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5[ a5 wn rAW18Vol. 6

inis report was prepared for use within the Bank and its affiiiated organizations.They do not accept responsibility for its accuracy or completeness. The report maynot be publisheci nor may it be quoted as representing their views.

INTERNATIONAL BANK FOR RECO:NSTRUCTION AND DEVELOPMENT

INTERNATIONAL DEVELOPMENT ASSOCIATION

THE: CURRENT ECONOMIC POSITION

A ?iTTT Ot fnC!1nrLtc QX.L IN v X L%'.J JJ L .iA%. 1 vI.

OF

GHANA

(in ten volumes)

VOLUME: VI

INDUSTRY

October Z6, 1970

Western Africa Department

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CURRENCY EQUIVALENTS

1 New Cedi = US$0.98

1 dollar = N$1.02

THE MISSION

Tnis annex is based on the findings ot a mission in Apriland May 1970 to Ghana composed of:

Mr. Barend A. de Vries Chief of Mission

Mr. Fateh Chaudhri General Economist

Mr. Thomas Klein Balance of Payments & External Debt

Miss Katharine Mortimer Population, Employment & Education

Mr. M. Taher Dajani* Fiscal

Mr. Ved Gandhi Fiscal

Mr. Nake Kamrany Social Sector

Mr. Jivat Thadani Industry

Mr. Alfredo Soto Transport

Mr. Hans Sc-hulte Transport

Mr. Charles Metcalfe Agriculture

Mr. Bruce Johnston** Agriculture

Mr. Merril:L Bateman** CDcoa

Mr. Herman Nissenbaum Proiect List

Mr. John Weston Electric Power

Mr. Edward Minnie Electric Power

Mr. S. Ransrachar Research

Mis Beverl 'ey Baxter

* Seconnied bhv the Tnternational Monetary Fund** Consu:Ltants

This vollimo hna bon prannrea 1- Mr. T4-t Th-Adr4

TABLE OF CONTENTS

VOLUME VT

INDUSTRY

Page io.

I. INTRODUCTION 1

II. ROLE OF IMPORTS 2

III. PUBLIC SECTOR INDUSTRIES 4

IV. PRIVAT'E SECTOR N(INJJSTRIES 9

V. DEVELOPMENT INSTITUTIONS 11

VI. SCOPE FOR DEVELOPMENT

VII. MINING 16

VOLUtiE VI

INDUSTRY

T. Tn.trniiiinvi anr

1. The growth of manufacturing iadustries in Ghana should be con-sidered in the perspective of the past decade. During the years 1960-1965, the Go'vernment of G-hana (GOG) .rade a ve.,o consciou-effort toAdevelop

manufacturing industries in the country; this was an integral part of itspolicy for ,,.odernization. In the absence of sufficient enepreneurialtalent in the private sector, and also because of a conscious policy forpub"lic own.ership of ir4n of poducion rnr establ`shed a nu-r-er of: fac=.LSL .JWLe L.LLJ4 JA. 1V XLL 0-IL %J1. pL J.UU A. L. L UIAL, ~'-J %J L. LPAJ. IUiJJ J ..L Al uLL .J

tories under its own direct control. It is difficult to assess the truevalu o._r ~L -3 1 4 : 4_J f-._ VL L U LJL Lile investments rkLaUe, [ Deaus 'iLL CLst- S d. £ Lact.rie Were oJ. Le

grossly inflated for extraneous reasons. It appears, however, from datapieceu togethJer b)y tLe present Gloverni-IIenIt, that the cost oL 29 LactorLies,

which nIow contstitute the Ghana Industrial Holding Corporation (GIHOC)arnounted to over No <30 million; and total public expenditure on industriesexceeded No 120 million. Unfortunately, many factories were establishedWithOUL adequlate attlntion to considerations ol economic 1ocation, COstsof raw materials and domestic processing, size of domestic markets andexport possibilities, etc. while the value of annuai output or theseState factories tota]Ls up to substantial amnount, it has involved a heavyburden of o<Sses for the national budgec.

2. At the same time, a number of privately owned industries alsocame into existence, principally for the production of consumer goods.Prominent among these were textile weaving, knitting and processing units,garment factories, breweries and tobacco product plants. While these fac-tories have subsequently faced problems in respect of import of inputsand equipment, they have made substantial headway. Overall, the contribu-tion of manufacturing industries to GDP rose from about 3 percent in 1960to 8 percent in 1969. Annex I indicates the gross output and value addedby industria:L production in the 6 years 1964-69.

3. In addition to the growth of organized industries, which inGhana are defined as employing 30 or more persons per establishment, therewas some growth of small and mediumn scale industries, employing 1-9 and10-29 workers each. GOG does not collect statistics regarding these unitson a continuous basis, and a clear picture for the decade is not readilyavailable; but the results of a physical survey conducted in 1962, updatedby sample surveys, and a projected estimate by the Ghana Central Bureauof Statistics (CBS), indicate that domestic value added by this sub-sectoramounted to about NO 35 million in 1969; and employment was provided tosome 35,000 workers. The quality and details of statistical data relatingto this sub-sector need refinement, and it would be worthwhile for GOG tocollect information on a continuous basis, at least in respect of specificindustry groups whicl-i make a significant contribution to domestic valueand employment. But even existing data indicates substantial growth, anda capital-labor ratic) which is lower than for organized large scale indus-tries in Ghana, and suggests a useful role for small enterprise in the

current qijtatl onj dnfen crpital for invest-ment is scrrrP and the nepei for

new employment opportunities is pressing. Altogether, industrial activi-tiep crnt-rihbted ahout P1N¢175 millinn w.Tort-h of e-n mct-ic value in 196,Q and

employed 75 to 80 thousand persons.

II. Role of Imoorts

4. A significant feature of industrial growth in Ghana, throughoutthe decade, has been it's grea Aependence on i.ports, not only of capital

goods, and spare parts, but also of raw materials in various stages ofprocess, an dIU UomnLL s LreLady For a -lILya. -I tIh early ye-ars o t'ne

decade, Ghana's reserves of foreign exchange helped it to meet the growingburden of' imports. nL thIe n e xt pha grohLLL, W coLL UULLLLY liedLU h,eavilyupon supplier's credits for imports of capital goods, and hoped that exportearnings wuUlu iIiLLUVtr sufficiently to finance raw uItaterial iuportLS. By1966, however, the country found itself in an unsustainable position. Whenthe new NLC Government was form-ned, it found many factories standing idieor working at a fraction of capacity because of lack of raw materials andessential spare parts. The new Government allocated additional resourcesto existing industries for import of essential raw materials, components,spares, etc. and revived production in many factories, in boLh the publicand private sectors. Annex II shows the expenditure incurred on importsfor industries. it will be noticed that in 1966 imports of industrialraw materials cost NO 45.9 million, (apart from imports for construction,which cost At 39.9 million); and the gross value of industrial outputamounted to No 142 million. In 1969, the cost of imports of industrialraw materials was NO 105 million, (up by 128Y) and the gross value of in-dustrial output was about NO 250 million (higher by 76%). The currentposition, prevailing since 1969, is that most existing factories arereceiving the licenses and permits they need to import raw materials,spare parts and balancing equipment, for their already installed capacity.Factories which can sell all the output they are capable of producing,are operating as near full capacity as they can. Some are operating atless than full capacity, because the domestic market is not large enoughfor their full capacity, and export outlets have not yet been established.Industrial imports in 1970 are being maintained at the 1969 level. Itappears, however, that the country will have difficulty in maaintainingthis policy for industrial imports further. The improved export earningsduring 1969 and 1970 have been absorbed by current consumption. Any de-cline in exports now would have an adverse effect on domestic industries.On the other hand, reduced allocations for import of capital goods in thelast 2 years (except for export oriented industries and mining) have beenfollowed by slower growth of new industries. There has been little hori-zontal and less vertical growth in industrial capacity in 1969-70.

5. In this context it is necessary to examine the efficiency ofutilization of foreign exchange resources in Ghanaian industries to iden-tify a strategy for further growth.

