AGI calls for a review of the benchmark value on imports
The Association of Ghana Industries (AGI) has called for a targeted review of the 50 per cent benchmark value to support the government’s industrialization drive. It said the policy in its current form ran counter to the government’s own Industrial initiatives and had dire consequences for sustainable job creation prospects and the stability of the cedi.
“Instead of the universal application of the policy to all imports, AGI believes imports which come to compete with locally manufactured products be exempted from the policy,” Mr Humphrey Ayim-Darkey, Vice-President of AGI in charge of SMEs, told a press conference to announce their demands ahead of the presentation of the 2022 Budget statement.
Mr Ayim-Darke said it was important for the government to cushion local products for which there is local production capacity. The government declared a 50% reduction on import values at the ports in 2019 to make the trade through the ports more attractive and enhance revenue mobilization.
“These expectations were not met barely two years into the implementation,” he said, adding that it had instead weakened the local industries.
He urged the government to maintain the benchmark policy for manufacturers for their raw material imports to help grow the real economy.
“We support economic cooperation and multi-lateral trade, the reason why Ghana has signed a number of trade agreements.
But we also note that signing of trade agreements such as AfCFTA and the interim Economic Partnership Agreement (iEPA), alone will not guarantee the
gains we desire.”
These agreements also come with competition emanating from their duty-free quota-free clauses. With the advent of these trade agreements, it becomes more crucial to support Industry with the right policies in order to scale up local production capacity.
He said the benchmark policy had led to unfair competition and local manufacturing was collapsing with the influx of finished imports, which were equally enjoying the 50% reduction in their benchmark value. Some of these imports to Ghana already enjoy significant export rebates from their countries of origin.
“Locally manufactured products including those for which Ghana already has local production capacity and comparative advantage have been under serious threat from imports,” Mr Ayim-Darke said.
The current implementation of the benchmark value also posed a threat to Ghanaian industries participation in the AfCFTA.
“The influx of cheaper imports is making the local production highly uncompetitive and discourage investment in the affected sectors,” he said.
Citing the example of the Palm Oil industry, he said the reduction in benchmark value of imported refined vegetable cooking oil would discourage potential investors for the oil palm sector.
Ghana cannot become a net exporter of crude & refined palm oil products to further increase its foreign income reserves. About $100m will be needed to import Crude Palm Oil annually if this policy persists.
He said a number of local rice brands were under pressure from imports, adding Avnash Industries, which has a 500MT of paddy per day rice mill located in near northern Ghana, was out of operation for about nine months on account of influx of rice imports coming to compete unfairly with local rice production.
Adding that the government’s commissioned Savelugu and Sefwi Akontombra rice factories with investments totaling about GHc14 million risked becoming redundant if such large rice imports persist.
Mr Ayim-Darke said under the current circumstances manufacturers were finding it difficult to retain their employees with such influx of imports at cheap prices displacing their products on the market.
“The benchmark reduction policy in its current form could worsen the unemployment situation. The future of our country and our youth should guide us in our quest to promote policies that spur economic growth, industrialization and sustainable job creation.”
We wish to emphasize that AGI is not calling for a total withdrawal of the policy but rather a
selective application of the policy to serve a better purpose for the entire Ghanaian economy, he added.
Mr Ayim-Darke said the impact assessment and review of the benchmark policy must be done, taking cognizance the overarching framework of an industrial transformation agenda and fair-trade practices.
Mr Seth Twum-Akwaboah, Chief Executive Officer of Association of Ghana Industries, said the Association was also concerned about stability in the macro economic indicators such as the exchange rate, inflation and interest rate to help in planning.
He also called on the government to review the straight levy policy as it was unsupportive of the manufacturing sector and called for the extension of the zero tax regime for local producers of textiles.
