Ghanaians’ quest for foreign goods against the local ones is having a negative toll on goods produced in the country.
Despite being boasted with a stable economy, Ghana consumes more foreign goods than what its hard working entrepreneurs produce annually.
The 2016 Review of the Budget and Economic Policy and Supplementary Estimates made the situation gloomier as total merchandise imports for the first four months of 2016 amounted to US$4,318.7 million, down by 2.6 per cent year-on-year. The decline in imports was on account of both oil and non-oil imports.
Oil imports was provisionally estimated at US$556.0 million, compared with US$658.1 million for the same period in 2015. Also, non-oil imports totaled US$3,760.8 million, down by 0.44 per cent from the outturn of US$3,777.3 million in the same period in 2015. The slight decrease was occasioned by a fall in consumption goods imported.
Between 2012 and 2013, Ghana lost US$1.3 billion in export revenues on account of the decline in cocoa and gold prices. At the same time Ghana’s import bill rose dramatically to US$1.7 billion.
To buttress these, data from the Ministry of Trade and Industry (MoTI) in 2013 alone showed that the West African country spent a whopping amount of almost $1.5 billion in foreign currency on the import of rice, sugar, wheat, tomato products, frozen fish, poultry and vegetable cooking oils.
Rice accounted for US$374 million, fish US$283.3 million, wheat US$226.7 million, poultry US$169.2 million, cooking oils US$127mmillion, tomato products US$112.1 million.
Imagine if this money had been retained in Ghana. Imagine if it had gone into the pockets of Ghanaian entrepreneurs who would, in turn, spend those monies at markets, restaurants, beauty shops, pharmacies, shopping centres and other Ghanaian enterprises. It would have transformed the country’s economy, economists lamented.
When Ghanaians produced goods that other Ghanaians use, they are then able to re‐invest that revenue back into the very communities that patronized them, a PhD development student at the University of Ghana, Nii Emma explained.
“The money flows in a current, and it fortifies the nation’s economy. That is the best use of a nation’s currency. Imagine all that we could achieve if in one year, we could spend as much in cedis on locally produced rice, sugar, wheat, tomato products, frozen fish, poultry, vegetable and cooking oils, as we spent in dollars on those very same imported items last year”.
Economists say raw material exports are subject to price fluctuations on the international market. Countries that are dependent on raw material exports are therefore subject to wild cycles of “booms and busts.”
The immediate past President of Ghana John Dramani Mahama in one of his state of the nation addresses who is not happy with this situation once said: “Can we, as a nation, continue this unbridled importation of everything from plastic dolls to toothpicks? Must we continue to rely on a narrow band of raw material exports? Were we born to be a nation of only shopkeepers and traders?”
Roland Agambire, an IT entrepreneur and owner of Rlg Communications Limited said every year entrepreneurs are celebrated at the Ghana Entrepreneurs’ Awards but Ghanaians do not purchase their locally made products.
Taking his own Rlg phones, computers, and Uhuru tablets as a test case, Mr Agambire asked how many Ghanaians here use his products. “In this hall I can count the number of people who are using Rlg phones, our products are as quality as the imported ones,” he stated.
“Apart from paying taxes, we also employed thousands of Ghanaians in our businesses. It is therefore unfair that our own people will shun our locally made products and go for the foreign ones,” Nana Kwesi Obeng, an entrepreneur added.
He recounted that in the past Ghanaians were patriotic which could be seen in all facets of their national life, as a result they used to purchase goods produced in the country as against the current dispensation.
This is one of the major challenges of the Ghanaian entrepreneur who spend his/her resources to produce a product to solve a need or problem and also create job opportunities for the teeming youth, however these entrepreneurs are yet to be appreciated.
Apart from the above challenge, Ghanaian entrepreneurs are also confronted with numerous adversities including both internal and external.
For Prince William Attipoe, a public relations and customer service expert at NewMax Company Limited, marketing, PR and business advisory firm, noted that the greatest of all challenges facing entrepreneurs especially the Ghanaian ones, is inadequate capital.
