Effects of trade liberalization policy on the performance of small and medium-sized food processing industries in the Greater Accra Region of Ghana

Abstract

Trade liberalization policy was analyzed to examine its effects on performance of Small and Medium Scale (SMS) food processing enterprises located in the Greater Accra Region of Ghana from 1970- 2003. Thirty-three SMS food processing companies were purposively sampled, and the results show a U-shaped trend in the number of registered firms, overall growth rate of 4.3% in the number of food processors, a negative growth rate of 1.8% between 1970 and 1982 and a positive growth rate of 15.3% between 1983 and 2003. Processing of fruits and vegetables was the most common venture, with 49% being limited liability companies producing mainly for the domestic market. The majority of food processors (94%) were established after the introduction of trade liberalization policy in 1983, and about 67% sourced raw materials locally and 55% financed businesses from own savings and profits. The trade liberalization policy had a positive effect on the output growth of SMS food processing companies. Capital was identified as the major constraint affecting growth of food processors, but the provision of tax relief; lower import tariff and financial support would enhance competitiveness of the processors.