6. The Bank Mission had access to a study (in progress) of the localcurrency cost of domestic resources used to achieve foreign exchange savings,

based on" a smnnl nf _hntot S induqtriq1 *m-ntsj and using data nertaining

to 1968. The study indicates that about 20% of the firms (9 or 10) couldsavea u n4t ef fnreI4,n Pxch:nan ($q) hby cpndnAina thp Pnliiivnlpnt wOntint in

local currenty (NO 1.02) on domestic resources. Ignoring all sunk costs,and concer.trating atter.tio.. on opreratinag costs, and pirenSuringCl -fi-l-l ut_ili-zation of installed capacity, it appears that an additional 30 percent offi.,a- in the sample w-Ould have been able to save foreign exchange by Snenai-

ing the equivalent amount in local currency on domestic resources. It issig.iffican.t,,- h,owever, that .. ,.st of t-hese firvm -wer enageda 4, foodi k,-be-

erages and allied process industries, in which the costs of packaging,transport and h1andli;;g, consti4tute a considAerab-le portion of the final

LLC.~~J& . LA L,uIA U , , 'JLOAU&..tP*.LAA 0UC.A.C U.LJI ~ JL - -

price paid by the consumer. On the other hand, industries producingengiLneezriLng an,d elecrtrical equipm.ent, chemruical com-poundus, p1harmaceutical'sand cosmetics, processed textiles and garments, were deemed unable toachie-ve economi'c sav:Lngs ofL foreiLgn exch'ange even under the f'avorablelpassumptions mentioned above, because of their dependence on imports fora very large percentae Of thleir t0ualt MUtMeril inputs, tLLLe ltively

high cost of imported inputs on account of the numerous charges for li-censing, financing, purchasing and handling, (not to mention the inflatLonof invoices for extraneous considerations) and the high costs of localprocessing and assembly. Domestic manufacture, in these cases, was re-sponsible for high cost output needing substantial protection. Such asituation may be acceptable in a developing economy in a transitory phase,in order to establish a foundation for further economies, through develop--ment of loca:i sources of raw materials, or "'progressive'- domestic manufac--ture, or expansion of scale of operations. But it appears that the Govern-ment of Ghana has not: yet devoted the necessary attention to these aspect.sof the problems of Ghanaian industries. Indeed, new projects continue tobe considered for incentives and assistance without sufficient examinationof the economic benelits and true costs to the economy.

7. The Bank of Ghana has been analyzing annual data regarding thecost of imports for the manufacturing sector. Figures for 1968 (see Anne):III) which are the latest available in sufficient detail, covering 76 in-dustry groups, which fall within the ISIC two-digit classification numbers;20-39, indicate that in 33 industries which accounted for gross outputworth about NO 95 million, (out of a total of NO 222 million for all in-dustries) the value of imported raw materials and components constituted90 percent or more of the total value o:E materials used, and amounted toNO 34 muillion. Another group, consisting of 17 industries, imported rawmaterials and components which cost from 50 to 89 percent of the totalvalue of raw materials used by them; the cost of these imported materialswas NO 13 million, and the total value of output was NO 47 million. The twogroups together accouLnted for imports worth NO 47 million out of a totalof NO 86 million for all industries in 1-hat year. The significance of thegross domestic value added by these industries, i.e. about NO 95 million,depends on the extent to which the prices of their products were competi-tive with the CIF cost of comparable imports. While detailed data was notreadily available, information regarding the low levels of profitabilityin these industries, the high levels of protection required to keep themin operation, the fiscal concessions sought and sanctioned, the pressures

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on the licensing and quota systems for imports of similar goods, the extentof smuggling prevalent, all suggest that the figures of gross value ofoutput of these industries contain a substantial element of inflation,and if the output were valued at the CIF cost of comparable imports, there,would be relat4-ly 14ttle ev4denc -If saving of foeg exhag -in--1q 9 allthis industrial activity. Thus the Ghanaian consumer has had to pay ave.r substantial price for the prese..t leve of: Ao,.stc mnfatuin

activity.

III. Public Sector Industries

8. The mission had the opportunity to review operations of somespeciLLc mianuLacturing industries in thie pubuic sector,; aLU soume signifi-

cant cases are mentioned below, for a more detailed appreciation of theinUUsLtriaL sLUdLatLo in L[ile country.

Ghana Industrial Holding Corporation (GTHOC)

9. The present Government of Ghana inherited from the previousregime as nany as 55 State owned companies involved in diverse businessoperations. Tnese had Deen sLarted by Lte SLaLe LnLerprises Secretariat,which was part of the erstwhile President's Office. In addition, therewere number of Joint (State/private) enterprises, in which the Governmenthad a substantial financial interest. Many of the state owned companieswere losing money; some were barely operating. In order to bring orderto the scene, and to put operations on a proper economic and commercialbasis, the Government appointed a "Negotiating Committee" to sell suchunits as were saleable to private enterprise, or to arrange private par-ticipation and management, wherever this course was feasible; and 20autonomous State corporations, with 29 factories in various parts of thecountry, were placed under a new organization, Ghana Industrial HoldingCorporation (GIHOC), to be reorganized and run on sound commercial lines.During the 2 years of its existence, GIHOC has some achievements to itscredit. A textile mill has been transferred to a private party withexperience of management in Hong Kong, and it is now expected to makeprofits. The Steel works is being reorganized and equipped to producesections for which there is most local demand, and will attempt to exportits surplus products. The glass works which faced technical problems, andhad inadequate equipment for bottles and excess capacity for sheet, andalso had problems with a furnace, is being reequipped for profitable op-erations. The distilleries, boat yards, electronic products and paperconversion units, all showed better results in 1969 than in 1968. Thecocoa products plant produced a substantial profit; but this is merelya reflection of a concessional price for cocoa beans supplied to GIHOC.Similarly the fibre bags unit shows a profit which is a consequence ofits monopoly status. The distilleries, glass bottles, and paper productsplants have a dominant status in the market, and the profits of theseunits reflect this position. Annex IV indicates the financial resultsof the principal divisions, on operating account, in 1968 and 1969. Theoverall operating profit (about NC 5 million) is not really significant,because it has been arrived at before provisions for depreciation and

- 5 -

taxation. Also several of the -,nits enjoy special fiscal concessions,and their high prices are heavily protected. The operations of some ofthe Units were reviewed with the management, and obsenatons are sum.-marized below:

lo" Sugar Division:

(i) Ghana has two sugar factories, located at Komenda andAsutsuare, -WLII-t insta'lled capcit for 1200 n 2,0t'i~ ~~ ,WL LLL L IL.C %LaP1%_LJ ~Y LJVL L.A-,VkJU CILLU -t ,VVUU

tons (per annual campaign) respectively. The plants were. ,, d: -LLdLCU ULt L.UL I[d[LULdCLUL U I.Ly Ld.L

granulated sugar from cane to be grown on factory ownedand operated estates. From tihe very- first year, liowever,

it was apparent that the estate cane-farm operations wouldncit be adequate, and private smrall-holders were encouragedto grow cane for sale to the factories. While these effortshave been successful to some extent, and it has been demon-started that suitable sugar cane can be grown in the economicregion of both factories, actual achievement has been farshort of requirements. Firstly, the cane areas were notselected with sufficient care. Many or them are far beyondthe reach of economic transport arrangements. The arrange-ments for care of the crop also need improvement. The weak-est link on the chain is the (lack of) arrangement for har-vesting and transport of cane from farms to factory. Inconsequence, the supply of cane to factories is inadequate,un-timely, and in poor condition at the time of delivery.

(ii) The manufacturing process is also subject to many short-comings. Partly on account of unreliable cane delivery,but also on account of technical problems in the plant,the crushing process has low efficiency, the recovery ofsugar is deplorably poor, and the quality of output is notgood enough. The Government has a detailed report on theoperations of the sugar mills from Tate and Lyle, whichhighlights the problems and possible solutions. Whilesome of the steps suggested may not be immediately essen-tial, there is a clear report on what needs to be done toremedy the present poor performance of the two factories.Most of the problems could be solved by reasonably compe-tent and experienced management of the cane estates andthe factories. It should not: be difficult to procuretechnical and managerial talent with capability forhandling the problems, in such a widely established andrelatively simple industry.

(iii) The urgency for appropriate action may be gauged from theobvious fact that if the 2 factories were to produce tocapacity, the country would save the cost of about 31,000tons of su_ar in foreign exchange each year (36,000-5,000).As soon as they are producing to capacity, action could

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be i4nti 4teA t-os rais capai fty to a leasto - .O Af) 00 torsi

per year, by doubling the Asutsuare plant. Ghana needsat presentl over 710 000 L.tLons of sugar annually. It hI--demonstrated capability for growing sugar-cane of suit-azb.le qualiy, ar.d there appears to be no ale

difficulty in the way of producing adequate quantities.

(iv) To ensure adequate sugar cane supply for the factories,it is necessary to extend L2LL[ILL g Uopperations suU StaLLtia Ly.

For Asutsuare alone, it is necessary to bring about 6 to 7thlousandU additioLal acres undUer sugar-can1te. ILn the contextof past experience, it would be advisable to develop about5,000 acres or small-holder sugar cane farms, and 1-2thousand acres of the factory estate. For Komenda, about2,uuu acres of cane in small-holder farms may be required.It has been estimated that the total program, includingprovision for transport of cane from farms to factories,would require an investment of about NO 2 million. Thisinvestment is probably unavoidable. Proper organizationwould ensure commensurate benefits within 2 years. Ade-quate and timely supply of sugarcane forms only the basisfor sound manufacturing practices. The two factories willneed to improve their process efficiencies very considera-bly, and take adequate preventive measures against break-downs. Trhe performance of the factories during the pastand current season only highlights the need for drasticmeasures at each stage of operations, from crushing throughprocess to products, to ensure efficiency. Off seasonactivities for maintenance and overhaul should be properlyplanned and executed, to avoid breakdowns in the course ofthe campaign. All these points may seem obvious, and arementioned only in the context of the actual performance ofthe plants in 1968 and 1969.

