Business News of 2014-01-21

Economy too liberalised—AGI

Newly sworn-in president of the Association of Ghana Industries (AGI), James Asare-Adjei, has asked government to reassess its trade liberalisation policy which has led to the influx of all manner of cheap foreign goods into the country at the expense of local ones.
“The Association of Ghana Industries recommends to government the introduction of countervailing measures to regulate such imports, while still promoting international trade,” Mr. Asare-Adjei said at his induction into office in Accra.
“The government could adopt a targetted tax policy whereby imported raw materials, or products which already exist locally, are given discriminated tax levels. The AGI calls on the Tariff Advisory Board to be at the forefront of the situation,” he added.
Various local industries in the country have been pushed to the margins by the influx of often cheap foreign goods.
The local textiles industry is nearing collapse as its designs are pirated and printed cheaply in China and sold far cheaper in Ghana.
The local furniture industry is equally reeling under the weight of imported furniture as major local manufacturers have been forced out of production, with some of them turning to imports.
The latest industry under siege is the cement industry, as cheaper-selling Chinese cement has entered the market. “We think that if the government offers some level of protection to fragile industries, it is really going to help the economy. We must be able to grow so that we can compete with global giants. You cannot do that when you ‘over-open’, with the influx of almost everything into the economy,” Mr. Asare-Adjei told the B&FT.
Government appears to be in a fix: on the one hand it wants to grow local industries, and on the other it is careful not to incur the wrath of those who regulate global trade mostly for the benefit of their giant industries.
Haruna Iddrisu, Trade and Industry Minister, noted recently that Ghana is a liberalised economy and that government will not impose a ban on rice importation.
On the issue of cement, the Minister told the B&FT last week that: “My attention has been drawn by the Tariff Advisory Board to the legitimate concern about cement being imported into Ghana cheaper than what is produced locally. We will be able to deal with it when we put the institutional structures and mechanism in place. Only yesterday, I asked the Tariff Advisory Board to give me an opinion as to what consequential action government can take on the matter.”
Local manufacturers, who bear the brunt of the influx of cheap imports, have often argued that the rates at which they borrow are far higher than what their competitors from abroad get.
They have also complained severally about the lack of access to credit, a situation that has pushed the AGI to consider setting up a bank to support small-scale businesses.
“You will agree with me that if we are running interest rates between 30 percent and 35 percent, we cannot compete with businesses which are attracting interest rates of between 1 percent and 5 percent in other economies...Yes, we feel frustrated; the cost and availability of credit have been a big headache for us, and for that matter industries are not growing,” the new AGI president said.
Source: B&FT
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