A study by the African Centre for Economic Transformation (ACET) has recommended that government develops a comprehensive national policy for the Export Processing Zones (EPZ) in order for the country to realise the full benefits due it, as a lack of it is subjecting the programme to some abuses.
According to the report, Ghana’s EPZ structure lags behind in many aspects of the objectives for which it was set up; as it has failed to curb rising unemployment in the country and has not helped to tilt the Balance of Trade (BoT) in favour of the country.
Some of the challenges the study identified as responsible for this include the fact that the programme is not well-connected to the broader development agenda and other industrial policies of government. Further, an ambitious strategy to integrate activities of the zones into the broader economy also does not exist to improve the multiplier effect of zone activities.
An even more serious observation is the recognition that the current compliance and reporting regime under the various incentives is not rigorous and reliable to safeguard the state’s interests. Then again, ACET observed that an overhaul of the reporting, compliance and monitoring regime is in order, as the free zones scheme is the subject of many waves of abuse and revenue leakages which must be tackled.
Furthermore, the study also raised some concerns about the environmental sustainability strategies employed by the companies, as some of them don’t have basic pollution abatement technology. And again, the report observed that technology-adoption in the zones is low and the current educational system is not well-linked to needs of the manufacturing industry.
To address these challenges, the policy think-tank recommends that a policy on EPZs in Ghana be formulated as soon as possible.
“It is envisaged that a policy on EPZs that finds definition in the industrial and trade policy of Ghana, which also aligns with the broader development plan, will lay a solid foundation for the strategic management of EPZs and its attendant effect on sustainability, linkages and national development.
“Again, ACET recommends that to ensure benefits of the programme are maximised and political commitment secured for its efficient operationalisation, there is a need to re-design the EPZ concept to be in line with current policy goals of government. There is a need to connect objectives of the zone to the broader development plan, and regional and global contexts, to project Ghana’s comparative advantage. The objective is to make the programme more efficacious and effective in achieving its goals,” ACET said.
To also prevent abuse of the free zones regime, ACET recommends that a new system based on best practices which rely on technology must be employed to eliminate the human element in the vetting and monitoring processes. Inter-agency collaboration should be strengthened to share information and reduce the systemic rigidities in enforcing regulatory compliance. Another recommendation made is improvement in the control of corruption, and corporate social responsibility by enclave-based firms.
“Control of corruption should be an integral part of the overhaul being advocated for in the compliance and regulatory regime. The hope is that a new system, based on transparency and monitoring systems that allow for checks and balances between zone administrative employees, firms, and other government agencies will be implemented.”
To also address the challenge of low technology employed in the sector, the study called for a review of the current educational curricula and vocational training orientation that will enable the zone to be linked with skills training centres which can closely work with the technical and vocational schools to provide knowledge-based technological support to firms in the zones.
Lastly, the policy think-tank called for a review of the Ghana free zones Authority act, the legislative instrument, and the administrative setup.
“This is against the realisation that the current regime gives room for abuse and corruption. At the core of the new regulatory regime must be adherence to the various dimensions of sustainability discussed earlier. The legislative instrument must recognise and seal all loopholes employed to evade taxes under the programme, to be informed by comprehensive cost benefit-analysis of the scheme.
“The new administrative setup must be in tandem with current needs and best practices. For effective monitoring, it is expedient to involve the various regulatory agencies that have a role to play under the programme in the review process to bring them in sync with dictates of the law and guarantee optimum outcome.”
Commenting on the report, Senior Director, Research, Policy and Programmes-ACET, Edward Brown, urged government to take the recommendations in the report seriously if it wants the One Region One Industrial Park initiative to be successful.
“The recommendations show that there are examples of what you need to do in order to ensure sustainability. Some of them are not financially burdensome, while others will require major changes. But more importantly, as government is embarking of its policy of One Region One Park, it must right from the beginning include within the plannig and design of these parks all the key elements of sustainability. So, it is a way to inform government about some of the good practices they need to take into account if they are to ensure that the One Region One Park policy is successful,” he said.