(v) It may be mentioned that as soon as sufficient productionis forthcoming, there will be need for coordination of theprices of domestic and import prices. Import prices varyconsiderably from year to year, and according to source ofsupply. For some years to come, domestic sugar costs willbe higher than the cheapest sugar that is available toGhana internationally. This is a common problem faced bymany countries which do not have adequate establisheddomestic production.

There will be need for the creation of a Sugar Board or Authority, withresponsibility for imports and fixation of a pooled price for sugar eachyear. Alternatively, the import duty on sugar imports will have to beraised to a protective level, which may be reduced gradually as thedomestic sugar industry gains internationally competitive cost efficiency.

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11. Carning Industry:

(i) GIHOC has t:aken responsibility, so far, for only one ofthree canning plants in Ghana. This is located at Nsawam,wit:h equipment specially designed for handling pineappleancl citrus fruits, (12000 + 2000 tons per year). Unfor-tunately, there simply is not enough fruit available inthe economic zone of the factory. If the plant is to func-tion at all, substantial investment and managerial effortwill be required to grow more fruit within an economicradius. Moreover, export markets will have to be foundfor the product, for the domestic market would absorb onlya fraction of the output.

It is understood that the Ivory Coast has a fairly prosnerous pineannlegrowirg and canning industry. It may be worthwhile for GIHOC to studythis- and develon a suitable gtratePv for effective titilization of theequipment it has inherited. The current, book profits of the unit arederived fronm n alcohol bottling farilitvy which takes credit for thesubstantial margins between the bulk price of alcohol (supplied by aGIHOCTdistillery) anA the cmall-pack prire at whi rh i tc iitniit i di-

tributed.

(ii) The Government of Ghana is saddled with 2 other canning plants,one for m-an.go.es, (at- WTench,4) 'n another f-r t-n-fa (at-

Pwalugu) which have almost identical problems, lack of rawrna-teri4iS and msarkets. The plants are, at -resent, -nt 4-

operation. It would be inadvisable to spend money on op-e rating them thout first making arrangements for exportmarketing. Perhaps it would be possible to transfer theplantzs to private entLLeriprse UA. 4 WA establiUshed4 ma-.-kes abt,road,

with the prospect of progressive development of fruit cultiva--ion in Ghana. But Uit sh-ouldA be- ronized that Ile extensloni..jLI LnL UJLLatL.L. J UL . _L. ~L a UU U ~ L.~%_U6 IL. U L .~ L.LL ~ ~IJLLof mango output may not be a priority project for the Ghananianenonom.y at present; e,nd iAf morle tonnatoes can 4n fact be grown,

then for some considerable time, it would be more practicalto -improve distrib-.ution arrangemnlents and consum"e the". fresh.in season instead of packing them at a cost perpound whichLar exee:u's Lize pr'Lce oU LLLte * rLei LI ULL.

12. re'co-we: The £ULwear puLant is equ'pped wLIL firLLy gUUUmachinery, and has demonstrated capability for turning out good qualityoutput. But its costs are too hi±gh fo0r bO[th ULUITeL1C andU expoUrL L.markeLb.

It has suffered considerable losses, and is now operating at a fractionof its capacity. It is recognized in GIHOC that the unit needs muchgreater attention of competent management for better buying, manufactur-ing and marketing. It should be able to meet domestic competition, andutilize its capacity profitably. It would perhaps be advantageous forGIHOC to explore the possibility of reorganizing managerial arrangementsto provide a financial incentive to the plant management for achievingprofitable operations.

-8-

13. Animal Products:

(i) Meat: This nlant was poorly nlanned- iA badly locatedand suffers from an inadequate supply of animals. Itwas1 n1sn estahlished withouit suiffic-ient rons-iderationn nf

the economics of the meat packing industry. In the ab-senre nf a mArket for selected uts whir-h *.zould fetch

premium prices, it cannot obviously produce canned goodsof the and corned meat class at -ri whi would

compete with imports, specially when the cost of canningin n 4_ em,bera-a is S t -ill higher V-1,. in mo.r AdmvelroApe

countries, and there are no organized by-product indus-tries, e.g. hides and skins tan-.ing, glue and bone meal.

(ii) Tanner;: The PAP di indeed envisaLge developre-. of the

leather tanning industry in Ghana; but equipment for atLaneLry WhLiclL Was JUL LpIuchaU s UUla LLIeen LdlleU \ dL tVey A LLJ

without any real consideration of the economic implicationsof its operations. Sufficient hides ardLU sk'inLs are notavailable for the tanning unit. There is little organizedslaughter, exept, in I or 6_ widel separated urban areas.Even in these, there is little skilled flaying. Manyhides and skins are wasted. The limited available supplyis divided between competing requirements, and the Governmenttannery simply cannot get what it is equipped to handle.

Ghana is a substantial importer of meat animals from its upcountry neighbors.It is also attempting to develop domestic animal husbandry. There is needto recognize meat packing and leather tanning as integral parts of thetotal industry, which starts with the import or domestic raising of cattle,and consists of efficient slaughter, and optimum recovery or parts rorfurther processing or packing. The last phase alone cannot be successful-ly developed without attention to earlier phases. It appears that theGovernment of Ghana has under consideration a proposal for activating itstannery equipment by importing semi-tanned hides. The economics of theoperations should be carefully examined before such a decision is taken.Prima facie, there appears to be little room for profitable operations atthe existing location, in the context of import of semi-tanned hides forproduction of leather for the local market. It may be possible to linkoperation of the tannery with a wider (export) market; and it would beworthwhile to try and secure the interest of a private internationallyestablished company or group for the enterprise.

14. Organization and Management of GIHOC. The current operations ofthe corporation belie its name. It is not functioning as a holding cor-poration. The factories are headed by general managers, but responsibil-ity for most important aspects of the business in each factory is cen-tralized in the Headquarters. In consequence, top managerial attentionis over-extended; and the headquarters organization is not adequate forthis pattern of operations. It is understood that the Management isanxious to group the 20 divisions into 3 groups, each to be placed under

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a group manager, who in turn would report to the Managing Director. Thismay help; but there is need for providing the larger units, and groups ofsmaller units, with management capable of taking decisions and responsi-bility. Without this, mere re-grouping, and rearrangement of responsibil-ity for communication with top management, will not produce much betterresults. The present management is conscious of the weakness of theexisting structure - especially in respect of technical supervision ofoperations, financial control, and marketing. As a Holding Corporation,it should pay greater attention to the task of providing competent managersto its constituent units, and reduce its involvement in day-to-day man-agerial problems. There is need for recognition also that competent man-agement is not easy to secure without provision of incentives for achieve-ment. The existing arrangements suffer from a common defect of governmentorganizations in that they have no provision for incentives for excellence.

IV. Private Sector Industries

15. (i) Privately owned industries in Ghana play an important rolein supplying a fairly wide range of consumer goods. speciallyfor the urban market, e.g. textiles, garments, knitted wear,furniture, soaps and cosmetics7 nacked and processed foods.alcoholic and non-alcoholic beverages, cigarettes andtobacco products- radios, record nlavers; records; simnleelectric equipment and gadgets, etc. They also producesome gaood fnr the exnnrt mnrket- narticiOlnrIv timber nrnduitq.The dependence of many of these industries on imported inputsand components has already be.n not-e-d (P-ra.rahs A and 7)Some of them are obviously uneconomic, in so far as they cancall theiv nrrodiuts onlxy at priac that are mr ucm,h hirAher thanthe CIF price of comparable imports, even though they importpracticanlly all t-ia mate-rilal tt-hait- ronst4ti-tu their prouActs.

But there are others that make effective use of imported raw=Pater4IaS -ad components -nd add domestic vaiue to the finPal

product at reasonably competitive cost. There is need for adetailed rev4i4 of casce in r.whic a o4 gnificant volume of

imports is involved, in order to develop an optimal strategyfor the future. In a ci a ses , it would be possible to under.take progressive manufacture. In some other cases, where theprincti.pal 9protduct. i8 agricultural or anL.mal, e.,. tobJa.co,textiles, milk, there is need for an integrated agro-industrialpolicy, whij'ch would rapidly encourage dom,estic produc'-ons ofpUJ±1y WL1 L~L WULU LU LLJUL uIJI~ t.LL LLUULLJ.JL J

the inputs presently being imported.

(ii) Unfortunately, some of the tariff and tax policies of GOG arenLot properly adjusted towardUs achieve..ent ol these objectives.In its anxiety to encourage domestic manufactures, GOG hassanctioned exempLions Lrro[m LimporL ULutes ana tncome tax, LUr

a number of years, to a wide range of industries which onlyperform an end-of line process, or an assembly operation, onhighly processed raw materials or.components which are imported.In many such cases, tihere is no financiai incentive for the

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domestic firm to move towards progressive local manufactureor domestic production of raw materials. Unless a manufacturingoperation has sufficient economic justiLication from the verybeginning, there is need for linking the concessions grantedto a private firm, either to progressive doniestic operationsor to progressive economy in domestic operations. If this isnot done, the incentives oolicv will continue to provide scopefor investments which, while profitable for the individualcompany, are uneconomic for the country, and impose an un-necessary burden on Ghanaian consumers. On the other hand,rational linkage of incentives with economic benefits to thecommunity will focus the attention of prospective investorson avenues of activity which are nrogressively more heneficialto the economy.

