info@businessghana.com
Strengthening the development, effectiveness, financial viability, long-term growth and sustainability of the One District One Factory Project.
1.0 Introduction
Ghana's industrialization dream is on! Without doubt, Industrialization has become a development priority for a number of developing African countries. Like Ghana, most of these countries are elaborating on ambitious and long-term industrial development plans which will provide a clear vision and rationale for industrial development, and promote skills and resources to meet the industrial development challenge. Ghana’s industrialization agenda is thus, a key factor to the nation's rise from the doldrums of an emerging to a fully developed economy.
The new administration “One District One Factory Project” (ODOF Project) is a critical developmental intervention, promising to produce strategic outcomes such as: high enterprise competitiveness, high levels of productivity, expanded market access to regional and international markets, improved balance of trade differentials, increased business revenue levels, high job creation, eradication of poverty, high level sustainable business practices, bolstered national economic revenue, improved livelihoods, etc.
In all economic sense, the “One District One Factory Project” intervention will be the silver bullet to Ghana's industrialization and economic transformation agenda. Thus, every Ghanaian must embrace this project and contribute to the smooth takeoff of this vision.
ONE DISTRICT ONE FACTORY MODEL FOR SUCCESS
2.0 Effective Corporate Governance and Management Structure
Right from the onset, there is the need to establish an effective and workable governance and management system for the “One District One Factory Project” in order for the new administration to achieve the right results. It is imperative to have a governance system which ensures accountability and transparency and gives approval for the strategic direction, financial and human resource plans of the ODOF Project. It must also give direction for the review of management performance, organisational controls and risk management, compliance with statutory and regulatory requirements or guidelines, ethical behaviour, conflict of interest policies, disclosure, reporting and audits. The corporate governance system for the “One District One Factory Project” should also spell out the roles and responsibilities of all stakeholders of the ODOF Project and what ought to be done in order to execute and accomplish the roles and responsibilities efficiently.
Proposed ODOF Governance and Management Structure
The President must exercise the overall leadership for the “One District One Factory” Project with support from the Ministry of Trade and Industry, Ministry of Finance, Ministry of Local Government, Donors, Private Business Service Providers and the Polytechnics/Technical Universities. The Governing and Management Council which will provide the strategic direction for efficient management of the project ought to be constituted with representatives from the Ministry of Trade and Industry, Ministry of Finance, Ministry of Local Government and Office of the President. Other representatives from the Private Enterprise Federation, Academia, UNIDO, Ghana Standard Authority, Project Management Company, among others should be members of the ODOF Governing and `Management Council. Within the governance structure, the role of donors and development partners will be to provide funding and technical assistance support in ensuring the effectiveness and sustainability of the ODOF Project.
3.0 Procurement of Services from a Project Management Company
In order for this initiative not to fail, the services of a Project Management Company should be procured by the Ministry of Trade and Industry through an International Competitive Bidding process. The Project Management Company will be charged with the responsibility to manage the ODOF Project. Drawing lessons from what happened from other laudable initiatives previous governments had embarked upon, e.g, the PSI in 2001, it will not be advisable to place the operational management activities of this project directly under the Ministry of Trade and Industry (MOTI). The MOTI and other connected Ministries must provide the policy direction with respect to the management and monitoring activities of the ODOF Project.
The Project Management Company (PMC) will manage the project and ensure that the project is delivered on time and to the standard required by the ODOF leadership. The company will recruit project staff and consultants, manage co-ordination of service providers, partners, key actors and stakeholders engaged in the project. The PMC will develop project planning and control systems, manage project deliverables in line with the project plan, develop calls for business proposals and tenders, evaluate them and award contracts. The company will also monitor project progress and performance, provide status reports to the project stakeholders, manage project training and capacity building, disseminate project information to project stakeholders. Currently, Donors and Development Partners are applying similar strategies to obtain fruitful results from their developmental initiatives.
4.0 Call for Business Proposals
Under the ODOF Project, the question we need to ask is how we are going to identify the type of factory to be established in each of the 216 districts? In order to ensure transparency, competition and the selection of the best factory to be established in each district, it is important for the Project Management Company (PMC) to advertise Call for Business Proposals so that the private business community can send their business proposals on the factories to be established in each district. The Call for Business Proposals ought to spell out the background and objectives of the project, project guidelines, policies and incentives, application instructions, eligibility requirements, evaluation criteria, procedure for contract award, etc.
