21.03.2010 Feature Article

Stepping on the Oil to accelerate industrial growth; the time is now or never!

Stepping on the Oil to accelerate industrial growth; the time is now or never!
21.03.2010 LISTEN

The oil and gas industry is known to contribute significantly to the economic growth of countries that produce oil and gas. It is therefore not wrong to anticipate that the development of the oil and gas industry in Ghana will be a source of accelerated growth, poverty reduction and general prosperity to Ghanaians.

Government of Ghana realising that the oil and gas industry by itself cannot make the expected impact on the socio-economic development of this country without deliberate planned policies has formulated Local Content and Local Participation policy framework. This policy seeks to develop the oil and gas industry with optimal participation of Ghanaians, enhance national development, create jobs and also effectively manage the potential revenue from the sector.

It is instructive to note that oil and gas industry will certainly be of no benefit to us unless we position ourselves in terms of the regulatory frameworks and other policies to guide the sector. Mining and the telecommunication sectors are clear examples of vital sectors of our economy that did not receive much attention in term of policies geared towards the active engagement of Ghanaians. Had we as a nation devised framework and policies with respect to local content agenda in those sensitive sectors of our economy we would have been counting our blessings by this time. We would have grown our own entrepreneurs, built local capacities in terms of technology and investments and taken up bolder initiatives. The best of all this is that the money would have remained in our countries and invested into other ventures.

Admittedly, there is no need to cry over spilled milk, so the option we have right now is to look forward and plan ahead. In looking forward and on the back of the oil find, it is appropriate that within the period of finalising the Local Content initiative for the oil and gas industry, the government sets up a Local Content Board which will focus on institutionalising the local content initiative within the industrial sector. This requires a bold decision from the government to include persons from all political background with vast knowledge and experience in our manufacturing sector. I think this will be the best legacy a government can leave behind. Generations unborn will appreciate this initiative when they come to reap the fruits of this action.

President John Evans Atta-Mills in addressing the Association of Ghana Industries (AGI) prior the 2008 election stated, “While we continue to attract foreign direct investment we must ensure the success of existing industries. The best way to attract foreigners to invest in Ghana is to show that we care for our own indigenous industrialist”. The opportunity for the president to display his intention for our own industrialists is here. While we develop policies for the oil and gas sector we must ensure it is tied to the growth of our industry. The industrial growth of this country requires some level of urgent attention from the government and this is not a matter of talk but of political will and commitment.

On the back of the oil find, I believe the time for Ghana's real industrial revolution is here and could be realised with proper planning. The oil and gas platform is very appropriate for the country to strategically weave out all policies in relation to the forward and backward linkages and opportunities. The opportunity should be used to develop and implement a consistent and aggressive government policy to support indigenous industries throughout the country to provide sustainable jobs and better wages.

We can never create a “BETTER GHANA” without giving a critical attention to our manufacturing industries. There is no better way of investing in Ghanaians than through the growing of manufacturing industries and there is no better time than the time that we are focusing on developing policies for the oil and gas sectors.

I am a believer of the saying, “the private sector is the engine of growth”, except that the political will to make this a reality was not recognised. It remained an engine without the appropriate fuel to move on to the intended growth. Engine without fuel is motionless. Sayings mean absolutely nothing in the business front. The situation is yet to change on the industrial front.

Like President Mills, the Malaysians also believed that the best way to attract foreigners to invest in Malaysia was to show that they cared for their own indigenous industrialist. Local industries played a pivotal role in Malaysia's economy hence the government along with trade associations tried to promote 20 to 30 percent of SMEs in Malaysia to penetrate into the world market. As a matter of fact, manufacturing remains the strongest sector that steered the Malaysia economic growth.

Malaysia embarked on its industrialisation drive in the 1970s with the focus on promoting labour intensive and export-oriented industries. The electronics and textiles industries were the industries promoted to address the growing problems of unemployment and adverse effects of constant fluctuation in the prices of commodities and export earnings on the economy.

The Government implemented several measures to create a favourable investment climate including the development of infrastructure in the form of industrial estates, power and telecommunication facilities; provision of special incentives to promote labour-intensive and export-oriented industries.

Based on these measures, Malaysia had successfully embarked on its efforts in attracting a large number of multinational corporations (MNCs) in the textile and electronics industries to establish their operations in Malaysia. As a result, Malaysia soon developed into a major exporter of semiconductor devices and textile products.

By the end of the decade, semiconductor companies that had set up their assembly operations in Malaysia include Intel, Motorola, Texas Instrument, Matsushita, Siemens and Toshiba. The textiles industry had also attracted investments from Europe, Japan, India and Taiwan for the export market.

Malaysia has constantly developed a national industrial plan that it consistently followed and that is a lesson for this country.

One man who backed his understanding of the fact that the private sector was the engine of growth was General Park Chung Hee who ruled South Korea from 1962 to 1979. He recognised that the prosperity of his country was dependent on the performance of the private sector. Park Chung therefore initiated successful programmes of industrialisation for South Korea based upon export-oriented industries where were ably aided and guided by the government. His administration decided that the central government must play the key role in economic development because no other South Korean institution had the capacity or resources to direct such drastic change in a short time.

Policy planners under the guidance of General Park Chung Hee selected a group of strategic industries to support nationally, including electronics, shipbuilding and automobiles. They identified companies that could boost the national economy and provided government assistance to aid their growth. Companies like Daewoo, Samsung and Hyundai benefited from such initiatives. No wonder these companies have become huge international ones today. New industries were nurtured by making the importation of such goods difficult. When new industry was on its feet, government worked to create good conditions for its survival.

Foreign expertise and foreign capital cannot get us to where we desire. It is Ghanaians who can develop Ghana and this can happen only with a government that understands that its economy can aptly be defined by its industrial growth. We cannot miss this opportunity on the platform of the oil and gas industry. The time for our industrial revolution is now!

Frank Agyemang