Reboot industry — AGI seeks fresh start in 2023 Budget
The Association of Ghana Industries (AGI) has proposed a raft of measures to be factored into the 2023 budget in a bid to create the right framework and environment for local industries to contribute fully to the industrial transformation agenda of the country.
These include the total reversal of the benchmark discount values policy; review of duty exemptions on imported raw materials; and lower cost of electricity in favour of industry.
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It also wants laws to govern the investment of pension funds in the country; a local content policy review; and the introduction of an impact assessment mechanism that would assess all government programmes and policies rolled out in the last couple of years.
The AGI maintained that the proposals, when considered, would stir up the productive sectors of the economy particularly industry, which is a major engine of growth.
The President of AGI, Dr Humphrey Ayim-Darke, made the call in an exclusive interview with the Graphic Business on the sidelines of the just ended Graphic Business/Stanbic Bank Breakfast Meeting held at the
Labadi Beach Hotel in Accra on August 10.
Benchmark values
Dr Ayim-Drake said a total reversal of the benchmark discount value policy which provides a discount of 30 per cent on some selected imported products was necessary to revive the industrial sector, make it more vibrant, and help stabilise the local currency.
The benchmark value discount policy was introduced in 2019 by the government in an attempt to make the country’s ports more attractive in the sub region. The policy initially provided a discount of 50 per cent on the value of the importation of some selected goods and 30 per cent discount on the importation of vehicles.
But after months of agitation and weeks of consultations between the government and stakeholders, the policy was revised in February 2022 and the discount was reduced to 30 per cent for some selected goods and 10 per cent for vehicles.
However, ahead of the 2023 budget preparations and presentation in November, the AGI is calling for the full reversal of the policy with the strong belief that it will help to promote the country’s industrialisation.
Dr Ayim-Drake said the AGI was looking forward to seeing a budget that would provide a detailed plan on how to stir up the productive sectors of the economy.
“For you to do that, one big policy that we believe must be tackled is the benchmark discount value. We must have a total and full reversal of this policy.
Duty exemptions
With regard to duty exemptions, he said there was the need for the government to ensure that there were exemptions on industrial raw materials imported into the country.
“We also seek further import duty exemptions on industrial raw materials because it is killer to our business because of its impact on the cost of production,” he said.
Electricity tariff
Over the years, there has been calls on the government to ensure that the electricity charges for the industrial sector are made cheaper.
This is also one of the calls of industry players who believe that such a move will impact on their cost of production and improve their bottomline.
When heeded, they claimed that industry would be able to produce at a cheaper cost, expand to absorb more unemployed people and pay more taxes in the long run.
Dr Ayim-Darke said “we pray that the electricity tariff will be bias towards industry,” he stated.
These, he said, would help reinvigorate the productive sectors to aid government reverse the cyclical issue on the exchange rate and budget deficit.
Use of pension funds
Mr Ayim-Darke also reemphasised calls for a relook at the laws governing the investment of pension funds in the country.
“There are a lot of pension funds sitting down seeking investments but the law gives a limitation on the investments of pension funds.”
“We should reconsider that law and also the cliché that government is a risk free enterprise and, therefore... investors put their money is today being tested by the rating agencies. Downgrading can put a country at risk and once you do not develop a local economy and a local content that guarantee the longevity of various sectors and make them robust, you will find yourself wanting because the productive sectors will be weak,” he explained.
He said the government should, therefore, deliberately look at local content in some strategic sectors and allow the pension funds to go into that sector and expand.
“The pension funds will give them time to develop their prepositions,” he stated.
Impact assessment
The AGI President also stressed the need to introduce an impact assessment mechanism that would assess all government programmes and policies rolled out in the last couple of years.
He believes this would help in gathering some data that would guide and improve the productive sectors of the economy.
“The policies that have been rolled out from the start must have clear monitoring and evaluation guidelines to help perfect it. Let’s get good feedback and perfect it so that we can attain the goals of the policies,” he stated.
Negotiations with IMF
Mr Ayim-Darke said the government in its negotiations with the International Monetary Fund (IMF) must be strategic to tilt aid towards the development of the agricultural value chain and other sectors that would help transform the economy.
He said the programme that would be agreed under the IMF deal must be one that would ensure that the country does not return to the funds again in the near future.
“Structural transformation takes time but once we factor it in the IMF negotiations, we can start now, three years from now, we will be okay and not return to the IMF,” he stated.