The Call for Business Proposals approach of involving the private sector as partners of viable projects is an excellent strategy adopted by development partners, especially the EU, USAID, World bank, etc. and contributes to the overall success of most projects.
5.0 ODOF Funding Support Schemes
Funding support to businesses to be established under the “One District One Factory Project” is of paramount importance if the new administration wants to achieve the desired results from the Project. New funding schemes need to be launched, whilst existing ones are modified to help businesses under the ODOF Project become sustainable and competitive. The question we need to ask is should the funding scheme be delivered directly by the Central government or through private intermediary? In most jurisdictions, especially the developed nations, some government funding schemes are delivered through private intermediary companies. For ODOF’s Project, it is important to have a hybrid funding scheme system where funds are delivered directly to the private businesses by both the central government and private intermediaries.
Examples of good funding schemes to be considered under the ODOF Project are:
6.0 Export-Oriented Industrialization
Over the years, Government of Ghana’s projections in terms of increased export volumes and revenues had been crippled with inconsistencies in exports resulting in a downward spiral of government revenues and unfavourable Balance of Trade differentials. The overarching policy of the ODOF industrialization vision should be centered on export-oriented industrialization. Naturally, most businesses under the ODOF will target the use of local raw materials in the form of agricultural produce, particularly when Ghana abounds in that resource. It is evident that the success of ODOF will churn out improved quantities of agri-products which will be more than Ghanaians can consume. In order to prevent waste, businesses under the ODOF must export greater amount of their products to the regional and international markets.
For the country's successful export-led industrialization take-off however, critical challenges need to be surmounted. Amongst the main challenges that affects Ghanaian businesses to export to international market is the lack of Export Quality Management Systems in their business processes. Export Quality is a prerequisite for successful market access and for improving the competitiveness of exporters. However, establishing and implementing quality systems that meet the requirements of Export Quality Management Standards (EQMS) is a challenge for many exporters, especially in view of the proliferation of standards.
It is instructive to note that countries in their quest to protect the health and safety of their citizens and to meet the demands and requirements of buyers impose export standards for exporters to comply with. According to the International Trade Centre (ITC), most problems faced by exporters are as a result of non-tariff measures from technical regulations, conformity assessment procedures, and sanitary and phytosanitary measures.
Under the ODOF Project, Quality Advisors with support from the Donors and Development Partners need to support the private sector businesses by building their capacities on Quality Management Systems such as QMS (ISO 9001), and Food Safety Systems (HACCP; ISO 22000:2005; BRC, IFS, Global-GAP), which are key Export Quality Management Standards for producers in the food and agricultural sectors.
Private sector businesses to be established under the ODOF Project will need Market Support Assistance in order to have better access to regional and international markets. There is the need to guide businesses in areas such as conducting market assessment, developing market entry strategies, facilitating overseas marketing, business matching, online marketing, among others. The ODOF Project Management Company (PMC) will have to procure the services of a Market Support Service Company through a tender process to provide such market support services to the businesses to be established under the ODOF.
Specifically, services to be provided under the ODOF Market Support Assistance include the following:
8.0 Local Inclusion and Capacity Building
The success of the ODOF Project will be measured by considering local community participation, engagement and involvement in the factories to be established in each district. It is critical for the local people to play key stakeholder roles in the conceptualization and the planning phase of the project. The Locals in each district must have a sense of ownership and belonging so they can contribute meaningfully towards the success of businesses to be established in their districts.
In that light, there is the need to build the capacities of the local people in all the communities in Ghana so as to prepare them fully and adequately to take up positions in businesses to be established in their districts. There are many instances in Ghana where local communities were sidelined due to their low capacities to take up important assignments and positions in private sector businesses established within their communities. The ODOF project must adopt a different approach by making it a policy for the local community to be given a quota in terms of employment absorption.
The ODOF Training and Advisory Support Service Company, whose services will be contracted by the Project Management Company (PMC) through a tender process, will be charged with the responsibility to build the capacities of not only the local people, but other management staff and personnel, to an appreciable level in order to sharpen their skills, abilities and confidence levels. It is imperative to develop ongoing capacity-building systems and trainers who will be engaged in capacity building support need to provide a tailor-made training to meet the specific needs of businesses under the ODOF.
