Wake up call: Shift to local produce

Experts say there is an urgent need to focus on the production of locally made products to reduce imports and create wealth locally. 

To this end, trade experts believe there is an urgent need for enhanced dialogue between policymakers and the private sector to improve a key critical aspect of the economy, namely local sourcing and raw materials production.

They worry that if we let this opportunity to reset the economy pass by the economy will continue to wobble at the slightest international crises and, therefore, call for investments in local supply chains, which, according to them, would reduce its reliance on imports and position the country as a more self-sufficient economy.

Over the years, local industries have been struggling with a shortage of raw materials, threatening their ability to meet production targets and maintain steady operations.

As various sectors rely on the continuous availability of inputs for manufacturing, the limited availability of raw materials affects local production negatively creating ripple effects that could impact the economy, employment and consumer prices.

Manufacturers across the country have raised concerns about the scarcity of essential raw materials, which has led to reduced production capacity in key industries such as food processing, textiles and construction.

This shortage, intensified by global supply chain disruptions, rising transportation costs, and challenges in local sourcing, they say is creating bottlenecks in industrial output.

Trade deficit

In an interview with the Graphic Business, the General Secretary of the Traders Advocacy Group Ghana (TAGG), Nana Opoku Acheampong, said Ghana’s reliance on imports for essential goods across industries highlighted the country’s challenge with sourcing raw materials for local production.

He explained that with a growing list of products imported annually ranging from tin tomatoes and rice to cars, iron, and steel products Ghana’s trade deficit would continue to expand.

“The lack of raw materials is hampering production across sectors. To compete effectively with imported goods, it is critical that our local industries have access to the raw materials they need, sourced within the country,” he said, stressing the need for urgent intervention to safeguard the survival of domestic producers.

Mr Acheampong cited how political favouritism was fuelling the influx of foreign goods at the expense of local producers.

He further raised concerns over the quality of goods entering the market, and the lack of support for local industries, saying the increasing demand for basic goods such as tomatoes and rice, placed so much burden on the Ghanaian economy.

“We’re experiencing a situation where political connections allow certain importers to bypass quality checks by the Food and Drugs Authority (FDA) and the Ghana Standards Authority (GSA),” he said.

He also criticised the inefficacy of the “One District, One Factory” policy, which, according to him, had not lived up to expectations. “What exactly are they producing, and how does it benefit the local traders? We extended our hand to the current administration, but the results are disappointing,” he said.

2023 trade report 

The 2023 trade report by the Ghana Statistical Service (GSS), which presented an in-depth assessment of Ghana’s trading patterns, revealed some notable changes recorded recently.

In contrast to the previous year when Ghana faced a trade deficit, the country recorded a surplus of GH₵5.3 billion in 2023, with total exports of GH₵186.0 billion and imports of GH₵180.7 billion.

According to the report, Ghana continued to face challenges in diversifying export markets, importing from more countries than exporting, further highlighting the economy’s dependency on external markets for goods that could potentially be produced locally.

As a result, key sectors such as agriculture and manufacturing, which depend heavily on raw materials, are facing significant pressure due to high import costs and local shortages.

The agricultural sector, traditionally a supplier of raw materials for food and beverage companies, has been hit hard by unpredictable weather patterns and rising input costs, particularly for fertilisers.

This has resulted in reduced crop yields, limiting the supply chain for industries that rely on agricultural outputs. That has left many companies struggling to meet domestic demand, with production slowing down or stalling entirely.

The situation is similarly dire in the construction sector where the $1.2 billion, according to the Ghana Trade Advocacy Network, spent annually on importing iron and steel, has led to a surge in the cost of building projects. These price hikes have driven up housing costs, potentially worsening the country’s already significant housing deficit.

Manufacturing sectors, including those producing soaps, cosmetics and plastics, are also grappling with rising costs of imported raw materials, pushing prices higher and squeezing profit margins.

Way forward 

Mr Acheampong advised the incoming administration to prioritise policies that favour local industries to drive Ghana’s industrialisation agenda.

“We need policies that support local production, not just the importation of raw materials, which often cost more than the finished products from abroad, research institutions like the Council for Scientific and Industrial Research (CSIR) must work to find substitutes for imported raw materials to make local manufacturing more competitive.

One of the key proposals from the Traders Advocacy Group is better regulation to protect local traders and manufacturers.

“It is time for policymakers to stop toying with the trading community and start investing in Ghana’s future through sustainable local production,” he said.