The manufacturing sector needs a bigger push from the state if it is to grow briskly, create jobs and be competitive, says Dr. John K. Kwakye, a senior economist at the Institute of Economic Affairs (IEA). The shrinking of manufacturing (relative to the total economy) and the sector’s underperformance should be a source of concern, he told reporters in Accra at the Institute’s review of government’s 2012 budget. “Manufacturing is a big problem. It’s suffering under the policy of trade liberalisation and the withdrawal of subsidies. It’s also suffering from high business costs, including the cost of credit. “We need to reverse the decline. Manufacturing needs to be supported to grow at a faster rate so that it can create more jobs.” Even as GDP has paced rapidly in the last half-decade, manufacturing has had a poor performance and generally recorded slower growth than other sectors. This year, its growth projection according to official figures is 1.7 percent; down from 7.6 percent in 2010, and after it had shrunk by 1.3 percent in 2009. Due to the slow growth, its share of GDP and jobs has dwindled. As recently as 2006, manufacturing output was about a tenth of GDP. This year, it has fallen to 6 percent of GDP and will shrink even more over the medium-term according to projections in next year’s budget. The sector faces a litany of problems, Dr. Kwakye said, including the impact of trade liberalisation which has killed many industries as they tried to compete with producers from Asia and Western countries -- whose governments provide them with cheap loans and subsidise their inputs. Another weakness is infrastructure, which adds to the cost of business. Bad roads, for example, increase the cost of haulage, and unreliable power supply leaves capacity under-utilised. Next year’s budget is targetting a boost to jobs through increased spending on infrastructure. But industry groups say the measures are not “far-reaching” enough, and regret that some of their proposals were not considered. “Incentives in the budget statement are not far-reaching enough for the manufacturing and agricultural sectors to bring about meaningful growth,” said Association of Ghana Industries (AGI) president, Nana Owusu-Afari. “The budget did not sufficiently provide for the development of the private sector to bring about the necessary growth,” Emmanuel Doni-Kwame, chief executive of the Ghana Chamber of Commerce and Industry, said in a separate reaction. The chamber’s proposal to the government -- to lower the corporate tax rate and increase exemptions for small enterprises -- was not been considered, he said; but he welcomed the reduction in the environmental tax-rate from 20 to 15 percent. Both industry leaders worried that government had done little to make credit affordable for businesses. Seven times out of eight, the cost of credit has featured in the top-three concerns of business owners polled by the AGI. The only time it did not appear in the top-three, the association said that respondents had probably given up on the problem because they didn’t see it being addressed. “We should have an industrial bank to offer subsidised credit to industries,” Dr. Kwakye suggested. Despite the budget’s promise of jobs, he said he didn’t see any large-scale job-creation in the immediate-term. “These are mostly public works which do not employ a lot of labour. But to the extent that the investments will support the private sector over time, there could be a strong impact on jobs in the long-term.”