In a bid to boost domestic production, government has recently implemented new restrictions on the importation of selected strategic products, a move that may inadvertently lead to massive price hikes on essential consumer goods.
The Export and Import (Restrictions on Importation of Selected Strategic Products) Regulations, unveiled in November, target among others some eight key products – rice, canned tomatoes, fruit juices, poultry, sugar, fish, cooking oil, and pasta.
Despite government’s intention to foster local industries, the existing high tax-induced price inflation on these products raises concerns about the impact of the new import restrictions on consumer affordability.
Various taxes and levies are already in place, with some goods experiencing price hikes of double or triple. A report from the Food and Beverages Association of Ghana reveals alarming price markups on items that fall within the “selected strategic products,” potentially facing import controls.
For perfumed rice, a 50kg bag that costs 410 cedis before taxes skyrockets to GH¢770 after duties and levies, marking an 88% increase. Non-perfumed rice faces an even steeper 117% markup. Canned tomatoes witness an 86% price surge, fruit juices become 84% more expensive, and sugar experiences a 90% rise at checkout due to taxes.
Imported poultry faces a 74% markup, while fish products like canned sardines see prices inflated by 109% post-taxes. Cooking oil experiences the highest markup at 120%, more than doubling for consumers after duties and VAT.
Even basic pasta products like spaghetti are being sold for 110% more than the base price when taxes are factored in. As further restrictions are imposed, concerns about scarcity, increased import costs, bureaucratic red tape, and potential corruption may contribute to driving up prices, further reducing affordability.
The anticipated decrease in affordability could have adverse effects on local businesses, potentially leading to lower sales volumes. This situation poses a challenge to the government’s goal of bringing inflation down to 15% next year.
Critics suggest that a more effective solution may lie in a selective approach, replacing products with a strategic plan based on proper data and competitive advantage.
By reconsidering the targeted products and adopting a more nuanced strategy, the government could balance its objective of stimulating domestic production with the need to maintain affordable prices for consumers.
The success of such measures would be crucial not only for economic stability but also for the well-being of the Ghanaian population.