skills development, regulatory compliance, and market access.
Unless Ghana abandons optics-driven industrial programs and returns to serious industrial economics grounded in global best practices, future initiatives will reproduce the same failures regardless of branding. The establishment of a National Industries Development and Regulatory Authority is not administrative reform. It is an economic and strategic imperative for Ghana’s transformation.
