Ofori-Atta affirms government decision to embark on import substitution
Finance Minister Ken Ofori-Atta has affirmed government’s position of eliminating imports of products which can be produced in the country, in order to address the long-term decline in value of the Ghanaian cedi and be self-sufficient.
The nation’s reliance on importing finished goods and exporting raw materials contributes to the ongoing shortage of domestic foreign currency supply and continual demand for foreign currencies. This is the cause of long-term decline in value of the Ghanaian cedi relative to significant trading currencies.
Speaking at a meeting with industry leaders from the Association of Ghana Industries (AGI), the minister said his ministry will do its part and work with all the relevant authorities, “especially with you, concerning the issue of eliminating imports of products that we can produce right here in Ghana”.
Stating some of the imported items that could be affected by the new government stance, the minister said: “Self-sufficiency and export of items such as rice, poultry, vegetable oil to fix pasture, fruit-juice, bottled water and ceramics is at this moment an urgent priority, and government is prepared to support our local industry players with this effort.
“Only when we achieve this feat can we guarantee a stable currency and secure a high level of predictability for citizens and the business community,” he stated.
Between 2017 and 2020, the country is reported to have spent as much as GH¢6.9billion on the importation of rice. Within the same period, the country has also imported some GH¢4billion of fish and another GH¢1.9billion of chicken and some GH¢487million of meat.
“I don’t know how we can continue to do this. You know, in effect, the poor cocoa farmer weeds and produces cocoa and we get some US$2billion from them – and then we use it to import these things and insist that we need benchmark value reduction. So, this is where we are. We must ask ourselves where our sovereignty lies,” the minister said.
Due to the decrease in benchmark prices during the last three years, government has lost close to GH¢9billion in tax revenue from the sale of imported goods.
Dr. Humphrey Ayim Darke, AGI President, expressed industrial concerns over a complete reversal of the benchmark policy, as the finance minister had hinted before passage of the 2022 budget.
“However, given the aforementioned context, one of our concerns is that this should apply to finished items rather than raw materials – which are our primary import for value addition.
In a format of intermediary costs or value addition, it’s very relevant for this policy issue to be taken into consideration; including zero-rated duty for industrial raw materials. This advocacy is on, and we fervently plead its implementation for the purposes of creating sustainable jobs, generating revenue for government, and charting the path of industrialisation,” the AGI President said.
Effective January 2022, the Ghana Revenue Authority (GRA) began implementing government’s policy directive on reversal of the reduction of values of imports on selected items, otherwise known as the ‘benchmark values’.
For general merchandise, the discount policy was changed from 50 percent to 30 percent, and for autos it was changed from 30 percent to 10 percent. In order to help stabilise the pricing of imported goods on the market over the last three years, government had to forego up to 40 percent of its anticipated revenue.