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Government Must Pay Attention to Free Zones to Boost Economy – ACET

The African Centre for Economic Transformation (ACET), a pan-African think tank, has recommended that the Ministry of Trade and Industry develop a comprehensive policy on Export Processing Zones in Ghana as soon as possible to lay the solid foundation for the strategic management of Export Processing Zones and their attendant effect on sustainability, linkages, and national development.

At a workshop organized by the Centre to present the key findings of a study titled, “Promoting Sustainable Export Processing Zones in Ghana: An Ecosystem Evaluation and Benchmarking Report,” Senior Director, Research and Policy Engagements, Edward K. Brown, said with the African Continental Free Trade Area coinciding with Ghana’s industrialization drive, the development and sustainability of some Export Processing Zones have become imperative in order to propel and achieve the estimated results the government seek with its One District One Factory Initiative.

The workshop brought together stakeholders and experts playing diverse roles in the Export Processing Zones ecosystem in Ghana, to evaluate the economic, social, environmental, and technological performance of Ghana’s Export Promoting Zones under three important themes: sustainable Export Processing Zones policies, sustainable infrastructure, and sustainable regulatory support.

Speaking on and upholding the contents of the report, Dr Steve Manteaw, a policy analyst with the Integrated Social Development Centre (ISODEC), said “the government and concerned stakeholders in the EPZ space need to build the necessary infrastructure to fully realize the benefits of industrialization” which he said “the lack of it adds to the cost of production of firms and could render Free zones production uncompetitive in terms of price.”

Dr Manteaw said there is the need to have a second look at the Ghana Free Zones Act 1995 (Act 504) which was enacted to offer incentives to firms that wished to operate within the Free Zones enclaves especially because it has not achieved the planned results after 25 years.

He said we have focused on handing off licenses to firms to operate in free zones to the neglect of the development of infrastructure in these enclaves.

“Because we live under the erroneous perception that tax incentives are all that matter, we haven’t paid attention to developing the required infrastructure for sustaining duty free production, whether within enclaves or within a geographically fused locations, and I am happy the report highlight this, when it looked at the Tema Free Zones enclave and other dispersed free zones businesses.”

“But perhaps more importantly, the lack of infrastructure such as grid-source power, centralized waste disposal and waste management facilities leads to improvisation by individual companies, which cumulatively can have a devastating toll on the environment; and I am happy the report draws attention to this situation at the Tema Free Zones enclave,” he added.

The study made some key findings during the period of investigation pertaining to measures and processes in developing sustainable export processing zones.

Key Findings of the Report

1. Economic sustainability of Export Processing Zones

The report found that Ghana’s Export Processing Zones program is not well connected to the country’s broader development agenda, and other industrial policies of the government. It further found that there was no ambitious strategy or efforts made to integrate the activities of the free zone enclaves into the broader economy to improve and multiply the effect of the zones activities. It also uncovered that there were no rigorous checks to religiously safeguard the interest of the state in the free zones scheme which has been embroiled in waves of abuse and revenue leakages that are left unattended to.

2. Environmental sustainability

It was also revealed that though Ghana is not currently experiencing any serious environmental problems within its Export Processing Zones because of the limited number of firms in operation, there may be catastrophic outcomes should the number of firms operating within those enclaves increase because environmental sustainability elements such as; integrated sustainable infrastructure, climate-friendly investment generation, low-carbon policy incentives and regulations, and carbon finance are lacking.

3.  Social sustainability

The report also found out that there are no measures put in place to check and curb corruption and that there have been numerous reported cases of litigations between residents and firms operating at the Tema free zones enclave over the latter’s lack of interest in social responsibility activities.

4. It was also found that the lack of technology and its usage in the enclave greatly hinders the smooth operations of firms in the enclaves