Trade Minister designate expresses concern over Ghana’s excessive imports of basic goods
Member of Parliament for Adansi-Asokwa, Kobina Tahiru Hammond, has expressed concern over the high rate at which Ghana imports some of the most basic goods, such as guts, bladders, and stomachs of animals. The legislator highlighted the worrying trend during his vetting by the Appointments Committee of Parliament on February 20, where he was being considered for the position of Minister for Trade and Industry.
Mr. Hammond argued that the excessive imports of basic goods have the potential to further derail local production by indigenes and may hinder the country’s economic growth.
Ghana’s economy is heavily reliant on imports, with the country importing a wide range of goods, including food, machinery, and consumer goods. According to data from the Ghana Statistical Service, the country’s imports grew by 7.9% in 2021, compared to the previous year, while exports only increased by 4.5%. This trade imbalance has contributed to the country’s widening current account deficit, which reached $2.8 billion in the third quarter of 2021, up from $1.9 billion in the same period of the previous year.
The excessive imports of basic goods have a severe impact on the country’s foreign exchange reserves, as Ghanaian importers need to pay for the goods in foreign currency, mainly US dollars. The high demand for dollars creates a significant drain on the country’s foreign exchange reserves, which are essential for maintaining economic stability. Ghana’s central bank has been struggling to maintain adequate foreign exchange reserves, as the country faces a mounting debt burden, weak export earnings, and a volatile currency.
To address the issue of excessive imports of basic goods, the Ghanaian government has launched several initiatives to promote local production and reduce dependence on imports. The government has introduced policies to encourage domestic manufacturing, such as the One District, One Factory program, which aims to establish at least one factory in each of Ghana’s 260 districts. The government has also implemented measures to boost agriculture and agribusiness, such as the Planting for Food and Jobs program, which provides farmers with inputs and extension services.
However, these initiatives face significant challenges, such as inadequate funding, poor infrastructure, and limited access to credit. Moreover, the COVID-19 pandemic has disrupted global supply chains and caused shortages of essential goods, forcing Ghana to rely more heavily on imports. The country’s economic recovery has also been hampered by the pandemic, with GDP growth slowing to 2.9% in 2020, down from 6.5% in 2019.
The excessive imports of basic goods raise concerns over Ghana’s economic stability, as the country faces mounting debt, rising inflation, and a volatile currency. The government must prioritize policies that promote local production and reduce dependence on imports, as these measures are critical for ensuring sustainable economic growth and reducing the country’s vulnerability to external shocks.
The proposed International Monetary Fund (IMF) support program, expected to begin in March 2023, could provide a much-needed boost to Ghana’s economic reform efforts, but sustained efforts will be necessary to address the underlying issues.