“Most of them go into business with inadequate capital hoping to secure more once the business begins to grow”.
Also, self-made business-people often struggle to obtain loans from banks, grants from agencies and investments from individuals or organisations. If they get these loans must be paid back and investors expect returns; even those providing grant-money need evidence of success to keep the money coming should it be necessary.
He was quick to note: “The real issue is most entrepreneurs face capital challenges a few months after operation. It is therefore important that entrepreneurs do the necessary research to be informed before starting a business, to avoid capital challenges before the first year of operation.”
Structure of the economy
The basic structure of Ghana’s economy has not changed from colonial times. The country’s economy was designed by the colonial masters to be exporters of raw material and importers of finished goods.
This is what best served their needs and purposes. After independence, Ghana’s first President Osagyefo Dr. Kwame Nkrumah of blessed memory sought to break this vicious cycle by establishing numerous state owned industries to produce consumerable products for the domestic market as an import substitution measure.
Unfortunately, the management of these enterprises became a challenge and soon turned into very huge expenses on the state.
A decision was made to divest these enterprises to the private sector. Unfortunately, in many cases, the domestic private sector was unable to leverage the financing needed to revamp these industries and bring them back into production.
The result, the former Minister of Finance Seth Terkper said, is that they are still largely dependent on the export of raw material, including gold, cocoa, timber, oil and mineral exports; and on the import of finished goods. That is still the basic structure of the Ghanaian economy.
Given this reality, Ghanaian entrepreneurs cannot do anything but look helplessly because the economy is structured in a way to benefit foreign countries, especially Ghana’s colonial masters.
Macro-economic imbalances
Entrepreneurs all over the world are able to grow their businesses when there is stable, sound and robust economy.
Such cannot be said of the Ghanaian entrepreneurs who have to weather the storm to overcome economic challenges. It is important to note that since 2013, Ghana’s economy which is second largest in West Africa has experienced a number of pressures which continue to pose challenges to the attainment of the government’s economic targets.
Power sector disruptions, arising from the more than three year shortages in gas supply from the West Africa Gas Pipeline and the frequent downtime of the TICO and Bui projects, amongst other disruptions, adversely affected power production and which development eventually resulted in the country’s reliance on higher imports of crude oil for thermal power generation. Luckily, the power crisis was brought control in the middle of 2016.
As if these are not enough, year-on-year consumer inflation increased from 17.0 per cent at the end of 2014 to 15.4 per cent at the end of 2016. This exceeded the revised end-year target of plus /minus 13 percent. The increase was due mainly to pass through effect of upward adjustment in utilities and fuel prices; and depreciation of the cedi.
Inflation also has repercussions on borrowing on the market. This automatically deters some entrepreneurs from borrowing from the banks, while those who muster the courage would have to pay high interest for their loans.
Infrastructure nightmare
Another factor most entrepreneurs or businesses consider before going to set up a business in a particular area is the availability of infrastructure such as good road networks, potable water, access to telecom services, and ports.
This explains why there are many companies in the southern part of Ghana than the northern part of the country. Because entrepreneurs want to cut down overhead and administrative costs, they tend to locate their businesses in areas where these above-mentioned facilities are present.
In addition, proximity to raw materials and nearness to market for semi-finished and finished products is one of the challenges confronting Ghanaian entrepreneurs in the country.
Delayed payments
After the entrepreneur suffered to set up the business, he/she usually thinks the woes are over. But not knowing that some of the company’s customers will not honour their payments on time in case they purchased goods on credit.
The entrepreneur may have finished the work as planned, but for no apparent reason or maybe some kind of procedural issues, payment is delayed — especially if the entrepreneur is dealing with a large customer. Another challenge on the part of the entrepreneurs is how to pay their employees and vendors.
But, despite these challenges, Ghana is still awash with many heroes and heroines who continue to overcome these challenges to make it big in the country.
By Masahudu Ankiilu Kunateh, African Eye Report
