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R a jiv B a l l The State and The Developm ent of Sm all-scale Industry in Ghana since c.1945 A T h e s i s s u b m i t t e d f o r F i n a l E x a m i n a t i o n f o r t h e De g r e e o f D o c t o r o f P h i l o s o p h y De p a r t m e n t o f E c o n o m ic H is t o r y L o n d o n S c h o o l o f E c o n o m ic s a n d P o l it ic a l S c ie n c e S e p t e m b e r 1997 UMI Number: U615B61 All rights reserved INFORMATION TO ALL USERS The quality of this reproduction is dependent upon the quality of the copy submitted. In the unlikely event that the author did not send a complete manuscript and there are missing pages, these will be noted. Also, if material had to be removed, a note will indicate the deletion. Dissertation Publishing UMI U615361 Published by ProQuest LLC 2014. Copyright in the Dissertation held by the Author. Microform Edition © ProQuest LLC. All rights reserved. This work is protected against unauthorized copying under Title 17, United States Code. ProQuest LLC 789 East Eisenhower Parkway P.O. Box 1346 Ann Arbor, Ml 48106-1346 Library British Library o' Poiitica' and Economy Science ABSTRACT Since c.1945, there has been an ‘explosion* of small-scale industrial activity in Ghana. This thesis attempts to explain why this has happened. First, developments in small industries during the colonial period are analyzed. Using new sources of data, it is argued that indigenous industries survived this period and were of significant importance by the end of British rule in 1957. Next, changes in the size and sophistication of these industries in the postcolonial period are quantified. It is estimated that, between 1960 and 1984, the number of workers employed in this sector more than doubled. There was also a clear increase in the small industry sector’s sophistication. A significant part of the thesis concerns government policy towards small industries since c.1945. Extensive use is made of newly-released archival material, particularly from the Nkrumah years (1951 to 1966). It is argued that, in general, government policies cannot explain Ghana’s small industry expansion: although some governments have championed the cause of small industrialists, their small industry development programmes have been relatively small. Also, some government policies actually have prevented small industry growth. Given that the state cannot be accountable for the ‘explosion’ of small-scale industrial activity, this thesis considers other possible reasons for this phenomenon. This is done by examining previous studies of the small industry sector and using new material from a survey of 40 small-scale industrialists conducted in 1996. It is argued that Ghana’s small-scale industrial ‘explosion’ can be understood as one of the consequences of Ghana’s pattern of economic development until the early 1960s, followed by a period of prolonged and rapid economic collapse during the 1970s and early 1980s. 2 CONTENTS Abstract 1 Table of Contents 3 List of Tables 6 Acknowledgements 7 Abbreviations 8 1 INTRODUCTION 10 1.1 Theoretical and comparative perspectives 10 1.2 Small-scale industries in Ghana: literature to date 21 1.3 The state and the development of small-scale industry in Ghana: 25 issues and hypothesis 2 SMALL-SCALE INDUSTRIES DURING THE COLONIAL 32 PERIOD, C.1800-C.1950 2.1 Small industries in precolonial Ghana 32 2.2 Small industries during the integration of the Gold Coast into the 37 world economy: C.1800-C. 1940s 2.3 Explanations for the survival of small industries 43 2.4 The Interbellum and structural change: the emergence of modern 52 small-scale industries 3 GHANA’S SMALL-SCALE INDUSTRIAL INHERITANCE 57 AND THE GROWTH OF SMALL-SCALE INDUSTRIES, c.1945-TODAY 3.1 Ghana’s small industry inheritance 57 3.2 Potential for further small industry expansion 62 3.3 What is ‘small-scale’? 65 3.4 The growth of small-scale industries since c.1945: employment, 68 output and sophistication 4 THE BIRTH OF A SMALL INDUSTRY POLICY, c.1945-1951 78 4.1 Small-scale entrepreneurs and colonial rule before c.1945 78 4.2 The postwar period: ideas on small industry promotion 85 4.3 From ideas to policy 89 3 4.4 Reasons for policy 95 4.5 Limits on government assistance to small-scale industries. 