9.0 Tax Incentives
Among the key business incentives the new administration ought to offer businesses under the ODOF Project, is Tax Incentives. Tax incentives are concessions, or statutory and administrative provisions which give exemptions to businesses from paying taxes, defer their tax liability or give businesses preferential tax rates for the purposes of attracting investment flows either locally or internationally.
The new administration under the Income Tax Act, 2015 (ACT 896), Value-Added Tax Act, 2013 (ACT 870), Customs, Excise and Preventive Management law 2003, should give an attractive tax incentives to businesses to be established under the ODOF Project.
Examples of tax incentives which must be offered businesses to be established under the ODOF Project are:
The above-mentioned tax incentives, if managed and administered properly, will undoubtedly propel private capital flows into the ODOF Project to guarantee its ultimate success.
10.0 Unique Business Identity and Culture
It is significant that businesses under the ODOF Project have the same unique business identity and culture. An organization’s culture is the unique value which makes the organization stands out differently from others. Under the ODOF Project, there is the need for leaders of the Project to establish norms, shared beliefs and values of businesses, right from the onset. Those norms, shared beliefs and values must be communicated to every employee in order to shape their perception, belief systems, behavior and understanding with respect to work culture.
For example, we need to define how businesses under the ODOF should interact with one another, how employees should behave and work, how teams should interact with the outside world or how businesses should interact with customers, employees, suppliers, media and all stakeholders, among others. It has been proven by research that businesses with strong cultures tend to produce superior results, have transparent and open communication, create mutual trust and cooperation across businesses and have less internal politics. Establishing a strong work culture for the ODOF businesses will define the right path employees ought to follow to achieve desired results. Without strong work culture, the competitiveness and efficient management of businesses to be established under the ODOF would be highly affected.
11. Quality Management and Lean Enterprise Development
Quality Management and Lean Enterprise Development concepts need to be embedded in the businesses to be established under the “One District One Factory” Project. A quality management system (QMS) is a system of policies, processes and procedures required by organizations to consistently meet the requirements of their customers. The establishment of Quality Management Systems will enable the ODOF businesses to reduce their operational costs, improve business results, ensure process efficiency and control, improve market access and business competitiveness as well as the overall improvement of profits and bottom lines.
In addition to instituting Quality Management Systems within ODOF businesses, it is important for businesses to adopt a Lean Enterprise Development Techniques, which will help them to eliminate waste and non-added value activities.
The ODOF Training and Advisory Support Service Company must recruit qualified Quality and Lean Enterprise Development Advisors to help businesses under the ODOF Project, effectively apply Quality Management and Lean Techniques which will result in significant improvements in cash flows, customer loyalty, market share and business competitiveness. Lots of inefficiencies and ineffectiveness in the operations of organizations in Ghana account for huge operational costs and losses which could otherwise have been avoided if Quality Management and Lean Enterprise Development Programmes had been introduced. In today’s business environment, Quality Management and Lean Enterprise Development Programmes have spurred ailing organizations to prosperity across the globe.
12.Group Purchasing and Supply Chain Consolidation
Group Purchasing and Supply Chain Consolidation are means of consolidating the purchasing and supply chain needs of many buyers for the purposes of obtaining a better price, quality and delivery from suppliers and service providers. Businesses to be established under the ODOF Project should institute better systems in place to reduce their overall supply chain costs and strengthen their competitiveness. Group Purchasing and Supply Chain Consolidation Strategy is one of the potent supply chain strategies, which will help businesses to be established under the ODOF reduce their supply chain costs.
Undoubtedly, greater number of businesses to be established under the ODOF Project will be agro-processing factories. They shall have similar purchasing and supply chain needs and requirements, which will make it easy for the adoption of Group Purchasing and Supply Chain Consolidation strategy to be implemented.
The strategy will help the ODOF businesses reduce cost by cutting non-value logistics activities, optimizing their inventory and consolidating warehouse costs, enhance flexibility and increase customer satisfaction. Many SMEs in Ghana have collapsed due to total neglect of the importance of supply chain management to the survival and profitability of their businesses.
