You are here: HomeNews2022 01 19Article 1448272

Business News of Wednesday, 19 January 2022

Source: thebftonline.com

Prioritise local manufacturers in benchmark policy decision – Prof. Quartey

Peter Quartey, Director at the Institute of Statistical, Social and Economic Research Peter Quartey, Director at the Institute of Statistical, Social and Economic Research

Director of the Institute of Statistical, Social and Economic Research (ISSER) at the University of Ghana, Professor Peter Quartey, has called on the government to be firm in making a decision on the benchmark policy that will favor and support local manufacturers rather than give advantage to importers.

His comments come after the Ghana Union of Traders Association (GUTA) expressed vehement opposition to the decision of the government to reverse the up to 50 percent benchmark value it applied on the importation of some products – which was primarily aimed at reducing the duties importers pay in order to increase the volume of goods that come through the country’s ports.

The professor is of the opinion that the issue must be discussed based on data and how it has impacted the economy so far; especially on local production, as he thinks domestic production must be prioritized over importation.

“I think the issue of benchmark values should be looked at again with data. The government thinks there are some products that the benchmark values should be taken off to encourage local production. And there are also several imported products that the benchmark value has to remain on.

“The AGI and GUTA should sit down and look at the data again and speak to data, because this benchmark policy is really killing local production. We cannot continue on that trajectory. Where there is sufficient local production, the benchmark should be taken off so that local products can compete with imported products. Otherwise, you are giving imports an undue advantage, and that isn’t going to augur well.

“With the Africa Continental Free Trade Area (AfCFTA), if imported products from Europe and Asia become cheaper than what is produced on the continent, it will kill that initiative,” he said in an interview with the B&FT.

The benchmark value policy was introduced in 2019; but the government has backtracked on it, given incessant complaints from local businesses as they argue the introduction of the policy has led to unfair competition from the imported products – thereby leading to reduced output and near collapse of some manufacturing businesses.

Already, one of the leading companies in vegetable oil production, Wilmar Africa, has shut down its plant mainly due to the impact the benchmark value policy is having on its operations.

“Since the introduction of government’s duty discount on benchmark value policy, there has been a huge increase in cheap imported products into the country. This has made it very difficult for us to sell in the local market because imported oils from Asia are selling far cheaper than our products.

“The unit cost of our oil is high compared to the imported ones, as we have to contend with all the overheads in our cost build-up. Government’s announcement of reversing the duty discount on benchmark policy was welcome news; however, the government has suspended action on this announcement,” stated a statement signed by the General Manager, Kwame Wiafe.

But despite the concerns voiced out by local producers, the government has put on hold implementation of the policy’s reversal allow further consultations among stakeholders, following importers’ loud outcry over current charges at the ports – which they say will consequently lead to more hardship for citizens, as prices of goods will see an astronomic rise.

However, the Association of Ghana Industries (AGI) insists government should prioritize strengthening the local economy through support to manufacturers, as this will create jobs for the youth and generate revenue for the government.

“Indeed, nothing explains the creation of sustainable jobs and economic emancipation better than the right industrial policy decisions, and deliberate effort to industrialize. Industrialization is so central to Ghana’s economic liberation that we cannot afford to sacrifice our industrial initiatives for such short-term gains which serve the interest of a few importers.

“This policy is very regressive and will be most unfortunate if maintained in its current form. We wish to emphasize that it is the sustainable jobs which will give economic empowerment and generate domestic revenue,” said AGI President, Dr. Humphrey Ayim-Darke.

Join our Newsletter