Economy reels under imports

As imports into the country surge, growth in key sectors of industry slows, reports Maxwell Adombila Akalaare

IMPORTS into the country within the first three months of 2012 overran exports by 2.5 million metric tons, further exposing the dull state of the country’s industrial sector and the import-dependent nature of the national economy.

The items imported within the period included furniture, used clothes, manufacturing equipment and raw materials, beverages, foodstuffs among others.

Statistics from the Ghana Shippers’ Authority (GSA) showed that out of the over 4.9 million metric tons of goods registered at the ports in the first quarter, about 3.7 million metric tons were imports. That represented 76 per cent of the period’s total trade compared to about 1.2 million tons, representing 24 per cent, which were exports.

The data indicates that the drop in exports over imports within the first quarter of 2012 is three per centage points higher than the one recorded in the first quarter of 2011. Imports in the first quarter of 2011 constituted about 73 per cent (3.5 million tons) of total throughput which was about 4.2 million tons at the time.

“The trend is worrying,” bemoaned the Chief Executive Officer (CEO) of the GSA, Dr Kofi Mbiah. “We need to implement tunnel initiatives; specialised economic policies that are focused and directed towards stimulating growth in selected areas of the manufacturing sector while limiting imports in the long term,” Dr Mbiah said.

Dr Kofi Mbiah, CEO, GSA

Although less patronage for local fabrics is currently crashing local textile companies out of business, imports of foreign textiles, cloths, yarn and second hand clothing has over the years been on a consistent rise.

Statistics on the country’s trade pattern showed that a total of 199,331 metric tons of second hand clothing, foreign textiles, yarn and cloth were imported into the country in 2010 alone. That figure meanwhile jumped to 263,986 metric tons in 2011, a year that witnessed massive employee layouts in most local textile companies nation-wide as the industry struggled to contain the effects of less patronage of their products.

The General Secretary of the Textiles, Garment and Leather Employees Union (TEGLEU), Mr Abraham Koomson, once told the GRAPHIC BUSINESS that “the influx of pirated textiles into the country is killing the local textile industry.

“That trend is denying the state of revenues and employment opportunities,” he said.

Local textile companies which were employing about 25,000 people are now employing less than 3,000 people, a development the Shippers’ Authority CEO said was a signal of how a country’s high taste for imports could be injurious to its local economy.

“Encouraging imports kill the economy slowly. It makes the country and the manufacturing sector in particular worse off,” he said.

A statement issued by the latest IMF mission to the country said in part that “despite buoyant exports, the (country’s) current account deficits exceeded 9 percent of GDP in 2011 on account of high import growth.”

According to the statement, the “rapid depreciation of the cedi in the first five months of this year has begun to feed into domestic prices, a development Dr Mbiah of the GSA said could be blamed on high imports.

“People normally argue that importing used items does not take away foreign exchange but limiting those imports also stimulates industrialisation, stabilises the local currency and generates job opportunities in the long run,” Dr Mbiah observed.

Most people, he said “just have taste for foreign goods, be them furniture or clothing and once you allow that taste to fester, then you can expect the economy to suffer in the long run.

Dr Mbiah recommended the implementation of “selective tariff regimes that will help discourage the importation of particular items so as to promote growth in local businesses.

“We must initiate tunnel-like policies; those that are directed and focused on specific sectors of the economic. We could even use tariffs to discourage imports of items that fall within those sectors.

“Once we do that, then we can give ourselves some targets that indigenous businesses must have a firm control over those areas by a certain time and work towards achieving those targets. If we do that, then we can be sure of achieving a longer aim of limiting imports to save local industries,” the GSA CEO added.

He, however, admitted that the economy at its current state was not “resilient enough” to manufacture to feed its populace.

But added that “that is why we must set targets for ourselves. We can start from somewhere. It doesn’t have to be an overnight thing.”