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Business News of Thursday, 25 December 2008

Source: Public Agenda

Floodgates Opened to Foreign Textiles

…TGLEU says decision is politically motivated

The speed with which the government has temporarily lifted the ban on imported textile has drawn the expected reaction from the category of Ghanaian workers who would be hardest hit.

The National Executive Council (NEC) of the Textile, Garments and Leather Employees Union (TGLEU) at an emergency meeting on December 18 said it viewed the development as unfortunate since the decision was taken in total disregard to the survival of the local textile industry.

The NEC recalled the numerous meetings of stakeholders (Government, Employers and Labour) as far back as 2003 to identify the problems and challenges confronting the industry, and views the turn of events as unfortunate. At one of such meetings it came to light that in 2002 alone the country lost ¢300 billion old Ghana cedis, with the accompanying job losses.

The meeting noted that given the expected loss of jobs and revenue to the government as exemplified in the 2002 Budget, the local textile manufacturers would be compelled to down size staff numbers to protect their investments. Even before the lifting of the ban, smugglers had outwitted the security agencies at the entry points and got their cheap imports into the country. The sight of Nigeriens and other non-Ghanaians selling foreign textiles on the streets of Accra, Kumasi and Takoradi etc is common. In their place are the numerous Ghanaian textiles workers who have lost their jobs due to the closure of textile factories or the reduction in production capacity by the few factories struggling to stay in business.

A report in 2003 by the Revenue Agencies Governing Board titled “Practical Measures to Combat the Menace of Under Invoicing and Smuggling into Ghana” pointed out that the “local production of textile which peaked at 130 million metres per annum in the 1970s has dropped to under 39 million metres per annum currently; and the labour force in the industry consequently reduced from 25, 000 in the 1970s to under 3,000 as of now.”

The report identified under invoicing in import duties, laxity in the performance of valuation and monitoring functions of the destination inspection agencies etc as some of the acts hampering the growth of the local textile industries. The report further pointed out that as a result of under invoicing there are rampant contraband goods dumped on the market. “This kills competition and also does not give any protection to the infant manufacturing sector because the smuggled goods sell cheaper than the locally produced goods.”

TGLEU wonders if anything has changed regarding local production to warrant the lifting of the ban on cheap foreign imports. ‘Since the reasons for Government’s action was not stated, the NEC considers the timing of the lifting of the ban as politically motivated aimed at influencing the votes of the electorate.”

As part of measures to curb smuggling of textiles into the country, the report recommended that personnel of CEPS should be strengthened, revamped and well motivated to improve productivity. It also recommended that the CEPS should embark on an education programme to sensitise the public on the menace of under invoicing.