CONTEXT AND CHALLENGES
There are hardly any formal jobs in Ghana's Northern Region
Although Ghanaian textile products are exempt from import duties by the European Union and the USA, there are currently only a handful of textile companies in the country that serve the global market. However, with rising wages in Asia and sustainability problems in some production countries, Ghana is now in a good starting position for the development of an export-orientated textile industry. In recent years, the country has attracted a lot of foreign direct investment, thanks in part to its stable political environment. Ghana is also well connected to international trade routes via its seaports. However, some progress still needs to be made if Ghanaian textile products are to achieve a breakthrough on the world market. Buyers from large international companies want consistently high product quality and often demand proof that social and environmental standards are being met during production.
The labour-intensive textile industry has a high employment potential and offers good job prospects. Structurally weak regions can benefit from this. In Ghana's Northern Region, unemployment remains above the national average. 30 per cent of 15 to 24-year-olds are neither employed nor in education or training. Many of them migrate to large cities and in particular to the Accra region because they hope to find better income opportunities there.
PROJECT APPROACH AND PROJECT GOALS
Focus on clothing that is not dependent on fashion trends
To tackle the high unemployment rate in the region, Invest for Jobs is supporting a project by two Accra-based consortium partners, MIK Designs, a textile company that has been in existence since 2016, and MUSOF Enterprise, a trading and construction company. The two partner companies will invest in the production of textiles through an existing special purpose vehicle. A textile factory will be built in the municipality of Savelugu, which lies in Ghana's Northern Region. It will mainly produce for export. The factory will make sportswear, workwear, and children's clothing as well as underwear and promotional items, as the demand for these items is not very dependent on fashion trends. During the 14-months investment phase, 30 production lines will be set up in the new sewing room. The aim is to produce seven to eight million items of clothing per year. Around three quarters of these will go to major customers in the USA and South Africa, who have already issued letters of intent to this effect.
The employees at the new textile factory will be trained at the existing MIK Designs production facility in Accra, before starting work. This is to ensure that the finished products meet the quality requirements of international buyers. The partner company is committed to prioritising disadvantaged groups and people with disabilities in its recruitment. A memorandum of understanding to this effect was signed with the Savelugu School for the Deaf, a school for young people with hearing impairments. The investors have pledged to give special consideration to these groups when selecting employees.
STATUS AND OUTLOOK
Jobs for women and young adults
The sewing factory will create 1,600 new jobs in the structurally weak Northern Region, around three quarters of which are expected to be for women. Around a third of the employees will be under the age of 24. Through their employment, the employees will have access to the social benefits required by law in Ghana, such as pension and health insurance. The salaries will be significantly higher than the applicable minimum wage. In addition to the jobs created in the sewing factory, the company is also expected to have a positive impact on employment in the local economy. Service providers and suppliers in the fields of textile printing, catering, transport, maintenance, and property protection will benefit from the new economic activity.
The consortium will invest a total of 10.03 million euros in the construction of the new factory. The Facility Investing for Employment grants a subsidy of 2.5 million euros (25 per cent) to co-finance the construction project and the purchase of new machinery.
The Facility Investing for Employment (IFE) of KfW Development Bank is part of the Special Initiative "Decent Work for a Just Transition" of the German Federal Ministry for Economic Cooperation and Development (BMZ). With its support, the Facility wants to remove barriers that prevent the creation of new and better jobs in the private sector in the African partner countries.
