Government to Ban Imports?

A RECIPE FOR DISASTER

In the wake of the free fall of the Ghana Cedi, many solutions have been offered from various quarters but one suggestion that is sending shivers down the spines of all in Ghana is the suggestion that Government is considering placing an embargo on certain imports as part of measures to curb the country’s swelling trade deficit.

President John Mahama told the BBC last month that his government is targeting a reduction of US$1billion imports of food and cited rice, sugar, tomatoes, cooking oil, fish and poultry products as some of the food imports that have to be looked at.

Also at a meeting in Accra with business leaders last week, the Minister for Trade and Industry Harruna Iddirisu reiterated the point and said categorically that Government will ban the importation into the country some goods and that the institutional framework is being put in place to effect the ban.

As was expected the business leaders immediately protested and the meeting deteriorated into a rancor and the Minister had to hold the rest of the meeting in camera away from the prying eyes of the media. The fact is, INTENTIONS TO BAN IMPORTS ARE NOT TO BE ANNOUNCED. YOU WORK AT IT, MAKING SURE THAT ALL SUBSITUTES ARE IN PLACE AND THAT THE PEOPLE ARE READY TO GO WITH YOU.

The announcement of an intention to ban some imports affects the market adversely and the economy suffers even the more. The situation is made worse when the country is not ready to do away with the imports at the material time the announcement is made.

President Mahama told the BBC that his government is aiming at shoring up Ghana’s rice production capacity and eventually becoming a net exporter rather than an importer. This clearly is a long term project that requires a lengthy preparation.

First, suitable lands for large scale production will have to be identified and procured. Investors willing to invest in rice production in the country will also have to be identified. Then credit facilities will have to be readied and made available. There is also the question of technology for production and processing to take care of the quality so that the local substitutes can compete with what consumers are already used to.

So then, even if the target was only rice, it will not be farfetched to say that the gestation period for the President’s laudable project to shore up production so as to reduce imports will take at least between five to ten years in the minimum.

The total annual consumption of rice in Ghana is estimated at 600,000 metric tons. Of this quantity local production is responsible for only 150,000 metric tons. Meaning that 450,000 metric tons are imported and so if Ghana wants to ban the importation of rice then she must produce those 450,000 metric tons annually, consistently, at the same quality and at competitive prices.

Similarly, Ghana’s total annual consumption of poultry products is estimated at 160,000 metric tons. Only 16,000 of this volume are produced locally and the rest is imported.

The sad thing is that the President’s concern is not only in the area of rice imports but also sugar, tomatoes, cooking oil, fish and poultry products and many more. For each of these products, long preparations will have to be made. There is the need to know the total annual consumption for each of these products, how many of each of these products is produced locally and therefore what is the gap that imports make up for.

 

For example, how long will it take for Ghana to be self-sufficient in the area of sugar, fish and poultry products, and all the other food imports that Ghana relies on so heavily? So therefore, in the absence of these preparations, announcing Ghana’s intention to ban imports and even present it as an immediate action to help with soaring up the Cedi is either a deception or a display of the lack of understanding of the issues.

To announce a ban on any kind of imports without sufficient preparation to provide acceptable substitutes will not only take Ghana back to the “KALABULE” days but also spell disaster for the country.

The move by the Ministry came after the Bank of Ghana stepped in early this month with short-term policies to halt the cedi’s steady decline, and urged the government to act to limit the import of consumption goods that have local substitutes and to diversify the country’s exports.

As part of long term measures toward reducing pressure on the local currency, President Mahama in the BBC interview said his government was targeting a reduction in the US$1b imports of food by developing the local capacity to produce more of them.

“We must look at the basic structure of our economy which is heavily import dependent and also dependent on the export of a narrow band of primary products. Until we change the structure of our economy in order to address the trade imbalance that we have between exports and imports, we’ll continue to have the pressure on the economy”, he stressed.

At the crucial meeting which saw in attendance the Minister of Finance, Seth Terkper, Deputy BoG Governor Millison Narh, AGI representatives, Trade and Industry Minister Haruna Iddrisu declared that, “We will ban the importation into the country of a number of products. I just want the institutional framework to be put in place, which is the establishment of the International Trade Commission to propose anti-dumping and countervailing measures,” Mr. Iddrisu further disclosed that government will secure a credit facility for rice farmers to boost production and curtail imports, which measure around $400million annually.

Source: The Scandal

One comment

  1. Every parliamentarian must be given a personal secretary and a bodyguard. Parliamentarians must be effective. Parliamentarians must represent the views of their constituents and not their own will. They must provide feedback to their contituents, especially the chiefs and opinion leaders. They must not forget that they are there foremost as representatives of their constituents. They have the power to create a bill, amend a bill or alter the national budget. A bill or a budget can only be passed only if parliament and the President come to a consensus but parliamentarians have not exercised that power.

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