Economic plan for Komenda Sugar factory lacked 'common sense'

Businessman Daniel Mckorley has urged the Akufo-Addo-led government not to pay lip service to private sector development unlike its predecessor whose economic policies he observed, ‘lacked common sense’

Picking an example of poor economic decision-making by the Mahama-led government, CEO at McDan Shipping Company Daniel McKorley pointed to the Komenda Sugar Factory revamped last May.

President John Mahama who inaugurated the factory said it has a manufacturing appetite capable of producing 1,250 tonnes of sugar daily. He said the $35-million factory, set up through an Indian government facility will create 7,000 direct and indirect jobs.



“You don’t expect to put up a tomato factory where there is no dam or there is no irrigation running through 12 months…you cannot tell me that you build a sugar factory in your common sense where there is no sugar,” he expressed frustration.

He explained that it was not the government’s responsibility to build a sugar factory when it can create the environment for the private sector to get in there.

“Most of the contracts and businesses that government is involving itself is unnecessary. Why should government borrow money through private individuals to build a sugar factory which is not working?”

The Exim Bank of India loan which was used in building the factory has an interest of 1.75 percent with a five-year moratorium. The loan repayment will begin in the sixth year while the Ghana government is providing a counterpart funding of $1.26 million. 

The Loan has an interest of 1.75 percent, with a five-year moratorium. Repayment starts in the sixth year. – See more at: http://thebftonline.com/business/agribusiness/19202/komenda-factory-requires-225000mt-of-sugar-cane.html#sthash.tiwWYOPQ.dpuf

“That factory is a white elephant. It will never work”, the vocal CEO said on Joy FM Super Morning Show Wednesday.

The factory closed down in July 2016 after the sugar cane season petered off.

The shut down fuelled criticism from the then opposition New Patriotic Party (NPP) that the commissioning of the project was for propaganda value rather than sound economic judgement.

The Trade Ministry, however, explained that the raw material -sugarcane- has entered its lean season hence the need to close down the revamped factory for maintenance. The Ministry said the company will resumed operations by November.

“You think if it was a private man’s money that factory will be a white elephant? Just do your investigation, that factory will never work. I tell you,” he said emphatically. 

Photo: President John Mahama as he commissioned the factory first built in 1967

Daniel McKorley said despite the talk of promoting private sector development, the previous government did not allow the private sector to lead.

Chief Executive of Yamson and Associates, Dr. Ishmael Yamson agreed with his colleague CEO, pointing out that the government put the cart before the horse in the business model of the Komenda Sugar factory.

He said the first thing the government should have done was to make sure the irrigation system works as an investment in the infrastructure that can invite the private sector.

“But if the govt is borrowing money to go and put up the factory, what money does it have to go and build the irrigation system…it didn’t make sense,” he said.

Comparing the National Democratic Congress (NDC) business plan while in government to what he has seen as the New Patriotic Party (NPP) business plan for the private sector, the McDan Shipping CEO is confident that the new government is on the right track.

He said after studying the NPP’s one-district, one-factory policy which he described as “a fantastic document”, he added that “it is nothing complicated” to achieve “…the interesting part for me is that it will be privately driven.”

Mr McKorley, a passionate believer in the private sector, said he is interested in taking advantage of the plan, challenging the NPP government to muster “the political will to execute it and leave it in the hands of the private sector”.

“We need to move the private sector forward…it is about time we stop playing politics with Ghana and get serious with business,, ” he said.

According to a Busines and Financial Times report, the project contractor in the construction of the Komenda Sugar factory, Nitin Wagh has said more work needs to be done to ensure that good quality sugarcane is available for processing.

The sugarcane farmers within the Komenda enclave don’t have the modern techniques, no irrigation, and no fertiliser programme. What they are doing is that whatever crop comes at the end of the year they harvest it. You cannot do that for many years,” he said.

“In India, when you plant the sugarcane, which takes one year to mature, it is harvested for two years and fresh seedlings are planted. But here in Ghana, the root is there for 38 or 40 years. That means farmers don’t know about it.

“So today, the sugarcane in the Komenda area will give you just 4 or 5 percent of sugar. So if you crush 1,250 tonnes, you will get about 50 tonnes,” Mr. Wagh noted.

The Ghana sugar industry was started in the First Republic and consisted of two factories at Asutsuare and Komenda which began operations in 1967.

The two factories had their own plantations and also bought cane from farmers. Development of the plantations and factories -which were supplied, erected and financed by Poland (Asutsuare) and Czechoslovakia (Komenda) – was badly-planned, executed and managed.

Water for the factory and housing at Komenda was provided by a 24-mile canal from the River Pra. The canal was intended to provide sugar estates with irrigation through a sprinkler system.

The Komenda Sugar Factory later went under private care, but this wasn’t enough to sustain it.

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