Trade leaders describe move to withdraw forex support on selected imports as rushed

Three trade leaders including the president of the Ghana Union of Traders Association (GUTA), Dr. Joseph Obeng; the West African Regional Director of CUTS International, Mr. Appiah Kusi-; and Executive Director of the EXIM Frozen Foods Association-Ghana, Michael Obiri-Agyei, have described the central bank’s current policy as a rushed one.

To them, they disagree with the new policy indicating the Bank of Ghana’s withdrawal of forex support for the importation for selected products identified as non-critical.

The central bank will no longer provide forex support for the import of rice, poultry, vegetable oils, toothpicks, pasta, fruit-juice, bottled water, ceramic tiles and a few others.

This policy has been viewed as one of the strategies government is taking as part of measures to fight cedi-depreciation, following President Nana Akufo-Addo’s address to the general public on the nation’s economic crisis.

Touching on the subject on the Eye on Port programme, these trade leaders acknowledged the wisdom behind the policy; however, it lacks enough stakeholder consultation and an effective contingency plan.

“I believe as a country we cannot forever import everything we need; however, if you want to stop the dependence on imports, you need to have the relevant capacity to produce to meet local demand and export. As it stands now, our total demand doesn’t match our local capacity to produce. There is a deficit,” Mr. Appiah Kusi Adomako opined.

He explained that the withdrawal of forex support can lead to a shortage of food, because without forex support importers will be unable to bring in essential food products – and Ghana is not yet self-sufficient when it comes to feeding all its people.

“Already, the cedi has been battered by the raging storms of depreciation and the economy is staggered by inflation. So if we allow this BoG measure to stick, we are going to create more problems. They need to look at the welfare implications on households; commodities are expensive and people don’t earn nearly enough. Things will get worse when there is scarcity,” Mr. Adomako added.

He said while such a policy will bring long-term benefits such as strengthening the cedi, create jobs and grow local industries, without an effective strategy in place this policy could worsen the present economic crisis.

The West African Regional Director of CUTS International said the Bank of Ghana will have to liaise with other key institutions – such as the Ministry of Food and Agriculture, the Statistical Services – in the decision-making process for such a drastic policy.

He explained that such an approach will have to be data-driven and all-encompassing to ascertain Ghana’s readiness to implement such a policy.

Similarly, he said government should come up with an effective and timely contingency plan that will make up for the production deficit.

“For example when you come to the rice production sector, government can look at providing subsidised loans to go into massive rice production for a period – and ban rice importation after. That is a policy backed by action. As of now, none of that has been done.”

The Executive Director of the EXIM Frozen Foods Association, Ghana, Michael Obiri-Agyei, said this is an example of a policy intended for good but not carefully thought-through.

He said government and the Bank of Ghana did not hold extensive consultations with stakeholders to help them appreciate the wisdom behind the directive, and also help them plan ahead.

“This is not the solution that we need right now. Take somebody who has imported frozen goods. Such a person has already engaged his suppliers to export to him. Prior to engaging the supplier, he was relying on the forex with assistance from the Bank of Ghana to pay the supplier. How do you expect him to survive? When you do these things, you cripple people doing legitimate business in your country. You make people unable to thrive in the business they have chosen to do. When you restrict them from accessing forex, you might as well tell them to close their businesses,” he lamented.

According to panellists, the directive will cause traders to engage in desperate methods including smuggling and patronising the black market.

“You do not expect that when you restrict people from gaining access to forex, you will solve the problem. What you will do is open us up to a black market that cannot be controlled. Others may also decide to import through Togo and smuggle goods into the system. The FDA is then unable to regulate what we consume; government is unable to collect taxes,” Mr. Obiri-Agyei articulated.

“The moment Bank of Ghana announced this directive, we knew it was the beginning of the greater challenges that we are going to have; because people might begin hoarding, demand will rise and pressure will be placed on these imported goods – and prices will hike,” added GUTA President Dr. Obeng.

Like his fellow panellists, he expressed admiration for the nation’s aspirations to self-sufficiency; but he said this cannot be done without proper preparation.

He said, for a long time, traders were blamed for the cedi-depreciation due to excessive importation.

Dr. Obeng emphasised that Ghanaian traders are open to sourcing goods locally, but only if Ghana can produce at the same capacity, standard quality and at competitive prices.

He said he believes government should take a measured approach in trying to discontinue the importation of these commodities.

“We have always been of the opinion that local production should be promoted side by side with importation,” he expressed.