‘Tax System Robs Local Businesses’

Godfred Frempong, a Director at the Science and Technology Policy Institute (STEPRI), has noted that the country’s tax system is obstructing local businesses from realising the full benefits they are supposed to enjoy from the trade liberalization in ICT services.

He said Ghana’s tax structure has made it cheaper, for example, to import whole computers rather than importing the parts to assembly them in the country.

Dr Frempong, who was part of a team of researchers who carried out a survey on the international liberalisation of trade in ICT services in Ghana in 2011, especially on obstacles that stood in the way of local businesses, mentioned that the situation had discouraged the local assembling of computers and constrained the growth of small firms.

Funded by the Canadian International Development Research Centre, the survey was conducted with collaboration from Panos Institute of West Africa.

“This could pose a threat to the development of local innovativeness, especially in the area of software development,” Dr Frempong said adding that a lot of multinationals send back their profits to their parent companies at the expense of the development of Ghana’s economy.

The survey found out that multinationals in the ICT sector have dominated the local market making it impossible for local firms to be competitive.

The report further mentioned that despite the numerous benefits that the international policy on trade in ICT services offer, efforts made by Ghana to educate indigenous businesses on the benefits in the ICT sector was not pronounced.

Though Ghana’s procurement law makes provision for local content in the goods and services procured by multinationals, not much articulation has been offered on it.

Currently, should the country plan to reverse the trend, it will need to effectively and efficiently support local companies to compete with the multinationals to reduce capital flight.

Ghana is among African countries that liberalized their telecoms sector.