Graphic Business News

Why Ghana imports more than it exports

By: Maclean Kwofi

EVERY year, tonnes of cargo passes through the twin seaports into and out of the country under an age-old global trade arrangement that allows countries to export their excess goods and resources to neigbours while feeding off on the surpluses of others.

Of the 21.4 million of cargo that passed through the Tema and Takoradi ports last year, data from the Ghana Shippers’ Authority (GSA) showed that 14.16 million were imports while 6.15 million were exports. The remaining 1.07 million were transit trade – goods transiting from Ghana into and/or from neigbouring countries.

A closer look at the data further showed that out of the 165.2 million tonnes of goods that passed through the two ports between 2007 and 2016, imports totaled 115.8 million tonnes.

The remainder comprised 38.4 million tonnes of exports and 7.3 million tonnes of transit trade.

On the face of this, it is clear that Ghana imports more than it exports.

As if to vindicate this, a recent survey by the Ghana Ports and Harbours Authority (GPHA) revealed that about 75 per cent of 464,000 twenty-foot equivalent unit (TEU) containers were shipped empty to destinations where they were most needed across the world between 2015 and 2017.

This means that three-quarter of all containers that carried imports into the country over the period left the shores empty to other destinations.

Although the GPHA assessment did not explain why, it is obvious that the importing companies did not have Ghanaian produce (exports) to fill the containers that were used for imports.

At the heart of this is the state of the Ghanaian manufacturing subsector.

Woes of manufacturing subsector
Ghana’s manufacturing sector is presently suffering from the influx of heavy imports, high tariffs, high cost of raw materials and an unconducive business environment which serve as a disincentive for the sector to scale up production, resulting in marginal growth and contribution to national output.

From 10.2 per cent in 2006, the sector’s contribution to the total economic output measured by gross domestic product (GDP) has declined to 4.5 per cent in 2017.

The drop in the sector’s contribution to GDP can be traced to the steady reduction in its growth rates over the years.

After ending at 6.9 per cent in 2011, growth in manufacturing resumed a downward trend, raising questions over the impact of various interventions aimed at lifting it.

To help reverse the trend, various institutions and stakeholders have come out with a number of initiatives that are aimed at inspiring the manufacturing sector and businesses along the value chain to increase output, but those have yielded little results.

Although the country has a large and very active consumer and industrial products and services sector, it is often dominated by multinational companies that source most of their products from their parent companies.

So the unfriendly business environment, coupled with heavy importation fuelled by high appetite for foreign goods, makes it difficult for the few surviving Ghanaian businesses to compete with the imports which are often cheap as they ignore export entirely.

Ironically, some of the goods imported are produced from raw materials such as cocoa beans, gold, and timber which are procured on a cheaper rates.

Way forward
Until a national consultative approach is adopted, no efforts by any institution to inspire companies or exporters will yield the desired results.

Tariffs will be reduced, incentives will be provided and ports will be expanded, yet it will only benefit importers.

Although the country’s ports are undergoing development, including the US$1.5 billion Tema Port expansion, if it does not position itself well, it will not be able to maximise the benefits in the development.

So pending the completion of the expansion works at the Tema and Takoradi ports, the government, as a matter of urgency, must take leadership in the export sector to bring in interventions that will accelerate the growth of the sector.

Also, export-related agencies such as Ghana Export Promotion Authority (GEPA), Exim Bank and Ghana Free Zones Authority (GFZA) must collaborate with the GPHA to encourage value-added exports.

Again, all the export strategies that are gathering dust at the various agencies must be re-looked at to develop a comprehensive document which will help improve the sector within the shortest possible time. –GB