Footwear Manufacturers Association (Ashanti Region)
1. INTRODUCTION
The Government of Ghana admits that the “Golden Age of Business” can only be achieved through partnership with the private sector. “Success will be measured by the response of the private sector to the improved business environment (for example by private sector investment and growth/productivity performance indicators …)” according to the National Medium Term Private Sector Development Strategy 2004-2008 document.
Government is aware that the Public-Private Sector Partnership is not working because of “weak, inefficient administration by the public service” which translates into time, money, risk and inefficiency for individual businesses. Government of Ghana, in its desire to enhance its capacity to make effective pro-private sector and pro-market decision, has decided “to support the development of private sector advocacy challenge funds, and put in place mechanisms to enable it to respond to such advocacy”.
The Business Sector Advocacy Challenge (BUSAC) Fund sponsored by DANIDA, DFID and USAID is, therefore, the instrument by which the Public-Private Sector Partnership is to be achieved.
2. APPLICATION/OBJECTIVES
The Footwear Manufacturers Association comprising indigenous micro and small-scale footwear makers, concentrated in the Ashanti Region, applied to BUSAC Fund in August 2004 (pilot phase) to obtain a grant to employ dialogue to get the Government to come to the rescuer of the ailing local artisanal industry as a result of competition from imported cheap new and used footwear.The advocacy, targeted at the Ministry of Trade and Industry and the World Bank in Ghana, had the objective to get a reduction of the customs duty on raw materials for footwear making.
The reduction of the 200% duty for importers who sell to the small-scale operators, will help bring down the retain price of locally made footwear so as to be able to complete with imported footwear.
3. THE EXPECTED BENEFITS
3.1 Lower prices of the raw materials will not consume our working capital on one hand and will make our final products affordable to our target market – low-income earners in the Ghana and neighbouring countries.3.2 Lower cost of inputs can help us to expand output and raise incomes and re-invest in new equipment and methods for growth. Our industry and its products will become more attractive to the market in West Africa.
3.3 Government at district and national levels can get increased revenue from the operations of small-scale footwear makers who are in their hundreds.
4. THE ACTION AND ITS ACTIVITIES
The advocacy action started with a study of the tax regime at the ports by a tax consultant. From the report of the study several recommendations were made, which are:- Computation of import duty on cost, insurance and freight (CIF) value of the goods and not on CIF plus VAT/NHIS. As is the case now, VAT/NHIS is added to the CIF before the duty is calculated.
- Five per cent import duty is to be charged on raw materials for footwear making. At the start of the advocacy the duty was 10 per cent for importer-footwear manufacturer and 20 per cent for general importer.
- The local footwear industry is a fertile area of employment and should be given special attention by the sector Ministry. This is to be done by creating an industrial estate for the large number of small-scale operators so that they will become visible and can receive management and technical assistance from Government and the development partners.
As a follow-up, another delegation attended the Forum on 2007 Budget organized by the Ministry of Trade and Industry in Accra on 20th September 2006. A presentation on the proposal was made at the forum, which generated great interest by the participants. The leaders of PEF and GNCCI enjoined the Minister to give serious attention to the content of our presentation. JOY FM in Accra interviewed the delegation after the forum and the story was given prominence in the Business News segment in their News Night programme that evening.
On return to Kumasi, the committee members and the service provider met the Regional Minister and the Kumasi Metropolitan Assembly Chief Executive in the Minister’s office to discuss the take over of the Kumasi Shoe Factory. The factory has been on the divestiture list for over a decade, and the association thinks that the members can make a better economic use of the factory by turning it into a shoe village.
Since then local and international NGOs have approached the association with the object of assisting its members to obtain raw materials and to export their products.
5. THE RESULTS AND IMPACTS
5.1 The ResultsThe results of the action are modest and not fully achieved but all the same commendable.
- Government granted reductions on import duties in the 2007 Budget (though we have not had a copy of the Budget Statement to validate this result).
- The radio talks shows we organized have indirectly influenced the Minister of Trade and Industry, Mr. Allen Kyeremateng to make a favourable public statement on the quality of shoes make in Kumasi, comparing it to those from Italy. (The difficulty for Government to give us the site for the defunct Kumasi Shoe Factory stems, ostensibly, from their view that the association has weak management and technical capacities to run the facilities well.)
- Locally made footwear has seen as improved patronage compared to the period before the advocacy. On the other hand footwear imported from Dubai, for example, is declining in sales.
5.2 The Impacts
The impacts of the advocacy have not been realized looking at the modest results. The leadership have, however, learnt lessons from the outcomes of the activities.- The need for a strong association in terms of leadership commitment, accountability and vision that will attract more footwear makers to the association. Steps are being taken to get to this end by effecting changes in the chairmanship of the association.
- The establishment of a kind company (eg. cooperative society) that can mobilize financial resources and go into the importation of standard inputs for the use of the small-scale footwear makers. General importers who are not manufacturers often sell inferior or adulterated raw materials that do not guarantee durable and quality products.
6. ACKNOWLEDGEMENT
Besides BUSAC Fund who supported our action in financial terms, the Service Provider has been on hand and committed to the completion and success of the action when the duration of the action run from 12 months to over 24 months. Prepared by Barnabas Sefa-Boakye
Service Provider
Business Ideas Consult, Kumasi
P. O. Box SN326, Kumasi
Tel: 027-775-1616
Email: bsefa_boakye@yahoo.co.uk
22nd May 2007
