Professor Godfred Bokpin, an Economist and lecturer at the University of Ghana Business School, has expressed worry over the way the government is handling the private sector businesses, noting that such actions make it difficult for the private sector to compete under the African Continental Free Trade Area (AfCFTA).
According to the academician, the private sector is being crowded out from the benefits of the African Continental Free Trade Area. He explained that this is due to the unfavourable tax regime in the country.
Prof. Bokpin is of the view that the high cost of borrowing, coupled with some nuisance taxes is having a severe impact on Ghanaian businesses intending to trade favourably under the continental programme agreement, compared to their peers.
Prof.Bokpin noted that unless the current tax regime in the country is reviewed, Ghanaian businesses will struggle to compete under the pact. “If you look at our tax basket, it is heavily indirect based. All of that contributes to the high production cost of doing business”.
“If you put that together with electricity restrictions on the growth drivers of the economy, Ghanaian private sector has to borrow at a rate in excess of 35 per cent… With this, you can’t compete with other businesses in different countries.”
Professor Godfred Bokpin
The economist iterated that all these challenges are making it difficult for Ghanaian businesses to compete under AfCFTA.
“So you can see the fundamentals and can project how that can affect the Ghanaian private sector and the ability to maximise the participation of the AfCFTA. That’s the point that we are talking about. As it stands now, we don’t get the clear picture and direction that government wants to create the enabling environment that guarantees private sector leadership.”
Professor Godfred Bokpin
Meanwhile, the African Continental Free Trade Area (AfCFTA) is a novelty by the Africa Union to encourage intra-Africa trade. Phase one of its protocol was negotiated in the area of trade in goods; services; working groups and procedures for the settlement of disputes. AfCFTA is in line with the vision and targets of the Sustainable Development Goals (SDGs). Intra-African trade is 16 per cent whilst Africa’s share in global trade is two-point six per cent. This means Ghana’s share of intra-African trade and global trade is approximately 0.3 per cent and 0.04 per cent.
Assurance from the Government
The Government has on several platforms and fora assured the business community that AfCFTA is a game changer and can transform the country’s economy. However, the current setback in macroeconomic indicators, accompanied by a consistent spike in inflation and the rapid depreciation of the cedi, together with a heap load of taxes on businesses, is making life unbearable for businesses. This, and many factors make businesses question their ability to compete with other businesses in other countries. This sentiment was echoed by Prof. Bopkin.
However, the Government over the years has made significant strides aimed at supporting Ghanaian entrepreneurs to maximize fully the potential of AfCFTA. Among these is the establishment of Ghana Exim which has over the past three years assisted businesses in the Pharmaceutical, Agribusiness, and Poultry industry, among others.
The government has also embarked on a One District One Factory initiative to create jobs and add value to raw materials for local consumption and export to rake in more foreign exchange and correct the balance of payment challenges.
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