The Group Purchasing and Supply Chain Consolidation Services to be rendered to businesses to be established under the ODOF Project should fall under the scope of the work of the Supply Chain Support Service Company, whose services will be procured by the Project Management Company (PMC).
13. Sustainable and Good Business Practices
The importance of Ghanaian SMEs and businesses to be established under the ODOF Project to Ghana’s economy cannot be overemphasized, more so when SMEs account for over 80% of all Ghanaian businesses, and also because the majority of private sector businesses account for a significant share of Gross Domestic Product (GDP), job creation, and social, technological and environmental impacts. In view of the role Ghanaian SMEs play in the economic development of Ghana, it is important for the existing SMEs and businesses to be established under the ODOF Project to implement sustainable and good business practices in line with international sustainability practices.
It is imperative to build the capacities of businesses under the ODOF Project on environmental management systems, greenhouse gas emission and energy use, water management, waste management, sustainable packaging, pollution prevention, green procurement and transportation, workplace management, employee health and safety, child and force labour issues, labour management and industrial relations, corporate accountability, business corruption, among others.
Under the tenets of the UN Global Compact, businesses are supposed to observe and comply with corporate sustainability good practices in order to strengthen their competitiveness, improve bottom lines and enhance corporate brand and reputation. Most of the large companies in Europe, Asia, America, among others have taken issues in relation to sustainability very serious. They prefer to deal with businesses that observe and implement sustainable business practices.
14. Conclusion
In conclusion, there is the need to develop a Performance Monitoring Matrix to monitor the performance of all project activities including the performance of the factories once they are established. Also, it is important for the ODOF Project key stakeholders including the factories to be established to have a risk management register, which will be used to identify potential risks, measure their impacts and likelihood of occurrences as well as the necessary prescriptions to mitigate those risks once they occur.
In order for the new administration to create the enabling environment and facilitate the establishment of the ODOF businesses, a Governing and Management Council will have to be established to provide the strategic direction and leadership for the successful implementation of the Project. The Ministry of Trade and Industry should be the focal Ministry to oversee the ODOF project in terms of policy direction and monitoring. In order for the Ministry of Trade and Industry to have that cutting edge to oversee the successful implementation of the project, there is the need to procure the services of a Project Management Company (PMC) through a tender process to manage the project. The Ministry of Local Government needs to play a role by identifying local talents and sources of raw materials within the 216 districts.
The Ministry of Finance needs to play a very important role in terms of making the financial resources available to support and facilitate the implementation of the project if the need be. It is crucial to keep the ODOF’s office within the Office of the President which will serve as a liaison office between the Presidency and all project stakeholders. The Donors and Development partners need to play that supporting role by providing some funding and technical assistant support for the successful takeoff and smooth implementation of the Project. The Private Enterprise Federation needs to encourage the private sector to take advantage of the enormous opportunities the ODOF Project presents. The capacities of Polytechnics/Technical Universities will have to be strengthened to provide technical assistance support to the ODOF Project. A Supply Chain Support Service Company’s services must be contracted to provide supply chain and logistical support services to factories to be established under the ODOF Project. Meanwhile, the Training and Advisory Support Service Company will build the capacities of the local people within the districts and provide training and technical assistance support and advisory services to ODOF businesses in areas such as quality management, lean enterprise development, work culture, risk management, sustainable business practices, etc. Finally, the Market Support Service Company will provide market assistance support services to factories to be established in order to guarantee access to regional and international markets.
Undoubtedly, the ODOF is a flagship project which will ensure that Ghana's industrialization dream becomes a reality. Efficient design and implementation strategies must be available and targeted at making the ODOF businesses competitive in order to have access to regional and international markets. The ODOF Project will ultimately ensure that businesses and trading activities in Ghana move into an all-time high. As business and trading activities boom in Ghana, massive industrialization will automatically result and culminate into better Balance of Trade differentials, job creation and poverty reduction in the country. The ODOF will see complete success with partnership from the private sector. It is imperative that every Ghanaian puts their shoulder to the ODOF Wheel, pushing it towards the full realization of Ghana’s industrialization and economic transformation vision.
Developed by:
Emmanuel Turkson
Business Strategist, Quality and Supply Chain Advisor and
Director of CLSCE, Ghana
Tel:+233 200 899 637/+233 244 375107
Email: emmanuel.clsce@gmail.com
