General News of 2014-01-13

Ghana can become manufacturing powerhouse of West Africa - Dr. Bawumia

Dr. Mahamudu Bawumia, Vice-Presidential candidate of the New Patriotic Party in the 2012 presidential elections has stated that with the right policies aimed at growth and production, Ghana could become the manufacturing hub of West Africa.

Dr. Bawumia stated these while delivering an address at the NPP-USA Congress over the weekend in Charlotte, North Carolina.

Addressing the party faithful domiciled in the United States, Dr. Bawumia bemoaned the high import duties aimed at increasing revenue but not growth and production, and which eventually makes Ghana less competitive globally.

“In response to the economic difficulties, government has resorted to increasing taxes, including until recently, imposing taxes on condoms and cutlasses. These higher taxes have served to increase the cost of doing business in Ghana compared with neighboring countries. A Minister of State in response to complaints from the business community about import duties is reported to have said that if they are not happy, they can import through Togo or other countries! This type of approach to dealing with the business environment is counterproductive and demonstrates a lack of appreciation of the private sector. The fact is import duties in Ghana are too high and discourage production.

In the global competitive world that we find ourselves today, most countries that manufacture goods for export also import a significant proportion of its raw materials. These countries have come to understand that high import tariffs can increase their cost of production and make them uncompetitive globally and therefore to support higher production and exports, import tariffs are kept relatively low, he said.

Dr. Bawumia stated that the trend in the aforementioned countries was in sharp contrast to the situation in other countries like Ghana which had an average import tariff of 15%.

He said the rationale for high import duties in Ghana is primarily to raise revenue and not to support production. Adding that 22.5% of tax revenue in Ghana is from trade taxes as compared to 2.69% for Brazil, 4.44% for China, 3.96% for South Africa and 1.25% for the USA.

The former deputy BoG boss said government's over reliance on import duties for revenue only serves to increase the cost of doing business and discourage production saying; "the NPP’s view as reflected in our 2012 manifesto is that tariff policy should be guided by lowering the cost of living and increasing production and productivity".

He questioned why spare parts and other equipment used in production that are imported into the country because they are not manufactured in the country should attract any import duty. The removing of import duty on these goods he said would expand the productivity in places such as Suame Magazine and other mechanic facilities across the country as well as reduce the cost of maintaining and safety of vehicles.

According to Dr Bawumia, "Ghana can become a manufacturing powerhouse in the sub-region if we go this route and along with other supportive policies.”

Source: Kojo Smith
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