The Business Climate 2020 Report has urged the country to change its old practice of exporting primary products to the United Kingdom (UK) to avoid negative balances of trade.
The report indicated that the UK imported US$242million worth of goods, while Ghana on the other hand imported US$473million worth of goods from the UK – presenting a negative trade balance of about US$231million.
Attributing factors include the country’s continuous export of raw materials and import of manufactured goods, coupled with a drop in the level of exports against imports in trade with the UK.
“Ghana’s exports to the UK remain largely primary products, while imports from the UK have mainly been manufactured goods. This accounts for the negative trade balance to the disadvantage of Ghana”.
Our forecasts show that this trend is likely to continue into the near future, the report stated.
Top-five exports from Ghana to UK, which are mostly in their raw state, remain mineral fuels, oils, and distillation products; meat, fish and seafood preparations; cocoa and cocoa preparations; edible fruit, nuts, peel of citrus fruit, melons; and edible vegetables and certain roots and tubers.
On the other hand, the top-five imports to Ghana from UK are: wood and articles of wood, wood charcoal; nuclear reactors, boilers, machinery; articles of iron or steel; plastics and articles thereof; and vehicles other than railway, tramway.
The report, however, projects that leveraging the Africa Continental Free Trade Area (AfCFTA) agreement could be a game-changer for the country to correct the balance of trade since it creates a single continental market for goods and services – enabling free movement of businesses, persons and investment on the back of reduced tariffs and trade barriers.
“It is established that there can be better prosperity if Africans trade more among themselves by leveraging AfCFTA”.
However, the report notes that merely implementing a free trade agreement will not necessarily translate into better outcomes unless certain critical issues are addressed. This means AfCFTA, if leveraged on properly, could be the game-changer to transform African economies.
Data from the United Nations Commission for Trade and Development puts intra-African trade at a measly 15 percent, which is estimated to be boosted under AfCFTA to 52.3 percent – which is still less than the 67 percent of Europe.
Fertilizer subsidy programme under threat…
Fertiliser suppliers for government’s Planting for Food and Jobs (PFJ) initiative are complaining that the programme is under threat over debts owed by government, with some of the monies, dating back to two years.
The suppliers admit that though the initiative had been successful in the first four years of its introduction, recent developments with regards to financing the project and making payments for fertilisers procured sends disturbing signals.
This year, MoFA seeks to distribute a total of 521,380 metric tonnes of organic and inorganic fertilizers to 1.5 million farmers under the programme.
However, it is feared that projections for this year, may not materialize due to current delays in debt payments to input dealers. There are more than 50 companies contracted to distribute fertilisers – both organic and inorganic, under the PFJ.
The delay in payments, according to these suppliers, is curtailing the initiative’s progress as most of these companies cannot fulfil their financial obligation to banks for credit acquired, thereby making it difficult to access new credits to continue to import fertilizers or purchase raw materials for production.
Due to payment challenges, some suppliers could not distribute fertilizers to farmers from April 2021 till now.
Reports from some of these distributors suggests that some farmers are beginning to lose interest in the programme since they are not getting access to fertilizers under the initiative. We therefore are calling on the Ministry of Finance, to as a matter of urgency, pay the outstanding debts.
Some economic pundits have called for the cancellation of the subsidy programme to enable the farmers buy from the open market since their frustrations about regular supply continues to build up.
The PFJ has been clouded with many challenges such as the heavy smuggling of fertiliser to neighbouring countries such as Burkina Faso, Togo and Ivory Coast.
Director of Crop Services at MoFA, Seth Osei Akoto, has observed that that most suppliers are fond of late submission of invoices for payments. The Finance Ministry is responsible for payments once invoices are submitted to the MoFA, it becomes the responsibility of the finance ministry to effect payments.
Between the Finance Ministry and MoFA, they should endeavor to rectify the anomaly and ensure the inputs are delivered timeously to make the programme credible.