The news that the Ministry of Trade and Industry intends to promote a bill for Parliament to pass into law which will introduce deliberate policies aimed at increasing patronage of made in Ghana products is most welcome. Ghanaians love for imported goods and distrust of locally made goods is not only disheartening but is debilitating for the economy. While Ghanaians tend to squarely blame each successive government for the cedi’s depreciation, they refuse to accept that it is largely the result of their inordinate desire for imports which creates a trade deficit and this ultimately translates into the cedi falling against the various international trading currencies used to buy those imports.
To be sure,consumers are justified in part to argue that imported goods in general are more price competitive than their locally manufactured counterparts and generally are of better quality to.
The quality issue can only be solved if Ghanaian manufacturers make enough sales to afford research and development into quality improvements. But for this to happen, the local versions must at least be price competitive against their imported counterparts.
New legislation can force retail outlets to put locally made goods up on display prominently, but it cannot force consumers to buy them.
Neither can appeal to consumers patriotism, which up till now has been the main strategy employed by government in trying to get them to buy locally made goods.
Rather, the most feasible strategy is to provide fiscal incentives that can improve the price competitiveness of local products. The most obvious strategy in this regard is to lower the tax rates for local producers but on the firm agreement that those producers would pass on the benefits in the form of lower finalproduct prices.
Several options also exist outside the box. For instance, consumers could take part of the wages in special payment vouchers guaranteed by government and usable only on locally made goods. The strategy would be that an employee would enjoy tax rebates correlated to the value of made in Ghana goods he or she used in a month.
Ultimately however, what is needed the most is a heavy dose of economic literacy for the citizenry, who need to be taught that buying imported goods rather than their locally manufactured versions is actually more expensive. Apart from the effect of the trade deficit on the cedi’s exchange rate and consequently on inflation,they also need to be schooled in the fact that this means higher petroleum prices (translate as higher transport fares and cost of energy for cooking) as well as higher electricity and water tariffs too.
Add to all these the fact that patronage of imported rather than locally made goods creates jobs abroad rather than here in Ghana, which is why most Ghanaians who are fortunate enough to be earning an income have to use a substantial part of to help out less fortunate friends and family members.
If Ghanaians could be taught the math properly, they would realize that although the imported version of a product may seemingly be marginally cheaper than the locally produced version, when all the negative consequences are factored in the locally made products are actually much cheaper.
In countries such as India the citizenry has come to understand all this and the results for the economy and those who live in it are there for all to see.