STATEMENT BY HON. ALAN KYEREMATEN, MINISTER FOR TRADE AND INDUSTRY ON THE FLOOR OF PARLIAMENT ON THE ONE DISTRICT ONE FACTORY (1D1F) INITIATIVE,
WEDNESDAY 21ST JULY 2021
Right Hon. Speaker, let me start first by thanking your esteemed self and Hon. Members of this august House for the opportunity to deliver a Statement on the Government’s flagship One District One Factory (1D1F) Initiative.
Mr. Speaker, it is an undeniable fact that most countries that have achieved superlative growth over the years have done so on the back of industrialization. It is therefore not by accident that the ten (10) largest economies in the world are also the most industrialized economies, namely, the United States, China, Japan, Germany, United Kingdom, India, France, Italy, Canada and South Korea.
It is against this background that the NPP Government on assumption of office in 2017 launched a comprehensive and ambitious programme for industrial reform. One of the key components of the Ten Point Industrial Transformation Plan is the One District One Factory Initiative otherwise referred to as the 1D1F Programme.
Mr. Speaker, the Programme seeks to address the challenge of severe poverty and underdevelopment among rural and peri-urban communities, through the establishment of manufacturing enterprises by private sector operators in the 260 administrative districts in the country.
The programme is designed to achieve the following strategic objectives:
• To create massive employment opportunities particularly for the youth and thereby improve income levels and standard of living in rural and peri-urban communities.
• To reduce rural-urban migration and help decongest our cities.
• To add value to the natural resource endowment of each district and exploit its economic potential based on the comparative advantage of the district.
• To decentralize industrial development and ensure even and spatial spread of industries and thereby stimulate economic activity in different parts of the country.
• To enhance the production of local substitutes for imported goods and thereby conserve scarce foreign exchange.
• To promote exports and increase foreign exchange earnings of the country and thereby strengthen our local currency.
The criteria for selecting 1D1F companies is based on these strategic objectives.
CORE PRINCIPLES
Rt. Hon. Speaker, the 1D1F Initiative is underpinned by some core principles including the following:
Firstly, 1D1F companies are not State Enterprises but are privately owned companies actively supported by Government. Government support to 1D1F companies include fiscal and non-fiscal incentives, technical assistance, and extension of infrastructural facilities, including electricity, water, and access roads.
Secondly, 1D1F Companies could either be new companies or existing companies that meet the 1D1F criteria. This is to ensure that existing companies that require strategic support could also benefit from the initiative.
Thirdly, two or more Districts can collaborate to establish one factory if they have a common resource endowment.
Fourthly, a District could have more than one enterprise or company if there are more promoters interested in a particular district, as a result of the different natural resource endowments of the district.
Fifthly, in selected cases Government may partner a strategic investor under a PPP arrangement to establish a commercial enterprise under the 1D1F initiative. Where Government has an interest in a 1D1F project, the goal would be for Government to offload its interest over time to the private sector.
Lastly, each 1D1F company is supported by a District Implementation Support Team, made up of representatives from the District Assembly, MOTI, Ghana Enterprises Agency, selected Regulatory Agencies and the Traditional Authorities in the specific district.
Applications to participate in the 1D1F programme are submitted to the Ministry of Trade and Industry with a Business Plan or Proposal attached.
Mr. Speaker, the various types of assistance available to 1D1F companies include but are not limited to the following:
1. Tax Incentives – a waiver on duties and levies on imported plant, machinery and equipment, as well as raw materials.
2. Five-Year Corporate Tax Holiday.
3. Interest Subsidies for loans granted to 1D1F Companies by Participating Financial Institutions (PFIs).
4. Technical Assistance services provided free of charge to 1D1F Companies by experienced Consultants recruited by the Ministry.
5. Extension of Infrastructural Facilities to 1D1F Project Sites, including Electricity, Water and Access Roads where necessary.
STATUS OF IMPLEMENTATION
Mr. Speaker, since the beginning of the Programme to date, there are 278 1D1F projects which are at various stages of implementation.
Out of this number, 104 companies are currently in operation, 150 are under construction and 24 are at the mobilization stage. One Hundred and Sixty Five (165) out of the 278 companies are new projects representing 60% whilst 113 companies are existing projects being supported, representing 40%.
The companies that are currently operational have created a total of 150,975 direct and indirect jobs, up from 139,331 in December 2020. It is expected that when the additional 150 1D1F projects currently under construction are completed, the cumulative number of direct and indirect jobs created will reach 282,792.
Mr. Speaker, it is worth noting that the youth have not been left out of the 1D1F Programme. Out of the 278 1D1F companies, 58 are fully owned by youth groups who have been mobilized by Government and supported with seed funding to establish their own state-of-the-art agro-processing factories in 58 districts, under what is referred to as the Enable Youth 1D1F Initiative supported by African Development Bank (AfDB) and International Fund for Agricultural Development (IFAD).
Each of these youth groups have between 40 and 48 individuals as Shareholders in each company.
In addition, 5 medium scale state-of-the-art agro processing Common User Facilities have also been established, owned by groups of farmers in 5 districts with funding from African Development Bank (AfDB).
Mr. Speaker, the sectoral breakdown of the 1D1F companies are as follows; 40.6% Agro processing companies, 43.9% other Manufacturing companies, 7.9% Meat Processing (Livestock, Poultry and Fish) and 7.6% representing others.
Mr. Speaker, the Regional Breakdown of the 1D1F companies are as follows:
REGIONAL BREAKDOWN OF 1D1F PROJECTS
Mr. Speaker, since the inception of the 1D1F Initiative, Parliament has granted approval for exemptions from import duty for the importation of Machinery, Equipment and Industrial Raw Materials to 37 1D1F Projects made up of 14 existing projects being expanded or upgraded, and 23 new projects.
Mr. Speaker, it is worth noting that granting of exemptions to 1D1F companies is not automatic. Companies applying for exemptions have to comply with specific criteria established by the Select Committee of Parliament on Finance, Ministry of Finance and Ghana Revenue Authority (GRA).
Mr. Speaker, since the start of the Programme, Government has successfully mobilized loans for 1D1F companies from the Participating Financial Institutions totaling an amount of GHS2.69 billion. This amount has been leveraged through the disbursement by Government of an amount of GHS 260.9 million to de-risk loans and support interest payment. As of 16th July 2021, 148 companies have benefited from loans facilitated by Government.
CONCLUSION
Rt. Hon. Speaker, the 1D1F programme is arguably one of the most innovative and comprehensive programmes for industrial development ever to have been implemented in our economic development history.
The programme will no doubt significantly enhance the capacity of the private sector in Ghana to take advantage of not only the African Continental Free Trade Agreement (AfCFTA), but also the interim Ghana-UK Trade Partnership Agreement as well as the interim EU-Ghana Economic Partnership Agreement (iEPA).
Above all Mr. Speaker, the implementation of the 1D1F programme in parallel with other components of the Ten Point Industrial Transformation Plan, such as the establishment of Industrial Parks, the establishment of One-Stop Business Resource Centres (BRCs) and Technology Solution Centers (TSCs) in various districts as well as the development of new Strategic Anchor Industries, will no doubt position Ghana as the new manufacturing hub for Africa. Ghana is moving forward.
Mr. Speaker, I respectfully submit this Statement for the kind consideration of this august House.