16. (i) Observations made in the course of some case studies wouldbear mentionn Thero are two cment grinding plants at Takoradi

and Tema ports. As at present constituted, they belong jointlyto Governm\ent (75% shares) and a No egian cement compar.y and the latter is responsible for management. The companyimpiorts clinke-ar fronm NorjTau w.h h iS o,roin and hbagcgd loc'ally

It appears that if cement were imported into Ghana, the CIFlanded cost would be about N¢ 22.00 per ton. The -resent ex-works price is NO 24.00 per ton. The cost of clinker, sparesad al I other requirements of the plants lvn foreign

exchange expenditure, amounts to about NO 15.00 per ton ofcement. TLLe current output of t1.hLe two. S 'A. .. . It LS. plat t-.og LeJ t-h ez , (whZL ich

have an installed capacity for 750,000 tons annually,) is about4kJU v UV L.ULL LLX1 U: , VlL ILIL Ci l-1 LLi1LI aL._VUILL t..L 1 U 1 y

saved for the country about NO 2,800,000 (equivalent) inforeign exchange. On the other harnd, consumers paid forthis saving an overprice of about NO 800,000. The companymade a profit of about Nh 1.1 uIm.llLon, of whicL 75/o s theshare of Government. On balance, the industry claims thatit is not a liability for the COun1try, in1 Lterlm Uo LoUreLgLL

exchange, at its present level of performance. There is scopefor improved performance, if the excess instailed capacity canbe used for exports. If economically workable limestonedeposits are located within Ghana, and ciinker imports canbe eliminated, the industry will, of course, become muchmore beneficial for the country.

(ii) A study was also made of the torch-cell industry, establishedby a well-known international corporation, with annual capacityfor 20 million pieces of a popular size of cell. Incentiveswere sanctioned for it on the basis of a calculation that theimport bill for full capacity output would be about NO 650,000,while the value of output would be about NO 1,000,000, on thebasis of CIF landed cost. However, this calculation did nottake into account the import content of certain inputs to be"locally purchased," and had no provision for remittance of

- 11 -

profit. The plant is at present producing substantiallyless than rated capacity; and local consumers want more thanone size of cell, particularly for radios. The price of com-petitive imports is also now reported to be substantiallyless than was assumed originally. The unit had, therefore,not been able to demonstrate any significant savings offoreign exchange through domestic manufacture.

(iii) A more signlificant case is that of the plvwood and veneersindustry. Ghana is a substantial exporter of timber, logs,sawn planks, veneers and plywood. In recent years, GOG hasoffered considerable encouragement for local sawing andplvwood man-ufacture. so that foreizn exchange earnings perunit of timber may be increased. A number of veneer andnl,vwond nl.ants have been estah1iqhed. Annex V indirates

the volume of exports and earnings for the four years 1965-68 Tt twill hp nntired that gross earnings frnm nlvwnnd are

better thain from timber. However, in the case of plywood,there were imports of .mnchinery nnd .mnterials whic-h offaetearnings to some extent, and unit values have not increasedin step with timber value. The hinistr, of Industry, OGm,is examining the case of this industry in some detail, toserve as a basis for guidance in other cases.

17. Mention may here be -ade of several inds-tries, the econom.icdevelopment of which is dependent on agricultural/plantation crops. First,thlC Aere is thL-Ae automobile tCyre inudustIrj, nc.w being operated by ar estab14sh;_d

international company. For the present, it caters to a small domesticMa.Z\k L, diAU LILL9UL mrLb a ULbs, Lp LL.LL of. its. 1. L L4 U.L L Li n.l di , Lii LA.Lng

rubber. But its future is linked to the rubber plantation industry.M.easures hIiave been taklen tLo dLeveLop a 'large ruLbber pLantatiLorL, w`Iiw4h wiL 'L

not only meet the requirements of the local tyre plant, but also producefor export. Th is1- integrated UevelUpuetL Uof the plantation adU rubUerusing industry should serve as an example for the tobacco products andcotLton textile industries. LBoth dUependU very largely on im.pjULL U. Loh.LL

raw materials, which Ghana has already demonstrated the capability ofproducing economically. YWhLat is needed nUw is a properly coordinatedpolicy for rapid development of cotton and tobacco cultivation in Ghana.This will proviae economic under-pinniLug for Lne existLing manufacturingindustries, reduce the linkage between expansion of these industries andfurther expansion of imports, and also provide domestic employment.

V. Development !nstitutions

18. Ghana has a Capital Investments Board, which was created in 1963,principally for the encouragement of investment of foreign capital inGhana; and it has powers to recommend to appropriate government authori-ties the grant of exemptions or reductions in taxes (including income tax)and tariffs, and special facilities and. licences for industrial invest-ments. In the past 7 years, the Board has granted concessions in 86 cases,involving investment of about No 100 million in domestic and NO 45 million

- 12 -

in foreign currency. Twelve projects were sanctioned in 1969; and a listof these is at Annex VI. This list contains several cases in which noforeign investment is involved. Concessions were granted because of theargument that concessions had been granted in similar cases to foreigninvestors. There is indeed a lacuna in the present position. There isno clear delimitation of areas in which foreign investments are to beencouraged; nor is the financial value of concessions related to thevolume of foreign or total investment. In several cases which were ex-amined, it appeared that the applicant company had emphasized orimarilvits inability to operate at a profit if it were to pay customs duty onimnorts and local taxes. Calculations of domestic value added and em-ployment data were also supplied, together with comparative data of c.i.f.Ianded cost of imnortsR and dompstir costs. Rut the reliahilitv of murhof this data is questionable, and the C.I.B. does not have the resourcesfor in.dpnpndent verifiration, or even for nost facto Pvqmination of actual

performance in comparison with initial presentation. There is apparentneed for clearer rules, in the absence of which the count-r may be fore-going revenues unnecessarily. Discussion of procedures and policies withthe present mzanagement indicated that there is con-iderable need for propercoordination of policies between the Board, the Ministry of Finance and theMi n-ixt n f Tnr,Qtv-y. Annpreq.ntlyu tha repnreentat-ion nf bonth Min it-riea

on the Board does not provide sufficient coordination; and there is needfor writte.n policy guideAi1nes 'and rules. Some pf t-h Act mayalso need to be amended, to clarify the correct position in respect ofquesMo . a*. L.a^ Vlhive C ra.en - n some ctases, and tA ImprVC eL x C X.LIC t Ch effe L *I LC; V C

ness of the Board as an instrument of GOG's policy for encouragement ofprivate foreign ir.vest.ments in Gthana.

in. Thie lati onal Investr,ient Bank (NIB): The rol e of the NIT, as an

instrument for encouraging industrial development, was reviewed with themanagement. Lt was notedu thLIat sinCe I 9U 7I,LL DtLhe [ndb cUILSkcUUsly al.teLeU

its lending policies, to favor private and Government ventures. (Earlier,it was more involved in supporting State venLtures.) This new pulicy en-tails more intensive spade work by the Bank, because of paucity of domesticprivate enterprise. Tne Bank has tried to maintain the tempo of develop-ment by collaborating with suitable foreign parties; and has encouragednew investments in food production, in keeping with nationai priorities.

(i) The Balance sheet for 1969 (Annex VII) shows that investmentin industry amounted to NO 1.3 million; and loans actuallydisbursed amounted to NO 5.5 million. Loans sanctioned butnot utilized amounted to NO 5 million, which is a very highfigure, if one considers it alongside the fact that new loanssanctioned in 1969 amounted to only N$ 2 million (of whichNC 1.3 million were for industry and NC 0.7 million for agri-culture). The Bank profit in 1969 amounted to NO 251,000, asagainst NO 200,000 in the previous year.

(ii) A review of cases pending consideration (Annex VIII) showedthat, out of 22 applications, three related to agriculture,

- 13 -

one to plantation, and one to animal husbandry. The remain-ing 17 included a housing project, a transport project, anda laundry.. Only 14 could be really classified as industrialapplications. In view of the existence of a separate Agri-cultural D)evelopment Bank in Ghana. it would be advantageousto have a demarcation of the appropriate spheres of activityof- NIB and ADB! in order to maximize the effectiveness ofscarce supervisory staff. The NIB would then be able toconcentrate on the more important industrial proiects. andincrease the rate of utilization of loans. It was understoodthat a number of nroiects have been in the Dine line for sometime, but have not matured for loans or investment, e.g.alumlnum rolling; Bitumen; wood wool and chin boards- andrice milling.

