Businesses want borders open to boost economy – research

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…as raw materials shortage keeps prices up

Businesses in the country, especially those in the retail sector, are calling for the borders to open as the gradual return to normal is being impeded by their closure, an IHS Markit Ghana survey has shown.

Government ordered the closure of borders in March this year, as an action to contain rapid spread of the coronavirus pandemic. However, that well-intentioned action has come at a great disadvantage to businesses as it has reduced economic activity in the country, thereby leading to supply chain disruptions.

The border closures, according to the survey, have restricted companies’ ability import goods; thereby resulting in shortage of raw materials and leading to a hike of their prices – pushing companies to also increase the prices of their products. It is against these issues that businesses say reopening the borders is essential to increasing economic activity.

Further commenting on the latest survey results, Andrew Harker-Economics Director at IHS Markit, said even though loosening the restrictions has increased business activities in the country, job-cuts continue to be a problem due to the general economic slowdown.

“The gradual return to normality continued in Ghana during June, helping firms to secure a renewed expansion of new orders. The economy looks to be getting back on its feet, raising hopes that the third quarter will see a recovery in private sector activity.

“That said, the severity of the COVID-19 downturn has been such that it will take a sustained period of solid growth to recover fully. Spare capacity is still evident for now, leading to more bad news on the jobs front as workforce numbers were reduced for a fourth month running.”

The World Bank, in April, cautioned African governments to keep their trade borders open as their continuous closure would raise prices and limit the supply of COVID-19-related goods and food to critically-affected areas or hotspots.

“Experience from previous crises shows that imposing export restrictions on medical and food products limits their access – particularly to the poorest, who will be adversely affected the most. Export restrictions adopted by African and other countries during the crisis affect not only the cost and availability of COVID-related medical supplies, but also necessities – mainly food.

African countries depend heavily on imports of medical supplies, with 94 percent of pharmaceuticals in the region imported from outside the region. Export bans within the region prevent the continental supply from being allocated to where it is needed the most. Within the region, export bans on food lower domestic prices, which reduces the incentive to grow food crops in the next season,” the World Bank said in its Africa’s Pulse report.

According to the Bretton Woods institution, as of the end of March this year, 31 countries in the region had closed their borders. Meanwhile, small-scale cross-border trade contributes to the livelihood of about 43 percent of the region’s population, predominantly the poor and women; and such trading activities are also dominated by agricultural and livestock products – essential to maintaining food security.

Hence, its advice to governments on the continent to keep borders open despite border closure is gaining international approval: “Borders need to be kept open as much as possible for trade while being consistent with a strategy of containment, and in line with the multilateral provisions of transit. Although it is deemed necessary to contain spread of the virus, closed borders make it difficult for medical supplies and other necessities of life to reach people,” the World Bank said in its Africa’s Pulse report (April 2020).

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