THE UNSUNG HEROES

How local entreprenuers thrive even in the hostile environment For a couple of years until now there has been a lot of debate about what should be the most appropriate response of the government in the face of the trouble most of the agric and industrial sectors have be going through. The industrial sector led by the textile industrial are looking for higher tariffs on textile import and a cool on strongly and dumping. Manufacturers of consumables want the same. Even giants like Unilever are believed to have sent an SOS for similar relieves. The rice and poultry sub-sector want protection from dumping by subsidized imports from the US, Europe and some Asia countries. Then comes in those into assert that these companies and sector players are living in the past where protectionism was the ruling principle. They assent that these companies are structurally ill-suited to participation in the new global trade system. They contend that Ghanaian companies use out-dated production method and are managed badly. So what they actually need is not protection but a new approach to management and production. They asset that we are in such brave – new world where protectionism has been expunged from the dictionary of economies and international trade. They also contend that the poor Ghanaian consumer should not be made to bear the brunt of gross inefficiency by these companies. They say the prices of Ghanaian companies are uncompetitive due to their inefficiencies and that Ghanaian consumers should not suffer for it through the use tariff, and other protectionist measures. This group is led by very powerful government official, cabinet ministries and is the President himself. Their ideological subscription to the high octane-Smithsonian liberal economics disposes than to oppose protection of any form. They cite the stable macro- economic condition as sufficient and that is all the government can afford to do. So in their perspective those companies crying for protection are merely incompetent industrialist who turn to government to perpetuate their inefficiency. So is it really true that Ghanaian companies are simply inefficient and don’t have any clue about the intricacies of the new global competitions environment? I say a big No! There people who venture and risk all they have to start and maintain these productive business in the most hostile business environment deserve much more praise than that. So lets explore the difficulties these companies go through. I don’t think anybody by any stretch of the imagination will expect companies and firms who operate in an economy where inflation is double digits (13.1% in February 2008). In an era where the macro economic indicators are stable, the headline interest rate is 13.5% in March 2008. This rate is even for below what is actually charged by commercial banks which is 29% on average. How can Ghanaians business involved in risky productive ventures compete in the global marketplace with similar companies elsewhere who produce under interest rate regimes of 5% and below and inflation rate of 6.25% and below? For instance Chinese textiles companies who compete with ours live under interest of 4.75%. Firms in Europe and America operate under even lower interest rates. Save the high interest rates, the Banks are even reluctant to lend to these perceived high risk businesses. Yet these companies have been living under such condition and even higher interest rates and harsher macroeconomic condition for years in the era where interest and inflation rates were hovering above 40%. After going through 5 years of public service reforms and institutional renewal in the golden age of businesses, it takes more than a week to register a business. It takes eternity and a ‘greasing of the palm’ to get documents signed and when it comes to information and up to date data, it would be more cost effective to commission a brand new one than to obtain one from government agencies. In an age where information is such a powerful tool for creating wealth it only goes to show how handicapped Ghanaian business are. Our firms are supposed to compete globally when they don’t’ even have the most vital and basic resource to work with: human resource. Most firms have to spend lots of money and time training the nation’s brightest graduate to make them suitable for employment. In most of the countries that Ghanaian companies are competing against, them government are firm promoters of business. This comes in the form vigorous protection, through tariffs and other trade barrier. Others take the form of subsides and various form of support. There is no gainsaying the amount of subsides granted by us and EU to their firm. One of the most potent vehicles of business development is through research and development (R&D). In most countries government is a leader in R&D that supports even the most profitable industries. For instance the American and British governments gave more than 20% grants to the R&D budget of some of the most profitable multi billion dollar pharmaceutical firms such Merck, GSK, Roche and Pfizer. Nobody can ever forget the spicy details of the huge subsides the governments of US and EU spent to prop up Boeing and Airbus respectively. The US Department of Commerce estimate that the EU spent about $13.5 billion in subsidies on Airbus between 1970 and 1990 while in a counter claim the EU Trade Commissioner put subsidies to Boeing and McDonnell Douglas by the US government at $22 billion between 1976 and 1990. These subsidy claims still continue till date and threaten to more blight trade relation between the two powers. Unlike elsewhere; in Ghana where any remote mention of subsidies is considered an economic heresy.Considering what the biggest and most profitable companies in the large economies receive in terms of support, it begs the question as to whether our local firms can survive. To say that Ghana’s infrastructure is severely business hampering is an understatement. Ghanaian business operate under the most inhospitable and distressing infrastructural environment found anywhere in the world .Imagine a company that has to spend about two months just clearing machinery and raw material from the port and still has to meet inventory requirement and keep production running. How can our businesses remain competitive globally when their phone keeps cutting (both landline and cell phone) in the middle of conversations and when internet connection is miserably unreliable? In this age of hyper-technology, when a minute of technology failure is the thin line between survival and bankruptcy, it is absolutely vital to get communication technology right. We expect Ghanaian business to compute favourably with their counterparts in other parts of world while they spend hours in banking halls just to transact business; precious hours that could have been more productively spent. We are not in an energy emergency situation but most manufacturing firms are used to unannounced power cuts and power surges. Companies that use water are even in a much direr situation… in most cases these companies get access to water a few hours per week and the catch is it flows at midnight! In a country where only less than 30% of all roads are tarred, railroad only stretches to a few kilometer and internal air transport runs between only two cities all be it irregular and expensive; transportation difficulties is an everyday reality. Can you imagine how Ghanaian firms cope when they have to beat deadlines but spend hour to make a few kilometers of road trip? This is really the crust of the matter not the blame game. Then companies have to deal with the almighty bureaucracy of the public services. The least said about this the better. Our government on other hand fails to initiate Research and Development (R & D) and worst still fail to support those undertaken by private concerns. Even as staunch Smithsonians, the Ghanaian government has failed in its most fundamental function of regulating the market. Ghanaian companies have been exposed to dumping and smuggling and his has affected their performance. By Ghanaian firm I’m not referring to the rent-seeking importers and traders and those in the service industry, am referring to farmers and industrialists. These people are real heroes who have distinguished themselves in the face of such crippling handicap. I am not endorsing mediocrity but people have to understand the context in which these businesses are operating and vilifying than for their shortcomings will not help matters. We cannot reach the middle income status we are craving if we do not build home grown successful businesses. These people are the unsung heroes of our time and deserve more praise to inspire other people to start productive ventures.