The Director of the Institute for Statistical, Social and Economic Research (ISSER) at the University of Ghana, Professor Peter Quartey, has called on the government to be firm in its decision-making on the benchmark policy that will promote and support the local manufacturers rather than giving benefit to importers.
His comments come after the Ghana Traders Association (GUTA) expressed vehement opposition to the government’s decision to cancel the reference value of up to 50% it applied to the import of certain products – which was primarily intended to reduce the duties that importers pay. in order to increase the volume of goods passing through the country’s ports.
The professor is of the opinion that the issue should be discussed based on the data and its impact on the economy so far; in particular on local production, because he thinks that national production must take priority over imports.
“I think the issue of baselines should be revisited with data. The government believes that there are certain products whose reference values should be removed to encourage local production. And there are also several imported products on which the reference value must remain.
“AGI and GUTA should sit down and review the data and talk about the data, because this benchmark policy is really killing local production. We cannot continue on this trajectory. When local production is sufficient, the benchmark must removed so that local products can compete with imported products, otherwise you are giving an unfair advantage to imports, and that does not bode well.
“With the African Continental Free Trade Area (AfCFTA), if products imported from Europe and Asia become cheaper than what is produced on the continent, it will kill this initiative,” he said in an interview with the B&FT.
The reference value policy was implemented in 2019; but the government has backtracked amid continued complaints from local businesses that the introduction of the policy has led to unfair competition from imported products, leading to reduced production and the near collapse of some businesses manufacturing.
Already, one of the main vegetable oil production companies, Wilmar Africa, has closed its factory mainly due to the impact of the benchmark policy on its operations.
“Since the introduction of the government’s tariff reduction on the reference value policy, there has been a huge increase in cheap imported products in the country. It is therefore very difficult for us to sell on the local market because oils imported from Asia sell for much less than our products.
“The unit cost of our oil is high compared to imported ones, because we have to deal with all the overhead in increasing our costs. The government’s announcement of the reversal of the reduction in duties on the benchmark policy was good news; however, the government has suspended action on this announcement,” said a statement signed by chief executive, Kwame Wiafe.
But despite concerns expressed by local producers, the government has suspended implementation of the policy reversal to allow for further consultation among stakeholders, following outcry from importers over current charges at ports – which they believe will therefore cause more difficulties for citizens. , because the prices of goods will rise astronomically.
However, the Association of Ghana Industries (AGI) insists that the government should prioritize strengthening the local economy through support to manufacturers as this will create jobs for the youth and generate income for the government.
“Indeed, nothing explains sustainable job creation and economic empowerment better than good industrial policy decisions and deliberate industrialization. Industrialization is so essential to Ghana’s economic liberation that we cannot afford to sacrifice our industrial initiatives for short-term gains that serve the interests of a few importers.
“This policy is very regressive and will be very unfortunate if continued in its current form. We would like to emphasize that it is the sustainable jobs that will provide economic empowerment and generate national revenue,” said AGI President Dr. Humphrey Ayim-Darke.