‘Support local industries ahead of trade treaty’
The Chief Executive Officer of Samba Foods, Mrs Leticia Osafo-Addo, has called on the government to draw up an intervention package to support local industries to able to take advantage of whatever opportunity that exists by signing the Economic Partnership Agreement (EPA), a trade pact with the European Union).
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Mrs Osafo-Addo, an executive member of the Association of Ghana Industries (AGI), signing a free trade agreement was not the problem, but preparing local industries to be ready to mount the stiff competition and take advantage of opportunity under the framework.
“At the moment, enterprises are so rudimental and lack everything to compete at the global level. So for me, it is important for the country to actually strengthen the small businesses to grow to take that advantage,” she said in an interview on the sidelines of the Graphic Business, Stanbic Bank Breakfast Meeting last Tuesday.
The meeting discussed the implications of the EPA on businesses in the country. Stanbic Bank was the headline sponsor of the series, and was supported by Busy and Graphic News App.
Private sector bodies such as the Association of Ghana Industries (AGI) have been calling for formalised support for small and medium scale enterprises (SMEs) in the country for so long.
Calls for support
The calls have not fallen on deaf ears, but action has been slow, thus leaving small businesses, which are supposed to be the engine of growth in the economy, at the mercy of the abrasive high cost of doing business.
This inaction has rendered businesses set up in the local environment face up mounting challenges such as high cost of capital, inadequate working capital, poor quality of goods, inability to employ skilled and qualified staff, etc which gang up to hinder the growth of the businesses.
But Mrs Osafo-Addo said failure on the part of the government to support local businesses to be competitive before such international trade treaties were signed would render the rationale and intention questionable.
“If they do not deal with the capacity challenges of small industries, it will mean that they are signing the agreement for other purposes and not actually to encourage the local industries,” she said.
AGI position on EPA
The AGI has been discussing the issue since the debate ensued about 12 years ago. It has members from various sectors of industries which see different impact of the agreement when signed. While some will benefit from access to quality machineries and export opportunities to the European Union market, others foresee their local market potential collapsing at the influx of goods from Europe when the deal becomes operational.
Samba Foods started as a micro business from her house in Tema, but has consistently developed an grown into a medium scale company now listed on the alternative market of the Ghana Stock Exchange.
The CEO of Samba Foods, therefore, believes such a transformational growth in a business was necessary in readying them to compete within the global marketplace.
Currently, Ghana exports to the EU under a trade agreement which allows Ghana to impose import duties on goods coming from the EU, but exports from Ghana are not subjected to the same measure of tariffs. The worldwide World Trade Organisation (WTO) rules frown on such non-reciprocal trade agreements.
A total of 46 per cent of Ghana’s exports go to the EU, eight per cent each to South Africa and China, with exports to ECOWAS, USA and India taking four per cent and three per cent respectively.
For imports, 23 per cent of Ghana’s total imports come from the EU; China 23 per cent; ECOWAS 20 per cent; USA six per cent; India five per cent and South Africa two per cent. Others constitute 21 per cent for imports and 25 per cent for exports.