The Association of Ghana Industries (AGI) has advocated the abolition of import tax on raw materials and the benchmark discount values to enhance local production to shore up the local Cedi.
That the AGI said would help address the depreciation of the Cedi and enhance
the industrialization of the government.
The President of AGI, Dr Humphrey Ayim-Darke, who stated this in an interview
with the Ghanaian Times on the sidelines of the launch of the African
Continental Free Trade Area (AfCFTA) Hub, said the five-per cent tax imposed on
imported raw materials and the benchmark discount values were disincentive to
local production and was encouraging the importation of finished goods into the
country.
The AfCFTAHub was launched by the Ministry of Communication and Digitalisation
in partnership with Ecobank Ghana and MTN.
The Ghanaian Times sought to find out from the AGI what could be done to stem
the rapid depreciation of the cedi, which has slumped more than 25 per cent
from year to date against its international peers.
Dr Ayim-Darke suggested that the government in the short term should change the
pre-production tax to post-production tax and reverse the benchmark discount
values.
According to the AGI President said such a move would be beneficial to the country
and help the government to raise more tax revenue.
“The government should change the pre-production tax to post-production tax,
revert the benchmark discount values and you will see the effect in six months
because all the pressure on the cedi, to that large extent, will be reversed,”
DrAyim-Darke said.
According to him, in spite of the increase in freight charges and disruptions
in global supply chains occasioned by COVID-pandemic and Russia-Ukraine war,
there was increase in importation of finished products into the country,
exerting pressure on the cedi.
“By virtue of these two policies, a number of industries that have the capacity
to do local production, as a result of the high cost of production, are
importing finished products because it t is cheaper to do so,” DrAyim-Darke
stressed.
He said the depreciation of the cedi was a cyclical issue that had been
happening year-in-year-out and would require both short-term and long-term
deliberate measures to address the challenge, including changing the structure
of the economy.
Dr Ayim-Darke explained that in the long-term, the government should support
the processing of primary products into secondary products through tax
exemptions for local producers.
“With the current rate of depreciation, and with other international incidents
that are affecting the entire economy that we find ourselves going to the
bottom, we need to take hard decisions in structural transformation,” the AGI
President stressed.
He said the One-District, One-Factory initiative and move by the government to
build the integrated aluminium industry was laudable and should be replicated
in the other sectors of the economy.
Dr Ayim-Darke said the members of AGI were ready to increase local production
if the necessary environment was created for them to do so.
Touching on the AfCFTA Hub launch, he said, it was a good initiative and
commended the Ministry of Communication Digitalisation and AfCFTA Secretariat
for the programme.
The AGI President said local industries could take advantage of AfCFTA through
funding and market.
Source: ghanaiantimes.com.gh