The Association of Ghana Industries (AGI) has issued a strong warning that Ghana’s ambition to transform its economy through industrialisation could be undermined if manufacturers continue to struggle with access to affordable, long term financing.

While businesses have welcomed the recent decline in lending rates, the AGI believes the country’s financing structure remains ill suited for the type of investments required to drive large scale manufacturing, factory expansion and sustainable job creation.

The Chief Executive Officer of the AGI, Seth Twum-Akwaboah, said the government’s flagship 24-hour economy initiative has the potential to stimulate production and unlock economic growth. However, he cautioned that without access to patient capital, many manufacturers will find it difficult to participate meaningfully in the programme.

His remarks highlight a challenge that has persisted within Ghana’s industrial sector for years. Manufacturers often rely on expensive short term commercial loans that are unsuitable for investments requiring several years before generating returns.

Short term loans cannot drive industrial growth

According to Mr Twum-Akwaboah, the financing needs of manufacturers differ significantly from those of businesses engaged in trading or other short cycle activities.

Industrial projects require substantial capital for land acquisition, factory construction, machinery installation and workforce development. These investments often take years before companies begin earning enough revenue to comfortably service their debts.

He stressed that banks must recognise this reality by offering financing arrangements specifically designed for long term industrial investments.

“If you are doing long-term, which is a medium- to long-term facility, five years, 10 years, you need a kind of arrangement that interest rate is even supposed to be lower than this. And then enough moratorium, and you have enough time to actually produce,” he said.

The AGI CEO believes that lower lending rates alone will not solve the financing challenges confronting manufacturers if repayment periods remain too short and grace periods insufficient.

24-hour economy requires massive investment

The government’s proposed 24-hour economy seeks to expand production, create employment and encourage businesses to operate around the clock.

Achieving that vision, however, requires significant investment in factories, equipment, logistics and production systems.

Mr Twum-Akwaboah explained that establishing a modern manufacturing facility is a lengthy process that cannot be financed with conventional short term loans.

“The government is doing a 24-hour economy; for you to set up a factory, go through the process, raise funds, the factory construction alone will take you six months, one year, even if you are fast.”
Mr Twum-Akwaboah

Even after factories become operational, businesses still need additional time to test production systems, build distribution networks and attract customers before generating stable cash flows.

Without adequate breathing space, manufacturers could face loan repayment obligations before their businesses are fully operational.

Businesses need time to grow before repayment

Mr Twum-Akwaboah argued that successful industrialisation depends not only on access to finance but also on financing arrangements that recognise the realities of manufacturing.

Factories require time to fine tune production, meet quality standards, penetrate markets and build customer confidence.

He noted that expecting businesses to begin immediate loan repayments after construction places enormous financial pressure on manufacturers.

“By the time you finish, and your moratorium is over and you have to start paying, you have to go through the trial process, develop the market,” he said.

According to him, flexible repayment schedules and adequate moratorium periods would give businesses the opportunity to stabilise operations before servicing their debts.

Such arrangements, he believes, would significantly improve the survival and growth prospects of local manufacturers.

Development finance institutions under scrutiny

The AGI is also calling for a closer assessment of Ghana’s development finance institutions to determine whether they are adequately serving the country’s industrial sector.

Although institutions such as the Development Bank Ghana (DBG) and the Ghana EXIM Bank were established to support productive sectors of the economy, manufacturers continue to report limited access to the long term funding they require.

Mr Twum-Akwaboah questioned whether existing financing mechanisms are effectively addressing the capital needs of industries seeking to expand production.

“I know DBG has been established, EXIM Bank is there, but all these have to be interrogated because we are still not getting access to the kind of critical development funding arrangement to support the capital.”
Mr Twum-Akwaboah

His comments are likely to reignite discussions about the effectiveness of development finance institutions and whether additional reforms are needed to unlock affordable capital for businesses.

Credit structure could determine industrial success

The AGI’s concerns come at a time when Ghana is pursuing policies aimed at accelerating industrialisation, increasing exports and creating sustainable employment opportunities.

Industry players argue that achieving these objectives will require more than favourable interest rates. The structure of credit itself will play a decisive role in determining whether manufacturers can confidently invest in long term production facilities.

Affordable financing with lower interest rates, extended repayment periods and generous moratoriums could encourage more businesses to establish factories, expand production capacity and support the government’s economic transformation agenda.

As Ghana intensifies efforts to build a resilient industrial economy through the 24-hour economy initiative, the AGI insists that access to appropriate long term financing will ultimately determine whether the country’s manufacturing sector becomes the engine of growth policymakers envision or continues to struggle under the weight of unsuitable credit arrangements.