Enhancing the production of non-traditional exports: the case of small and medium scale industries.

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The poor performance of traditional exports on the world market has necessitated the diversification of exports; especially by developing countries like Ghana in order in face the challenges of external shocks due to price instability of these exports and also to take advantage of the ever expanding market through globalisation. To this end, the Processed and Semi-processed Products (PSPs) category of Non-Traditional Exports (NTEs) holds a lot of prospects for Ghana as it provides the widest variety of products and highest export earnings among the NTEs. However, the concentration of production of these exports in the hands of Small and Medium Scale Industries (SMIs) that are saddled with a myriad of problems threatens the potential benefits that can be derived from this sub-sector. With the objective of reviewing existing policies on the promotion of NTEs and SMIs, identifying the major problems as well as possible remedies, this study used a purposive sampling technique to identify 25 (twenty five) SMIs that are into the production and exports of PSPs and located in the Accra Tema Metropolis. It was deduced from various literature that achieving growth of SMIs and export of PSPs would require a conductive environment of policies, institutions and infrastructure at the national level as well as dynamism at the firm level in order to fully utilise capacity and meet export demand conditions. Employing the Internal Profile Analyses (IPA) and External Profile Analyses (EPA), the internal and external issues of SM1s and PSPs exports were examined. From the analyses, the following findings were made: to most of the SM1s surveyed, the cost of raw materials and credit are still high in the country leading to their low price competitiveness even on the local scene; a substantial proportion (28%) of firms are still operating at low capacity though output has been increasing; there is generally poor attempts at product development; and the percentage of exported output is still low (average of’ 28% ), there is low awareness on incentives for industrial production by firms because they exhibit little or no knowledge of any; there is high intra-ECOWAS trade among firms but low among other African countries; and the supporting agencies and institutions are not well resourced to fully support the industries. From the observations made, it has been recommended that the various institutions mandated to promote export and industries should be well resourced (logistically, financially and n human resource) to enable them to perform more effectively. Firms would also have to exhibit greater ingenuity in order to be more competitive on the world scene. It is thus hoped that an effective supportive environment and dynamic SMIs sub-sector will enable Ghana tap the rich potential that the export of PSPs offer.
A Thesis submitted to the School of Graduate Studies Kwame Nkrumah University of Science and Technology, Kumasi in partial fulfilment of the requirements for the degree of Master of Science in Development Policy and Planning, 2004