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AGI Press Releases

ADMINISTRATOR

The Annual General Meeting (AGM) is the highest policy making body whilst the National Council acts as the Board governing the affairs of the Association in between AGMs.

The National Council comprises six Elected Members, the Immediate Past President, Regional Branch Chairmen, Sector Chairmen and Representatives of Associate Members. The Association is headed by the President, assisted by two Vice Presidents and a National Treasurer.

The Directorate is headed by an Executive Director, who is the Chief Executive Officer. It has three Divisions; Policy & Research, Business Services and Finance & Administration.

All core activities are funded through membership contributions and grants from private sponsors. Special programmes are funded separately by development partners. This ensures sustainability and secures AGI’s independence as the voice of the Ghanaian industries.

08 Jun, 2021

AGI CALLS FOR REVIEW OF BENCHMARK VALUE REDUCTION POLICY

The Association of Ghana Industries (AGI) is deeply concerned over policies and initiatives that do not support our industrialization agenda and domestic revenue mobilization, especially in the wake of the Continental Free Trade.

Guided by the overarching framework of Ghana’s industrial transformation agenda, 1D1F initiatives, Planting for Food and Jobs, and Ghana’s export development agenda, the AGI is calling for a review of the 50% benchmark value reduction policy to align with the country’s industrialization drive. Indeed, the covid-19 pandemic has taught us lessons as a country.

Following the disruption of global supply chains during the pandemic, we all saw the need to quickly develop our local supply chains. The policy in its current form runs counter to Government’s own Industrial initiatives and has dire consequences for sustainable job creation prospects and the stability of our local currency.

Government declared a 50% reduction on import values at our ports in 2019 to make trade through our ports more attractive and enhance revenue mobilization. These expectations were not met barely two years into the implementation.

Instead of the universal application of the policy to all imports, AGI believes imports which come to compete with locally manufactured products be exempted from the policy. It is important for Government to cushion local products for which there is local production capacity. Secondly, we urge Government to maintain the benchmark policy for manufacturers for their raw material imports to help grow the real economy. We support economic cooperation and multi-lateral trade, the reason why Ghana has signed a number of trade agreements. But we also note that signing of trade agreements such as AfCFTA and the interim Economic Partnership Agreement (iEPA), alone will not guarantee the gains we desire. These agreements also come with competition emanating from their duty- free quota-free clauses. With the advent of these trade agreements, it becomes more crucial to support Industry with the right policies in order to scale up local production capacity.

The impact of this policy includes the following;

1. Unfair competition-Local manufacturing is collapsing with the influx of finished imports equally enjoying 50% reduction in their benchmark value. Some of these imports to Ghana already enjoy significant export rebates from their countries of origin. Locally manufactured products including those for which Ghana already has local production capacity and comparative advantage have been under serious threat from imports.

2. Revenue leakages -The situation is further worsened if importers of finished goods are not registered and captured under the VAT scheme and end therefore up selling their products in our markets at closeout without charging any front to end VAT/levies.

3. Threat to participation in AfCFTA-The influx of cheaper imports is making the local production highly uncompetitive and discourage investment in the affected sectors. Citing the example of the Palm Oil industry, the reduction in benchmark value of imported refined vegetable cooking oil will discourage potential investors for the oil palm sector. Ghana cannot become a net exporter of crude & refined palm oil products to further increase its foreign income reserves. About $100m will be needed to import Crude Palm Oil annually if this policy persists.

4. Return on investments- A number of local rice brands, Worawora , Champion long grain rice etc, have been under pressure from imports. For example, Avnash Industries 500MT of paddy per day rice mill located in near northern Ghana was out of operation for about nine months, on account of influx of rice imports coming to compete unfairly with local rice production. Government commissioned Savelugu and Sefwi Akontombra rice factories in August and September this year, respectively. These two recent investments totaling about Ghs14 million risk becoming redundant if the such large rice imports persist.

5. Job creation-Manufacturers are finding it difficult to retain their employees, with such influx of imports at cheap prices displacing their products on the market. The benchmark reduction policy in its current foam could worsen the unemployment situation. The future of our country and our youth should guide us in our quest to promote policies that spur economic growth, industrialization and sustainable job creation.

We wish to emphasize that AGI is not calling for a total withdrawal of the policy but rather a selective application of the policy to serve a better purpose for the entire Ghanaian economy. Therefore, the impact assessment and review of the benchmark policy must be done, taking cognizance of the overarching framework of an industrial transformation agenda and fair- trade practices.

Signed: Seth Twum-Akwaboah
Chief Executive Officer.

For and on behalf of Association of Ghana Industries.
If you need further information, please call 0302 251266

11 Nov, 2021