NIB has obtained offers of assistance from USAID and IBRD, for programsfor finnanc yng privat:e business on a larger scale tharn hithertno thasnot yet been able to avail of these. The only major foreign credit thatit has been ble fn avai e o f dur4

ng the past 2 years has hen fromKreditanstalt fur wiLederaufbau amounting to DM 20 million, with whichNIB was able to finance asisIstance to plants for high voltaOe cablesIelectrical appliances, ceramics, razor blades, industrial adhesives,*..oAd at-r.aors, et. ]t is apparert in the ckonet of the nmeds for indus-~ I ~5.U~ 3 - 1 . - C

0r 4- - U. *lf5 O5-L~.O a & JS~

trial investment in Ghana, that the NIB could play a much more vital role,toenou agn indur4i1l A p -1--p- -.nA T hF .-1- a 1o ,.4A; F 4-:Q ;1.A

tion of projects.

20. Ghana faces some special problems in its trade with immediateneighbors oni the W esLt ALfrican coast, i.e. T Logo, IDCi.iomey, andU Lvoy Coas.t.All three countries are members of the Entente group, and under Frenchspo.,sorshiLp, are assloc'Lateu wi th tLie European Commr,,on rLketL. hLaInI, w't

its Commonwealth link, is not a member of the group, and suffers tariffdiscriminati on. Its; domestic ITmarket i:s too small for a number Of modern

industries; the markets of the region, together, would be a more suitablebase for sevrera'L inLdu.StriteSiU i; and it -Wuld bUe WUrtbLw1-i.e fLUL Ghana tL iin

a way around its problem in the regional market. It is generally recognizedthat there i.s a substantial unoffficial trade between Ghana and its neigh-boring; countries, and manufactured goods are smuggled out of Ghana evenas cocoa is. Gnana has made a considerable investment at Tema port, tocreate suitable infrastructure facilities for industrial development. AIIindustrial area has also been laid out, with suitable provision for powerfrom the Volta Dam. In this context Ghana may find it advantageous todevelcip a Free Trade Zone at Tema port. Tnis would allow new industriesto be located there, free of restrictions and regulations that apply gen-erally in the country. At present the Aluminium smelter of VALCO enjoyssome concessions which are typically available in free trade areas - forimports and exports tree ot licences and imposts. The extension ot similarfacilities to a wider range of industries may provide the necessary induce-ment for new export-oriented investments. The neighboring port of Lomeenjoys partial free trade status already, but industrial development thereis believed to be haampered by physical limitations, and also by a variety

- 14 -

of fiscal charges. The oronosal for Tema is that concessional terms;. andfreedom from the handicaps attendant upon location in Ghana at present,should be nrovidred for indlLstries which would not he econnmic for Ghana'sdomestic economy only, and which would cater to wider export markets. Oneof the mnaor nrnholms of free trnde zones- namely, the sopne for srmugglinginto adjoining territory, would not be of much significance here. GOGshould e-xnmino the impnlirt-inQ of the proposal in depth, and take stepsto utilize beneficially the industrial prospects of the area. Instead ofinstalling 1 iT c cm-1 ineconomic ni t-s fnr its donmestic qrke,-t' it Tinul be

able to sponsor large economic factories to cater to the needs of theregion, and -lon export to more distant nmrkets

VI. Scope for Development

9.I T.. LI-he* cours 4tO L LILaCf -S. .t tJiO dalt .L £ UL -IL t.uOO .' - - w. Lth9 1 T FL . . _ A A S . . PA | 4 : A i S _ 2 A ..A A t t 4 Z u~~~~~~~~~~~~~~~~~~~ol: ves nsI a

responsible persons in ministries, Banks and industries, the Missionunderstood tha lt is Aeeal reonzdnwta . osnthvLULU~L LLAJU LL . LL A.0 6t1L~LULaL.L LC__U L.JLtIi_. A "L) CIIL '.JIL1ALia UI.JE0 1IVL_ LIav

further scope for development of local capacity for end-of-line process-ing Uo asse,it,bly Uo LI1tj9UL LtU UompoUneLLL fUL pLVUUcLtLUo Uo conLsU1r,eL goUod

for the domestic market. There is growing emphasis now on the developmentUL LIAUUO Li L ' . .t1 WIIL.lL L1 L UUULL0I LLL LUtIIIJULEI.LLL U1 k LUb0 vau- wuu.LU

substantial. In this context, there has emerged a growing interest inarLcuLturaL andU all.Leu acti-vities, whIlch wouldu supply raw mLaterLaLs for

industrial processing; and there is need for this trend to be fostered.

(i) The textile industry, which has grown conspicuously inrecent years,-has scope for further growth. Tne volumeof yarn currently imported, and the likely growth of demandfor textiles in the next 3 or 4 years, suggest scope for40-50,000 additional spindles. Of course, this developmentmay not be very advantageous if Ghana cannot produce morecotton. The present structure of world prices for cottonand yarn makes the installation of additionai spindleagea matter of questionable profitability; but if cottoncultivation makes progress in Ghana, there would be advantagein the installation of more spindles. In either case thereappears to be scope for additional capacity for weaving.Medium sized establishments appear to be capable of perform-ing at reasonable levels of efficiency, and local enterpriseshould be able to take advantage of the scope available.

(ii) A related field is the manufacture of coated fabrics, thoughthe domestic market is small, and excess capacity should beavoided. Perhaps a single unit of modest capacity wouldmeet the country's needs for some time. On a small scale,there would appear to be room for rubber and plastic mouldingand extrusion plants also. These could supply the domesticmarket with its needs for a variety of small products, andcreate gainful employment for moderately skilled personnel.The development of the Dlywood and veneer industry has alreadybeen noted. There appears to be scope for development of the

- 15 -

furniture parts industry also, though this would requireclose liaison with markets in developed countries. Ghanahas made a beginning in the fish and sea food packing in-dustry. There is very considerable scope for expansion ofthis industry, for domestic and export markets. The primeneed in this field is for competent organization and manage-ment. The experience of the different groups working outof Tema should be examined in detail, for the formulation offuture policies in this field,.

(iii) There are several other Dossibilities. e.g. Bitumen. builder'shardware, aluminum sheets, extrusions and sections, asbestoscement sheets and nines, cast: iron nines and fitting; hbut thefield should be left open for private enterprise to make de-tailed market Attidies and cost ann1vqis; before inuestmentsare sponsored.

(iv) A major industry that may be feasible, is the manufacture ofalumina frr.m ,-mlrct-ic t hbuii te. A npa-rt of the oup wouldbe used by the aluminum smelter at Tema, which imports itsrequiremen.ts at present. The indstr is understood to beunder investigation by the group that owns the aluminiumsmAelter (VTCO) and their findings would be of cons r"einterest to Ghana. GOG is considering establishment of a

alumina and aluminium in the country. Coordinated attentionto thle problemiis of i-lLining, rei.lning, transport, etc. woulU be

advantageous.

22. It may be appropriate to ment:ion here some industries which existin Ghana, and have excess capacity awaiting eciLaUtic utillzatilon, e.g.cement, sheet glass, footwear, ship and boat repair, and steel re-rolling.These could be operated more fully to serve the regional market in WestAfrica, if suitable negotiated arrangements could be made with neighboringcou.trLies Ln respect oi tarLifs, andu pro-vided that shipping could bearranged at reasonable cost. At present the cost of sea freight betweenWest Africa ports is prohLibLive. Ine problems and the prospects are bot.hwithin the rnotice of concerned countries. The need now is for specificattention tco them, with a view to identifying workable solutions. Gnanacould, in exchange for its prospective exports, accept imports which itneeds, e.g. clinker for its cement grinding plants from Togo, animals(for meat arLd hides) and agricultural products (cotton, cereals, etc.)from its inland neighbors.

23. Taking into account all these possibilities, the scope tor smallscale and service industries, and the :Likely growth of existing and alliedindustries in response to market development, it appears likely that forthe next two or three years, industrial growth may proceed at a rate of8 or 9 percent per year. This does nol: take into account the projectfor manufacture of aLlumina, nor the possibility for petroleum-based in-dustries, in the event of success in the search for off-shore oil. The

- 16 -

rate of growth anticipated is somewhat less than that achieved in the pastthree years; but this merely reflects the country's transition to a moredifficult stage in industrial development, when the earlier availableslack has been utilized. It is anticipated that growth of this order ofmagnitude would involve direct additional investment of at least Nt 40to 50 million annually in industries. Such an amount should be withinthe range of capability of the country's economy.

