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 industrialisation 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.
BY KINGSLEY ASARE