AGI urges government to hedge oil prices

Accra, Nov. 28, GNA - The Association of Ghana Industries has asked government to consider adopting the strategy of hedging to save the country from future oil price hikes. Hedging techniques are used to reduce the exposure to various risks, especially price volatilities on the commodities market. Speaking at the 48th Annual General Meeting of the Association in Accra, Mr Tony Oteng-Gyasi, President of the Association, said the current low oil price offered a good time for government to look at oil futures and hedging.

At the height of the recent oil price increases, there was talk about hedging to save the country from rising crude oil prices. "This is the appropriate time to use such strategies," Mr Oteng-Gyasi told members at the meeting.

Touching on the oil industry, Mr Oteng-Gyasi reiterated the need to develop a strategy to ensure full benefit of the oil discovery to Ghanaians and encouraged AGI members to take full advantage of the opportunities coming out of the discovery. He called on government and parliament to ensure early adoption of laws and regulations which would favour local companies. Mr Oteng-Gyasi said industries in the country have not realised their potential because of unfair competition from foreign finished products. "The active players in world trade negotiations have managed to negotiate a strategy which will keep countries like Ghana as perpetual markets for manufacturers in other countries," he said. Citing a recent study by the Association in three sectors - food processing, wood processing and textiles and garments - Mr Oteng-Gyasi said the critical finding was that about 70 per cent of products from these sectors were being imported. Other findings are high domestic resource cost, low effective protection rates and poor marketing support. "The study gives food for thought and calls for dramatic, pragmatic and concerted effort to change the paradigm of the dwindling fortunes of the manufacturing sector," he said. Mr Oteng-Gyasi said investment in industry by both local and foreign investors was critical if industrial development had to move to the level expected. The AGM was held on the theme: "Creating African Industrial Giants: Charting a Structured Path for the Growth of SMEs in Ghana." 28 Nov. 08