Interview: Seth Twum-Akwaboah
What do you see as the single biggest obstacle facing manufacturers in Ghana?
SETH TWUM-AKWABOAH: The greatest obstacle to making businesses more competitive is the cost of doing business. Reducing costs increases market share as well as our domestic and global competitiveness. Certainly, a lot more companies in Ghana are competitive within ECOWAS than globally, but there is room for growth. One major impediment for all manufacturers and industries in Ghana currently is the high cost of electricity. Companies operating in the industrial zone or free trade zones (FTZs) no longer enjoy concessionary electricity tariffs and this remains an issue. Individual taxes may not be high, but cumulatively the taxes on the cost of production are huge. The Income Tax Act 2015 (Act 896) and the Energy Sector Levies Act 2015 (Act 899) have each been introduced at different points in 2016, causing undue burdens on industries that are already tax-compliant and that demonstrate good corporate governance.
The AGI is undertaking a comprehensive tax study to determine which taxes have outlived their use and those which require reform. At the end of 2015, for example, the Ministry of Finance decided that the 5% National Fiscal Stabilisation Levy and 1-2% Special Import Levy be extended to 2017. Specific taxes may be necessary, but taken as a whole, they remain damaging. Previously, the corporate tax was 32.5%. Over the last couple of years, through advocacy, it was reduced to 30%, then 27% and is currently at 25%. The government did not lose tax revenue, rather as this tax fell foreign direct investment increased.
How are the manufacturing and industry sectors positioned for 2017?
TWUM-AKWABOAH: The stability experienced in mid-2016 should encourage manufacturers and industries to take advantage of current market conditions. With this development companies perceive 2017 with more optimism. The support provided by the IMF will ensure Ghana remains stable beyond 2017, but manufacturing’s contribution to GDP will only increase over time and not immediately, despite the immense potential it possesses. If overall GDP growth records 5% in 2017 and increases in subsequent years, as projected, and if an expanding middle class demands more products, this bodes well for businesses. Additionally, the ECOWAS community is working more closely and is bolstered by the common external tariff. All of these factors will ensure the country’s progress, but interest rates and inflation must decrease.
What effects do you expect from the National Export Development Programme 2016-20?
TWUM-AKWABOAH: The lesson learned from 2014 clearly indicates that the country cannot be wholly reliant on imports, because of the effect this had on the currency and economy. There needs to be more emphasis placed on high-quality “Made in Ghana” products from small and medium-sized enterprises and the informal sector. Basic foodstuffs are also imported, and this is inexcusable. Discussions have centred around not only decreasing imports, but also developing the country’s traditional exports, such as cocoa, gold, oil and timber. Non-traditional exports, where the country may have a competitive advantage, must also be increased moving forward.
As a product of the export situation, foreign exchange is badly needed so that the currency stabilises. Direct and indirect job creation has occurred because of the increased activity at the FTZs and Tema and Takoradi ports. The supply chain remains important as many specific exports are linked to other sectors, thus creating a much-needed knock-on effect. Being both present and competitive in the global export market requires that certain international standards are met, thus improving quality.
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