International Forum on Sustainable Private Sector Development Growing Inclusive Markets

Transcription

1 International Forum on Sustainable Private Sector Development Growing Inclusive Markets Halifax, Nova Scotia, Canada Faculty of Management, Dalhousie University June 19th 21st 2008

2 Employment Generation and Small Medium Enterprise (SME) Development: the Garment and Textile Manufacturing Industry in Ghana Dr Afua A. Kufuor (Ph.D) GIMPA Business School, Ghana

3 Introduction Private sector development is said to be critical for employment creation, growth and development of Africa (Kurokawa et al 2008). The development of small and medium enterprises (SME s) is acknowledged as a key condition in promoting equitable and sustainable economic development in Africa. The importance of the micro and small medium enterprise to the development of African economies is well documented.

4 Background Small medium enterprises (SME s) in Ghana face a host of problems and constraints. The role of SME s in employment generation and development in Ghana is explored in this paper. the Garment and Textile manufacturing industry in Ghana as one of the industries targeted as key to: reducing poverty promoting growth generating employment.

5 Proposition The Ghana government policy framework for sustained growth, GPRSII, targets the private sector as the engine of growth. The policy framework is also aimed at the creation of adequate wage and self employment opportunities for entrants into the labour market especially within the micro and small scale enterprises and opportunities to create employment for women. These owner entrepreneurs who could play a much larger role in job creation and development of a sustainable SME sector are marginalized.

6 Purpose Paper identifies key constraints faced by SME in G&T Manufacturing sector and discusses key interventions for successful development of the garment and textile manufacturing sector in particular. The impact of the president s special initiative (PSi) as an intervention to boost production and growth in this sector is assessed.

7 Objectives examine the constraints faced by organized urban SME s in the garment and textile manufacturing sector to development. to investigate the efforts of the government initiative within the textile and garment industry and the impact these activities have for increasing the rate of employment and sustaining growth in this sector.

8 Key characteristics of SME s in Ghana SME s make up the largest portion of the employment base in Ghana and are the bedrock of the local private sector. In Ghana, SME s contribute about 85% of manufacturing employment and account for about 92% of businesses. This sector is characterized by low levels of education and training of the self employed. In Ghana, classification of firms by size as SME s as firms with employee size of less than one hundred (Teal, 2002).

9 Key characteristics of SME s in Ghana The Ghana Statistical Service (GSS) considers firms with less than 10 employees as small scale enterprise Those with more than 10 are categorized as medium to large enterprises. SME s in Ghana tend to have few employees (1-5). Mostly relatives of the owner hence there is often lack of separation between ownership and control.

10 The Manufacturing Sector SME s contribute about 85% of manufacturing employment and account for about 92% of businesses (Steel land Webster, 1991). Larger manufacturing firms in Ghana tend to be older. Foreign or state ownership, there is the tendency for such firms to be more capital intensive. Export more and have a higher labour productivity.

11 Characteristics of the Small & Medium Garment & Textile Manufacturing Sector The garment and textile industry in Ghana is dominated by 90 percent women both as owner entrepreneurs and as employees and are described as clothing designers and seamstresses. Most garment and textiles businesses comprise a workforce of 9 25 employees. Managed by self-made entrepreneurs. Often clustered together in the urban centres.

12 PSi Project The President s Special Initiative (PSi) on Garment and Textiles is a government of Ghana s intervention to support the private sector investment in the garment and textiles industry in Ghana. The president s special initiative was launched in September 2001 as a public private partnership programme designed to develop new pillars of growth for the Ghanaian economy. Ghana is now earning between 200,000 to 1 million us dollars per annum from the garment and textile industry. Investment cost; 60m dollars Production target: 3.2m pieces annually $16m annual export revenue

13 Objectives of the PSI To actively support, facilitate and accelerate the development of the garment and textile industry to become a lead export earner. A primary source of employment generation in Ghana. To attract and assist 10 large scale foreign investors in the garment and textile sector to relocate to Ghana. To assist and build the capacity of 100 medium sized companies in Ghana by end of To create a large pool of small scale local sub contractors and secondary suppliers.

14 PSi: Socio-economic Benefits Serves as a platform for improving the quality of life of Ghanaians. To generate over 70,000 direct jobs into the economy. promoting industrial sub-contracting to boost capacity of larger garment manufacturing companies in Ghana.

15 SME (G&T) Constraints & Challenges Finance - viewed as costly and high risk entities by the key players in the financial sector and hence many of the commercial banks avoid lending to them. Lack of managerial competencies. Lack of access to international markets. Technology and equipment.

16 Constraints & challenges They tend to have limited access to credit low levels of technology lack of institutional framework to overcome the disadvantage of being a small size organization. Garment manufacturing companies in Ghana currently continue to lose large orders notably as a result of: the absence of production flexibility lack of professional marketing presentation inefficient production techniques.

17 Constraints & challenges Gender; gender discrimination limits women s access to land & financial support. limits their options for engaging fully in the economy and in this sector. There is a huge degree of competition from imported clothing from abroad. Poor work ethic

18 Key interventions The challenges and opportunities now facing the sector require that developing of capacities become a high priority. This will require having the right human capacity for development management. Proper institutional frameworks for the effective utilization of these capacities.

19 Key interventions Promotion of small businesses and entrepreneurship. Tapping into new markets. improved technical and vocational training. Effective dissemination of information about markets and technology. More responsive types of industrial organization blending traditional and modern technologies.

20 Focused study; linking the Psi project and impact on job creation and growth. Way Forward Bottom-up approach to understanding the needs of the SME G&T Manufacturers. Identifying any socio-cultural barriers to growth. Research: an in-depth study of SME G&T in key urban areas; such as Accra and Tema; targeting about of such enterprises.