The recent appreciation of Ghana’s local currency, the cedi, has sparked significant discussions within the business community, particularly concerning its impact on imports and local industries. While the strengthening of the cedi against major trading currencies—over 40% against the US dollar, 31% against the British pound, and 24% against the Euro—signals improved macroeconomic stability, falling inflation, and robust external reserves, it also presents challenges that demand immediate attention from regulatory authorities.
One of the primary concerns raised by the Association of Ghana Industries (AGI) is the influx of illicit imports that bypass official channels. The appreciation of the cedi has made imports relatively cheaper, creating a fertile ground for unscrupulous activities that undermine legitimate businesses and threaten local industries. Speaking at a Special Customer Seminar on the cedi’s appreciation hosted by Prudential Bank, AGI Chief Executive Officer Seth Twum Akwaboah emphasized the need for robust enforcement mechanisms to address these challenges.
The Cost Dynamics of Illicit Imports
Mr. Akwaboah highlighted a troubling trend where imported goods arrive in Ghana at prices that appear suspiciously low. He pointed out that by examining international market prices for raw materials like copper and plastics used in manufacturing products such as cables, one can estimate a reasonable cost structure. However, the prices at which some goods land in Ghana often defy logic, raising questions about whether proper duties were paid, accurate volumes declared, and values reported.
This situation creates an uneven playing field for local manufacturers who adhere to regulatory requirements, pay appropriate taxes, and operate within the confines of the law. When illicit imports flood the market at artificially low prices, they not only erode the competitiveness of local businesses but also jeopardize jobs within the industrial sector.
The Role of Regulatory Agencies
In light of these developments, Mr. Akwaboah issued a clarion call to regulatory agencies, particularly the Ghana Revenue Authority (GRA), to intensify their enforcement efforts. He underscored the critical role these agencies play in safeguarding the integrity of Ghana’s economy and ensuring fair competition within the market.
“Therefore, in a situation where there is a higher tendency to maneuver and it is affecting industries—and we are going to lose jobs—then the regulatory agencies have a major role to play. GRA has a major role to play,” he stated.
Enhanced scrutiny at entry points, rigorous customs inspections, and stringent penalties for non-compliance are essential measures to curb illicit imports. By plugging loopholes in import processes and ensuring transparency in trade activities, regulators can help protect local industries from unfair competition.
Balancing Imports and Industrial Growth
It is important to note that AGI does not oppose imports outright. Imports are an integral part of Ghana’s economy, facilitating access to goods that may not be produced locally and contributing to consumer choice. However, these imports must be routed through legitimate channels to ensure compliance with tax laws and trade regulations.
The appreciation of the cedi presents an opportunity for Ghana to leverage its improved economic standing to attract quality imports while simultaneously fostering industrial growth. Striking this balance requires collaboration between government agencies, industry stakeholders, and financial institutions.
Conclusion
As Ghana navigates this period of currency appreciation and economic stabilization, it is imperative for regulatory bodies to step up enforcement against illicit imports. The integrity of local industries and the livelihoods of thousands of workers depend on decisive action to address these challenges.
The Association of Ghana Industries has sounded an alarm that cannot be ignored. It is now up to the Ghana Revenue Authority and other relevant agencies to rise to the occasion and ensure that Ghana’s economic gains translate into sustainable growth for both imports and local production. Only through vigilant enforcement and fair trade practices can Ghana truly harness the benefits of its strengthened currency while safeguarding its industrial sector.
-Citinewsroom
Curated by Tetteh Belinda | GhanaCrimes
