Posted: Tuesday 27th May 2014 at 8:30 am

Obuasi West MP Calls On Gov’t To ‘Sit Up’ (Statement)

08f2659796845 653112 Obuasi West MP Calls On Govt To Sit Up (Statement)Industrial crisis in Obuasi and elsewhere: Time for government to sit up

AngloGold Ashanti (AGA) in Obuasi directly employs about 4,300 workers, almost all of whom are Ghanaians. According to the company’s books, last year, they paid a total of about GH¢ 4.2 million to the state by way of taxes, royalties and dividend payments. The company has announced its intention to lay off a vast majority of these employees.

AGA is yet to give exact figures, but it appears the company will retain only some 600 of its current workforce. Put in another way, some 3,700 will be going home, albeit with their severance awards. These 3,700 do not include contractors who may lose their contracts and therefore lay off their workers as a result of the crisis.

The company has assured us, the people of Obuasi, that within 18 to 24 months, they expect to complete the restructuring needed to address the current challenges of the mine. After that, they will re-employ people. The Obuasi community has positive interest in AGA recovering from its current difficulties, and we wish the company well, but the fact remains that nobody knows the future, and we have good reason to be worried about events in Obuasi and anxious about what is yet to come.

The problems of AGA are not isolated. Tema, Ghana’s industrial hub, is a pale shadow of its former self. Last month, Tema Chemical Ltd announced plans to lay off 400 workers. Super Paper Products Ltd has folded up completely. Many of the Tema companies have folded up or are in serious distress. But it is not just Tema; in the last quarter of 2013, Blue Skies Products (Ghana) Ltd in Nsawam laid off 400 workers. The list is endless.

It is disheartening listening to industry. The Association of Ghana Industries’ Greater Accra regional chairman, Mr Humphrey Ayim-Darke laments, “We don’t see an end to the crisis. We are not inspired and there’s no hope being communicated to us in terms of what will be done in the short-term and the medium- and long-term. The mood among businesses is absolute frustration”.

The Private Enterprise Federation’s chief executive, Nana Osei-Bonsu feels the same, “We don’t see the road ahead, we don’t know the policies that will be put together to lift us from where we are.”?

And the national figures reflect this negative trend and mood. In the second quarter of 2013, Ghana recorded GH¢2,281 million worth of industrial activity in real terms. In the third quarter, this reduced to GH¢2,057 million. In the fourth quarter, it reduced further to GH¢2,030 million.

Of course, government cannot be responsible for all the factors contributing to this industrial decline, but a responsive government attitude to industry can save many of our suffering companies.

AGA, for example, cites high cost of production (relative to gold prices) as the reason for its present difficulties. A close look at the cost profile of the company reveals that the cost of electricity and the falling value of the cedi are two important contributors to the company’s current distress. In both cases, responsive government policy could have made a difference.

The current government’s appetite for spending more money than it has will only lead to further depreciation of the cedi. Especially so when we look on while the industries that should produce and bring in foreign exchange fold up.

Government should cut the waste and the corruption, and support our declining industries. We must and can find the money. Government cannot be making dubious payments to companies like Subah InfoSolutions and others whilst lamenting at the same time that it cannot raise the money to support our suffering industries.

And again and again, erratic power supply and the cost of electrical power to industry have been mentioned by industry players as serious setbacks to the growth of business. Where are the strategies to match power demand with supply? What is government’s policy response to industries’ growing cost of production as a result of high tariffs for industrial power? I don’t find any.

The option of political leadership looking on unconcerned as industries suffer and fold up should no longer be entertained. It is time for the Mahama administration to sit up!

Signed

Kwaku Kwarteng

(MP, Obuasi West Constituency)

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