24. Employment. The number of persons employed in organized indus-tries (employing 30 or more persons) is now reported to be about 45,000.It was reported to be about 40,000 in 1968. and the increase is perhapspartially accountable by more adequate coverage of the data. Actual in-crease in employment in organized industries would not account for 5,000persons in one year. It is true that the increase in domestic value addingonerations during 1969 was fairly good (about 13%); but many industrieshad idle capacity in 1968, and it is likely that actual increase in em-ninvment was nparpr t nnn. Simall and mrpiiim qr.nlp induqtrips Pmnlnovpcabout 35,000 persons in 1969, as noted earlier. Hence total employmentin thep indusct-rial scrtonr in Ghana is around n000 oCnsiderling prospectsfor further employment, in the context of industrial growth at a rate of8 to 9 nprrcnt nnnnually, there appears to be sonnp for no mnrp than 5 to6 thousand jobs annually; and even this may be an optimistic estimate ifGOG has diff4 -1 t-ie a 4in 4 mrl omonting new policies that are necessary tocreate conditions for further industrial growth, and small and mediumscale industries do not grow to the extent envisaged. Large scale in-dustries in Ghana tend to be fairly capital intensive and automated,and cre-ate few, ji obs

25 M-1nin g: - hn' prncpa ..Ineral prdut are4 G-ld D AmonManganese and Bauxite. The table below indicates the quantities of min-e r a ls p r odlu c ed i n th -Le pas-L0t% f i ve y ear s .

Production of 2Inera's~~~La..L3 ~~~~~~~~~JLL~~~~~UU~~~~~~~U iLL L.LL~~~~~~~~~~~~ IJ u LA . I.yLL~

.C 4-... ~ ~ ~ ~ ~ ~~ nI 0..A1

rLL'neral 'unIi t 196J 19616 1968 _1969

Gold Fine ounces 775,200 684,400 762,600 727,100 i12,300

Diamonds Carats 2,273,200 2,818,500 2,537,50U 2,4472,0UU 2,8,JUU

Manganese Tons 594,500 568,100 490,500 406,800 346,000

Bauxite Tons 304,200 396,000 345,400 280,200 265,200

It will be noticed that the performance of all the extractive industrieswas better in 1965 or 1966 than it has been subsequently. Turning atten-tion from quantities to values, we find the position no better. Detailedinformation for 1969 was not readily available; the table below indicatesthe position for the four years 1965-68.

- 17 -

Gross Value of Mineral Production

Unit: NO millions

1965 1966 1967 1968

I. Gross Value

(i) In current prices 42.2 48.8 54.4 54.8

(ii) in 1962 prices 44.7 47.7 43.0 39.2

II. Indices of Value of Production(1962=100)

(i) In current prices 96.4 111.4 124.2 125.0

(ii) in 1962 prices 102.0 108.8 98.2 89.4

Iti W.4 11 ,o r-,t-

4,.A th6.t- 1QAA -.no t-h c. c Fk~t ̂ f fkho=, f-~.i Tk', k4 ,k.~

It wil be nticedthat 1966 --- the best of these f-u yea-s -..- -ie,e-figures of value in 1967 and 1968 are the result of devaluation of theC-hanaian currency. As almost all the output of m-neraS is expoprteA,earnings counted in local currency showed improvement; but the indicesXL [L. LLGL 1 1O V SJ V * tJ | 1A ± t.- .L fJ t.a L.I W.LCL.S U; C. C.t A. A. CCL G WVpsu\ tJO 4.. L VL JLL LSC L. G;:O j C. C. '.V

earnings of foreign currencies. It must be mentioned, however, that theue V~.LaL~ULI UI LLaLCELLL±L L-ULLMLLI-y Lu I J-76 WCZ: IM-A 4 JL U. LU LtLi- LILA.LiiI.t LLLUU

try generally, and to the Gold and Manganese mines in particular. WithoutuevaLuatLon, output ndL e:a-Lings would have been lower.

(L) ULu IULLnLLg iS the largest extraeti-ve industLry in Ghana, bothin respect of value of output and employment. The AshantiGold mine at Obuasi is the s:ingle iargest mine in tne country.It is owned and operated by a private company (LONIIRO) whichis current:ly executing a progral for substantial expansion bymining poorer ores; by extending the mining area, both ver-tically and horizontally; and Dy instaiiing new equipment inthe mines and refinery.

(ii) There are five other mines, with a considerable history ofoperations. Originally all were privately owned; but asknown reserves got exhausted, and operations became lessprofitable, the erstwhile owners wanted to shut down opera-tions. As this course would have led to several thousandminers being rendered unemployed, GOG took over the mines,in quick succession, in the early 1960's, and made them partof the State Gold Mining Corporation (SGMC). The minershave been maintained in employment but SGMC has been losingmoney on iits operations. Reluctantly, it closed operationsat one mine (Bibiani) in 1968. It is interesting to noticethat gross output of gold was maintained at the previous

- 18 -

years' level from the remaining four mines. SGMC incurreda loss of about No 4 million in 1969-70; and anticipatesa loss of NO 5.5 million for 1970-71. These losses havebeen minimized through a policy of strict limitation ofexpenditure on mines development, in the knowledge thatlarger expenditure is not likely to bring forth commen-surate results. It is easy enough to recogize the anxietyof GOG for the future of about 10,000 miners; but efficientreorganization of operations would not mean retrenchment ofall of them. There is need for a detailed review of SGMC'soperations, in order to develop an economic strategy forfuture operations. Even if employment has to be cut by halfin order to eliminate losses, it would be worthwhile, becausean annual saving of NO 1,000 per miner would justify an in-vestment to rehabilitate him elsewhere. SGMC should concen-trate attention on its best prospects and limit risks toworthwhile operations.

27. Diamond mining is next in importance to Gold. The value ofdiamond exports has ranged from NV 11 million to N¢ 16 million in thepast 5 years, largely on account of changes in prices. The arrangementsfor marketing Ghanaian diamonds have had a rather checkered history andthe State Diamond Marketing Board has not been altogether successful.The need for a more active role for organized private enterprise wasnoted in 1969: and stenp shourld he taken to nrnvide it- It may he men-tioned that the output of local diggers has declined sharply in recentyears; vis-a-vis orcanized diamond mining firmq. There annpears to he

need for well organized prospecting and greater use of equipment fordAredging andl reovry- whiIch in tuirn reneiiirp.Q cQict:;infil innrntversC There

is also some possibility of mining garnet and abrasive materials which arefound in association with di a.onds; and it should be investigated.

28. Manganrese mining has been in a prea-r4i-o -nAit4ion fo- some

time. There is only one known area of manganese deposit, and the miningt..l*lj.fllL nna _ 0 1a., L.. 1 3 t.J i a: a. a1: ed . tA. .1L,&1 : S . . LiA L.J .a, a.J ..L S.. Jf4

of economic reserves. Devaluation of the Cedi in 1967 made it feasiblefor -le mi,ning com,pany lo extract poorer grales of ore an' more diffi4cultI.LA ILL ILU ~ Lui _an t L cIL~JI I ~ ~ L.L u aiu UI U.L.LL .L LUL

reserves; but it is reluctant to make any commitments for continued pro-uct'Lon bUeyonu a Lew years at a time. Present indicatLons are thLlat man-

ganese will continue to be mined for at least 4-5 years; but annual outputma I - - I A - J - 1 ..t -- -- _� A -- - - A

may deCline WILtIOUL mIuch prior iIoLiCe.

(i) Bauxite, which has been the least important mineral extractedin Ghana so far, has a brighter future. It also has scope forlinkage with further industriai processing in Gnana, whnichother minerals presently mined there do not. So far, bauxitehas been mined only at Awaso, north of Takoradi, and is exportedthrough that port. The first hill, on which a mine was estab-lished during the II World war, has now been exhausted; andoperations have been moved to an adjoining hill, which has alarger quantity of extractable ore. The capacity of the mine

- 19 -

is being developed, and its output should increase to about450,000 tons per year. The Mining Company was reported to beplanning to achieve this volume of exports in 1971.

(ii) GCOG is keen to develop new mi.nes in the Kibi and Yenahinareas, where deposits of bauxite are known to exist. TheKibi area has been prospectecl in some detail, and reserveshave been proved to the extent of about 88 million tons. Theprospects of mining in this area are likely to be linked withthe proposal for an alumina plant, in whichi also GOG is veryinteres ted..

(iii) The Yenahin area has to be considered in two parts. One part,covering ebout 2/3's of the areEa known to contain bauxite isheld on lease by ALCAN, and has been partially prospected.Reserves to the extent of about 30 million tons have beenproved, and there are indications for about 90 million tonsmore; more! detailed work will be required before a decisioncan be taken to develop a mine in the area. The other part(about 1/3 of the area) is free of any lease and has not beenprospected so far. The Geological Survey of Ghana has a pro-posal for prospecting this area, to prove reserves; and thisshould be implemented at an early date. The Yenahin area hasgood potential for mining bauxite for export, and could earnvaluable foreign exchange fo r the countrv.

30 COr. has given leases to 8 initernational netrolpum companies foroffshore prospecting for oil. Workl is in progress, but results will taketime to be knotn= A sm,riP.ft1I -tri ke wouilci certninly mnke 2 hiLg differ-ence for the Ghanaicmn economy.

31. GOG contirnues to be handicapped by lack of technical staff inits MUinistry of Lands and Mineral Resources and G-eological Survey. Thecountry is currently spending considerable amounts of foreign exchange onPxnntrintP personnel for mininc nnPrt'ions. SG(MC nlnne emnlnvR nniitP n

large team. But there is a great shortage of really qualified and expe-rienced personnel for forward planning. 1Bt ter ri-esuilts fnr tho ecnonmy

could probably be achieved through employment of high level expatriateand do-mestic staff for development workl and for trainin a cadre of younerGhanaians in this fiLeld.

