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FACTORS MILITATING AGAINST
THE GROWTH OF THE
INDUSTRIAL SECTOR IN GHANA
LECTURER: DR. RAYMOND DZIWONU
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Learning Objectives
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 Definition of Industry.
 What is industrialization ?
 The sectors of Ghana's economy and their
Contributions.
 The sub-sectors of the industry and their
contributions to the economy.
 Factors that militate against the growth of the sector.
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Introduction
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What is industry ?
 The term industry refers to a group of firms which
produce goods or offer services. An example is all the
firms producing cement belong to the cement industry.
What is industrialization ?
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. Industrialization is a deliberate policy by
government to create many industries in the country.
The process of industrialization involves the production,
increasing use of machinery and power tools as well as
the use of improved technology in production all of
which leads to higher level of output of industrial goods.
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Contribution of the industrial sector
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 The industrial sector is the second largest sector which
contributes about 27.3percent to Gross Domestic Product
(GDP). It grew by 7% in the year 2012. The service sector is
the first largest which contributes 50% to Gross Domestic
Product(GDP) and the agricultural sector the smallest
contributor which contributes 22.7% to Gross Domestic
Product(GDP).
contribution to GDP %
22.7%
27.3%
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50%
sevice
industry
agriculture
The Sub-Sectors and their Contribution
to GDP
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SUB-SECTORS
CONTRIBUTION TO GDP
Construction
grew by 11.2% in 2012
Electricity
grew by 11.1% in 2012
Manufacturing
grew by 5.2% in 2012
Mining and Quarrying
grew by 5% in 2012
Water and Sewage
grew by 2.0% in 2012
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Inadequate raw materials
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 Inadequate raw materials compel industries to :
 import raw materials from outside the country
 leads to high cost of production
 Exchange much of the local currency to facilitate the
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purchase
Channeling of the cost of production to the consumer
by charging higher prices
Low patronage of the product as a result of high prices
Low returns to the industry
Limits growth
E.g.. Steelco Ghana and wire weaving industry
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Unreliable or unstable power supply
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 The industrial sector suffers most during power crisis. The reason
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is that, out of 4,494,934,000 kw of energy produced, the agric
sector consumes 0.02%,the service sector consumes 9.7% and the
rest (90.28%) is consumed by the industrial sector.
Unreliable power supply forces industries to look for alternative
source of power through acquisition of stand-by generators as
well as fuel to generate power.
The result is, lower capacity utilization levels, higher production
cost and loss of jobs.
Eg ,curently energy supply to mining and manufacturing
companies has been reduced by 25%of their demand due to the
on going energy crisis.
Valco has also laid off some of its workers to cut down operation
cost due to unreliable power supply.
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Limited appropriate technology
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 Most of Ghana's industries are more of labour intensive
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than capital intensive.
The result is , work is done at a slower rate as compared
to the use of machines.
This makes industries produce below capacity, at higher
productivity cost and earn little revenue .
The inability of industries to get access to credit facilities
due to high collateral demands limits the acquisition of
machinery for expansion.
E.g., The rice industry where milling is done manually
and the inability of farmers to afford the purchase of
combined-harvesters to harvest and separate the rice
from the husk.
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Inadequate domestic and restricted
foreign market
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 Low aggregate demand for domestically produced goods
due to low income earned
 A more flexible market created for foreign goods in the
Ghanaian market coupled with the notion carried by
Ghanaians concerning indigenous goods
 Trade barriers establish by foreign market protecting
their local industries and restricting the Ghanaian
industry from penetrating into the international market
 E.g. A typical example is the textile industry where
statistics have shown that since the year 2000, about
20,000 employees in the industry has lost their jobs
because of the collapse of the industry due to low
patronage and invasion of foreign textiles.
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Conclusion
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 The factors discussed above which are lack of raw
materials, unreliable and unstable power supply,
limited or lack of appropriate technology and capital
resources, inadequate domestic market and
restricted foreign market explains their implication
on the growth of the industrial sector. These factors
need to be attended to or addressed else Ghana’s
industrial sector will continue to face challenges
respect to growth.
THANK YOU FOR YOUR ATTENTION
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