Factshee

t
Country: Ghana
Project: Programme for
sustainable economic
development

Wood products cluster initiative: Networking for mutual benefit

Background:

The BDS component of SPEED Ghana pays special attention to the BDS
markets in two selected value chains, namely tourism and the wood
products. Support to the wood products sector aims at enhancing
competitiveness of all the enterprises in the industry, create new jobs
and safeguard the existing ones. SPEED is cooperating with two private
sector business membership organisations (BMOs), namely the
Furniture and wood products association of Ghana (FAWAG) and the
Woodworkers Association of Ghana (WAG) and a knowledge institution,
the Wood Industries Training Centre (WITC). This is the triple helix
concept.
The focus of all interventions is on a 180 acre industrial enclave belonging
to FAWAG popularly called the ‘Wood Village’. In view of time constraints,
SPEED Ghana’s use of the cluster approach is seem as a fast-track vehicle
to deliver various interventions. Three thematic areas for interventions
are targeted, these are:
• Technology improvement and promotion

• Production improvement and product quality

• Market access

The cluster also collaborates and uses independent, experienced

Professional Researchers of the Forest Research Institute of Ghana
(FORIG) & Centre for Renewable Natural Resources (CRNR) as and when
necessary.

2.0 Justification

Available statistics indicates a positive contribution of the wood sector

towards job creation. In terms of GDP, the forestry and wood industry
ranks (5-6% of GDP) forth, after cocoa, minerals and tourism. There are a
total of 41,141 small-scale carpenters registered with the Association of
Small scale carpenters alone in Ghana. The carpenters have been found
to represent the largest group of end users together requiring about
219,000 cubic meters of sawn timber annually. This alone represents
about 72% of total domestic timber requirements. However a recent
study commissioned by SPEED also revealed that the sector is confronted
by a myriad of challenges and set backs. Among these challenges are:

• Access to markets
• Shortage good quality lumber (kiln dried and dimensioned)
• Access to capital
• Old and obsolete equipment
• Lack of managerial and technical expertise

SPEED Ghana sees the successful implementation of these initiatives as

one of the plausible routes towards the promotion of the three thematic
areas mentioned earlier.

Indeed, in both industrialized and developing countries, there is

increasing awareness that isolation rather than size is the key obstacle,
preventing MSMEs from boosting their competitiveness. Groups of firms
located in close proximity (also known as clusters) have proven to be
capable of rapid economic growth, sustainable leadership in export
markets, significant employment generation and/or preservation of high-
value-added jobs and technological progress. Evidence testifies to the
unique opportunity the SME cluster development provides for reconciling
the objectives of economic development, environmental sustainability
and social equity.

SMEs operating in a cluster environment derive a clear competitive

advantage from:
 • Proximity to sources of raw materials
• Availability of suitably customized business development services
• The abundance of clients attracted by the cluster tradition in that
industry and
• The presence of a skilled labour force

In Ghana, one finds a geographical concentration of wood products industry

players and some form natural clustering in the so called “Timber Markets”
and more recently the public sector sponsored wood villages. The term
‘cluster’ indicates a sectoral and geographical concentration of enterprises
which produce and sell a range of complimetary products and are thus faced
with common challenges and opportunity.

The area around Kumasi where this cluster operates, is estimated to

generate about 70% of total wood products industry value and employment.
In total the wood products industry in Ghana is also estimated to provide
direct employment to 100,000 people and livelihoods to some 2,500,000.
The cluster initiative such as the one in Kumasi is meant to galvanise all
industry operatives towards growth and competitiveness.

3.0 Impacts
• Improved efficiency and resource use
• Increased social capital
• Sustained employment
• Increased drive for innovation.

Product Description
A net work of firms in furniture production, builder’s woodwork, saw millers,
lumber retailers and two knowledge institutions working collaboratively for
mutual benefits in such areas as:

Information sharing
Skills development
Common procurement and supply to customers

Basic Features
• Platform for stakeholder dialogue and joint action
• Common services facility
• Productivity improvement schemes
• Technology transfer
 • FSC certification
• Use of alternative raw materials

Benefits
• Improved efficiency and resource use
• Increased social capital
• Sustained employment
• Increased drive for innovation.

Implementation process
Development
SPEED Ghana conducted a feasibility study to assess the potential for
facilitating innovation and competitiveness in selected industries/sub-
sectors through active cluster development activities.

A stakeholder process (i.e. engaging representatives from business,

knowledge institutions and government agencies) – concluded that active
cluster development activities would be an important contribution to build
competitiveness of the wood industry in and around Kumasi. This was
followed by a market study of the wood industry in Ghana which also
confirmed the significant development potential of the wood industry in
and around Kumasi.
A series of meetings with leading stakeholders and cluster proponents in
and around Kumasi, re-confirmed a strong commitment on the ground for
further developing the competitiveness of wood industry in and around
Kumasi through active cluster development activities.

Input
SPEED Ghana facilitated the process through the following contributions:
 Technical Advice by means of international and national experts. This
comprised:
o Adaption and dissemination of research innovation: Use of wood
waste(saw dust) as fuel for wood Kiln dryer
o Training of industry players:
Standards for wood products
Use of ICT
Best practices in production
 Facilitated market research and sector study
  Furniture show room in a prime location as common service facility for
paying members
Challenges and weakness
From the onset, large numbers of association members were rather skeptical
as previous attempts at such collaboration had failed, apparently hijacked by
a few. SPEED needed to demonstrate that the new approach was more
participatory and ownership rested with the association. This meant that the
process of consultations was long drawn delayed and the actual start of
implementation. A buy-in by membership was a necessity for the projects
sustainability

Observations
Produced results

A cluster development facilitation and collaboration structure in the form of a

management committee is in place, overseeing the operations of the cluster
secretariat manned by a local wood industries expert.
The capacity of some 50 leading stakeholders has been built through
sensitization on cluster based competitiveness and the workings of a cluster
Monthly production clinics and exposure visits delivers best practices in
furniture production and joint effort in market search in neighbouring Burkina
Faso opens a new vista of market opportunities in the sahel countries of
West Africa to member firm within the cluster.

Cost.
The direct costs associated with this product development process went into
the financing of consultancies that provided the initial industry information,
facilitation of stakeholder consultations as well as technical assistance and
human resource development.

Lessons learned