- 20 -

Annexure I

Gross O°itDut and Value Added in Manufacturing Industries Y

Items 196k 1965 1966 1967 1968 1969

1. Gross output (No million)

1.1 at current prices 107.0 120.1 142.0 170.7 219.2 263

1.2 at constant prices 9h.7 95.4 107.4 120.3 145.6 174

2. Value added (Ng million)

2.1 at current prices 59.1 69.5 85.1 97.9 118.7 137

2.2 at constant prices 52.0 54.9 64.4 69.0 79.7 92

3. Indices of value ofproduction (1962=100)

3.1 at current prices 15.1 168A.3 19. z^,9.0 ,06.9 368-t _ * A_l A/ jJU ^ _1. _tJ _ _J .j7J * 7 e e 7 .1 . 7 JL.

vU 'a-l-c Ons .I1a , U c sX .'I) * 'I ).7 j .± -V .UI.L_ U C 4 L. uI1 c44

4. T--dices ofP va-lue "dde4 LLLU4AL IJL L c"Auu,.L

(1962=100)

4.1 at current prices 144.1 169.6 207.6 238.8 289.6 334

4.2 at constant prices 126.8 139.0 156.9 168.3 194.4 224

-/ Constant prices relate to the year 1962.

2/ Figures for 1969 are provisional

Sources: Central Bureau of Statistics

- 21. -

Annexure II

Unit: N¢ - 000,000% - of total imports

Imports of Industrial Inputs

1966 1967 1968 1969

NC % NC % NC % NC %

I. Producers n.cr-durable good 45.9 18.4 70.5 27.1 86.5 29.4 105.0 29.6

Material for:

(a) F'ood,D-vera- es,

Tobaccco 12.8 5.1 17.9 6.9 26.4 8.9 26.0 7.3

(b) Agriculture 5.7 2.3 10.7 4.1 8.0 2.8 7.0 2.0

(c) Mining,

commerce 27.4 11.0 41.9 16.1 52.1 17.7 72.0 20.3

II.. Uonstnuctiol .17 -7 l9.u 29.4 ;1. 2-3 >. L4 u 104

III. Producers Capitalgoods 7 o76.6 30.6 59 2 2 2 9 78 .2 25.0 803.0 2 .51

Total I, II & III 162.4 64.9 159.7 61.3 192.0 63.6 225.0 65.1

Source: Central Bureau of Statistics

- 22 -

ANNEXURE IIT

SELECTED DETAILS OF MANUFACTURING SECTOR ACTIVITY - 1968

Economic Gross Imported Imported/Activity Group output materials Total materials

Food: 20 2010 1,098,589 285,576 0.57

2031 965,302 57,817 0.16

2039 795,401 275,466 0.66

2049 550,574 9,362 0.77

2054 1,967,204 - -

2055 82,948 5,235 0.10

2061 1,060,074 531,065 1.00

2062 1,856,861 1444,373 0.56

2071 54,51L 28,646 0.L46

2082 14,18)4,833 271,038 0.32

2083 406,140 - -

2089 227,815 99,7h1 0.73

Beverages 21 2111 3,373,144 839,680 0.47

2131 16,795,549 1,679,514 0.54

2140 4,252,1483 6)42,757 1.00

Tobacco 22 2201 2,151,181 9,320 0.01

2202 23,748,874 N.A. N.A.

Textiles 23 2311 16,017 4,166 1.00

2312 4,690,862 N.A. N.A.

2319 20,906,271 8,669,L81 0.90

2320 258,648 101,685 1.00

2391 19,750 2,036 0.94

(Cont.)

- 23 -

Economic Gross Imported Imported/A-4- ,r4

4-r- fl--^ on n,n+u n . a tei l nTI men - 1a

Apparel 21 21l11 14.,669,1434 624,555 0.94

21430 1o,iDo6,476 604,096 0.98

2442 3,727,359 1,298,318 0.95

214143 1,228s072 36,057 0.69

24L.4 1,:321,8314 608,005 1.00

2449 6714,253 272,1497 1.00

21411 22,689,166 6,1453,509 0o,46

Wood & Cork 25 2512 1,L408,806 353,765 0.70

2529 6,574 498 0..24

2591 5,2143 -

Furniture 26 2601 1,1353,768 380,708 0.,33

2609 1,314 11 0.02

Paper Products 27 2720 6,:L682208 2,781,896 0.99

Printing &Publishi-ng 28 2801 6,706,5114 1,248,292 0.89

Leather-Products 29 2912 O55,653 337,283 1.00

RubberProducts 3O° 3001 AL65 ,58, 67,015 1.00

'rnr-v9 '77 404 CO

eiemiCa!S 31 3119 sl170C 72 .7 C 2 1A.00

3121 :326,230 31,109 0.17

3122 87NLL25 = 0.05

311. 7 CN 6 \T A

3125~~~~~r-n ff0,7 5 223 ,1C 0fn. \ 3

3130A 1 )91 7I 8 7r3A 1.47 A .9

(,ont. )

4

+-P- a) C- CNJ r-i ° C) C) C) CNJ ON ON - .\sJ 0" 1J\ a:) 0 0 0 h. c a) O, O\ 0N O\ C) O C) r- ac ON a) r- ON \-0 ON * 0 0 0

PA C; C; C; C; C r r r; O ° C; C; C8 rici

H

4)

rJ) (I 'r- a) rH H CC) Hr H 0 O r\ 0 rH t ON C) r-) N0 t5\t rX\ ON C 0 J NC) C) CX] \C) CJ kC\ NC r \ r-H C) C] OJ co

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CH fd ffH %% CN H

C) cr- aC) ON H- C- ' 0N . ON O a) 0 H ON rI- CN CON tF\ H C° CXI ONON Ci rd -_ H C) H -_J rH C- a) 0 0 Oli rH CN c ONl - -- C\J

.3 (J C, rl- U\ El- a) CO LJ_ C' r-q °) °\ ON 01 \D U-\ \D (DI r- 00 O

rI C) 4 H C) J \ \O O 0 ON a) O O 0 \0 \ CrJ O t OO 0O 4D (' H CNJ r- -_ tf\ r- cr- Cr- o\J ON r- CN CN NO \ OIN N0 - --h> a) r- Ltf oJI NC) tC\ r-i Cl\\ aC) - r rHi 0 C] L- Cr- H\ H o J N

C\] C) H C\J NO r 0 H H r'- L C\J

Hri (QJ CL - ~ b r- cr\ C) H r-i 0 C\J ON rHi C- O H r ' t 0\O: O\N cN Cr\ CN ON CN ON CON H CXJ _: ON CC ) C) 0 ) C OO H r H rH rHi r rH i H Q'J rt o -o) \L\ Lr\ lTj NO r-- r-- -- r-

1g 4 ('-\ r-t o- - r\ r o) (Y' ry- ) (,r r- Y) r

O H (N - tA N4-

rr~i ri) ("I r0 ~ ~ ~ ~ ~ ~ ~ ~ o0

r- C in rd

In r 4i tDOli I]) taD O - - °D

tDD ID C3 4 ) tn CD1)I 0 C 0

- 25 -

Economic Gross Imported Imported/Activitv Group ouLtut materials Total mnaterials

Transportequipment 38 3811 l1i]70,124 319,491 0.57

3820 1,(090,907 N.A. N.A.

3830 5,327,791 3,269,298 0.96

Miscellaneous 39 3920 54,669 26,609 1.00

3949 142,975 - _

3959 J.814,338 36,287 1.00

3990 2,(514,302 964,562 1.00

Source: Bank of ohana

- 26 -

ANNE XURE TV

(Unit: Nt '00)

