Dr Steve Manteaw, a policy analyst at the Integrated Social Development Centre (ISODEC), has urged the government and other stakeholders in the Export Processing Zones (EPZ) to build the necessary infrastructure to fully realize the benefits of industrialization. According to him, “the lack of it adds to the cost of production of firms and could render Free zones production uncompetitive in terms of price”.
“…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”.
Furthermore, he highlighted that the lack of infrastructure leads to improvisation by individual companies. This, according to him, “can have a devastating toll on the environment”. Meanwhile, Dr. Manteaw feels infrastructure such as grid-source power, centralized waste disposal and waste management facilities are lacking.
Speaking at an African Centre for Economic Transformation (ACET) workshop, Dr Manteaw called for a review of the Ghana Free Zones Act 1995 (Act 504). According to him, the Act has not achieved the planned results after 25 years. Ghana enacted Act 504 to offer incentives to firms that operate within the Free Zones.
Also, Dr. Manteaw indicated that the country has only focused on handing off licenses to firms to operate in free zones. However, it neglects the development of infrastructure in these enclaves.
Findings of the report
Meanwhile, ACET, at the workshop, presented the findings of its new report on Promoting Sustainable Export Processing Zones in Ghana. The report shows that Ghana’s Export Processing Zones program is not well connected to the country’s broader development agenda. It further finds that the government it yet to integrate the activities of the free zone enclaves into the broader economy. This integration, according to ACET, will help improve and multiply the effect of the zones’ activities.
Also, the report reveals that there were no rigorous checks to religiously safeguard the interest of the state in the free zones scheme. This resulted in waves of abuse and revenue leakages that needs to be addressed.
Strikingly, the report reveals that the government has not put in place measures to check and curb corruption in these enclaves. According to the report, there have been numerous reported cases of litigations between residents and firms operating at the Tema free zones enclave. This is due to the latter’s lack of interest in social responsibility activities.
Looming Environmental problems
Similarly, the report finds that there are limited number of firms operating in the Export Processing Zones in the country. As such, Ghana is currently not experiencing any serious environmental problems within its Export Processing Zones.
However, the report warns that there may be catastrophic outcomes should the number of firms operating within these Zones increase. This is because the zones lack environmental sustainability elements such as integrated sustainable infrastructure. Other elements lacking include climate-friendly investment generation, low-carbon policy incentives and regulations, and carbon finance.
Furthermore, the report reveals low usage of technology among the firms which greatly hinders the smooth operations of firms in the enclaves.
Consequently, ACET recommended a comprehensive policy on Export Processing Zones in Ghana as soon as possible. This, the Pan-African think tank, believes will lay a solid foundation for the strategic management of Export Processing Zones. This policy will also highlight their attendant effect on sustainability, linkages, and national development.