13.04.2023 Article

Developing Ghana’s One District One Factory (1D1F) in India way

By Samir Bhattacharya
Developing Ghanas One District One Factory 1D1F in India way
13.04.2023 LISTEN

Following a closely contested election, Ghana's President Nana Akufo-Addo obtained a second four-year term in 2020. Fending off a courageous battle from his predecessor John Mahama, Akufo-Addo defeated him with 51.59% of the vote to 47.37%. After his win, Akufo-Addo pledged to carry out a $17 billion initiative to stimulate Ghana's economic growth.

Ghana shining
Indeed, Ghana's economic successes were highlighted when President Nana Akufo-Addo's new administration took office for the first time in January 2017. During his first time in office, he brought down inflation from 15.4% to 7.9%. Similarly, Ghana's budget deficit was reduced to less than 5% of GDP by the end of 2019 from roughly 6.5 per cent of GDP.

Ghana's economy grew at the fastest pace in the world in 2019. The World Bank and the International Monetary Fund (IMF) had high hopes for the country's continued economic growth. Although oil is the primary driver of Ghana's economy, non-oil sectors like manufacturing, services, and agriculture are also growing significantly. Up until the Covid pandemic outbreak, everything was fine.

The economic crisis in Ghana
The President has been under pressure to reduce government expenditure since the start of his second term. It has caused the debt-to-GDP ratio to exceed 70% and prompted warnings from the International Monetary Fund. Without maintaining these subsidies, it was challenging to continue the process of fixing the impact COVID-19 had on the Ghanaian economy. Supporters danced, yelled, and waved flags at a conference hall in the nation's capital Accra as he maintained his populist agenda.

However, now hundreds of young people are unhappy and frustrated with the President and hold him responsible for the skyrocketing food and fuel prices. Ghana, West Africa's economic poster child, is on the cusp of an acute financial crisis. Although it exports a lot of cocoa and gold, it is going through its most significant economic crisis in decades. The inflation rose from 13.9% in January 2022 to 53.6% in January 2023. Some analysts believe the actual level is more than twice the official rate, around 98%. Petrol and diesel prices have jumped by 88.6% and 128.6%, respectively. Most public transport fares have increased by over 100% since January. In October 2022, Ghana sought an IMF $3 billion relief package to help revive the economy.

The administration initially had high hopes for the economy's post-pandemic recovery. But the Russian crisis in Ukraine severely jolted Ghana's economic recovery. The Ghanaian currency, the cedi, lost more than 50% of its value between January and October 2022, resulting in a $6 billion increase in Ghana's debt. The President recently acknowledged to the nation that Ghana is indeed in trouble. He blamed the situation on outside forces like the pandemic and the confrontation between Russia and Ukraine.

What is 1D1F?
The Akufo government knows that the key to resolving the issue is to boost tax revenue by fostering economic development, which should involve more foreign private investment. In this regard, the Akufo government unveiled the One District One Factory (1D1F) development plan reasonably early in its first term to attract investment. Agriculture processing, Clothing and textiles, Pharmaceuticals, Components Manufacturing, Paper and Paper Products, and Packaging Materials were the priority industries designated for the 1D1F plan.

The program called for creating an industrial zone in each of Ghana's ten provinces and one new factory in the country's 216 districts. According to the project, each district was expected to generate about 6,000 direct employments. The 1D1F initiative and other pro-business policies were intended to increase export-related manufacturing and FDI for its industrial infrastructure.

The 1D1F strategy is unable to draw investments in its current form. Nevertheless, as Ghana strives to accelerate its technical developments and involves more young people in sustaining and boosting its economic performance, it must be modified and rejuvenated. And to do that, it can draw some lessons from policies in India, particularly those in the Indian state of Uttar Pradesh.

The Indian model of ODOP
With a geographic expanse of 2,40,928 sq km and a population of 204.2 million, Uttar Pradesh is more vast, populated, and diverse than Ghana. It has a variety of geography, foods and crops, temperatures, and local traditions and economic activities. As a result, Uttar Pradesh has a wide variety of crafts and businesses, and even its tiniest cities and districts are well-known for their distinctive and fascinating regional specialities.

Similar to 1D1F, the Uttar Pradesh state administration introduced the "One District One Product (ODOP)" programme in 2018. ODOP was viewed as a crucial initiative as the government of UP aimed to increase the state's economy to $1 trillion and increase its share of India's GDP from 8% to 15-16%. The overall goal of ODOP was to stimulate regional growth by utilising local talent, resources, and expertise. Modelled after the Japanese "One Village One Product" programme of the 1980s, the ODOP sought to revitalise the economy by fostering regional development through local resources, talent, and knowledge. The initial seed funding for the scheme was fixed at $30 million. Government estimates indicate that this plan has generated at least $10 million in earnings and provided five lakh young people employment in MSME units and industrial hubs.

Can Ghana do it?
Notwithstanding a few shortcomings of the Indian ODOP, Ghana may still emulate numerous positive components of the Indian experience. The ODOP could serve as a model for 1D1F and help Ghana's economic recovery. Similar to the flagship ODOP plan of the UP Government, Ghana's 1D1F initiative can be more effective if it prioritises value chain development, product marketing support, financial aid, and skill development. These four vital elements are not yet adequately aligned in Ghana. The West African nation might also follow UP's example of consistently involving institutions from the public and business sectors at all levels..

ODOF is a landmark project that could help Ghana achieve its goal of industrialisation. With the increase in commercial and trading activity, massive automation will inevitably lead to increased export capacity, job creation, and poverty eradication. However, practical design and implementation methodologies to make ODOF firms competitive at the regional level and beyond must be made available. Additionally, commercial sector participation will be essential to ODOF's success.

Ghana was once hailed as Africa's brightest star, and it can rise to similar heights again. Ghana's tenacious government can still turn around the country's economy. In order to accomplish this, it must also provide local governments and communities with more power. Akufo-Addo vowed in December 2021 to abide by the Ghanaian constitution's two-term limit and refrain from seeking reelection in 2024. The general election is scheduled for December 7th, 2024 and is still approximately 20 months away. Time is of the essence as the dream of his party, the New Patriotic Party (NPP), returning to power will only be determined by the success of 1D1F. This will also determine the future direction of the country.