The President of Ghana Union of Traders Association (GUTA), Dr Joseph Obeng has disclosed that the high cost of doing business in Ghana has led to its inability to compete in the sub-region.
According to him, the benchmark reversal, VAT increment, and interest rate in Ghana have contributed to the high prices of goods and services.
“Factors of doing business in a country like duties, benchmark reversal, VAT increment and cost of borrowing at a higher in Ghana is the cause for preference in buying from other African countries.”
He further explained that due to the reversal of the benchmark discount policy, prices of imported goods will increase proportionally.
“Due to the reversal of the benchmark discount policy on imported goods, importers will pass charges accordingly on to the consumer.”
“Benchmark was reversed because there is an assumption that the introduction of benchmark reduction for traders has made imported goods cheaper than products made here and there is no competition. So the reversal of the benchmark is meant to increase in prices of imported goods and increase the patronage of locally produced goods.”
He added that the union supports the government’s initiative on reducing importation and the campaign on the need to patronize locally made products.
“The recent exchange rate has shown that importation is too high and other factors. The way to go is to enhance local productivity. So we go with the government if by virtue of the reversal of the benchmark will help the economy and government so we can produce within, patronize and be self-sufficient. Knowing this, we support the government.”
However, he stressed that Ghana’s overdependence on imported goods cannot be overlooked.
Dr. Obeng added that over 80% of daily commodities consumed by Ghanaians are imported while 20% of products consumed are locally produced.
“80% of the basic necessities Ghanaians depend on are imported. Only 20% of these basic daily necessities consumers need are produced,” he said on Adom TV Badwam Show.
He cautioned that traders who overprice products do it at their own risk because there is competition
“With the competition in the market, traders who overprice goods, overprice themselves out of the market. The competition is huge. In Ghana we have the consumer’s market not the seller’s market there is bargaining and the consumers determine the prices of products. Consumers search and purchase products that are cheaper and punish expensive sellers. It is not in our own interest to overprice,” he warned.
He also mentioned that prices of imported goods are cheaper in other African countries due to low and favourable factors of doing business.
“When the cost of doing business is low in a country, prices of products are low.”
“The exchange rate is unpredictable so traders do forecasting which is allowed. This is done so no loss is incurred in case the cedi depreciates. Cost of buying goods, FRIT charges, VAT and duty which is 55% of the transactional value and addition of profit of 5% affect product pricing.”
Dr. Obeng commended the government for putting measures in place to control foreign traders’ operations in Ghana.
“The Ministry of Trade and Industry has set up a committee and taskforce and in collaboration with some Nigerian authorities, only documented persons will be allowed to trade. Those undocumented have had their shops closed and this will happen across all regions.”
Dr. Obeng urged the government to revise its investment law in order to generate revenue for national development from foreign investors in various sectors.