The Association of Ghana Industries (AGI) has urged government to safeguard jobs, revenues and local production by being unwavering in its decision to implement the reversal of the benchmark discount policy.
It said the benchmark discount policy offers universal import rebates that only promote importation, which distorts micro- and macro-economic fundamentals – especially local production, and as such is a significant hindrance to the economy’s industrialisation.
“Indeed, nothing explains the creation of sustainable jobs and economic emancipation better than the right industrial policy decisions, and that deliberate effort to industrialise,” its president, Dr. Humphrey Ayim-Darke, said.
The reversal of the benchmark values, which affects only 43 products that can be produced locally, was announced in November last year. The policy had been in existence since 2019, but largely viewed as counterproductive to the country’s bid to be a leading producer in the Africa Continental Free Trade Area (AfCFTA) market by economists and manufacturers alike.
Implementation of the reversal was to begin January 4, 2022; but has been suspended by President Nana Addo Dankwa Akufo-Addo to allow for wider stakeholder engagement.
However, speaking at a press conference in Accra on why government must not yield to pressure from importers of these 43 products, Dr. Ayim-Darke observed that while other countries offer export rebates to their firms to develop export trade, Ghana is doing the opposite.
“Industrialisation is so central to Ghana’s economic liberation that we cannot afford to sacrifice our industrial initiatives for such short-term gains which serve the interest of few importers. This policy is very regressive and will be most unfortunate if maintained in its current form. We wish to emphasise that it is the sustainable jobs which will give economic empowerment and generate domestic revenue,” he said.
AGI, he explains, supports application of the policy to selected items of national priority only. He also urged government to maintain the benchmark policy for manufacturers – import of raw materials – to help grow the real economy.
Explaining further, he said the exigencies of local manufacturing became more prominent with the outbreak of the COVID-19 pandemic. “With the disruption of global supply chains, high cost of raw materials and freight during the pandemic, we all saw the need to quickly scale-up the development of our local supply chains. Today, we are all complaining of the rising cost of freight. But the more dependent we are on imports, the more likely we are to bear the brunt of such high freight costs; and the reverse holds true”.
He also wants government to be guided by its own industrialisation transformation agenda, through One District-One Factory, Planting for Food and Jobs, Fertiliser subsidy and Ghana’s export development agenda – and the impact an import-driven policy like the 50 percent benchmark discount could have on the success of these initiatives.
“The AGI believes the benchmark discount policy in its current form runs counter to government’s own agenda to industrialise. To mention a few, we have seen government commission the Savelugu Rice Factory in August and Sefwi Akontombra Rice Factory in September just last year. These two recent investments totalling about GH¢14million risk becoming redundant if such large rice imports persist. Investor confidence is waning, and no investor would like to invest in a real sector that is currently exposed to the influx of imports as we are,” he added.
Although the AGI said it supports economic cooperation and multi-lateral trade, it noted that signing trade agreements such as AfCFTA and the interim Economic Partnership Agreement (iEPA) alone will not guarantee the desired gains. Instead, it said, these will only be meaningful “if we build local production capacity to create jobs and export”.
According to the association, many producers are finding it difficult to retain their employees with such an influx of imports at cheap prices displacing their products on the market.
For instance, companies like Avnash and Wilmar which are into rice and oil palm production and processing are currently operating below capacity due to the unfair trade practices brought about by the benchmark values policy. “The benchmark discount 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 which spur economic growth, industrialisation and sustainable job creation,” the AGI’s president lamented.
Advice to importers
“We welcome stakeholder dialogue on the benchmark discount within the context of what is best for our country. We do understand why some of our importers and traders are unable to broach the topic of industrialisation. Indeed, industrialisation is a difficult path in doing business.
“It may sound long-term and possibly deprive some businesses of short-term gains. But we all need to make sacrifices for our country to develop, and that is the reality. Our sacrifices will eventually pay off. We seize this opportunity to make a clarion call on all well-meaning persons and groups – including the TUC, ICU, GNCCI, and GUTA – to support this worthy cause of reversing this benchmark discount policy in our national interest,” he added.
“We urge government to continue creating the favourable policy framework needed for industry to thrive and create prosperity,” Dr. Ayim-Darke concluded.