1968 1969Division Turnover Profit _ Turnover Profit _

1. C'ccoa Products 132R2 2Th75 11;51 )i1

2. Distilleries and C'nnery ) 781 1012 -np873 1;78

3 Ti9hre Bags 3;<nn I;j9 A2;? 771 738.

4. Paper 1ovrso l76)1 317 2,083 510l

5. Electronics r- 1zI 1R), 2,1370 399

6. BoatwTards 1,381 111 1l, ) h5 188

7. Pa-i nt-s 1 1-, 2)l1 1 261 172

8a Metl1 799 102 263 59

9. C 768 (1E552) 977 (1 A,7 7

10. Tex iles 2I ,2 113 1;100 ( 779)

11. Foot wear 1 -'( t -4?7 ()An ( 91

12. G-lass 818 (1,008) 660 ( 241)

13. PhTan rcutcas 68 ( 21) 13 ( I9)

17 Ph m.On -l+i o01 … AR 1 9h1 9 I %o

16. Brik and Tleworks 5~7 ( 6 6 2

17. * V eables oll *-- --l..t..ll) = ==N t avaIlab l=--=-------

Total 36,110 _/ 4h,167 33,508 4/ 4,927

1/ Before depreciation or Taxation.°/ T-1n-A- ng .,adq-arte+ ratn

Sourcet GIHOC Head Office

- 27 -

ANNEXUR-E V Quantity

TTni tf (hi f t-. 000

Value: Nt ,000

Quantity and Value of Timber ExportsL/

Variety 1965 1966 1967 1968

Krokodua Quanitity 264 231 211 369

Value 549 511 428 866

Uni-t Value 2,079 2,212 2,028 ',2,346

Mahogony Quantity 1,321 1,211 1,395 IL,180

VaLue 1,390 1,278 1,597 :L,463

Unit Value 1,052 1,055 1,144 I1,239

Baker Quantity 1,130 955 942 913

Value 1,315 1,092 1,180 :L,303

Uni-t Value 1,163 1,143 1,252 IL,427

.vawa (2Vuan UV UUty 7,15 6 6,68 1,987

Value 3,878 2,913 3,99 I4,728

uni-t Value 542 4U85 523 591

Sapele Quantity 1,565 1,025 1,071 1L,408

Value 2,217 1,025 1,580 2,573

Unit Value 1,416 1,000 1,475 :1,827

Utile Quantity 1,711 1,9147 2,161 2,218

Value 1,800 1,987 2,588 3,376

Unit Value 1,052 1,020 1,197 1,522

Total Quantity 13,173 11,375 12,471 14,076

Value 11,153 9,175 10,874 14,312

Unit Value 846 806 871 1,016

(Cont.)

_ 28 -

1965 1966 1967 1968

Plywood ~/ Quantity 459 L79 635 730

Value 1,363 1,512 2,160 2,410

Unit Value 2.97 3.16 3. 40 3.30

Notes: 1/ All timber export in Log only.

2/ One Cu.ft. of Plywood represents aproximately 2.5 Cu.ft. of Log.

Source: Central Bureau of Statistics

- 29 -

A\rAJR V1 VI

CAPITAL INVESTMENTS BOARD

LIST OF PROJECTS SANCTIONED IN 1969

NAME NATURE OF EXEMPTIONS/CONCESSIONS

Food Specialities (Ghana) Ltd. 16. 1.69 For 3 years (from date of production) CustomsImport duties on butter oil, skim milk powder,tin plate, soldering materials, labels cardboards and machinery spare parts.

Agricare 17. 1.69 For h years (from date of production) CustomsImport duties on dried yeast, decalcium phos-phate, fish meal, antibioties minerals, papersacks and spare parts.

For 4 years kfrom date of production) Exportand Excise duties.

United Textiles Ltd. 12. 1.69 For 3 years - Company to pay 2/3 of thecurrentu ralte oil excise duty on fini3hedu goodus.

United M'Mttress C. P,..,. T 4-A o~f). ~O ~ * -I C orI r dK.t-41

s onT

Chemicals, springs, special cover cloth &spare -ts for machinery-nd rawa

For 3 years - EYport and Exce riiut.ies

J'Piter Printing Press: 2h. 1.69 For 3 years from (Date of nroduction) CustomsImport duties on paper, M.G. covers, matricesand mould, ink eyelets stitching wire,binding cloth and gauze, thread, lead andmachinery, spare parts and other raw materials.

Universal Industries Ltd. 25. 1.67 For 2 years - Customs Import duties and SalesTax.

For 2 years - Excise duty

West Coast Dyeing Co. 8. 7.69 For 3 years - Customs import duties oncarded yarns in Grey state, Bright Fibre spunrayon yarns, Dermies rayon filament, Dyestuff,Chemicals, Finishing Agents Cellophane andmachinery parts and other raw materidis.

'fl --- I… - -- It 10/Zn'

New .ia-cun racLory ±. 0 rEor 4 yuars kuueg±nnlng -L4U/U)/f lubt,01fib

Import duties on such raw materials requiredand rmachin-ery spUVare parts, also cher,Micals,paper and cardboards wood and tools.

Tema Textiles Ltd. 10. 9.69 For 3 years - Customs import duties on rawcotton andl grey 0 .aff, d-stuffs, ch.llica.sand packing materials and such raw materials

For 3 years -(from date of production) Export

- 30 -

Augustus Textile Mfg. Co. Ltd. 24.11.69 For 2 years (from date of production) Customsimport duties on synthetic fabrics, pigmentdyestuffs, chemicals, packing materials,synthetic fabric printing and bleachingmaterials and such raw materials not producedln sufficient quantities in Ghana.

V_1UeCIe 4 a Gh fUi.Iana) Ltd. 4-. Fo 5I years ( . df poutn Oms A-ms -J UULA-4-4-

Import duties on Cu rolled wire, AI coarsewire dra7X., PVC + -ITInsu+all

PVC granulate/coating and machinery spare-arts.

Parnmuint Diftillpripe TLtid 1011=69 Pay c rate A N¢22=00n npr gallon

plus an additional N¢0.58 per gallon forevery 1% of pure alcohol by volume in excessof 4L% on imported concentrates.Proviso Not produced in sufficientquantities in Ghana.

AWTUVP =T1

NATIONAL INVE'TMENT BANK

Balance Sheet as at December 31, 1969

1968 liabilities 1969

Capital

(i) 1,500,000 Ordinary Slares of2,00( 0 NE n2.0~ 0 er)ac h Df 1 - - paid ,000,000

C. VIA(ii 7.50,0 C,;n' £U.J arsoOA_ / I IA s~±LLL1i-..J.y CJUO.J, J C'--

5,000,0(00 Nt 2.00 each, Nt 0.68 paid 5,100,000

7,000,000 8,100,000

580,635 General Reserve 1 775,4)46

7,580,6:35 Shareho:Lders Interest 8,875.LL7

20.995 -&rants :Less Exoenditure to-date -

lpb53,333 Medium and Lone Term Loans 2,033,333

359.29' Current Liabilities and Other Accounts )i30,.016

5.002.768 Endorsernents and letters of credit -/.82.92L

14,,4117,026 N'XA 1:5,,9121',720

Assets

292,8:11 Cash at Bankers and on Hand 358,149

139,772 Money at Call 102,041

2,980,000 Short Term Investments 2,000,000

890,822 Current Assets and Other Accounts '1,76)1,586

4,179,819 Loans and Advances 2/ 5,591,285

806,132 Medium and Long-Term Investments 1,389,968

124,902 Fixed Assets at cost less amounts written off. 132,767. .:Customers' Liability on Endorsements

5,002,768 and letters of Credit Established )4,582 ,92)4

14,)417,026 Nt 15,921,720

(Notes: see cont. sheet)

-1I/ tGene ral, R e - - rVe

-~ ~ ~ ~~~~~~~~~~~~~~~~~~~~~~~~~~- -

At- Tnua- 1, 196940 580, 6

Add Tnransfer 4rom Op-eratlu-ng andLI TechnicallIWU.LL Ii aiQ. -11'L a tl .II 4 ipJJ1 ,.

Assistance Grant 20,995

Appropriation of Prifit for year 161,316

Transfer from Consultancy Fees Reserve 12,500 19)4,811

NV 775,)Lj6

2/ ilcI-uQeu inL LdabVIIL UiLt Uon lIloris IIIaluI i ll .[wIU UI L. Uof

i'JLyU,L433 L In respect of t ree Governnu nb rjruects,

which is guaranteed by the Governnment of Ghana.

3 I/aris and fiduvarnces Private Sector rublic Sector

Loaris Granted, Less Repaymlents 8399!231,0

Less not utilized to-date ( -. l(7 )

3,98Li,768 1,606,517

NV 5,591,285

- 33 -

ANNU1RE VITTT

NAT A Ar'T(ThT AT TnT'TTfV OrllrTT n A ATrVPIIV hi. -'IV mu. iLIV V ID .j 1 r.ixV I£)±UVLX

A: Loan Applications Pending: March 1970

Project Amount of Loan

Palm Oil Plantation 226,280

Tobacco Cultivation 9h,000

Food Distribution and Processing 826,500

Transportation 188,000

Salt Production 1,620,000

Se rvicep Laundry 65,000

Shoe Manufacture 190,000

Housing (Estates) 700,000

Food Crops Cultivation 1,136,h4O

Sawmilling and plywood 3,868,705

Garment Manufacture 150,000

Fishing and Fish Net Manufacture b29,808

Engineering 239,890

Livestock Farming 195,000

Brewery 1,813,216

Plastic Goods Manufacture 93,000

Carbon and Paper Products 272,000

Household Utilities 76h,546

Printing 230,000

Leather Products 100,000

Fibre Cultivation 9h4,500

Pharmaceutical 277,859

Total NV 13,574,744

B: Projects Pending for Development

Name Likely NIB Assistance Total Investment

1. Bitimen L40.000 2;100;000

2. Aluminiiim Rolling 1,500;000 750o0o0o0

3,Wooci w9ol ani rnhin hoarcis J00.00 1;80.0o;000

) P Ric-e Mi l ling Not. et. dtprminp(i

' Breweryrv 1,30. 0 200;000

6. .Sepp multiplication 300,000 900;000