Encouraging competition in AfCFTA: Govt waives import duties

The government has waived import duties on imported equipment, machines and raw materials for local manufacturing companies to enable them to become competitive in the global marketplace.

Since 2017, the government has also reduced some taxes, and in some cases completely removed them, provided some critical infrastructure and simplified some trade procedures to boost local production.

The measures are part of a fiscal incentive framework under the Industrial Transformation Programme to empower the private sector to fully harness market opportunities such as the African Continental Free Trade Area (AfCFTA).

The Minister of Trade and Industry, Mr Alan Kyerematen, disclosed this in a keynote address delivered on his behalf at the Graphic Business/Stanbic Bank Breakfast Meeting in Accra Tuesday [March 30, 2021].

The meeting was held on the theme: “Leveraging AfCFTA: The critical success factors”.

Fiscal support

Mr Kyerematen said although the AfCFTA created a market area of 1.3 billion people, with a combined productivity value of $3.4 trillion, the benefits would not drop automatically.

In order to harness the benefits of AfCFTA, he said, the Ghanaian private sector required fiscal incentives in the areas of taxation to boost their competitiveness.

“It is in view of this that the government has, since 2017, removed or reduced a number of taxes,” he said, adding that in consultation with the private sector, the ministry would soon develop a fiscal incentive framework for the private sector.

Access to finance

The minister noted that access to financing for exports and the high cost of credit in the country were generally a constraint to export development.

Again, the government had, since 2017, implemented a number of interventions to support the business community with improved access to finance, as well as reduced cost of credit, he said.

“These include the financial stimulus package for local industries which is being implemented with the support of participating financial institutions, the banking sector reforms which have led to improved liquidity in the banking sector, a proposal to establish a local credit rating agency to assist firms to access capital and the Ghana Stock Exchange market initiatives to help attract capital for Ghanaian businesses,” he said.

Mr Kyerematen said the ministry would continue to collaborate with banks and other financial institutions to establish special financing windows for products of strategic sectors.

“We will also ensure that businesses benefit from the roll-out of the proposed Pan African Payment and Settlement System by the Africa Export-Import Bank and the African Trade Insurance which will provide export credit, insurance and guarantees for businesses in Africa under the AfCFTA agreement,” he said.

Adequate trade infrastructure

Mr Kyerematen pointed out that the importance of trade-related infrastructure in the area of ports, roads, railway, aviation, communication and energy could not be overemphasised.

He said the availability and adequacy of trade-related infrastructure would enhance Ghana’s competitiveness and position it as an attractive investment destination.

“We will create the enabling environment for private sector participation in the development of infrastructural projects,” he noted.

He said the completion of the Tema Port expansion project and the successful implementation of the ICUMS system, coupled with the ongoing Takoradi Port expansion and the construction and rehabilitation of various road networks, formed part of the government’s measures to ensure adequate infrastructure.

Weak institutional capacity

Mr Kyerematen said one of the critical success factors that all member states of AfCFTA must address was the weak institutional capacity within public sector agencies supporting export development.

He said majority of private sector enterprises in the country were micro, small and medium enterprises (MSMEs) operating in the informal sector and which, from the development experience, had limited capacity for producing for export.

“They require capacity support in the areas of standards, certification, packaging, among others. The MoTI, with support from the African Development Bank (AfDB) and the International Fund for Agricultural Development (IFAD), has established 67 business resource centres across the country.

“The business centres are designed to provide business services for MSMEs, as well as serve as service centres at the district level for key regulatory agencies,” Mr Kyerematen said.

In January this year, the minister said, the government designated the Customs Division of the Ghana Revenue Authority (GRA) as the competent authority to ensure that exporters under AfCFTA had easy access to export registration, AfCFTA rules of origin certification, among other services, when exporting under AfCFTA.

Trade information

He also pointed out that trade information on products with export potential, prices and market access requirement was a critical part in trading under the AfCFTA.

Mr Kyerematen said under the National Action Plan, the government was seeking to bridge the information gap by providing easily accessible and timely information necessary for businesses to take full advantage of the opportunities under AfCFTA.

“The Ghana Export Promotion Authority (GEPA) and the Ghana AfCFTA Coordinating Office have intensified their activities under a one-stop shop market hub for the provision of relevant export trade information.

“The MoTI is developing a structured framework to assist the Ghanaian private sector to establish regional networks to share information on various business, export and market opportunities across Africa,” he said.

“The ministry, in collaboration with GEPA, has organised national and regional conferences designed to provide general and specific information on the key components of the agreement, as well as the operational modalities,” he added.