98 5 VACILLATION: THE STATE AND SMALL-SCALE 102 INDUSTRIES, 1951-66 5.1 Interpretations of the state-private sector relationship 102 5.2 The CPP and Nkrumah’s domination of the Ghanaian state 103 5.3 The state and small-scale industries 106 5.4 Assistance to small industries in the context of general government 118 policy 5.5 The appeal of small industry development 121 5.6 The problems of the small industry promotion case 124 6 ‘NURTURE CAPITALISM’, 1966-72 134 6.1 Historiography 135 6.2 NLC policy 136 6.3 The Busia years 145 6.4 Reasons for policy 156 7 ‘MICRO’ NURTURING, ‘MACRO’ SUPPRESSION, 1972-79 163 7.1 Historiography 164 7.2 Rhetoric and policies towards the private sector 165 7.3 Policy towards small-scale industries 170 7.4 Reasons for policy 181 7.5 AFRC rhetoric and policies 183 8 THE BIRTH OF NURTURE CAPITALISM? 1979-92. 188 8.1 Historiography 188 8.2 The Limann years 190 8.3 The Provisional National Defence Council 197 4 9 EXPLANATIONS FOR SMALL INDUSTRY GROWTH: 216 ENTREPRENEURSHIP 9.1 The dynamics of small industry growth: the Steel framework 216 9.2 Introduction to the sources 218 9.3 Are there agents willing and able to respond? 227 10 COMPLEMENTARY RESOURCES, DEMAND AND OTHER 246 SUPPLY-SIDE FACTORS 10.1 Complementary resources: capital 246 10.2 Complementary resources: labour 254 10.3 Complementary resources: raw materials 256 10.4 Incentives for small industry production 257 11 CONCLUSIONS 275 11.1 Ghana’s small industry inheritance and the postwar ‘explosion’ 275 11.2 Government policy towards small-scale industries 276 11.3 Hypothesis testing: small industries a consequence of Ghana’s 282 pattern of economic development and collapse? 11.4 An agenda for further research 287 11.5 Policy recommendations 289 SOURCES 292 A Archival 292 B Non-Archival Primary 299 C Secondary 310 5 LIST OF TABLES 2.1. Weights and Prices of Gold Coast Cotton Yarn Imports, 1923-29. 41 2.2. Value of Imports of Artisans* Implements into the Gold Coast, 41 1923-29. 2.3. The Number of Skilled Africans in the Gold Coast, 1931-48. 53 3.1 Employment in Small Industries in the Rural Regions of the Gold 60 Coast in the Mid 1950s. 3.2. Net Value-added in Industrial Establishments Employing fewer 74 than Thirty Workers, 1965-84. 5.1 NIB, 1963-66: Applications, Loans and Credits (Small and Large- 118 scale Industries). 7.1. Small Business Credit Scheme, Loan Disbursements by Sector, 175 1970-June 1978. 8.1. GRATIS* Sources of Income, 1988. 208 9.1. Published Surveys of Ghana’s Small-scale Industrial Sector. 218 9.2. Unpublished Surveys of Ghana’s Small-scale Industrial Sector. 219 9.3. Definitions of Small-scale Industry Used in Selected Surveys. 221 9.4. The Kumasi Survey: Small-scale Metal-workers. 223 9.5. The Kumasi Survey: Small-scale Miscellaneous Workers. 225 9.6. Labour Force Characteristics of Small-Scale Manufacturing Firms 238 in Africa (Percentages). 10.1.. Population per Commercial Motor Vehicle, 1975. 262 6 ACKNOWLEDGEMENTS I have received assistance from numerous quarters while researching and writing this thesis. The Economic and Social Research Council provided me with funding, without which I would not have been able to embark on three years of study. While in Britain, I received much encouragement and intellectual stimulation from my fellow research students and academics at the Economic History Department of the London School of Economics. My year in Ghana was made easier and much happier by the staff at the Institute of African Studies of the University of Ghana, Legon. My thanks to Professor Kwame Arhin, the former head of the Institute, for inviting me to Ghana, and to his successor, the late Professor Kofi Agovi, for his support. Dr. Kwabia was efficient in arranging letters of introduction and the like, while Dr. Awedoba gave me several insights into interview methodology. Becky Nahr and Lily Darko were always ready to help out with a smile and they taught me a lot about life in Ghana, as did Kofi and Nii, caretakers at the Institute’s Chalets. The staff at the National Archives of Ghana, Accra, were always friendly despite the difficult conditions in which they laboured. In Kumasi, Professor Owusu-Sarpong of the University of Science and Technology helped me get orientated, while Emmanuel Sah provided dedicated assistance while conducting interviews. Mr. Obeng at the Suame Intermediate Technology Transfer Unit also helped me make contacts with respondents in the Suame Magazine. Special thanks to Dr. Gareth Austin, my supervisor. He introduced me to this subject and has been at hand at all times to listen to my problems and offer me constructive advice. My parents, who have stressed to me the value of education from an early age, have been full of encouragement and support.
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