The Association of Ghana Industries is the largest gathering of industry in Ghana and alongside the Ghana National Chamber for Commerce and Industry is the loudest and most listened to voice of business under the overall umbrella of the Private Enterprise Federation. As the engine of Ghana’s productive sector – as different from commerce which adds to product price tags without adding to their actual value – AGI deserves to have a say in the formulation and implementation of public policy with regards to the running of the economy, even if it does not always have its way.
As is customary prior to and after both the presentation of the annual national budget and the mid-year budget review, AGI has made public its expectations for this year’s edition of the latter presentation.
AGI wants reviewed the wholesale reduction in benchmark values used for determining duties payable on imports since this makes locally made products less cost competitive. While we understand governments reason for this move, we also understand AGI’s worries; indeed, the more the local value added, the more uncompetitive the product as a result of the reduction. Surely this was not part of government’s intent and so reconsideration is in order.
The Association is also unhappy about the straight VAT and GET Fund levies imposed a year ago, because they effectively make imports more competitive against locally manufactured goods as well. AGI is right to assert that this burden is ultimately passed onto consumers much of the time and so this is yet another reason why government would do to review it even though it direly needs the extra revenue it generates.
The luxury vehicle tax is perhaps the most straight forward issue of all and government itself now realizes its mistake although it is loath to release the extra revenues it earns from the importation of high engine capacity work horses. All it has to do is distinguish between vehicles made for luxury and those made to serve as work horses.
The Fumigation Levy is equally simple. Indeed, since imports are required to be fumigated before being shipped to Ghana, we see this levy simply as a new “nuisance tax”, introduced to replace some of the ones the incumbent government so proudly removed on its assumption of office in 2017. So too the excise duty rate of 17.5 percent on bottled water.
But AGI’s views on the AfCFTA Agreement is less clear cut. What the Association wants in this regard encompasses virtually all its demands for public policy towards supporting industrialization. If these could not all be provided over the past 68 years of Ghana’s political independence, we fail to see how this can suddenly be provided in the 2019 mid-year budget review. AGI’s position on cedi depreciation is similarly over ambitious and over-reaching. While Ghana has not been fighting unsuccessfully to maintain cedi stability within a market regime for as long as it has been struggling unsuccessfully to industrialize, the lack of success since floating the cedi back in the mid-1980s shows just how difficult the task is, and why it cannot be achieved through policy measures to be introduced at the 2019 budget review.
The AGI’s position on government’s industrialization initiatives is quite correct though. Simply put, government is allowing too many social interventions – which conveniently are vote catchers – to crowd out crucial industrialization initiatives which could transform Ghana’s economy.
All this means that AGI will not have its way in everything it is asking for. But just having its say provides some invaluable policy pointers, both for the rest of this year, and for the medium to long term too.