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Opinions of Wednesday, 20 December 2017

Columnist: Akoto-Bamfo Edmund

How to boost locally manufactured products

“Made in Ghana Products Campaign” is designed to promote consumption of locally made products and increase industrial productivity of indigenous products. Leading to the development and growth of industries. The resultant effect will be the massive creation of Jobs and a better quality of life for our citizens. In the long run, the “Made in Ghana Products Campaign” would help the nation achieve its desire for a diversified and industrialized economy.

Notwithstanding the above and our quest to boost preference for locally produced goods, it’s worthy to understand some of the reasons why people do not patronise made in Ghana products. This to a large extent will help in finding effective solutions to the rather unnoticed or overlooked problems from which our crooked production and consumption path has emanated.

In this presentation, I would focus on the factors of PRICE, PATRIOTISM and GOVERNMENT POLICY.

PRICE

All other things being equal, when the price of a product increases, the quantity demanded goes down. This is because price has significant influence on quantity demanded. Most Ghanaians utilize foreign products because of the low price of the foreign products compared to local products. The following are some of the reasons why the prices of made in Ghana product are higher than foreign imported substitutes;

Under Invoicing

It is generally perceived that; made in Ghana products are expensive. BUT on a closer examination this situation can be reversed if importers are made to stop what can be described as “under invoicing” for low customs duty and tax purposes.

Many importers declare undervalued invoices to arrive at lesser CIF in order to pay small custom duties and taxes. When this happens, total cost of the imported goods would be lower. This would enable the imported products gain competitive advantage over their local substitute and hence increases the quantity demanded.

To address this, there should be a meticulous examination of the exact value of all goods imported into the country by the Ghana Customs. This will generate increased revenue to the government for the development of the country, protect locally manufactured products and boost the production of made in Ghana goods.

Inferior Foreign Products

Poor demand of locally manufactured goods is also as a result of importation of inferior substitutes to local products, such inferior products usually sell at cheaper prices compared to locally manufactured products that would have used even better quality raw materials. Ghanaians are price conscious, therefore they would rather buy such foreign products instead of made in Ghana products.

To address this issue, Ghana Standard Authority must make it mandatory for every importer who intends to import anything into the country to get/ collect standard specification from the Authority for that item. The conformity of imported items to laid down standard specification will go a long way to help address this problem and ensure safety of the health of the citizens and improvement of the Ghanaian economy. This will create a balanced playing field for all foreign or locally made products because if quality is enforced the price war will reduce or even be eliminated.

High Electricity Tariff

The environment in which Ghanaian manufacturing industries operate are unfriendly. It is all the time difficult and discouraging. In Ghana, Manufacturing industries subsidizes electricity for household consumption. This increases the industry’s cost of production as compared to other countries whose conditions are favourable i.e. the domestic consumers of electricity should rather contribute to subsidize electricity for the industries. If a foreign product should come from any of such countries, it is obvious that their selling price will be lower than that of “Made in Ghana” products.

To alleviate this challenge, I recommend that the Government find a model that will reduce the cost of electricity for manufacturers, Stop the manufacturers paying for the residential consumption of Electricity and adopt proven system that have guaranteed the viability of manufacturing in many of the developed countries of the world.

Domestic consumption of electricity is mostly for convenience and comfort purposes and therefore should rather attract higher tariff than that of industries. Industrial consumption of electricity is for production purposes which helps to increase national income, create employment, develop natural and human resources etc. This would also help the manufacturing sector to improve in capacity utilisation, become more viable to expand their operations and invest in new ventures.

High Cost of Borrowing from Banks

Another factor that is responsible for the high cost of “Made in Ghana” goods is high cost of borrowing. Ghana is one of the 10 (ten) countries with the highest lending rate in the world. My personal experience is 32.5% per annum. The table below illustrates this better. Ghanaian businesses cannot compete with their counterparts in South Africa, Zimbabwe, Nigeria and Uganda.

AFRICAN LOAN RATES



Clearly businesses that are dependent on such High Loan Rates fall victim and become perpetual slaves to their lenders. This High Rate of borrowing stifles businesses and is very discouraging to entrepreneurship in Ghana.

BANK OF GHANA, WAKE UP AND DOTHE NEEDFUL

PATRIOTISM

PATRIOTISM is devotion, love, support and defence of one’s country, I will call on Ghanaians to in the spirit of patriotism patronize made in Ghana products even if the prices appear to be high at this time because this way we all are empowering the local manufacturers to become strong and bigger to be able to produce at lower cost in the near future.

The fundamental rule to develop is to keep your money within your country. We must build Ghanaian businesses, hire Ghanaian, buy Ghanaian and spend Ghanaian. This is a basic rule Ghanaians must follow but due to lack of adequate motivation and education we fail to adopt this philosophy.

Let me advocate that there is no better time than now to educate the present generation about the importance of devotion and loyalty to “Made in Ghana” products. This can be done by educating the citizens and consistently into the future of the good of buying made in Ghana products. This national orientation should be carried out by a collaboration of the Ministry of Education, Youth and Sport, The Ministry of Information and Communications with the theme like “ BOA WO HO” just like operation feed yourself” instituted by the late Chairman General I. K. Acheampong.

GOVERNMENT POLICY

In a country, where the people have wild demand for foreign goods, persuasive actions such as advertising on radio, television and bill-boards may take longer time to effectively change mind-set and attitudes towards loving and patronizing locally produced goods.


Therefore, I recommend that we use dual approach of persuasive media campaign with compulsory actions like import prohibition. Import prohibition is where selected items which are manufactured in a country are banned from being imported into that country, when that is effectively implemented, the people will have no other choice than to patronise no other than that made in their country.

Nigeria has done it, they have prohibited the importation of about 40 items and this is helping them to move forward their industrialisation policy. Ghana can also do the same because we are well positioned with technology, capital and human resources to produce some of the items we import into the country. Mosquito coils for example can be banned with no consequential disadvantage to the country. 98% of the composition of mosquito coils is sawdust and cassava starch. One may ask why do we use our hard-earned foreign currency to import sawdust that is abundant in Ghana?

By reducing importation, we will create more employment, our balance of payment position will improve, and the depreciation of the Ghana cedi will stop.

Let me conclude, in our quest to boost locally manufactured goods and services, it’s worthy to capture the exact challenges facing the local entrepreneur, therefore, the government should take into consideration the suggestions made here.