The Association of Ghana Industries (AGI) has urged the government of Ghana to abolish duties on imported raw materials and the benchmark discount values to enhance local production to shore up the local Cedi.
According to the President of AGI, Dr Humphrey Ayim-Darke, adhering to the calls would help address the depreciation of the Cedi and enhance the industrialization of the government.
Dr. Humphrey Ayim-Darke noted that the five per cent tax imposed on imported raw materials and the benchmark discount values are disincentive to local production and is encouraging the importation of finished goods into the country.
The AGI President, on what should be done to tame the rapid depreciation of the cedi, suggested that the government in the short-term should change the pre-production tax to post production tax and reverse the benchmark discount values. According to the AGI President, such a move would be beneficial to the country and help the government to raise more tax revenue.
“The government should change the pre-production tax to post production tax, revert the benchmark discount values and you will see the effect in six months because all the pressure on the cedi, to the large extent, will be reversed.”Dr. Humphrey Ayim-Darke
Increase in Freight Charges and Disruptions in Global Supply Chains
Dr Ayim-Darke stated that, in spite of the increase in freight charges and disruptions in global supply chains occasioned by COVID-19 pandemic and Russia-Ukraine war, there is an increase in importation of finished products into the country, exerting pressure on the cedi.
“By virtue of these two policies, a number of industries that have the capacity to do local production, as a result of the high cost of production, are importing finished products because it t is cheaper to do so.”Dr. Humphrey Ayim-Darke
Dr Ayim-Darke explained that the depreciation of the cedi is a cyclical issue that has been happening year-in-year-out and would require both short-term and long-term deliberate measures to address the challenge, including changing the structure of the economy.
Dr. Ayim-Darke added that in the long-term, the government should support the processing of primary products into secondary products through tax exemptions for local producers.
“With the current rate of depreciation, and with other international incidents that are affecting the entire economy that we find ourselves going to the bottom, we need to take hard decisions in structural transformation.”Dr. Humphrey Ayim-Darke
The AGI President asserted that the One-District, One-Factory initiative and move by the government to build the integrated aluminium industry is laudable and should be replicated in the other sectors of the economy.
Dr Ayim-Darke indicated that the members of AGI are ready to increase local production if the necessary environment was created for them to do so.
The AGI President also called on local industries to take advantage of AfCFTA through funding and market.